Chasing Your Dreams Is The Worst Way To Start Business
Business isn't about fulfilling our wishes
My friend was a CFO of a multinational company, and she had a hobby. She made very nice, lovely elephants out of clay in her spare time. She made them for herself and gave them as gifts to her friends.
She was happy, her husband was delighted, and her clay elephants looked hilarious.
But then somebody told her that making clay elephants was her calling, and she should chase her dream instead of wasting her time at the company. So, she quit her job and began to sell her clay creatures online.
And this was probably the worst strategic decision in her life.
Before she turned her hobby into a business, she had made the elephants only when she had felt like it. Selling the figurines online meant everyday hard work.
All her elephants used to have unique personalities. But online customers didn't need different characters and wanted to buy copies of the most popular figurines. So, what had been creativity became a craft.
Her income shrank. She worked hard but couldn't even come close to the earnings she had as a CFO.
She got frustrated, her husband was upset, and even her elephants looked sad.
As a result, she closed her online business and applied for a job as a CFO. She didn't turn her hobby into a business. And she lost her hobby because she hated clay and elephants after her failure.
It may seem like a story of a personal disaster, but it reveals a major business problem because of which we live in not as great a world as we could have had.
"Follow your dream"
No motivational speaker will tell you that you must follow somebody else's dream. Chasing your dream is a cliche, an axiom we take for granted. But even if it may be applicable, to the extent, to one's individual life, it doesn't work in business.
Because customers are the ones who pay. And we need to fulfill their dreams to establish a thriving enterprise, not ours.
A successful businessperson of the future won't be a thought leader or somebody who'll show us how to live better. They will be more of an attentive attendant who will observe our life and work conditions and offer us solutions to improve them.
Centuries ago European kings were considered to be the owners of their countries. Nowadays, presidents and prime ministers are employees, managers hired by nations to make people's lives better. We need the same shift to happen in the business world.
Let's look at the top 12 reasons startups fail, according to CB Insights:
No market need – 35%
Got outcompeted – 20%
Pricing/cost issue – 15%
Product mistimed – 10%
What do they all have in common? They all indicate that founders failed to offer customers what they needed for the price they considered reasonable. I am positive that many of them "followed their dreams."
Business media and books are full of egoistic notions such as strategic goals and selfish metrics like net profit, market share or cap, or revenue. But if we start our business to fulfill our selfish ambitions and dream, we will never succeed.
Steve Jobs, when he was the CEO of Apple, said that customers don't have the vote when it comes to product development. He understood customers intuitively. But unfortunately, many other companies are not led by Steve Jobs.
And this is why we live in a world where humans can travel to the Moon, but we must stand in long lines in the airports, use printers that require a computer education to set them up, and coffee machines that rumble like excavators.
These companies' leaders don't follow our dreams, they chase theirs. They dream about their bonuses, shareholder value, or net profit.
The first three questions any strategic discussion should start with are:
Who will be our customers tomorrow?
What are their needs?
What customer values can we offer them to satisfy these needs?
That's why I don't believe Apple Vision Pro will become "the next iPhone." I published the article about it on Medium, behind the paywall, but you may read it for free at the friend link here.
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Good article. Many times I've seen people turn an enjoyable hobby into a chore of a business. Also, being good at a technical skill - baking cakes, fixing computers, or making clay elephants - doesn't mean you have the skills to run a business.