The Personal MBA
The Personal MBA

The Personal MBA

Life’s tough. It’s tougher if you’re stupid. (Location 565)

Tags: quotes

As to methods, there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble. (Location 583)

Tags: principles

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. (Location 586)

Tags: learning, principles

Once you have a solid scaffold of core principles to work from, building upon your knowledge and making progress becomes much easier. (Location 587)

Tags: compounding, principles

Note: Mastering the core principles makes all learning easier

The limits of my language are the limits of my world. (Location 621)

Tags: language

Large companies move slowly. Good ideas often died on the vine simply because they had to be approved by too many people. (Location 697)

Tags: large companies

Amazon.com carries over 630,000 business-related titles, not counting audiobooks, e-books, or materials that are published without an ISBN. (Location 714)

Tags: nonfiction, amazon

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. (Location 820)

Tags: business mechanics, favorite

Take away any of these things—value creation, customer demand, transactions, value delivery, or profit sufficiency—and you have something other than a business. Each factor is both essential and universal. (Location 822)

Tags: business mechanics, favorite

Value can’t be created without understanding what people want (market research). Attracting customers first requires getting their attention, then making them interested (marketing). In order to close a sale, people must first trust your ability to deliver on what’s promised (value delivery and operations). Customer satisfaction depends on reliably exceeding the customer’s expectations (customer service). Profit sufficiency requires bringing in more money than is spent (finance). (Location 825)

Tags: business mechanics

Every business fundamentally relies on two additional factors: people and systems. (Location 830)

Tags: business mechanics

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. (Location 853)

Tags: mba

Skip business school. Educate yourself. (Location 860)

Tags: mba

College: two hundred people reading the same book. An obvious mistake. Two hundred people can read two hundred books. (Location 863)

Tags: college, mba

Business schools don’t create successful people. They simply accept them, then take credit for their success. (Location 929)

Tags: mba

Process improvements are easy to skip if you want the business’s short-term profit numbers to look good, even though they’re essential to long-term viability. (Location 1041)

Tags: short term gains, business mechanics

By ignoring the things that make a business operate more effectively, MBA-trained executives have unwittingly gutted previously viable companies in the name of quarterly earnings per share. (Location 1042)

Tags: short term gains, mba

The “leveraged buyout” strategy taught in many business school classrooms—buying a company, financing massive expansion via debt, then selling the business to another company at a premium18—turned formerly self-sustaining companies into debt-bloated monstrosities, and the constant flipping of businesses from one temporary owner to the next turned financial markets into a game of musical chairs. (Location 1046)

Tags: leveraged buyout

The demands of the public market push executives to chase short-term earnings at the expense of long-term stability, creating waves of layoffs and severe budget cuts when times get tight or unexpected events occur. (Location 1066)

Tags: short term gains

All truly wise thoughts have been thought already thousands of times; but to make them truly ours, we must think them over again honestly, until they take root in our personal experience. (Location 1173)

Tags: learning

A business is a repeatable process that makes money. Everything else is a hobby. (Location 1208)

Tags: business mechanics

At the core, every business is fundamentally a collection of five Interdependent (discussed later) 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’ve promised and ensuring that they’re satisfied. Finance. Bringing in enough money to keep going and make your effort worthwhile. (Location 1218)

Tags: business mechanics

Clayton Alderfer’s version of Maslow’s hierarchy, which he called “ERG theory”: people seek existence, relatedness, and growth, in that order. (Location 1281)

Tags: maslows hierarchy of needs

According to Harvard Business School professors Paul Lawrence and Nitin Nohria, the authors of Driven: How Human Nature Shapes Our Choices, all human beings have four Core Human Drives that have a profound influence on our decisions and actions: (Location 1285)

Tags: human drivers

The Drive to Acquire. The desire to obtain or collect physical objects, as well as immaterial qualities like status, power, and influence. (Location 1287)

Tags: human drivers

The Drive to Bond. The desire to feel valued and loved by forming relationships with others, either platonic or romantic. (Location 1290)

Tags: human drivers

The Drive to Learn. The desire to satisfy our curiosity. (Location 1292)

Tags: human drivers

The Drive to Defend. The desire to protect ourselves, our loved ones, and our property. (Location 1295)

Tags: human drivers

The Drive to Feel. The desire for new sensory stimulus, intense emotional experiences, pleasure, excitement, entertainment, and anticipation. (Location 1298)

Tags: human drivers

At the core, all successful businesses sell some combination of money, status, power, love, knowledge, protection, pleasure, and excitement. (Location 1302)

Tags: business mechanics

When given a choice between different Alternatives (discussed later), people will typically choose the option with the highest perceived status. (Location 1318)

Tags: perceived status

So often people are working hard at the wrong thing. Working on the right thing is probably more important than working hard. (Location 1333)

Tags: priotitise

Cheer up: there are Hidden Benefits of Competition. 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. (Location 1370)

Tags: competition

Economic Value usually takes on 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 durable asset that can be used by many people, then charge for access. Subscription. Offer 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 thing happening to the policy holder in exchange for a predefined series of payments, then 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. (Location 1419)

Tags: favorite, business mechanics, economic value

Providing value in Product form is valuable because Products can be Duplicated. This book was only written once, but individual copies can be printed and delivered millions of times to readers all around the world. (Location 1450)

Tags: business mechanics

As a result, products tend to Scale better than other forms of value, since they can be Duplicated and/or Multiplied (Location 1452)

Tags: business mechanics

Services can be lucrative, particularly if the skills required to provide them are rare and difficult to develop, but the trade-off is that they’re difficult to duplicate. (Location 1466)

Tags: business mechanics

Services typically depend on the Service provider’s investment of time and energy, both of which are finite. (Location 1467)

Tags: business mechanics

A Shared Resource is a durable asset that can be used by many people. Shared Resources allow you to create the asset once, then charge your customers for its (Location 1475)

Tags: business mechanics

The tricky part about offering a Shared Resource is carefully monitoring usage levels. If you don’t have enough users, you won’t be able to spread out the cost of the asset enough to cover up-front costs and ongoing maintenance. If you have too many users, overcrowding will diminish the experience so much that they’ll become frustrated, stop using the resource, and advise others not to patronize your business, diminishing your Reputation (Location 1486)

Subscription is an attractive form of value because it provides more predictable revenue. Instead of having to resell to your existing customers every day, Subscriptions allow you to build a steady base of loyal customers over time. This model ensures a certain level of revenue coming in each billing period. (Location 1504)

Tags: saas

The key to Subscription offers is doing everything you can to keep customer attrition as low as possible. As long as you continue to make your customers happy, only a small percentage of your customer base will cancel each period, giving you the ability to plan your finances with more certainty. (Location 1506)

Tags: saas

A Lease involves acquiring an asset, followed by allowing another person to use that asset for a predefined amount of time in exchange for a (Location 1533)

Agency involves the marketing and sale of an asset you don’t own. Instead of producing value by yourself, you team up with someone else who has value to offer, then work to find a purchaser. In exchange for establishing a new relationship between your source and a buyer, you earn a commission or fee. (Location 1551)

Audience Aggregation revolves around collecting the attention of a group of people with similar characteristics, then selling access to that audience to a third party. Since attention is limited and valuable, gathering a group of people in a certain demographic is quite valuable to businesses or groups that are interested in getting the attention of those people. (Location 1571)

Tags: ads

A Loan involves an agreement to let the borrower use a certain amount of resources for a certain period of time. In exchange, the borrower must pay the lender a series of payments over a predefined period of time, which is equal to the original loan plus a predefined interest rate. (Location 1591)

the process of identifying how risky a particular Loan is—a process called “underwriting”—is (Location 1604)

