1. the expense
2. the outdated curriculum
3. not guaranteed you’ll get a high paying job or that it will make you a good manager

• Business schools don’t create successful people - they just accept them.

1. Urgency (Rent old movie, vs see latest bond)
2. Market size (How many people are actively purchasing things like this)
3. Pricing potential (What is the highest price people are willing to pay?)
4. Cost of customer acquisition (how much cost to get a sale in money and effort)
5. Cost of value delivery (Delivering files by internet is free, investing a product and building a factory cost millions)
6. Uniqueness of offer (Competitors, can you be copied?)
7. Speed to market (How quickly can you create something to sell?)
8. Up-front investment (How much will you have to invest before you can sell?)
9. Upsell potential (related or secondary offers?)
10. Evergreen potential (After the initial product has been created, what additional work is required to keep selling?)

• Satisfy one or more of the prospects Core Human Drives
• Offer an attractive and easy to visualise end result
• Command the highest hassle premium by reducing end user involvement
• Satisfy the prospects status seeking tendency, by providing desirable social signals

• Efficacy - how well does it work?
• Speed - how quickly does it work?
• Reliability - can I depend on it working?
• 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 is it?
• Emotion - How does it make me feel?
• Cost - How much does it cost?

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.

• replacement cost
• market comparison
• discounted cashflow / net present value
• value comparison (who is this valuable to?)

• Costs too much (framing, value based selling)
• Won't work (social proof, referrals)
• Won't work for me (social proof, referrals)
• I can wait (education based selling, visualise)
• Its too difficult (education based selling, visualise)

• Increase the number of customers you serve
• Increase the average size of each transaction
• Increase the frequency of transactions per customer
• Raise prices

• Work to make enough money. Money contributes to happiness but only to a point.
• Focus on improving your health and energy.
• Spend time with people you enjoy
• Remove chronic annoyances.
• Pursue a new challenge - master a new skill, complete a big project, pursue something

• The invisible decision - no one knows how or where decisions are made
• Unfinished business - too many tasks are seen through to the end
• Coordination paralysis - nothing can be done without sign-off from everyone
• Nothing new - no radical ideas, inventions, lateral thinking, initiative
• Pseudo problems - minor issues are magnified
• Embattled centre - centre battles for consistency and control against regions
• Negative deadlines - deadlines become more important than quality work
• Input domination - individuals react to inputs, their in tray, as opposed to initiative

1. Recruit the smallest group of people, who can deliver quickly with high quality
2. Clearly communicate the desired end result
3. Treat people with respect. Appreciation, courtesy and respect
4. Create an environment where everyone can be as productive as possible
5. Refrain from having unrealistic expectations regarding certainty and prediction
6. Measure to see if what you're doing is working

• Complex systems have:
• interdependent flows
• Stocks
• Processes
• Parts
• Sub-systems
• Flows
• Inputs
• Outputs
• Feedback loops
• Triggers and endpoints (what starts and stops parts of the system)
• Diagrams and flowcharts help you understand how each inflow, process, trigger, conditional, endpoint and outflow come together.

Take any of these away and you won’t have a business. A business is not rocket science, its simply a process of identifying a problem and finding a way to solve it that benefits both parties.

• Focus on improving skills directly related to the 5 parts of every business.
• Any skill that helps you create value, market, sell, deliver value or manage finances is economically valuable.

• Market matters most. A stellar team or fantastic product won’t redeem a bad market.
• Every business is limited by the size and quality of the market that it tries to serve. The iron law of the market is cold hard and unforgiving.
• THe best approach is to focus on making things that people want to buy. Creating something no one wants is a waste. Market research is looking before you leap. Books like the ‘new business road test’ by John Mullins can help you identify good markets from the outset. Increasing the probability of success.

• Maslow’ so hierarchy of needs. Physiology, safety, belongingness/love, esteem and self-actualisation
• Each lower level must be met before a person can focus on a higher level
• Clayton Alderfer’s version: existence, relatedness and growth
• Describes the general priority of human desires, but not the methods people use to satisfy them.
• Driven: How human nature shapes our choices:
1. The drive to acquire (objects, power, status)
2. The drive to bond (relationships, social)
3. The drive to learn (curiosity, knowledge)
4. The drive to defend (protect us from problems)
5. The drive to feel (new sensory experiences, pleasure, excitement, thrill, look forward to)
• The more drives your offer connects with, the more attractive it will be to your market.
• All successful businesses sell some combination of money, status, power, love, knowledge, protection, pleasure and excitement. The more clearly you articulate how your product satisfies one or more of these drives the more attractive your offer will become.

• Humans evolved to compete for power (bringing food, mates, protection)
• Our brains still seek status, people care intensely about what others think of them, spend significant energy tracking their relative status, seize opportunities to increase status
• We like to be associated with people and organizations we perceive to be powerful, important or exclusive
• If one felt successful, there would be little incentive to be successful
• As an individual, be conscious when you’re choosing status over something else.

1. Urgency (Rent old movie, vs see latest bond)
2. Market size (How many people are actively purchasing things like this)
3. Pricing potential (What is the highest price people are willing to pay?)
4. Cost of customer acquisition (how much cost to get a sale in money and effort)
5. Cost of value delivery (Delivering files by internet is free, investing a product and building a factory cost millions)
6. Uniqueness of offer (Competitors, can you be copied?)
7. Speed to market (How quickly can you create something to sell?)
8. Up-front investment (How much will you have to invest before you can sell?)
9. Upsell potential (related or secondary offers?)
10. Evergreen potential (After the initial product has been created, what additional work is required to keep selling?)

• Competition means that the market exists (there's no market risk)
• Learn from the competition, be their customer, see what works and what doesn't

• Don't start a business just for the money
• It takes a lot of effort, to reduce the effort of starting a business by introducing systems
• Take notice of what you choose to spend your time doing.
• Find an attractive market that interests you enough to keep you improving your offering every single day.
• You can also try to make a necessary but dull market interesting to persue

• Don't let your calling stop you being objective. There's a difference between a solid business and an interesting idea.
• Keep things like this as a side project, approach them in a way that you can learn new skills whilst doing it
• Use 10 ways to evaluate a market before entering it.

1. Product:
1. Create a tangible item that people want
2. Produce it inexpensively whilst maintaining acceptable quality
3. Sell as many as possible, for as high a price as the market can bare
4. Keep enough inventory available to fulfil orders as they come in
2. Service: Provide help or assistance, then charge a fee for the benefits rendered
1. Have employees capable of a skill that other people require but can't, won't or don't want to use themselves
2. Ensure that the service is provided with consistently high quality
3. Attract and retain paying customers
3. Shared resource: Create a durable asset that can be used by many people, then charge for access
1. Create an asset people want to have access to
2. Serve as many customers as you can without affecting UX
3. Charge enough to maintain and improve the shared resource
4. Subscription: Offer a benefit on an ongoing basis, and charge a recurring fee
1. Provide significant value to each subscriber on a regular basis
2. Build a subscriber base and attract new subscribers to compensate for attrition
3. Bill customers on a recurring basis
4. Retain each subscriber as long as possible
5. Resale: Acquire an asset from a wholesaler, then sell that asset to a retail buyer at a higher price
1. Purchase product as inexpensively as possible, usually in bulk
2. Keep product in good condition until sale
3. Find potential purchasers of the product quickly, to keep inventory cost low
4. Sell the product for as high a markup as possible, preferably a multiple of purchase price
6. Lease: Acquire an asset, then allow another person to use it in exchange for a fee
1. Acquire an asset people want to use
2. Lease the asset to a paying customer on favorable terms
3. Protect yourself from unexpected events, including loss or damage of the asset
7. 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
1. Find a seller who has a valuable asset
2. Establish contact and trust with potential buyers
3. Negotiate until an agreement is reached on terms of sale
4. Collect the agreed-upon fee or commission from the seller
8. Audience Aggregation: Get the attention of a group of people, with certain characteristics, then sell access in the form of advertising
1. Identify a group of people with common interests
2. Consistently attract and maintain their attention
3. Find third parties who are interested in buying that attention
4. Sell access to that audience without alienating the audience itself
9. Loan: Lend a certain amount of money, collect payments over a predefined period of time
1. Have some amount of money to lend
2. Find people who want to borrow that money
3. Set an interest rate that compensates you adequately for the load
4. Estimate and protect against the possibility that the load won't be repaid
10. Option: Offer the ability to take a predefined action for a fixed period of time in exchange for a fee
1. Identify some action people might want to take in future
2. Offer potential buyers the right to take that action before a deadline
3. Convince potential buyers that the option is worth the asking price
4. Enforce the specified deadline on taking action
11. Insurance:
1. Create a binding legal agreement that transfers the risk of a bad thing from the policy holder to you
2. Estimate the risk of that thing, using available data
3. Collect the agreed-upon series of payments
4. PAy out legitimate claims upon the policy
12. Capital: Purchase ownership stake in a business. Collect a portion of the profits
1. Have a pool of resources available to invest
2. find a promising business in which you'd be willing to invest
3. Estimate the current worth, its worth in the future, and the probability that the business will not survive
4. Negotate the amount of ownership you'd receive in exchange for the amount of Capital you're investing

• People are willing to pay, to relieve pain.
• Time, effort, distraction, uncertainty, experience, resources or equipment

• People don't trade money for things when they value their money more highly than they value the things
• Willingness to pay
• The most valuable offers:
• Satisfy one or more of the prospects Core Human Drives
• Offer an attractive and easy to visualise end result
• Command the highest hassle premium by reducing end user involvement
• Satisfy the prospects status seeking tendency, by providing desirable social signals

• The 12 standard forms of value are not mutually exclusive. Most successful businesses offer value in multiple forms.
• By making offers modular the business can create and improve each offer in isolation. Customers can combine them in interesting ways.

