The Subtle Art of Business Intellect, with Jaroslav Kaplan
Story by Brand Buzz
Flexibility of thinking is key for any business to thrive these days. Jaroslav Kaplan, President of Kaplan Research Company and a respected sustainability expert, shares profound insights into business intellect, drawing parallels to the artistic finesse of Picasso in the corporate arena. In the summer of 2023, one of Russia’s most prestigious business magazines, Expert, even named Kaplan the “Picasso of Business.” We sit down with Kaplan as he illuminates the challenges confronting businesses, the evolving nature of business intellect, and the critical role played by strategic thinking in ensuring enterprises’ long-term success.
Why doesn’t every business survive?
In 2015, I pondered the question of why some enterprises flourish while others face a premature demise. Much like diagnosing a medical condition, I delved into the symptoms and causes of high mortality rates among businesses.
The key, I discovered, is the inability to mentally adapt to changing trends, which is reminiscent of philosopher Eric Hoffner’s expression about living in a world that no longer exists.
Here we are talking about such a phenomenon as inertia of thinking. In other words, you don’t need to look for what entrepreneurs do wrong, you need to understand where they think wrong.
How do you define business intellect?
In my book “Business Incognita: how to expand the boundaries of entrepreneurial thinking” I gave several “basic” definitions of the concept of business intellect.
In the most general sense, “Business Intellect is the relative ability (or lack thereof) to evaluate available resources. The resources, both internal and external, are then used to lay the foundation for strategy employed by the entrepreneur to reach a certain business goal.”
From a practical point of view, another definition is more convenient: “Business Intellect manifests itself in the entrepreneur’s intention to recognize various market conditions, as well as in his willingness and desire to use the available resources and turn them into real market achievements.”
From this definition it follows that the key ability of business intellect is to understand that every decision made by the entrepreneur must fit into its proper context and must agree with the type of consumer interaction chosen.
Indeed, the same bottle of water will have different values for the consumer in different contexts: in a supermarket, in a restaurant, and in the desert.
For me, business intellect is like stepping out of a comfortable car to assess the path ahead. The first step is recognizing the environment in which your business operates and adapting the right tools to it. This includes not succumbing to “organizational diabetes,” a condition where the organization fails to absorb important external information, resulting in a lack of awareness of critical shifts in the market.
Your concept of “organizational diabetes” seems intriguing. Could you elaborate?
Let me explain. In medicine, there is a concept known as “insulin resistance.” It is characterized by a large quantity of insulin molecules next to the cell, coupled with the disability of insulin to get in. So, the cell, unable to absorb insulin and therefore glucose, goes hungry. Very crudely, this is analogous to Type II Diabetes, where the cell is unable to take in insulin and glucose.
“Organizational diabetes” occurs when an entrepreneur fails to perceive information from the environment, leading to a disconnect between the external reality and the internal workings of the organization. This ailment is contagious, affecting organizations of all sizes. For instance, Facebook overlooked the potential of TikTok, much like Xerox’s oversight with smartphones replacing traditional copy machines.
In your book, you talk about the Goshio fish story. Why use such metaphors?
Metaphors, like the Goshio fish tale, serve to simplify complex ideas. They help convey the challenges businesses face when the environment unexpectedly shifts, leaving them unprepared. The story illustrates how businesses, like fish in an aquarium, may struggle when their surroundings change, drawing parallels to companies like Xerox and Kodak freezing in the face of technological evolution.
Can everyone develop a business mindset?
One of the main conclusions that I have come to over eight years of working on the Business Intellect project is that business intellect can and should be developed in the same way that people successfully develop their emotional, musical intelligence, or all eight Howard Gardner’s types of intelligence.
Although business thinking can be developed to some extent, people vary in their entrepreneurial abilities. For me, business is a philosophy in which the entrepreneur becomes an integral part of the product and its story of interaction with customers. It’s about creating value that fits the context of the customer experience.
How did businesses restructure during the challenges of 2022?
