Common Sense Again.

If you’ve been reading my blogs, then there was a series of blogtorials in which I talked about entrepreneurial common sense. Some entrepreneurs seem to just have it, others don’t. Common sense is what tells the president of the company that if he has $100,000 in the bank and a $10,000 monthly burn rate, with no more cash coming in, he’s got 10 months of business life left. No real sense making a three year business plan if you can’t get through the next 10 months. If we listen, common sense tells us what we should focus on.

Often, advisors and business executives try to outsmart basic common sense. They try to outsmart common sense using complicated graphs, Excel spreadsheets, marketing reports, research and focus groups until they’ve analyzed things that probably don’t need analysis and talked themselves out of what common sense tells us what they should really do. Generally, people do not like to follow common sense because it lacks the academic sophistication often inappropriately associated with complicated analysis.

Common sense should have told Kodak that the film business was over. Digital cameras were pervasive. Anyone on the outside looking in and I’m sure there were many that did, told Kodak, “It’s over. You need to switch to digital.” They finally did after laying off more than a third of their company prior to that and laying off significantly more when they finally made the decision. Had they used their common sense years previous, many of those people would probably still have a job making digital cameras or peripheral devices for digital cameras. Someone at Kodak tried to outsmart common sense and failed.

My guess is that every executive and probably employee of Kodak could have gone home and asked their children what kind of camera do you want for Christmas? And when 95% of the children came back and said a digital camera that would have been a giant red flag for Kodak that the film business was over. But I suspect no one asked the children and Kodak responded to significant market research that concluded film would come back. I hope those market research people were eventually fired, but chances are they’re not. They’re probably now doing marketing research for some other company that also is on its way out.

Common sense tells us that the Federal government doesn’t create jobs. And the more money that we send to the government, the more money they have to spend on issues that do not create jobs. Common sense tells us that jobs are created when entrepreneurs get investment dollars to build a business. The business grows and they hire more people. Jobs are created in that process. We don’t need to have a PhD in economics or be a mathematical wizard to come to that understanding. California has created lots of jobs because of Google, E-Bay, Apple, and dozens of other companies that were started because entrepreneurs received investments, built businesses, hired people, hence, created jobs.

Common sense tells us that’s how it works. It’s not that complicated. Common sense tells us that anything we do as a country to discourage that investment kills jobs. Common sense tells us that anything we do to encourage that investment creates more jobs. Common sense is not taught in college. There are no courses in Common Sense I, Common Sense II, Advanced Common Sense, and you can’t get a degree in common sense. Yet, many employers will tell you when they’re hiring people they’re looking for people with a lot of common sense. I guess colleges simply haven’t responded to the obvious need for common sense at the educational level or the Ivory Tower academics believe that common sense can’t be taught. And they could be right.

For me, common sense is acquired by observing and doing. For example, in the world that I live in, I conclude that businesses started by entrepreneurs with investment capital create jobs. I can’t point to a single business started by government that created jobs. Government can’t start businesses. They regulate them, and in many cases, they regulate them out of business.

The next time someone attempts to persuade you that Washington creates jobs, please correct them immediately. That is just common sense.