Seduced by the Dark Side: Taking Management Advice from Donald Rumsfeld

30 MAR 2010

by Doug Richard

What better way to start to start an article than by quoting a man I loathe?

“. . . as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.” — Donald Rumsfeld, February 12, 2002

The thing is. He’s right. Every critical undertaking, business or otherwise, involves a lot of unknowns. In fact, often what you don’t know about a business you are starting vastly exceeds what you do know. And, if you have to wait until you know everything before you throw open your doors, you will never open them.

This means you have to find fast, efficient ways to determine which questions you should be asking, which you must have answers to right away, and which you can put off until another time. For example, a man starting a construction company probably does need to know what kind of business structure protects him if one of his employees runs a dump trunk into a Ferrari. He might also need to know what kind of vehicle insurance he needs and what kind of license his driver needs. He might not need to know England’s national security plans in case of asteroid impact. While such plans surely exist, and while such an impact would surely effect his business, the last several thousand years of human history would seem to indicate that most constructions companies are not killed by asteroid attacks.

But how does a business owner address the “unknown unknowns”? Failure to address them often leads to getting blindsided by unexpected costs or the loss of important opportunities. A restauranteer who doesn’t know that he has to keep food above a certain temperature, or below a certain temperature, or he risks poisoning people is a restaurant owner who is likely to find himself out of business and possibly in court for negligence. Someone making rhinestone leashes had better know the largest pet trade shows in the UK. That’s where their buyers are.

Many would-be entrepreneurs understand the dangers of the unknown unknowns, they just don’t know what steps they can take to identify and deal with them.

Resolving the Unknown Unknowns

So, given that you are starting a new business, and given that you may not be an expert in either running a business or the industry you are entering, how do you identify and quantify the risk associated with the things you don’t know that you don’t know? Here are seven things to do:

  • Apprentice yourself to someone doing what you want to do. Want to be a record promoter? Go work with one. Want to build bridges? Work for a civil engineer. Apprenticeship, as opposed to going to school, delivers practical, hands-on, effective instruction in a trade you can take up to make a living. This is a great way for almost anyone who needs to earn as they learn to get the training they need.
  • Find experts. You may not know what corporate structures provide the best protection for magazine owners, filmmakers, car repair store fronts and wedding dress makers, but you can bet there’s a cost effective attorney in your area who does. Accountants, insurance agents, bankers . . . expertise is all around you. Develop relationships with these professionals to get answers to the questions you know you have to ask, and then ask them what other issues you should address. You may think you can’t afford to even talk to these people, but most will chat with you for an hour or two for little or nothing. That’s often as long as you need, especially if you make it appoint to talk to several overlapping experts in quick succession.
  • Contact regulators. The best way to find out about tax obligations is through the government. If your business is regulated or taxed by any government entity you can bet they have several booklets, pamphlets, websites and people that describe, clearly, what your obligations are and when they are incurred. A few phone calls, a few office visits and a few dozen hours on line is usually enough to gather the data you absolutely need to know.
  • Read books. Everything you need to know is written down somewhere. Every year thousands of new books are written and published by successful people in every industry. In many cases these books provide valuable case studies that can help you, regardless of the industry you are entering, pick up specific skills and insights you need to be successful. For example, it only takes one biography about Thomas Alva Edison to convince you of the value in registering your own patents and copyrights and in the benefits of work for hire agreements.
  • Find and read news feeds for your industry. Every business has dozens or hundreds of news organizations and trade organizations that cover it every day. If you are starting up a miniature golf park, there is a publication that covers it and reviews news related to it. Several months of reading that publication will introduce you to a wide array of dangers and opportunities you were never aware of before.
  • Find trade organizations and other industry networks with meetings and conferences to attend. Nothing beats mingling with insiders when it comes to hearing the raw truth about the opportunities and challenges a given industry affords. If you go to an international trade conference you can learn how to structure great deals with minimal financing. they will have seminars on that. Sometimes it may seem as if there’s no good reason to talk to the competition, but the truth is you have a great deal in common with your direct competitors and it is surprisingly easy to get them to share that information with you. And competition really is in the eye of the beholder. Do people who buy balls forgo buying dolls? No. They buy both. So even though you and someone else both make toys you may not be in competition.
  • Take classes. There are all kinds of short courses and classes you can take to get both broad overviews and in-depth training in every facet of every business. There are also seminars and events where you can hear those who have succeeded before you discuss their journey. You’ll be surprised just how different those who are successful in an industry think from those who are not. It is because they think differently that they are successful. Adopting their insights will help you understand and use their methods.

The process of uncovering unknown unknowns is life long and leads to great prosperity. Not only do you put yourself in a position that will allow you to seize great opportunity, but you often avoid fairly expensive disasters.

In fact, one of the reasons I so much enjoy Rumsfeld’s quote is that so he clearly understood that unknown unknowns are a terrible risk . . . and he demonstrated to so many the dangers associated with not addressing that risk before big decisions were made.

Looking to Know More?

School for Startups offers new courses and events every month. You can find them listed online at http://www.schoolforstartups.co.uk/events/. You can also follow us @s4startups and @s4stv.

  1. Nice post! Here’s one for ya… In a hierarchical organization, the higher the level, the greater the confusion.

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