The changes witnessed in 2022 marked a shift in the logic of interaction between entrepreneurs and consumers. It’s a transition from the cliché “know your customer” to the imperative of “understand your customer.” These are two different “layers” in the context of interaction with the client. In this sense, entrepreneurs today need to “dive” deeper into the sea of interaction with consumers.
Your concept of “business intellect” stands out. How can young entrepreneurs develop it?
Business intellect, in my view, involves recognizing market opportunities and leveraging available resources to capitalize on them. Young entrepreneurs need to be taught not only to recognize these opportunities but also to understand the context of available resources. It’s about observing and interpreting the nuances of the environment.
In your book, you emphasize separating thinking and doing. Could you elaborate on this?
I separate tools for doing and tools for thinking. If I have, for example, a drill, then it is a tool for doing and I can use it to make a lot of holes. But I won’t be able to lift a sunken boat with a drill; for that I’ll need another tool. That’s the problem with making tools, they have their specific uses and their limitations. With thinking, everything happens differently; other tools “work” there, which I call thinking tools.
When thinking is inextricably linked to the tools used for doing, it limits a person’s ability to scale and develop beyond the existing capabilities of the tool itself. The entrepreneurial mindset requires a unique set of tools like an architect designing a building.
Thinking without the constraints of specific tools allows for creativity and innovation. Entrepreneurial thinking requires a unique set of tools to envision and communicate a project, much like an architect designing a building.
An architect builds a building in his imagination and then puts the design on paper – he does not build the building, lay the bricks or paint the walls. In other words, he does not use tools for doing, but uses various tools for thinking, which may be very different from tools for doing.
You advocate starting with a project for consumer interaction rather than building an organization. Why is that?
Many businesses fail because they build organizations before understanding the nuances of consumer interaction. To survive, entrepreneurs must start with a project for consumer interaction— a development vector. This project defines the direction of interaction, ensuring businesses don’t fall into the trap of outdated strategies.
It’s a lot like building a house; you do not start building a house until you have a complete and detailed design of this house, agreed upon with all competent organizations. In the case of entrepreneurship, the role of these “competent organizations” that approve (or disapprove) of your project is played by your customers. Only after this begins the construction of the “house” – your organization.
What’s your advice for business leaders aiming to convey their values within the company?
Rather than starting with organizational structures, business leaders should begin by crafting a project for interaction with consumers. Clients must understand the product the entrepreneur constructs for them. This approach ensures that the values are not artificial and random, but an integral part of the customer interaction project.
Why doesn’t every business survive?
In 2015, I pondered the question of why some enterprises flourish while others face a premature demise. Much like diagnosing a medical condition, I delved into the symptoms and causes of high mortality rates among businesses.
The key, I discovered, is the inability to mentally adapt to changing trends, which is reminiscent of philosopher Eric Hoffner’s expression about living in a world that no longer exists.
Here we are talking about such a phenomenon as inertia of thinking. In other words, you don’t need to look for what entrepreneurs do wrong, you need to understand where they think wrong.
How do you define business intellect?
In my book “Business Incognita: how to expand the boundaries of entrepreneurial thinking” I gave several “basic” definitions of the concept of business intellect.
In the most general sense, “Business Intellect is the relative ability (or lack thereof) to evaluate available resources. The resources, both internal and external, are then used to lay the foundation for strategy employed by the entrepreneur to reach a certain business goal.”
From a practical point of view, another definition is more convenient: “Business Intellect manifests itself in the entrepreneur’s intention to recognize various market conditions, as well as in his willingness and desire to use the available resources and turn them into real market achievements.”
From this definition it follows that the key ability of business intellect is to understand that every decision made by the entrepreneur must fit into its proper context and must agree with the type of consumer interaction chosen.
Indeed, the same bottle of water will have different values for the consumer in different contexts: in a supermarket, in a restaurant, and in the desert.
For me, business intellect is like stepping out of a comfortable car to assess the path ahead. The first step is recognizing the environment in which your business operates and adapting the right tools to it. This includes not succumbing to “organizational diabetes,” a condition where the organization fails to absorb important external information, resulting in a lack of awareness of critical shifts in the market.
Your concept of “organizational diabetes” seems intriguing. Could you elaborate?