• Make offers small and modular enables you to offer bundles. Repurpose the value you've created to make more value
• The more things in the bundle the higher the perceived value
• Bundling and unbundling can help you create value for different types of customers without requiring the creation of something new

• Ideas are largely worthless, getting them to work in reality is the most important job of any entrepreneur
• Show your work to potential customers early
• Being in 'stealth mode' diminishes your early learning opportunities
• Prototypes give an early representation of what your offering will look like.
• All your prototype has to do is represent what you're offering in a tangible way, so that customers can understand what you're doing well enough to give you feedback
• Prototypes are valuable because they allow you to get feedback before you spend time, effort and money.

• Nobody gets it right first time
• The iteration cycle is a process you can use to make anything better over time.
• There's nothing wasteful about the changes and revisions that great artists make to their creations. Every iteration brings the project closer to completion
• 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 - 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?

• Our goal is to have more at bats per time and money than anyone else (Eric Schmidt - Google)
• Work through each iteration cycle as quickly as possible
• The faster you move through the iteration cycle, the better you product offering will become.
• Keep each iteration small, clear and quick.
• Basing each iteration on what you learned vis previous iterations.
• Iteration cycles feel like additional work because they are, but you're derisking the time, energy and resources you put into the product

• No business plan survives first contact with customers
• Getting useful feedback from customers is is the core of the iteration cycle
• Get it from real customers
• Ask open-ended questions
• Steady yourself, and keep calm
• Take what you hear with a grain of salt
• Give potential customers the opportunity to preorder
• You can do this even if you don't have the product yet (Shadow testing)

• When deciding what to build. Think about your customers decisions, what might attract them to you over their alternatives. Innovate in those areas first.

• A decision that places a higher value on one of several competing options
• Time, energy and resources are finite
• Predicting how people will make Trade-offs is tricky, values change quickly based on the environment and the context
• Values are preferences - how much we want or desire, or place importance on one particular object.
• When making decisions on your offering, it pays to look for patterns. How specific groups of people tend to value some characteristic in a certain context
• You can't make everyone happy, so you need to go after what your best customers want

• Efficacy - how well does it work?
• Speed - how quickly does it work?
• Reliability - can I depend on it working?
• 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 is it?
• Emotion - How does it make me feel?
• Cost - How much does it cost?

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.

• The tricky thing about working out what people want is that people want everything
• People never accept tradeoffs unless they're forced to make a decision
• People are happy to settle for the next best alternative to the perfect option
• In testing, force customers to make tradeoffs. Which of these is most important? Which of these items is least important?
• Random questions sets containing 4-5 criteria are shown to the customer until they've ranked everything against everything else for you

• Facts or characteristics that must be true in the real world for your business or offering to be successful
• If any critical assumptions turn out to be false, the business idea will vastly less promising than it appears.
• The more accurately you can define these assumptions and test them in advance the less risk you'll be taking

• Selling an offering before it exists
• Real paying customers are always different from hypothetical ones.
• You can turn a hypothetical customer into a real one by asking them to commit to buy the product or service
• Test your critical assumptions with real customers quickly and cheaply

• To conduct a shadow test you need something to sell
• You don't have to create the entire offer before you start selling
• A minimum viable offer is an offer that promises or provides the smallest number of benefits necessary to produce an actual sale.

• Using the iteration cycle to add new benefits to an existing offer. Keep making and testing additions to the core offer, continue doing what works, and stop doing what doesn't

• Use the product in the field
• Iterate many times before releasing to customers
• Using what you make everyday is the best way to improve the quality of what you're offering

• People ignore what they don’t care about
• Receptivity is how open a person is to your message
• What and when are the big components of receptivity
• More receptive at certain things at certain times.
• The medium matters
• More receptive if they think its personal (hand written vs To the household )

• Advertising is the tax you pay for being unremarkable
• Being remarkable is the best way to attract attention
• Design your offer to be remarkable-unique enough to pique your prospects curiosity - it’ll be significantly easier to attract attention

• Most people won’t buy your product
• It’s a mistake to assume most people care about your product
• You don’t need most people, you just need enough attention to close enough sales, to make enough profit
• Focus your attention on getting the attention of the right people at the right time
• Your probable purchaser is the type of person who is perfectly suited to what you’re offering
• Find people who are already interested in the types of things that you can offer

• To earn attention of a prospect, you must divert their attention from what they’re doing, thats hard
• Your prospects are paying attention to something else, not you
• To break their attention, provoke curiosity, surprise or concern
• The stronger and more emotionally compelling the stumbling, the easier it is to attract attention
• Marketers use evocative imagery, words and sounds as we’re wired to stop what we’re doing and evaluate them
• You can do this subtly too.
• Always assume your prospects begin in a state of preoccupation, break it and earn their attention

• Marketing is most effective when it focuses on the end result, which is usually a distinctive experience or emotion related to a core human drive. The function of the purchase is important, but the end result is what the prospect is most interested in hearing about
• Often more comfortable to focus on features you offer, but focusing on the benefits you'll provide is more important

• Evaluate customers before they buy. To minimise the chance of wasting your time dealing with a customer who's not a good fit for your business
• Car insurance company asking you questions. Are you the type of person that they want to insure? If so, how much should they charge you?
• If you're not right for them, they'll encourage you to go to a competitor.
• Screen customers to filter out bad customers before they do business with you. Clearly define the ideal customer, filter the rest, and the more you'll be able to serve your ideal customer

• Certain markets have clear entry and entry points (when you expect a child)
• They can have a massive impact on the effectiveness of your marketing
• Get your customers attention as soon as they become interested, you become the thing that everything else gets compared to

• Addressability: how easy it is to get in touch with people who might want what you're offering
• A mixture of accessibility and receptiveness
• Sensitive or embarrassing topics have low addressability.

• You need to make your prospect want what you have to offer
• You need to produce a feeling of desire in your prospects
• Discover what people really want, present your offer in a way that intersects with that preexisting desire
• Education based selling. Show how the offer will help them achieve what they desire
• Help your prospects convince themselves that what you're offering will get them what they really want

• The test drive is the most effective tool a car salesperson has. Stops you from evaluating options and prices, start to feel emotions.
• Stopped comparing and started wanting
• The most effective way to get people to want something is to encourage them to visualise what their life would be like once they've accepted your offer. Stimulate their minds, to trigger a positive future that the product brings about

• Framing is the act of emphasising the details that are critically important, while de-emphasising things that aren't
• Use well: present your offer persuasively while honouring your customer's time and attention

• If you want to attract attention quickly, give something valuable away for free
• Offer to try with no obligation
• Offering free value is a quick and effective way to attract attention
• You earn their attention, give them a change to experience the value you provide
• Give only free value that is going to attract paying customers

• Asking for permission to follow up after providing free value is more effective than interruption
• Asking permission give you the opportunity to focus on communicating with people you know are interested in what you have to offer

• Complicated messages are ignored or forgotten (people are busy, don't pay you attention)
• A hook is a single phrase or sentence that describes an offer's primary benefit. Sometimes the hook is a title, and sometimes its a short tagline. It conveys the reason someone would want what you're selling
• iPod= 1000 songs in your pocket
• Focus on the primary benefit, the unique differentiator, why people should care
• Brainstorm words and phrases, connect them in new ways, the more options you generate the faster you'll find your hook

• Whilst you have attention, you need to direct it towards a sale
• Give them a call to action (take exit 25, for the best burgers in town)
• Make it clear, simple and obvious
• Collecting emails? Make it clear where the field is, why they should fill it out, what to click once they've done that and what they can expect to happen
• The best calls to action, ask for the permission to follow up
• Every marketing message should have a clear call to action

• The hero's journey: Normal person, normal life, a challenge is answered, depart from normal life, remarkable experiences expose them to a new world, tested, learns secrets, acquires a power, vanquishes the foe, returns to tell the story, gets admiration
• Customers want to be heroes. Telling them a story of people who've already walked the path they want to can be compelling
• Testimonials, case studies and other stories are effective to getting customers to accept calls to action. Make them vivid, clear and emotionally compelling.

• Publicly taking a position not everyone will agree with.
• It can attract attention, which is a good thing, discussion is attention

• What people generally think about a particular offer or company
• No one ever got fired for buying IBM
• The market place is the arbiter or your reputation, its always watching what you do.
• Building a reputation takes time, but its the most valuable tool their is

• A transaction is an exchange of value between 2 parties. If you don't have anything your customers want they won't buy from you.
• Developing and testing a Minimal Viable Offer is so important. Its the best way to determine whether or not you've created something valuable enough to sell before you invest
• When starting a business, get to the point where you can make your first profitable transaction as quickly as possible. That's what changes you from a project to a business.

• You need trust to make transactions
• Building a trustworthy reputation overtime overtime by dealing fairly and honestly is the best way to build trust.
• There are ways to signal you're trustworthy

• Overlapping interests between two or more parties.
• Understand what your probable purchasers want or need
• Common ground is a precondition of a transaction. Aligning interests is critical to finding common ground.
• Align your interests with theirs, find something that works for both of you, and you'll both trust each other more
• Negotiation is the process of exploring different options to find common ground.
• The more paths you explore, and the more open you are to options the higher likelihood you'll find common ground.

• All prices are arbitrary and malleable.
• Any price, can be set at any level, at any time
• You must be able to support your asking price before a customer will actually accept it.
• People prefer to pay as little as possible. You must be able to provide a reason why the offered price is worth paying

• There are 4 ways to support a price on something of value
1. replacement cost
2. market comparison
3. discounted cashflow / net present value
4. value comparison (who is this valuable to?)
• A house that used to be Elvis Presley's would be more valuable to Rich buyers. So method 4 would value it higher than the others
• Value comparison is typically the optimal way to price your offer. Use the others as a baseline

• Discounts attract a customer when an offer is a commodity.
• Price elasticity - how changes in price affect demand.
• Sometimes by raising price you can appeal to different customers, or more customers (Bentley)
• When changing price, think about: potential profitability changes, ideal customer characteristics
• 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
• Changing prices changes the prospects attracted to your offer.

