Saturday, September 26, 2009

Timeless Business Principles

Fresh out of university in 1997, I started my business career in investment banking. I lasted 4 months.

While the experience was rewarding (I learned how to use Excel like a pro), I was more suited to entrepreneurship as I always wanted to build something I could call my own. (I also had a mind for sales/marketing, not finance).

Given my time in investment banking, I was interested how Goldman Sachs - the industry's 800 pound gorilla - grew from a mid-tier firm to a global powerhouse over the course of a few decades. To learn more about this rise, I have been reading Charles Ellis's The Partnership: The Making of Goldman Sachs

I have very little connection to the investment banking industry these days (my Excel skills have also weakened over time!), nor do I endorse the shenanigans of modern day Wall Street. However, what I have found interesting about this book are some of the timeless business principles that can be applied to almost any enterprise, regardless of industry or company size.

This is also not a commentary on Goldman Sachs per se, but rather a look at how one company within one industry was able to grow by applying some surprisingly simple principles.

In 1970 (long before subprime mortgages and credit default swaps), John Whitehead, a co-head of the firm, wrote the following ten commandments that guided their business development efforts:

1. Don't waste your time going after business we don't really want.
2. The boss usually decides - not the assistant treasurer. Do you know the boss?
3. It's just as easy to get a first-rate piece of business as a second-rate one.
4. You never learn anything when you are talking.
5. The client's objective is more important than yours.
6. The respect of one person is worth more than acquaintance with 100.
7. When there's business to be done, get it!
8. Important people like to deal with other important people. Are you one?
9. There's nothing worse than an unhappy client.
10. If you get the business, it's up to you to see that it's well handled.

As an entrepreneur, I reflect on these "10 commandments" and many of them make perfect sense, especially for an organization that wants to be outstanding (or be a Purple Cow, as Seth Godin would say). Many people in business waste a lot of time chasing opportunities that just do not make sense and act as a distraction to what really matters.

I particularly agree with commandments 4, 5, 6, 9 and 10. These are absolutely timeless and should be ingrained in any organization's culture, for-profits and non-profits alike.

This is a long book at 752 pages, but if you were to read anything, I would recommend Chapter 11, entitled "Principles" (pp 183-214).

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