Deseret News Archives,
Sunday, March 24, 2002

Edition: All
Section: Money
Page: M01
Length: 74 lines

Boring basics often = success

He also succeeded in generalizing a set of extremely complex problems known to economists since 1840 that describe what might happen when two big companies collide with one another in the marketplace. His "beautiful idea" won the 1994 Nobel Prize in Economic Science and has found more applications in the business world than was ever envisioned.

Original and unique ideas such as Nash's are the catalyst for many corporate success stories. For example: FedEx (overnight package delivery), Cisco (Internet router), Apple (personal computer) and Microsoft (PC software).

Unfortunately, some entrepreneurs think their success will be assured by a great idea that requires compromising ethical business practices or is dependent upon "creative" accounting. Too often, bright people devise schemes that border on fraud -- or are blatantly illegal.

An original and beautiful new idea is a great first step for the classic entrepreneur, but it is not essential. The majority of successful new ventures take an old, even mundane idea and introduce a new twist. That's called innovation. Then the founders work hard -- even passionately -- to make sure they add value to the consumer in products, pricing and/or services.

For example, in 1962 a new company was formed that seven years later would reach $12 million in annual sales and would soon become the largest private employer in the world. Who would have thought that Sam Walton would succeed in changing the shopping habits of millions, and that Wal--Mart would exceed $191 billion in annual sales in 2001? Who would have believed that last November Wal--Mart would exceed $1.25 billion in sales in one day? Incredible!

Some would say that Sam Walton's business was routine, even downright boring. It certainly wasn't revolutionary, but his strategy was exciting. After 40 years, his business empire is solid and isn't likely to implode overnight. He built the largest retail merchandising company in the world by using well--known strategies and management practices.

Sam Walton didn't have a Nobel prize-winning idea like John Nash. And he didn't rely on far--out debt management strategies, off-balance-sheet transactions and creative bookkeeping as some very high-profile companies have done.

Former Labor secretary Robert Reich has said: "The human mind is capable of inventing very innovative products and services -- and also extraordinarily innovative swindles." The wise entrepreneur focuses on innovative products and services.

The message is that even though it is wonderful to have a truly great and original idea with which to launch your new venture, it is not essential. It's foolish to waste your time thinking up exotic strategies that require creative bookkeeping that may leave your key executives hiding behind the Fifth Amendment.

If you stick to basic and fundamental business practices, there is no need to compromise your integrity to get a competitive advantage. Start your venture with a business plan that includes a complete marketing plan, financial plan, description of management duties and responsibilities, and a complete description of your short- and long-term objectives.

Then implement your plan with an undeviating focus on customer satisfaction while providing superior products and services at competitive prices. This will give you a competitive advantage, and you will win.

And that, come to think of it, is a beautiful idea, indeed.

David M. Brown is associated with the BYU Center for Entrepreneurship. He can be contacted via e-mail at cfe@byu.edu.

© 2001 Deseret News Publishing Co.