• Understanding and reinforcing reasons why your offer is valuable to the purchaser
• Reinforcing the reason why a transaction will be valuable to the customer
• Value-based selling is about listening not talking. Listen intently for what the customer actually wants
• Asking good questions is the best way to identify what your offer is worth to your prospect.
• SPIN selling. 4 phases of selling
1. Understanding the situation
2. Defining the problem
3. Clarifying the short-term and longterm implications of that problem
4. Quantifying the need-payoff, or the financial and emotional benefits the customers would experience after the resolution of their problem
• By asking those questions you increase the prospects confidence that you understand the situation, which increases their confidence in your ability to deliver a solution. Second, you'll discover information that will help you emphasise just how valuable your offer is, which helps you in framing the price of your offer versus the value it will provide.

• the process of making your prospects better, more informed customers
• As a sales consultant:
• Make them feel comfortable and relaxed
• Help them become more knowledgable about the product and industry
• Allows the prospect to learn, appreciate where the value is.
• Earns you trust
• Requires an upfront investment in your prospects but its worth it.
• Best if your product is actually superior to your competitors though

• When negotiating always worth knowing what the other party will do if an agreement can't be reached
• The other party always has a next best alternative.
• Understanding it gives you a sales advantage. You can structure your agreement so its more attractive than their next best option.
• The more you know the better you can frame your offer by bundling or unbundling services
• In a negotiation the power lies in the party that is willing to walk away from a bad deal.

• Best interests to maintain exclusivity
• Creating a unique offer or quality that other firms can't match
• If you're the only place they can get that product or service, then you're in a strong position
• Makes it easier to maintain a high perceived value, since there's no competition
• High prices and high profit margins
• If you're the exclusive source for what your prospects want, you win

• In every negotiation there are 3 universal currencies:
• Resources, time and flexibility
• One of these can be traded for more or less of the others
• Flexibility reflects the opportunity cost. Do something and you're not able to do something else
• Think of creative tradeoffs between the three to offer more options at the negotiating table

• Setup, structure and discussion
• Create an environment thats conducive to a deal
• Setup is stacking the odds in your favor before you negotiate
• Who? Are they open to dealing with you?
• Do they know who you are? How can you help them?
• What are you proposing, and how does it benefit the other party?
• Whats the setting?
• What other factors are relevant? Recent events?
• Structure is the terms of the proposal
• What. How to frame it.
• Benefits to them.
• Their next best alternative
• Barriers to purchase
• Tradeoffs or concessions you can make
• Discussion
• Presenting the offer. Talk through the proposal.
• Yes, No, Maybe

• 3rd party that negotiates on your behalf
• Agents, attorneys, mediators, brokers, accountants and other subject matter experts are all examples of buffers
• Can protect your reputation.
• Can be handy to say "I need to discuss this with my x"
• Be mindful of incentive-caused bias. Your buffers priorities might be different to yours.
• Don't give anyone unfettered control over decisions that directly affect your money

• When prospects feel the salesman is going in for the hard sell.
• Reactance - people react in the same way. The harder the salesman pushes the more the prospect resists
• Present yourself to the prospect as an assistant buyer. Your job is not to sell the thing, its to help them make an informed decision. You're helping them to invest their resources wisely
• This reinterpretation of your role eliminates the prospects feeling of pressure, convinces them you're looking out for their best interests.
• As a sales person, you need to avoid desperation and chasing.
• These social signals are important.

• Desire people feel to pay back favors , gifts, benefits and resources provided
• If someone benefits us, we like to benefit them in return
• The powerful remained in power by throwing lavish parties
• Salesman: can I get you a coffee? Would you like a soda? Is there anything that I can do to make you more comfortable?
• Providing free value builds your social capital. Builds your reputation. Makes people more likely to convert when you provide your call to action

• Making damaging admissions can actually increase their trust in your ability to deliver what you promise
• Your prospects know you're not perfect, people get suspicious when something appears too good to be true

• Identify and eliminate barriers to purchase
• 5 standard objections (how to address)
• Costs too much (framing, value based selling)
• Won't work (social proof, referrals)
• Won't work for me (social proof, referrals)
• I can wait (education based selling, visualise)
• Its too difficult (education based selling, visualise)
• Convince the prospect the objection isn't true. Convince the prospect the objection isn't relevant.
• If they still don't want to buy, there might be a power issue. They don't have permission.

• Transfers some of the risk of a transaction from the buyer to the seller.
• Money back guarantee. "take the puppy home strategy"

• Convincing past customers to buy from you again.
• Netflix does it well. Reduced rates.
• Quicker, simpler, and more effective to increasing revenue by attracting new customers
• Cost of acquisition is low as you have their information
• Easier if you have permission from your customers to follow up

• A set of steps and processes from the start of your value creation process all the way through the delivery to the end
• Combination of value creation and value delivery processes.
• Toyota reputation with high quality products. Until the paradox of automation destroyed that reputation.
• Diagram your value stream. it can help you streamline your process, making the entire system perform better.
• Make your value stream as small and efficient as possible. The longer your process the greater that things go wrong. The shorter and more streamlined your value stream, the easier it is to manage and the more effectively you'll be able to deliver value.

• Direct to user:
• Simple and effective.
• Control over experience
• You could limit reach and disappoint customers if you become the bottleneck
• Distribution through intermediary
• Can increase sales
• You have to give up margin
• You have to give up control - counterparty risk = partner will screw up and diminish your reputation

• Zappos eliminate risk by offering free shipping and free returns. Overcoming a barrier to buying (risk reversal)
• Zappos ship faster than they promise.
• Expectation Effect: Quality = Performance - Expectations
• After the purchase, you must surpass their expectations for them to be satisfied
• Give customers an unexpected bonus.

• Do great work every single time, on schedule, always pleasant to work with
• Customers want to know what to expect. They want a predictable experience.
• Uniformity, consistency and reliability
• Uniformity = same characteristics every time
• Consistency = the same value over time
• Reliability = count on the delivery of the value without error or delay
• Predictability improves reputation

• Rate at which system achieves its goal
• Effectiveness of your value stream
• Dollar throughput: how quickly your business creates a dollar of profit
• Unit throughput: how quickly your business create a unit for sale
• Satisfaction throughput: how much time to create a happy customer

• Reproduce something of value
• Design the wheel once, make as many as you wish
• The internet has made duplication easier
• Duplication of information, text, images, music, video is essentially free
• Combining duplication and automation allows you to deliver value to more people and close more sales as a result

• Multiplication is duplication of an entire system
• Walmart = Stores + Distribution Centres
• The easier it is to multiply your business system, the more value you can deliver

• Scale is the ability to reliably duplicate or multiply a process as volume increases.
• Scalability determines your maximum potential volume
• Automation helps with scale.
• Products are easier to duplicate, while shared resources like gyms are easiest to multiply
• Humans don't scale. People have limited time and energy. Constraint which doesn't change. Performance Load: A persons effectiveness usually goes down as the demands on them increase.
• Services are typically difficult to Scale, since they tend to rely heavily on the direct involvement of people. The less human involvement the more scalable the business

• Toyota employees implement over 1 million improvements to the Toyota production system every year
• Small helpful inputs tend to accumulate overtime, producing huge results
• Kaizen - continual improvement of the system by eliminating waste via a lot of very small changes. Many small improvements, consistently implemented, inevitably produce huge results
• Accumulation isn't always positive
• Incremental augmentation is an example of the power of accumulation. IF your offer improves with every iteration cycle, it won't be long before your offer is many times more valuable to your customers that it was before.
• Small changes to your value delivery process can save you a ton of time and effort in the long run. The more small improvements, the better your results

• Making a small change to a scalable system produces huge results.
• The effect fo any improvement or system optimisation is amplified by the size of the system. The larger the system, the larger the result.
• The best way to look for amplification opportunities is to look for things that are constantly duplicated or multiplied.
• Scalable systems amplify the results of small changes. Small changes to scalable systems produce massive results

• The more time and energy you spend following your competition the less time and energy you have to actually build your business
• Every improvement you make to your value stream makes it harder for potential competitors to keep up.
• Increase your ability to create and deliver value efficiently and effectively, you're simultaneously making it more difficult for competitors to compete with you by doing what you're doing
• Don't focus on competing, focus on delivering even more value

• Tools multiply the effect of a physical force
• The more a tool amplifies or concentrates your effort, the more effective the tool
• Investing in force multipliers makes sense because you can get more done with the same amount of effort
• They can be expensive - the more effective they are, the more expensive they tend to be
• As a 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.
• Choose the best tools you can obtain and afford.
• Quality tools give you maximum output with minimum of input
• Invest in force multipliers to free up your time energy and attention to focus on building your business instead of simply operating it.

• A system is a process made explicit and repeatable
• A series of steps that has been formalised in some way
• Systems can be written or diagrammed but they are always externalised in some way
• Help align people
• Developing clear systems and processes for events and tasks can help everyone do what must be done with a minimum of misunderstanding and fuss.
• If you can't systemise it, you can't automate it
• Creating business systems can feel like extra work. But they make work easier.

• Bring in more money that you spend
• Profit allows the business to stay in operation
• The more profitable the business, the better it will be able to handle uncertainty and change.

• the difference between how much revenue you capture and how much you spend to capture it, expressed as a %
• ((Revenue - Cost) / revenue) * 100 = % Profit margin
• Profit margin isn't the same as markup, which represents how the price of an offer compares to its total cost.
• Markups = ((Price - Cost) / Cost) * 100 = % Markup
• Profit margins can never be more than 100% but markups can
• Clearly, the higher the profit margin the better. If you need to focus and cut costs, cut low margin products

• You can get anything you want in this life if you help enough other people get what they want
• Value capture is retaining a % of the value provided in every Transaction
• You need to capture enough value to make your investment of time and energy worthwhile, but not so much that there's no reason to business with you. People buy because they believe they're getting more value in the transaction than they're spending
• Maximisation = capture as much as possible
• Minimisation = capture as little as possible, as long as the business remains sufficient (long run powerful)

• 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.
• Ramen profitable = pay your rent, keep the utilities running, and buy inexpensive food like ramen noodles
• Track sufficiency by using a number called TMR Target Monthly Revenue
• The quicker you can reach the point of sufficiency the better the chance your business will survive and thrive

• An estimate of the total worth of a company.
• Important when raising capital. Perceived value applies just as much to businesses and offers.

