"The Personal MBA" by Josh Kaufman

• One of the beautiful things about learning any subject is the fact that you don't need to know everything--you only need to understand a few critically important concepts that provide most of the value. Once you have a solid scaffold of core principles to work from, building upon your knowledge and making progress becomes much faster.
• Knowing what’s critically important in every business is the first step in making good business decisions. The more you know about the essential questions to ask in your current situation, the more quickly you’ll be able to find the answer you need to move forward.
• Large companies move slowly.
• Climbing the corporate ladder is an obstacle to doing great work.
• Frustration leads to burnout.
• Every successful business (1) creates or provides something of value that (2) other people want or need (3) at a price they’re willing to pay, in a way that (4) satisfies the purchaser's needs and expectations and (5) provides the business sufficient revenue to make it worthwhile for the owners to continue operation.
• Value can’t be created without understanding what people want (market research).
• Every business is created by people and survives by benefiting other people in some way.
• Skip business school. Educate yourself.
• Business schools don’t create successful people. They simply accept them, then take credit for their success.
• The on significant benefit that business schools do provide is better access to Fortune 50 recruiters, consulting firms, large accounting firms, and investment banks via on-campus recruiting and alumni networks.
• I can’t emphasize this enough: the quickest and easiest way to screw up your life is to take on too much debt.
• The primary reason people spend decades working in jobs they despise is to pay off their creditors.
• Many business resources (and all business schools) conflate management and leadership skills with business skills; they’re not the same thing.
• Repetition inevitably leads to mastery, and the better you internalize these concepts, the more you’ll improve your results.
• Every successful business creates something of value.
• The best businesses in the world are the ones that create the most value for other people.
• Roughly defined, a business is a repeatable process that:
• Creates and delivers something of value…
• That other people want or need…
• At a price they’re willing to pay…
• In a way that satisfies the customer’s needs and expectations…
• So that the business brings in enough profit to make it worthwhile for the owners to continue operation.
• At the core, every business is fundamentally a collection of five interdependent processes, each of which flows into the next:
• Value creation. Discovering what people need or want, then creating it.
• Marketing. Attracting attention and building demand for what you’ve created.
• Sales. Turning prospective customers into paying customers.
• Value delivery. Giving your customers what you’re promised and ensuring that they are satisfied.
• Finance. Bringing in enough money to keep going and make your effort worthwhile.
• Business is not (and has never been) rocket science--it’s simple a process of identifying a problem and finding a way to solve it that benefits both parties.
• The five parts of every business are the basis of the every good business idea and business plan.
• If you want to improve your value as a businessperson, focus on improving skills directly related to the five parts of every business.
• Without enough revenue to sustain it, any business will fail.
• Your revenue is completely dependent on people actually wanting what you have to offer.
• The iron law of the market is cold, hard, and unforgiving: if you don’t have a large group of people who really want what you have to offer, your chances of building a viable business are very slim.
• All human beings have four core human drives that have profound influence on our decisions and actions:
• The drive to acquire. The desire to obtain or collect physical objects, as well as immaterial qualities like status, power, and influence.
• The drive to bond. The desire to feel valued and loved by forming relationships with others, either platonic or romantic.
• The drive to learn. The desire to satisfy our curiosity.
• The drive to defend. The desire to protect ourselves ,our loved ones, and our property.
• The drive to feel. The desire for new sensory stimulus, intense emotional experiences, pleasure, excitement, entertainment, and anticipation.
• At the core, all successful business sell some combination of money, status, power, love, and knowledge, protection, pleasure, and excitement.
• The ten ways to evaluate a market provide a back-of-the-napkin method you can use to identify the attractiveness of any potential market.
• Urgency: How badly do people want or need this right now?
• Market size: How many people are actively purchasing things like this?
• Pricing potential: What is the highest price a typical purchaser would be willing to spend for a solution?
