Invest into Your Business English!

From the time that goods and services began to be traded in early civilizations, people have been thinking about business. The emergence of specialized producers and the use of money as a means of exchange were methods by which individuals and societies could, in modern terms, gain a “business edge.” The ancient Egyptians, the Mayans, the Greeks, and the Romans all knew that wealth creation through the mechanism of commerce was fundamental to the acquisition of power, and formed the base on which civilization could prosper.

The lessons of the early traders resonate even today. Specialism revealed the benefits of economies of scale—that production costs fall as more items are produced. Money gave rise to the concept of “value added”—selling an item for more than it cost to produce. Even when barter was the norm, producers still knew it was advantageous to lower costs and raise the value of goods.

Today’s companies may use different technologies and trade on a global scale, but the essence of business has changed little in millennia.

AN ERA OF CHANGE

However, the study of business as an activity in its own right emerged relatively recently. The terms “manager” and “management” did not appear in the English language until the late 16th century. In his 1977 text The Visible Hand, Dr. Alfred Chandler divided business history into two periods: pre-1850 and post-1850. Before 1850 local, family-owned firms dominated the business environment. With commerce operating on a relatively small scale, little thought was given to the wider disciplines of business.

The growth of the railroads in the mid-1800s, followed by the Industrial Revolution, enabled businesses to grow beyond the immediate gaze of friends or family, and outside the immediate locale.

To prosper in this new—and increasingly international— environment businesses needed different, and more rigorous, processes and structures. The geographic scope and ever-growing size of these evolving businesses required new levels of coordination and communication—in short, businesses needed management.

MANAGING PRODUCTION

The initial focus of the new breed of manager was on production. As manufacturing moved from individual craftsmen to machinery, and as ever-greater scale was required, theorists such as Henri Fayol examined ever-more-efficient ways of operating. The theories of Scientific Management, chiefly formulated by Frederick Taylor, suggested that there was “one best way” to perform a task. Businesses were organized by precise routines, and the role of the worker was simply to supervise and “feed” machinery, as though they were part of it. With the advent of production lines in the early 1900s, business was characterized by standardization and mass production.

While Henry Ford’s Model T car is seen as a major accomplishment of industrialization, Ford also remarked “why is it every time I ask for a pair of hands, they come with a brain attached?” Output may have increased, but so too did conflict between management and staff. Working conditions were poor and businesses ignored the sociological context of work—productivity mattered more than people.

STUDYING PEOPLE

In the 1920s a new influence on business thinking emerged—the Human Relations Movement of behavioral studies. Through the work of psychologists Elton Mayo and Abraham Maslow, businesses began to recognize the value of human relations. Workers were no longer seen as simply “cogs in the machine,” but as individuals with unique needs. Managers still focused on efficiency, but realized that workers were more productive when their social and emotional needs were taken care of. For the first time, job design, workplace environments, teamwork, remuneration, and nonfinancial benefits were all considered important to staff motivation.

In the period following World War II, business practice shifted again. Wartime innovation had yielded significant technological advances that could be applied to commerce. Managers began to utilize quantitative analysis, and were able to make use of computers to help solve operational problems. Human relations were not forgotten, but in management thinking, measurability returned to the fore.

GLOBAL BRANDS

The postwar period saw the growth of multinationals and conglomerates—businesses with multiple and diverse interests across the globe. The war had made the world seem smaller, and had paved the way for the global brand.

These newly emerging global brands grew as a result of a media revolution—television, magazines, and newspapers gave businesses the means to reach a mass audience. Businesses had always used advertising to inform customers about products and to persuade them to buy, but mass media provided the platform for a new, and much broader, field—marketing. In the 1940s US advertising executive Rosser Reeves promoted the value of a Unique Selling Proposition. By the 1960s, marketing methods had shifted from simply telling customers about products to listening to what customers wanted, and adapting products and services to suit that.

Initially, marketing had its critics. In the early 1960s hype about the product became more important than quality, and customers grew dissatisfied with empty claims. This, and competition from Japanese manufacturers, had Western companies embracing a new form of business thinking: Total Quality Management (TQM) and Zero Defects management.

