Why businesses need enemies

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Enterprises that innovate, and work diligently grow from strength to strength. FILE 

By Peter Mutua

In Summary

• Enterprises should study the commercial battlefield and strategise to deal with adversaries

[Any organisation that doesn’t have an enemy should create one. Why?] “…because that is the only way you can have a war” - Roberto Goizueta, chairman Coca Cola 1980-1997.

An agricultural products company in Nakuru did booming business for more than 30 years till it suddenly collapsed under a mountain of debt.

The outlet for many prominent brands of fertiliser and chemicals had developed a system in which farmers could obtain inputs and pay for them when they harvested their crop after four to six months.

Given that most large-scale farmers in the Rift Valley knew one another well and that reputation is often more prized than cash, the system worked well, until 2002.

One prominent farmer who had an enormous acreage of wheat committed to take up all his inputs from this particular outlet. The elderly owner, thinking this was the deal of a lifetime, bent over backwards to supply the large consignment of fertiliser and chemicals on implied credit terms.

Alas, it turned out that payment was not top on this farmer’s agenda nor was the matter of reputation one of his concerns. He balked on making the payments seeing that there was no contractual obligation setting a time frame for the settlement of the debt.

Come the next season, he imported inputs for himself while the dealer was forced to shut down his business, a casualty of a war he did not even know was taking place.

This story is reflective of many tales of woe told around the country, of family businesses taken advantage of by large entities that either delay payments or decline to honour debts all together.

The majority of the complainants are either new to the business – therefore naively trustful of big business’ goodwill – or careless – therefore placing too much faith in their ability to evaluate risk.

Family businesses that survive the rough and tumble of the world of commerce are known to carefully evaluate all business opportunities for pros and cons, measure risks against expected rewards and carefully analyse the potential fallout from business deals gone sour.

Only after such rigorous analysis will their leader approve any deal

.

Leaders of family business understand that they are responsible only for their own ventures; that every business can and should negotiate the best possible terms for itself rather than put their hope in the goodwill or mercy of others.

Prudent family business leaders understand that because commercial atmospheres are similar to war situations, it is important for businesses to have a known enemy against whom all competitive efforts should be directed.

If one is vanquished, another should immediately be lined up to take its place; this is the only way to keep the organisation’s energy constructively focused, without which businesses become slow and lazy.

Astute business leaders recognise that business is war. Nothing more, nothing less. To approach business in any other way, believing that the other players in the marketplace will extend brotherly geniality to one’s venture is unwise.