notes-abstract-businessChineseElements

the 5 chinese elements are fire, earth, metal, water, wood (it is a circle, so after wood comes fire again)

fire burns and leaves ash which is a type of earth. in the earth is found metal. metal melts and becomes liquid, like water. water nourishes wood. wood is burned to make fire.

for each element, the preceeding element (the "mother") encourages/nourishes it, and the element which preceeds it by 2 (the "grandmother") restrains/takes from it.

in the body,

fire provides driving force and separates the pure from the impure. the heart is firey.

earth provides nourishment (of the "fuel" sort) the stomach is earthy.

metal is a catalyst or gateway where the ethereal can be transmuted into the base the lungs and immune system and large intestine are metallic.

water provides nourishment (of the "structural" sort) the kidneys and bladder are watery.

wood provides reach, growth, and suppleness

i forgot which ones the liver, spleen, bones (water?), and gallbladder are.

my notes: some of these correspond to basic flows in modern biology: metal to oxygen, earth and fire to energy from food (sugar), water to water.


so how does a startup correspond?

the fuel of a startup is money, so earth must correspond to sales

one choice is: is labor considered an "input" to the startup, or a separate, integral part of it, or just a term which applies to all of its parts? if the first, then perhaps fire is management, and the flow of money to employees in return for services. if the second, then perhaps fire is labor. if the third, then labor does not appear, and fire could be operations.

more choices are: is capital to be represented, or is that just the same as "fuel"? if so, do we consider capital to only be money, or do ideas count too? if capital is the same as fuel, then "sales" includes investor relations. if it is its own thing, then perhaps metal is investor relations. if it includes ideas, then metal is investor relations but also product development.

wood could be ideas, or employee moral, or marketing

you could make these correspond to different depts or tasks, or different types of resources, or you could make them correspond to various things differing in kind. examples:

depts:

fire: ops earth: sales metal: product dev water: purchasing, HR, admin wood: marketing

tasks or goals:

fire: management earth: sales metal: product dev water: ops wood: ?

diff kinds (goalish)

fire: labor earth: sales metal: vision water: departments, organization wood: growth

(i like this one a little)

things on financial statements:

fire: profit metal: capital earth: cash water: assets wood: growth

things on financial statements II:

earth: revenue metal: gross margin water: equity wood: cash fire: profit

(i like this one)

combination of the ones i like (todo):

earth: sales metal: vision, ops, product dev, gross margin, coo? water: equity, departments, organization, admin, ops, ceo, coo, cfo, fairness? wood: investment, cash, morale, vision, ceo? fire: labor, management, profit, coo, cfo?

let's filter by the mother/grandmother stuff:

earth is sales metal is fed by sales: so not vision water is restrained by sales (sales takes from water): ? hmm. earth competes with water passively, because they are separate and there's only so much room, and so the more land there is, the less water. also, water soaks into the earth. that tends to rule out equity. ops is looking good; if you pay attention to increasing revenue you have trouble paying attention to cutting variable costs (decreasing quality).

so water is ops or fiscal disclipline or good organization/discipline in genenral or good gross margin

so we have:

earth: sales metal: ops, product dev, gross margin, coo? water: departments, organization, admin, ops, ceo, coo, cfo, fairness? wood: investment, cash, morale, vision, ceo? fire: labor, management, profit, coo, cfo?

water feeds wood, so keeping costs down, having good organization, having a good gross margin (good value/low quality), etc is good for something. sounds like cash or profit, not investment or morale or vision. metal restrains wood, so what restrains cash or profit? sounds like metal is product dev or gross margin (high quality goods) or morale or vision (but we struck vision b/c sales doesn't feed it). wood restrains sales. sounds like cash/inventory/capacity.

we lost vision now, let's put it in fire and see if it goes there

so we have

earth: sales metal: ops, product dev, gross margin, coo, morale? water: departments, organization, admin, ops, coo, cfo wood: cash/capacity fire: labor, management, profit, coo, cfo, vision?

fire is fed by wood: labor, managment, profit, ops, vision all fit. fire feeds sales. labor should be labor/hiring. labor/hiring, management, profit, ops, vision (and product dev) all fit. fire is restrained by water. labor/hiring, ops, vision/product dev all fit; management/profit does not. fire restrains metal. not sure.

so we have:

earth: sales metal: ops, product dev, gross margin, coo, morale? water: departments, organization, admin, ops, coo, cfo wood: cash/capacity/investment/profit fire: labor, coo, cfo, vision?

so how about:

earth: market metal: value proposition of product/competitive landscape/efficient production water: organization wood: money fire: people (and ideas?)