An Option is the ability to take a predefined action for a fixed period of time in exchange for a fee. (Location 1611)

Insurance involves the transfer of risk from the purchaser to the seller. In exchange for taking on the risk of some specific bad thing happening to the policy holder, the policy holder agrees to give the insurer a predefined series of payments. (Location 1633)

Tags: insurance

Capital is the purchase of an ownership stake in a business. For parties that have resources to allocate, providing Capital is a way to help owners of new or existing businesses expand or enter new markets. (Location 1657)

Angel investing, venture capital, and purchasing stock in publicly traded companies are all examples of providing value via Capital, (Location 1658)

Hassle Premium (Location 1674)

People are almost always willing to pay for things that they believe are too much of a pain to take care of themselves. Where there’s a hassle, there’s a business opportunity. (Location 1676)

Bundling allows you to repurpose value that you have already created to create even more value. (Location 1738)

It’s this simple: if I never try anything, I never learn anything. (Location 1753)

Tags: learning

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. (Location 1758)

Ideas are cheap—what counts is the ability to translate an idea into reality, which is much more difficult than recognizing a good idea. (Location 1761)

Tags: execution

The Iteration Cycle (Location 1778)

I have not failed. I’ve just found 10,000 ways that won’t work. (Location 1779)

Nobody—no matter how smart or talented they are—gets it right the first time. (Location 1780)

Iteration has six major steps, which I call the WIGWAM method: Watch—What’s happening? What’s working and what’s not? Ideate—What could you improve? What are your options? Guess—Based on what you’ve learned so far, which of your ideas do you think will make the biggest impact? Which?—Decide which change to make. Act—Actually make the change. Measure—What happened? Was the change positive or negative? Should you keep the change, or go back to how things were before this iteration? (Location 1787)

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. (Location 1804)

The key is to keep each iteration small, clear, and quick, basing each iteration on what you learned via previous iterations. (Location 1806)

The major problem with the direct approach is risk: you’re sinking a great deal of time, energy, and resources into creating something that may not ultimately sell. (Location 1809)

Iteration may take some additional effort up front, but after you’ve gone through a few cycles, you’ll have a deeper understanding of the market, direct knowledge of what people actually want enough to pay for, and a clear understanding of whether or not you have a viable offer to give them. (Location 1812)

Tags: iteration

Note: Iteration greatly helps you understand the market and their needs

Get Feedback from real potential customers instead of friends and family. (Location 1824)

they’ll unintentionally sugarcoat their Feedback. (Location 1825)

Whenever possible, give the people who are giving you Feedback the opportunity to preorder the offering. (Location 1838)

Trade-offs I can’t give you a surefire formula for success, but I can give you a formula for failure: try to please everybody all the time. (Location 1870)

Economic Values (Location 1891)

Assuming the promised benefits of the offering are appealing, there are nine common Economic Values that people typically consider when evaluating a potential purchase. They are: Efficacy—How well does it work? Speed—How quickly does it work? Reliability—Can I depend on it to do what I want? Ease of Use—How much effort does it require? Flexibility—How many things does it do? Status—How does this affect the way others perceive me? Aesthetic Appeal—How attractive or otherwise aesthetically pleasing is it? Emotion—How does it make me feel? Cost—How much do I have to give up to get this? (Location 1897)

the book Trade-Off: Why Some Things Catch On, and Others Don’t, Kevin Maney discusses these common values in terms of two primary characteristics: convenience and fidelity. Things that are quick, reliable, easy, and flexible are convenient. Things that offer quality, status, aesthetic appeal, or emotional impact are high-fidelity. (Location 1905)

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 (Location 1932)

Shadow Testing is the process of selling an offering before it actually exists. As long as you’re completely up front 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 Critical Assumptions with real customers quickly and inexpensively. (Location 2000)

Note: Theranos sold many offerings that did not exist!

Minimum Viable Offer If you’re not embarrassed by the first version of your product, you’ve launched too late. (Location 2016)

A Minimum Viable Offer 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. (Location 2022)

The purpose of starting with a Minimum Viable Offer is to minimize your risk. By keeping the investments small, incremental, and learning oriented, you’ll be able to quickly discover what works and what doesn’t. If the idea is promising, you’re in a great position to make it happen. (Location 2044)

Incremental Augmentation is the process of using the Iteration Cycle to add new benefits to an existing offer. The process is simple: keep making and testing additions to the core offer, continue doing what works, and stop doing what doesn’t. (Location 2056)

Offering value is not enough. If no one knows (or cares) about what you have to offer, it doesn’t matter how much value you create. Without Marketing, no business can survive—people who don’t know you exist can’t purchase what you have to offer, and people who aren’t interested in what you have to offer won’t become paying customers. (Location 2103)

Note: Marketing is key to tell people about the value you offer

Marketing is the art and science of finding “prospects”—people (Location 2108)

Marketing is about getting noticed; Sales, which we’ll discuss in chapter 3, is about closing the deal. (Location 2112)

Attention In an attention economy (like this one), marketers struggle for attention. If you don’t have it, you lose. (Location 2115)

Rule #1 of Marketing is that your potential customer’s available attention is limited. Keeping up with everything in your world would require way more attention than you actually have to work with. To compensate, you filter: you ration your attention, allocating more to things you care about and less to things you don’t. (Location 2121)

Receptivity has two primary components: what and when. People tend to be receptive only to certain categories of things at certain times. (Location 2149)

You wouldn’t worry so much about what others think of you if you realized how seldom they do. (Location 2206)

Tags: worrying

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. (Location 2231)

The End Result is what matters most. By focusing on the End Result, you’re homing in on what will cause your prospect to conclude, “This is for me.” (Location 2235)

Qualification is the process of determining whether or not a prospect is a good customer before they purchase from you. By evaluating a prospect before they buy, you can minimize the chance of wasting your time dealing with a customer who’s not a good fit for your business. (Location 2244)

Addressability is a measure of how easy it is to get in touch with people who might want what you’re offering. A highly Addressable audience can be reached quickly and easily. A non-Addressable audience can only be reached with extreme hardship, or isn’t Receptive and doesn’t want to be reached at all. (Location 2298)

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. (Location 2354)

Framing Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth. (Location 2362)

Tags: framing

Framing is the act of emphasizing the details that are critically important while de-emphasizing things that aren’t, by either minimizing certain facts or leaving them out entirely. (Location 2376)

Framing is a natural part of communication: some form of compression in any message is inevitable. It’s simply not practical to include all of the facts and context when communicating with others—we emphasize some details and leave out others to save time. (Location 2379)

Complicated messages are ignored or forgotten. (Location 2450)

A Hook is a single phrase or sentence that describes an offer’s primary benefit. Sometimes the Hook is a title, and sometimes it’s a short tagline. Regardless, it conveys the reason someone would want what you’re selling. (Location 2453)

When creating a Hook, focus on the primary benefit or value your offer provides. Emphasize what’s uniquely valuable about your offer and why the prospect should care. (Location 2465)

when business professionals say they want to “enhance their brand” or “build brand equity,” they almost always mean “improve their reputation.” (Location 2547)

No one wants to make a bad decision or be taken advantage of, so sales mostly consists of helping the prospect understand what’s important and convincing them you’re capable of actually delivering on what you promise. (Location 2570)

There are four ways to support a price on something of value: (1) replacement cost, (2) market comparison, (3) discounted cash flow/net present value, and (4) value comparison. These Four Pricing Methods will help you estimate just how much something is potentially worth to your customers. (Location 2662)

