The key takeaway from Good to Great is discipline. Jim Collins and his team studied 28 companies over 5 years and identified the key determinants of success and failure. The books describe 6 different levels mentioned as follows:
1. Level 5 Leadership
The first is Level 5 Leadership. Every great company Collin studied had the same type of leader – Level 5 Leaders. The organizational hierarchy’s lowest level of leadership includes the Highly Capable Individual who contributes using their skills, know-how and good work habits. The next is Contributing Team Members who are able to use their skills and knowledge to help their team succeed. The next level is Competent Manager who are capable of organizing their team to efficiently reach pre-determined objectives. Level 4 is Effective Leaders where the majority of leaders can be found and are able to create the commitment from their team to vigorously pursue a clear and compelling vision. Finally the Level 5 Leadership level consists of great leaders. They have the abilities of the other four levels plus a unique combination of willpower and humility.
Entrepreneurs should try to develop the following traits if they want to become a Level 5 Leader. Paradox, Driven, Share praise, Take blame, Normal people, and Come from within the organization.
To encourage and find Level 5 Leaders in your organization you can: -Look for great results without an individual claiming the credit. -Practice the Good to Great concepts. -Hire from within. Avoid the temptation to recruit external talent. – Invest in personal development, coaching and mentoring for your team.
2. First Who, Then What
This is the second concept of disciplined people. It means that you don’t decide what you want to do and then get the people you need to do it. Instead, you start by getting the right people into the organization and the wrong people out. Getting the right people takes precedence over strategy, vision and over almost everything. First who, then what means shifting your mindset to realize that people are not your most valuable asset, the right people are. The benefits of putting “who” before “what” include: -It’s easier to change direction because people are present because of who they get to work with rather than what they are working on. -A person doesn’t have to waste time and energy motivating and managing his team. -Putting who before what gives the organization the potential to become great.
As part of first who, then what, Collins gives three principles to follow. These are: Principle 1: When in doubt, don’t hire – keep looking. Great companies are prepared to grow only at the rate they can hire the right people. Principle 2: Act the right way when there is a need to make a personal change. You must let go of the wrong people because it isn’t fair on them and it’s not fair on the organization to keep them around. Principle 3: Put your best people at the required place.
The best people will be debating what the “what” should be. This gives you a better chance of making the right “what” decision.
3. Confront the brutal facts
Great results can only be achieved when you are making lots of good decisions and then execute well. To make good decisions you need to confront the facts, even if those facts are brutal and uncomfortable. To avoid distorting the facts you need an atmosphere where the truth is welcomed. There are four practices to help you create this atmosphere: 1. Lead with questions not with answers. The leaders of Good to Great companies start by assuming they don’t know what is required. They ask questions until a picture of reality and its implications emerges. This is the opposite of superstar leaders who assume they have all the answers are likely to make bad decisions because they don’t have a true understanding of the facts.
2. Engage in dialog and debate, not coercion. Engage in a debate, have heated discussions, even agree to disagree, but great leaders never coerce people. 3. Conduct autopsies without blame and use them to learn. Even great companies make mistakes. Great companies don’t try to hide these mistakes. Rather, they try to learn from them. Trying to blame someone for the mistake doesn’t even enter into the conscious thoughts of Good to Great leaders. 4. Build red flag mechanisms Great companies pay attention to what’s really important. They build red flag mechanisms. Further, these turn raw data into information that cannot be ignored.
The Stockdale Paradox
In this part of the book the author explains a concept called The Stockdale Paradox. A US Navy Vice-Admiral named James Stockdale, was a prisoner of war for over seven years during which time he was tortured many times. He never doubted that he would survive and that’s how he handled this situation. When asked which kind of people didn’t survive, Stockdale said it was the optimists. The ones who, for example, believed they’d be out by Christmas. Christmas then came and went. And so did the following Christmas. And eventually, they gave up and died demoralized and of a broken heart.
