Book: The Personal MBA
Why Read This Book?
Eliminate your unfounded fears (business angst, certification intimidation, impostor syndrome) and move up in the world
This book assumes no prior knowledge and will teach you:
* how businesses actually work * how to start a new business * how to improve an existing business * how to use business skills to accomplish personal goals
Instead of focusing on lots of specific methods, the book focuses on 'mental models'—foundational concepts that help you understand how businesses work
The author took MBA-style classes as an undergrad, got a job in management, and set out to DIY an MBA with lots of books. The book started out as a website, personalmba.com, that made business book recommendations.
He appears to have developed an anti-big-business leaning while working at Proctor & Gamble, and states:
* Large companies move slowly * Climbing the corporate ladder is an obstacle to doing great work * Frustration leads to burnout
The author defines the key aspects of a business:
"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."
"Every business is a collection of processes that can be reliably repeated to produce a particular result."
The author argues that actually paying to get an MBA is a poor decision because:
* it's way too expensive (~$150,000) - you'll have to "mortgage your life" * the programs teach outdated and flawed concepts and practices * getting an MBA doesn't guarantee you anything - there is no correlation between business school success and lifetime earnings
In fact, he cites some calculations that business school has a negative net-present value for most students.
He argues that old-school 'Skinner box', 'economies of scale', and 'obsessive quantification' thinking are outdated and harmful
Business schools WILL get you into interviews that you can't get otherwise... but that's an expensive interview!
Instead, read this book, get some of your own business experience, and save yourself a lot of time and money.
Running a business involves five interdependent processes:
* value creation * marketing * sales * value delivery * finance
You MUST have a large group of people that constitute a potential market before you invest lots of time and effort!
Your offering should cater to a core human need:
* the drive to acquire * the drive to bond * the drive to learn * the drive to defend * the drive to feel
How attractive is a potential market? Evaluate each of the following areas from 1-10:
* urgency of the market need * market size * pricing potential * cost of customer acquisition * cost of value delivery * uniqueness of the offer * speed to market * up-front investment * upsell potential (consumables, add-ons, etc) * evergreen potential (how much additional work to sell another unit?)
A score of 75+ has high potential; 50-75 is 'only okay'. A few hours of evaluation can prevent lots of wasted effort!
Starting a business is a lot of work, so also make sure you actually care about the market!
A hidden benefit of entering a market with competition: you know there's a market!
Become a customer of your competition to figure out how they do it and how the offer might be improved
The book proposed 12 standard formats for creating value (and important aspects of each):
* Product - scales well! * Service - make sure you're sufficiently compensated for your time * Shared Resource - monitor usage levels carefully * Subscription - minimize customer attrition * Resale - establish close relationships with wholesalers and carefully manage inventory * Lease - charge enough to cover the asset's cost, plus repair, replacement, insurance, and profit * Agency - make sure your commission is large enough * Audience Aggregation - fulfill the advertiser's needs without driving away the audience * Loan - gauge and account for the risk of default * Option - convince buyers that the offer is worth it and enforce the specified deadline * Insurance - avoid bad risks! * Capital - make intelligent guesses about the future
Most products mix-and-match these categories:
* Orbitz - products, insurance, audience aggregation * Movie Theater - shared resource, option, audience aggregation, products
Modular offers allow bundling and unbundling: customers to mix-and-match which components of the offer they'd like
The perceived value of an offer to a customer scales with:
* efficacy - how well does it work? * speed - how quickly does it work? * reliability - how dependable is it? * ease-of-use - how much effort does it require? * flexibility - how many things can it do? * status - how does it affect others' view of me? * aesthetic appeal - how aesthetically pleasing is it? * emotion - how does it make me feel? * cost - how much do I have to give up to get it?
In designing any offer, tradeoffs must be made between these categories.
Customers will tell you that they want it all, but this isn't realistic!
Prototyping and Testing
To avoid blowing your life savings on a dud, learn as much about your market and your product's reception while investing as little as possible:
* create a minimum economically viable prototype your offer * get real feedback from potential customers (NOT just friends and family!) to identify likes, dislikes, and barriers to purchase * iterate on the feedback to improve your offer * 'shadow test' by offering preorders
When asking for feedback, ask open-ended questions and ask them to rank potential improvements by relative importance
Don't just rely on potential customers - field-test your own offers as much as possible!
Prototyping and shadow-testing with preordering helps you verify that your critical market assumptions are actually valid
If your critical assumptions don't seem to be right and you don't have a viable market, don't blindly charge ahead!
The Human Mind
Keep in mind that at our cores we are still animals, and our minds evolved under very different conditions than we live in now!
If you want to perform at your peak, take care of yourself:
- eat well
- exercise regularly
- sleep sufficiently
- get enough sun (but don't get burned)
Experiment to find what works best for you! Manipulate your environment to make the healthy choice easier
Your brain is composed of many underlying parts that react to your environment outside of your conscious control
Perched on top of this subconscious 'elephant' is a conscious 'rider' - self-awareness, logic, deliberation, inhibition
Realize that your immediate reactions are mostly outside of your control, and are often illogical and unhelpful!
Consider taking up meditation, even for only a few minutes a day, to improve your mindfulness