Macedonia's Great Opportunity
or: How to Write a Business Plan

(A speech given at the 13/2/97 meeting of
the Skopje Chamber of the Rotary Club)

By: Dr. Sam Vaknin
 

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Five thousand years ago, people were still roaming the earth as nomads. They carried along their few precious possessions in their hands and on their backs. They hunted and gathered food at random.

Then came the Agricultural Revolution : people settled down and got attached - physically, emotionally and legally - to specific plots of land. They grew their food in accordance with a pre-meditated plan. They domesticated animals. This new pattern of human existence led to enormous shifts in demographic patterns.

It took yet another 4500 years before the dawn of the next Revolution : the Industrial one. Its main achievement was to separate the raw materials and the means of production from the land. It also created the need to have an educated workforce. This Revolution brought in its wake the formation of cities (which supplied workers to mega-factories), mass education systems and leisure.

For the first time in history, people began to have free time on their hands.

Numerous organizations, firms and institutions sprang up in an effort to satisfy the insatiable desire for entertainment and the necessity to cope with the ever growing complexity of social and economic institutions.

Contrary to common opinion, the service oriented society was - and still is - an inseparable part of the industrial world.

Today, we are in the eye of the biggest storm ever : the Third Wave (to borrow Alvin Toffler's excellent coinage). This is the Information and Knowledge Revolution. It is leading to an economy which will be based on the accumulation, the processing and the delivery of information (the equivalent of raw materials) and of knowledge (the equivalent of processed goods). All these will be made accessible to ever widening strata of society.

This, indeed, is what separates this Revolution from its predecessors :

(1) It is equitable - anyone and everyone can partake in it.

To participate in the previous two Revolutions - large amounts of capital were needed. Where capital was amiss - raw force was used to obtain raw materials, capital goods, land and other means of production
(including very cheap labour in the form of slavery).

This Revolution is different : all that is needed is good ideas, some (ever lessening) technical background and ever cheaper infrastructure.

So, this Revolution is open to young people in home garages (this is how computer giants such as Apple Computers and Microsoft were established).

It is non-discriminating : age, gender, race, colour, nationality, sexual preferences - they all do not matter. This Revolution is the Great Equalizer.

(2) This is the first time in human history that raw materials, production processes, finished products and marketing and distribution channels are one and the same. Let us examine the example of the sales of
products (e.g., software) through the Internet :

Software is written on computers using programming languages - a manipulation of electronic bits in a virtual environment. Thus, the product (=the software), the production processes (=the programming
languages), the raw materials (mental algorithms translated to electronic bits) and the channels of marketing and distribution (the electronic bit streams of the Internet) - they are all made of the same elements and components.

This is why the technology is so cheap. This is why the products of the forthcoming Revolution will be disseminated so easily. To manufacture and to distribute will become mundane - rather than arcane - operations.

(3) Only some of our forefathers have been influenced by the Agricultural Revolution. Only some of them have been influenced by the Industrial Revolution. Gradually, the percentage of the population working the land decreased from well over 60% to less than 3% (in the USA, for instance). An equal drop can be discerned among the part of population engaged in industry.

But this is not the case with the third Revolution :

There is not a single human on earth who is not influenced by the third, biggest Revolution of all : the Information / Knowledge Revolution.

All of us are exposed to radio, television, computers, cellular phones, the Internet. These products and services are becoming cheaper and more available and accessible by the month. The new Revolution is all- pervasive and all-encompassing.

(4) All the above characteristics brought about a new form of economic development : non-centralised, high value added, fast progressing with quick business cycles. It is the first non-mercantilist, non-colonial phase in human history. All economic activity in the past was characterized by the importation of raw products at low prices from the very same markets that absorbed the final products (produced from those raw materials) at much higher prices.

This form of exploitation will gradually become impossible. Today, it is no longer important where goods are produced. The demarcation lines between finished products and raw materials are so blurred (even where old-fashioned industrial products are concerned) - that the old distinctionbetween "colonizer" and "colony" has all but vanished.
 

This holds a great promise for less-developed and developing countries.

In the (near) past, they would have needed huge amounts of capital and other, non-monetary, resources to equate themselves with the more developed part of the World. Today, much less investment is needed to achieve the same results. The world is finally becoming what the sage of Western media, Marshall McLuhan called : "The Global Village". It matters less WHERE you are - it matters more WHAT you think. A global economic premium is placed on innovation, creativity, improvisation and the entrepreneurial spirit.

