The Physics of Business

Running a business is part of life. And life is subject to the laws of Nature. Therefore, it is logical that business must also follow natural laws.

Just think of some of the sayings that are commonly used in business. “We need to accelerate the growth of the company.” The business is starting to gain momentum.” “Things will take off when we get enough leverage with the market.”

It is clear that people intuitively know that life and business follows the laws of nature. The problem is that we tend to forget that since it is a ‘law,” it always applies. We think that we can escape through some short cut or special exception. However, to hijack the famous quote from George Santayana “Those who cannot remember the laws of nature are condemned to repeat their failures.”

Basic Physics

To start off with the science discussion, let’s first visit some laws of physics. Sir Isaac Newton developed Three Laws of Motion, which describe basic rules about how the motion of physical objects changes. Newton was able to define the fundamental relationship between the acceleration of an object and the total forces acting upon it.

To illustrate the relationship with life and business, let’s focus on just the first and third law for now.

The first law states that every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it. A pool ball runs in a straight line until it hits another ball or one of the bumpers. If a business is failing, it will continue to fail unless some action is taken.

The third law states that for every action there is an equal and opposite reaction. If one jumps off the dock into a rowboat, the rowboat moves away from the dock. If a business lowers their prices, sales will increase.

“A more meaningful translation of Newton’s third law is — for every effect there is a cause,” says Hugh Shearar, an international trader who developed a course blending business, life, physics and ancient wisdom together called Wisdom, Wealth & Success.

If one’s business or life is not where it should be (the effect), what is the cause? To make any changes, one needs to move beyond the “effect” and focus on adjusting the “cause.” If a car is stuck in the mud (the “effect”), there is no sense focusing on that fact. Action needs to be taken to create a new “cause” and a different “effect.”

Just because we live in the physical world, we experience the impact of these laws everyday. We as humans often feel we are exempt from the consequence if we ignore the laws. A business owner needs to keep these laws in mind and apply them to their advantage.

Thermodynamics and Energy

Jumping to thermodynamics, the First Law is that heat supplied to a system equals the increase in internal energy of the system plus the work done by the system. In its simplest form, the First Law of Thermodynamics states that neither matter nor energy can be created or destroyed.

The amount of energy in the universe is constant – energy can be changed, moved, controlled, stored, or dissipated. Heating up a pot of water will increase the energy (temperature) in the water while the bubbling and steam can be considered work (release of energy) done by the system.

For a business, the energy one put into the business, will be transformed into the energy of the business. The trick is to put the energy into the right parts of the business. How often will a small business owner put tons of time into something like designing their own website, only to see the return on their effort as a failure. Website design is a commodity that is best outsourced if one is an insurance agent.

The focus of energy for an insurance agent should be on selling insurance. A business owner that wants to grow should shift their focus from them personally selling insurance to instead creating a business structure with many employees that sell insurance.

Many people work really hard on their business with poor results. The key is to use their energy in the areas that are most meaningful. A small concentration in the right area will deliver better results than spreading lots of energy over a wide area. The goal is to work on the business, notin the business.

Also, if the right amount of energy is focused in the right area, but the results are less than expected, then the energy is being dissipated, usually through friction or resistance. Friction and resistance take energy to overcome. More “work” can be done with less “power” when “friction” and “resistance” are reduced.

Note the areas in the business where “friction” or “resistance” is wasting energy and causing poor results. This could be an employee with poor morale, or a producer that ignores policies and procedures, or a client that always has problems. Removal of “friction” should then produce the desired results.

Power, Time and Work

Another law of physics is the equation for power. One way to define it is that power is equal to the amount of work done over a specific time period. It takes a certain amount of power to push a stalled car along the road for 5 minutes.

In life, the power we achieve is based on the amount of work we do over a period of time. People who have a lot of “power” in a small town are those that spent a lifetime building up their success. It is important to note that power can be derived from the accumulated work of others. Rockefeller, Gates and Buffet leveraged the work of many people to gain tremendous amounts of “power.”

“Power can also be measured in terms of money,” notes Shearar. “Those who producer more work over more time have generated more money.” This is a tangible way to show the value of work and time. An experienced CSR that handles a large book of business should get a larger paycheck that a new employee that is less productive.

Shearar also points out that the time to do a task can be “calculated” by using the power equation. Time equals the amount of work done divided by power. So, in other words, the time for someone to do a task decreases with the amount of power they have.

Think of employees, if they are not given a lot of “power” (such as resources and authority) it will take much longer to get the job done. So, providing employees the right “powers” to get the job done will make the business much more productive.

Summary

How can this be applied to business and the daily lives of a business owner?

There are no secrets to life and business success. It is all out there in the open. Successful people have “learned” how to apply the laws of nature to their lives and their businesses.

Most people, however, feel that they or their business is unique and that what others did will not work for them. However, if one is always getting poor results, then something is wrong with the system, such as how and where energy is applied, or the loss of energy due to friction.

The key is to realize that one cannot escape the laws of nature, so it is best to use them to one’s advantage.