5 Pieces of Terrible Business Advice
Elon Musk. Jeff Bezos. Mark Zuckerberg. They are some of the richest entrepreneurs in history and, if much of their media coverage is to be believed, virtually infallible.
For many, their names are synonymous with an almost omniscient understanding of business.
And I say that’s — to use a term of art — a buncha hooey.
Because for all their wealth, success, and power, these men — and those like them — frequently prove that they are just that: men. They understand some things and fail to understand others. They are skilled in some areas and incompetent in others.
And, every now and then, they give very, very bad advice.
The richest man in the world goes with his gut
Sometimes (often actually) in business, you do know where you’re going, and when you do, you can be efficient. Put in place a plan and execute. In contrast, wandering in business is not efficient … but it’s also not random. It’s guided — by hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it’s worth being a little messy and tangential to find our way there. Wandering is an essential counter-balance to efficiency. You need to employ both. The outsized discoveries — the “non-linear” ones — are highly likely to require wandering.
-Jeff Bezos, 2018 Letter to Shareholders
Not only is Bezos’ advocacy for following your “gut” in this quote counter-productive, but it’s also a little disingenuous. If ever there was a company that established the utility of following hard data, rather than intuitions, it’s Amazon. Seemingly everything Amazon does is powered by its vast amounts of consumer data.
There is simply no reason, none whatsoever, to believe that a hunch, a gut feeling, intuition, or curiosity is ever a useful adjunct to following the data.
What Amazon’s former CEO seems to be saying is that sometimes, as a leader and as a company, you need to take a leap into uncharted territory to realize a big win. But that’s a far cry from saying that you can rely on your hunches to safely guide you through that leap.
In reality, you’re at the mercy of the data you do have, luck, and timing. Successful companies don’t take such leaps unless forced by circumstance to do so. And they always deploy a large safety net first.
The king of solo consulting throws shade at business plans
If I had ever had a business plan and created even stretch aspirations 30 years ago, I never would have imagined or predicted I’d be where I am today. Never.
A business plan will kill you, because you’ll hit it.
[S]uccess doesn’t ever mean having a business plan, since these are notoriously inaccurate and become dismal, self-fulfilling prophesies.
Alan Weiss, The Consulting Bible, First Edition
Alan Weiss’ name isn’t as famous as the other men on this list (except amongst solo consultants), but his was the quote that gave me the idea for this article. I came upon this gem as I was reading The Consulting Bible, an otherwise fantastic guide for solo and small firm consultants.
Mr. Weiss’ logic is pretty simple here. He argues that putting clear goals down on paper limits you to the achievement of those goals and only those goals. For example, a consultant just starting out sets a goal of $200,000 in annual revenue in 3 years will become satisfied if and when he hits that goal, and stop shooting for $300,000.
But the best-selling author and renowned solo consultant misunderstands the nature and purpose of written business plans. In reality, well-written business plans are not straitjackets — they’re roadmaps. They include not just one destination, but several, and show you various ways to get to each one. They demonstrate which paths are impassable and which contain dead ends.
To be fair, the author is only speaking about consultants so he may not have intended the statement to be applied universally.
But the advice isn’t even good for junior consultants. Everyone can benefit from an intelligent consideration of future possibilities, if only as a useful thought experiment that gets your mental wheels turning.
There’s a reason that the US Small Business Administration suggests small business owners write one. There’s a reason almost every, if not every, Fortune 100 company has a strategic plan. There’s a reason that the cliche says, “Failure to plan is planning to fail,” and not, “Failure to plan is totally fine.”
Zuckerberg abdicates responsibility
But ultimately I don’t believe private companies like ours should be making so many important decisions about speech on our own. That’s why I’ve called for governments to set clearer standards around harmful content…
-Mark Zuckerberg, Letter from Mark Zuckerberg on the Oversight Board Charter
Facebook is facing an existential crisis. It turns out that giving everyone in the world a voice and then rewarding them based on how viral their content is, regardless of its nature or tone, is a recipe for the spread of deceit and violence.
The quote from the Facebook CEO demonstrates his fundamental lack of understanding of the nature of corporate and moral responsibility. Just as a factory is responsible for the pollution it pours into a nearby lake, content platforms are morally (if not legally) responsible for the misinformation and vitriol they spew into the body politic.
While time will ultimately tell, I suggest that this fundamental failure to take responsibility for the content it hosts will spell the end of Facebook as we know it. Already, powerful forces are gathering to oppose Facebook’s stranglehold over the social networking space, with many of its most powerful foes angered by Facebook’s unwillingness to police its own users.
History may well view Mark Zuckerberg’s leadership on this issue as the poison pill that brought down one of the biggest tech giants in modern history.
Carnegie endorses first-mover advantage
“The first one gets the oyster, the second gets the shell.”
-Andrew Carnegie, Specific source unknown
This quote is usually attributed to Andrew Carnegie, a late 19th-century industrialist and one of the richest Americans in history. Today, it’s usually interpreted as an early expression of the common belief that the company first to market with a particular product wins the day and gains market dominance.
Over a century of experience since Carnegie’s quote, however, has shown us that the “first-mover advantage” is, at best, a mixed blessing. A quick look back at our recent past demonstrates the questionable benefit of being first to market. After all, who came first: Yahoo or Google? MySpace or Facebook? And, contrary to popular opinion, Apple was never the first to introduce a product in any major category.
In real life, the “first one” from Carnegie’s quote often finds all the pitfalls and unearths all the landmines, while the second takes advantage of the first one’s mistakes.
Musk mistakes effort for productivity
“Work like hell. I mean you just have to put in 80 to 100 hour weeks every week. [This] improves the odds of success. If other people are putting in 40 hour workweeks and you’re putting in 100 hour workweeks, then even if you’re doing the same thing, you know that you will achieve in four months what it takes them a year to achieve.”
A 100-hour workweek, which some of the people I went to law school with still endure, does not “improve the odds of success.” It improves the odds of burnout, illness, injury, and despair. No human being is meant to spend every waking minute working, which is what a 100-hour workweek demands.
One study conducted at Stanford University by John Pencavel suggested that, after a given threshold (around 55 hours per week), the per-hour productivity of a manual laborer declines dramatically. There is a large collection of research that strongly suggests longer hours do not equate to better business results, as this article in Harvard Business Review succinctly summarizes.
There are many factors that determine the productivity of a founder, manager, leader, or employee: autonomy, happiness, health, technology, age, experience, personality, and countless others. But hours worked, beyond a certain point, is not one of them.
A grain of salt
One of the defining characteristics of most advice, whether it comes from successful entrepreneurs, your parents, or your grocer, is that it tends to arise from the teller’s personal experience. Elon Musk tells you to work 100-hour weeks because that’s what worked for him. Alan Weiss tells you to eschew a business plan because it turned out he didn’t need one.
But we should all be hesitant to take advice like this. What worked for Zuckerberg, your mother, or your mechanic won’t necessarily work for you. Your circumstances are unique.
So, take personal advice, even when it comes from a distinguished source, with a grain of salt. Consider why it may or may not apply in your situation. Don’t disregard it out of hand but don’t swallow it unexamined either.
Finally, I’ll leave you with a quick disclaimer. My list isn’t meant to disparage any of the people on it. They’re clearly all accomplished and capable men.
But none of us are perfect and we all give bad advice on occasion. Even the titans of industry and commerce are no exception to these universal rules.