I highlight and take notes when I read nonfiction books. Once I finish a book, I format and edit my notes so that I can easily remind myself of what I learned without having to reread the book. These notes are not a substitute for reading the book, they only serve as a reminder of key concepts.
The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble. — RALPH WALDO EMERSON
If you put the same amount of time and energy you’d spend completing an MBA into doing good work and improving your skills, you’ll do just as well.
Whoever best describes the problem is the one most likely to solve it. — DAN ROAM, AUTHOR OF THE BACK OF THE NAPKIN
What you need is a latticework of mental models in your head. And, with that system, things gradually fit together in a way that enhances cognition.
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.
At the core, every business is a collection of processes that can be reliably repeated to produce a particular result. By understanding the essentials of how complex systems work, it’s possible to find ways to improve existing systems, whether you’re dealing with a marketing campaign or an automotive assembly line.
There is a difference between (A) what an MBA does to help you prove your abilities to others and (B) what getting an MBA actually does to improve your abilities. They are two different things. — SCOTT BERKUN, AUTHOR OF MAKING THINGS HAPPEN AND THE MYTHS OF INNOVATION
College: two hundred people reading the same book. An obvious mistake. Two hundred people can read two hundred books. — JOHN CAGE, SELF-TAUGHT WRITER AND COMPOSER
3 problems about MBA programs:
- Often times not worth the cost.
- Too much theory, not enough real world problems.
- MBA programs don’t guarantee high paying jobs.
Business schools don’t create successful people. They simply accept them, then take credit for their success.
Business school is a big risk. Should you choose to enroll, the only certainty is that you will shell out about $125,000. Such a figure correlates to a $1,500/month non-deductible loan repayment and a ten-year period of time in which you will not be able to save a red cent.
According to Pfeffer and Fong’s study, it doesn’t matter if you graduate at the top of your class with a perfect 4.0 or at the bottom with a barely passing grade — getting an MBA has zero correlation with long-term career success. None.
The quickest and easiest way to screw up your life is to take on too much debt.
Financial stress can destroy relationships, threaten your health, and jeopardize your sanity.
When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles — generally three to twelve of them — that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles. — JOHN T. REED, REAL ESTATE INVESTMENT EXPERT AND AUTHOR OF SUCCEEDING
Your job as a businessperson is to identify things that people don’t have enough of, then find a way to provide them.
Some businesses thrive by providing a little value to many, and others focus on providing a lot of value to only a few people.
So often people are working hard at the wrong thing. Working on the right thing is probably more important than working hard. — CATERINA FAKE, FOUNDER OF FLICKR.COM AND HUNCH.COM
10 ways to evaluate a potential market for a new business. Rate on scale of 0–10. Sum of 75+ is potential for an idea.
- Market size
- Pricing potential
- Cost of customer acquisition
- Cost of value delivery
- Uniqueness of Offer
- Speed to market
- Up-front investment
- Upsell potential
- Evergreen potential
The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time. — HENRY FORD, FOUNDER OF THE FORD MOTOR COMPANY AND ASSEMBLY-LINE PIONEER
When any two markets are equally attractive in other respects, you’re better off choosing to enter the one with competition. Here’s why: it means you know from the start there’s a market of paying customers for this idea, eliminating your biggest risk.
Some ideas don’t have enough of a market behind them to support a business, and that’s perfectly okay. That doesn’t mean you should ignore them: side projects can help you expand your knowledge, improve your skills, and experiment with new methods and techniques.
Don’t be shy about showing potential customers your work in progress.
Nobody — no matter how smart or talented they are — gets it right the first time.
Pick three key attributes or features, get those things very, very right, and then forget about everything else… By focusing on only a few core features in the first version, you are forced to find the true essence and value of the product. — PAUL BUCHHEIT, CREATOR OF GMAIL AND GOOGLE ADSENSE
Any engineer that doesn’t need to wash his hands at least three times a day is a failure. — SHOICHIRO TOYODA, FORMER CHAIRMAN OF THE TOYOTA MOTOR CORPORATION
People don’t buy quarter-inch drills; they buy quarter-inch holes. — THEODORE LEVITT, ECONOMIST AND FORMER PROFESSOR AT HARVARD BUSINESS SCHOOL
Most drivers don’t buy expensive off-road-capable vehicles because they actually drive off the road. They buy them because off-road capability makes them feel adventurous and bold, capable of meeting any driving challenge.
Believe it or not, it’s often wise to turn away paying customers. Not every customer is a good customer: customers who require more time, energy, attention, or risk than they’re worth to your bottom line aren’t worth attracting in the first place.
Your job as a marketer 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.
Raising your prices can increase demand by appealing to a more attractive type of customer.
The best salespeople are the ones who can listen intently for the things the customer really wants.