but my problem with this is that the value proposition of the product isnt fed by sales (or market), but rather the reverse. how about:

earth: market, sales, demand metal: production, operations water: organization, fixed cost efficiency wood: money (cash/profit), growth, investment fire: value proposition relative to competition

check:

fire: the value proposition for the customer drives everything, and separates the pure from the impure. the better the value proposition, the more demand and sales you will have. is restrained by an overly bureaucratic organization or by high costs, which prevent you from innovating or prevent you from offering a low cost (high value) product. and if the company is dreaming too much, you need to focus on organizational discipline. earth: revenue is the fuel of the company. revenue pays for labor and for operational improvements; but more specifically, the more sales you make, the more products you will produce (and the more the sales cost, the more you will spend on inputs). is limited by problems with cash (can't ramp up sales), product development (product isn't good enough to sell), or morale (bad customer experience). and if the company is too sales-oriented, you need to focus more on the bigger picture of profit and growth and investing in the future. metal: the process by which supplies and labor is transmuted into the product. the more money you end up spending making products, the more organization you will want to have to direct this expenditure. is limited by the value proposition; if the value proposition promises a lot, then it may be difficult to deliver on it (this suggests that "value propostion" in this context should include the plan for, and expected cost of, producing the product; more of a business plan than a raw product idea). and if the company is too focused on operations, you need to focus more on making innovative products. water: the procedures and administration of the company. the better your procedures are, the more money you will make, and the better that morale will be. is limited by market demand; if you are focused on creating and fulfilling demand, you may lose focus on controlling costs, and to the extent that you are focused externally on what the customer wants, you may lose focus on internal matters. and if the company is too bureaucratic, you need to focus more on the customers. wood: money. the more money you have, the more you will tend to invest in improving the value proposition (by developing new products, or by investing capital that improves operations). if you're execution (wood) is bad, you won't make as much money as you "should". and if the company is too focused on making money and growing, you need to focus more on the day-to-day practical realities of your business.

note: in general, it seems like the "mother" relationship means that the child tends to be something that NECESSARILY results from the parent, in an almost tautological way; the same way that increased sales causes increased production. the "grandmother" relationship, by contrast, is when a problem or deficiency in the grandmother can cause a problem or deficiency in the grandchild; that is, when the subjective perception is that the grandchild "should" be much larger but is being limited by a bottleneck in the grandparent.

note: revenue is analogous to food. production inputs are analogous to oxygen. labor is analogous to water.

fire: value prop earth: revenue metal: gross margin water: profit margin wood: cash and profit

vision/culture/long range planning is yin, execution/management is yang

fire: product, production, value prop, morale earth: revenue, sales, demand metal: organization water: ? wood: investment, cash, profit, growth

other ppl's:

http://www.1000ventures.com/business_guide/crosscuttings/cultures_5_basic_elements.html diff: sales is water

http://www.jyotishexpert.com/chineseastrology/elements.php diff: organiz is earth

http://www.michaelschiesser.com/the-five-elements.html

http://www.refresher.com/ajswelements.html

hmm mb ppl should be earth?:

fire: revenue, sales, demand, production earth: ppl metal: organization water: value prop wood: investment, cash, profit, growth, money

probs: org shouldnt restrain money; value prop shouldnt restrain sales (mb the opposite tho); org should perhaps restrain ppl; sales shouldnt restrain org

some elements:

demand ppl org money

production value prop

fire: sales? value prop? ppl? product/production? earth: sales? ppl? metal: organization water: value prop? value/thrift/efficiency? ppl? strategy? wood: investment, cash, profit, growth, money

fire: product, production, people earth: demand, sales, revenue metal: organization (planning, rules, legal form) water: thrift, efficiency? demand, competitive landscape? wood: investment, cash, profit, growth, money

fire: product, production, people earth: sales, revenue metal: organization (planning, rules, legal form) water: value (, thrift, efficiency, low cost product, low cost suppliers) wood: investment, cash, profit, growth, money

in short:

fire: value proposition, product offering, marketing, morale earth: sales, production metal: organization water: efficiency, analysis, strategy, selection of and focus on core idea to the exclusion of other opportunities wood: money

fire: product offering, marketing, morale earth: sales, production metal: organization, focus on core idea to the exclusion of other opportunities water: efficiency, profit, money, cash wood: strategy, innovation, investment, value proposition, growth

prob: growth, value prop shouldnt restrain sales. also, wood feels more like money; cash determines suppleness. cash doesn't lead to strategy or to value prop.

fire: product offering, marketing, morale earth: sales, production metal: organization, focus on core idea to the exclusion of other opportunities water: efficiency, profit wood: innovation, investment, growth, finance, cash

fire: product offering, marketing, morale earth: sales, production metal: organization, focus water: frugality wood: money, innovation, finance

fire: value proposition, sales, morale (red) earth: labor, people, production (yellow) metal: organization (white or purple) water: frugality, focus (black or blue) wood: money, innovation, finance (green or blue)

probs: metal restrains labor, it is not a child of labor?? but mb it's ok.. b/c it's not the case that the more organization you have, the less ppl you have

some related virtues:

discipline, followthru, organization awareness, honesty, focus initiative, creativity passion, communication love, fairness

the wu xing, more concisely:

fire: sales earth: people metal: procedures water: frugality, focus wood: money, innovation

less concisely:

fire: product offering, sales (red) earth: people, production (yellow) metal: procedures, rules (white or purple) water: frugality, focus (black or blue) wood: money, growth (green)