• Cost of customer acquisition: How easy is it to acquire a new customer? On average, how much will it cost to generate a sale, in both money and effort?
• Cost of value delivery: How much would it cost to create and deliver the value offered, both in money and effort?
• Uniqueness of offer: How unique is your offer versus competing offerings in the market, and how easy is it for potential competitors to copy you?
• Speed to market: How quickly can you create something to sell?
• Up-front investment--How much will you have to invest before you’re ready to sell?
• Up-sell potential: Are there related secondary offers that you could also present to purchasing customers?
• Evergreen potential: Once the initial offer has been created, how much additional work will you have to put into it in order to continue selling?
• The existence of a market means you're already on the right side of the iron law of the marker, so you can spend more time developing your offer instead of proving a market exists.
• Learn everything you can from your competition, and then create something even more valuable.
• Don’t start a business for the money alone. Here’s why: starting and running a business always takes more effort than you first expect.
• Pay very close attention to the things you find yourself coming back to over and over again.
• Building or finishing anything is mostly a matter of starting over and over again; don’t ignore what pulls you.
• Finding that market is mostly a matter of patience and active exploration.
• Changing the world is difficult if you can’t pay the bills.
• Economic value usually take son one of twelve standard forms:
• Product. Create a single tangible item or entity, then sell and deliver it for more than what it cost to make.
• Service. Provide help or assistance, then charge a fee for the benefits rendered.
• Shared resource. Create a benefit on an ongoing basis, and charge a recurring fee.
• Resale. Acquire an asset from a wholesaler, then sell that asset to a retail buyer at a higher price.
• Lease. Acquire an asset, then allow another person to use that asset for a predefined amount of time in exchange for a fee.
• Agency. Market and sell an asset or service you don’t own on behalf of a third party, then collect a percentage of the transaction price as a fee.
• Audience Aggregation. Get the attention of a group of people with certain characteristics, then sell access in the form of advertising to another business looking to reach that audience.
• Loan. Lend a certain amount of money, then collect payments over a predefined period of time equal to the original loan plus a predefined interest rate.
• Option. Offer the ability to take a predefined action for a fixed period of time in exchange for a fee.
• Insurance. Take on the risk of some specific bad things happening to the policy holder in exchange for a predefined series of payments, they pay out claims only when the bad thing actually happens.
• Capital. Purchase an ownership stake in a business, then collect a corresponding portion of the profit as a one-time payout or ongoing dividend.
• The higher the perceived value of your offering, the more you’ll be able to charge for it, which significantly improves your chances of succeeding.
• On their own, ideas are largely worthless--discovering whether or not you can actually make them work in reality is the most important job of any entrepreneur.
• When creating a new offering, your primary goal should be to work your way through each iteration cycles as quickly as possible. Iteration is a structured form of learning that helps you make your offering better; the faster you learn, the more quickly you’ll be able to improve. The faster you move through the iteration cycle, the better your offering will become.
• Getting useful feedback from your potential customers is the core of the iteration cycle. Useful feedback from real prospects helps you understand how well your offer meets their needs before development is complete, which allows you to make changes before you start selling.
• If no one seems to care about what you’ve created, you don't have a viable business idea.
• As a rule, people never accept trade-offs unless they’re forced to make a decision. If the perfect option existed, they’d buy it. Since there’s no such thing as the perfect offering, people are happy to settle for the next best alternative.
• Critically important assumptions are facts or characteristics that must be true in the real world for your business or offering to be successful.
• It’s much smarter to minimize your risk by testing your offering with real paying customers before you fully commit to making it real.
• Shadow testing is the process of selling an offering before it actually exists.
• As long as you’re completely upfront with your potential customers that the offering is still in development, shadow testing is a very useful strategy you can use to actually test your CIAs with real customers quickly and inexpensively.
• A minimum economically viable offer is an offer that promises and/or provides the smallest number of benefits necessary to produce an actual sale. A MEVO is essentially a prototype that’s been developed to the point that someone will actually pull out their wallet and commit to making a purchase.
