The Personal MBA [summary]

This book was a quick read.

The author, Josh Kauffman, is precise in his choice of words and covers a gamut of topics such as entrepreneurship, marketing, sales, operations, and productivity. Overall, the book offers nothing new in terms of content that you couldn’t gleam from Wikipedia, blogs, and books. But in its objective of collating a diverse buffet rather than the experience of fine dining, it performs exceedingly well where you might be tempted to read detailed recipes on some of the items.

Here are the snippets:

5 interdependent business processes

• Value creation
• Marketing
• Sales
• Value delivery
• Finance

Iron law of the market

If you don’t have a large group of people who really want what you have to offer, your chances of building a viable business are very slim.

Core human drives

• The drive to admire
• The drive to bond
• The drive to learn
• The drive to defend
• The drive to feel

10 ways to evaluate the 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
• Evergreen potential

12 standard forms of economic value

• Product
• Service
• Shared resource
• Subscription
• Resale
• Lease
• Agency
• Audience aggregation
• Loan
• Option - ability to take a predefined action for a fixed period of time in exchange for a fee
• Insurance
• Capital

Perceived value

Focus on creating Forms of Value that require the least end-user effort to get the best possible End Result—they will have the highest perceived value.

Modularity

Twelve Standard Forms of Value aren’t mutually exclusive: you can offer any number or combination of these forms to your potential customers to see which ones they like best.

Bundling and unbundling

Bundling allows you to repurpose value that you have already created to create even more value.

Prototype

Ideas are cheap—what counts is the ability to translate an idea into reality, which is much more difficult than recognizing a good idea. “Stealth mode” diminishes your early learning opportunities, putting you at a huge early disadvantage. It’s almost always better to focus on getting feedback from real customers as quickly as you possibly can.

6 steps of iteration

• Watch
• Ideate
• Guess
• Which?
• Act
• Measure

Iteration velocity

When creating a new offering, your primary goal should be to work your way through each Iteration Cycle as quickly as possible. Iteration is a structured form of learning that helps you make your offering better; the faster you learn, the more quickly you’ll be able to improve.

Feedback

• Get Feedback from real potential customers instead of friends and family
• Ask open-ended questions - Talk less and listen more
• Try not to get offended or defensive if someone doesn’t like what you’ve created; they’re doing you a great service.
• The worst response you can get when asking for Feedback isn’t emphatic dislike: it’s total apathy. If no one seems to care about what you’ve created, you don’t have a viable business idea.
• Give potential customers the opportunity to preorder

Alternatives

Examining the possible Alternatives and considering the customer’s perspective results in better choices.

Trade-offs

• When making decisions about what to include in your offering, it pays to look for Patterns—how specific groups of people tend to value some characteristic in a certain context.
• By paying attention to the Patterns behind what your best customers value, you’ll be able to focus on improving your offering for most of your best potential customers most of the time.

9 common economic values

1. Efficacy—How well does it work?
2. Speed—How quickly does it work?
3. Reliability—Can I depend on it to do what I want?
4. Ease of Use—How much effort does it require?
5. Flexibility—How many things does it do?
6. Status—How does this affect the way others perceive me?
7. Aesthetic Appeal—How attractive or otherwise aesthetically pleasing is it?
8. Emotion—How does it make me feel?
9. Cost—How much do I have to give up to get this?

Relative importance testing

• As a rule, people never accept Trade-offs unless they’re forced to make a Decision. If the perfect option existed, they’d buy it. Since there’s no such thing as the perfect offering, people are happy to settle for the Next Best Alternative
• Determine what people actually want by asking them a series of simple questions designed to simulate real-life Trade-offs.
• Relative Importance Testing can help you quickly determine which benefits you should focus on to make your offering maximally attractive.

Critically Important Assumptions (CIAs)

• Facts or characteristics that must be true in the real world for your business or offering to be successful.
• The more accurately you can identify these assumptions in advance and actually test whether or not they’re true, the less risk you’ll be taking and the more confidence you’ll have in the wisdom of your decisions.

Shadow testing

• The process of selling an offering before it actually exists
• Shadow Testing allows you to get a critical piece of customer feedback you can get in no other way: whether or not people will actually pay for what you’re developing.

Minimum Economically Viable Offer (MEVO)

• An offer that promises and/or provides the smallest number of benefits necessary to produce an actual sale.
• Creating a MEVO is useful because it’s impossible to predict 100 percent accurately what will work in advance.

Incremental augmentation

• The process of using the Iteration Cycle to add new benefits to an existing offer.