Tags: pricing

The Replacement Cost method supports a price by answering the question “How much would it cost to replace?” In the case of the house, the question becomes “What would it cost to create or construct a house just like this one?” (Location 2664)

Applied to most offers, Replacement Cost is typically a “cost-plus” calculation: figure out how much it costs to create, add your desired markup, and set your price appropriately. (Location 2669)

The Market Comparison method supports a price by answering the question “How much are other things like this selling for?” In the case of the house, this question becomes “How much have houses like this, in this general area, sold for recently?” (Location 2671)

The Discounted Cash Flow (DCF) / Net Present Value (NPV) method supports a price by answering the question “How much is it worth if it can bring in money over time?” In the case of your house, the question becomes “How much would this house bring in each month if you rented it for a period of time, and how much is that series of cash flows worth as a lump sum today?” (Location 2677)

DCF/NPV is only used for pricing things that can produce an ongoing cash flow, which makes it a very common way to price businesses when they’re sold or acquired—the more profit the business generates each month, the more valuable the business is to the purchaser. (Location 2685)

The Value Comparison method supports a price by answering the question “Who is this particularly valuable to?” In the case of the house, this question becomes “What features of this house would make it valuable to certain types of people?” (Location 2687)

Value Comparison is typically the optimal way to price your offer, since the value of an offer to a specific group can be quite high, resulting in a much better price. Use the other methods as a baseline, but focus on discovering how much your offer is worth to the party you hope to sell it to, then set your price appropriately. (Location 2695)

In introductory economics courses, this idea is called “price elasticity.” Offers with high price elasticity experience major changes in demand when prices go up or down. Offers with low price elasticity experience little fluctuation in demand when prices change. Economists love to draw downward-sloping pricing curves that show demand increasing as prices decrease. (Location 2709)

The trouble with the traditional pricing curve is that it can be misleading when the offer isn’t a commodity. In practice, raising your prices can increase demand by appealing to a more attractive type of customer. (Location 2711)

There are two major considerations when setting your prices with Price Transition Shock in mind: (1) potential profitability and (2) ideal customer characteristics.

The best strategy is to set your prices to appeal to the prospects that will ensure you work with your most desirable customers in a way that results in the highest profits. (Location 2718)

Tags: pricing

Price is what you pay. Value is what you get. —WARREN BUFFETT (Location 2735)

Value-Based Selling is the process of understanding and reinforcing the Reasons Why your offer is valuable to the purchaser. (Location 2742)

In the classic sales book SPIN Selling, Neil Rackham describes the four phases of successful selling: (1) understanding the situation, (2) defining the problem, (3) clarifying the short-term and longterm implications of that problem, and (4) quantifying the need-payoff, or the financial and emotional benefits the customer would experience after the resolution of their problem. (Location 2751)

Tags: selling

Note: Understand the situation, define the problem, clarify short & long term impact of the problem and quantify the benefits after you resolve the problem

By encouraging your prospects to tell you more about what they need, you reap two major benefits. First, you increase the prospect’s confidence in your understanding of the situation, increasing their confidence in your ability to deliver a solution. Second, you’ll discover information that will help you emphasize just how valuable your offer is, which helps you in Framing the price of your offer versus the value it will provide. (Location 2755)

Education-Based Selling is the process of making your prospects better, more informed customers. As a sales consultant, Kelsey worked to do two things: (1) make the bride feel comfortable and relaxed, then (2) help the bride become more knowledgeable about gowns in terms of how they are made and what to look for when buying one. (Location 2779)

The more you know about the other party’s alternatives, the more attractively you can Frame your total offer by Bundling/ Unbundling various options. (Location 2805)

Time will take your money, but money won’t buy time. —JAMES TAYLOR, MUSICIAN (Location 2831)

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. (Location 2833)

Tags: negotiation

Resources are tangible items like money, gold, oil, etc. Resources are physical: you can hold them in your hand. (Location 2834)

Time is the second major currency. If you go to work as an hourly employee, you are trading a certain amount of time and effort for a certain amount of resources. (Location 2837)

Tags: salary

Flexibility is the third universal currency—one that is usually quite underrated. Becoming a salaried employee isn’t a straightforward exchange of resources for effort—you’re also giving up a certain amount of flexibility. (Location 2840)

The Three Dimensions of Negotiation are setup, structure, and discussion. (Location 2861)

by creating an Environment (discussed later) that’s conducive to a deal and preparing your strategy in advance, you can dramatically increase the probability of finding a mutually acceptable solution. (Location 2862)

The first phase of every negotiation is the Setup: setting the stage for a satisfying outcome to the negotiation. The more you can stack the odds in your favor before you start negotiating, the better the deal you’ll be able to strike: (Location 2864)

Who is involved in the negotiation, and are they open to dealing with you? (Location 2867)

Setup is the negotiation equivalent of Guiding Structure (discussed later)— the Environment surrounding the deal plays a huge role in the eventual outcome, so it pays to ensure that the Environment is conducive to getting a good deal before you ever reach the table. (Location 2874)

The second dimension of negotiation is Structure: the terms of the proposal. In this phase, you put together your draft proposal in a way they’re likely to appreciate and accept: (Location 2879)

What exactly will you propose, and how will you Frame your proposal to the other party? (Location 2882)

The third dimension of negotiation is the Discussion: actually presenting the offer to the other party. (Location 2895)

A Buffer is a third party empowered to negotiate on your behalf. Agents, attorneys, mediators, brokers, accountants, and other similar subject-matter experts are all examples of Buffers. (Location 2915)

Buffers can also be useful in order to add some time or space to a high-intensity negotiation. It’s often quite useful not to be the party who has the final say. Being able to say, “I need to discuss this with my agent/accountant/ attorney” before giving final approval on a deal is a valuable check-step that prevents hasty or unwise decisions. (Location 2926)

Tags: negotiation

Zig Ziglar, (Location 2956)

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 prospect’s objections and barriers, and you’ll close the deal. (Location 3033)

Tags: selling

It costs too much. Loss Aversion (discussed later) makes spending money feel like a loss—by purchasing, the prospect is giving something up, and that naturally makes people hesitate. (Location 3037)

There are five standard objections that appear in sales of all kinds: (Location 3037)

It won’t work. If the prospect thinks that there’s a chance the offer won’t (or can’t) provide the promised benefits, they won’t purchase. (Location 3040)

It won’t work for ME. The prospect may believe that the offer is capable of providing benefits to other people but that they’re different—a special case. (Location 3041)

I can wait. The prospect may believe they don’t have a problem worth addressing right now, even if it’s very clear to you that they (Location 3043)

It’s too difficult. If the offer takes any effort whatsoever on their part, the prospect may believe that their contribution will be too hard to manage. (Location 3044)

Objection #1 (“it costs too much”) is best addressed via Framing and Value-Based Selling. (Location 3048)

If it’s clear that the value of your offer far exceeds the asking price, this objection is moot. (Location 3050)

Objections #2 and #3 (“it won’t work” / “it won’t work for me”) are best addressed via Social Proof—showing (Location 3051)

Objections #4 and #5 (“I can wait” / “it’s too difficult”) are best addressed via Education-Based Selling. (Location 3055)

Often, your prospects haven’t fully realized they have a problem, particularly in the case of Absence Blindness (Location 3056)

The best way to get around this is to focus your early sales efforts on making your customers smarter by teaching them what you know about their business, then helping them Visualize what their involvement would look like if they decide to proceed. (Location 3058)

