6 Pieces of Conventional Business Wisdom That Are Completely Wrong
It’s a reality of entrepreneurship that much of the time we’re flying blind. As entrepreneurs, we strive to live and think at the outer rims of our industries, always working to innovate better products and processes to improve our businesses and bring value to our customers. We thrive on the creativity and uncertainty of it all.
At the same time, we reach for tried and true precepts to live by, anything to help guide us in the unknown. Conventional wisdom isn’t called conventional wisdom for nothing and often it imparts good and useful advice. Don’t act impulsively when you’re angry, for example -- there’s a truism that has stood the test of time.
Yet what was once convention can become stale and lead us astray. And conventional wisdom isn’t everything -- isn’t bucking convention part of the reason we became entrepreneurs in the first place?
You’ve heard them all before. Here are six pieces of conventional business wisdom that, in my experience, are totally wrong.
1. Write a business plan.
I didn’t. Instead of agonizing over developing a fully-formed, well-honed strategy for my company, I focused on highlighting and developing my skills and aggressively pursuing a range of opportunities. At Vision Critical, it took us three years to figure out what precisely our product was. Had I spent my time and energy developing a clear business plan in the first place I never would have happened upon Vision Critical’s billion-dollar idea -- that happened because I was open to opportunities and aggressive. A business plan isn’t necessarily a bad thing, of course. But not having one isn’t necessarily a bad thing either.
2. Marketing trumps product
This may be one of the most pernicious myths there is about business. At one time, it might have been true that your brand was more important than your product. That’s simply not the case in today’s age of the empowered customer. People aren’t stupid and the internet has given them, literally, a world of shopping options. Through online reviews they have information about your product (and, importantly, your competitor’s product) galore. And with social media customers have a megaphone to broadcast their displeasure or their delight -- today your product is your brand.
3. Value performance over loyalty.
Sometimes you need to make the tough call to axe even a passionate and loyal a co-worker who is underperforming. But blindly valuing performance over loyalty is not courageous or decisive -- it’s stupid. At Vision Critical, we’ve had loyal people who didn’t at first gel, become irreplaceable. We’ve also cut under-performers and replaced them with people who turned out to be worse because they didn’t care enough. You need people who are passionate about the company and the mission.
4. Profitability doesn’t matter.
In tech, people often say success is all about high growth rates and that focusing on profitability is wrong. But no one has ever run a successful business in the red for years and years with no end in sight. Investing in innovation, rapid iteration and high-velocity growth are all powerful precepts to live by, but profitability needs to be within reach. Even Salesforce, a company famous for reinvesting its earnings, posted a small profit in 2015.
5. Follow a proven playbook.
Though Salesforce is one of the most successful product companies in the world, it’s a unique animal. The company has hardly ever been profitable. You can’t follow anyone else’s playbook, because your company, like all companies, is unique in its own ways as well. Think and plan independently and don’t expect things to work out just because you followed all the steps someone else did.
6.Get an MBA.
BS, and that doesn’t stand for Bachelor of Science. More important than an MBA is to understand what you do well, highlight your best traits and leverage your skills. I didn't have an MBA when I started Vision Critical, yet I still became successful by focusing aggressively on seeking out new opportunities, saying yes when opportunity knocked and building successes by excelling at the things we did best.