• Using what you make everyday is the best way to improve the quality of what you’re offering. Nothing will help you find ways to make your offer better than being its most avid and demanding customer.
• Rule #1 of marketing is that your potential customers’ available attention is limited.
• The fastest way to be ignored by anyone is to start talking about something they don’t care about.
• If no one knows you exist, no one will buy what you have to sell.
• Being remarkable is the best way to attract attention.
• Attempting to appeal to everyone is a waste of time and money: focus your marketing efforts on you're probably purchaser.
• Marketing is most effective when it focuses on the desired end result, which is usually a distinctive experience or emotion related to a core human drive.
• The essence of effective marketing is discovering what people already want, then presenting your offer in a way that intersects with that preexisting desire.
• The best marketing is similar to education based selling: it shows the prospect how the offer will help them achieve what they desire. Your job as a marketers isn't to convince people to want what you’re offering: it’s to help your prospects convince themselves that what you’re offering will help them get what they really want.
• The most effective way to get people to want something is to encourage them to visualize what their life would be like once they’ve accepted your offer.
• A hook is a single phrase or sentence that describes an offer’s primary benefit.
• The most effective marketing messages give the recipient or prospect a single, very clear, very short action to take next.
• The best calls-to-action ask directly either for the sale or for permission to follow up.
• When you’re starting a new business, the object is to get to the point where you make your first profitable transaction as quickly as you possibly can, because that's the point where you transition from being a project to being a business.
• The best salespeople are the ones who can listen intently for the things the customer really wants.
• In every negotiation, there are three universal currencies: resources, time, and flexibility. Any one of these currencies can be traded for more or less of the others.
• As a rule of thumb: don’t give anyone unfettered control over decisions that directly affect your money.
• As a social force, reciprocation is one of the primary psychological tendencies that underlie human cooperation.
• Providing free value builds your social capital, making it more likely the people you benefit will reciprocate when you make an offer down the road.
• Your prospects know you’re not perfect, so don’t pretend to be. People actually get suspicious when something appears to be “too good to be true.”
• Instead of making them wonder, tell them yourself. By being upfront with your prospects regarding drawbacks and tradeoffs, you’ll enhance your trustworthiness and close more sales.
• Selling anything is largely the process of identifying and eliminating barriers to purchase: risks, unknowns, and concerns that prevent your prospects from buying what you offer.
• Your primary job as a salesperson is to identify and eliminate barriers standing in the way of completing the transaction. Eliminate your prospects objections and barriers, and you’ll close the dead.
• There are five standard objections that appear in sales of all kinds:
• It costs too much.
• It won’t work.
• It won’t work for ME.
• I can wait.
• It’s too difficult.
• Reactivation is typically quicker, simpler, and more effective approach to increasing revenue than attractive new customers.
• A customer’s perception of quality relies on two criteria: expectations and performance.
• Do whatever you can do to provide something that unexpectedly delight your customers.
• There are three primary factors that influence the predictability of an offer: uniformity, consistency, and reliability.
• Uniformity means delivering the same characteristics every time.
• Consistency means delivering the same value over time.
• Reliability means being able to count on delivery of the value without error or delay.
• Throughput is the rate at which a system achieves its desired goal.
• The best way to begin increasing throughput is to start measuring it.
• Combining duplication with automation allows you to deliver value to more people and close more sales as a result.
• Multiplication is duplication for an entire process or system.
• Scale is the ability to reliably duplicate or multiply a process as volume increases.
• If your goal is to create a business that doesn’t require your direct daily involvement, scalability should be a major consideration.
• Humans don’t scale.
• Some helpful or harmful behaviors and inputs tend to accumulate over time, producing huge results.
• The more time and energy you spend following your competition, the less time and energy you have to actually build your business.
• Don’t focus on competing--focus on delivering even more value. Your competition will take care of itself.