Once you have the prospect’s Attention and Permission, there are two possible tactics if they still have these objections: (1) convince the prospect that the objection isn’t true, or (2) convince the prospect that the objection is irrelevant. The approach you’ll use depends on the objection raised, but some combination of Framing, Value-Based Selling, Education-Based Selling, Social Proof, and Visualization will usually do the trick. (Location 3060)

Risk Reversal is a strategy that transfers some (or all) of the risk of a Transaction from the buyer to the seller. (Location 3076)

Instead of making the purchaser shoulder the risk of a bad Transaction, the seller agrees in advance to make things right if—for whatever reason—things don’t turn out as the purchaser expected. (Location 3077)

“take the puppy home” strategy. (Location 3085)

Reactivation is the process of convincing past customers to buy from you again. (Location 3104)

Netflix is a company that uses Reactivation brilliantly. If you cancel a Netflix subscription, three to six months later you’ll receive a postcard and/ or e-mail from Netflix with an offer to resubscribe at a reduced rate. (Location 3107)

A satisfied customer is the best business strategy of all. (Location 3125)

Tags: customer focused

Value Delivery (Location 3125)

Value Delivery involves everything necessary to ensure that every paying customer is a happy customer: order processing, inventory management, delivery/fulfillment, troubleshooting, customer support, etc. Without Value Delivery, you don’t have a business. (Location 3129)

A Value Stream is the set of all steps and all processes from the start of your Value Creation process all the way through the delivery of the end result to your customer. (Location 3158)

You can think of the Value Stream as a combination of your Value Creation and Value Delivery processes. (Location 3161)

A Distribution Channel describes how your form of value is actually delivered to the end user. (Location 3181)

There are two basic types of Distribution Channels: direct-to-user and intermediary. (Location 3182)

Direct-to-user distribution works across a single channel: from the business directly to the end user. Services are a classic example: when you get a haircut, the value is provided by the business itself directly to you, with no intermediary. (Location 3183)

Intermediary distribution works across multiple channels. When you purchase a Product from a store, that store is acting as a Reseller. The store (in most cases) doesn’t manufacture the Products—it purchases them from another business. (Location 3187)

customer’s perception of quality relies on two criteria: expectations and performance. You can characterize this relationship in the form of a quasi-equation, which I call the Expectation Effect: Quality = Performance - Expectations. (Location 3215)

Tags: expectation

The best way to consistently surpass expectations is to give your customers an unexpected bonus in addition to the value they expect. (Location 3227)

Throughput is a measure of the effectiveness of your Value Stream. Throughput is measured in the formula [units/time]. The more results you create per unit of time, the higher the Throughput. (Location 3272)

Duplication is the ability to reliably reproduce something of value. Factory production is the quintessential example of Duplication: one design, many copies. Instead of “reinventing the wheel” over and over again, Duplication allows you to design the wheel once, then make as many of them as you wish. (Location 3291)

Multiplication is Duplication for an entire process or System. McDonald’s began as a single restaurant in California; Starbucks began as a single coffee shop in Seattle. By learning to Duplicate the entire business system that is a McDonald’s or Starbucks store, each company opened new possibilities for growth. (Location 3315)

Scale is the ability to reliably Duplicate or Multiply a process as volume increases. Scalability determines your maximum potential volume. The easier it is to Duplicate or Multiply the value provided, the more scalable the business. (Location 3335)

Products are typically the easiest to Duplicate, while Shared Resources (like gyms, etc.) are easiest to Multiply. (Location 3345)

In nature, there are neither rewards nor punishment—there are consequences. (Location 3374)

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. (Location 3432)

Tags: raising capital

Systemization If you can’t describe what you are doing as a process, you don’t know what you’re doing. (Location 3440)

Tags: systems

If you can’t systematize your process, you can’t Automate it. (Location 3459)

For now, recognize that effective systems are the lifeblood of a business—they allow you to create, market, sell, and ultimately deliver what you have to offer. (Location 3467)

Tags: goals

Finance (Location 3472)

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. (Location 3478)

Accounting is the process of ensuring the data you use to make financial decisions is as complete and accurate as possible. (Location 3480)

It doesn’t matter if your business brings in $100,000,000 a year in revenue if you spend $100,000,001. Business is not about what you make—it’s about what you keep. (Location 3497)

Profit Margin (often abbreviated to “margin”) is the difference between how much revenue you capture and how much you spend to capture it, expressed in percentage terms. Here’s the formula for Profit Margin: ((Revenue – Cost) / Revenue) × 100 = % Profit Margin (Location 3516)

Profit Margin is not the same as markup, which represents how the price of an offer compares to its total cost. Here’s the formula for markup: ((Price – Cost) / Cost) × 100 = % Markup (Location 3523)

When examining a business, pay close attention to Profit Margin. The higher the margin, the stronger the business. (Location 3533)

Tags: business mechanics

Value Capture is the process of retaining some percentage of the value provided in every Transaction. If you’re able to offer another business something that will allow them to bring in $1 million of additional revenue and you charge $100,000, you’re capturing 10 percent of the value created by the Transaction. (Location 3541)

There are two dominant philosophies behind Value Capture: maximization and minimization. (Location 3548)

Maximization (the approach taught in most business schools) means that a business should attempt to capture as much value as possible. Accordingly, the business should attempt to capture as much revenue in each Transaction as possible—capturing less than the maximum amount of value possible is unacceptable. (Location 3549)

The minimization approach means that businesses should capture as little value as possible, as long as the business remains Sufficient (discussed later). While this approach may not bring in as much short-term revenue as maximization, it preserves the value customers see in doing business with the company, which is necessary for the business’s long-term success. (Location 3555)

Once, a powerful executive went on vacation—his first in fifteen years. As he was exploring a pier in a small coastal fishing village, a tuna fisherman docked his boat. As the Fisherman lashed his boat to the pier, the Executive complimented him on the size and quality of his fish. “How long did it take you to catch these fish?” the Executive asked. “Only a little while,” the Fisherman replied. “Why don’t you stay out longer and catch more?” the Executive asked. “I have enough to support my family’s needs,” said the Fisherman. “But,” asked the Executive, “what do you do with the rest of your time?” The Fisherman replied, “I sleep late, fish a little, play with my children, take a siesta with my wife, and stroll into the village each evening, where I sip wine and play guitar with my friends. I have a full and busy life.” The Executive was flabbergasted. “I’m a Harvard MBA, and I can help you. You should spend more time fishing. With the proceeds, you could buy a bigger boat. A bigger boat would help you catch more fish, which you could sell to buy several boats. Eventually, you’d own an entire fleet. “Instead of selling your catch to a middleman you could sell directly to the consumers, which would improve your margins. Eventually, you could open your own factory, so you’d control the product, the processing, and the distribution. Of course, you’d have to leave this village and move to the city so you could run your expanding enterprise.” The Fisherman was quiet for a moment, then asked, “How long would this take?” “Fifteen, twenty years. Twenty-five, tops.” “Then what?” The Executive laughed. “That’s the best part. When the time is right, you’d take your company public and sell all of your stock. You’d make millions.” “Millions? What would I do then?” The Executive paused for a moment. “You could retire, sleep late, fish a little, play with your children, take a siesta with your wife, and stroll into the village each evening to sip wine and play the guitar with your friends.” Shaking his head, the Executive bade the Fisherman farewell. Immediately after returning from vacation, the Executive resigned from his position. (Location 3567)

money is a tool, and the usefulness of that tool depends on what you intend to do with it. (Location 3588)

