In yesterday's blog I promised to discuss the second reason that I was forced to adapt my worldview to the reality around me.
The first change in my worldview occurred at age 19 based on my dramatic experiences in a kibbutz. The second change came in my early 50’s when I was digesting my 30 years of experience in business. My business experience began as a marketing researcher then as a banker, as a corporate treasurer, as a foundation president and as a business consultant to more than 1000 businesses of all sizes. Finally as founder of a business school and author of several books on commerce.
My epiphany came as I was trying to explain to myself the nature of commerce. It was at that moment (while on a business trip to Washington D.C.) that I realized that commerce had three separate and distinct components. At that point I began to see the world differently.
In my first book, The Seven Laws of Money, I used the terminology of “tradeskills”. As I faced my new understanding that commerce is made up of three components, I realized that ‘trade’ was only one of these.
The three components of commerce are: trade, industry, and clientry. Each of these modes of commerce has a different goal and a different structure. Trade is directed at making certain that each sale covers the costs of replacing the sold item and providing sufficient revenue to continue in business. Retail stand-alone coffee shops, flower shops and Chinese restaurants are good examples of trade. Traders notoriously are travelers and sell their goods as they travel. Each sale is final.
Industry is directed at reducing costs. Cost reduction can occur through innovation at the supply, manufacturing, distribution and marketing points. Industrial commerce usually takes advantage of economies of scale. We all know industrial commerce because it is what created our modern world.
Clientry is the third form of commerce. Its goal is to maintain the customer relationship for a lifetime. Examples include dentists, designers, lawyers and bankers. (In the last case, bankers, they seldom understand the nature of their business.)
The world around us is made up of a mixture of all three forms of commerce.
Once I understood that the world around me was not a homogeneous world of commerce with singular business goals, I was much better able to realize the importance of commerce. I was also better able to synthesize my experiences in business and realized that commerce embodies both an amoral system of decision-making and a deeply moral system of values that lead to a modern society. Values such as anti-nepotism, diversity, openness, and the development of each individual's unique personal attributes.
Understanding this nature of commerce was my second epiphany on the road to my current pro-commerce worldview.