Created on Tuesday, 11 May 2010 15:08
Written by Alvin Tan Jye Yee
I do not consider myself to be an authority on how to make money. As with certain people, I am considerably driven by my social insecurities to attain a certain level of financial wealth.
To that end, I try to learn as much as possible and make radical sacrifices in life, even if I have nothing to show for it at the end of the day. However, just to provide this article with the tinge of credibility that it sorely needs, let us just say that I have made some really exciting returns in the stock market since I have been in it less than a year ago.
As a preamble, it is a settled principle that, in order for one to experience substantial financial growth, one must achieve self-sufficiency as quickly as practicable in the form of self-employment in a field where one is best adapted to succeed. It is an unsurprising fact that, in any company, the better employees are paid less than what they are actually worth (while the worse employees are paid more than they actually deserve).
Thus, to fully capture the value generated from one’s work, one has to place oneself in a position to reap all that one has sown, not in a position where one is constantly harassed by the need to “increase shareholder value” or “do what is best for the company”. Unless, of course, one owns shares in said company and has a real chance of affecting its value. The latter is an important consideration; why else would stock options fail to boost loyalty and work productivity?
In my opinion, although there are many paths to obscene financial success, most of them are similar in their essence. Generally, they all involve two main stages.
First, one has to develop a keen eye for growth opportunities. Then, one has to develop the ability to identify, acquire and effectively deploy the resources needed to exploit said opportunities.
The first stage more or less strikes one as being obvious in a that-goes-without-saying fashion. For the purposes of this article, however, “keen” and “opportunities” should have narrow, constrained meanings.
An “opportunity” refers to a specific state of affairs that is generally unnoticed. Or, even if noticed, is perceived by the vast majority of people to be uninteresting, unattractive or difficult to understand. Yet this state of affairs has great potential for creating value.
On the other hand, “keen” should be understood in juxtaposition to “speculative”. This simply means that one with a “keen eye” only professes interest and confidence in a perceived opportunity if one has sufficient reasons to do so – reasons that are strongly grounded in reality.
Just for illustration purposes, misguided school-going souls who believe that there lies a pot of gold at the culmination of medical, law or, worst of all, business school would not be considered people who have a “keen eye”. Similarly, people who think that they can disregard their studies on their way to making billions by starting a business and being their own bosses a la Steve Jobs or Larry Ellison belong to the same category.
As to whether a “keen eye” is inborn, I believe that it is not. Any person with sufficient exposure to targeted environments can acquire a “keen eye” over time through guidance and effort. The key is to isolate said targeted environments and allocate the necessary resources to accumulate as much useful information as possible upon immersing oneself in said environments.
In essence, the identification of opportunities is both a process and a result. Yet it really boils down to an academic exercise in seeing what others cannot see. The rule of thumb is that if at least one person from the general public thinks that something is an opportunity, it probably is not one.
The second stage, that one has to develop the ability to identify, acquire and effectively deploy the resources needed to exploit an opportunity, can be seen, on the whole, as execution upon identification of an opportunity. An opportunity merely holds locked-up potential if left untapped by any form of actual exploitation. For the purposes of this section, “resources” is defined to mean both hard (time, money, energy, etc.) and soft (strategies, tactics, paradigms, etc.) resources.
The first two tasks, the identification and acquisition of the relevant resources, should be seen as prerequisites that merely put one in a ready position to commence exploitation of the opportunity. In other words, assuming that the necessary resources are correctly identified and successfully acquired, one’s effectiveness at exploiting the opportunity is still largely undetermined.
The deployment of resources is invariably the limiting factor that restricts how much one is able to squeeze out of the opportunity. Intuitively, one would understand that value could only be increased by shifting resources from unproductive uses to productive uses, as what an entrepreneur would do by definition. The effective deployment of resources is, in fact, an activity of de-risking and crystallising the theoretical plans conceived for exploitation to the extent where surpluses are generated and beyond.
To end off on a cautionary note, while execution and implementation are immersing activities that can make one feel a bloated sense of achievement, the more important activity is to keep the big picture in mind. We should continuously assess – with the benefit of new information acquired throughout the execution process – if the plan devised to exploit the opportunity is the best plan and if the opportunity is even lucrative or existent in the first place.
Leadership is always more important and difficult than management, but it is indeed the best weapon to minimise waste and, yes, to generate wealth.About the Author:
Alvin Tan Jye Yee is the CEO and co-founder of Fezzl
.Related link: Becoming Financially Independent and Free