So, Stockdale Paradox is a philosophy of duality which involves having the discipline to confront the brutal facts regarding your circumstances. But at the same time, it involves never losing faith that you will prevail in the end. It all depends how we handle these difficulties that will have the biggest impact on the course of our lives and our business.
4. The Hedgehog Concept
The next in going Good to Great is the Hedgehog Concept. To explain this concept the author quotes an example of the difference between a fox and a hedgehog. A fox is a very clever creature because it sees the world in all its complexity and can pursue many goals at once. Whereas, a hedgehog is a much more simple creature because it doesn’t get bogged down by all the complexity. Hedgehogs are not capable of seeing complexity. They see is a single goal and accordingly execute it. Good to Great companies behave in a similar way to a hedgehog. They stick to doing what they’re best at and avoid getting distracted.
So you can find your inner hedgehog at the intersection of these three questions: 1. What do you feel most passionate about? 2. What can you be best in the world at? 3. What drives your economic engine?
Great companies set their goals on Hedgehog concept. This is very different from setting your goals from the desire to grow, for example.It takes time to develop your Hedgehog Concept. It’s not going to happen overnight, in a flash of brilliant inspiration. A business council is primarily established to achieve great results. The members are tasked with finding the Hedgehog Concept. To be effective the council needs the right people on board. You can get align with other concepts only if you have developed a hedgehog concept.
5. Culture of Discipline
Having discipline of people eliminates the need for hierarchy. Having discipline of thought keeps everyone on track. Now we move to the discipline of action which eliminates the need for bureaucracy. Most companies fail not because of the lack of opportunity but because there is too much opportunity, and they spread themselves too thinly.
To support a culture of discipline you’ll need to do five things: 1. Within a defined framework build a culture of freedom and responsibility. You will free up your time if you put in place boundaries but let people decide themselves how to act within those boundaries. All you’ll have to do is manage the system itself. The best way to explain this is by using the example of an airline pilot. The pilot is guided by air-traffic control but with an ultimate responsibility for the safety of the its passengers, and crew. 2. Get the right people on board those that have the will to achieve their responsibilities. You need the right people, confronting the brutal facts, following the Hedgehog Concept and then having the discipline to do what needs to be done to reach their objectives.
3. Build a strong culture, not a dictatorship. It’s about creating a culture where the team wants to achieve. 4. Exercise extreme focus in adhering to your Hedgehog Concept If you want to be average, start by trying to be great at lots of things. But Good to Great companies give supreme attention to their hedgehog concept. 5. Create a Stop-Doing list Create a list of not to do things to retain more focus on goals. Focus on which projects support your Hedgehog Concept. Those who doesn’t support the Hedgehog Concept get less funding or are scrapped.
6. Technology Accelerator
Good to Great companies invest in new technology only if it serves their Hedgehog Concept. Good to Great companies behavior around technology include the following traits: 1. They view technology if it serves the purpose of their Hedgehog Concept. They invest in new technology only if it it fits with their Hedgehog Concept. 2. They use technology in unique ways. 3. They maintain a balanced view of technology. This means that they view how technology is used as being far more important than adopting the latest technology.
The Flywheel and Doom Loop Imagine a very large flywheel which is thousands of kilograms or pounds in weight. Now to get it to spin you need to start pushing it. As you begin to push you might make one single step of progress. Then another step and then another. A single push has no impact on the wheel. As you first start to push it seems almost impossible to turn. Pushing it, and pushing it, and pushing it. Then ultimately with all the efforts it takes on a life of its own and its spinning really fast and doesn’t need as much effort to spin.
In fact, now it’s really difficult to stop! We have achieved a Good to Great Flywheel Effect. This, in turn, energizes people and momentum is easy to sustain without much effort. The media is obsessed with moments of breakthrough and inspiration. But, if someone came to you and inquired as to what was the one big push that made your flywheel spin so fast what would you say? You wouldn’t be able to answer! It’s about consistency over a long period of time. A key concept here is to realize that no single push makes a difference. So you have to be thinking about cumulative effects, not looking for the dramatic singular win.