Let me explain. In medicine, there is a concept known as “insulin resistance.” It is characterized by a large quantity of insulin molecules next to the cell, coupled with the disability of insulin to get in. So, the cell, unable to absorb insulin and therefore glucose, goes hungry. Very crudely, this is analogous to Type II Diabetes, where the cell is unable to take in insulin and glucose.
“Organizational diabetes” occurs when an entrepreneur fails to perceive information from the environment, leading to a disconnect between the external reality and the internal workings of the organization. This ailment is contagious, affecting organizations of all sizes. For instance, Facebook overlooked the potential of TikTok, much like Xerox’s oversight with smartphones replacing traditional copy machines.
In your book, you talk about the Goshio fish story. Why use such metaphors?
Metaphors, like the Goshio fish tale, serve to simplify complex ideas. They help convey the challenges businesses face when the environment unexpectedly shifts, leaving them unprepared. The story illustrates how businesses, like fish in an aquarium, may struggle when their surroundings change, drawing parallels to companies like Xerox and Kodak freezing in the face of technological evolution.
Can everyone develop a business mindset?
One of the main conclusions that I have come to over eight years of working on the Business Intellect project is that business intellect can and should be developed in the same way that people successfully develop their emotional, musical intelligence, or all eight Howard Gardner’s types of intelligence.
Although business thinking can be developed to some extent, people vary in their entrepreneurial abilities. For me, business is a philosophy in which the entrepreneur becomes an integral part of the product and its story of interaction with customers. It’s about creating value that fits the context of the customer experience.
How did businesses restructure during the challenges of 2022?
The changes witnessed in 2022 marked a shift in the logic of interaction between entrepreneurs and consumers. It’s a transition from the cliché “know your customer” to the imperative of “understand your customer.” These are two different “layers” in the context of interaction with the client. In this sense, entrepreneurs today need to “dive” deeper into the sea of interaction with consumers.
Your concept of “business intellect” stands out. How can young entrepreneurs develop it?
Business intellect, in my view, involves recognizing market opportunities and leveraging available resources to capitalize on them. Young entrepreneurs need to be taught not only to recognize these opportunities but also to understand the context of available resources. It’s about observing and interpreting the nuances of the environment.
In your book, you emphasize separating thinking and doing. Could you elaborate on this?
I separate tools for doing and tools for thinking. If I have, for example, a drill, then it is a tool for doing and I can use it to make a lot of holes. But I won’t be able to lift a sunken boat with a drill; for that I’ll need another tool. That’s the problem with making tools, they have their specific uses and their limitations. With thinking, everything happens differently; other tools “work” there, which I call thinking tools.
When thinking is inextricably linked to the tools used for doing, it limits a person’s ability to scale and develop beyond the existing capabilities of the tool itself. The entrepreneurial mindset requires a unique set of tools like an architect designing a building.
Thinking without the constraints of specific tools allows for creativity and innovation. Entrepreneurial thinking requires a unique set of tools to envision and communicate a project, much like an architect designing a building.
An architect builds a building in his imagination and then puts the design on paper – he does not build the building, lay the bricks or paint the walls. In other words, he does not use tools for doing, but uses various tools for thinking, which may be very different from tools for doing.
You advocate starting with a project for consumer interaction rather than building an organization. Why is that?
Many businesses fail because they build organizations before understanding the nuances of consumer interaction. To survive, entrepreneurs must start with a project for consumer interaction— a development vector. This project defines the direction of interaction, ensuring businesses don’t fall into the trap of outdated strategies.
It’s a lot like building a house; you do not start building a house until you have a complete and detailed design of this house, agreed upon with all competent organizations. In the case of entrepreneurship, the role of these “competent organizations” that approve (or disapprove) of your project is played by your customers. Only after this begins the construction of the “house” – your organization.
What’s your advice for business leaders aiming to convey their values within the company?
Rather than starting with organizational structures, business leaders should begin by crafting a project for interaction with consumers. Clients must understand the product the entrepreneur constructs for them. This approach ensures that the values are not artificial and random, but an integral part of the customer interaction project.
