Brokerage within the Walls of your Business

A broker is a party that mediates between a buyer and a seller.

I would like to extend this definition to represent a more abstract sense of doing business with the interests of every person you meet in mind.

In some ways every one who has ever sold anything has been a broker in the first sense.

It is rare that a person takes careful consideration of all of the ways they may trade information of value with their clients and colleagues as in the latter sense.

The abstract "brokerage" I'm describing has less to do with products, securities or services and more to do with strategic business planning with monetary goals.

If I as a Financial Planner have non-material but clearly valuable information that others do not, I am serving as an Information Broker when I write your Financial Plan. The degree of informational advantage, the money waiting to happen, may not be easily predicted, but it can be understood and compared through the double barreled process of generalization and specification.

If I provide for one company a specific way to relate to another so that the two companies make absolute gains based on the compliment of skills and assets they share I have created value greater than any goods or services exchanged. This value sourced purely in the informational advantage that I originate is the essence of brokerage.

Over time we can produce statistics to generalize about the value of information in a history of business outcomes and over time manage to produce an increasingly informed management team.

This informational advantage is non-linear. Meaning that it can produce large spikes in revenues or service cost reduction that will be noncontiguous with trends. It's source is in the depth and detail of understanding I have about the companies involved. In the information management industry small details often overtake big blue chips.

Corporate Strategy or Mergers and Acquisitions, benefits may reduce overall costs through shared services. They may also improve revenue generating messages by creating a unified front in marketing and sales. People often think that these blue chip strategies are rarely adopted in the small business environment. In reality these strategies are represented in the small business community, but only in a finite set of business owners who see the depth of their own people. The average small business owner often feels at risk when they lose any of their key talent and they can't imagine merging with another company in the same field. This would feel like giving up to a competitor.

In these lean times many small business owners are learning that they must partner whenever and where ever they may to find the hidden opportunities and bring to market core competencies. Those who "stick to their guns" tend to suffer in times of systemic change.

It is important for small businesses to observe that within each individual there is often several roles played. Many employees in small businesses take on many roles. If two competing companies knew each other well enough to identify the strengths and weaknesses within their staff, there would be the potential for the two companies to reduce the number of generalists and increase the number of specialists in either a partnership or a series of contracts for services.

Comcast encourages competitive quotes between it's own engineering cells as a means of observing the market value of the employees within each cell. Engineering cells literally auction the value of their own engineers internally through old fashioned phone calls and conversations about the projects on the table, the demand for skills, and the supply of skills across cells. There is some time lost as these engineers perform business functions with each other in cell to cell interactions but ultimately the value of the work and the cost of the work become more transparent through the conduct and tracking of this behavior.

I am not arguing for more specialization. I am not arguing for more generalization. I am arguing that a good business owner or manager can take advantage of a situation by adapting his strategy to meet the needs of the scenario at hand. This adaptation can maintain an underpinning in classic cost benefits analysis without leaning on ideal forms to produce optimal outcomes. Creative adaptation driven by bottom line orientation will increase the probability of non-linear revenue and savings spikes for your business. Free your mind and the rest will follow.

You probably already knew that.

-David Caro-Greene