Recently read an article of Jeremy about What is the difference between a good product and a good company?.
I like the way it describes the two different company. Below is my extension of the idea, not necessarily what Jeremy wrote in his blog.
- A company that create value but cannot make profit.
- A company that create profit that does not provide value
The interesting type is the second type of company. One class is arbitrage. In China, there are so many arbitrage opportunities with fast development of everything, and there is opportunity everywhere. If you want, you can capture that opportunity easily. However, there is a nature end of life for these projects when the arbitrage opportunity closes.
This echoes to what on the page 64 of Guy Kawasaki’s book Reality Check.
What is your background?
- Engineering (add 5 points)
- Sales (add 5 points)
- Management Consultant (subtracts 5 points)
- Investment Banker (subtracts 5 points)
- Accounting (subtracts 5 points)
- MBA (subtracts 5 points)
Engineers often tend to build value but cannot realize its value.
Sales can always see arbitrage opportunity but often fail to create value.
They may end up with the two different type of companies. The idea case is a company that can get profit by creating value.
Guy Kawasaki is absolutely about the view of a management consultant (Jack Welch’s word: good at giving options but hard to make decisions), investment banking (build the company for wall street, not customers), and accountant. I don’t like MBA either (my discussion about MBA).