Personal MBA

🚀 The Book in 3 Sentences

A book with small but interesting stories and lessons. It is meant to concretize a master in business and administration into a single magnum opus. Its lessons are short but interesting.

🎨 Impressions

It was an okay book, learned some but not that much new.

I cannot say the book was a turning point. It was okay and learned some lessons. One of the most interesting lessons was the Paradox of Automation. How increasing automation leads to a more demanding workload for the ones that monitor the processes.

✍️ My Top Quotes

Just what the world needs . . . another business book! —U.S. CUSTOMS AGENT AT JFK INTERNATIONAL AIRPORT, AFTER ASKING ABOUT MY OCCUPATION
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.
Who goeth a borrowing, goeth a sorrowing . . . A fool and his money are soon parted. —THOMAS TUSSER, SIXTEENTH-CENTURY ENGLISH FARMER AND POET
Hypocrisy can afford to be magnificent in its promises; for never intending to go beyond promises, it costs nothing.
Hypocrisy can afford to be magnificent in its promises; for never intending to go beyond promises, it costs nothing. —EDMUND BURKE, POLITICIAN AND POLITICAL THEORIST
Beware of geeks bearing formulas. —WARREN BUFFETT,
Institutions will try to preserve the problem to which they are the solution. —CLAY SHIRKY, PROFESSOR AT NYU AND AUTHOR OF HERE COMES EVERYBODY AND COGNITIVE SURPLUS
At the core, every business is fundamentally a collection of five Interdependent (discussed later) processes, each of which flows into the next: 1. Value Creation. Discovering what people need or want, then creating it. 2. Marketing. Attracting attention and building demand for what you’ve created. 3. Sales. Turning prospective customers into paying customers. 4. Value Delivery. Giving your customers what you’ve promised and ensuring that they’re satisfied. 5. Finance. Bringing in enough money to keep going and make your effort worthwhile.
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.
The zealous display the strength of their belief, while the judicious show the grounds of it.
Service involves helping or assisting someone in exchange for a fee. To create value via Services, you must
Service involves helping or assisting someone in exchange for a fee. To create value via Services, you must
A Service involves helping or assisting someone in exchange for a fee. To create value via Services, you must be able to provide some type of benefit to the user.
Buy low, sell high. —STOCK TRADER’S MAXIM
The human species, according to the best theory I can form of it, is composed of two distinct races: the men who borrow and the men who lend. —CHARLES LAMB, ESSAYIST
So long as there’s a jingle in your head, television isn’t free. —JASON LOVE, MARKETING EXECUTIVE
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.
Capital is the purchase of an ownership stake in a business.
Our goal is to have more at bats per unit of time and money than anyone else. —ERIC SCHMIDT, CHAIRMAN AND CEO OF GOOGLE
When creating a new offering, your primary goal should be to work your way through each Iteration Cycle as quickly as possible. Iteration is a structured form of learning that helps you make your offering better; the faster you learn, the more quickly you’ll be able to improve.
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: 1. Efficacy—How well does it work? 2. Speed—How quickly does it work? 3. Reliability—Can I depend on it to do what I want? 4. Ease of Use—How much effort does it require? 5. Flexibility—How many things does it do? 6. Status—How does this affect the way others perceive me? 7. Aesthetic Appeal—How attractive or otherwise aesthetically pleasing is it? 8. Emotion—How does it make me feel? 9. Cost—How much do I have to give up to get this?
In 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.
Things which matter most must never be at the mercy of things which matter least. —JOHANN WOLFGANG VON GOETHE, NINETEENTH-CENTURY DRAMATIST, POET, AND POLYMATH
It is better to be roughly right than precisely wrong. —JOHN MAYNARD KEYNES, ECONOMIST
If you’re not embarrassed by the first version of your product, you’ve launched too late. —REID HOFFMAN, FOUNDER OF LINKEDIN
Any engineer that doesn’t need to wash his hands at least three times a day is a failure.
Advertising is the tax you pay for being unremarkable
Discovering where Probable Purchasers start looking for information after crossing the interest threshold is extremely valuable.
People always hate to lose. They hate to feel stupid. They hate to make bad People always hate to lose. They hate to feel stupid.