Field testing

Using what you make every day is the best way to improve the quality of what you’re offering. Nothing will help you find ways to make your offer better than being its most avid and demanding customer.

Marketing

Without Marketing , no business can survive—people who don’t know you exist can’t purchase what you have to offer, and people who aren’t interested in what you have to offer won’t become paying customers.

Attention

In order to be noticed, you need to find a way to earn that attention by being more interesting or useful than the competing alternatives.

Receptivity

• Receptivity is a measure of how open a person is to your message.
• If you design your offer to be Remarkable—unique enough to pique your prospect’s curiosity—it’ll be significantly easier to attract attention.

End result

• Marketing is most effective when it focuses on the desired End Result, which is usually a distinctive experience or emotion related to a Core Human Drive.
• It’s often far more comfortable to focus on the features: you know what your offer does. Even so, it’s far more effective to focus on the benefits: what your offer will provide to customers.

Random points

• Skilled marketers don’t try to get everyone’s attention—they focus on getting the attention of the right people at the right time.
• Attempting to appeal to everyone is a waste of time and money: focus your marketing efforts on your Probable Purchaser.
• Marketing is most effective when it focuses on the desired End Result, which is usually a distinctive experience or emotion related to a Core Human Drive.
• The product that will not sell without advertising will not sell profitably with advertising. —ALBERT LASKER, FORMER CEO OF LORD & THOMAS AND PIONEER OF MODERN ADVERTISING
• The more clearly you define your ideal customer, the better you can screen out the prospects who don’t fit that description, and the more you’ll be able to focus on serving your best customers well.
• Attracting your Probable Purchaser’s Attention immediately after they’ve reached the Point of Market Entry is hugely valuable.
• Sometimes the road less traveled is less traveled for a reason. —JERRY SEINFELD, COMEDIAN
• Addressability is a measure of how easy it is to get in touch with people who might want what you’re offering.
• The essence of effective marketing is discovering what people already want, then presenting your offer in a way that intersects with that preexisting Desire.
• Framing is the act of emphasizing the details that are critically important while de-emphasizing things that aren’t, by either minimizing certain facts or leaving them out entirely.
• Selling to people who actually want to hear from you is more effective than interrupting strangers who don’t. —SETH GODIN
• Asking for Permission to follow up after providing Free value is more effective than interruption.
• A Hook is a single phrase or sentence that describes an offer’s primary benefit.
• When creating a Hook, focus on the primary benefit or value your offer provides.
• A Call-To-Action directs your prospects to take a single, simple, obvious action. Visit a Web site. Enter an e-mail address. Call a phone number.
• Testimonials, case studies, and other stories are extremely effective in encouraging your prospects to accept your “call to adventure.” By telling stories about the customers who have come before, you grab your prospect’s Attention and show them a path to achieve what they want. The more vivid, clear, and emotionally compelling the story, the more prospects you’ll attract.
• It’s okay to support a position that not everyone else supports. It’s okay to disagree with someone, or to call someone out, or to position yourself against something, because Controversy provokes a discussion. Discussion is Attention, which is a very good thing if you want to attract people who will benefit from what you’re doing.
• Building your Reputation takes time and effort, but it’s the most effective kind of marketing there is.
• The easier it is to demonstrate your trustworthiness and verify that the other party is trustworthy, the greater the chance of a successful Transaction.
• There are four ways to support a price on something of value: (1) replacement cost, (2) market comparison, (3) discounted cash flow/net present value, and (4) value comparison.
• Value-Based Selling is the process of understanding and reinforcing the Reasons Why your offer is valuable to the purchaser.
• Education-Based Selling is the process of making your prospects better, more informed customers.
• In every negotiation, the power lies with the party that is able and willing to walk away from a bad deal.
• In every negotiation, there are Three Universal Currencies: resources, time, and flexibility. Any one of these currencies can be traded for more or less of the others.
• In every negotiation, there are Three Universal Currencies: resources, time, and flexibility. Any one of these currencies can be traded for more or less of the others.
• The Three Dimensions of Negotiation are setup, structure, and discussion.
• As a social force, Reciprocation is one of the primary psychological tendencies that underlie human cooperation.
• Your prospects know you’re not perfect, so don’t pretend to be. People actually get suspicious when something appears to be “too good to be true.”
• Selling anything is largely the process of identifying and eliminating Barriers to Purchase: risks, unknowns, and concerns that prevent your prospects from buying what you offer. Your primary job as a salesperson is to identify and eliminate barriers standing in the way of completing the Transaction
