Opinion and Analysis
If business is a game, here are the rules
Posted Thursday, June 21 2012 at 19:51
Last week, I started a discussion on possible reasons why start-ups do not thrive. I drew lessons from the game of chess and how these can help investors.
We covered three lessons namely; a good business plan, laying strong foundations and preparing for competition.
In this final part of the series, we continue with the lessons.
Lesson Four: Keep records
Chess is one of the few games, in fact the only one, where every move of the game can be recorded accurately on a piece of paper for reference. What this means is that, for a recorded game, the players can retrace steps they played and reflect on performance.
Similarly, thanks to recording even non-players can review the games. Thus, a game that was played more than 100 years ago, if it was recorded, can be replayed. Recording a chess game has enabled the game to flourish as new generations learn more techniques from the past.
Business start-ups need to have all their transactions recorded. Proper record keeping means that the business owner can accurately tell how well they are doing financially. This means that one of the most important investments that new businesses should invest in is book-keeping. Records are the conscience of the business and the only real measure of progress.
Lesson Five: The entity is more important than individual
In a chess game, there are pieces with different ranks and powers. Pieces are accorded value by how much you stand to lose if you do. Pawns are the least powerful and have a value of one. Bishops and horses (knights) are second in line with a rank of three. Castles (rooks) have a rank of five. The queen is the most powerful at nine. The king is not assigned a value because, hypothetically, it can never be captured during the game.
Players, in a bid to gain control, exchange their pieces. Often, they make sure to exchange pieces of equal value (say a horse for a bishop). Exchanging a higher value to lower value piece is seen as a weakening move.
However, chess professionals know that this rule is not straightforward. There are times when it makes sense to let go of your higher value piece to gain good position to attack. Such an exchange is known as a sacrifice.
Such professionals know that no part of their pieces are indispensable; even the queen.
Strategic positioning is sometimes more important than the value, just like in business.
Some employees may think they are more important than the business. Such a notion cannot be tolerated. For the sake of the business, it should be known that anyone can be let go. No one is too important to risk the growth of the business. All members of the business must work as a team. If we have to cut down salaries to remain competitive, so be it. If an arm of the business is rendered irrelevant, say by technology, unless it can be absorbed usefully into other departments, the painful decision would be to let them go.
This is the hard but painfully true adage of business. The main role of a business is, at the risk of sounding overly capitalistic, not to provide employment. It is to provide a service that provides a solution while giving a fair return to the ownership.