Sufficiency is the point where a business is bringing in enough profit that the people who are running the business find it worthwhile to keep going for the foreseeable future. Paul Graham, venture capitalist and founder of Y Combinator (an early-stage venture capital firm), calls the point of sufficiency “ramen profitable”—being profitable enough to pay your rent, keep the utilities running, and buy inexpensive food like ramen noodles. You may… (Location 3591)

You can track financial sufficiency using a number called “target monthly revenue” (TMR). Since employees, contractors, and vendors are typically paid on a monthly basis, it’s relatively simple to… (Location 3598)

Valuation is an estimate of the total worth of a company. The higher a business’s revenues, the stronger the company’s Profit Margins, the higher its bank balance, and the more promising its future, the higher its Valuation. (Location 3612)

Many companies base their financial decisions on what will increase the business’s Valuation. Higher estimates of value are beneficial for many reasons. If a company is private, having a high Valuation makes it easier to borrow money. If the company is public, a high Valuation leads to a high share price and a profit opportunity for the shareholders. (Location 3614)

The Cash Flow Statement is straightforward: it’s an examination of a company’s bank account over a certain period of time. Think of it like a checking account ledger: deposits of cash flow in and withdrawals of cash flow out. Ideally, more money flows in than flows out, and the total never goes below zero. (Location 3636)

Every Cash Flow Statement covers specific period of time: a day, a week, a month, a year. The time period of the report depends on the purpose. Shorter periods, like days and weeks, are most useful for making sure the company doesn’t run out of cash. Longer periods, like months and years, are more useful for tracking performance over time. (Location 3638)

Cash tends to move in three primary areas: operations (selling offers and buying inputs), investing (collecting dividends and paying for capital expenses), and financing (borrowing money and paying it back). Cash Flow Statements usually track these sources separately to make it easy to see where the cash flows come from. (Location 3640)

Many investors use a metric called “free cash flow” when evaluating companies. This metric comes from the Cash Flow Statement: it’s the amount of cash a business collects from operations minus cash spent for capital equipment and assets, which are necessary to keep the company operating. The higher a company’s free cash flow, the better: it means the business doesn’t have to keep investing huge amounts of capital in order to continue bringing in money. (Location 3645)

For other businesses, relying on a Cash Flow Statement isn’t enough. If the business manages an inventory or extends credit to customers, a simple cash flow analysis can be misleading. (Location 3667)

In accrual accounting, revenue is recognized immediately when a sale is made (i.e., a product is purchased, a service is rendered, etc.), and the expenses associated with that sale are incurred in the same time period. (Location 3672)

Accountants call this the “matching principle,” and one of the primary jobs of an accountant is to match revenue and expenses as accurately as possible. (Location 3674)

The end result of this effort is an Income Statement, which is sometimes called a “Profit and Loss Statement,” “Operating Statement,” or “Earnings Statement.” Regardless of the label, 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. (Location 3677)

The general format for an Income Statement looks like this: Revenue – Cost of Goods Sold – Expenses – Taxes = Net Profit (Location 3679)

The matching principle, for all of its benefits, introduces many sources of potential bias in the Income Statement. By changing when revenue is recognized and how expenses are matched to that revenue, accountants and finance professionals can make the “profit” line skyrocket or implode by changing a few assumptions or formulas. (Location 3687)

Tags: accounting

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. Balance Sheets always cite a specific day and use this calculation: Assets – Liabilities = Owner’s Equity (Location 3698)

Assets are things the company owns that have value: products, equipment, stock, etc. Liabilities are obligations the firm hasn’t yet discharged: loans, financing, etc. What’s left over when you discharge all of the business’s liabilities is Owner’s Equity, the company’s “net worth.” (Location 3702)

business. By examining a company’s Balance Sheet, you can determine whether or not the company is solvent (i.e., its assets are greater than its liabilities), if it’s having trouble paying its bills, or how the company’s value has changed over time. (Location 3727)

Financial Ratios are beneficial because they allow you to make comparisons very quickly. Instead of poring through the data in the financial reports manually, looking at a Financial Ratio helps you decide at a glance whether or not certain parts of the business are healthy. (Location 3740)

Leverage ratios indicate how your company uses debt. “Debt-to-Equity” ratios, which are calculated by dividing total liabilities by shareholders’ equity, tell you how many dollars a company has borrowed for every $1 in owner’s equity. If the ratio is high, it’s a signal the company is highly Leveraged, which could be a bad sign. Other ratios, like “Interest Coverage,” calculate how much of the business’s profit goes to pay off interest on debt. (Location 3747)

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. (Location 3789)

Tags: revenue, sales, favorite

Allowable Acquisition Cost (AAC) is the marketing component of Lifetime Value. The higher the average customer’s Lifetime Value, the more you can spend to attract a new customer, making it possible to spread the word about your offer in new ways. (Location 3867)

Amortization is the process of spreading the cost of a resource investment over the estimated useful life of that investment. (Location 3981)

Purchasing Power is the sum total of all liquid assets a business has at its disposal. That includes your cash, credit, and any outside financing that’s available. More purchasing power is always better, as long as you use that power wisely. (Location 4007)

Receivables are promises of payment you’ve accepted from others. (Location 4026)

Improve by 1% a day, and in just 70 days, you’re twice as good. —ALAN WEISS, MANAGEMENT CONSULTANT AND AUTHOR OF GETTING STARTED IN CONSULTING AND MILLION DOLLAR CONSULTING (Location 4096)

Leverage is the practice of using borrowed money to magnify potential gains. (Location 4122)

Leverage is a form of financial Amplification—it magnifies the potential for both gains and losses. When your investment pays off, Leverage helps it pay off more. When your investment tanks, you lose more money than you would otherwise. (Location 4132)

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 operation’s growth. If the business has structural issues, it will explode, and not in a good way. (Location 4150)

Tags: funding

Note: Only fund when you are already pointed in the right direction

Bootstrapping Felix qui nihil debet. (Happy is he who owes nothing.) —ROMAN PROVERB (Location 4215)

Sunk Costs are investments of time, energy, and money that can’t be recovered once they’ve been made. (Location 4271)

Don’t continue to pour concrete into a bottomless pit—if it’s not worth the additional investment, walk away. You never have to earn back money in the same way you lost it. If the reward isn’t worth the investment required to obtain it or the risk, don’t invest. (Location 4280)

Internal Controls are a set of specific Standard Operating Procedures (discussed later) a business uses to collect accurate data, keep the business running smoothly, and spot trouble as quickly as possible. (Location 4289)

Auditing helps ensure the quality of the company’s data and can increase the confidence of lenders, investors, shareholders, and regulatory bodies regarding the business’s practices. In all cases, the auditing party should have no interest in the outcome: this “separation of concerns” helps ensure the results are accurate, particularly if they’re not pretty. (Location 4304)

Your mind is first and foremost a physical system. Oftentimes, what we experience as mental fatigue or emotional distress is simply a signal from our body that we’re not getting enough of something we physically need: nutrients, exercise, or rest. (Location 4363)

A good multivitamin supplement, fish oil, magnesium, and essential amino acids can go a long way to ensure your brain has what it needs to function effectively. (Location 4395)

Tags: brain, fish oil

you’re interested in learning to meditate, I recommend Mindfulness in Plain English by Bhante Henepola Gunaratana and Wherever You Go, There You Are by Jon Kabat-Zinn. (Location 4441)