The Doom Loop This concept states that big companies start with a great idea or a flash of brilliance. But then they work on it intermittently, giving only intermittent big pushes. These huge efforts are exhausting. Over time, their intermittent nature leads to poor results.This, in turn, causes the firm to switch to a new idea because the previous one didn’t work out the way they’d hoped. Each time they switch idea momentum is lost. These companies completely stop trying to create momentum. Instead, they are focus on having one breakthrough. This breakthrough never comes. The absolute prime thing to grasp in this flywheel analogy is that each push on the flywheel builds on all the previous thousands of pushes and bridge the gap between good to great.
Thus the book focuses entirely upon creating a disciplined life, thoughts and actions aligned with hedgehog concept to become Good to Great.
This book contains numerous examples of successful blue ocean strategies, and it teaches how to discover and execute them.
Blue Ocean Strategy
Creating Blue Oceans According to the authors value innovation is a consistent pattern leading to successful blue ocean strategies. Blue ocean strategy creates new market spaces, creates new demand, and thus leads to profitable growth. Therefore to succeed, blue ocean strategy requires doing things in a new way that delivers a leap in value to customers.
The properties of Blue Ocean are as follows: • Blue oceans are being continuously created • These lead to more profitable growth • It doesn’t seek to trade off value • There is no eternal successful executor of blue ocean strategy • Technology innovation is not necessary for blue ocean strategy
One of the major reasons imitative competition is so popular is that it provides a straightforward blueprint for what to do.
The Strategy Canvas
The strategy canvas represents how a blue ocean strategy differs and what is the current state of the industry. It plots two axes: On the horizontal axis it list the values the customer it cares about, and current dimensions of competition. On the other hand, the vertical axis Segment buyers into distinct groups. Finally for each group, show how much buyers receive in each of the horizontal factors by plotting a value curve.
Thus it requires a four Actions Framework to create a distinct curve. 1. Which factors the industry takes for granted should be eliminated? 2. Factors that are well below industry standards should be reduced. 3. Which factors need improvement well above industry standards? 4. Those factors should be created that the industry has never offered? Therefore, the three Characteristics of a Good Blue Ocean Strategy are: 1. Focuses on a few factors, instead of spreading itself thin across many. 2. Diverges from competition, instead of imitating it. 3. Can articulate its strategy with a clear tagline.
Formulating Blue Ocean Strategy
In this section the author teaches the ways to discover blue oceans. Reconstruct Market Boundaries The author offers 6 paths to find new blue ocean opportunities: Path 1: Look across -Alternative Industries Path 2: Strategic Groups within Industries Path 3: The Chain of Buyers Path 4: Complementary Product and Service Offerings Path 5: Functional or Emotional Appeal to Buyers Path 6: Look across Time Focus on the Big Picture, Not the Numbers A strategy canvas accomplishes the following: • It identifies the important factors of competition in the industry. • Strategic canvas shows the strategic profile of current competitors. • Shows unique value curve critical to customers at the expense of less-important factors.
The Blue Ocean Strategy’s method to generate strategy canvases:
1. Visual awakening -Goal: Agree on the current state of play and overcome denial about your company’s current position. -Create separate teams to highlight different opinions on competitive factors -See where your strategy needs to change and notice where your organization has lost focus, is the spread thin, or resembles the exact strategy of competitors and take note of where your competitor’s strategy differs.
2. Visual exploration -Goal: See customer problems in person. -Go directly to customers, non-customers, lost customers, and competitors’ customers to evaluate the 6 paths to creating blue oceans -Talk to people and watch them in action. – Then find which factors they care a lot about and which factors they couldn’t care. At least a few of your assumptions are probably wrong. So try alternatives to your product to find new factors your product doesn’t have – Finally, draw a range of new strategy canvases and decide which factors you will eliminate, reduce, raise, or create -Force people to create multiple canvases to push thinking and consider creating one canvas for each of the six paths.