Guided by management theorists, such as W. Edwards Demming and Philip B. Crosby, quality was seen as the responsibility of the entire company, not just those on the production line. Combining Human Relations thinking and the customer-focused approach of marketing, many companies adopted the Japanese philosophy of kaizen: “continuous improvement of everything, by everyone.” Staff at all levels was tasked with improving processes an products through “quality circles.” While TQM is no longer the buzzword it once was, quality remains important. The modern iteration of TQM is Six Sigma, an approach to process improvement that was developed by Motorola in 1986 and adapted by Jack Welch during his time as CEO of General Electric.

GURUS AND THINKERS

Business history itself emerged as a topic of study in the 1970s. Dr. Alfred Chandler progressed the study of business history from the purely descriptive to the analytical—his course at Harvard Business School stressed the importance of organizational capabilities, technological innovation, and continuous learning. Taking their cue from Chandler, in the 1980s and 1990s management experts—such as Michael Porter, Igor Ansoff, Rosabeth Moss Kanter, Henry Mintzberg, and Peter Drucker— encouraged businesses to consider their environments, to consider the needs of people, and to remain adaptable to change. Maintaining the conditions for business growth, and the correct positioning of product within their market, were considered key to business strategy.

Moreover, what distinguished these gurus from their predecessors—who had tended to focus on operational issues—was a focus on leadership itself. For example, Charles Handy’s The Empty Raincoat revealed the paradoxes of leadership, and acknowledged the vulnerabilities and fragilities of the managers themselves. Leadership in the context of business, these writers recognized, is no easy undertaking.

DIGITAL PIONEERING

Just as television and mass media had done before, the growth of the Internet in the 1990s and early 2000s heralded a new era for business. While early hype led to the failure of many online start-ups in the dot-com bubble of 1997 to 2000, the successful e-commerce pioneers laid the foundations for a business landscape that would be dominated by innovation. From high-tech garage start-ups—such as Hewlett-Packard and Apple— to the websites, mobile apps, and social-media forums of the modern business environment, technology is increasingly vital for business.

The explosion of new businesses thanks to technology also helped to expand the availability of finance. During the 1980s and 1990s finance had grown into a distinct discipline. Corporate mergers and high-profile takeovers became a way for businesses to grow beyond their operational limits; leverage joined marketing and strategy as part of the management lexicon. In the late 1990s this expanded to venture capital: the funding of small companies by profit-seeking investors. The risk of starting and running a business remains, but the opportunities afforded by technology and easier access to finance have made taking the first step a little easier. With microfinance, and the support of online networks and communities of likeminded people dispensing business advice, enterprise has never been more entrepreneurial.

Recent business thinking has brought diversity and social responsibility to the fore. Businesses are encouraged, and increasingly required by law, to employ people from diverse backgrounds and to act in an ethical manner, wherever they operate in the world.

Businesses such Nike and Adidas require suppliers to prove that labor conditions in their factories meet required standards. Sustainability, recycling, diversity, and environmentalism have entered business thinking alongside strategic management and risk.

NEW HORIZONS

If business thinking has shifted, so too has the nature of business itself. Where once a company was constrained by its locality, today the opportunities are truly global. Globalization does, however, mean that business is more competitive than ever. Emerging markets are creating new opportunities and new threats. They may be able to outsource production to low-cost countries, but as their economies grow, these emerging nations are breeding new competition. China, for example, may be “the world’s factory,” but its home-grown companies are also starting to represent a threat to Western businesses. As the global recession of 2007–08 and ongoing economic uncertainty have proven, business in the 21st century is increasingly more interdependent and more challenging than ever before.

Starting a business might be easier, but to survive entrepreneurs need the tenacity to take an idea to market, the business acumen to turn a good plan into a profitable enterprise, and the financial skill to maintain success.

CONTINUAL CHANGE

For centuries social, political, and technological factors have forced companies and individuals to create new ways of generating profits. Whether bartering goods with a neighboring village or seeking ways to make profits from social networking, business thinking has changed, shifted, and evolved to mirror the wants and needs of the societies whose wealth it creates. Sometimes, as in the 2008 financial crisis, business failed in its efforts. In other examples—the legacy of Apple’s game-changing products, for example—companies have been spectacularly successful.

Business is a fascinating subject. It surrounds us and affects us daily. A walk down the street, a wander around a supermarket, an Internet search on almost any topic will reveal commerce in its many and varied forms. At its core business is, and always has been, about survival and surplus—about the advancement of self and of society.

As the world continues to open up, and as opportunities for enterprise multiply, an interest in business has never been more relevant, or more exciting. Moreover, for those with entrepreneurial spirit, business has never been more rewarding.