NO SWEAT NO CHECK
GEORGE WILSON ADAMS CPA MBA
July 13, 2024
THOMAS EDISON
Genius at Work
BERNIE MADOFF
Big Talker, Cunning Fraudster
Free Money
We live in a corrupt era of history when more and more self-entitled people think they can sit around all day, eat chips, play video games, not work at all, and get paid big money. I am not referring to retirees or the truly disabled.
Reality Asks Questions
One of my first classes in graduate school was a course in strategic business management. For our first assignment the professor asked us to answer the following timeless question to the best of our ability:
What is more important to success: Who you know or what you know?
I choose to live in the real world and here is my answer:
Substantive Knowledge Versus Behavioral Schemes
One can answer this question with clarity and precision by using a simulation. I define “what you know” as all substantive knowledge ("SK"): engineering, medicine, research & development, management science, psychology, and general intellectual ability, skill and talent. I define “who you know” as the behavioral schemes ("BS" - pun intended) of people who seek advancement by manipulating other people. SK identifies, creates and nurtures objective value. BS attempts to curry favor and gain advantage through proximity to power, manipulation, networking, fraud, and politics. A company built on SK is staffed with highly qualified, competent people. A company built on BS is staffed with incompetent friends, favorites and cronies.
SK succeeds by finding, creating and nurturing value.
BS succeeds (only in the short run) through internet scams, pyramid schemes, Bernie Madoff type fraud, and playing games with other people through cunning persuasion.
Every company must choose between investing in SK or BS, and in so doing will choose whether to follow principle or be guided, instead, by politics, slick salesmanship and delusion. Sadly, we live in a world where if enough people truly believe in a lie, then the lie acquires power over everyone.
My simulation evaluates the effect at the company level of altering the amount of corporate effort allocated to these competing strategies, SK or BS. But the result is the same regardless of perspective, and applies equally at the individual, company, national, global and universal levels. The laws of nature cannot be changed. Value cannot be created from nothing.
The Simulation
Imagine a company with a fixed workforce that is capable of a fixed amount of effort. Following prevailing practice, this company allocates units of effort between SK and BS. A fair and objective performance metric, called X, measures the results of any given allocation. X could be sales, profits, etc.
The new CEO believes the company is not investing sufficiently in networking with customers, key suppliers, politicians, and his buddies at the chamber of commerce. He decides to change the allocation of corporate effort by investing in more BS and less SK.
Stage 1: 10% of the company’s effort is shifted away from SK towards BS. What happens to X? Does it increase, decrease, or stay the same?
Of course there could be payoffs from ingratiating customers, suppliers and politicians who control regulation of the company. The decisive question, however, is to ask what is lost by shifting effort away from SK versus what is gained from shifting effort towards BS.
Stage 2: The CEO is having more fun golfing with his buddies and decides to shift another 10% of company effort away from SK towards BS.
What happens to X? Up, down or the same? It should be obvious where this simulation is headed, but for those who don’t foresee the trajectory of disaster I will complete the simulation. Stage 10: The CEO, perhaps after guzzling his 10th vodka martini, decides to go all the way with his new BS strategy and pulls the trigger on the company. The final 10% of units of effort are shifted away from SK towards BS. The result is that zero effort is spent on SK and 100% of company effort is spent on BS consistent with those who believe “who you know" is far more important than “what you know.”
The company has now become an empty shell. It no longer finds, creates or nurtures value. (Enron anyone?) All company effort is spent attempting to trick, manipulate and gain advantage over others while no longer producing anything valuable to offer in exchange. The company is doomed and its extinction is imminent. Sycophants, talkers, fraudsters and politicians don't create value. But the laws of capitalist competition require the creation of value in order to obtain value: No sweat, no check.
Conclusions
First, I conclude that truly great ideas, performers and innovations require zero BS. Imagine you discover the cure for cancer. How much effort would be needed to persuade, manipulate and ingratiate others to ‘accept’ your cure? Merely to ask this question is to see its absurdity. The best ideas, performers and innovations have value that is self-evident, self-propagating, and self-sustaining. The best products and services in the world require the least amount of advertising.
Once a crucial quality threshold is surpassed, ‘supply creates its own demand’ and ‘the world will beat a path to your door.’ Find the cure for cancer and the world may kick your door in. In this context BS is not only redundant but contemptible.
Second, in the harsh and unforgiving climate of global competitive capitalism, weakness and inefficiency of any kind will be exposed and crushed mercilessly. Deleting weakness and inefficiency is a major source of competitive advantage. Thus, Network Company, which staffs key jobs with incompetent friends, favorites and cronies who practice BS, is outperformed and driven out of business by Tight Ship, LLC, which staffs its jobs with competent, highly qualified people who practice SK.
Objective standards for hiring will separate the talkers from the doers and the schemers from the achievers. SK never practices DEI standards (Dumb, Egregious and Ignorant) for hiring and promoting people. Instead, SK practices MEI: Meritocracy, Excellence and Intelligence. In another article to come I will discuss the reverse racism and outrageous bigotry inherent in despicable DEI standards promoted by wokesters worldwide.
Third, there’s a limit to how much BS a company can take. But if a company operates in a corrupt environment where key politicians require payoffs, important suppliers need lubrication, and new customers demand kickbacks, then some BS must be practiced to survive. What matters then is the ratio of SK to BS. Since it is almost always harder to find, create and nurture value than to network, SK > BS. If corruption passes a maximum point of toleration then SK < BS and the world itself won’t last much longer. Societies that don’t find, create and nurture value go out of business just like companies. See Jared Diamond’s Collapse. The laws of nature cannot be changed. Value cannot be created from nothing.
"I am not a product of my circumstances. I am a product of my decisions."
Stephen Covey
"By the sweat of your face you shall eat bread...."
Genesis 3:19
George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
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