• Investing in force multipliers makes sense because you can get more done with the same amount of effort.
• As a general rule, the only good use of debt or outside capital in setting up a system is to give you access to force multipliers you would not be able to access any other way.
• Always choose the best tools that you can obtain and afford. Quality tools give you maximum output with a minimum of input.
• A system is a process made explicit and repeatable--a series of steps that has been formalized in some way.
• The primary benefit of creating a system is that you can examine the process and make improvements.
• If you can’t systematize your process, you can’t automate it.
• Finance is the art and science of watching the money flowing into and out of a business, then deciding how to allocate it and determining whether or not what you’re doing is producing the results you want.
• Business is not about what you make--it’s about what you keep.
• Profit margin is the difference between how much revenue you capture and how much you spend to capture it, expressed in percentage terms.
• When something is a “good deal,” customers tend to continue to patronize the business and spread the word to other potential customers.
• As long as you’re bringing in enough to keep doing what you’re doing, there’s no need to fight for every last penny.
• Dollars aren’t an end in themselves: money is a tool, and the usefulness of that tool depends on what you intend to do with it.
• Believe it or not, there are only four ways to increase our business’s revenue:
• Increase the number of customers you serve.
• Increase the average size of each transaction by selling more.
• Increase the frequency of transactions per customer.
• Raise your prices.
• Remember the lesson of qualification: not every customer is a good customer.
• Always focus the majority of your efforts on serving your ideal customers.
• Imagine doubling your current prices. If you’d lose less than half of your customers, it’s probably a good idea.
• Pricing power is related to a concept economists call “price elasticity.” If customers are very sensitive to the price of your offer, you'll lose many customers with even a slight increase in price, meaning demand is “elastic.” If your customers aren’t price sensitive, you could quadruple the price with little change in sales.
• Lifetime value is the total value of a customer's business over the lifetime of their relationship with your company. The more a customer purchases from you and the longer they stay with you, the more valuable that customer is to your business.
• Once you understand the lifetime value of a prospect, you can calculate the maximum amount of time and resources you’re willing to spend to acquire a new prospect.
• Overhead represents the minimum ongoing resources required for a business to continue operation.
• Overhead is critically important if you are building your company on a fixed amount of capital.
• The slower the burn [rate], the more time you have to create a successful business.
• The lower your overhead, the more flexibility you’ll have and the easier it will be to sustain your business operations indefinitely.
• Fixed costs are incurred no matter how much value you create.
• Variable costs are directly related to how much value you create.
• Reductions in fixed costs accumulate; reductions in variable costs are amplified by volume.
• The better you understand your costs, the more likely you are to find ways of producing as much value as possible without spending everything you make.
• Saving money doesn’t help you if you degrade the quality of your offer.
• Creating and delivering more value is a much better way to to enhance your bottom line.
• Break-even is the point where your business’s total revenue exceeds its total expenses--it’s the point where you business starts creating wealth instead of consuming it.
• Amortization is the process of spreading the costs of a resource investment over the estimated useful life of that investment.
• Amortization can help you determine whether or not a big expense is a good idea.
• IOU’s don’t pay the bills--if you can’t pay your employees or keep the lights on, you’re done.
• Purchasing power is the sum total of all liquid assets a business has at its disposal.
• Keeping track of your available purchasing power makes it much easier to run a business.
• Receivables are promises of payment you’ve accepted from others.
• Ideally, try to get paid immediately, even before buying raw materials and delivering value.
• It’s best to avoid using debt or lines of credit if you don’t absolutely need to, but increasing available credit certainly increases your purchasing power.
• The more purchasing power you have, the more resilient your business is and the better your ability to handle the unexpected.
• Opportunity cost is the value you’re giving up by making a decision.
• Opportunity cost is important because it’s hidden.
• Don’t get bogged down with all of the options available--consider only what appear to be the best alternatives at the time of your decision.