• Cash Flow Statement is an analysis of the companies bank account over a period of time
• Deposits and withdrawals.
• Always over a period of time. Shorter periods are used for making sure you don't run out of cash, longer periods are used for assessing performance
• Operations (Selling and buying)
• Investing (collecting dividends and paying capital expenses)
• Financing (borrowing money and paying it back)
• Cash doesn't lie. Little room for creative interpretation
• Free cash flow = cash a business collects from operations minus cash spent for capital equipment and assets, which are necessary to keep it operating.
• Cash represents options. The option to create new offers, invest in marketing and sales, hire employees, purchase equipment, acquire another company. The more cash your business has at its disposal, the more options it has, and the more Resilient the business becomes.

• Cash isn't the whole picture.
• Cash isn't profit, profit is what we're after
• You can have a positive cash position while losing money on every sale
• To determine whether or not your sales are profitable, you need to be able to track which sales and expenses are related.
• Track revenue on a accrual basis. Revenue is recognised immediately when a sale is made and the expenses associated with that sale are incurred in the same time period
• This is the matching principle. Accountants job is to match revenue and expenses as accurately as possible.
• The end result is an Income Statement = Profit and Loss Statement = Earnings Statement = Operating Statement
• Revenue - Cost of Goods Sold - Expenses - Taxes = Net Profit
• Easier to see profitability. Income statements include assumptions and estimates.
• Amortisation (spreading the cost of capital equipment over time)

• Snapshot of what the business owns and what it owes.
• Assets - Liabilities = Owners Equity
• Assets (have value: products, equipment, stock)
• Liabilities (obligations, debt)
• Balance bit:
• Assets = Liabilities + Owners Equity
• When a business borrows money, it receives the cash borrowed. That goes on the cashflow statement, and the influx of money makes it look like the business had a good month, even though it was a loan.
• The business though, has more cash, but it also has a new liability (debt). The companies "net worth" didn't change at all.
• The second formula is useful, it reflects the relationship .
• The balance sheet always balances.
• You can tell if a company is solvent, if it can pay its bills, how the value has changed over time
• Balance sheets have assumptions and estimates. Brand value. % of accounts receivable that will be paid. Inventory value.

• Profitability ratios
• Leverage ratios. Debt to equity. How many dollars of debt for dollars of equity
• Liquidity ratios.
• Current ratio = current assets / current liabilities
• Quick ratio = current assets - inventory / current liabilities (measure of bankruptcy)
• Efficiency ratios
• How well a business is managing assets and liabilities
• Average number of days an item is in inventory
• How long it takes to sell out current inventory
• Day sales outstanding (a measure of how long it takes to collect cash from sales)

• Examining potential changes to your business to see if benefits outweigh the costs
• Include non-economic costs too.
• Small improvements accumulate over time

• Increase the number of customers you serve
• Increase the average size of each transaction
• Increase the frequency of transactions per customer
• Raise prices

Not every customer is a good customer. Some sap your time, energy and resources without providing the results that you're looking for

• the ability to raise prices you're charging over time
• price elasticity - experiment to find what works
• pricing power helps deal with inflation
• raising prices allows you to protect yourself from shocks

• the total value of a customers business over the lifetime of their relationship
• the more they purchase and the more they stay the more valuable they are
• subscriptions are so profitable is that they increase the lifetime value of a customer
• the higher the lifetime value of a customer, the more you can do to keep them happy

• Insurance agencies can spend more to acquire customers than a lemonade stand can. the lifetime value of their customers is super high
• Allowable Acquisition Cost is the marketing component of lifetime value
• You can lose money on the first sale if you need to, when lifetime value is high (loss leader)
• AAC = (Lifetime value - value stream costs - share of fixed costs) * (1 - desired profit margin)

• The minimum ongoing resources required for a business to continue operation
• Low overheads, you don't need much revenue before reaching sufficiency
• Overhead also is how quickly you'll burn through any startup capital you've raised.

• Fixed costs = happen no matter how much value you create. Your overhead is a fixed cost.
• Variable costs = directly related to how much value you create.
• Reductions in fixed costs accumulate
• Reductions in variable costs are amplified by volume

• Individual decisions to cut costs might be OK trade-offs
• Overtime though, accumulated effects undermine the quality
• Cutting costs that are wasteful is a good idea, but diminishing returns always kick in
• Focus on creating and delivering more value
• Control your costs, don't undermine the reason customers but form you in the first place

• The point where your business's total revenue to date is equal to its total expenses to date. Your business starts creating wealth, not consuming it

• the process of spreading cost of a resource investment over the estimated useful life of that investment
• helps you determine if a big expense is a good idea. If investing capital makes sense

• the sum total of all liquid assets a business has at its disposal
• what you use to pay your overhead and your suppliers
• always track how much purchasing power you have

• How cash flows through a business.
• Revenues and expenses work like water flowing in and out of a bathtub
• Receivables = promised of payment you've accepted from others
• Debt = promises you make to pay someone at a later date
• Debts can get out of hand. Extend payment deadlines to avoid cash crunches.
• To bring in cash more quickly, speed up collections and reduce credit lines you're giving others
• The more purchasing power you have, the more resilient your business is and the better your ability to handle the unexpected

• The value you're giving up by making a decision
• whenever you invest time, energy or resources, you're implicitly choosing not to invest that time, energy or resources in any other way.
• Opportunity cost is important because its hidden. Absence blindness, humans have a hard time paying attention to what's not present.
• Don't analyse too many alternative actions though, just the best alternatives.

• Discounted cashflow. Net present value.
• Discount against the next best alternative rate of return. (Interest rate)

• The accumulation of gains over time
• You're able to reinvest gains, your investment will build upon itself exponentially, a positive feedback loop
• Creates the possibility of huge gains in a small period of time

• the practice of using borrowed money to magnify potential gains
• essentially a form of financial amplification, magnifies potential for both gains and losses
• playing with fire. can be useful if used properly, can burn you severely

• Funding can help you do things that would otherwise be impossible with your current budget
• Funding is the business equivalent of rocket fuel
• Hierarchy of funding:
• Personal cash
• Personal credit
• Personal loans
• Unsecured loans
• Secured loans
• Bonds
• Receivables financing
• Angel capital
• Venture capital
• Public stock offering (often how angels and VCs exit
• The more control you must give up for a dollar of funding gained, the less attractive the source of funding. Investors increase communication overhead.
• Funding can be useful, but be wary of giving up control over your businesses operations (and the guarantee that you'll be at the helm)

• The art of building and operating a business without funding
• Raising money from VCs isn't the only way to grow
• Limit yourself to personal cash and credit, the revenue and some ingenuity, you could build a successful business without funding.
• You can maintain 100% of control. Can take longer though.
• Force multipliers are useful but expensive. Taking funding in order to get access to critical capabilities can be smart. Otherwise, try to operate from cash and operating revenue as much as possible.
• Bootstrap as far as you can go, then move up the hierarchy of funding.

• ROI is the value created from an investment of time or resources. Helps you decide between alternatives.
• Return on invested time is an extremely useful way to analyse the benefits of your effort.
• The return on every investment is always directly related to how much the investment costs.
• Every future ROI estimate is a guess. You only know it for certain after the event.

• Are investments of time, energy and money that can't be recovered once they've been make. No matter what you do, you can't get those resources back.
• Continuing to invest in a project to recoup lost resources doesn't make sense. All that matters is how much more investment is required.
• Throwing good money after bad.

• Notice patterns in your value chain
• Internal controls are a set of specific standard operating procedures a business uses to collect accurate data, keep the business running smoothly, and spot trouble as quickly as possible.
• Budgeting: act of estimating future costs and taking steps to ensure estimates aren't exceeded without good reason. Good for controlling profit, cash flow and leverage.
• Supervision - delivery time, quality, cost and systems failures enables you to evaluate if you need to make changes to operations
• Compliance - you will have reporting obligations
• Theft and fraud prevention - internal controls make it harder for people to commit fraud
• Dispassionate third party auditors are useful. Separation of concerns is key

• Human biology is optimised for the conditions that existed 100k years ago
• Your brain and body are not optimised for the modern world
• Don't be too hard on yourself, you weren't built for this
• We're all running demanding new software, on ancient hardware

• Look after your brain and your body.
• Nutrition, exercise, sleep and rest = make you more productive.
• Good food, no refined sugar or processed food.
• Caffeine only in moderation.
• Exercise regularly. Increases energy and mental performance.
• 8 hours sleep restores willpower.
• Get enough sun, but not too much. Light helps your circadian rhythm
• Feed your brain the raw materials it needs to run
• Experiment. Change your environment.

• You are not the voice in your brain.
• Hindbrain - breathing, heartbeats, sleeping, muscles, reflexes
• Midbrain - processing sensory data. Pattern Matching. Prediction. Announcer
• Forebrain - cognition that make us human. Self awareness, logic, deliberation, inhibition and decision
• Think of your brain as a horse, and you are the rider. Its intelligent, and does stuff without you
• Disassociate yourself from the voice in your head. The announcer lists things in the environment that may fulfil human drives, or present some danger.
• Meditation can help you separate you from the voice in your head.

• Control the stimuli and you control the behaviour
• Perceptual control - sensors, trigger at certain levels, then they trigger actions until levels are restored. We put on a coat because we feel cold, and we don't want to feel cold.
• Control is not planned, its just a reaction to the environment. People act to control their perceptions.

• A range of perceptions that indicate a system is under control
• Set points - min or max.
• Ranges - spread of acceptable values
• Errors - zero (anything that's not zero is out of control)
• To change a behaviour, you must change the reference level or change the environment.

