The Personal MBA: Master the Art of Business

I liked the book's easily-digestible format, but I didn't find it terribly useful overall. Worth the read, though.

Key Takeaways:

Many of these concepts were not new to me but sometimes they were presented in a new way that grabbed me.

- Everyone in your workplace should use the same vocabulary and concepts. This allows everyone to move in the same direction and align quickly.
- Are you providing a little value to many people or a lot of value to a few people?
- People need to want what you offer. Don't build a product you think is great then try to force people to want it. Find out what they want and build that product.
- Every business is trying to satisfy a need in Maslow's Hierarchy of Needs. The more needs you can meet (and touching on several different levels) the more appealing you will be.
- Often when someone is buying a product, the way it makes them feel or the perceived social status is as important as it's other value. Add social status considerations into your sales pitches.
- Competition is good. It means you have a viable product. It also means you can piggyback on the hard work and innovation of other people.
- Sometimes projects that don't make a lot of money are worth pursuing for the experience or good will you gain.
- 12 Forms of Value: Product, Service, Shared Resource (gym, library, etc.), Subscription, Resale (acquire a product and resell it), Lease/Rental (temporarily grant the use of an asset for a fee), Agency (acting as an intermediary to bring together buyers and sellers), Audience Aggregation (attract a large group of people then sell access to that audience), Loan, Option, Insurance, Capital
- Customer attention is limited. Customers filter their attention, allocating more resources to things they care about. How do we get around their filters? How can we piggyback on something our customers are already paying attention to? When competing for someone's attention, you are competing against everything else in their world. To earn their attention, you need to be more interesting or more useful than all the alternatives. You only care about the attention of people who are likely to purchase from you.
- The best way to cut through the distractions and get someone's attention is to make them feel curious, surprised, or concerned.
- It's not about having the biggest customer base, it's about having the best customer base.
- What is the entry point for our potential customers? If you get to them first, any future or competing offers will have to measure up to yours. For example, Huggies sends free diapers to hospitals and expectant parents. Now, if a diaper is missing a feature that Huggies has, you'll likely prefer Huggies, even if the other diaper is better in other ways.
- How addressable is your target market? It's unlikely to see a conference for people suffering with IBS where you can set up a booth. They would be much more effectively reached through ads on internet chat boards, or services like WebMD, or directly marketing to doctors. On the flipside, if you sell software that can revolutionize customer relationship management, you would likely find success in a booth at a tradeshow where you can actually talk to people and demo it.
- When someone is considering buying something, it's often a theoretical brain exercise, not an emotional thing. When you go for a test drive in a new car, it shifts from a theoretical, fact based decision to an emotional experience. It's much harder to engage your rational brain after the test drive. You're no longer thinking about how much horsepower it has, because you have felt the horsepower. How do we allow people to test drive our products?
- Framing is emphasizing some details and leaving out others. It would take way too long to go through every facet and feature of your product. Select the aspects your prospective customer cares about most. Be conscious of which parts you are highlighting.
- Present your offer. Discuss or clarify any issues the other party has. Answer objections. Remove obstacles. Ask for the sale.
- You're not a salesperson, you're an assistant buyer. You're not pressuring them to give you their money, you're helping them find a solution to a problem.
- Reciprocity. If you do something for someone, they start to feel like they owe you–even something as small as offering them a coffee or snack when they sit in your office.
- Reactivation is often easier than finding a completely new customer. We should have a list of all members that close accounts or payout loans. We can email them every three months with an invitation to come back. Include a special offer in your email.
- Zappos offers free expediated shipping on all orders. Customers are told their order should arrive in 5 business days. It usually arrives next day. What is our equivalent? How to we go above and beyond to surprise our members with exceptional service?
- It's not enough to have a great system or process. You need to maintain that system or process and keep driving it forward.
- Don't always feel the need to ‘compete'. Find your own niche and be really good at it. Blackberry tried to keep up with iPhone, but by the time they launched, iPhone had already iterated so many times, they couldn't catch up.
- The purpose of financial analysis is to make better decisions. If your data is bad, your analysis will be wrong.
- The four ways to increase revenue: 1) Serve more people. 2) Increase value of each transaction. 3) Increase the frequency of transactions per customer. 4) Increase prices.
- What is the lifetime value of a customer? If you sell little souvenirs in a place travelers aren't likely to visit again, their lifetime value is low. If you make thousands of dollars each year on their mortgage, their lifetime value is high. Lifetime value can be used to determine how much it is worth spending to attract a new customer.
- Fixed vs. variable costs. Fixed costs (salaried employees, rent on office space, etc.) are the same each month. Variable costs (raw materials, usage based utilities, hourly workers, etc.) will change in direct proportion to the amount of business you do. Savings in fixed costs accumulate, but savings in your variable costs are amplified by volume. If you make t-shirts and you save $1 per shirt made, your saving increase as you make more shirts, compared to saving $5 on your cell phone bill each month.
- Collect 70% of available information, then make a decision.
- Why is default time for meetings one hour? Like a gas will fill a container, so will your time. If we only had 10 or 20 minutes for a meeting, often we could get the same amount done without all the fluff.
- Keep teams small, elite, and surgical. Avoid communication overhead. The bigger the team gets, more time is spent on communication, less on the work.
- When you ask someone to do something, give them a reason, even if it is small.
- Use testimonials. Celebrity endorsements work because people like, ‘know', and trust them. A celebrity endorsement transfers that trust to you. The same works with a referral from a friend.
- If you lead people and want their thoughts, be very careful sharing your opinion tell after they have shared theirs. Often they will be influenced by your thoughts and you might not get their true opinions.
- Pygmalion effect. Expect more from people and they will give you more. They will live up to your expectations, whether good or bad.
- Gaul's Law: All complex systems that work have evolved from simpler systems that worked. A complex system designed from scratch will not work. Start building the simplest system that meets your needs. Then improve it. Eventually you will have a complex system.
- As soon as you fix one constraint or bottleneck, the next slowest part will become the bottle neck. Going through the cycle of fixing a bottleneck more often and quicker will result in a rapidly improving system.
- Second order effects: Actions have consequences, and those consequences will have consequences. Make changes to complex systems extremely carefully.
- Measuring the wrong thing is worse than measuring nothing. It can distract you from what is truly important.
- If you analyze bad data, your analysis will be bad.
- Intervention bias and null hypothetical. When something happens, you will be tempted to act. This can often lead to bigger problems than just letting things ride. Act carefully.
- When optimizing a system adjust one variable at a time so you can ensure your actions are making the difference you want.
- Make something 85% good enough then move on. Driving for complete perfection will slow you down more than that last 15% is worth and that last 15% might not even be possible.
- Innovate, then slow down and take time to consolidate and maintain what you built.