Fruitful Decision Making

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If you're not already familiar with the Franklin or Balance Sheet close it's an old sales technique that should be out of favor with today's business decision makers. The story is when Benjamin Franklin had trouble making a decision he would make a written list of all the pros and cons. Doing this would help lead him to the best decision. The gimmick behind it us while there are usually many pros in a sales proposition, a prospect is generally only facing a couple of cons, typically risk and/or affordability. It's a manipulative scheme because it leads a prospect to consider the quantity of items on the pro and con lists as opposed to their importance. One significant risk can easily outweigh a hundred minor advantages.

Like all really great lies, it's appealing because there are truthful elements inside. Putting your thoughts on paper is a powerful method of clarifying thinking. It's use should be encouraged; but with an orientation toward what's important. I'm proposing a modification to the Franklin close we can call the Fruitful close for your personal decisions.

Create a list of what's important to you. This is the really hard part and since it may be time consuming needs to be done in advance. Personally, I started with the Roles I developed from the time management disciplines found in The Seven Habits of Highly Successful People. Later I found a much more useful list. The logic behind its use was if I made my decisions in alignment with the characteristics of the Creator, the results would be in alignment with Creation - a very desirable result. These characteristics are listed in the Bible in Galatians 5:22 as the Fruits of the Holy Spirit. They are: love, joy, peace patience, kindness, goodness, faithfulness, gentleness, and self-control. I've come to see the list as operating from the last item (self-control) backwards to the first as one develops into greater alignment with Creation. With a list of importance established, it's now time to create the Balance Sheet.

In Column One, Titled "Important", write down the elements of your list. Now consider all the alternatives to your decision and make a subsequent column for each with an appropriate label. Assign a weight (I use the numbers 1 to 5) that represents how each alternative might contribute toward each result. There may be no effect in many cases. Large effects should be given higher weights. In the end, one column should outweigh the others.

Test this result. Does it make sense that this alternative really is the most fruitful choice? It may not turn-out that way because something was missed during the first analysis (this is normal). Keep repeating the process. Eventually an alternative emerges that that makes sense and we know why. Now its time to become fruitful.

Properties of Value - Powerful, Gentle, and Repetitive

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The forces that create commercial value in a business have the same properties as those that create natural wonders. We find them to be Powerful, Gentle, and Repetitive. Erosion from the Colorado river is is neither loud nor threatening, yet it created the Grand Canyon.

There is no doubt that Bonnie and Clyde created cash flow with their business; however, it was cash flow without any Value for others. Contrast that to to their contemporary, Henry Ford. He neither invented the automobile nor forced the public to buy them. His genius was understanding how industrial-age forces could make them affordable. Year-by-year, model-by-model, plant-by-plant he built an organization that produced at lower and lower unit cost. It was powerful, gentle, and repetitive. Today this organization may become the last solvent US automotive manufacturer.

This is the kind of Value every Active Investor seeks in their business or profession. It starts with a sense of something that is Powerful. The Value to others (which translates as the real value of ownership) is directly related to where this sense of Power is located. Personal power produces cash, but not lasting (or salable) Value. Process or Organizational power produces both. Real power that addresses real needs doesn't require Force to permeate a market. It can be Gentle, as long as it's Repetitive.

Consider the activity of closing a sale. Is your product or service Powerful, that is does it use a proven process that will surely address a prospect's core need? If it does, getting to a close is a matter of communicating that value. This may take some repetition. It's not forceful; but its probably going to take several "messages". Here are the properties of value forming a powerful, gentle, repetitive closing process. Every really valuable business process will be similar in nature.

Our job, as Active Investors, is to be continually aligning with these powerful, gentle, and repetitive forces as they apply to our situation. The degree of our ultimate success is based on it.

Crossing a Mental Divide

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A traveler crossing the Rocky Mountains passes the Continental Divide. If they straddle this imaginary line they have an enormous, yet unseen power. Water poured on to the ground on one side will ultimately flow into the Pacific. Water poured inches away will flow into the Gulf of Mexico. This seemingly insignificant change will mandate the end result, regardless of all that happens to the water on its long journey.

This sensitivity to initial conditions is a common characteristic of natural systems. We are used to thinking about systems in more simplistic ways. A pendulum will ultimately come to rest at its lowest point, regardless of where the motion is started. There is no sensitivity to the initial conditions. It's an esy system to understand.

Because the motion of a pendulum always ends at a point, its dynamics have been called that of a point attractor. The end point doesn't attract like a magnet; but it acts that way. Next in complexity are two dimensional periodic attractors that don't end in a point, yet always repeat the same cycle. The rotation of the earth around its axis creates a daily periodic attractor. Adding a third dimension increases complexity again. The additional rotation of the earth around the sun is expressed as a torus (doughnut) attractor, which is what it looks like.