• We're evolved to avoid expending energy unless absolutely necessary
• Unless a reference level is violated, people will conserve energy and not act

• Change your environment to support your choices
• Don't have to use much willpower that way
• Make it easier to act the way that you decide you want to act
• Guiding structure environment is a largest determinant of your behaviour
• Don't want to eat ice cream, don't buy it
• Add friction or eliminate options.
• Sterile cockpit rule. Pilots are only allowed to talk about flying the plane until they're above 10k feet.

• Something needs to change. You may not know what that is
• Reorganisation is random action that occurs when a reference level is violated but you don't know what to do to bring the perception back under control.
• When you're feeling lost, take heart. Its your brain gathering the information it needs to make good decisions

• Conflicts occur when two control systems try to change the same perception.
• When you procrastinate. One subsystem is trying to control getting things done. While another is trying to control getting enough rest.
• Both subsystems will keep increasing their strength to win (this makes you feel conflicted)
• Interpersonal conflict is challenging because we can never truly control the actions of another human being. We can influence, persuade, inspire or negotiate but we can't act for them, or change their reference levels
• Conflicts can only be resolved by changing reference levels. How success is defined by the parties involved. Attempting to resolve a conflict by calling attention to unacceptable behaviour is ineffective
• Each party has a reference level, influenced by their environment.
• Procrastination conflict can be ended, by Scheduling time for work and rest.
• You can focus on work, when there's an end in sight and your brain thinks it'll get its rest

• We are natural pattern matchers
• Learnt by experimentation
• Memory is a database of patterns learned by experience
• Recall is optimised for speed not accuracy
• The more patterns you've learned, the more options you have when solving problems

• Our mind's ability to imagine taking a specific acton, then simulating the probable result before acting
• Anticipating the results of our actions is a significant advantage. It dramatically enhances our ability to solve novel problems.
• Relies on our memory - our database of patterns. Associations of previous experiences
• Hold the end result in mind for a few seconds, and your brain will start simulating solutions
• You need a destination though, without a destination there is no simulation

• Our brain makes interpretations
• You can alter the snap judgements through reinterpretation
• Your memory is fundamentally impermanent. Memories can when recalled be recommitted to a new location with a twist, it can include alterations we've made to it
• You can change your beliefs and mental simulations by recalling and reinterpreting it

• Motivation is an emotional state that links parts of our brain that feel with the parts that are responsible for action
• Basic desires involved in motivation
• Moving towards something that is desirable
• Moving away from things that aren't
• Motivation is an emotion. Not a logical, rational activity
• Eliminate the inner conflicts that compel you to move away from potential threats, you'll find yourself experiencing a feeling of motivation to move toward what you really want

• Most of the time we are on autopilot, sensing the world around us, against internal reference levels and acting accordingly.
• Inhibition is the ability to temporarily override our natural inclinations
• Willpower is the fuel of inhibition.

• Willpower can be thought of as instinctual override
• Willpower has limitations
• Tired and stressed? That seems to reduce willpower
• Use your willpower to change your environment, not your behaviour
• Change your environment, save your willpower for when you need it

• People hate to lose things more than they like to gain them
• Reinterpret risk of loss as 'no big deal'
• Loss aversion is why risk reversal is so important when presenting an offer to a customer

• The response to a threat is fight, flight or freeze
• Your brain chooses based on an automatic mental simulation of the situation
• Your caveman brains in modern environments have us eat too much, exercise too little we also fight, freeze or run when we don't need to
• Threat lockdown can become a downward spiral
• Don't try to turn off the signal. Send a little confirmation back, message received. Thank you
• You need to convince your mind there is no longer a threat
• you can convince it there never was one
• you can convince it the threat has passed
• Exercise, sleep and meditation can help

• Beyond your Dumbar number, people are treated more like objects
• The more remote the connection to a person, the less we feel
• Executives struggle with this.
• Personalising an issue hacks this limitation. Imagine they effect someone close to us.
• The grandchild rule helps you evaluate decisions with longer-term impact
• Personalise the results of your decisions and actions, and you'll be far less likely to run afoul of cognitive scope limitation

• Your brain is constantly trying to find out what is associated to what
• Coke = Happy Moments
• Your brain will make the association even if your rational mind doesn't
• Present your prospects with positive association

• cognitive bias that prevents us from identifying what we can't observe
• its far more difficult for people to notice what's missing
• anticipating issues before they arise
• no one sees all of the bad things a great manager prevents
• absence blindness makes prevention grossly underappreciated
• always state benefits in positive, immediate, concrete, and specific terms. Focus on things the user can directly experience (insurance could focus on peace of mind, rather than on avoiding financial ruin)
• using checklists helps with absence blindness

• Our perception is optimised to notice contrast in our surrounding environment
• Framing is a way to control perception of contrast

• Because of the conservation of energy... people have a tendency to do things later
• Later often turns into never. So you need to get customers to act immediately.
• Scarcity encourages people to make decisions quickly.
• Loss aversion makes a powerful reason to act now.
• Limited quantities - only the first x units
• Price increases
• Price decreases ending in the near future
• Deadlines - only good for a period of time \
• scarcity shouldn't be only artificial, that can backfire

• Novelty - new sensory data. is critical to attracting and maintaining attention
• Use hooks - and explanations

• Akrasia is the knowing or feeling that we should do something or that an action would be in our best interest... but we don't do it.
• Procrastination is different. You've decided to do it, but you put if off until later without consciously deciding to do it later.
• Akrasia is a deeper issue. It's a general feeling that you should do something, but that doesn't lead to action, even if its in your self interest.
• Akrasia is a widespread barrier to getting things done. You need a strategy for recognising and combatting it.
• The 4 parts
• A tast
• A desire. want
• A should
• An emotional resistance
• Sources of resistance:
• Unclear on the desire
• The task will bring things you don't want
• You don't know the path
• Its low probability - fear of failure
• Its somebody else's should
• A competing action has immediate gratification
• Benefits are abstract and distant.

• Just do it
• Goal: focus the full power of your energy and attention on a task
• Most productive, clear, focused.
• The state where you have exactly one thing on your mind
• When your mind is in 100% do mode, you get more done
• How to get into flow state:
1. Eliminate distractions: music, internet off, it takes 10-30 mins to get into flow.
2. Resolve inner conflicts before working. Make sure you're focusing on the right thing. Then dive in. If it doesn't feel right, try to resolve that
3. Kickstart with a dash. Work with pace for 10-30 minutes. If you're still not feeling after 30 that's OK, but commit to working fast
4. Meditation and the Pomodoro technique are essentially training you to get better at flow

• Tasks take attention
• The goal is to accomplish everything you need to do most effectively
• Multitasking is the opposite of MonoidealISm. Don't do it
• Your brain can only focus on one thing at once. There's a cognitive switching penalty
• The less you thrash and switch, the less friction cost you pay.
• To avoid context switching batch similar work.
• Paul Graham: makers vs managers schedule.
• Plan the day with the 3-10-20 method.
• 3 major tasks (more than 20m of attention)
• 10 minor tasks
• Keeping in mind theres a limit to what I can accomplish in a single day makes it easier to keep stress and recovery in balance.

• There are only 4 ways to do something
• Completion: doing the task
• Deletion: eliminating the task
• Delegation: assigning the task to somebody else
• Deferment: putting off until later

• A most important task (MIT) critical task that creates the most important results you're looking to achieve
• Create just 2 or 3 of these tasks a day
• What are the 2 or 3 most important things I need to do today? What would make a huge difference?
• Time box the tasks. Try to get them done as quickly as possible in the day. By 10am.
• Having the most important tasks gives you permission to ignore everything else and get those done

• A goal does 2 things. It clarifies what you're trying to achieve. Helps you visualise it.
• Well-formed goals should motivate you.
• Once you make a decision to achieve a goal. Your mind automatically starts finding ways to get it done.
• Goals are most useful when framed: positive, immediate, concrete and specific format (PICS)
• Goals should also be under your control
• It's OK to change your goals. That's learning.

• A state of being is a quality of your present experience
• Emotional experiences aren't achievements. They fluctuate.
• States of being are decision criteria, not goals.
• States of being help you answer, is what I'm doing right now working?
• I define successful as:
• Working on things I like
• With people I choose
• Being able to choose what I work on
• Having enough money to live without financial stress
• I define happy as:
• Having fun
• Spending time with people I enjoy
• Feeling calm
• Feeling free

• Things you want to do on a daily basis are not goals, or states of being. They are habits
• Good habits are regular actions that support us.
• Due to accumulation, small habits can add up to huge results over time
• 4 types of habit:
• Start doing habit
• Stop doing
• Do more
• Do less
• Habits require willpower to create
• Make it easier to adopt the habits that you want

• Priming is a method of consciously programming your brain to alert you when particular information is present in your environment
• If you tell your mind what to find, it will start looking for it, matching patterns
• 10 days to faster reading book. Purpose setting. Before reading something
• 1) why do you want to read this material
• 2) what kind of information are you looking for
• You can now flip through the book, look at the contents, pay attention to the bits that will help
• This improves your reading speed, as you know what you're looking for
• Goal setting is a kind of priming. Things that help you move toward your goal

• The act of committing to a specific plan (from 'to cut off')
• You can only strive to make better decisions
• Don't wait until you have enough information to be 100% sure
• Collect just enough information to make an informed decision.
• Failure to make a decision is a decision
• Out of the available options? Which experience do I want to have?

