Hunting the Propitious Niche (Maybe don’t get your hopes up…)

It seems a quite a few folk are searching the net hunting for a business opportunity – or at least how to find one (No… there are very few in Detroit right now..). Strangely (and I refer here with respectful wonderment) I seem to get a fair rate of searches for propitious niche ending up at this blog, so I have decided to take advantage of this propititious circumstance and say a few words on the subject.

First, lets go back to basics here. The word propitious simply means ‘favourable conditions’ (note, titling my blog the ‘favourable conditions manager’, just doesn’t quite have the same ring about it..). The word niche in a business context means appealing or appropriate market or segment. So a propitious niche refers to an appealing market segment favourable presumably to a product or service or business idea.

Now I have done a bit of googlie research to see what people have to say about propitious niches. For example, one of the top listed results seems to be from the American University of Bulgaria World Business 101 course which suggests:

A propitious niche – a niche is propitious to the extent that it is just large enough for one firm to satisfy the demand.

The search came up with a number of SWOT analyses, and papers about propitious niches in the business planning context. The basic theme is how one should search for one, and then the difficulties of hanging on to it if you do find one. One somwhat bold idea was that the firm that discovered baking soda actually discovered a proptious niche. This of course raises the interesting issue because I would imagine that the market for baking soda, has become somewhat competitive and that the niche characteristics were rather short lived.

Another idea was that propitious niches are relatively common in the IT market – although I imagine again that any good idea either collapses into a competitive market or is bought by a very large company who has the market power to try and defend its property rights – temporarily at least.

Perhaps the most interesting link from my search was a question on WikiAnswers requesting 4 examples of a propitious niche. To date there is no answer.

Now my recollection is that a great idea pretty quickly becomes a competitive market (even the ipod has many competitors) or a finite product life (how many old game consols have you got hanging around from the past 15 years). There are also very few instances where you can grow a company with a market and keep out competitors without a bit of help from government regulators, and good luck to you if you come across a natural monopoly.

Perhaps my local grass mowing service has a propitious niche. I can’t imagine that the old folks of the neighborhood will give up their trust in him, so he’s got this niche market pretty much sown up. Mind you the growth prospects are slow and the economies of scale few. Whatsmore, if the drought comes and everyone switches to synthetic lawn he might have problems.

So good luck with the hunt for a propitious niche. If you find one maybe drop me a line (or maybe not if you want to keep the niche) – which pretty much explains why there aren’t any examples of propitious niches on Wikianswers.

Can Governments Spend Their Way Out of the Economic Crisis

Of course, what to do about the current economic situation, is perplexing many Governments. It a bit like the fish after its been hooked, thrashing about as it’s reeled in to a certain death…But maybe if it can just twist and squirm it will slip off the hook to live another day…

In most countries, Governments have a few big macro bulldozers to push around such as flood money into the market and lower interest rates (which might take some subtle conniving with so called independent central bank – but whose taking orders from who anyway).  The problem wit the bulldozer strategies is you don’t have much control.  Lower interest rates are OK if it turns into lower credit and stimulates a bit of business activity.  But when there’s such an imbalance between haves and have’s not’s, its hard to point it in th right direction.  (I doubt anyone’s got the courage to set up business in Detroit at the moment.)

Then there are micro economic activities which generally no one wants to talk about when growth is strong but everyone justifies during the hard times – industry protection and subsidy policies which keep farm and motor vehicle companies going in most modern economies.  (The exception of course is in the US where the cars are clearly made to cross-subsidise the local oil industry – why else?).

But the popular one is infra-structure development because a government has some control over how the money is spent.  It sounds good.  Spend it on education roads and highways, health and the like.  Sure if a government can operate efficiently enough to find and approve expenditure strategies it employs lots of people.  This is the difference between just giving a tax cut because people might save it rather than buy something.  Even if they buy something it will probably be from  Asia, so won’t appeal to the western markets.  At least if you build a road, you employee locals even if they save some of their pay, after they’ve paid the rent or mortgage and bought the food.