At the heart of every Perceptual Control system is a Reference Level—a range of perceptions that indicate the system is “under control.” When a perception is within the system’s Reference Level, nothing happens. When the perception violates the Reference Level by being too high or too low, the system will act to bring the perception back under control. There are three kinds of Reference Levels: set points, ranges, and errors. (Location 4490)

Tags: references

Good books, magazines, blogs, documentaries, and even competitors are valuable if they violate your expectations about what’s possible. When you discover that other people are actually doing something you previously considered unrealistic or impossible, it changes your Reference Levels in a very useful way. All you need to know is that something you want is possible, and you’ll find a way to get it. (Location 4552)

Guiding Structure Your environment will eat your goals and plans for breakfast. (Location 4557)

Tags: environment

Note: Your environment has a huge impact on your plans and goals

Guiding Structure means the structure of your Environment is the largest determinant of your behavior. 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. If you don’t want to eat ice cream, don’t buy it in the first place. (Location 4570)

Reorganization Not all those who wander are lost. (Location 4585)

You can think of your memory as the database of patterns you’ve learned via past experience. Patterns get stored in our long-term memory, waiting to be used to determine responses to new or uncommon situations. Recall is optimized for speed, not accuracy—the brain stores information contextually, which helps you recall related patterns quickly when you need them. That’s why the best way to find a set of lost keys is to mentally walk through all of the places you’ve been recently—the context makes it easier to recall the information. (Location 4670)

Willpower can be thought of as instinctual override—it’s a way to interrupt our automatic processing in order to do something else. Whenever we experience a situation in which it’s useful to inhibit our natural inclinations, Willpower is required to keep us from responding. As such, Willpower is a useful tool, but it has certain inherent limitations. (Location 4813)

Our reserves of Willpower are very limited and become Depleted with use. Dr. Roy Baumeister, a researcher at Florida State University, found that our ability to successfully use Willpower for self-control tasks is dependent on a physiological fuel: blood glucose. Acts of Willpower Deplete relatively large amounts of glucose, and when those stores run low, we have a hard time using Willpower to inhibit behavior. That’s why it’s difficult to resist dishing up a bowl of ice cream at 8:30 p.m. when you’re on a diet—by then, your stores of Willpower are long gone. (Location 4816)

Loss Aversion is the idea that people hate to lose things more than they like to gain them. There are very few relationships that psychology is able to quantify, but this is one of them: people respond twice as strongly to potential loss as they do to the opportunity of an equivalent gain. (Location 4845)

Tags: lossaversion

“Dunbar’s number” is a theoretical cognitive limit on the number of stable social relationships humans can maintain at one time. According to Robin Dunbar, a British anthropologist, humans have the cognitive capacity to keep track of somewhere around 150 close personal connections. Beyond this limited circle, we start treating people less like individuals and more like objects, and groups of people beyond this limit are likely to splinter off into subgroups over time. (Location 4925)

The “newspaper rule” and “grandchild rule” are effective ways of personalizing the results of your decisions. (Location 4952)

Personalize the results of your decisions and actions, and you’ll be far less likely to run afoul of Cognitive Scope Limitation. (Location 4958)

Here are a few ways you can add an element of Scarcity to your offer: Limited Quantities—inform prospects that you’re offering a limited number of units for sale. Price Increases—inform prospects that the price will go up in the near future. Price Decreases—inform prospects that a current discount will end in the near future. Deadlines—inform prospects that the offer is only good for a limited period of (Location 5088)

Monoidealism is the state of focusing your energy and attention on only one thing, without conflicts. Monoidealism is often called a “flow” state, a term coined by psychologist Mihaly Csikszentmihalyi. This is the state of human attention at its most productive: clear, focused Attention and effort directed at one (and only one) subject for an extended period of time. (Location 5186)

Tags: multitasking

Cognitive Switching Penalty (Location 5233)

Many people rely on multitasking: trying to do more than one thing at the same time. While many people assume this makes them more efficient, Monoidealism and multitasking are complete opposites. Neurologically, it’s impossible for your brain to multitask. When you’re trying to do more than one thing at a time, you’re not really parallel processing—you’re rapidly switching your Attention from one thing to another. While you’re paying Attention to Task A, you’re ignoring Task B until you switch back to it. (Location 5237)

Tags: multitasking

Every time you switch the focus of your Attention from one subject to another, you incur the Cognitive Switching Penalty. In order to take action, your brain has to “load” the context of what you’re doing into working memory. If you constantly switch the focus of your Attention, you’re forcing your brain to spend time and effort thrashing, loading and reloading contexts over and over again. (Location 5245)

Tags: attention, multitasking

Note: Multi-tasking encurs attention losses as you switch from one context to another, thus reducing overall effectiveness.

To avoid unproductive context switching, a batching strategy is best. Eliminating distractions can help prevent unnecessary interruptions, but it’s entirely possible to waste energy mentally thrashing even if you have the entire day free. The best approach to avoid unnecessary cognitive switching is to group similar tasks together. (Location 5252)

Tags: multitasking

Note: Batch tasks to avoid context switching

If you’re trying to create something, the worst thing you can possibly do is to try to fit creative tasks in between administrative tasks—context switching will kill your productivity. The “Maker’s Schedule” consists of large blocks of uninterrupted time; the “Manager’s Schedule” is broken up into many small chunks for meetings. Both schedules serve different purposes—just don’t try to combine them if your goal is to get useful work done. (Location 5261)

There are really only four ways to “do” something: completion, deletion, delegation, and deferment. (Location 5279)

Delegation—assigning the task to someone else—is effective for anything another person can do 80 percent as well as you can. (Location 5285)

In Getting Things Done, David Allen recommends keeping a “someday/maybe” list of things you’d like to do someday but that aren’t that important right now. Creativity researcher Scott Belsky recommends a similar approach in Making Ideas Happen: create a “back burner” list of tasks you want to get to eventually but that aren’t a priority right now. Periodically reviewing this list when you’re looking for something new or exciting to do is quite useful. (Location 5295)

Tags: someday

A Goal is a statement that clarifies precisely what you want to achieve, which makes it easy for your brain to use Mental Simulation to Visualize what achieving that Goal looks like. (Location 5332)

Tags: goals

Note: Goals make things easy to visualise

“being successful” as “working on things I enjoy with people I like,” “feeling free to choose what I work on,” and “having enough money to live without financial stress.” (Location 5385)

Tags: favorite

The same goes for “happiness.” Instead of being a single State of Being, “being happy” is a combination of “having fun,” “spending time with people I enjoy,” “feeling calm,” and “feeling free.” (Location 5387)

We are what we repeatedly do. Excellence, then, is not an act, but a habit. (Location 5395)

Priming is a method of consciously programming your brain to alert you when particular information is present in your Environment. (Location 5425)

One of the fascinating ramifications of our brain’s Pattern Matching function is that we’re constantly scanning the Environment for useful information. If you tell your mind specifically what you want to find, it will alert you whenever your senses notice it. Priming is a way to consciously influence your brain’s Pattern Matching capabilities. (Location 5426)

One of the ways people “get lucky” when they’re working toward a particular Goal is via Priming. One of the reasons Goal setting is useful is because it’s an easy way to Prime your brain to look for things that will help you get what you want. (Location 5443)

Tags: priming, goals

As the saying goes, “The palest ink is clearer than the fondest memory.” Notebooks and journals, regularly used, are worth their weight in gold. (Location 5575)

Tags: memory, newsletter, favorite

Speaking—to yourself or to another person—is another effective method of Externalization. Vocal Externalization explains why most of us have had the experience of solving our own problems while talking with a friend or colleague. By the time you’re done talking, you’re likely to have more insight into your problem—even if your listener didn’t say a word. (Location 5576)

Self-Elicitation is the practice of asking yourself questions, then answering them. By asking yourself good questions (or working with someone who asks good questions), you can grasp important insights or generate new ideas very quickly. (Location 5592)

Note: Ask questions to learn quickly

The Excessive Self-Regard Tendency is even more pronounced if you don’t know much about the subject at hand. The more incompetent a person is, the less they realize they’re incompetent. The more a person actually knows, the better their ability to self-assess their capabilities, and the more likely they are to doubt their capabilities until they have enough experience to know they’ve mastered the subject. (Location 5718)

People who are “unconsciously incompetent” don’t know they’re incompetent—they know so little about the subject that they can’t fully appreciate how little they actually know. That’s why every barber and taxi driver you meet is an expert on the economy and international politics. (Location 5727)

Tags: favorite

Note: There are many people who know so little they don't appreciate how little they can't fully appreciate how little they know.

