Aug, 2016

Step 15: Descartes & Solving Problems With A Calculator

The Big Idea: To run a successful business, you must be comfortable with math and statistics.

  • Math is the only 100% certain truth. — Descartes
  • I was dyslexic, but I realized that if I was going to be rich I had to understand numbers. — Richard Branson
  • To make good decisions, you must understand math and statistics.
  • By far the most common background for billionaires is investing.
  • To make good decisions, measure and quantify.
  • Trying to quantity the unquantifiable (happiness, leisure) can still help.
  • Keep an old algebra textbook around.
  • Play chess or backgammon to stay sharp.
  • Almost all billionaires play games like poker, bridge, chess, backgammon.
  • Quantify possible outcomes to make decisions easier.
  • Logical Fallacy of the Slippery Slope: I don’t want to lift weights because I don’t want to look like Arnold Schwarzenegger

Tai Lopez is an entrepreneur, investor, and blogger who runs an awesome online book club. 67 Steps is a lecture series teaching how to be successful in health, wealth, love, and happiness.  I’m a big fan.

What They Don’t Teach You At Business School About Entrepreneurship

-startups are best for people who crave flexibility, excitement
-partners (cofounders) are great, it’s so difficult to do it all by yourself
-it’s okay to not have all the answers; trust in the process and in yourself to find the answers when you need them
-focus on the process and the results will take care of themselves — Nick Saban
-a small team with high morale is really hard to beat
-the quality of the team is more important than the quality of the idea
-be ready for changes and be ready to embrace them
-speed is the ultimate weapon
-if you wait too long to hire great people, you may lose them
-in investor meetings, show that you have a detailed plan ready to execute
-schedule multiple investor meetings in the same day and tell investors about the competition
-even if you don’t have term sheets, don’t give up if you believe in the idea and team
-entrepreneurship is not that risky when you consider the skills you acquire along the way
-business schools undervalue sales, even though sales is the heart of business
-business schools do a poor job of teaching executives how to communicate with non-business types
-founders need to know sales skills so they can close (hiring, partnerships, investors)
-bigger is not always better for founders
-be humble and learn where you are weak
-if you do raise venture money, consider raising small amounts and making it work
-at the end of every day, just sit quietly for 10 minutes
-we have a weekly 12min standup meeting, regular 30 minute one-on-one’s, and that’s it for meetings
-useful for trying to partner with or work with a big company, is to know how big companies work internally, think about the level (VP/Director/Manager) of person you’re speaking with and what their concerns are (P&L/market share/stock price)
-the most critical departments, day to day, are sales and operations
-spend some time on help desk and/or sales
-exponential growth what others look for during investing and acquisitions, it also helps with employee morale and hiring
-when hiring, some people are high growth people and some people are not, hire people who fit your goals
-when starting a company, start with sales people and follow quickly with execution people

Scaling Up by Robert Sutton and Huggy Rao

THE BIG IDEA

Scaling is a ground war, not just an air war. Scaling requires grinding it out; building the organization brick by brick, day after day. One more metaphor…it’s a marathon, not a sprint.

META LESSONS

1. All scaling issues are basically the same across all organizations and industries.
2. Scaling entails more than the Problem of More. You must grow AND get better.
3. People who are adept at scaling excellence are comfortable with the uncertainty and mess that accompanies scaling.
4. Scaling starts and ends with individuals.

SCALING MANTRAS

1. Spread a mindset, not just a footprint.
Running up the numbers and putting your logo on as many people and places as possible isn’t enough.
Examples: Facebook Bootcamp

2. Engage all the senses.
Bolster the mindset you want to spread with supportive sights, sounds, smells, and other subtle cues that people may barely notice, if at all.
Examples: Disney theme parks

3. Link short-term realities to long-term dreams.
Hound yourself and others with questions about what it takes to link the never-ending now to the sweet dreams you hope to realize later.
Examples: Stanford Directors College

4. Accelerate accountability
Build in the feeling that “I own the place and the place owns me.”
Examples: NovoEd

5. Fear the clusterfug.
The terrible trio of illusion, impatience, and incompetence are ever-present risks. Healthy doses of worry and self-doubt are antidotes to these three hallmarks of scaling clusterfugs.
Examples: Oracle Financials at Stanford

6. Scaling requires both addition and subtraction.
The problem of more is also a problem of less. What got us here won’t get us there. There is time to take down the scaffolding.
Examples: IDEO, Cost Plus Market

7. Slow down to scale faster – and better – down the road.
Learn when and how to shift gears from automatic, mindless, and fast modes of thinking (system 1) to slow, taxing, logical, deliberative, and conscious modes (system 2); sometimes the best advice is, “Don’t just do something, stand there.”

