the physics of business
Running a business is part of life. And life is subject to the laws of Nature. Therefore, it stands to reason that business should also follow natural laws.
Just think of some of the sayings that are commonly used in business. “We need to accelerate the growth of the company.” The business is starting to pick up momentum.” “Things will take off when we get enough leverage with the market.”
It is clear that people intuitively know that life and business follow the laws of nature. The problem is that we tend to forget that since it is a “law” it always applies. We think we can escape through some shortcut or special exception. However, to hijack George Santayana’s famous quote “Those who cannot remember the laws of nature are doomed to repeat their failures.”
Basic physics
To get started with the scientific discussion, let’s first look at some laws of physics. Sir Isaac Newton developed the Three Laws of Motion, which describe basic rules for how the motion of physical objects changes. Newton was able to define the fundamental relationship between the acceleration of an object and the total forces acting on it.
To illustrate the relationship to life and business, let’s just focus on the first and third laws for now.
The first law states that any object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it. A billiard ball runs in a straight line until it hits another ball or one of the bumpers. If a business is failing, it will continue to fail unless action is taken.
The third law states that for every action there is an equal and opposite reaction. If one jumps off the dock into a rowboat, the rowboat moves away from the dock. If a company lowers its prices, sales will increase.
“A more significant translation of Newton’s third law is: for every effect there is a cause,” says Hugh Shearar, an international trader who developed a course that combines business, life, physics, and ancient wisdom called Wisdom, Wealth, and Success.
If one’s business or life is not where it should be (the effect), what is the cause? To make any change, one must go beyond the “effect” and focus on adjusting the “cause.” If a car is stuck in the mud (the “effect”), there is no point in focusing on that fact. It is necessary to take steps to create a new “cause” and a different “effect”.
Just because we live in the physical world, we experience the impact of these laws every day. We as humans often feel that we are exempt from the consequences if we ignore the laws. A business owner must take these laws into account and apply them to his benefit.
Thermodynamics and Energy
Jumping into thermodynamics, the First Law is that the heat supplied to a system is equal to the increase in internal energy of the system plus the work done by the system. In its simplest form, the First Law of Thermodynamics states that neither matter nor energy can be created or destroyed.
The amount of energy in the universe is constant: energy can be changed, moved, controlled, stored, or dissipated. Heating a pot of water will increase the energy (temperature) in the water, while the bubbling and steaming can be considered work (energy release) done by the system.
For a business, energy is put in the business, will be transformed into the energy of the business. The trick is to put your energy into the right parts of the business. How often does a small business owner spend a lot of time on something like designing his own website, only to see his effort return as failure? Website design is a product best outsourced if one is an insurance agent.
The energy focus for an insurance agent should be on the sale of insurance. A business owner who wants to grow must shift their focus from selling insurance personally to creating a business structure with many employees selling insurance.
Many people work very hard in their business with poor results. The key is to use your energy in the areas that are most meaningful. A small concentration in the right area will give better results than spreading a lot of energy over a wide area. the goal is to work us the business, notin the business.
Also, if the right amount of energy is being focused in the right area, but the results are less than expected, then the energy is being dissipated, usually through friction or resistance. Friction and resistance require energy to overcome. More “work” can be done with less “power” when “friction” and “drag” are reduced.
Be aware of areas in the business where “friction” or “resistance” is wasting energy and causing poor results. It could be an employee with low morale, a producer who ignores policies and procedures, or a customer who always has problems. Elimination of “friction” should then produce the desired results.
Power, Time and Work
Another law of physics is the power equation. One way to define it is that power is equal to the amount of work done during a specified period of time. It takes a certain amount of energy to push a stuck car down the road for 5 minutes.
In life, the power we achieve is based on the amount of work we do over a period of time. The people who have a lot of “power” in a small town are those who have dedicated their entire lives to building their success. It is important to note that power can be derived from the accumulated work of others. Rockefeller, Gates, and Buffett harnessed the work of many people to gain enormous amounts of “power.”
“Power can also be measured in terms of money,” says Shearar. “Those who produce more work for longer have generated more money.” This is a tangible way to show the value of work and time. An experienced CSR running a large portfolio of businesses should get a bigger paycheck than a new hire who is less productive.
Shearar also points out that the time to perform a task can be “calculated” using the power equation. Time is equal to the amount of work done divided by power. So in other words, the time for someone to do a task decreases with the amount of power she has.
Think of the employees, if you don’t give them a lot of “power” (like resources and authority) it will take them a lot longer to get the job done. Therefore, providing employees with the right “powers” to get the job done will make the company much more productive.
Summary
How can this be applied to business and the daily life of an entrepreneur?
There are no secrets to life and business success. It’s all out there in the open. Successful people have “learned” how to apply the laws of nature to their lives and businesses.
Most people, however, feel that they or their business is unique and that what others have done will not work for them. However, if one always gets bad results, then something is wrong with the system, such as how and where the energy is applied, or energy loss due to friction.
The key is to realize that one cannot escape the laws of nature, so it is better to use them to your advantage.