Start The Best Business You Can

I just started teaching a new class of aspiring entrepreneurs. One of them asked at the end of the first meeting, “Are you going to tell me what’s the best business for me to start?”

He was surprised when I said “no” and told him, instead, about places where he could find lots of statistics about profitability and growth for various kinds of businesses as a way to begin narrowing down the possibilities.

Having no experience in starting a business, he didn’t realize that the best business for him to start depends a lot on what his personal goals are, what capabilities he already has, how well he can attract talent and resources, and how effective he is in various kinds of innovation, from developing new offerings to pioneering advantaged business models.

Since we had just met, I had no idea about those personal factors. During the next few sessions, I will show him how to evaluate those fitness dimensions, and to take them into account for selecting a business to start.

Let me mention another misperception: Most new entrepreneurs mistakenly think that new businesses are usually so well-formed that they only require being expanded without change.

Actually, what’s required is usually just the opposite: New businesses are a mess and need improvement before they can be successfully expanded.

One of my favorite comments to new entrepreneurs is: “Your first business idea will be your worst one. Your second business idea will be your second to worst one. Your third business idea will be your third to worst one. And so forth.”

As a result, I encourage those planning to start new businesses to first try lots of their ideas in low-cost, rapid ways.

For many future entrepreneurs it can be especially valuable to work first for a successful organization that is world class in performing whatever it is that the entrepreneurs think they want to do. After having that experience, many of them develop a better idea of what to do and become effective partners, and even competitors, with their former employers.

I was reminded of that lesson recently while attending the opening ceremonies for the Innovation Group’s impressive new rubber compounding line in Rayong, Thailand.

The group was founded just over twenty years earlier by Professor Banja Junhasavasdikul, Ph.D. of Chulalongkorn University, who earned his doctorate in technology management from Rushmore University, following a Bachelor of Science in chemistry from Chulalongkorn University, a Master of Arts in organic chemistry from the University of Texas, and an executive MBA from Thammasart University.

Before starting the group, Professor Junhasavasdikul worked for Shell (Thailand) and DuPont for twelve years where he learned a lot about creating and profiting from producing high-performance organic products.

At its inception, Innovation Group had only three employees. They focused on marketing high-performance products produced by American chemical companies, especially DuPont.

Today, Innovation Group has 1,230 employees, operates three trading companies, two rubber compounding factories, one finished-products factory, and two research-and-development centers. The company’s expertise is sought by the world’s leading companies when they want to access the best technology for creating high-performance products using polymers.

As an example of its development and production expertise, Reebok shoes now last longer than they used to, thanks to Innovation Group. Recently, Innovation Group added nanotechnology-based products to its line of offerings.

Few distributors of technical products graduate to become technology-based production companies. Innovation Group was able to do so because its founder saw the firm’s beginning as just one step in the process of Winning with Technology, a process he described in his book by that title in 2011.

In the book, Professor Junhasavasdikul describes some of the lessons the firm’s success demonstrates. One lesson learned while working for others was that the quality of bosses varied a lot. From those experiences in working for others, he wanted to do better: He determined to be a “good, but tough, coach.”

Acting on that lesson paid off seventeen years ago. That’s when Innovation Group was told by its rubber compounding partner, a firm that controlled the technology, manufacturing, and marketing to large Japanese customers, that the partner would be establishing its own factory in competition with Innovation Group.

The partner vowed it would take all of the Japanese customers with it. For a weak enterprise, that would have been a deadly event.

Today, Innovation Group is much larger than its former Japanese partner. That’s because the Thai firm developed its own technology and improved its employees from the “inside-out” so that they could deliver the firm’s strong technology to its customers.

Despite the global slowdown in recent years, Innovation Group has continued to expand at an enviable rate… even after much of Thailand was shut down by floods during 2011.

The firm’s prospects have never appeared to be brighter. In addition to Professor Junhasavasdikul, top management includes his daughter, Ms. Patima Junhasavasdikul, and son, Mr. Panitan Junhasavasdikul, (each holds an MBA degree from an American university) who have performed well in important leadership tasks at the firm.

What are some of the lessons that Professor Junhasavasdikul feels are important for other entrepreneurs?

“I have found that to be successful in growing industrial products in a global market the company must develop its competitive edge over the competitors in eight ways:

1. Build strong core-competency in three areas:

a. Strong technology in the industry that we serve
b. Employees’ abilities, control systems, and culture
c. A strong technical marketing organization

2. Build a strong partnership in the total value chain.

3. Have the ability to ensure congruence between its internal competency and external position.

4. Create and apply great corporate strategies to stay in front of the competition.

5. Develop great marketers.

6. Build a strong corporate image.

7. Establish an effective business network along the value chain.

8. Put in place and improve a strong marketing channel of distribution.

“Innovation never comes by luck. Just generating different ideas cannot create an innovative product. Productive ideas have to come from the industrial demands of customers. An innovative organization brings customers’ needs and industrial future requirements into the development cycle, which requires strong knowledge and technology in that area.

“Innovators are not born as such, but they can be developed. Innovators have unique senses in generating breakthrough business ideas. Innovators have creative intelligence, which differs from other types of intelligence and enables them to make discoveries. The more diverse the experience and knowledge an organization has, the more connections that can developed in creative thinking.

“To be a success, a company must have strong business cultures emphasizing good corporate governance and building employees’ competence. Management must also develop effective systems to control and measure the achievements.

“Customers demand today new products with better quality and better performance, but at a lower price. The way to succeed in business has to change to reflect those demands.

“Modern marketing’s task is to translate what we know about customers’ demands and our technology into the next growth ideas and then to create innovative products that can be provided with competitive prices and good service.”

As you can see from these lessons, building a great business is a moving target. Yesterday’s great business can become tomorrow’s also-ran by stopping its improvements and failing to work on the right things.

Ultimately, the lesson for new entrepreneurs is that they must continually focus on the right vision for what they want their organizations to do and to then organize work to make those capabilities come to life. In so doing, they, too, may well be publishing books in a few years to explain to another generation how they, too, can become successful entrepreneurs.

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