These - the new mental commodities - are abundantly and equally available to all the countries in the world : poor and rich, off-center and on-center, developed, developing and less developed.

The old economic conception of an evolution : from the agricultural to the industrial to the service economies is being replaced. The new breed of economic thinking encourages countries - such as Macedonia - to move directly from the Agricultural phase to the Third Wave : that of Information and Knowledge industries. Macedonia can better accommodate this type of industries : they are affordable, accessible, easy to understand and to implement, highly profitable, ever evolving and progressing.

Macedonia will not be the first country to implement such a daring policy of leaping forward and skipping the Industrial stage - straight into the age of Information. Israel has done it before and so have Switzerland, Hong-Kong, Singapore and (to a certain and hesitant extent) India. All these countries were naturally under-privileged. Some of them are mere deserts, others isolated, barren islands or severely overpopulated. But they all managed to get heavily involved in the unfolding revolution. All of them (with the exception of India which is a new, half-hearted, entrant) possess the highest per capita GNP in the world.

The gamble has paid off.
 

But there is a fascinating side-benefit to such a choice.

The shift from industry to the information technology and knowledge industries - is a shift from dealing with reality to dealing with symbols. The techniques used to manipulate symbols are the very same - no matter what the symbols are. If a country is successful at developing trained operators of symbols - they will know how to manipulate, operate and transform any kind of symbol.

This is also true when it comes to the biggest symbol of all : to Money.

Money - as we all know - is a symbol. It represents an agreement reached amongst members of a group of people. It has no intrinsic value. The same techniques which are used for the manipulation of information are easily applicable to the manipulation of the symbol called money.

THE MORE ADEPT A COUNTRY IS AT PROCESSING SYMBOLS (=INFORMATION) - THE MORE ADEPT IT IS IN FINANCIAL TRANSACTIONS OF ALL KINDS. It is more likely to attract investments, to develop flourishing stock exchanges and money markets, to train young professionals, to trade and in general : to get enmeshed in the very fabric of the modern international economy.
 

HOW TO PREPARE A SUCCESSFUL BUSINESS PLAN

By : Dr. Sam Vaknin

In our previous article, we recommended that Macedonia, as a nation, will skip the Industrial Age. It should go directly to the age of Information and Knowledge. In other words : it should move directly to the age of manipulation of symbols.

There are many types of symbols. Money from investors, banks or financial organisations is one such kind of symbols.

A successful Business Plan (=a successful manipulation of symbols) is one which brings in its wake the receipt of credits (money, another kind of symbol). What are the rules of manipulating symbols ? In our example, what are the properties of a successful Business Plan ?

(1) That it is closely linked to reality. The symbol system must map out reality in an isomorphic manner. We must be able to identify reality the minute we see the symbols arranged.

If we react to a Business Plan with incredulity ("It is too good to be true" or "some of the assumptions are non realistic") - then this condition is not met and the Business Plan is a failure.

(2) That it rearranges old, familiar data into new, emergent, patterns.

The symbol manipulation must bring to the world some contribution to the sphere of knowledge (very much as a doctoral dissertation should).

When faced with a Business Plan, for instance, we must respond with a modicum of awe and fascination ("That's right ! - I never thought of it" or "(arranged) This way it makes sense").

(3) That all the symbols are internally consistent. The demand of external consistency (compatibility with the real world, a realistic representation system) was stipulated above. This is a different one : all symbols must live in peace with one another, the system must be coherent.

In the example of the Business Plan :

Reactions such as : "This assumption / number/ projection defies or contradicts the other" indicate the lack of internal consistency and the certain failure to obtain money (=to manipulate the corresponding
symbols).

(4) Another demand is transparency : all the information should be available at any given time. When the symbol system is opaque - when data are missing, or, worse, hidden - the manipulation will fail.

In our example : if the applicant refuses to denude himself, to expose his most intimate parts, his vulnerabilities as well as his strong points - then he is not likely to get financing. The accounting system in Macedonia - albeit gradually revised - is a prime example of concealment in a placewhere exposition should have prevailed.

(5) The fifth requirement is universality. Symbol systems are species of languages. The language should be understood by all - in an unambiguous manner. A common terminology, a dictionary, should be
available to both manipulator and manipulated.

Clear signs of the failure of a Business Plan to manipulate would be remarks like : "Why is he using this strange method for calculation?""Why did he fail to calculate the cost of financing ?" and even :
"What does this term mean and what does he mean by using it ?"