Great design is eliminating all unnecessary details
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. Understanding what your offer’s Value Stream looks like is critically important if you want to be able to deliver value to your customers quickly, reliably, and consistently.
However beautiful the strategy, you should occasionally look at the results. —WINSTON CHURCHILL, PRIME MINISTER OF GREAT BRITAIN DURING WORLD WAR II
The problems of this world are only truly solved in two ways: by extinction or duplication. —SUSAN SONTAG, AUTHOR AND POLITICAL ACTIVIST
Sometimes when I consider what tremendous consequences come from little things, I am tempted to think: there are no little things. —BRUCE BARTON, ADVERTISING EXECUTIVE BEST KNOWN FOR CREATING THE BETTY CROCKER BRAND
Nature, there are neither rewards nor punishment—there are consequences. —ROBERT G. INGERSOLL, POLITICAL LEADER AND ORATOR
Remind people that profit is the difference between revenue and expense. This makes you look smart. —SCOTT ADAMS, CARTOONIST AND CREATOR OF “DILBERT”
Profit is a very simple concept: it’s bringing in more money than you spend. In order for a business to continue to exist, the revenue it brings in must exceed expenses at some point in the foreseeable future.
The moment you make a mistake in pricing, you’re eating into your reputation or your profits. —KATHARINE PAINE, FOUNDER OF THE DELAHAYE GROUP
Amortization is the process of spreading the cost of a resource investment over the estimated useful life of that investment.
Leverage is the practice of using borrowed money to magnify potential gains.
Leverage is a form of financial Amplification—it magnifies the potential for both gains and losses. When your investment pays off, Leverage helps it pay off more. When your investment tanks, you lose more money than you would otherwise.
Sunk Costs are investments of time, energy, and money that can’t be recovered once they’ve been made. No matter what you do, you can’t get those resources back.
Change the structure of your Environment, and your behavior will change automatically. Add a bit of Friction (discussed later) or eliminate certain options completely, and you’ll find it much easier to focus on what you’re trying to accomplish.
A great example of Guiding Structure is the “Sterile Cockpit Rule” that the Federal Aviation Administration (FAA) instituted in 1981. Most airline accidents happen below ten thousand feet, where distractions can be deadly. Above ten thousand feet, pilots can talk about anything they want, but below ten thousand feet, the only discussion permitted is about information directly related to the flight in progress. By eliminating distractions, the Sterile Cockpit Rule reduces errors and accidents.
If you don’t want to slip, don’t go where it’s slippery. —ALCOHOLICS ANONYMOUS MAXIM
To simulate this challenging environment, Mackworth created the “Mackworth Clock,” a device designed to test how well people pay attention over time. The “clock” featured a second hand that worked like a normal clock, with a twist—it would randomly skip a second, ticking two notches instead of one. The test subject’s job was to press a button every time they noticed the skip. Here’s what Mackworth found: after ten minutes of staring at the clock, the quality of the subject’s attention went down dramatically. The maximum period of sustained attention even highly motivated operators (who were given substantial bonuses for performance) were able to sustain was thirty minutes—any longer, and they’d inevitably zone out.
Properly, “monoidealism” is simply the state in which you have exactly one thing on your mind, with no conflicts.
So how exactly do you get yourself into a Monoideal state? First, eliminate potential distractions and interruptions. Depending on the level of cognitive activity required to complete your work, it’ll take ten to thirty minutes before your mind becomes absorbed in what you’re doing. Phone calls, coworkers “dropping by to pick your brain,” and other unanticipated demands on your Attention will break your Monoideal state, so priority number one is ensuring that you don’t get distracted. I often use earplugs or play instrumental music to eliminate background noise, and disconnect the phone when I don’t want to be interrupted. Turning off my Internet connection (see Willpower Depletion) while I’m writing also makes it much easier for me to maintain a Monoideal state. Otherwise, I’m way too likely to browse the Web when the going gets tough. Using similar Guiding Structure techniques is a good way to prevent your Attention from straying. Second, eliminate inner Conflicts. Sometimes it’s difficult to get started because you’re experiencing a Conflict between two control systems in your mind. Eliminating these Conflicts before you start working helps you achieve a Monoideal state much more quickly.