• A dollar today is worth more than a dollar tomorrow. How much more depends on what you chose to do with that dollar.
• Calculating the time value of money is a way of making decisions in the face of opportunity costs.
• I recommend picking up The McGraw Hill 36-Hour Course in Finance for Nonfinancial Managers by Robert A. Cooke.
• Compounding is important because it creates the possibility of huge gains in surprisingly short periods of time.
• Compounding is the secret that explains how small companies that reinvest their profits become large companies in a few short years.
• Leverage is the practice of using borrowed money to magnify potential gains.
• Leverage is a form of financial amplification--it magnifies the potential for both gains and losses.
• Never use leverage unless you’re fully aware of the consequences and are prepared to accept them.
• Funding is the business equivalent of rocket fuel. If your business needs additional capacity and is already pointed in the right direction, judicious use of financing can help you accelerate the operations growth.
• Personal cash is by far the best form of financing. Investing cash you already own is quick, easy, and requires no approval or paperwork.
• Angel capital is where we shift from loans to capital. An “angel” is an individual private investor--someone who has excess wealth they'd like to invest in a private business, typically $10,000 to $1 million. In exchange, they’ll own 1 to 10 percent of the business.
• Venture capital takes over where angels leave off. Venture Capitalists are extremely wealthy investors with very large sums of capital available: tens (or hundreds) of millions of dollars in a single investment. Funding via venture capital happens in “rounds” that start small, then grow as more capital is needed. Later rounds can dilute the ownership percentage of current shareholders, so they're typically a great deal of negotiation involved. VCs also require large amount of control in exchange for large amounts of capital, which usually means seats on the company’s board of directors.
• A public stock offering involves selling partial ownership of the company to investors on the open market. This is typically down via investment banks: companies that will provide a business with enormous amounts of capital in exchange for the shares of that company to sell on the public stock market.
• Whoever owns the most shares in the company controls it, so “going public” creates the risk of a hostile takeover: the mass purchasing of shares in an effort to control the company.
• Public stock offerings enable investors to sell their shares in exchange for money, so it’s common for angels and VCs to push successful companies to “go public” or be acquired by another company as quickly as possible in order to “cash out” of the investment.
• The more people you’re required to consult with before making decisions, the slower your company will operate.
• Investors increased communication overhead, which can adversely affect your ability to get things done quickly.
• It’s also not uncommon for investors to remove executives of a company that’s not performing well, even if those executives are the founders of the company.
• Bootstrapping is the art of building and operating a business without funding.
• Bootstrapping allows you to grow your business while maintaining 100 percent control over the business's operations.
• For best results, bootstrap as far as you can go, then move up the hierarchy of funding only as needed.
• Return on investment (ROI) is the value created from an investment of time or resources.
• Sunk costs are investments of time, energy, and money that can’t be recovered once they've been made. No matter what you do, you can’t get those resources back.
• Making mistakes is inevitable: no one is perfect.
• If the reward isn't’ worth the investment required to obtain it or the risk, don’t invest.
• Business are built by people for people.
• Your brain and body simply aren’t optimized for the modern world.
• Taking care of yourself should be your primary concern if you want to get important things done without burning out.
• Even low intensity physical activity increases energy, improves mental performance, and enhances your ability to focus.
• Going to bed early helps you get up early, which is very useful if you do creative work.
• One of the best things you can do to get more done is to dissociate yourself from the voice in your head.
• Living organisms--including human beings--are essentially very complex perceptual control systems: we act in ways to keep our perception of the world within acceptable boundaries.
• There are three kinds of reference levels: set points, ranges, and errors. A set point is a minimum or maximum value. A range is a spread of acceptable values. An error is a set point defined as zero--any perception that’s not zero is out of control.
• If you want to change a behavior, you must either change the system’s reference level or change the environment in which the system is operation.
• Here’s a universal truth of human nature: people are generally lazy. The critical insight is that being lazy is a feature, not a bug.