I’m not sure why government spending plans should be any more successful than private sector.  If they ever get it off the ground then I hope its worthwhile – its my (or my kids) taxes they’ll be spending.  Worst case is it  just means a lot of employment for do nothing public servants but that’s definitely not the intention.  There aren’t to many desk jobs for bricklayers down at Council…

Here’s hoping.

Ooops …. They’ve made a mistake (Okay – NOT)

The BBC Business Daily Report of 5 January 2009 suggests its not okay to make the mistakes in business.  Their on the mark. The old chestnut ‘ if your going to try new things in business be prepared to make mistakes and learn’ has got to be one of the biggest of the many furphies to come out of popular management theory in the last 20 years.   Over the past year we have seen what happens if you make big enough mistakes….  it’s all over (for some at least).   Furthermore, make a big mistake, or enough little mistakes and you won’t get a chance to see if you’ve learnt anything.

The idea that selling lots of sub-prime loans to lots of people who couldn’t afford them constitutes lots of mistakes and not much learning, is pretty tempting.  Lots of people in lots of businesses down the supply chain, being careless, with insufficient knowledge, evaluating things wrongly – making mistakes.

If making mistakes isn’t actually a good thing then what is the solution?  Maybe it’s about thinking things out before you make the decision.  Disciplined planning and analysis, careful thinking and review and questioning  – all the hard things.  Its also about having a culture which supports honest and free speech – which not only encourages (and enforces) disciplined analysis but reinforces the exercise and debate of considered opinions.   The latter in my experience can be difficult  to achieve – as challenging as good analysis in the first place.

Does this mean you don’t take risks or fail on occasions?   Many decisions or plans have a risk (be it a known risk, a known unknown risk or an unknown unknown etc.) and even the most detailed decisions/plans have an element of judgement initially and along the way.  You don’t always fail because you made a mistake.  You can fail for any number of reasons beyond your control, but you need to hunt them down and pull the plug straight away.   A mistake occurs if you don’t look for problems and find them and then act on  them.

I know – sometimes there isn’t the time or money to do the analysis required.  This can lead to all sots of trouble – be it on your own head.   Its your call but maybe its better not to go into the jungle in bare feet.

The idea that we don’t learn from mistakes has interesting consequences for senior management and Boards.  If the solution to a mistake is to implement stronger regulation then why should those responsible for the mistake continue to hold responsibility in the aftermath?  Why should we think they have learnt the skills necessary not to make the same mistakes again, let alone other is a new environment?

“I Can’t Trust Nobody…(in business)”

If there are any lessons from 2008, it’s about trust – or who not to trust. It’s a bit of an issue really, because trust is a pretty important part of doing business. In fact its the foundation of an efficient economy. If your a business, you need to trust your staff and your suppliers, your banker (dare I say it) and your insurer. If your a consumer, you need to trust the producer and the product description.

The sub-prime events have revealed a lot about trust – or at least what happens if its misplaced.  If you trust people who don’t deserve to be trusted then the whole system of business can break down.  We trusted financiers we thought were smarter  and they weren’t.  We trusted mortgage salesman who sold unnafordable loans , we trusted banks offering credit that couldn’t be repayed and on so on.

The world is too big and complex not to trust others – we need too believe that they know what they are doing and will give us good guidance and advice.  Without trust it all breaks down – and it did.

Many countries in the world who had prior experience of misplaced trust and have the benefit of regulations to underpin financial integrity are responding better to the sub prime mess.    But unless we want an army of regulatory bureacrats overseeing all our decisions, we must all start taking reesponsibility – learning more about what we can afford, learning to ask the hard questions of those in positions of responsibility.

To trust others we need to be confident in their ability to understand and act for the benefit of everyone.  Those who are take a role which effects the lives of others need to ask themsleves ‘do I have the capacity and knowledge to do this job competently and with integrity?’.  Those that allow them to take the job need to ask them the same question and piss them off quickly if they can’t.

The fact that so many in positions of responsibility performed so poorly gives no excuse to place any individual on a pedestal beyond accountability.  No manager, CEO or Executive is that much of a superstar that they shouldn’t be made to stand and account for their actions.  There are no Gods of business – just ordinary men and women. When they perform well we must rteward them and when they stuff up, we’d better find them before they bring us down.