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Procrustes had a very nasty behavior of forcing issues to suit.
The Greek mythological character would compel folks to lie in an iron mattress. That is when his compulsion to make them match got here in. If the mattress was longer than the person mendacity in it, Procrustes would hammer or rack the physique till it crammed the mattress’s area. These too tall didn’t escape a grotesque destiny — Procrustes would lower off their limbs to make them the fitting dimension for the mattress.
It’s truthful to say nobody would need to discover themselves in a Procrustean mattress. Sadly, many companies are caught in a Procrustean mattress of kinds after they search the recommendation of tunnel-visioned specialists who contort them unnaturally to suit a sure scheme or sample. These enterprise advisors have strictly one focus, whether or not that’s M&A, chapter, administration consulting or one thing else. The trendy-day tragedy is that enterprise homeowners don’t even understand they’re in a Procrustean mattress till it’s a lot too late.
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Ignorance will not be bliss
Some folks might imagine that “ignorance is bliss,” however there may be typically a hefty worth to pay when positioned within the care of a Procrustean skilled. For instance, in case your lender is pressuring you, these advisors would possibly lead you into a dangerous restructuring or, worse, a chapter submitting, when an M&A transaction could be the optimum answer. Alternatively, an M&A specialist would possibly peddle a sale of your corporation when you might vastly improve your return by previous, or obviating, such a step with an infusion of extra capital, a efficiency enchancment engagement, a even handed acquisition or a balance-sheet repair. Tunnel-visioned specialists don’t essentially advocate these approaches with dangerous intentions — even when they do not consciously skew their recommendation out of self-interest, they may simply be unconsciously biased.
Put one other method: For those who had been contemplating a medical plan of action, would you confer solely with a surgeon? In fact not! A surgeon is prone to advocate an operation even when there are higher choices. It would be useful to have surgical procedure, it would not. You might find yourself wholesome or disemboweled. Now, think about why you’d search extra balanced medical recommendation after which apply that reasoning to your corporation decision-making. The surgeon and the Procrustean skilled simply naturally flip to what they know.
The worst a part of all this: A Procrustean skilled would possibly information a enterprise proprietor to a passable outcome, however the truth will all the time stay that higher outcomes may have been achieved had the proprietor simply identified the place to look. Enterprise homeowners won’t ever know the way a lot cash they left on the desk had they’d pursued a distinct path. They received’t even know what was doable.
“Unknown unknowns” are reworked into alternatives
Former secretary of protection Donald Rumsfeld popularized the psychological perception that “there are unknown unknowns”: We don’t know what we don’t know. So how can shoppers make themselves conscious of “unknown unknowns”? That is the true function of an advisor. An advisor who has broad expertise, a assorted toolkit and a track-record of success makes shoppers conscious of what was beforehand unknown.
As broad-focused advisors aren’t restricted to offering a single service, there’s a higher chance they are going to be dedicated to the consumer’s mission relatively than their very own self-interest. The broad-focused advisor opens doorways conceptually, makes advantageous introductions and offers options starting from a cope with international traders, an M&A transaction, a efficiency “tune-up” to a number of different choices. “Unknown unknowns” are reworked into alternatives.
Cash left on the desk
You simply have to look to latest enterprise historical past to see the risks of inadequately exploring choices and some great benefits of remodeling “unknown unknowns” into alternatives.
Microsoft dominated the software program world beginning within the Eighties, and in the present day it has wholesome companies in lots of segments. However within the 2000s, the behemoth company did not turn out to be a serious competitor to Apple’s iPhone, a “mismanagement” mistake “that induced Microsoft to not be what [Google] Android is,” firm co-founder Invoice Gates stated. He estimates Microsoft misplaced out on $400 billion of potential revenues because of the corporate not seeing the potential of contact display screen cell units. That’s some huge cash left on the desk.
Microsoft weathered this failure, however one other former big fell with its resolution to stay with just one course. Blockbuster had been the reigning champion of the house video market, however it failed to see how the web may change the house video expertise. Even after constructing a video-on-demand enterprise with Enron, Blockbuster stayed so targeted on its retail areas that it did not develop it additional. Ultimately, Netflix and different opponents devoured the corporate.
On the opposite aspect of the coin, Ecolab was based within the Twenties as a dishwashing detergent developer and ultimately expanded additional into cleansing and sanitation. Douglas Baker, Ecolab’s CEO, wasn’t content material with the outdated technique.
“Our strategic plan was to promote extra of what we had,” Baker informed Harvard Enterprise Evaluate.
That wasn’t daring sufficient, he stated, so he launched into a listening initiative, decided to study what his prospects wanted. This inquiry led to Ecolab’s largest acquisition ever, an $8 billion merger with water administration firm Nalco, which the corporate stated “immediately reworked Ecolab into the worldwide chief in water administration within the industrial, institutional and power sectors.”
The corporate would in all probability nonetheless be wholesome serving the identical prospects it had previous to this acquisition, however as a result of it explored what was doable, Ecolab noticed its market capitalization develop by greater than eight instances and its worth improve by $50 billion.
“We broadened our imaginative and prescient and our function modified,” Baker stated.
That’s the important thing to not solely surviving, however thriving, particularly in a disruptive economic system. These three corporations seem to have had one main distinction: Microsoft and Blockbuster had been content material with the choices in entrance of them; Ecolab explored new ones.
A world of alternative
Even companies that wouldn’t have a “CEO of the 12 months” like Douglas Baker can increase their choices. There’s a complete world of alternative simply ready to be taken benefit of — if solely enterprise homeowners knew the place to look.
Thankfully, entrepreneurs can understand the “unknown unknowns” and remodel them into alternatives by accessing very important perception and steerage. Simply as Ecolab’s CEO engaged the corporate’s prospects to search out out what they want, companies ought to hunt down broad-focused advisors who’re dedicated to the consumer’s mission and can assist them acknowledge and discover the huge array of choices obtainable. Entrepreneurial alternatives will probably be vastly elevated within the present disruptive economic system if enterprise homeowners are open to inventive recommendation. Broad-focused professionals free entrepreneurs from the Procrustean mattress of slim recommendation, increase their imaginative and prescient and information them by the maze of potentialities to success.
For those who don’t broaden your imaginative and prescient, you dim your prospects.