Here’s an example of how I use Priming: in the book 10 Days to Faster Reading, Abby Marks-Beale recommends a technique I refer to as purpose setting: taking a few minutes before you start reading to figure out (1) why you want to read this material and (2) what kind of information you’re looking for. Jotting down a few notes before picking up the book reinforces exactly what you’re looking to find.
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.
ANTECEDENT • When did it happen? • Whom were you with? • What were you doing? • Where were you? • What were you saying to yourself ? • What thoughts were you having? • What feelings were you having? BEHAVIOR • What were you saying to yourself ? • What thoughts did you have? • What feelings were you having? • What actions were you performing? CONSEQUENCES • What happened as a result? • Was it pleasant or unpleasant?
For small tasks, use what I call Ingvar’s Rule—assume each task will take no more than ten minutes to complete, then begin. This includes meetings and phone calls: for some reason, the default time period for meetings is an hour—whether you need it or not.
I haven’t been wrong since 1961, when I thought I made a mistake. —BOB HUDSON, POLITICIAN
They explain the “Dunning-Kruger effect” as follows: 1. Incompetent individuals tend to overestimate their own level of skill. 2. Incompetent individuals fail to recognize genuine skill in others. 3. Incompetent individuals fail to recognize the extremity of their inadequacy. 4. If they can be trained to substantially improve their own skill level, these individuals can recognize and acknowledge their own previous lack of skill. People who are “unconsciously incompetent” don’t know they’re incompetent
R&D exists because it works—companies that make Research and Development a priority often discover new products to offer their customers or process improvements that meaningfully contribute to the bottom line. If it works for them, it can work for you.
Communication Overhead is the proportion of time you spend communicating with members of your team instead of getting productive work done.
Dr. Michael Sutcliffe of the University of Cambridge1 has proposed “8 Symptoms of Bureaucratic Breakdown” that appear in teams suffering from Communication Overhead: 1. The Invisible Decision—No one knows how or where decisions are made, and there is no transparency in the decision-making process. 2. Unfinished Business—Too many tasks are started but very few are carried through to the end. 3. Coordination Paralysis—Nothing can be done without checking with a host of interconnected units. 4. Nothing New—There are no radical ideas, inventions, or lateral thinking—a general lack of initiative. 5. Pseudo-Problems—Minor issues become magnified out of all proportion. 6. Embattled Center—The center battles for consistency and control against local/regional units. 7. Negative Deadlines—The deadlines for work become more important than the quality of the work being done. 8. Input Domination—Individuals react to inputs—i.e., whatever gets put in their in-tray—as opposed to using their own initiative.
Al Switzler recommend using the STATE model to communicate without provoking anger or defensiveness: 1. Share your facts—Facts are less controversial, more persuasive, and less insulting than conclusions, so lead with them first. 2. Tell your story—Explain the situation from your point of view, taking care to avoid insulting or judging, which makes the other person feel less safe. 3. Ask for others’ paths—Ask for the other person’s side of the situation, what they intended, and what they want. 4. Talk tentatively—Avoid conclusions, judgments, and ultimatums. 5. Encourage testing—Make suggestions, ask for input, and discuss until you reach a productive and mutually satisfactory course of action.
Commander’s Intent is a much better method of delegating tasks: whenever you assign a task to someone, tell them why it must be done. The more your agent understands the purpose behind your actions, the better they’ll be able to respond appropriately when the situation changes.
Humans naturally tend to form distinct groups, a process called Clanning.
