“I am sick and tired of the government putting things in the way of our growth,” Rory said. “We’ve got a good business, but all the regulations are killing us.”
“Indeed. I see that,” I replied. “So, why did you decide that this was the business to be in?”
“Because we are good at it,” Rory beamed trying not to show too much pride.
“May I use some exaggeration?” I asked, then continued without waiting for a response. “If you were good at manufacturing music CDs with the highest quality, at an operating cost lower than any of your competitors, would you choose that as a business model?”
“Your example is absurd,” Rory smirked. “An operating cost lower that any competitor is ridiculous, there would be no competitors.”
“And, why is that?”
“Because nobody buys CDs anymore,” he explained. Then stopped. “I wouldn’t be in that business, it would be a poor choice.”
“Rory, the most strategic decision you make is to decide what business to be in. Your market, market demand is an external system in which you have little control. Government regulation is an external system over which you have little control. You are fighting the headwinds of your market, fighting the headwinds of regulation. Pick (or adapt) your business model that doesn’t fight these external systems, but takes advantage of them.”