The Personal MBA: Master the Art of Business

My personal notes on the book The Personal MBA: Master the Art of Business.

My personal MBA

• If you put the same amount of time and energy you’d spend completing an MBA into doing good work and improving your skills, you’ll do just as well.

Value creation

• Every successful business creates something of value.
• A business is a repeatable process that:
  1. Creates and delivers something of value…
  2. That other people want or need…
  3. At a price they’re willing to pay…
  4. In a way that satisfies the customer’s needs and expectations…
  5. So that the business brings in enough profit to make it worthwhile for the owners to continue operation.
• Core human drives: what people want.
  1. The drive to acquire.
  2. The drive to bond (connect).
  3. The drive to learn.
  4. The drive to defend.
  5. The drive to feel.
• Evaluate the market before creating or expanding a business. Rate the factors below in a scale from 0 to 10 (conervately):
  1. Urgency
  2. Market size
  3. Pricing potential
  4. Cost of customer acquisition
  5. Cost of value delivery
  6. Uniqueness of offer
  7. Speed to market
  8. Up-front investiment
  9. Upsell potential
  10. Evergreen potential
• Competition means the market exists.
• There’s often a huge difference between an interesting idea and a solid business.
• Economic value usually takes on one of the twelve standard forms:
  1. Product: create a single tangible item or entity, then sell and deliver it for more than what it cost to make.
  2. Service: provide help or assistance and charge a fee.
  3. Shared resource: create a durable asset that can be used by many people, then charge fees for access.
  4. Subscription: offer a benefit on an ongoing basis, and charge a recurring fee.
  5. Resale: acquire an asset from a wholesaler and sell to a retail buyer for a high price.
  6. Lease: acquire an asset, then allow another person to use that asset for a predefined amount of time in exchange for a fee.
  7. Agency: market and sell on behalf of a third party, and collect a fee over the transaction price.
  8. Audience aggregation: get the attention of a group of people and sell access to them in the form of advertising.
  9. Loan money
  10. Option
  11. Insurance
  12. Capital: invest in a business.
• Perceived value: it determines how much your customers will be willing to pay for what you’re offering.
  • Focus on creating forms of value that require the least end-user effort to get the best possible end result.
• Bundling: allows you to repurpose value that you have already created to create even more value.
• Unbundling: taking one offer and splitting it up into multiple offers.
• Prototype: an early representation of what your offering will look like.
  • Show potential customers your work in progress. It’s better to get feedback from real customers as early as you possible can.
• The iteration cycle: nobody gets it right the first time.
  • Use the WIGWAM method:
    • Watch: what’s happening?
    • Ideate: what could you improve?
    • Guess: which idea will make the biggest impact?
    • Which: decide which change to make.
    • Act: make the change.
    • Measure: what happened after the change?
  • Iterate as fast as possible, but don’t skip any steps.
  • Feedback: getting useful feedback from your potential customers is the core of the Iteration Cycle.
    • Ask open-ended questions.
    • Steady yourself and keep calm.
    • Take what you hear with a grain of salt.
    • Give potential customers the opportunity to pre-order.
• Trade-off: a decision that places a higher value on one of several competing options.
  • When making decisions about what to include in your offering, it pays to look for patterrns - how specific groups of people tend to value some characteristic in a certain context.
• Economic values: when customers purchase from you, they are deciding that they value what you have to offer more than they value anything else their money could buy at that moment.
  • Willingness to pay (WTP).
  • Convenience and fidelity.
• Relative importance testing: people never accept trade-offs unless they’re forced to make a decision. Since there’s no perfect offering, people are happy to settle for the “next best alternative”.
• Critically Important Assumptions (CIAs): facts or characteristics that must be true in the real world for your business or offering to be successful.
• Minimum Economically Viable Offer (MEVO): it’s an offer that promises and/or provides the smallers number of benefits to produce an actual sale.
• Incremental augmentation: use the Iteration Cycle to add new benefits to an existing offer.
• Field testing: using what you make everyday is the best way to improve the quality of what you’re offering.

Marketing

• People must know what you have to offer.
• Attention: you must earn the attention of the people who are likely to buy from you.
• Receptivity: is a measure of how open a person is to your message. People ignore what they don’t care about.
• Remarkability: design your offer to be remarkable - unique enough to pick your prospects curiosity.
• Probably purchaser: focus on attracting the attention of the people who will actually care about what you’re doing.
• End result: focus on what your offer will provide to customers.
• Qualification: it’s the process of determining whether or not a prospect is a good customer before they purchase from you. Not every customer is a good customer.
• Point of market entry: find our when people are interested in hearing from you before you reach out (e.g.: people start to care about diapers when they have children).
• Addressability: how easy it’s to get in touch with people who might want what you’re offering.
• Desire: discover what people want, and connect them with your offering.
• Visualization: the most effective way to get people to want something is to encourage them to visualize what their life would be life once they have accepted your offer.
• Framing: it’s the act of emphasizing the details that are critically important while de-emphasizing things that aren’t.
• Free: if you want to get attention fast, give something valuable away for free.
• Permission: ask permission to follow up. Things like spam only hurt your business.
• Hook: it’s a single phrase or sentence that describes an offer’s primary benefit. Emphasize what’s uniquelly valuable about your offer and why the prospect should care.
• Call-to-action (CTA): give the recipient or prospect a single, very clear, very short action to take next. The more clearly, the better.
• Narrative: tell the history of the “hero” - about people who have already worked the path your prospects are considering.
• Controversy: using it constructively, it can be a way to attract attention.
• Reputation: people are often willing to pay a premium for a good reputation.