Thursday, December 6, 2007

1+1=3

My oldest son is a math wizard. Proud parent that I am, I posed the following equation: Scott, what’s one plus one? Two, dad, c’mon. Nope, sometimes it’s three. Remember the Jack Johnson tune, "Three is a magic number, yes it it, it's a magic number"?. You’re wrong, dad, and you’re nuts.

Nuts, yes. Wrong, no. Here’s why:

In business we practice musical, hopefully magical math, seeking scenarios where one plus one equals three (or more). Here are three examples:

  1. Solutions: The essence (or efficacy) of innovation is the combinatorial ability to merge two or more existing elements where the sum is greater than the parts. This added, or differential, value is the essence of your being. An example: Solar is an increasingly economically sensible and pragmatically desirable alternative energy source. Desalinization is the no-duh answer to the world’s potable water thirst, but the economics of conversion are cost-prohibitive. What if – this has gotta exist – a solar-powered desalination solution evolves? Simple math.
  2. Mergers: At last check, a majority of company consolidations fail. One plus one equals less than two. When contemplated (and when executed successfully), the proposition of merging two or more organizations makes sense: Value (the sum of the conslidation) is buoyed thanks to economies of scale, procurement economics, product/solution combos, industry leverage, and business development virtues. When it works, it's magic.
  3. Teams: My brother-in-law relayed (and I paraphrase) an apt analogy: If you’re going to run a marathon, it’s a lot harder to go it alone. Running a relay – teaming with others, be it managers, investors, advisors, or partners – is a heck of a lot easier, let alone efficacious. Think of the Advil you'll save too.
When 1+1=2, you’re playing with flash cards; the results are algorithmically predictable. When the sum of the parts is greater than the whole, the flip side of the card is yours to calculate.

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Post-script (1/10/08): My comrade Redwood chimes in with a fact-loaded and metric-filled post about Affordable Desalination, along with a read-my-mind (full disclosure: Wood and I explored this over a few beers in December) article about Photovoltaic Desalinization. There's a there there and the math computes. What's missing?

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