——————————————————————–
PART I. SETTING THE STAGE
Chapter 1. It’s a Ground War, Not Just an Air War
Chapter 2. Buddhism Versus Catholicism

PART II. SCALING PRINCIPLES
Chapter 3. Hot Causes, Cool Solutions
Chapter 4. Cut Cognitive Load: But Deal with Necessary Complexity
Chapter 5. The People Who Propel Scaling: Build Organizations Where “I Own the Place and the Place Owns Me”
Chapter 6. Connect People and Cascade Excellence: Using Social Bonds to Spread the Right Mindset
Chapter 7. Bad Is Stronger Than Good: Clearing the Way for Excellence

PART III. PARTING POINTS
Chapter 8. Did This, Not That: Imagine You’ve Already Succeeded

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PART I. SETTING THE STAGE

Chapter 1. It’s a Ground War, Not Just an Air War; Going Slower to Scale Faster (and Better) Later
-scaling requires grinding it out
-make one small change after another, day after day
-never leave well enough alone
it’s a marathon, not a sprint
-7 scaling mantras (see above)

Chapter 2. Buddhism Versus Catholicism
-Buddhism: mindset guides behavior, but actions and practices vary wildly, KFC/Taco Bell/Pizza Hut in China, Joie de Vivre hotels,
-Catholicism: actions and practices are replicated identically, In-N-Out, See’s Candies
-constant tension between replicating tried-and-true practices and modifying them (or inventing new ones) to fit local conditions
success requires balance between Buddhism and Catholicism
-examples: IKEA in China, Atul Gawande and surgical standardization, Girl Scouts of Northern California, Starbucks, McDonald’s
-start with a great template and customize it
customization of a template instills a sense of ownership in people
-references: Mindset by Carol Dweck, Switch by Chip and Dan Heath
-scaling tradeoff “alone versus together”: shunning partners can slow growth but retain quality and consistency
-scaling tradeoff “more versus better”: grow faster might cost quality, sometimes quality can rebound
understand these tradeoffs and make a clear decision

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PART II. SCALING PRINCIPLES

Chapter 3. Hot Causes, Cool Solutions
-a hot cause (crisis) triggers attention, emotional energy, and commitment
-when changing a culture, focus on both beliefs and actions
-when getting people to rally behind a hot cause, the key is creating experiences that generate “communities of feeling”
-it is harder to break a commitment when you have proclaimed it publicly
don’t foster a heroic mindset, where problems are continuously resolved with quick fixes by heroes instead of finding permanent solutions
-focus on creating good systems and a continuous improvement mindset
-strategy: name the problem to galvanize efforts, ex: “date rape”, “100,000 Lives Campaign”
-strategy: name the enemy to create some team spirit, ex: Apple vs Microsoft
-strategy: make efforts highly visible, Cialdini’s public commitments and accountability, ex: Gandhi’s Salt March
-strategy: breach assumptions, ex: IDEO CEO desk
-strategy: create gateway experiences and on-ramps, ex: teddy bear, security blanket, Chrysler factory cleanups,
-strategy: new/better rituals, Omnicell coatracks to check ego at the door
-strategy: lean on people who can’t leave well enough alone, identify and promote change promoters, ex: Charlotte Beers at Ogilvy Mathers
-tradeoff between poetry and plumbing, poetry can inspire people, plumbing makes things work
-example: Stanford bike helmets and smashed watermelons