3. Visual strategy fair -Present canvases to stakeholders, including not just management but also employees, customers, non customers -Limit presentations to 10 minutes -Judges award stickers to their favorites. They explain their picks and also their non-picks -Find commonalities between strategy curves. -End by synthesizing a value curve for the new strategy 4. Visual communication -Distribute your strategic profile to team members. -Support only those projects that bridge the gap between outcome and new strategy.
Reach Beyond Existing Demand
Blue Ocean Strategy requires that you must reach beyond existing demand. In addition, you must build on commonalities between customer groups to find unmet pain points.
The book argues there are three tiers of non customers: -First tier: Soon-to-be non customers are begrudging customers in your market, waiting to jump to better alternatives. -Second tier: Refusing non customers have considered your industry’s options but have decided not to consume them. -Third tier: Unexplored non customers have never thought of your industry’s products as an option.
Get the Strategic Sequence Right
Blue Ocean Strategy proposes the following strategic sequence: -Buyer utility: Regarding exceptional utility in your idea. -Price: Regarding accessibility to the target mass of buyers. -Cost: Regarding attainment of your cost target to profit at your price. -Adoption: Regarding hurdles that impede your idea.
Executing Blue Ocean Strategy
This section covers the common hurdles faced in executing your blue ocean idea.
Overcome Key Organizational Hurdles Organizations undergoing a strategic shift face these four hurdles: 1.Cognitive – recognizing the need for change 2. Limited resources 3. Motivation – inspiring real action 4. Politics
Build Execution into Strategy
The point of this chapter is that you shouldn’t develop and implement the blue ocean strategy in a silo, ignoring people and Blue Ocean Strategy highlights the importance of procedural justice i.e people care as much about the fairness of the process as they do about the ultimate outcome. There are three elements of fair process: 1. Engagement Involve people by asking for their input and discuss their ideas. 2. Explanation Make clear that you have considered people’s opinions and decided for the overall interest of the company. 3. Clear expectations Make clear how employees will be evaluated and specify successful goals. As a result, workers can focus on execution rather than angst.
Align Value, Profit, and People Propositions When all 3 propositions (value, profit, and people) are aligned they work beautifully in harmony, reinforcing each other and making the strategy more defensible. The three propositions reinforce each other. An organization’s activities are mutually reinforcing and lead to a strong competitive advantage. Any activities that do not reinforce the other activities are discarded.
Renew Blue Oceans When you create a blue ocean will definitely attract imitators turning it into a red ocean. This raises two challenges: 1. How do you prolong the sustainability of your blue ocean to maximize profits? 2. How do you perpetuate your organization as your former blue oceans turn red?
Maximizing a Blue Ocean Business To prolong sustainability of your blue ocean broaden your defensive moat to ward off competitors and renew the blue ocean with constant innovation. Renewing the Organization When the blue ocean turns red and it’s difficult to value innovate further, and then the company needs to look for more blue oceans to enter. Therefore the company maintains a portfolio of businesses at different stages of their life cycle.
Avoid Red Ocean Traps
Blue Ocean Strategy ends with ten cognitive traps that can deter you from creating blue oceans or it can jeopardize your execution. 1. Myth: Blue ocean strategy is a customer-led strategy. Reality: Blue oceans are about exploring non customers and creating new demand. 2. Myth: To create blue oceans, you must venture beyond your core business. Reality: It doesn’t have to be this risky or scary. Discover 3. Myth: Blue ocean strategy requires new technologies. Reality: Customers care about values in their lives instead of new technology. 4. Myth: You must be first to market with a blue ocean strategy. Reality: It’s more important to be the company that makes a huge leap in customer value
5. Myth: Blue ocean strategy is the same as differentiation strategy Reality: Rather than trying to maximize all factors, blue oceans focuses on the critical value factors and eliminates unnecessary factors.
6. Myth: Blue ocean strategies are low-cost strategies that price low. Reality: Blue ocean strategies try to change the basis of competition, with lower cost. 7. Myth: Blue ocean strategy is purely about marketing. Reality: A successful strategy requires great propositions of value, cost, and people. Marketing is important, but focusing on this at the expense of other components will cripple the sustainability of the strategy.