• Often we're not consciously aware of what we want
• The five-fold-why technique helps you discover what you actually want
• Helps sense check a goal or an objective
• I want to be a millionaire
• why? so I don't have to stress about money
• why? so I don't feel anxious
• why? so I feel secure
• why? so I feel free?
• why? so I feel free
• There are other ways to feel free without money

• Connects your core desires to physical actions
• How would you feel free?
• Pay off debt
• Reduce work hours
• Spending more time doing your hobby
• Moving to a new city or country
• Breaking off a restricting personal relationship
• Ask "how would you go about doing that?" until you have a clear plan of action
• Connect big goals to small actions you can take now

• Goals and projects are fraught with complexity and uncertainty
• The next action - the specific concrete thing you could do to make progress on a project. All you need to know if the very next thing you can do to move a project forward
• 1) Write down the project
• 2) Write down the desired outcome
• 3) What needs to happen to mark this as done?
• 4) Write down the next physical action step required to move the situation forward
• 5) put those answers in a system you trust
• Essentially, you're defining what done and doing look like for this project

• Convert internal thoughts to external ones
• Re-input information into our brains via a different channel
• You can do this by writing or speaking
• Writing helps you structure your thoughts, share them with others
• "The palest ink is clearer than the fondest memory"
• Speaking to yourself or another person can help

• Use a journal as a problem solving tool
• Self elicitation is the practice of asking yourself questions, then answering them.
• An example of behaviour change questions:
• Antecedent:
• When, with who, what, where, what were you saying to yourself, what thoughts were you having, what feelings were you having
• Behaviour:
• 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?
• If you don't know where to begin, ask yourself.... "What are the best questions I should ask myself?"
• Make it a habit to ask yourself good questions?

• Applied imagination
• What if, what would happen if?
• Suspend judgement, pose the question, wait for the answer
• Forces your brain to run the simulations you want to run
• You can simulate anything you want
• Don't assume what you want isn't realistic or possible, simulate to figure out the path to making it happen

• Work expands to fill the time available for its completion
• What would it be like to finish the project on an aggressive timescale
• Ingvar Kampard - split your day into 10 minute increments. Try to waste as few as possible. You'll be amazed what you can achieve.

• If you're in threat lockdown its hard to get anything done
• How do you encourage your brain to stop trying to protect you when its clearly overreacting?
• A Doomsday scenario is a counterfactual simulation where you assume everything that can go wrong will go wrong
• What if you don't complete the project on time? What if your plan doesn't work? What if you lose everything? What if they all laugh at you?
• In most circumstances you're going to be OK
• Caveman syndrome makes our ancient brains overdramatic
• Our brains interpret losing resources, diminishing status, or being rejected to threats to our survival
• Externalise and define your worst fears, you're exposing them as what they really are. Irrational overreactions
• Once you've imagined the worse scenario, you can define how to mitigate the risks

• Natural tendency to overestimate your own abilities, particularly if you have little experience with the matter at hand
• Novices sometimes accomplish great things, they do them before they realise how risky or difficult the objective was
• The more incompetent a person is, the less they realise they're incompetent
• Dunning Kruger effect:
• Incompetent individuals tend to overestimate their own level of skill
• Fail to recognise genuine skill in others
• Incompetent individuals fail to recognise the extremity of their inadequacy
• If they can be trained to substantially improve their skill level, they can recognise and acknowledge their own previous lack of skill
• People who are unconsciously incompetent - don't know they're incompetent
• We want to move towards conscious competence
• Overconfidence is a cause of the planning fallacy
• Cultivate relationships with people who aren't afraid to tell you when you're making questionable assumptions or going down the wrong path.

• Stop confirmation bias by seeking out information that challenges your hypothesis
• Pay attention to disconfirming evidence

• How do you feel when you've made a mistake?
• Hindsight bias is the tendency to kick yourself about things you 'should have known'
• You'll always have more information when you evaluate the results of your actions than when you had to make the decision
• Changing the past is outside your locus of control
• Hindsight is 20-20. Reinterpret your past mistakes in a constructive light, focus on what you can do now

• If not controlled, work will flow to the competent man until he submerges
• Performance load is what happens when you have too many things to do
• To be productive you must set limits
• Time boxing
• Number of major tasks per day
• To avoid burnout
• You must retain some unscheduled time to allow for unexpected things

• Time is not what needs to be managed. Time will always pass.
• Every hour is not created equal. Your energy levels change.
• You have up and down swings, caused by the circadian rhythm
• Humans need to rest and recover for peak performance
• Tips:
• Learn your patterns
• Maximise your peak cycles
• Take a break (rest in down cycles)
• Get enough sleep

• Run at about 90% capacity
• Get a lot done, don't burn out
• Pay attention to stress and recovery
• You can experiment to find your limit
• Bodies are not machines that can operate at maximum capacity at all times
• You are not a machine - Humans are not robots, they need rest, relaxation, sleep an play in order to function
• Recover by spending time doing something different to your normal
• The less overlap between your hobby and work the better
• Churchhill: Change is the master key. A man can wear out a part of his mind by using it continually.

• I write best early in the morning, after 8 hours of sleep
• Test different approaches. Make what works a habit.
• Apply the iteration cycle to your life. Experiment
• Observations. knowns. Hypothesis. Tests. Results.

• Difference between liking the idea of doing something and the actual doing of something.
• Its easy to like the idea of being self employed. Its harder to like the fact that 100% of your income comes from your effort
• Mystique is a powerful force. A little mystery makes most things appear to be a lot more attractive than they actually are.
• Have a real human conversation with someone who is actually done what you're interested in doing.
• Ask about the high and low points. Is it worth it?
• Every course of action has tradeoffs. Learning what they are in advance gives you a mahor advantage.

• We pursue pleasureable things because we think they will make us happy
• When we finally achieve them, we adapt to our success in a short period of time.
• Our success no longer gives us pleasure. As a result, we begin seeking something new.
• There are 5 priorities that contribute to longterm happiness in a way that minimize hedonic adaptation:
• Work to make enough money. Money contributes to happiness but only to a point.
• Focus on imporving yoru health and energy.
• Spend time with people you enjoy
• Remove chronic annoyances.
• Pursue a new challenge - master a new skill, complete a big project, pursue something
• Focus on experiences over goods

• Status seeking ensures that we spend energy tracking our relative status to our peers, and most of the time our conclusions aren't favorable.
• Focus on achieving your own goals
• Other peoples success shouldn't dimish you in anyway
• The comparison fallacy: other people are not you, and you are not other people. Comparing yourself to others there's nothing to gain from that
• Everyone makes trade-offs. You don't see the downsides when you make comparisons.
• The only metric of success that matters = are you spending your time doing work you like, wiht people you enjoy in a way that keeps you financially sufficient?
• Focus on your locus of control until this is the case

• Seperate what you can control from what you can't
• Trying to control things that aren't actually under your control is a recipie for external frustration
• Make sure you can control your goals.
• Focus your energy on things that you can influence

• When something we can't control affects our plans or goals its easy to take it personally
• The more attached you are to an idea or plan the more you limit your flexibliliy and reduce your chances of finding a better solution
• Acceptance requires applying the concept of sunk cost to yourself.
• The solution to attatchment is accepting that yoru idea or plan is no longer feasable or useful. The less attached you are to your plans, goals, status and position the easier it will be to respond appropriately to inveviatable change or unforseen circumstances.
• Focus. Accept the things that have happened. Choose to work on things that you can do to make things better. You'll be happier.

• Experimenting with new techniques and processes in order to enhance their capabilities
• What would you spend a few hundred pounds a month on an R&D budget on?
• Books, courses, equipment, conferences,
• Anything to improve your skills and capabilities

• Fixed mindset: skills and ability are fixed
• Growth mindset: Your skills and abilities are like muscles that can be strengthened with practice
• A fixed mindset is a limiting belief.
• Everyone has limiting beliefs in certain areas.
• I can't, I have to, I'm not good at ....
• These words are all red flags

• Human relationships are based on power - ability to influence actions of others
• We can't control peeople. All we can do is act in ways that encourage people to do what we suggest
• Power comes in 2 forms. Influence or compulsion.
• Clearly we should focus on influence.
• Power is a neutral tool, that can be used for good or evil
• There's nothing morally wrong with trying to increase your power. Provided you respect the rights of others
• The more power you have the more you can accomplish
• To innrease your power, increase your reputaiton and influence (amoungst capable people)

• Its better for people to trade with each other (rather than trying to produce everything themselves)
• Don't waste time and money struggling to do something you're not good at, do what you do best and trade with others
• Better to capitalieze on strengths than shore up weaknesses
• This applies to individuals as much as it does countries
• Specialisatoin
• Self reliance naturally improves your flexibility and knowledge overtime, but too much self-reliance is a mistake.
• Working with others helps you get more done, faster adn imrpove the quality of the end result
• Learn a little programming and your ability to identify good programmers will increase, making you more likely to identify skilled colleagues and partners.
• No man is an island. Focus on what you can do well, work with others to acheive the rest

• The proportion of your time you spend communicating with members of your team instead of getting productive work done.
• The more team members you have, the more you need to communicate and coordinate
• Large companies are slow because they suffer from communication overhead.
• If you work with a group of 5-8 people, 80% of your job will be communicating with the people you work with
• Objectives, plans and ideas are worthless unless everyone involved understands them well enough to take action
• Book Beyond Beureaucracy - 8 symptons of beureaucracy breakdown
• The invisible decision - no one knows how or where decisions are made
• Unfinished business - too many tasks are seen through to the end
• Corodination paralysis - nothing can be done without signoff from everyone
• Nothing new - no radical ideas, inventions, lateral thinking, intitiative
• Pseudo problems - minore issues are magnified
• Embatteled centre - center battels for consistency and control against regions
• Negative deadlines - deadliens become more important than quality work
• Input domination - individuals react to inputs, their in tray, as opposed to initiative
• Solutions:
• Make teams as small and autonomous as possible

• Everyone has a need to feel important
• The more you make them feel important, the more they'll value the relationship with you
• The more interest you take in them the more important they'll feel
• Make an effort to be present and curtious
• Paying attention, listening intently, expressing interest, asking questions
• Cultivating a genuine interest in other people goes a very long way
• The more they like you, the more they'll want to be around you

• Putting down others shuts down effective communication, making people mentally and emotionally withdraw
• People need to feel safe when expressing their opinion to be open and honest.
• To communicate without provoking anger:
• Share your facts.
• Tell your story. Explain from your point of view. No judgements
• Ask for others' paths. Understaind their side of the situation
• Talk tentatively. Avoid the conclusions, judments and ultimatums
• Encourage testing. Make suggestions, ask for input, discuss until you reach a productive and mutually satisfactory course of action

• 3 word summary of how to win freinds and influence people
• If you want make others feel important and safe around you, always remmeber to treat people with appreciation, courtesy and respect.
• Appreciation: expressing your gratitude for what others are doing for you.
• Courtesy: politeness, pure and simple
• Respect: honoring the other persons status.

