In my Week 2 Tekedia Mini-MBA course material – The Grand Playbook of Business – I chronicled the core steps companies and entrepreneurs have to take, to turn an idea into a product/service for a market. In it, I noted one key thing: running a company is not a vacation job, and it is one of the hardest jobs in the world. In supporting live Zoom sessions for that week, I have consistently used a picture which was inspired by a 200 level course in Federal University of Technology Owerri on Thermodynamics (Engineering Thermodynamics, ENG 209), but instead of focusing on thermodynamics transduction, I did an analogy, calling it Business Transduction.
Thermodynamics transduction refers to the process of converting energy from one form to another, following the principles of thermodynamics, encapsulating that energy is neither created nor destroyed during the transformation. Yes, it simply changes form, like during photosynthesis where light energy is converted into chemical energy. (My business lectures use a lot of physics, chemistry and natural philosophy. You will see growth momentum, business friction, business inertia, etc, in my course materials).
Business Transduction focuses on converting a Business Idea (you have an idea; it is a state of energy in business) to a Product or Service (you have something now in the market which customers can buy). I identify what happens as a complex transductional process. Here, to convert the idea to a product which can generate revenue when customers buy the product to overcome their friction, you are in an uphill battle. Many bad things could happen as you convert from one energy to another, including business energy states of ideas and products!
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Customer problems are frictions they have. If someone is hungry, he needs food. That hunger is a massive friction at that moment which is resistive and must be overcome. At that moment, the only force which can overcome that customer hunger friction is food. In other words, that food is a force which the entrepreneur has to create to overcome the resistive frictional force of hunger! (Tekedia programs require a minimum of secondary school education, and that means Integrated Science which is mandatory in all JSCE (junior WAEC) and equivalents across Africa)
In a restaurant business, you have a factory where you put together an idea of making food so that at the end, you have one to sell to customers. That food will be “tested” by forces of hunger which men and women have to see if you did well. Great food, you have a business. Not great, you fail.
But note this, as in thermodynamics transduction, there is always an imperfect conversion even though energy is not destroyed, losing your money as you turn an idea into a product is part of the game. In other words, bankruptcy is a business energy state as there is no guarantee that the idea (a state) will morph into a product (a state). There, you could be converting an idea into a product and end up with bankruptcy!
In summary, as a founder or entrepreneur, everything falls on your table. Your company is a Business Transducer, but note that besides products, there are other states your idea can turn out, and one of those products is losing money and all the efforts put in. To avoid that, you must design that transducer to improve your chances of getting the right outcome (revenue and profit generating products).
Thank you for partaking in The Physics of Business, one of my favourite Zoom sessions in Tekedia Mini-MBA Zoom where I use the concept of natural philosophy to explain business and markets. Register for the next edition of Tekedia Mini-MBA here.
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Good analogy, but very sophisticated and elitist too. One who struggles to understand why companies exist, the need to make outputs (or selling price) higher than inputs (or cost price) with effective pricing as the anchor, is it thermodynamics that such person will now understand? It will lead from small confusion to higher confusion. The reason why you cannot sell the amount you buy is because if you do so, there will come a time when you will no longer have anything to to sell, and you will be empty. If you are in doubt, just try it with your money.