• If you want to successfully change a behavior, don't’ try to change the behavior directly. Change the structure that influences or supports the behavior, and the behavior will change automatically.
• Change the structure of your environment, and your behavior will change automatically.
• Our brains are natural pattern matching machines. The brain is constantly busy trying to find patterns in what we perceive, then associating new patterns with outer patterns that are stored in memory.
• Every time we recall something, the memory is saved in a different location, with a twist: the new memory will include any alterations we’ve made to it.
• It’s possible to change your beliefs and mental simulations consciously by recalling and actively reinterpreting past events.
• Process to reinterpret past events in a simple and useful way:
• Identify the undesirable pattern.
• Name the underlying belief.
• Identify the source of the belief in memory, including as much sensory detail as possible.
• Describe possible alternate interpretations of the memory.
• Realize that your original belief is an interpretation, not reality.
• Consciously choose to reject the original belief as “false.”
• Consciously choose to accept your reinterpretation as “true.”
• Our reserves of willpower are very limited and become depleted with use.
• Save your willpower: focus on using it to change your environment, and you’ll have more available to use whenever inhibition is necessary.
• Loss aversion is the idea that people hate to lose things more than they like to gain them. People respond twice as strongly to potential loss as they do to the opportunity of an equivalent gain.
• Eliminate this perception of risk by offering a money-back guaranteed or similar risk reversal offer, and people will feel the decision is less risky, resulting in more sales.
• If you’re ever in the unfortunate situations of having to lay off workers, it's best to do it quickly, cleanly, and all at once.
• The mind gets overwhelmed, so it starts simplifying reality to compensate.
• Because the brain is a pattern matching machine, it’s constantly trying to figure out what’s associated with what. As a result, your mind effortlessly forms associations--even between things that aren’t logically connected.
• Absence blindness is a cognitive bias that prevents us from identifying what we can’t observe. Our perceptual faculties evolved to detect objects that are present in the environment. It’s far more difficult for people to notice or identify what’s missing.
• Make a note to remind yourself to handsomely reward the low-drama manager who quietly and effectively gets things done.
• Always state benefits in positive, immediate, concrete, and specific terms by focusing on things the user can directly experience.
• Framing is a way to control the perception of contrast.
• Scarcity encourages people to make decisions quickly.
• Novelty--the presence of new sensory data--is critical of you want to attract and maintain attention over a long period of time.
• Ideally, you want to focus the full powers of your energy and attention on a single subject at a time.
• Eliminate potential distractions and interruptions.
• Depending on the level of cognitive activity required to complete your work, it's all take ten to thirty minutes before your mind becomes absorbed in what you’re doing.
• Every time you switch the focus of your attention from one subject to another, you incur the cognitive switching penalty.
• There are really only four ways to “do” something: completion, deletion, delegation, and deferment.
• Habits are easier to install if you look for triggers that signal when it’s time to act.
• It’s possible to extract most of the useful content in almost any nonfiction book in less than twenty minutes.
• No decisions, large or small, is ever made with complete information.
• Don’t feel you need to have all of the information before you decide--the world is too complicated to make accurate predictions.
• Collect just enough information to make an informed decision, then make your decision and move forward.
• Focus only on the action you need to take next to move toward your goal.
• Asking yourself good questions helps you discover good answers. Make it a habit to constantly ask yourself good questions, and you’ll be surprised how easy it is to overcome the challenges you face.
• Counterfactual--”what if”--questions allow you to directly access your brains simulation capabilities. You can think of counterfactual simulation as applied imagination--you’re consciously posing a “what if” or “what would happen if” question to your mind, then sitting back and letting your brain do what it does best
• When you run a counterfactual simulation, you assume the event or end state you’re simulations is already true. By supplying your mind with an artificial destination, it will automatically start to fill in the blanks between point A and point B.
• Assume each task will take no more than ten minutes to complete, then begin.
