review / notes of Josh Kaufman’s The Personal MBA
I recently finished Josh Kaufman’s book The Personal MBA. Josh is the author of the website http://www.personalmba.com – the premise is simple: teach you basic business school concepts without the 2-year curriculum and $100k+ price tag. The book’s not perfect – for example, the introduction (34 pages) is about 33 pages too long– but I still got a ton of value from it. I also know that in the future, when stuck or hunting for ideas on how to improve my marketing or sales efforts, flipping through his discussion on those topics is likely to inspired creative solutions.
The Personal MBA is available on Amazon for $15.04.
Here are my notes – these are the concepts that I found to be most important and relevant to me at this stage of my development. (This is a long post. Each of these concepts could easily be extended into an individual thoughtful blog post. Perhaps in the future I will expand – but for now I am posting to share, and also so I have a reference I can use for review later. For me, many of these ideas merit regular review.)
5 parts of every business:
value creation: discovering what people need or want, then creating it
marketing: attracting attention & building demand for what you’ve created
sales: turning prospects into paying customers
value delivery: giving your customers what you’ve promised & ensure they’re satisfied
finance: bringing in enough money to keep going and making your effort worthwhile
iron law of market: you are limited by the size and quality of the market you serve
5 core human drives:
drive to acquire: physical objects, status, power, influence, fame.
drive to bond: feel valued and loved by forming relationships with others, either platonic or romantic. restaurants/conferences/dating services. companies that promise to make you attractive/well-liked/highly regarded
drive to learn. satisfy our curiosity. competence/skills
drive to defend: home alarm, insurance, martial arts, legal services
drive to feel: new sensory stimulus/emotional experiences/pleasure/excitement/entertainment/anticipation.
Reflection: How can my blog post titles hit on each of these human drives? Ditto with marketing emails.
evaluating a market:
urgency
market size
pricing potential
cost of customer acquisition
cost of value delivery
uniqueness of offer
speed to market
up-front investment
upsell potential (related secondary offers. frisbee=bad, razor=good)
evergreen potential (build it once)
if you can get a prospective customer’s attention as soon as they become interested in what you’re offering, you become the standard by which competing offers are evaluated. example1 – new parents get a care package from hospital. young men get a free blade from gilette. etc
your job as a marketer isn’t to convince people to want what you’re offering: it’s to help your prospects convince themselves that what you’re offering will help them get what they really want (their core human drives). the more closely connected your product is to a core human drive, the more effective your marketing activities will be
once you take car for a test drive, you start to imagine what your life would be like if you owned this vehicle. fantasizing. you’ve stopped comparing and started *wanting*. once you start wanting, you’ll probably buy – it’s only a matter of time. dale carnegie: “Arouse .. an eager want”. it makes me wonder if there’s a systematic way to jolt people into fantasy mode. clearly it has something to play on the ego. revisiting my post on games criminals play, i find that you want to initiate a ME versus THEM mentality. they are DIFFERENT from everyone else (whereas the truth is people are generic and all exhibit the same core human drives, though perhaps w/ different weighting)
have them visualize what their life would be like once they’ve accepted your offer. how can your marketing and sales efforts support this vision?
a hook is a single phrase or sentence that describes an offer’s primary benefit
the best businesses in the world earn the trust of their prospects and help them understand why the offer is worth paying for
four pricing methods:
replacement cost; market comparison; discounted cash flow/net present value (how much is it worth if it can bring money in over time); value comparison (who is this particularly valuable to?).
value-based selling is the process of understanding and reinforcing the reasons why your offer is valuable to the purchaser.
by investing energy in making your prospects smarter, you simultaneously build Trust in your expertise and make them better customers. work the dunning-kruger effect to your advantage.
the more you know about the other party’s alternatives, the more attractively you can Frame your total offer by Bundling/Unbundling various options
barriers to purchase.
1. it costs too much – loss aversion – also causes buyer’s remorse
2. it won’t work – the offer won’t provide the promised benefits
3. it won’t work for ME – the offer is capable of providing benefits to other people but that they’re different – a special case
4. i can wait. the problem is not worth addressing right now.
