1. What does “knowing business” mean?
2. How does “knowing the business” differ from “knowing business?”
3. How can a manager utilize these two types of knowledge to be a success?

Some people might argue about whether a quarterback or a wide receiver is more important to a football team. The rational answer is that both are important, and a football team would be handicapped if deprived of the services of either. In operating a business, success is more likely if those in control know business as well as know the business. It would be foolish to ask which type of knowledge is more important. Let’s look at these two types of knowledge. The phrase “knowing business” refers to an accumulated knowledge of basic procedures and attitudes that have proved useful in running any kind of business. A person who knows business understands accounting, the handling of personnel, marketing, cash flow, inventory control, and effective decision making. The phrase “knowing the business” refers to an accumulated knowledge of a particular field such as the automotive industry, oil, journalism, professional sports, processed foods, textiles, and transportation, to name a few. In the past, there have been champions of the idea that a good manager could be effective in any business. But the various waves of mergers and acquisitions have sometimes shown this idea to be less than universally applicable. Here is a fictional sketch to convey what has sometimes happened when managers branched out into new fields. Wavemaster Shipbuilding, Limited, acquired Hoffman-Torcell Publishing, Midwest Sports Network (MSN), and Fluffy-Lite Bread Bakery. Wavemaster executives, with eyes always on the bottom line, made drastic cuts in the operations at Fluffy-Lite, Hoffman-Torcell, and MSN. The cuts administered by executives who knew nothing of publishing, baking, or sports broadcasting crippled the newly acquired firms, and their fortunes sagged. Wavemaster eventually had to get rid of the three firms. Wavemaster ruined the firms because its decision makers knew nothing of the businesses in which the three firms operated. A different example would be the fabulous cook who opens a restaurant. Entrepreneurs need to know the business, but the cook of our story does not understand business. The food is so good and so inexpensive that the restaurant is filled for every meal. At such low prices, the business loses money on every meal. The cook needs someone who knows business. Knowing business and knowing the business—both kinds of knowledge must be present for a firm to be a success.