Using Abstract Thinking in Business

Before I get to the main points of the plan I just want to quickly interject by bringing up a way of thinking we use in business. In business one of the most successful traits you can have is what is called “abstract thinking”, abstract thinking is defined as “the ability to think about objects, principles, and ideas that are not physically present” and that “abstract thinkers can’t help but think about how everything relates to the bigger picture”. This is in contrast to “concrete thinking” which is defined as “reasoning that’s based on what you can see, hear, feel, and experience in the here and now”. Having spoken to many struggling entrepreneurs I have found this to be one of the most important things that they lack. I think our education system has a lot to do with it, successful abstract thinking requires the mind to be challenged whereas with our education system the bar has been lowered to the point where you not really challenged with the end results often being graduates that are unemployable and end up being unproductive members of society.

I spoke of what is required to successfully take advantage of a business opportunity, mainly these three will require some sort of abstract thinking:

  • Stop and reflect / Apply your mind, try to visualise yourself doing the business
  • Do you understand the requirements? Do you meet the requirements, skills, know-how etc.
  • Your suitability: Does the business suit your temperament/disposition? (e.g. if a business requires you to knock on doors and you very shy then its probably not for you)

But abstract thinking goes further than that, in business you have to be able to visualise any business, estimate probabilities, run permutations in order to make projections of whether it can succeed and how in any scenario. And this is so lacking, the vast majority of local entrepreneurs can’t reason or apply logic and that is one of the reasons they are failing.   In the next two pages, I am going to introduce a few concepts that are very important that will help guide your thinking and maybe help you. Abstract thinking will allow you to optimise and streamline your business because you can see the big picture and make the changes that will lead to success.

A quick example
One of the times you will need to use abstract thinking is to write a business plan because when you writing the plan the business does not exist yet so you are dealing with stuff that isn’t real.

Many people when writing a business plan they either download it from the internet or they hire someone to write it and they have no clue what is happening in it and a small business person should be able to understand their plan. The projections aren’t based on reality. Now projections are not real, they are just that projections but there has to be data to underpin in and that requires you to be able to think in the abstract.

We use a lean business plan using the components bolded below and that allows us to build an abstract representation of the business based on reality. That is all a business plan is, a big one is expanded from those points but people still cannot visualise it, that is a problem because it means that they cannot strategise.

You have the proposed business, the value proposition, the market need or problem with solving and the business model or solution (how you are solving the problem), your competition (who else is solving problem how/how much), the target market (who are you solving the problem for), the sales channel/premises (where are you operating from), marketing, advertising and sales (how are you telling your target market about your solution and getting them to your sales channel), operations (people and resources needed to carry out your plan) and budget and sales goals.

Now we come to the budget and sales goals, important without it you flying blind, which is your projections, everything has to be looked at in totality but it’s not real, so how do you do it? By using abstract thinking.

Here I usually divide businesses into:
Service, manufacturing, retail (including wholesale).
Sales channel brick and mortar or online.
Is it B2B or B2C etc.
This makes thingseasier because with online there is no here or there or office hours your conversion calculations will be different to brick and mortar.

Here is where people cannot grasp reality by using abstraction, I usually start at the lowest point possible often starting with time and then I extrapolate. Other people start with say  R1 million a month, but they can’t explain how they going to make R50k a working day or R6250 an hour in an 8 hour day. Which is what you need to make using the working time of a 9-to-5, Monday to Friday.

If time is important part of your equation (which is often the case in brick and mortar service or retail where you have office hours). There is 24 hours in a day, the union movement says we must work for 8, rest for 8, and sleep for 8. If you only working one shift that is 8 hours or 8 x 60 minutes.

If you follow that working time and got a brick and mortar that is open for 8 hours a day and you only offer a service (no profits from products) and you the only person that can do the work. Your projected income cannot exceed your hourly rate x8 (and that is optimistic that you will be busy every hour every day). As basic and common sense as it is you will still get people making wild, impossible projections that beggars belief because they cannot abstract.

If you cannot visualise your plans and execute accordingly you will have a hard time in business.