Chapter 4: Cut Cognitive Load
-new rules, processes, and technologies can create cognitive overload
-cognitive overload can obscure focus, lower motivation, increase errors, decrease effectiveness
as teams get bigger, individual performance suffers
-J. Richard Hackman rule of thumb: no more than 10 people in one work team
-Dunbar number is 150 people
-at some point, bloated bureaucracies overwhelm the advantages of greater scale
-most startups are too small to suffer from Big Dumb Company disease but lessons still apply
people say they dislike hierarchies, but studies show they are happier, calmer, and more productive when power and status differences are present and well understood
-strategy: subtraction is a way of life, routinely refactor to remove bureaucracy
-ex: scaffolding in construction is needed at the beginning but always removed
-A.G. Lafley: keep things Sesame Street Simple
-strategy: make people squirm, killing bureaucracy is always a little scary, ex: Pixar’s Incredibles
-strategy: bring on the load buster (subtraction by addition), tools that focus attention to what matters, ex: Sberbank’s traffic light system, ex: checklists
-strategy: divide and conquer, divide large teams into smaller teams, ex: hospital pods, carefully think through coordination between small teams, bonus for team/organization performance not individual performance, ex: Ben Horowitz Freaky Friday
-strategy: bolster collective brainpower
-stick with savvy insiders and stable teams over new hires and new blood
-put together people who’ve worked together on new teams
-a team of smart people doesn’t automatically mean success
-fatigue and burnout hurts performance and decision making, so make sure everyone gets plenty of physical and mental rest
-it’s a marathon, not a sprint
-more hiring, more processes, and more rules are inevitable but wait until they are absolutely necessary
-Ben Horowitz says “give ground grudgingly”

Chapter 5: The People Who Propel Scaling
effective scaling requires people who care about the company and the customers
-Netflix pays top dollar to have stars at every position, then expects that they “act in Netflix’s best interest”
-alternatively, Japanese food service Tamago-Ya hires high school dropouts, give them lots of training and support, and receives loyalty and effort in return
-organizations that scale well avoid the trap of hiring “high-priced stars” to fix issues, instead they do the deep thinking and demanding work required to install, spread, and sustain excellence
-talent x accountability = scaling excellence
-strategy: squelch free-riding
-at about 20 people, if startups aren’t careful, new hires will feel like employees not owners
-at P&G, managers who fail to share ideas simply don’t get promoted
-GE evaluates managers based on leadership (including supporting GE’s culture) and performance
-moving out bad apples (free riders) is almost as important as hiring the right people
-strategy: inject pride and righteous anger
-Netflix treats the company like a competitive sports team, not a family, to focus employees on winning
-strategy: bring in guilt-prone leaders
-leaders who worry about their performance tend to be action-oriented and put the needs of others ahead of their own
-strategy: use subtle cues to prime accountability, ex: pair of eyes on the wall
-strategy: create the right gene pool, hire carefully early on
-a company becomes the people it hires, because founders and first employees create the culture
-founders tend to believe they are destined for greatness, and this belief gives them resiliency, persistency, and persuasiveness
-people shape the culture, and the culture then shapes the people, ex: Tata CEO Factory
-strategy: use other organizations are your HR, ex: hire from Teach for America, military, Stanford
-strategy: hire people prewired to fit your mindset, ex: Specialisterne hiring autistic workers

Chapter 6: Connect People and Cascade Excellence
-scaling hinges on discovering pockets of excellence and connecting them to others, then the excellence spreads on its own like dominoes
amateurs discuss strategy, professionals discuss logistics –US Army
-having a diverse change group propels scaling because diverse people interact with diverse groups of people
-look for master multipliers, high energy people who can spread the excellence broadly, ex: Hayden Fry, ex: Dr. William Halsted
bring on energizers, people with lots of positive energy to infect others with, ex: Facebook Chris Cox
-implement savvy gamification, ex: Rite-Solutions Mutual Fun for idea generation
-seven tools for activating domino chains of excellence: top down, broadcast your message out to one and all, have the many teach the few, one on one, from the few to the many, brokers, create crossroads and meeting places
-create a common heart beat through stand up meetings, 2-4 week sprints
-scaling is propelled by leaders who think and act like connectors

Chapter 7: Bad is Stronger than Good
-a little bit of negativity can undermine a lot of good work
when one deadbeat or asshole joins a small team, performance can drop 30%-40%
-8 strategies for getting rid of bad: nip it in the bud, get rid of bad apples, plumbing before poetry, adequacy before excellence, use the cool kids, kill the thrill, time shifting, focus on the best/worst/end

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PART III. PARTING POINTS

Chapter 8. Did This, Not That: Imagine You’ve Already Succeeded
-Daniel Kahnamann’s premortem: imagine failure and try to explain what happened, imagine success and try to explain what happened
most high-growth startups fail because they grew too big too fast
-ask your team, are we happy living in the world we built?