• In a study, straightforward requests were honoured 60 percent of the time.
• Adding a reason for the request increased the compliance to 95%
• People are more receptive to requests with a reason. Any reason will do.

• People don't like to be told exactly what to do
• It makes people feel less important and it impairs their effectiveness
• Human beings don't scale. You can micro manage 10, but not 1000.
• Commanders intent is a better method of delegating.
• When you delegate, tell them why it must be done
• Allows people to use their knowledge of the goal - to make follow on decisions as new information emerges. If they don't know the why, they'll keep coming back to you
• When everyone understands the purpose of the plan, you allow people you work with to intelligently respond to changes as they happen

• Always personally step up and take responsibility, unless relieved by a more experienced professional
• Always direct commands or requests clearly to one specific individual at a time
• Bystander apathy - the number of people who could take action and the number of people who actually choose to act.
• Tasks need to have clear owners and deadlines.

• Planning is guessing.
• People have a tendency to underestimate completion times
• The more interedependencies a project contains, the more likely it won't go to plan
• We underestimate the amount of slack needed to make a plan accurate
• Including slack time is almost never seen as acceptable or appropriate
• The innaccuracy of plans doesn't make them worthless.
• Helps you understand requirements, dependencies and risks.
• Plans are useless, planning is indispensible

• People will always prefer to interact with people they know and like.
• Referrals make it far easier for people to decide to work with someone they don't know
• The more people know, like and trust you, the better off you are.
• Referrals are the best way to expand your network of personal connectoins

• Clanning is a natural tendency. We're automatically and profoundly influenced by the people around us. Identifying ourselves as part of a group and distinguishing ourselves form others groups

• You become more and more like those you spend time with over time, and less like people in other groups
• Convergence: the tendency of group members to become more alike over time. Cutlure. Similar characteristics, behaviours adn philosophies.
• groups police themselves and create norms
• use influence to drive conformity
• Divergence: the tendancy for groups to become less like other groups over time. Group norms change to reist being confused with another group or imitator.
• Fashions change quickly and dramatically because of this effect

Convergence can be useful if you spend time with people you want to become more like

Breaking away from groups that don't serve you well is a good idea

Use these forces to your advantage

• tangible indicators of some intangible quality that increases a persons social status or group affiliation
• Often people who want to signal their well off aren't
• Social signals have economic value - build them into your offer if you can
• People want to signal that they're wealthy, attractive, intelligent, high status, insteresting and confident
• Connect your offer to one of these by association can trigger desire

• Actoins of others give us a strong signal its OK to do what they do
• When somebody acts its a social signal. You quickly get feedback loops.
• Testomonials are good. The most effective have the following format
• I was interested in this offer, but skeptical. I purchased anyway, and I'm pleased with the end result
• ^ this matches how prospects are feeling

• People comply to authority figures
• When in a position of authority, it will change the way others interact with you
• Subordinates are more likely to take an opinion as a truth or a command
• Authority figures therefore struggle with confirmation bias.
• Authority increases your won influence

• Commitments bind groups together
• Breaking commitments impacts reputaiton
• Most people will do whatever they can to act in ways that are consistent with previous positions and promises
• Obtaining small commitments makes it more likely people will choose to act ocnsistently with them later.

• our relationships are self fulfilling prophecies
• if a teacher things a student is smart, they act in ways that enourages that student.
• Giving people a great reputation to live up to!
• Produces better results, but you're also more likely to be disappointed
• The expectation effect means that the perception of quality of somebodies work is a function of our original expectations

• when others screw up, we blame their charachter
• when we screw up, we attribute the situaitons to cricumstances

• When something goes wrong how you handle the situation matters
• The issue has already happened, the only quesitons is how you plan to respond.
• Don't dwell on the problem, focus on your options.

• Management is simple but not simplistic
• Management is the act of coordinating a group of people to achieve a goal. While accounting for change and uncertainty
• Principles:
1. Recruit the smallest group of people, who can deliver quickly with high quality
2. Clearly communicate the desired end result
3. Treat people with respect. Apreciation, courtesy and respect
4. Create an environment where everyone can be as productive as possible
5. Refrain from having unrealistic expectations regarding certainty and prediction
6. Measure to see if what you're doing is working
• Don't do top down management
• Stop thinking of the management team at the top of the organization. Start thinking of the software developers, the designers, the product managers, and the front line sales people as the top of the organization. The “management team” isn’t the “decision making” team. It’s a support function. You may want to call them administration instead of management, which will keep them from getting too big for their britches. Administrators aren’t supposed to make the hard decisions. They don’t know enough. … Administrators exist to move the furniture around so that the people at the top of the tree can make the hard decisions. … That’s the way it has to work in a knowledge organization. You don’t build a startup with one big gigantic brain on the top, and a bunch of lesser brains obeying orders down below. You try to get everyone to have a gigantic brain in their area, and you provide a minimum amount of administrative support to keep them humming along.

• the best predictor of future behaviour is past performance
• what has the applicant accomplished
• short-term opportunity to wokr with you before committing to a longer-term engagement
• steps:
• Advertise - make it as real and detailed as possible. Not a sales pitch. They've got to be attracted to the work
• Identify and acid test - you need a filter
• Ask for examples of work or projects
• Check references
• Give promisisng candidates a short project to turn around (give them all the tools and access they would have in the real world)

• All complex systems that work evolved from simpler systems that worked.
• Complex systems are full of variables and interdependencies
• Complex systems designed from scratch never work in the real world (they haven't been shaped by the environment)
• Uncertainty ensures you won't be able to anticipate all of the interdependencies in advance
• Environmental selection tests need to meet systems design. The best approach is to build a simple system that works in the environment, that can be improved overtime.
• Gall's law is why prototyping and iteration work so well as value creation methodologies.
• Expanding your minimal viable offer allows you to validate your critically important assumption... resulting in the simplest possible system that can succeed with actual purchasers.
• Iteration and incremental augmentation will produce complex systems that work

• No matter what a system does. It will have flows. Movements of resources into and out of the system.
• Inflows are resources moving into the system. Outflows are resources flowing out of a system.
• Follow the flows and you'll be able to understand what the system is doing

• When resources pool together, you have stock.
• To increase stock, increase inflows or decrease outflows
• If waitlists are too long, increase throughput

• Since stocks are pools of resources. It pays to understand how many resources you have to work with.
• The more resources you have in stock the more slack you have
• Stocks should be just the right size. Not too big, not too small.
• Slack brings flexibility, but flexibility comes at a cost, worse cashflow, lower profit margins
• Managing slack is tricky but important

• The performance of a system is always limited by the availability of a critical input
• Alleviate the constraint and the systems performance would improve
• If you identify and alleviate the constraint, you'll increase the throughput of the system
• You can increase the stock in front of a constraint. Make sure the constraint is never starved.
• To identify the constraint. Use this 5 step process:
1. Identification: find the limiting factor.
2. Exploitation: ensure that resources related to the constraint aren't wasted
3. Subordination: redesign the entire system to support the constraint. Its OK for other systems to be less efficient, as long as the constraint is utilised.
4. Elevation: permanently increase the capacity of the constraint (often effective but expensive)
5. Reevaluation: after making a change, reevaluate the system to see were the constraint is now located.
• The steps are similar to iteration velocity, the more quickly you move through this process the more cycles you complete, the more systems throughput will improve.

• Feedback loop: when the output of a system, becomes an input for the next cycle
• Feedback is how systems learn. How they perceive their environment and know if they are satisfying selection tests.
• Balancing loops dampen each systems cycles output, leading to equilibriums and resistance to change.
• Perceptual control systems are made up of balancing loops (thermostats)
• Reinforcing loops amplify the systems output with each cycle. Compounding is a positive reinforcing loop.

• A reaction whose output produces the raw materials necessary for an identical reaction
• An autocatalysis system produces the inputs needed for the next cycle as a bi-product form the previous cycle. Amplifying the cycle. Compounding positive, self reinforcing feedback loop.
• Network effects and viral loops are similar.
• Include an autocatalysis in your business for faster growth

• No system stands alone. Every system inevitably affected by others around it.
• And environment is the structure in which a system operates
• The environment impacts the systems flows or processes, changing the output of the system
• When the environment changes, the system must change with it.

• Self-perpetuation is only possible if you meet the conditions necessary to be successful in the environment
• A selection test in an environmental constraint that determines which systems continue and which die.
• Think of natural selection.
• Business selection test: provide enough value to customers, generate enough revenue to over expenses
• Selection tests are less 'survival of the fittest' but more 'death of the unfit'
• As the environment changes, the selection tests change.
• Changing environments and selection tests are an entrepreneurs best friend, they allow small companies to outperform large ones.