5. it’s too difficult. if the offer takes any effort whatsoever on their part…
objection#1 addressed by: framing and value-based selling. if it’s clear that the value of you offer far exceeds the asking price, the objection is moot. e.g. you buy $5 in roses for your girlfriend she spends you 3 hours cooking dinner, massaging your back, etc
objection#2 and #3 best addressed by social proof – showing the prospect how customers JUST LIKE THEM are already benefitting from your offer. the more like your prospect your stories and testimonials are, the better. that’s why referrals are so powerful: customers refer ppl who have similar situations and needs, so referral itself helps break down these objections
–think: rapleaf, using demographic data to reframe the sales page
objection#4 and #5 are best addressed via education-based selling; customers don’t realize they have a problem, absence blindness. if the business doesn’t realize it’s losing $10mm it’s difficult to convince them you can help. thus focus your early sales efforts on making your customers smarter by teaching them what you know about their business, them helping them visualize what their involvement would be.
make it a priority every 3 to 6 months to contact your lapsed customers with another offer to see if you can encourage them to start buying again, and you’ll be amazed by the results.
“Ridiculously awesome improvements to AwesomenessReminders” <— no. frame it in terms of BENEFITS TO THEM!!!!!! !subject lines, blog posts — FRAME IN BENEFITS FRAME IN BENEFITS FRAME IN BENEFITS
expectation effect. quality = performance – expectations. think zappos. if expectations are sooooo high then you better better overdeliver. in general you should always overdeliver.
japanese concept of kaizen, which emphasizes the continual improvement of a system by eliminating muda (waste) via a lot of very small changes. many small improvements, consistently implemented, inevitably produce huge results. make it a daily practice – make sure your INFRASTRUCTURE makes it EASY
the purpose of a custom isn’t to get a sale. the purpose of a sale is to get a customer.
“it is unusual, and indeed abnormal, for a concern to make money during the first several years of its existence. the initial product and initial organization are never right.”
-harvey s. firestone, founder of the firestone tire and rubber company
the central insight that a dollar today is worth more than a dollar tomorrow can be extended to apply to many common financial situations. for ex, the time value of money can help you figure out that max. to pay for a business that earns 200k/profit a year. assuming an interest rate of 5%, no growth, and a foreseeable future of ten years, the”present value” of that series of future cash flows is $1.544mm – if you pay less than that amount, you’ll come out ahead as long as your assumptions are correct (very big “if”, though. that’s why lean startup movement emphasizes establishing your assumptions as hypotheses and then rigorously testing them) <— I don’t really understand this one and how it applies.
human behavior: people act to control their perceptions. “the behavior of an organism is the output of control systems, and is performed with the purpose of controlling perceptions at desired reference values. behavior is the control of perception”. once your perception dips below reference threshold you then take massive action.
I am this kind of person. I have this kind of comfort. I have these kinds of relationships. I have this kind of popularity. I have this kind of financial success. I have this kind of success, compared to my friend John / my peer group.
People only start to expend effort if their Reference Levels are violated in some way (e.g. you become unpopular, John becomes more successful, etc.), so if their expectations aren’t violated, they simply don’t act.
for example: steve pavlina calls himself a “human alarm clock”. wakes up people sleeping thorugh life. jonathan safran foer, eating animals. some people don’t want knowledge because they don’t want to change their reference levels. Reference level is EXPECTATION about something–the range into which it’s “under control”. Absence blindness. By educating people you can change their reference levels.
Every time we recall something, the memory is saved in a different location, with a twist: the new memory will include any alterations we’ve made to it.
in re-create your life, morty lefkoe teaches a process that can be used to reintrepret past events in a simple and useful way:
1. identify the undesirable pattern
2. name the underlying belief
3. identify the source of the belief in memory, including as much sensory detail as possible
4. describe possible alternate interpretations of the memory
5. realize that your original belief is an interpretation, not reality
6. consciously choose to reject the original belief as “false”
7. consciously choose to accept your reinterpretation as “true”
reinterpret your past, and you’ll enhance your ability to make great things happen in the present
acts of willpower deplete relatively large amounts of glucose, and when those stores run low, we have a hard time using willpower to inhibit behavior.
change environment – steve pavlina: “your environment will eat your goals and plans for breakfast” – you’re not lazy/smart, your environment is supportive/unsupportive/you have developed processes/you haven’t. fundamental attribution error
personalize the results of your decisions and actions, and you’ll be far less likely to run afoul of cognitive scope limitation
cultivate the right associations and potential customers will want what you have even more. attractive woman and coke. brand image. jaguar.
absence blindness: human beings have a hard time realizing that something isn’t there
***if you’re trying to sell the absence or prevention of something, you’re fighting an uphill battle, even if your Product is great.
