A clear, simple, and penetrating theory of the business, rather than intuition, characterizes the truly successful entrepreneur.
A theory of the business has three parts. First, there are assumptions about the environment of the organization: society and its structure, the market, the customer, and technology. The assumptions about the environment define what an organization is paid for. Second, there are assumptions about the specific mission of the organization. The assumptions about mission define what an organization considers to be meaningful results—they point to how it envisions itself making a difference in the economy and society at large. Third, there are assumptions about the core competencies needed to accomplish the organization’s mission. Core competencies define where an organization must excel in order to maintain leadership.
Every one of the great business builders we know of—from the Medici and the founders of the Bank of England down to IBM’s Thomas Watson in our day—had a definite idea, had, indeed, a clear theory of the business that informed his actions and decisions. A clear, simple, and penetrating theory of the business, rather than intuition, characterizes the truly successful entrepreneur, the person who builds an organization that can endure and grow long after he or she is gone.
ACTION POINT: A company that was a superstar only yesterday finds itself stagnating and in an unmanageable crisis. What does this say about the company’s theory of the business?
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* Source: The Daily Drucker by Peter F. Drucker