Those are the easy ones. What happens if more than 3 forces (dimensions) are in play? For most of history, these were called chaotic. They seemed to be beyond pattern or properties because of their complexity. Recent advancements in computers have enabled mathematicians to demonstrate this was a bad term. These systems do have properties, although some, like sensitivity to initial conditions, seemed strange at first. They have been called strange attractors and although they are extremely hard to visualize, understanding their emergent properties help us understand how the world really works.

Learning to appreciate both the order and the complexity of natural and social systems takes you across a mental Continental Divide. It is the single difference between developing a simple business solution versus a simplistic failure. An Active Investor develops a sense of caution and mental red lights begin to flash when any answer appear to be too quick and easy.

Sellers Remorse - The Greatest Exit Ever Told

This diagram summarizes many Exit Planning strategies. We've all experienced the fact that nothing goes on forever. There are limits to growth. This is due to the effect of Balancing loops as explained in System Dynamics. The diagram shows business growth leveling off as some limit to a resource is ultimately reached.

The optimal time for a business owner to move to their next challenge is before that happens. It's the "X" on the chart marked "Time to Exit." From this earlier position a Potential Growth possibility exits. A new ownership will change parameters and frequently delay the Balancing forces that result in the Actual Growth curve. The big issue at this point in time is that it feels like selling now is too soon. This is strange; but that's the wrong feeling you may get at the right time.

We can never know the future and can never know the exact time selling our business will yield the optimal result. What we can know is when it's time to move on to the next thing in our life, in spite of financially-based feelings.

The timing of the Easter story is striking when seen as an Exit. The crucifixion Christians celebrate on Easter is preceded by Palm Sunday. This day celebrates the triumphant entry of Jesus into Jerusalem, by all political and social standards the peak of His ministry to date.

Imagine the feelings that might have been experienced by Jesus and His followers as He Exits at this point. Everything seems to be going so well! Yet His mission is completing and He knows this is the right time. Unlike every other Jewish Prophet or King before Him, death will not limit the growth of His ministry. Defeating death will enable the greatest growth cycle of all history.

In the Garden of Gethsemane it may have felt to everyone like leaving too soon. That's not always a bad thing; it can be what the right timing feels like.

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Constellations are our Motivations

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There is always a special moment when my younger daughter and I look up into the night sky together and see the bright cluster of 3 stars that form Orion's belt. I first showed her Orion over a decade ago and each time we see it a part of that father-daughter moment returns. It's what being alive is all about.

But in reality, there really is no Orion. These are unrelated stars light years apart that happen to form a pattern only when viewed from our planet.

Any social enterprise, like a business, can be understood as a constellation. It first takes an Active Investor, a business owner or owner-to-be, to see a new pattern that can meet people's needs. Previously unrelated resources flowing together in new ways.

Orion has a story. In mythology Orion, the Hunter, was in love with Merope, one of the Seven Sisters who form the Pleiades stars. She would not return his love and his already tragic life was ended when he stepped on a scorpion. Feeling sorry for him, the gods placed him in the sky near his faithful dogs, adjacent constellations, and on the opposite side of the sky from the deadly scorpion.

Each business has a similar story. Something that inspired the founder to start. Often a picture that could only be seen from their perspective. To everyone else, it was just a group of unrelated elements.

It's sad when this constellation story gets reduced to a just "mission statement". The inspiration of the story gets objectified as financial statements and business plans. When trying to value a business we deal in these valuable instruments; however, they only represent the passive side of any business investment. What makes the organization successful is the power of its invisible but very real story.

Being a part of a powerful story is also a part of what being alive is all about.

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Forces around us

In a Lewin Force Field Diagram, like this one, an organization is pictured to be at a certain level because that is where the Driving and Restraining forces acting on it come into balance. This diagraming technique helped the US Government during World War II to more effectively mobilize the civilian population in supporting the war effort.

 As an analytical tool it often gives an insight into understanding our current situation. We are often guilty in making the fundamental attribute error where we believe things are a certain way because of the personalities of the people involved. While success in anything requires personal dedication and effort, when that is coupled with positive circumstances, things happen.

American is a land of opportunity for every individual. That makes us quick to make our circumstances about the individuals rather than the forces involved. Look at how we become more obsessed during elections with politicians personal characteristics rather than their understanding of the nation's problems.

Leigh Hilton, a Texas attorney specializing in asset protection, brought this national disposition to light recently when she told me she asked clients to think about what they wanted to happen "if" they should die. They had too much trouble thinking of what to tell her if she asked them to think about "when" they die. Our Egos just have enormous difficulty imagining life not centered on us personally.

An advantage of being in corporate America is that our responsibilities are generally on things we don't personally own. In those circumstances it's much easier to be process oriented and systematic. Our thinking frequently changes when we choose to own our own business. 

More than most, Active Investors need to get over their American Ego dominance. We need to understand and believe in the dynamics of the vast forces around us. Try a Lewin diagram next time you're about to assign blame to yourself (or anyone else) for what is happening. Forces can be family, health, the market, competition, industry, legal, the economy, spiritual or from any number of sources that constantly affect us.  Are there any that are being ignored?