The Essence Of Business: Innovation And Marketing

I consider the ATM a miracle. Let’s say I’m traveling outside North America — at an Israeli outpost close to Lebanon, for instance — and I run out of cash. I look around and find a store down the street that has an Automated Teller Machine. I stick my card into it, choose between English, Hebrew, and Arabic, then, after a pause that’s only slightly longer than usual, the machine gives me a handful of shekels. Talk about massive amounts of co-operation among strangers!

We all live within a single system.

In the sixties and seventies, a French philosopher named Jacques Ellul described the way technology was growing into an all-encompassing global system that transcends all social, political, moral, and economic divides. Before, he said, societies contained individual technologies. Today, a single technological system contains all societies.

So what’s at the core of my miracle transaction with the ATM? Certainly there’s the element I talked about in my previous post: a tremendous co-ordination and co-operation among strangers, which is the result of centuries of human beings building on the trading instinct. And every time we trade with one another, we try to make it more automatic in order to increase the productivity. Now that we’ve been able to get machines to do it, our productivity has increased exponentially. But the system isn’t the valuable part.

Using the miracle.

The question that fascinates me as an entrepreneurial coach is, how is this useful to entrepreneurs and small business owners? What should you be focusing on in the midst of this global system to take the greatest advantage of it?

I refer you to another modern philosopher, Peter Drucker, an Austrian-American writer and management consultant who said that a business enterprise has just two basic functions: innovation and marketing. Everything else is just a cost.

The heart of entrepreneurism is innovation — coming up with a new thing. Then there’s marketing — the communication that opens a trading connection, a relationship, between individuals and groups. Once we’ve worked that out, we create techniques or technologies for delivering things, but these are costs. As Ellul’s “single technological system” evolves, it continually drives down the cost of making these connections and exchanges.

A logo from far away.

One of my entrepreneurial coaching clients wanted to get a new look for his small business. So he went to Elance.com, put in a request for a new logo and a design for all his corporate communications, and within an hour, he got 50 different bids. He finally picked one by a designer in the Philippines and paid $5,000 for it.

The work probably took the designer two or three days and earned him $5,000 in an economy where $1,000 is a really good income for a month. And my client got what he wanted at a good price and without having to do a lot of searching for the right person to hire.

In today’s world, we can receive endless help from strangers and be useful to people we would never have met before. But who’s in control of this system? And how do you stand a chance of being seen or heard in a market with billions of interconnected individuals in it?

In the next post of the Multiplier Blog, I’ll talk about how to make your peace with the global marketplace.