Confirmation Bias is the general tendency for people to pay Attention to information that supports their conclusions and ignore information that doesn’t. No one particularly likes to learn they’ve made a bad decision, so we tend to filter the information we pay Attention to. The more (Location 5752)

Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be encumbered with your old nonsense. —RALPH WALDO EMERSON, ESSAYIST AND POET (Location 5773)

Here are a few questions to help you discover things worth Testing: How much sleep do you need to feel rested and alert? Which foods make you feel energetic after eating? Which foods make you feel ill or lethargic? When do you do your most productive work? Are there any patterns in your productivity? When do you get your best ideas? What are you doing when they occur to you? What is your biggest source of stress or concern? When do you start worrying, and why? (Location 5921)

Note: Test out how a change in your lifestyle effects your energy levels, happiness and productivity

Here’s what to ask: “I really respect what you’re doing, but I imagine it has high points and low points. Could you share them with me? Knowing what you know now, is it worth the effort?” (Location 5955)

If thou wilt make a man happy, add not unto his riches but take away from his desires. —EPICURUS, ANCIENT GREEK PHILOSOPHER (Location 5963)

This cycle is called the Hedonic Treadmill: we pursue pleasurable things because we think they’ll make us happy. When we finally achieve or acquire what we’re seeking, we adapt to our success in a very short period of time, and our success no longer gives us pleasure. As a result, we begin seeking something new, and the cycle repeats. (Location 5968)

Tags: favorite, hedonic adaptation

There are, however, a few things we can focus on that tend to lead to sustained levels of life satisfaction. Based on the available research, here are five priorities that will contribute to your long-term happiness in a way that minimizes hedonic adaptation: (Location 5976)

Work to make “enough” money. (Location 5978)

As a general rule: experiences contribute more to happiness than material goods. Beyond the point where your needs are met, you’ll get a higher emotional return for your dollar by traveling with people you like than by purchasing an expensive luxury item. (Location 5989)

Focus on improving your health and energy. Health is a major contributing factor to happiness: when you feel great, you’re more likely to feel happy. The converse is also true: when you feel ill, you tend to experience less pleasure, enjoyment, and life satisfaction. (Location 5991)

Tags: happiness, health

Spend time with people you enjoy. (Location 5996)

The context and environment are less important than the people you spend time with.     Different people need different levels of social contact to feel happy. (Location 5997)

Remove chronic annoyances. There are many things in life that can wear on your nerves. Examining ways to reduce or eliminate chronic stresses or annoyances can generate significant improvements in life satisfaction. (Location 6004)

Tags: newsletter, favorite

Note: Remove annoyances from your life

Pursue a new challenge. (Location 6010)

“We act as though comfort and luxury were the chief requirements of life, when all we need to make us happy is something to be enthusiastic about.” (Location 6016)

Tags: luxury, happiness

Comparison Fallacy Never compare your inside with someone else’s outside. (Location 6020)

Whenever you’re tempted to compare yourself to an acquaintance, colleague, classmate, or celebrity, it always helps to keep in mind that your goals, preferences, and priorities are completely different. (Location 6039)

Tags: comparison

Note: Dont compare to others. Remember you may have different goals & priorities

You’ve lived different lives, and you’ve each paid a different price for what you’ve accomplished. Any comparison you make instantly renders itself invalid, so you can relax. (Location 6041)

Tags: comparison

Note: If you want to compare yourself to others you should compare everything. You cant just take the successes, you must also take the sacrifices

The only metric of success that matters is this: are you spending your time doing work you like, with people you enjoy, in a way that keeps you financially Sufficient? (Location 6042)

Tags: success

Locus of Control Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. —THE SERENITY PRAYER (Location 6048)

Focusing on your efforts helps you stay sane—turning results you don’t directly control into Goals is a recipe for frustration. (Location 6059)

One of the reasons that diets drive people crazy is that they involve trying to control a result—weight—that is not directly under their control. If you focus on efforts—eating healthy food, exercising, and doing what you can to manage related medical conditions—your weight will handle itself. (Location 6060)

One of the best things I’ve ever done was choose to stop paying Attention to the news—99.9 percent of the information you’ll find in a newspaper or television newscast is completely outside of your Locus of Control. Instead of fruitlessly worrying about “what the world is coming to,” ignoring the news helps me spend more of my time doing what I can to actually make things better. (Location 6063)

Tags: news

Attachment If thou wilt make a man happy, add not unto his riches but take away from his desires. —EPICURUS, ANCIENT GREEK PHILOSOPHER (Location 6071)

Personal Research and Development (R&D) If a man empties his purse into his head, no one can take it from him. An investment in knowledge always pays the highest return. —BENJAMIN FRANKLIN (Location 6091)

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. (Location 6168)

Power is a neutral tool—one that can be used for good or ill. Power represents your ability to get things done through other people—the more power you have, the more things you can do. (Location 6178)

Comparative Advantage means it’s better to capitalize on your strengths than to shore up your weaknesses. (Location 6200)

As it turns out, Comparative Advantage applies as much to individuals as it does to countries: businesses work better if the individuals who operate them focus on what they’re best at, working with other specialists to accomplish everything else they need. “Strengths-Based Management” is simply another term for Comparative Advantage. (Location 6202)

Comparative Advantage explains why it often makes sense to work with contractors or outsourcers rather than try to do everything yourself. (Location 6205)

Large companies are slow because they suffer from Communication Overhead. If you’re responsible for working with a group of more than five to eight people, at least 80 percent of your job will inevitably be communicating effectively with the people you work with. Objectives, plans, and ideas are worthless unless everyone involved understands them well enough to take action. (Location 6231)

Tags: communication

Note: Large companies move so slowly because of the communication overhead

If you want your team to perform at its best, make your teams as small and autonomous as possible. (Location 6258)

Note: Keep teams small and give them the freedom to decide the best course of action

The Golden Trifecta is my personal three-word summary of How to Win Friends and Influence People. If you want to make others feel Important and safe around you, always remember to treat people with appreciation, courtesy, and respect. (Location 6309)

Note: Treat people with appreciation, courtesy and respect

Courtesy is politeness, pure and simple. I once heard Courtesy defined as “accepting small inconveniences on behalf of another person,” and I think that’s a very useful definition. (Location 6316)

Bystander Apathy explains why anything assigned to a committee never gets done. If you’ve ever worked with a group of people who have no Power over one another, you know what I’m talking about. Unless someone steps up and takes individual responsibility for actually making things happen and holding individuals accountable for progress, a committee can deliberate for years without getting anything done. Each member of the committee simply assumes someone else is working on (Location 6381)

