Competence-based Success

In this type of venture, high Competency, accompanied by Product Market Match, Net Buyer Benefit , Margins, Volume, Purchase Frequency, and the availability of Resources indicate long-term success potential.

Medium Product Longevity implies increased Ambiguity and medium Scarcity, with a DECAYING level of Innovation.

Figure 19: "B/K" Diagram

Figure 20: Target "Bulls-eye" Diagram

ADVICE:
Need to build a business that replicates key behaviors and competences. This means that these successful entrepreneurs should spend sufficient time working "on" the business (v. "in" the business) to ensure that the factors that have lead to its success can be replicated as circumstances change.

Because the business is based upon key Competences , there should be ample effort expended (while the Resources are still plentiful), on continuing education and the upgrading of skills--that in turn lead to ongoing Innovation.

CASE STUDY EXAMPLE:

Bond & Bond Plumbing Solutions -- A Competence-Based Success
Larry Bond scribbled down the information that his receptionist was relaying over his cell phone while he was still under the sink. The plumbing job over at the Carter's would have to wait for a couple of days because of the backlog of service calls. This was typical though, because Bond & Bond was a father and son partnership whose services were high in demand. There was more than enough work to keep both men busy all year long.

Larry and his father Jerry, had over 60 years of combined plumbing experience between them. Both partners could diagnose problems quickly and accurately. Independently on small jobs, and together on larger ones, father and son worked competently. When Larry was six years old, he had flushed his toy alligator down the toilet. His father took that opportunity to teach Larry how to unplug the toilet. Larry and Jerry had the talent to find the source of hidden leaks. Some of Larry's friends had even dubbed him the 'Water Detective' when he joined his father's company straight out of high school.

Because their reputation preceded them, Bond & Bond were able to charge twice as much as their competitors, who took twice as long to complete jobs. Bond & Bond's clients appreciated being able to get on with the rest of their day, and knew that it would be unlikely that they would encounter the same problem once Larry or Jerry had fixed it.

Of course there were some people who claimed that Larry's price was outrageously high and would try to bargain it down to other plumbers' quotes. When Larry refused to negotiate, these individuals would either 'do it themselves' or go with the lower quote.

However, there had been enough people who were willing to pay dearly for the services that the partnership had been bringing in six figure revenues for the last 20 years. Larry could easily retire today, at age 38, on the handsome nest egg that he had saved up, but Larry was not quite ready to give up his working life yet. He really enjoyed his job, fixing up mundane problems in people's lives.

Aside from insuring the business practice from the usual type of liabilities, and buying a reasonable amount of insurance for both partners, Larry tried not to trouble himself with thinking too much about 'what if' questions. For instance, what if pipe design and commercial plumbing products improved so much that plumbers would be out of work in the long term? To Larry, plumbing was a simple business. As long as there were pipes in the house, plumbers would be needed. Larry could not see what there was to anticipate going wrong, so he just focused on doing what he did best.