8. Myth: Blue ocean strategy is about finding and dominating niches. Reality: Blue ocean strategy tries to de-segment buyers by focusing on commonalities across customers and non customers, and creating a new value proposition. This creates a larger market than further segmentation.
9. Myth: Blue ocean strategy sees competition as always bad, when it can actually be good. Reality: Competition is bad at a certain point, when supply exceeds demand, and cutthroat competition leads to fall in margins. 10. Myth: Blue ocean strategy is synonymous with creative destruction or disruption. Reality: Blue oceans don’t necessitate displacement, because they redefine industry boundaries and reach non customers, thus expanding the industry. This is nondestructive creation.
Keller says that to taste huge success, narrow your concentration to one thing, and where your success varied, the focus had too. Always approach a “go small” strategy to succeed at anything you want. The author emphasizes on the fact that extraordinary results are directly determined by how narrow you can make your focus. You need to focus on doing fewer things for more effect instead of doing more things with side effects.
The Domino Effect
A domino effect can lead to extraordinary results in your life. Success is built sequentially. It’s one thing at a time. Success Leaves Clues. No one is self-made and no one succeeds alone. The one thing is the fundamental truth in the lives of successful people. According to the author the Six Lies between You and Success are: 1. Everything Matters Equally 2. Multitasking 3. A Disciplined Life 4. Willpower Is Always on Will-Call 5. A Balanced Life 6. Big Is Bad
Everything Matters Equally
“The things which are most important don’t always scream the loudest.” – Bob Hawke
We prioritize everything uniformly in urgent circumstances. As a result, we respond accordingly. But that doesn’t bridge the gap between you and success. However, achievers always effectively prioritize their tasks. Most to-do lists are survival lists—getting you through your day and your life, but not making each day a stepping-stone for the next so that you sequentially build a successful life. Instead you should focus on a success list that is deliberately created to achieve extraordinary results. If your to do list contains everything under the umbrella then it will divert you from your one thing. You can start with as large a list as you want, but develop the mindset that you will eliminate the redundant tasks and end with the essential one. There will always be just a few things that matter more than the rest, and out of those, one will matter most. Doing the most important thing should always be the priority.
Multitasking is a lie because you either can’t or won’t do either well. It’s not that we have too little time to do all the things we need to do, it’s that we feel the need to do too many things in the time we have. While multitasking switching between tasks deteriorate the focus level. Secondly, you have to activate the “rules” for whatever you’re about to do. Thus you can’t focus effectively on more than one task at once. According to some research estimates workers are interrupted every 11 minutes and then spend almost a third of their day recovering from these distractions. Researchers further added that we lose 28 percent of an average workday due to multitasking.
A Disciplined Life
Discipline in your lifestyle is essentially training yourself to act in a particular way. But you can become successful with less discipline than you think because success is about doing the right thing, not about doing everything right. So you should devote your energy and discipline to that one task only. Doing right things, can liberate from monitoring unnecessary things in life. Those with the right habits seem to do better than others just by maintaining the required discipline in one thing.
Willpower Is Always on Call
Willpower is always on will-call is a lie. Crediting willpower for the success we observe should not mislead you. So, if you want to get the most out of your day, do your most important work—your one thing before your willpower is drawn down.
A Balanced Life
A balanced life is a lie. Gambling with your time may result into non recoverable losses. Expecting all things done in life is foolishness. When the things that matter most get done, you’ll still be left with a sense of imbalance. So it is wise to choose the most important things in life and dedicate all time and energy to it.
Big Is Bad
Big is bad is a lie. No one knows their limit for achievement. So, it is not worth to worry about this. Your actions today determine your future. We over think, over plan, and over-analyze our careers, our businesses, and our lives; that long hours are neither virtuous nor healthy; and that we usually succeed in spite of most of what we do, not because of it. We can’t manage time. The key to success isn’t in all the things we do but in the handful of things we do well. If you can honestly say, “This is where I’m meant to be, doing exactly what I’m doing,” then all the amazing possibilities for your life become possible.