• The more incompetent a person is, the less they realize they’re incompetent. The more a person actually knows, the better they are to doubt their capabilities until they have enough experience to know they’ve master the subject.
• Paradoxically, one of the best ways to figure out whether or not you’re right is to actively look for information that proves you're wrong.
• The more strongly held the opinion or belief, the more we ignore sources of information the challenge that position.
• The best way to counteract confirmation bias is to intentionally seek out source of information that challenge your current hypothesis or belief.
• All human relationships are based on power-the ability to influence the actions of other people.
• The use of power typically takes one of two fundamental forms: influence or compulsion. Influence is the ability to encourage someone else to want what you suggest. Compulsion is the ability to force someone else to do what you command.
• The best way to increase your power is to do the things that increase your influence and reputation. The more people know your capabilities and respect the reputation you’ve built, the more power you will have.
• Communication overhead is the proportion of time you spend communicating with members of your team instead of getting productive work done.
• Focus on what you can do well, and work with others to accomplish the rest.
• The solution to communication overhead is simple but not easy: make your team as small as possible.
• Studies of effective teamwork usually recommend working in groups of three to eight people.
• Everyone has a fundamental need to feel important.
• If you want to make others feel important and safe around you, always remember to treat people with appreciation, courtesy, and respect.
• Humans are predisposed to look for behavioral causes. People will be more receipt veto any request if you give them a reason why. Any reason will do.
• Never tell people how to do things. Tell them what to do, and they will surprise you with their ingenuity.
• Commander’s intent is a much better method of delegation tasks: whenever you assign a task to someone, tell them why it must be done. The more your agent understand the purpose behind your actions, the better they’ll be able to respond appropriately when the situation changes.
• When you communicate the intent behind your plans, you allow the people you work with to intelligently respond to changes as they happen.
• The best way to eliminate bystander apathy in project management is to ensure that all tasks have single, clear owners and deadlines. Unless every individual on your team knows exactly what they are responsible for and when it must be done, it’s very unlikely that they’ll actually do it.
• When delegation responsibilities, always assign tasks to a single owner with a clear deadline. Only then will people feel responsible for getting things done.
• People are consistently and uniformly horrendous at planning.
• Most plans drastically underestimate the amount of slack necessary to make the plan accurate. If you’re responsible for complete a complex project, including a few months of slack time is appropriate--unexpected delays, vacation, sicknesses, and other unforeseen events are likely to make things take longer than expected.
• The value of planning is in mental simulation: the thought process required to create the plan itself.
• Given the choice, people always prefer to interact with people they know and like. Referrals make it far easier for people to decide to work with someone they don’t know.
• Over time, you become more and more like those whom you spend time with, and less like people in other groups.
• The values and behaviors of the people you interact with on a daily basis exert constant pressures on you to adopt the same values and behaviors.
• Breaking away from groups that aren’t serving you is painful but necessary to grow.
• People have an inherent tendency to comply with authority figures. As a result, when an authority figure asks us to do something, we're very likely to comply--even if the request isn’t appropriate or doesn’t make sense.
• Authority figures are automatically and strongly persuasive. In the presence of an authority figure, people will do things they’d otherwise view as reprehensible, or wouldn’t consider in the first place--the source of many a s scandal involving famous and powerful people.
• Individuals tend to rise to the level of other people’s expectations of them.
• Focus on options, not issues, and you’ll be able to handle any situation life throws at you.
• Based on what we’ve learned thus far, here are six simple principles of effective real-world management:
• Recruit the smallest group of people who can accomplish what must be done quickly and with high quality.
• Clearly communicate the desired end results, who is responsible for what, and the current status.
• Treat people with respect.
• Create an environment where everyone can be as productive as possible, then let people do their work.
• Refrain from having unrealistic expectations regarding certainty and prediction.
• Measure to see if what you’re doing is working--if not, try another approach.
• Small, elite teams are best.
• All complex systems that work evolved from simpler systems that worked.