If you discover why, how, and how much your offer will benefit the customer, you’ll be able to explain that value in terms they’ll understand and appreciate. Understanding the value you can provide your customers is the golden path to a profitable sale.
Present yourself to the prospect as an “assistant buyer.” Your job is not to sell the prospect a bill of goods: it’s to help them make an informed decision about what’s best for them.
Accepting this small offer creates a psychological need to Reciprocate, subtly stacking the deck in the salesman’s favor. Prospective car buyers who accepted this free offer were far more likely to purchase a vehicle, add optional accessories, and agree to less attractive financing terms. As a result, these customers spent thousands of dollars more than the people who did not accept anything from the salesman while negotiating. That doesn’t make rational sense, because the coffee or cookies cost the dealer very little, but Reciprocation makes it more likely that the buyer will “pay back” the favor with a much larger concession.
Colloquially, this approach is sometimes called the “take the puppy home” strategy. If you visit a pet store and meet an adorable puppy, but you’re not sure whether or not you’re ready to commit, the pet store will tell you to take the puppy home on a trial basis. “If it doesn’t work out,” the salesman says, “you can always bring it back.”
Do whatever you can do to provide something that unexpectedly delights your customers.
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.
Accounting is the process of ensuring the data you use to make financial decisions is as complete and accurate as possible.
The Cash Flow Statement is straightforward: it’s an examination of a company’s bank account over a certain period of time.
The Income Statement contains an estimate of the business’s Profit over a certain period of time, once revenue is matched with the related expenses.
A Balance Sheet is a snapshot of what a business owns and what it owes at a particular moment in time. You can think of it as an estimate of the company’s net worth at the time the Balance Sheet was created.
Believe it or not, there are only four ways to increase your 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.
If you want to do good work, taking care of yourself isn’t optional. Nutrition, exercise, and rest are the inputs your body converts into productive energy. Poor (or too little) input inevitably reduces the quantity and quality of your output.
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 guarantee or similar Risk Reversal offer, and people will feel the decision is less risky, resulting in more sales.
Great management is boring — and often unrewarding. The hallmark of an effective manager is anticipating likely issues and resolving them in advance, before they become an issue.
Some of the best managers in the world look like they’re not doing much, but everything gets done on time and under budget.
The problem is, no one sees all of the bad things that the great manager prevents. Less skilled managers are actually more likely to be rewarded, since everyone can see them “making things happen” and “moving heaven and earth” to resolve issues — issues they may have created themselves via poor management.
Limit scarcity by:
- Limited Quantities
- Price Increases
- Price Decreases
It’s perfectly okay to change your Goals. Sometimes we think we want something, only to find out later that we don’t want it so much anymore. Don’t feel bad about that — it’s called learning.
The more people know your capabilities and respect the Reputation you’ve built, the more Power you will have.
Comparative Advantage also explains why diverse teams consistently outperform homogenous teams. Having a wide variety of team members with different skills and backgrounds is a major asset: it increases the probability that one of your teammates will know what to do in any given circumstance. If every team member has the same skills and the same background, it’s far more likely the team will get stuck or make a preventable error.
There’s a reason high-performing surgical teams, military units, and sports teams tend to be small and focused: too much time spent in communication and coordination can kill a team’s effectiveness.
Everyone has a fundamental need to feel Important. The more Important you make them feel, the more they’ll value their relationship with you.
People will be more receptive to any request if you give them a reason why. Any reason will do.
The most effective testimonials tend to follow this format: “I was interested in this offer, but skeptical. I decided to purchase anyway, and I’m very pleased with the end result.”
Dale Carnegie recommends “Giving others a great reputation to live up to.” He was a wise man — raise your expectations of others, and they’ll naturally do their best to satisfy those expectations.
Here’s the golden rule of hiring: the best predictor of future behavior is past performance.
Checking references at this point is a good use of time. Question should be simple: Would they work with the candidate again? If they hesitate or talk around the question, it’s a no. If you can’t reach a reference when you call, leave a message and ask them to contact you if the candidate is extraordinary. If they are, you’ll receive a return call. If they aren’t, you won’t.
Finally, give promising candidates a short-turnaround project or scenario to see how they think, work, and communicate firsthand. Small projects tend to work best for skilled technical employees, while scenarios work best for candidates who will be responsible for product creation, marketing, sales, business development, finance, and management roles. The outcome of the assignment should be a deliverable of some kind: a report, a pitch, an asset, or a process.
If you want to build a system that works, the best approach is to build a simple system that meets the Environment’s current selection tests first, then improve it over time. Over time, you’ll build a complex system that works.
The more tightly coupled the processes in a system are, the more likely failures or delays will affect other parts of the system.
Self-education, whether it’s about business or anything else, is a never-ending process.
NOTE: Links to products in this post go through my Amazon affiliate account so if you use my links to buy something, a small percentage of that sale will go towards funding my book buying habit.