The Focusing Question
Voltaire once said, “Judge a man by his questions rather than his answers.” Quality of an answer is directly determined by the quality of the respective question asked. If you ask the right question, you get the right answer, but wrong question will result into wrong answer. If you ask the most powerful question, the answer can be life-changing. The Focusing Question can lead you to answer not only “big picture” questions like Where am I going ? What target should I aim for? But also “small focus” ones as well like What must I do right now to be on the path to getting the big picture? Where’s the bulls-eye?. Therefore, our choices and actions determine the extraordinary results in life.
The Path to Great Answers
Extraordinary results require a Great Answer. Most satisfying answer always reside outside your comfort zone. When moving toward a goal, the first thing to do is ask, “Has anyone else studied or accomplished this or something like it?” The research and experience of others is the best place to start when looking for your answer. A simple formula for implementing the one thing and achieving extraordinary results is to set a purpose, priority, and productivity.
Live with Purpose
Once we get what we want, our happiness sooner or later diminishes because we quickly become accustomed to what we have acquired. Happiness happens on the way to fulfillment. Dr. Martin Seligman, former president of the American Psychological Association, asserted that there are five factors that contribute to our happiness. These are- positive emotion and pleasure, achievement, relationships, engagement, and meaning. Financially wealthy means having a purpose for your life. Happiness happens when you have a bigger purpose than having more fulfills, which is why it is said happiness happens on the way to fulfillment.
Live by Priority
Purpose without priority is powerless. The truth about success is that farther away a reward is in the future, the smaller the immediate motivation to achieve it. Connect today to all your tomorrows. Breaking a big goal down into the steps needed to achieve it helps in planning better to achieve extraordinary results. This requires visualizing the process thoroughly. In one study, those who wrote down their goals were 39.5 percent more likely to accomplish them.
Live for Productivity
Productive action transforms lives. The most successful people are the most productive people. To enhance your productivity, devote your time proportionately. Three things of time block to achieve extraordinary results are: 1. Time block your time off 2. Time block your ONE Thing 3. Time block your planning time The most productive people design their days around doing their ONE Thing. Block time as early in your day as soon possible. The author suggests blocking four hours a day.
The Three Commitments
To achieve extraordinary results you require three commitments. First, is to seek mastery. Second, is to pursue best ways of doing things. Last, is the attitude of being accountable for everything you do to achieve your ONE Thing. The path of mastering is the combination of not only doing the best you can do, but also doing it in the best possible way.
Anders Ericsson observed that “the single most important difference between these amateurs and the three groups of elite performers is that the future elite performers seek out teachers and coaches and engage in supervised training, whereas the amateurs rarely engage in similar types of practice.”
The Four Thieves
The Four Thieves of Productivity according to the author are: 1. Inability to Say “No” 2. Fear of Chaos 3. Poor Health Habits 4. Environment Doesn’t Support Your Goals The way to protect what you’ve said yes to and stay productive is to say no to anyone or anything that could derail you. When you say yes to something, it’s imperative that you understand what you’re saying no to. You can’t please everyone under the sun, so don’t try. Rather you should focus on adequate management of your personal energy so as to sustain the productivity. High achievement and extraordinary results require big energy.
The Highly Productive Person’s Daily Energy Plan include: 1. For spiritual energy: Meditation and pray. 2. For physical energy: Eat Healthy, exercise, and have a sufficient sleep. 3. Emotional energy: Hug, enjoy, and laugh with loved ones. 4. Mental energy: Set goals, plan, and calendar 5. Business energy: Time block your ONE Thing. The people surrounding you must support your goals because no one succeeds alone and no one fails alone. Pay attention to the people around you. When you clear the path to success—that’s when you consistently get there. When you know what matters most, everything makes sense but when you don’t know what matters most, nothing makes sense.
This book is a guide for those who are conscious regarding their habits and struggle with their habits, cravings and willpower. The author has also mentioned ways to create and change a particular habit is icing on the cake.