• A Value Stream is the set of all steps and all processes from the start of your Value Creation process all the way through the delivery of the end result to your customer. Understanding what your offer’s Value Stream looks like is critically important if you want to be able to deliver value to your customers quickly, reliably, and consistently.
• A customer’s perception of quality relies on two criteria: expectations and performance. You can characterize this relationship in the form of a quasi-equation, which I call the Expectation Effect: Quality = Performance - Expectations.
• Do whatever you can do to provide something that unexpectedly delights your customers. Zappos’s free upgraded shipping is more valuable as a surprise—if it were part of the deal, it would lose its emotional punch.
• There are three primary factors that influence the Predictability of an offer: uniformity, consistency, and reliability.
• Throughput is a measure of the effectiveness of your Value Stream. Throughput is measured in the formula [rate/time].
• Scale is the ability to reliably Duplicate or Multiply a process as volume increases. Scalability determines your maximum potential volume.
• As a general rule, the less human involvement required to create and deliver value, the more Scalable the business.
• Incremental Augmentation is an example of the power of Accumulation.
• Lifetime Value is the total value of a customer’s business over the lifetime of their relationship with your company.
• Allowable Acquisition Cost (AAC) is the marketing component of Lifetime Value. The higher the average customer’s Lifetime Value, the more you can spend to attract a new customer, making it possible to spread the word about your offer in new ways.
• Purchasing Power is the sum total of all liquid assets a business has at its disposal.
• Guiding Structure means the structure of your Environment is the largest determinant of your behavior. If you want to successfully change a behavior, don’t try to change the behavior directly. Change the structure that influences or supports the behavior, and the behavior will change automatically.
• Our perceptual faculties are optimized to notice Contrast, not to compare what we perceive with things that aren’t there, which is the root of Absence Blindness.
• Commander’s Intent is a much better method of delegating tasks: whenever you assign a task to someone, tell them why it must be done. Bystander Apathy is an inverse relationship between the number of people who could take action and the number of people who actually choose to act.
• Modal Bias is the automatic assumption that our idea or approach is best.
• The Pygmalion Effect is a tendency named after the protagonist of a Greek myth. Pygmalion was a gifted sculptor who created a statue of a woman so perfect that he fell in love with his creation. After Pygmalion desperately prayed to Aphrodite, the goddess of love, she took pity on him by bringing the statue to life. The Pygmalion Effect explains why all of our relationships are, in a very real sense, self-fulfilling prophecies.
• The Attribution Error means that when others screw up, we blame their character; when we screw up, we attribute the situation to circumstances.
• Recruit the smallest group of people who can accomplish what must be done quickly and with high quality. Clearly communicate the desired End Result, who is responsible for what, and the current status.
• Treat people with respect. Consistently using the Golden Trifecta—appreciation, courtesy, and respect—is the best way to make the individuals on your team feel Important and is also the best way to ensure that they respect you as a leader and manager.
• Create an Environment where everyone can be as productive as possible, then let people do their work. The best working Environment takes full advantage of Guiding Structure—provide the best equipment and tools possible and ensure that the Environment
• Here’s Gall’s Law : all complex systems that work evolved from simpler systems that worked.

Memorable quotes

• “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.” — Henry Ford
• “Make money your god and it will plague you like the devil.” - Henry Fielding
• “The zealous display the strength of their belief, while the judicious show the grounds of it.” - William Shenstone
• “Everyone can be great because everyone can serve.” - Martin Luther King
• “Capital is that part of wealth which is devoted to obtaining further wealth.” - Alfred Marshall
• “Great things are not done by impulse, but by a series of small things brought together.” - Van Gogh
• “I can’t give you a surefire formula for success, but I can give you a formula for failure: try to please everybody all the time.” - Herbert Bayard Swope
• “A successful business is either loved or needed.”i - Ted Leonsis
• “Things which matter most must never be at the mercy of things which matter least.” - Johann Goethe
• “It is better to be roughly right than precisely wrong.”- John Maynard Keynes
• “If you’re not embarrassed by the first version of your product, you’ve launched too late.” - Reid Hoffman
• “Pick three key attributes or features, get those things very, very right, and then forget about everything else … By focusing on only a few core features in the first version, you are forced to find the true essence and value of the product.” - Paul Buchheit
• “The cardinal marketing sin is being boring.” - Dan Kennedy
• “Advertising is the tax you pay for being unremarkable.” - Robert Stephens