The One Lesson of Business

According to Froeb (2016), the one lesson of business s, “the art of business consists of identifying asserts in low-valued uses and devising ways to profitably move them to higher-value ones.”  The reason I find Froeb’s assertion so interesting is that I find different meaning in this statement after nearly 30 years of business experience than I did when I was a newly minted business school graduate. 

I entered the steel industry in 1987 after graduating from Indiana University.  I quickly learned that, in order to make money in the steel industry, you need to extract materials from the earth (iron ore, coal, taconite, silicon, etc.), expose them to extreme temperatures and pressures then sell them to a narrow customer base that is usually unwilling to pay for the value offered.  I’ve been an ardent fan of Capitalism my adult life and I sincerely believe in it and its benefits.  However, I do believe we’ve gotten.  As Capitalists, we may produce different “widgets” but there is one asset that we all share that makes the difference between success and failure.  We’ve still haven’t learned that people are the grease that keep the gears of Capitalism moving and, while we are focusing on costs (which is very important) we forget to consider that every investing a dollar in our people is a more productive use of our assets than investing a dollar in a disposable asset.

As a country, we have a somewhat perverted view of educating and training people.  We do not distribute it freely and evenly to those that need it so that we can improve our country through an educated and well-trained workforce.  Instead, it is used as means of creating wealth for a narrow group of individuals.  If we all changed our view of education and training as an asset to convert a “low-valued asset” into a “high-valued-asset” not just for the good of a single individual but for the good of the whole country, I believe the quality, cost and availability of education and training would change drastically and the value of our greatest assets (people) could be maximized.    

Reference

Froeb, L., McCann, B., Shot, M. and Ward, M. (2016). Managerial economics: a problem solving approach. Boston, MA. Cengage Learning.