Always state benefits in Positive, Immediate, Concrete, and Specific terms by focusing on things the user can directly experience.
ways to add scarcity to your offer (see notes on cialdini’s influence): limited quantities; price increases; price decreases; deadlines.
electronic files can be duplicated infiinitely at essentially no cost, so the scarcity feels manipulative, which makes people want to buy from you less. price increases with deadlines, on the other hand, tend to work well.
there are only four ways to “Do” something: completion, deletion, delegation, and deferment
completion is best for important tasks that only you can do particularly well. everything else can be handled in another manner.
delegation – assigning the task to someone else – is effective for anything another person can do 80% as well as you can.
deferment – putting the task off until later – is effective for tasks that aren’t critical or time dependent.
deletion is effective for anything important or unnecessary.
reflection: how can you design your business to eliminate important tasks that only you can do particularly well??? e-myth revisited. PROCESSES.
five fold why – to help you discover what you actually want (core desire, underneath the specific goal). fivefold how is a way to connect your core desire to physical actions. list 5 possible options of how you can connect to your core desires directly.
carry around a notebook with a 3×5 index card. card contains a short list of active projects. notebook contains to-do list, the next actions that will move my projects forward. josh processes using a system called “autofocus”, which was created by mark forster. as long as projects are tied to goals and are aligned with my preferred emotional states of being, it’s only a matter of time before i complete them. autofocus can be found here: http://www.markforster.net/autofocus-system/
states of being = feelings = how can **I** make sure to align my projects->actions->activities with my states of being? and projects must serve my goals
goals must be positive (not couched in negative), immediately actionable, concrete, and specific (kind of like how to sell benefits of absence/prevention to customers)
parkinson’s law: time expands to fill allotted
ingvar kamprad, the founder of IKEA, once said “if you split your day into ten-minte increments, and you try to waste as few of those ten-minute increments as possible, you’ll be amazed at what you can get done”
for small tasks, use “ingvar’s rule” assume each task will take no more than ten mins to complete, then begin. this includes meetings and phone calls. what would you do if you only had 10m to get something done? act accordingly
energy cycling: some times our bodies get in upswing when we can be highly focused and very efficient
1. LEARN YOUR PATTERNS. use a notebook/calendar to track how mcuh energy you ahve during different parts of the day, as well as what you’re eating and drinking. if you do this for a few days, you’ll notice patterns
2. plan your day to take advantage of a peak cycle. e.g. creative work during peak cycle. plan important things during upcycle.
3. when in a down cycle — rest, don’t power through. go for a walk – meditate – take a 20minute nap.
have a real, human conversation with someone who’s actually done what you’re interested in doing: “i really respect what you’re doing, but i imagine it has high points and low points. could you share them with me? knowing what you know now, is it worth the effort?”
the best way to increase your Power is to do things that increase your influence and reputation. the more people know your capabilities and respect the Reputation you’ve built, the more Power you will have.
Communication overhead is the proportion of time you spend communicating with members of your team instead of getting productve work done. necessary, but after you have more than 5 to 8 people, at least 80% of your job is gonna be communication
how to make people feel important–give them your undivided focus: paying attention, listening intently, expressing interest, and asking questions.
STATE model to communciate without provoking anger or defensiveness:
1. Share your facts
2. Tell your story-from your point of view – taking care to avoid INSULTING or JUDGING
3. Ask for others’ paths – ask for the other persons’s side of the situation, what they intended & what they want
4. Talk tentatively – avoid conclusions, judgments, and ultimatums
5. Encouraging testing – make suggestions, ask for input, and discuss until you reach a productive & mutually satisfying course of action
^— how can i build this model into a process/checklist– to guide everyday decisionmaking and email communication. GMail plugin? testing for filters — anger keywords
golden trifecta – people have a fundamental need to feel important and safe
golden trifecta – josh kaufman’s personal 3 word summary of how to win friends and influence people.
Appreciation means expressing your gratitude for what others are doing for you, even if it’s not quite perfect. Apprecaition: “thanks-it’s clear you worked hard on this and i appreciate that. i’m not sure if we’re there yet, so here are a few ideas that may help…”
Courtesy is politeness, pure and simple. Courtesy is “accepting a small inconvenience on behalf of another person”
Respect is a matter of honoring the other person’s status. no matter how you relate to the person you’re communicating with, Respecting them as an individual is critical if you want to make them feel Important or safe, no matter how high or low their social status. being kind to the waitstaff, etc. treating other people poorly sends a clear signal to everyone that you can’t be trusted.
when asking for something, providing a reason why helps compliance (cialdini – influence)
general commander’s intent is much better way of delegating: whenever you assign a task to someone, tell them WHY it must be done!! the more your agent understands the purpose behind your actions, the better they’ll be able to respond appropriately when the situation changes.