(6) The symbol system must be comprehensive. It cannot exclude certain symbols arbitrarily. It cannot ignore the existence of competing meanings, double entendres, ambiguities. It must engulf all possible interpretations and absolutely ALL the symbols available to the system.

Let us return to the Business Plan :

A Business Plan must incorporate all the data available - and all the known techniques to process them. It can safely establish a hierarchy of priorities and of preferences - but it must present all the possibilities and only then make a selection while giving good reasons for doing so.

(7) The symbol system must have links to other, relevant, symbol systems.
These links can be both formal and informal (implied, by way of mental association, or by way of explicit reference or incorporation).

Coming back to the Business Plan :

There is no point in devising a Business Plan which will ignore geopolitical macro-economic and marketing contexts. Is the region safe for investments?

What are the prevailing laws and regulations in the territory and how likely are they to be changed ? What is the competition and how can it be neutralized or co - opted ? These are all external variables, external
symbol systems. Some of them are closely and formally linked to the business at hand (Laws, customs tariffs, taxes, for instance). Some are informally linked to it : substitute products, emerging technologies, ethical and environmental considerations. The Business Plan is supposed to resonate within the mind of the reader and to elicit the reaction : "How very true !!!"

(8) The symbol system must have a discernible hierarchy. There are - and have been - efforts to invent and to use non-hierarchical symbol systems. They all failed and resulted in the establishment of a formal, or an informal, hierarchy. The professional term is "Utility Functions". This is not a theoretical demand. Utility functions dictate most of the investment decisions in today's complex financial markets.

The author(s) of the Business Plan must clearly state what he wants and what he wants most, what is an absolute sine qua non and what would be nice to have. He must fix and detail his preferences, priorities, needs and requirements. If he were to attach equal weight to all the parts of the Business Plan, his message will confuse those who are trying to decode it and they will deny his application.

(9) The symbol system must be seen to serve a (useful) purpose and it must demonstrate an effort at being successful. It must, therefore, be direct, understandable, clear and it must contain lists of demands
and wishes (all of them prioritized, as we have mentioned).

When a computer faces a few tasks simultaneously - it prioritizes them and allocates its resources in strict compliance with this list of priorities.
 

A computer is the physical embodiment of a symbol system - and so is a bank doling out credit. The same principles apply to the human organism.

All natural (and most human) systems are goal-oriented.

(10) The last - but by no means the least - requirement is that the symbol system must be interfaced with human beings. There is not much point in a having a computer without a screen, or a bank without clients, or a Business Plan without someone to review it. We must always - when manipulating symbol systems - bear in mind the "end user" and be "user friendly" to him. There is no such thing as a bank, a firm, or even a country. At the end of the line, there are humans, like me and you.

To manipulate them into providing credits, we must motivate them into doing so. We must appeal to their emotions and senses : our symbol system (=presentation, Business Plan) must be aesthetic, powerful,
convincing, appealing, resonating, fascinating, interesting. All these are irrational (or, at least, non-cognitive) reactions.

We must appeal to their cognition. Our symbol system must be rational, logical, hierarchical, not far fetched, true, consistent, internally and externally. All this must lead to motor motivation : the hand that signs the check given to us should not shake.

THE PROBLEM, THEREFORE, IS NOT WHERE TO GO, NOT EVEN WHEN TO GO IN ORDER TO OBTAIN CREDITS.

THE ISSUE IS HOW TO COMMUNICATE (=to manipulate symbols) IN ORDER TO MOTIVATE.

Using this theory of the manipulation of symbols we can differentiate three kinds of financing organizations :

(1) Those who deal with non-quantifiable symbols. The World Bank, for one, when it evaluates business propositions, employs criteriawhich cannot be quantified (how does one quantify the contribution
to regional stability or the increase in democracy and the improvement in human rights records ?)

(2) Those who deal with semi-quantifiable symbols. Organizations such as the IFC or the EBRD employ sound - quantitative - business and financial criteria in their decision making processes. But were they totally business oriented, they would probably not have made many of the investments that they are making and in the geographical parts of the world that they are making them.

(3) And there are those classical financing organizations which deal exclusively with quantifiable, measurable variables. Most of us come across this type of financing institutions : commercial banks, private firms, etc.

Whatever the kind of financial institution, we must never forget :

We are dealing with humans who are influenced mostly by the manipulation of symbol systems. Abiding by the aforementioned rules would guarantee success in obtaining funding. Making the right decision on the national level - would catapult Macedonia into the 21st century without having first to re-visit the twentieth.