• The only thing you can do about change is increase your flexibility to handle a wide variety of different circumstances. The more flexibility you are, the more resilient you’ll be when things inevitably change.
• Changing some aspect of a complex system always introduces second order effects, some of which may be antithetical to the original intent of the change.
• The larger and more complex the system, the higher the likelihood that something will eventually go very, very wrong.
• To analyze a system, deconstruct complex systems into subsystems that are easier to understand, then build your understanding of the system from the ground up.
• Measuring something is the first step to improving it.
• What gets measured gets managed.
• Key performance indicators (KPIs) are measurements of the critical parts of a system.
• Measurements that don’t help you make improvements to your system are worse than worthless: they’re a waste of your limited attention and energy.
• Typically, business-related KPIs are directly related to either the five parts of every business or throughput.
• Garbage in, garbage out is a straightforward principle: put useless input into a system, and you'll get useless output.
• Sampling is the process of taking at random a small percentage of the total output, then using it as a proxy for the winter system.
• Beware of misleading measurements based on small sample sizes.
• When it comes to analytical confidence, more data is always better--collect the largest samples you can.
• Correlation is not causation. Even if you notice that one measurement is highly associated with another, that does not prove that one thing caused the other.
• Norms are measures that use historical data as a tool to provide context for current measurements.
• Deconstruction is the process of separating complex system into the smallest possible subsystems in order to understand how things work. Instead of trying to understand the system all at once, you break up the system into parts, then work on understanding the subsystems and how they interact with one another.
• Creating and improving system is the threat to successful business practice.
• For best results, focus on the critical inputs that produce the most of the results you want.
• All good things are subject to diminishing returns--after a certain point, having more of something can actually be detrimental.
• So many people get wrapped up in making the perfect decision that they wind up overwhelming himself and doing nothing. Focus on doing a few simple things that will produce most of the results you’re looking for, then call it a day.
• Removing small amounts of Friction consistently over time accumulates large improvements in both quality and efficiency.
• Here’s the paradox of automation: the more efficient the automated system, the more crucial the contribution of the human operators of that system. When an error happens, operators need to identify and fix the situation quickly or shut the system down--otherwise, the automated system will continue to multiply the error.
• Create standard operating procedures for important recurring tasks, and you’ll see your productivity skyrocket.
• Want to make sure an important task is done correctly every single time? Create a checklist.
• Once the checklist has been created, it’s easier to see how to improve or automate the system.
• Even simple processes can benefit from systematization and the use of checklists.
• Checklisting can produce major improvements in your ability to do quality work, as well as your ability to delegate work effectively.
• For best results, create explicit checklists for the five parts of your business, then make sure they're followed every single time.
• Sometimes the best way to impose a system is to stop doing so much.
• Cessation takes guts. It's often unpopular or unpalatable to do nothing, even if doing nothing is actually the right solution.
• Resilience is a massively underrated quality in business. Having the toughness and flexibility to handle anything life throws at your is a major asset that can save your skin--literally and metaphorically. Your ability to adjust your strategy and tactics as conditions change can be the difference between survival and disaster.
• Preparing for the unexpected makes you more resilient.
• Here’s what make s a business resilient:
• low (preferably zero) outstanding debt
• low overhead, fixed costs, and operating expenses
• substantial cash reserves for unexpected contingencies
• multiple independent products/industries/lines of business
• flexible workers/employees who can handle many responsibilities well
• no single point of failure
• fail-safes/backup systems for all core processes
• In order to be effective, fail-safes must be developed before you need them. If you wait to develop backup systems until you need them, it’s too late to make a difference.
• The people who experience the most success in this world are the people who accept the uncertainty and fear as best they can, learn from their experiences, and keep trying new things.
• Constant experimentation is the only way you can identify what will actually produce the result you desire. Often, the best (or only) way to learn things is to jump in and try.
• All failures are temporary-what you learn in the process always helps you move forward.