• Nobody knows. The world is uncertain.
• This is a blessing and a curse.
• There's a big difference between risk and uncertainty
• Risks are known unknowns.
• Uncertainties are unknown, unknowns.
• You can't predict the future based on past events in the face of uncertainty
• Black swan events can change everything in an instant. Before they happen, the probability that they will happen is almost zero
• Black swan events can change selection tests in an instant.
• You can't predict. But you can be flexible, prepared and resilient.
• Many people sell certainty, with predictions and forecasting. They aren't worth the cost.
• Don't rely on predictions. Instead make plans to be flexible, do scenario planning

• All systems change. There is no stasis.
• Complex systems are always in flux.
• It is uncertain how a system will change. But change is certain.
• The only thing you can do about change is to increase your flexibility to handle a wide variety of circumstances. The more flexible you are, the more resilient you'll be when things inevitably change

• Nothing exists in isolation
• Complex systems are often interdependent
• Highly dependent systems are referred to as tightly coupled
• Time dependent
• Rigidly ordered
• Have very little slack
• Critical path is only the tasks that must be completed in order for the project to be finished on schedule
• Loosely coupled systems have low degrees of interdependence. You can remove dependencies to decouple systems
• Eliminate unnecessary dependencies and you'll reduce the risk of a cascading failure

• the possibility that other people won't deliver what they have promised
• too much counter-party risk increases the risk of catastrophic system failure
• counter-party risk is amplified by the planning fallacy. Everyone has a tendency to be optimistic with plans and deadlines
• When your system relies on the performance of someone outside of your control, do all that you can to prepare for the possibility that they won't perform as expected

• Actions have consequences. Those consequences have consequences. These are called second order effects
• Sometimes second order effects can be antithetical to the original intent of the change
• Approach making changes to a complex system with extreme caution: what you get may be the opposite of what you expect

• The theory of normal accidents: 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 higher the likelihood.
• Overreacting to normal accidents is actually counterproductive.
• Be careful not to react in a way that makes the system more complex or tightly coupled.
• Don't add more systems that could fail, when trying to fix a system that fails occasionally
• Keep systems loose. Expecting zero failures is unrealistic and extreme.
• Loose systems may not be as efficient, but they last longer and fail less catastrophically.

• Complex systems have:
• interdependent flows
• Stocks
• Processes
• Parts
• Sub-systems
• Flows
• Inputs
• Outputs
• Feedback loops
• Triggers and endpoints (what starts and stops parts of the system)
• Diagrams and flowcharts help you understand how each inflow, process, trigger, conditional, endpoint and outflow come together.
• As a whole the system maybe too complex to take in.
• Break it into parts, understand how they interact with each other

• How well is the system operating?
• Collect data as the system operates. Measure things related to core functions
• Compare against other systems
• Measurement helps avoid absence blindness
• Measuring something is the first step to improving it
• What gets measured gets managed

• Measure too much and you'll down in the data
• Key Performance Indicators are more important than others
• Measurements that don't help you make improvements are worthless
• Pay attention to the just a few key measurements that really matter
• Its easy to fixate on the things that are easy to measure but not important
• Beware of incentive caused bias.
• Business related KPIs are related to either the 5 parts of every business or throughput
• Ask smart questions to identify your KPIs (how quickly are we creating value?)
• Any questions related to these questions are probably KPIs
• Limit yourself to 3-5 KPIs per system
• Don't overload yourself with data on a dashboard.
• You want to identify and spot the changes that are critically important.

• Analysing poor quality data can be worthless
• put useless input into a system, and you'll get useless output
• to improve results, improve the quality of what you start with

• Inexperienced business people expect perfection
• Normal accidents are a way of life. Plan for them.
• A tolerance is an acceptable level of "normal error" in a system.
• Reliability of systems is measured in percentages. 4 nines means 99.99%

• measuring and analysing the data you have dispassionately
• have your measurements evaluated by someone who isn't personally invested in your system
• Incentive caused bias and confirmation bias occur when your social status is on the line.

• If you don't understand something, it's because you aren't aware of its context
• Context is the use of related measurements to provide additional information about the data you're examining.
• Having a monthly revenue number doesn't mean much on its own. Add last years, last months and your competitors and it has more context and is more useful
• Aggregate measurements almost never tel you anything useful.
• Without context you can't determine change or effectiveness. Which limits your ability to improve systems.
• Is the change important? Random? Due to the environment or you?

• If your system is too large or complex to collect data on every process... sample
• It's not practical to measure the flows of an entire system.
• Sampling is taking a small percentage and using it as a proxy for the population
• Helps you identify systematic errors quickly, without testing the entire system
• Sampling is prone to bias is the sample isn't random or uniform. For best results, use the largest random sample that you can

• An estimate of how much you can trust your conclusions form a given set of observed samples.
• The more samples you take the lower your margin of error becomes
• This is the same as confidence intervals

• Comparing two measurements against each other
• Percentages are ratios with a base of 100
• Tracking ratios overtime provides directional indication

• Analysis relies on defining typicality

• Correlation is not causation
• Causation is more difficult to prove. Especially in complex systems with lots of interdependent variables or a dynamic environment
• The more a change can be isolated, the more chance you have

• If you want to compare the effectiveness of something in the present, its often useful to learn from the past
• Norms are measures that use historical data as a tool to provide context for current measurements
• Seasonality.
• When measurement practices change, norms change.
• Past performance is no guarantee for future performance

• Use a proxy measure if you can't measure something directly.
• Useful proxies are closely related to the subject.
• The better the correlation the better the better the proxy
• Used with care, proxies can help you measure the immeasurable

• Splitting data into well-defined subgroups to add additional context
• 3 common ways to segment customer data:
• Past performance(actions), demographics (characteristics) and psychographics (attitudes or world views)

• Data often tells you what is happening.
• Users can often tell you why its happening.
• Humanisation is the process of using data to tell a story (narrative) about a real person's experience or behaviour. Quantifiable measures are helpful in the aggregate, but its often necessary to reframe the measure into actual behaviour to really understand what's actually happening.
• Don't just present data. Tell a story that helps people understand what's happening and you'll find your analysis efforts more usual

• There's a bias to do something over nothing
• Bureaucracy is often a result of intervention bias
• Always examine what would happen if you were to do nothing
• Allow normal accidents

• maximising the system output or minimising the inputs
• If you're trying to maximise or minimise more than one thing, you're making trade-offs
• Many people use the term optimisation to mean making everything better, but that definition doesn't help you actually do anything
• You can't reliably optimise a systems performance across multiple variables at once. Pick the most important one and focus your efforts accordingly.

• Not all changes to a system are designed to affect the systems output.
• Refactoring is changing a system to improve efficiency without changing the output of the system.
• Refactoring is redesigning a program to do exactly the same thing when its finished. This can improve the system, make it faster for efficient, more reliable, easier to maintain
• Deconstruct a system, look for patterns, what are the critical processes that must be done right in order to achieve the desired objective. Do those processes have to be completed in a certain order? What are the constrains. Often things in the system don't make sense. Rearrange the system to group similar processes or inputs together. ]IF your goal is to make the system faster or more efficient, refactoring is important.

• In any complex system, the minority of the inputs produce the majority of the output. This is the 80-20 rule or Pareto rule.
• Non-linearity can often be extreme
• Focus on the critical inputs that produce most of the results you want.
• Noncritical inputs are significant opportunity cost. Unproductive meetings for example.

• All good things are subject to diminishing returns
• At a certain point, having more of something can be a detriment
• Its always better to spend a little time and energy to get the big wins than to do nothing. Focus on a few simple things that will produce most of the results.
• Don't optimise and refactor daily. You get diminishing returns from optimisation too

• Any force or process that removes energy from the system
• You need to add continual energy to keep it going
• 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.
• Identify where friction exists. Make small changes to reduce the amount of friction.
• Customers placing orders, needing refunds.

• Processes that can operate without human intervention
• The less human effort required to operate a system the more efficient the automation
• Automate your system and you open doors to scale via duplication and multiplication

• It has drawbacks worth understanding
• the more efficient the automated system, the more crucial the contribution of the human operators of that system. They need to quickly identify and fix issues otherwise they are multiplied

• Efficient automated systems make skilled human intervention critically important to prevent amplification of errors
• The less human operators have to do, the less they pay attention
• Humans get bored extremely quickly
• The best approach to avoid major automation errors is rigorous ongoing sampling and testing.

• a predefined process used to complete a task or resolve a common issue.
• business systems often include repetitive tasks, and having a standard process in place can help you spend less time reinventing the wheel and more time doing productive work
• SOPs reduce friction and minimise willpower depletion. Waste time and energy spent solving problems that have already been solved
• They help bring new people up to speed quickly
• The purpose of an SOP is to minimise time and effort it takes to complete or solve a task
• Review SOPs on a quarterly basis.

• Externalised pre-defined standard operating procedure
• Helps you define a process that hasn't been formalised
• Its easier to improve and automate a defined process
• Helps ensure that you don't forget important steps
• Major improvements in your ability to do quality work

• 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
• Cessation takes guts. Often unpopular or unpalatable to do nothing
• Doing something is not always better than doing nothing

• Unexpected things happen
• Resilience is a massively underrated quality in business
• Your ability to adjust your strategy and tactics as conditions change can be the difference between survival and disaster.
• Resilience is never optimal if you evaluate a system solely on Throughput.
• Flexibility comes at a price.
• Running a business on high leverage, trade off between profitability and resilience
• Preparing for the unexpected makes your resilient. Planning for resilience as well as performance is good management

• a backup system designed to prevent or allow recovery from a primary system failure
• failsafes are not efficient. by the time you need a failsafe though, its too late to develop one.
• you need to develop failsafes before you need them
• separate your failsafe and primary system as much as possible
• failsafes that are highly interdependent with the primary system can introduce additional risks
• as much as possible, never have a single critical point of failure

• Stress testing is the process of identifying the boundaries of a system by simulating environmental conditions
• Help you learn more about how your system works.
• Let your inner daemon run wild

• The process of systematically constructing a series of hypothetical situations then mentally simulating what you would do if they occurred.
• Counterfactual simulation gives you a powerful capability. What might occur. How might you react.
• What would I do if?
• The goal is to become more prepared, flexible and resilient. Improving your ability to change and adapt to a changing environment.
• You may discover that there are risks that you can hedge or insure against

• A system can't grow indefinitely without limit
• They tend to have a natural size, and exceeding this size can cause many problems.
• The sustainable growth cycle- growing year after year without difficulty
• Expansion phase. Maintenance phase. Consolidation phase.
• Expansion = new products and offerings
• Maintenance = executing the current plan. Exploiting potential.
• Consolidation = focused on analysis. What's working what isn't.
• Maintenance and consolidation are necessary to bring the system into balance

• You don't know what changes are going to have the best impact
• Constant experimentation helps you identify what works
• Experimentation is learning through play
• Every experiment teaches you something new. Increases your ability to accomplish great things

• Self education is never ending process
• There's never a limit to how much you can grow