The difference between S-quadrant and B-quadrant businesses

December 14th, 2009 by admin Leave a reply »

Robert Kiyosaki wrote the Cashflow Quadrant and introduced the S and B quadrants of business in our vocabulary. They refer to the advice received from Poor Dad and Rich Dad on small traditional business and big cutting-edge businesses respectively. Having been on both sides, I feel fairly competent to explain the practical difference in operations and mindset between the two.

Straight off the bat, Kiyosaki says any organization with more than 500 people must necessarily be run using a system, making it a B-quadrant business . Otherwise it will crash and burn. The skill of the promoters lies in developing the system. And that’s why companies like KFC, Fedex, Walmart, Microsoft and Genpact (to name a few) run on systems and keep growing stronger. But systems need not always be conceived from scratch. Often they are bought.

Microsoft paid Hotmail several million to buy a mailing system. Google has recently acquired FeedBurner to own a blog syndication system and so on. At an individual level too, Kiyosaki says, we can buy systems using personal franchising. By doing so, all we need do to become B-quadrant entrepreneurs is change our thinking, for the system development aspect has been franchised. And thus the foundation is laid for a large business.

So what is this thinking?

The first thing B-quadrant entrepreneurs do is have concrete dreams. They know why they are in business. What they wish to achieve. What contribution they wish to make to society. What is their purpose larger than themselves. Of course they often build on these things progressively, but they do realize from the start that a ‘vision statement’ will be the cornerstone of their business. Otherwise, they will be operating in the S-quadrant all their lives.

Second, B-quadrant business owners are never excuse focused. They are dream focused. You will never have them offer you an excuse for things to go amiss. Which in turn, makes them great leaders. While S-quadrants ‘manage’ situations, B-quadrants lead the way through them. Leadership is a key B-quadrant attribute, which arises from being focused on the vision.

A third aspect of mindset is thinking ‘leverage’. While the S-quadrant will be gratified in being the expert and doing things oneself for his business, the B-quadrant will always seek the means to transfer business processes onto a system. This is well documented in the words of the world’s first billionaire, J Paul Ghetty, “I would rather a hundred people do one percent of the work that I do a hundred percent of it.” Henry Ford expressed a similar sentiment on the lines, “I don’t need to know how things are done. I need to know the people who know how things are done. I focus on ‘why’ they need to be done.”

Quite bluntly, Robert Kiyosaki says, “Poor people work, Rich people network.” And this is a fourth point. Whatever their business, B-quadrants network and associate with other B-quadrant people on a win-win basis. S-quadrants operate from a win-lose paradigm. Networking is about helping others to get what they want. Working is about getting others to what you want. Quite naturally therefore, the S-quadrant is competitive while the B-quadrant is collaborative. This is also because there are less than 10% of the world’s people in the B-quadrant and more than 90% of the world’s wealth is controlled by them.

And finally, as Kiyosaki says in the first chapter of his first book (Rich Dad Poor Dad), “The rich don’t work for money”. B-quadrants work to create assets and that makes money work for them. The S-quadrants can’t rest till they get paid for their effort; and thus stay poor.

So if you want to migrate from S-quadrant to B-quadrant thinking, look up an online business opportunity here. The operating systems will be privately franchised and you’ll be taught how to acquire the mindset using an internet based training system . More here



  1. John Barbour says:

    What if your business is a service business? For example: Competing with the big guys in shipping by specializing in moving one thing and in one region of the country. In this case it is moving copiers in the mid-west.

  2. admin says:

    Really appreciate your question John. If you move copiers in the mid-west, you could be either operating the trucks OR you could be operating a set of systems that do the marketing, handle the finance, work with vendors and operate the trucks.

    If YOU are the systems, you’re S-quadrant … else you would be B-quadrant, which is scalable and modular. Do read the book.

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