The Pygmalion Effect is a tendency named after the protagonist of a Greek myth. Pygmalion was a gifted sculptor who created a statue of a woman so perfect that he fell in love with his creation. After Pygmalion desperately prayed to Aphrodite, the goddess of love, she took pity on him by bringing the statue to life. The Pygmalion Effect explains why all of our relationships are, in a very real sense, self-fulfilling prophecies.
Here’s Gall’s Law : all complex systems that work evolved from simpler systems that worked.
The performance of a System is always limited by the availability of a critical input. Eliminate the Constraint, and the system’s performance will improve.
“Theory of Constraints”: any manageable system is always limited in achieving more of its Goal by at least one Constraint.
Balancing Loops dampen each system cycle’s output, leading to system equilibrium and resistance to change. Think of dropping a tennis ball from shoulder height: it’ll bounce up and down, each bounce smaller than the last. Friction and air resistance dampen each cycle until the energy in the system reaches equilibrium and the ball sits at rest upon the ground.
Autocatalysis is a concept that comes from chemistry: it’s a reaction whose output produces the raw materials necessary for an identical reaction.
Tightly coupled systems are typically time dependent, rigidly ordered, and have very little Slack. There’s often only one path to a successful outcome, and a failure in any part of the system can “cascade” to the rest of the system.
If your System relies on other people in order to function, that poses a major risk to the operation of your system.
Changing some aspect of a complex system always introduces Second-Order Effects, some of which may be antithetical to the original intent of the change.
The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem.
The theory of Normal Accidents is a more formal way of expressing a universal proverb: shit happens. In a tightly coupled system, small risks accumulate to the point where errors and accidents are inevitable. The larger and more complex the system, the higher the likelihood that something will eventually go very, very wrong.
You can’t understand it, you can’t change it. —ERI CEVANS, TECHNOLOGIST
Measuring something is the first step to improving it. Peter Drucker famously opined, “What gets measured gets managed.”
Analytical Honesty means measuring and analyzing the data you have dispassionately. Since humans are social creatures, we tend to care deeply about how others perceive us, which gives us a natural incentive to make things look better than they actually are. If your purpose is to actually make things better, this tendency can get in the way of collecting accurate data and conducting useful analysis.
Segmentation is a technique that involves splitting a data set into well-defined subgroups to add additional Context.
Humanization is the process of using data to tell a story (Narrative) about a real person’s experience or behavior.
Premature optimization is the root of all evil. —DONALD KNUTH,
Elegance is necessarily unnatural, only achievable at great expense. If you just do something, it won’t be elegant, but if you do it and then see what might be more elegant, and do it again, you might, after an unknown number of iterations, get something that is very elegant. —ERIK NAGGUM, COMPUTER PROGRAMMER
The last 10 percent of performance generates one-third of the cost and two-thirds of the problems
Friction is any force or process that removes energy from a System over time. In the presence of Friction, it’s necessary to continue to add energy to a system to keep it moving at the same rate over time.
Every business process has some amount of Friction. The key is to identify areas where Friction currently exists, then experiment with small improvements that will reduce the amount of Friction in the system. Removing small amounts of Friction consistently over time Accumulates large improvements in both quality and efficiency.
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency. —BILL GATES, FOUNDER AND CHAIRMAN OF MICROSOFT
Here’s the Paradox of Automation: the more efficient the Automated system, the more crucial the contribution of the human operators of that system. When an error happens, operators need to identify and fix the situation quickly or shut the system down—otherwise, the Automated system will continue to Multiply the error.
Cessation is the choice to intentionally stop doing something that’s counterproductive. Due to Absence Blindness, we’re predisposed to attempt to improve a system by doing something—it “feels wrong” to do nothing.