Webster defines experience as:
"a : direct observation of or participation in events as a basis of knowledge"
OR
"b : the fact or state of having been affected by or gained knowledge through direct observation or participation"
I contend that experience is not static. Experience is based on many variables that change over time. Cultural norms, economic conditions, business practices, technologies available and the legal / regulatory environment are just a few.
Executives count on their experience to drive decisions. It provides a base of stability to feel empowered, important and valuable. It is the executive "comfort zone". Challenging that experience means challenging the very essence of executive value. Or does it?
It is far easier to say "no, that business is not profitable" than to say "how would you make that profitable under today's environment and would it be sustainable". Yet how many times in the last ten years have companies redefined ways to drive profit out of their business? Too many to count.
This is where I see opportunity lost. Who is going back to re-review industries, processes, growth ideas and business models in light of changed variables? These ideas are intellectual capital that has already been invested in that could drive growth.
There are numerous examples in history:
The steel manufacturing market was considered "saturated" and having "high barriers to entry". The Japanese said "what if we use the arc furnace to recycle scrap steel?" This fundamentally changed the process, profit margins, the supply chain model and removed the barriers to entry.
The beer industry was a highly localized, fragmented industry. It was when Adolphus Busch in the early 1870's asked "how can we keep beer fresh to transport it long distances". Pasteurization was applied to the process opening the door to national distributing and national brands.
Buying a software company in its "mature > decline" life cycle was once considered a catastrophic mistake. Computer Associates thought "this is when the purchase price is lowest; what if I buy them and fund only required maintenance through the end of life". This increased margins, severely reduced sales expenses (buy existing customer base) and provided instant brand recognition.
An outsourcing example for today:
Healthcare Payers (insurance) have been consolidating for years. Providers started a few years ago but are in the midst of a long cycle of consolidation. Labor intensive process like coding, collections, billing and transcription have been outsourced for decades. Most of this work is done regionally by small businesses.
One might say "But given the labor involved margins are low." True, if you follow the traditional labor model.
What if you consider your company a "business process outsourcing" company instead of a "services" company. Reduce the use of labor through automation (natural language processing) for electronic coding. Buy the receivables at a discount (very common) and make arbitrage between the buy price and collections. Integrate with the provider's billing systems to handle bill generation and automate distribution processes. This fundamentally reshapes the profitability of the business.
Now, take the lead from Computer Associates, BUY YOUR CUSTOMERS. Quickly buy up the local / regional revenue cycle companies. Eliminate overhead through centralization of administration and processing but keep the local sales rep's for their relationship. Rapid growth and low cost of sales. Oh, and a stronger national brand. Now I'm getting excited!
So now you have a profitable, high volume, national business line. Economies of scale and automation provide high margins. A large customer base and geographical presence provide create a strong national brand. Now cross-sell and upsell those customers and grow to the next level.
"No" is too easy. Relying too much on experience can be detrimental. Re-assess opportunities and reshape your experience frequently to grow the business and your career.
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