The best way to eliminate Bystander Apathy in project management is to ensure that all tasks have single, clear owners and deadlines. (Location 6384)

Note: Assign owners to tasks

In the immortal words of Dwight D. Eisenhower: “No battle was ever won according to plan, but no battle was ever won without one … Plans are useless, but planning is indispensable.” (Location 6412)

Tags: favorite, plans

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.” (Location 6543)

The Attribution Error means that when others screw up, we blame their character; when we screw up, we attribute the situation to circumstances. (Location 6700)

Management is simple, but not simplistic. In essence, Management is the act of coordinating a group of people to achieve a specific Goal while accounting for ever-present Change and Uncertainty (both discussed later). (Location 6740)

Tags: goal, management

Here’s Gall’s Law : all complex systems that work evolved from simpler systems that worked. Complex systems are full of variables and Interdependencies (discussed later) that must be arranged just right in order to function. Complex systems designed from scratch will never work in the real world, since they haven’t been subject to environmental selection forces while being designed. (Location 6858)

Note: Complex systems must be built up from simpler systems

Slack is tricky to manage: too much, and you’re wasting time and money. Too little, and your system faces the risk of running out of the resources necessary to continue operating. (Location 6916)

U.S. secretary of defense Donald Rumsfeld: There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. These are things we don’t know we don’t know. (Location 7041)

You can make a system less Interdependent by removing dependencies. A dependency is an input that’s required before the next stage of a process can take place. The more dependencies there are in a system, the higher the likelihood of delay or system failure. (Location 7110)

Normal Accidents The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem. (Location 7176)

Key Performance Indicator It is better to have an approximate answer to the right question than an exact answer to the wrong question. (Location 7274)

Tags: quotes, measuring

Note: Ensure you are focusing on the right questions

HERE ARE SOME USEFUL RATIOS TO TRACK: —Return on Promotion: For every $1 you spend in advertising, how much revenue do you collect? —Profit per Employee: For every person you employ, how much profit does your business generate? —Closing Ratio: For every prospect you serve, how many purchase? —Returns/Complaints Ratio: For every sale you make, how many choose to return or complain? (Location 7447)

Tags: favorite

Note: Good ratios for a business to know: Profit for advertising dollar, profit per employee

The average household net worth of a person who reads the Wall Street Journal is $1.7 million. Seems that WSJ readers are extremely well off, right? (Location 7464)

Averages are simple to calculate but are prone to Gates and Buffett Syndrome: the presence of outliers that skew the average too high or low to be representative. (Location 7472)

Tags: averages, gates syndrome

There are three common ways to Segment customer data: Past Performance, Demographics, and Psychographics. (Location 7567)

Tags: customer focused

Note: Customer data segregation

Psychographics Segment customers by internal psychological characteristics. Typically discovered via surveys, assessments, or focus groups, Psychographics are attitudes or worldviews that influence how people see themselves and the world at large. (Location 7575)

Don’t just present data—tell a story that helps people understand what’s happening, and you’ll find your analysis efforts more useful. (Location 7603)

Tags: data

Note: You need to tell a story when presenting data

By definition, if you’re trying to Maximize or Minimize more than one thing, you’re not Optimizing—you’re making Trade-offs. Many people use the term Optimization to mean “making everything better,” but that definition doesn’t help you actually do anything. In practical terms, trying to Optimize for many variables at once doesn’t work—you need to be able to concentrate on a single variable for a while, so you can understand how the Changes you make affect the system as a whole. (Location 7649)

Dr. Lisanne Bainbridge, a psychologist at University College London, was one of the first to rigorously study the ramifications of efficient and reliable systems.2 She was the first to identify and express the “paradox” of Automated systems: efficient Automated systems reduce the need for human effort, but make human involvement even more critical. (Location 7810)

Checklist is an Externalized, predefined Standard Operating Procedure for completing a specific task. Creating a Checklist is enormously valuable for two reasons. First, Checklisting will help you define a System for a process that hasn’t yet been formalized—once the Checklist has been created, it’s easier to see how to improve or Automate the system. Second, using Checklists as a normal part of working can help ensure that you don’t forget to handle important steps that are easily overlooked when things get busy. (Location 7864)

Tags: checklists, memory, external brain

Cessation There is nothing so useless as doing efficiently that which should not be done at all. (Location 7895)

Resilience is never “optimal” if you evaluate a System solely on Throughput. Flexibility always comes at a price. A turtle’s shell is heavy—it could certainly move faster without it. Giving it up, however, would leave the turtle vulnerable in the moments when moving a little faster just isn’t fast enough. In an effort to chase a few more short-term dollars, many businesses trade Resilience for short-term results—and pay a hefty price. (Location 7937)

HERE’S WHAT MAKES 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 points of failure —Fail-safes/backup systems for all core processes (Location 7951)

To make no mistakes is not in the power of man; but from their errors and mistakes the wise and good learn wisdom for the future. —PLUTARCH, ANCIENT GREEK HISTORIAN AND ESSAYIST (Location 8005)

Scenario Planning A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences. (Location 8026)

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. At the beginning, you may be in over your head, but there’s no faster way to learn what works. Once you’re committed to exploring something, you’ll learn far more quickly than if you’d cowered on the sidelines. (Location 8104)

Tags: learning, experimenting

The next best thing to knowing something is knowing where to find it. (Location 8190)

DO I USE MY BODY OPTIMALLY?   What is the quality of my current diet?   Do I get enough sleep?   Am I managing my energy well each day?   How well am I managing daily stress?   Do I have good posture and poise?   What can I do to improve my ability to observe the world around me? DO I KNOW WHAT I WANT?   What achievements would make me really excited?   What “states of being” do I want to experience each day?   Are my priorities and values clearly defined?   Am I capable of making decisions quickly and confidently?   Do I consistently focus my attention on what I want versus what I don’t want? WHAT AM I AFRAID OF?   Have I created an honest and complete list of the fears I’m holding on to?   Have I confronted each fear to imagine how I would handle it if it came to pass?   Am I capable of recognizing and correcting self-limitation?   Am I appropriately pushing my own limits? IS MY MIND CLEAR AND FOCUSED?   Do I systematically externalize (write or record) what I’m thinking about?   Am I making it easy to capture my thoughts quickly, while as I have them?   What has my attention right now?   Am I regularly asking myself appropriate guiding questions?   Do I spend most of my time focusing on a single task, or am I constantly flipping between multiple tasks?   Do I spend enough time actively reflecting on my goals, projects, and progress? AM I CONFIDENT, RELAXED, AND PRODUCTIVE?   Have I found a planning method that works for me?   Am I “just organized enough”?   Do I have an up-to-date list of my projects and active tasks?   Do I review all of my commitments on a regular basis?   Do I take regular, genuine breaks from my work?   Am I consciously creating positive habits?   Am I working to shed nonproductive habits?   Am I comfortable with telling other people “no”? HOW DO I PERFORM BEST?   What do I particularly enjoy?   What am I particularly good at doing?   What environment(s) do I find most conducive to doing good work?   How do I tend to learn most effectively?   How do I prefer to work with and communicate with others?   What is currently holding me back? WHAT DO I REALLY NEED TO BE HAPPY AND FULFILLED?   How am I currently defining “success”?   Is there another way of defining “success” that I may find more fulfilling?   How often do I compare myself with my perceptions of other people?   Am I currently living below my means?   If I could only own one hundred things, what would they be?   Am I capable of separating necessity and luxury?   What do I feel grateful for in my life and work? (Location 8365)