8 Integrities To Make Your Business Structurally Sound
Many people come to me excited about a new product idea that they believe is truly innovative and worth investing in. My response is that the world is full of great products.
Many people also come to me thinking that their product is the best, better than any other existing product on the market. This, they think, also makes it worth investing in. My response is that only those in the E (employee) and S (self-employed) quadrant of the CASHFLOW Quadrant, where being the best or highest quality is important for success, think that having the best product is most important.
Rich dad said, “The product is the least important piece to inspect when evaluating a business.”
He believed that a truly successful business was built on systems and that the product didn’t have to be the best if the systems were world-class. It still had to be good, just not the best. That is why he always placed “product” in the smallest portion of the B-I Triangle, his model for building the most successful businesses.
For example, let’s say there is someone who has an outstanding recipe for chocolate chip cookies that everyone loves and people are always asking to buy them, goes into business. She’s excellent at baking the cookies, but when it comes to accounting, sales, marketing, and legal issues—important aspects of any business—she is ill-equipped and no longer enjoys her work. She wants to bake cookies. Now, all of a sudden, she’s no longer a baker. She’s a bookkeeper, lawyer, and marketer, and not doing well at any of them. The same thing can happen to an accountant who goes into business and finds out he has to be a marketer and sales rep too. Or the lawyer who focuses too heavily on the legal aspects of the business and prevents his own success.
You get the point here. It is next to impossible to “do it all” well, regardless of how smart you are or the excellent grades you got in school, so businesses fail.
The B-I Triangle illustrates the 8 Integrities of Business with each element being an integrity. Entrepreneurs must work on the perimeter of the triangle. They hire specialists to work inside the triangle.
The eight integrities are:
- Cash flow
Three Elements That Give Business Its Structure
This is the spiritual reason for the existence of the business. In military school, the first thing they teach you is the importance of the mission. It makes sense when you think about it. In religion, missionaries have a mission and focus on it. Too many corporations don’t recognize the importance of the mission. They create mission statements that are flat and uninspiring. They totally miss this massive opportunity to define the spiritual purpose of the business.
Some think that military school teaches people how to be followers, how to conform, and how to respond to commands. Both of us understand that the ability to follow orders is the ability to focus. When everyone learns how to focus, you have the foundations of an excellent team. In military school, teamwork is not just a subject. It is a way of life, practiced every minute of every day.
By contrast, traditional schools are not about teamwork at all. Maybe there is an element of teamwork in school sports, but certainly not in the classroom where everyone is competing for grades. Even if there are study groups where students can cooperate and learn together but when it’s test time, the team is dissolved and it’s back to competition. “Cooperate” on a test and you are labeled a cheater!
In business, cooperation is essential to success. We can’t achieve much of anything on our own in this world, and that includes survival or success. One of the biggest challenges an entrepreneur faces is to break employees of their competitive, win/lose mentality and replace it with a team mentality. The mission goes a long way to make that happen. So does strong leadership.
In military school, we developed our leadership skills by taking and giving orders. In that world, it was a way of life. Anyone who couldn’t take or give orders was soon washed out. It was an environment of discipline, and there were no exceptions.
Perhaps you’ve heard the saying, “There is no such thing as bad soldiers. There are only bad leaders.” That philosophy is drummed into the head of every future military officer. The same holds true in business. There are no bad employees, only bad leaders.
Think about the companies you’ve worked for. If a business is financially struggling with low morale, declining productivity, dropping sales, and increasing expenses, it is due to poor leadership. Leaders, true leaders, take responsibility for the success of the team and understand that they must also take responsibility for the failure. Too often entrepreneurs blame a lack of performance on employees, the economy, or competitors. However, the best entrepreneurs look at themselves first to uncover their own mistakes and learn from them.
Five Elements of Business Operation
The outer three integrities on the B-I Triangle’s perimeter give power to the interior five integrities which are generally taught by traditional education. When even one of the three integrities of mission, team, and leadership is weak, the interior five integrities cannot possibly hold their shape. When a business is having trouble, look at this triangle. In nearly every case, you will be able to pinpoint the source of the problem within one or more of these 8 integrities.
While the product is important, it is the least important integrity. You might be surprised at that, but think about this. The world is filled with great products, many of which never make it to market or, when they do, die a quick death. The world does not lack great product ideas—you’ve probably had many of them yourself. What the world lacks are great entrepreneurs who can bring great products to life.
Most new entrepreneurs focus only on the product. They spend all their time honing their ideas and may even contract with companies that promise to advise them and develop prototypes. It takes a lot of money and a lot of time. In the end, the prototypes usually end up, not in stores, but tucked away in boxes, forgotten. A great entrepreneur knows how to turn a product idea into a great product by focusing on building a great B-I Triangle. The B-I Triangle isn’t just a concept. It is a tool that many successful entrepreneurs have modeled their companies around.
I learned early that a product without legal protection is everyone’s product, not yours. My Velcro-wallet idea was copied over and over. Legal agreements are important because they create property. In the case of the wallet business, legal agreements would have created intellectual property.
In business, you can’t operate without legal agreements, which are essential to defining and creating products. Through patents, trademarks, licenses, and service agreements for services, a company builds its own property, which adds value and protection to the company. Without a strong legal team and sound legal agreements, you will always have confusion, chaos, even crime—all of which costs money and weakens the business.
A business is a system of systems. It has to be, or no business would ever grow beyond the capabilities of its founder and maybe a few key people. The bigger it gets without systems in place, the more fragile it becomes. Our physical bodies, and even a car, are both systems of systems.
In business, you’ll have accounting systems, communication systems, legal systems, supply-chain systems, manufacturing systems, distribution systems, and many others. The point is that the whole business, body, or car relies on its systems to operate effectively. It only takes one system to falter or failure to hinder or shut down the entire body, car, or business.
Entrepreneurs must be great communicators and speak many languages. We are talking about the languages of business. Entrepreneurs must be able to speak the language of the law. They must be able to talk accounting, real estate, marketing, Internet, and every other discipline within their companies. Entrepreneurs must also understand and learn to speak the language of their customers. Only that way can leaders carry on meaningful conversations and make solid decisions.
Learning the languages of business is no different than learning a foreign language. It takes time and practice. And just as the best way to learn a foreign language is to travel abroad and immerse yourself in the culture, the same goes for learning the languages of business. Just dive in and begin experiencing and hearing and then speaking the language.
Often this is called “the bottom line” and appropriately, it is at the bottom of the triangle. Cash flow is similar to blood flow in a body or fuel flow through a car. Without cash, blood, or fuel flowing, the business, body, and car stop operating. A body can hemorrhage blood, a car can have a fuel leak, and a business can hemorrhage cash. As if the entrepreneur doesn’t have enough to do as leader, another role is to make sure enough cash is flowing to all 8 integrities (aka expenses) and still keep the company profitable.
If you want to be a successful entrepreneur who builds successful businesses or invests in them, the entire B-I Triangle must be strong and interdependent. If it is, the businesses will grow and flourish.
The good news is that if you are a team player, you don’t have to be an expert at every level. Just become part of a winning team with a clear vision, a strong mission, and an iron stomach. Find that, and you’ll be well on your way to success.
Editor, Rich Dad Poor Dad Daily