–>field commander can use knowledge of the Goal, and fresh intelligence, to act in a new way that supports the original intent
alleviates communication overhead, too.
when you communicate the intent behind your plans, you allow the people you work with to intelligently respond to changes as they happen
bystander apathy: it’s far more effective to SINGLE SOMEONE OUT, make eye contact, POINT, and say very clearly – “YOU – CALL 911″. they will
dwight d eisenhower, no battle was ever won according to plan but no battle was ever won without one “plans are useless, but planning is indispensable”"
violating the norms of a group is a Social Signal that you don’t belong in the group
social signals are tangible indicators of some intangible quality that increases a person’s social status or group affiliation
^— very important
social signals have real economic value, so it pays to build them into your offer if you can. part of building a signaling value into something is understanding what people want to signal to other. signals go back to core human drives – acquisition . bonding . learning . defending . feeling – people want to signal that they’re:
wealthy, attractive, intelligent, high status, interesting, and confident
connecting your offer to one of these qualities via Association is a surefire way to make people Desire your offer more strongly.!!
social proof can take a life of its own. fads often form when one person takes an action, others perceive it as a Social Signal, then act the same way, creating a social FEedback Loop. pet rocks, yellow lance armstrong livestrong bracelets, viral videos, and stock market bubbles all gain power via social proof – if so many other people are doing it, it’s easy to come to the conclusion that you should probably do it too!!!!
— the popular person – the person with teh most capital – the person who sets the group norms – who most conforms to them?
google query: “how does a group norm become set?”
the most effective testimonials tend to follow this format: “i was interested in this offer, but skeptical. i decided to purchase anyway, and I’m very pleased with the end result”
work to establish yourself as an authority on what your’e offering, and people will be more likely to accept your offer
no one wants to be considered an “oath breaker”. commitments have ben used throughout history as a way of binding groups together. breaking a promise or commitment can often have a negative impact on social status and Reptuation, so most people will do whatever they can to act in ways that are Consistent with previous positions.
- i have personally found that not only publicly declaring a position helps you accomplish a goal, but also mentally antagonizing those who do not exhibit characteristics promoted by the goal
stories of past sales to encourage customer to like and trust him before selling process begins
obtain a small commitment, and you’ll make it far more likely that others will comply with your request
incentivization structure for salespeople: focus on making profitable sale versus sales at any cost
remind yourself to keep an open mind, and you’ll enhance your ability to make wise decisions (how to create a process for this?)
instead of dwelling on the problem, focus on your OPTIONS. ruminating on the issue doesn’t solve anything; what are you going to DO about it? by focusing your energy on evaluating potential responses, your’e far more likely to fin a way to make things better
focus on Options, not issues, and you’ll be able to handle any situation life throws at you
business-related KPIs are directly related to the 5 parts of every business (Value creation, marketing, sales, value delivery, finance).
q’s used to identify KPIs:
Value creation: how quickly is the system creating value? what is the current level of inflows?
marketing: how many people are paying attention to your offer? how many prospects are giving you permission to provide more information?
sales: how many prospects are becoming paying customers? what is the average customer’s lifetime value?
value delivery: how quickly can you serve each customer? what is your current returns or complaints rate?
finance: what is your profit margin? how much Purchasing Power do you have? Are you financially sufficient?
try to limit yourself to only 3 to 5 KPIs per system. when collecting measurements, it’s tempting to build a dashboard with every piece of desirable information. if you overload yourself with too much data, you’ll be far less likely to see changes that are critically important. find your system’s KPIs..
analytical honesty: measuring & analyzing the data you have- dispassionately. since we’re social creatures, we care about how others perceive us, which gives us a natural incentive to make things look better than they actually are. figure out ways to circumvent this natural bias: honesty is the first step towards increased profits. care more on long-term profits&viability over looking good.
incentive-caused bias and confirmation bias are all too easy to succumb to if your social status is on the line. having an experienced but dispassionate third party audit your measurement and analysis practices is a neat workaround for these tendencies: you might not like what you hear, but at least you’ll be fully aware of potential issues.
you can’t reliably optimize a system’s performance across multiple variables at once. pick the most important one and focus your efforts accordingly.
novelty – even highly-attention skilled WM “willpower depletion” resilient radar operators – get ADD after 10 minutes of focus looking for blips. institute policy of forced rotations, regular breaks.
The Personal MBA is available on Amazon for $15.04.
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