Habits work in 3-step loops: cue, response, reward.
The root of all habits lies in a 3-step loop: Cues are combinations of stimuli. These repetitive cues triggers long term changes in the brain’s structure. So this repetition and coordination becomes independent of conscious decision making.
Responses are the chain of thoughts that brain begins to expect and crave for rewards as soon as cue arises.
Rewards are the pleasant/ unpleasant emotions that these cravings begin to drive responses that deliver the reward.
Change your habits by REPLACING just one part of the loop: The routine.
Duhigg calls this -“The Golden Rule“. Naturally, the more often you reinforce a habit, the more it gets embedded in your brain. The golden rule of habit change says that-” to change a habit, it is important to keep the cue and the reward the same, while inserting a new routine into the habit loop.”
Charles Duhigg used an example of Bill Wilson, a recovering alcoholic to illustrate his argument. His newfound faith in Christ led him to create Alcoholics Anonymous.
Your most important habit is willpower, and you can strengthen it over time in 3 ways.
Duhigg also explained the significance of “willpower” in creating a habit. Duhigg says willpower is by far one of the most significant habits, as it helps us do better in all spheres of life. While quoting an example of coffee the author says that you’ll probably get grumpy if you can’t have it on a particular day. Therefore switching the routine with everything else in motion can trick your mind to adapt to the new one.
Here are 3 uncommon ways in which you can grow your willpower capacity over time: 1. Maintain discipline, because persistently delaying gratification will boost your willpower. 2. Plan in advance to deal with worst scenarios. 3. Preserve your autonomy because tasks assigned by someone else, will exhaust your willpower muscle much quicker.
How to create a Habit
1. Identify the desired response. Firstly, focus on one task at a time because new habits need willpower and willpower is limited. Don’t bite off more than you can chew. Secondly, plan/prepare in advance to make the new response easy to complete. 2. Select a cue. Choose one or more of the following to establish as a cue for your response: – Location: Somewhere unique that supports this habit. – Timing: A regular time each day / week brings consistency. – Emotional state: Is the emotional factor behind this new habit excitement? Anger? or Anxiety? – Other people: Who will trigger the new habit? a spouse? a colleague? a friend? – Directly preceding sensation, thought or action: What series of steps will trigger this response? Is it another habit? Finally, visualize the cue and plan out your response to it in your head.
3. Design some carrots. -Treat yourself with rewards that makes you feel happy. -Establish support networks to keep yourself motivated. -Visualize your desired outcome and remind yourself of it often. -Write a clear visualization of your end goal, print a photo, save a video etc. -Track progress and celebrate small wins to create a positive cycle of belief. 4. Set up some sticks. -Commit yourself to your new resolution on paper because those who write down resolutions are 10 times more likely to complete them. -Track streaks of completed responses as the threat of breaking a long streak is a powerful motivator. Make a public commitment to those whose opinion matters but won’t judge you if you fail. 5. Practice your new habit cycle every day for 30 days. -The structural changes that underlie habits are triggered only by perpetual consistency.
How to change a Habit
Changing a habit is not about hitting bull’s eye. Every individual’s response and behavior differs in dealing with changing/ acquiring a habit. 1. Choose the existing response that you want to change. For instance, web browsing, smoking, waking up late, nail-biting, stuttering etc. 2. Experiment with rewards. -Rewards are often obvious in retrospect but difficult to uncover. -Don’t put yourself under pressure to change in this period. -Adjust your responses to test different rewards and determine the craving that is driving your routine. – To create momentary awareness jot down first three emotions on your mind. -Set a timer for 15 minutes. Give the response and reward time to take effect. -Review your notes and ask yourself if you still feel the same urge. If no: you have found the reward that satisfies your craving. If yes: the reward is something else, try again.
3. Isolate the cue. Like rewards, cues are often obvious in retrospect. -Each time you feel the craving, make a quick note of: – Where you are – What time it is – How you feel – Who else is around – What you’ve just been doing or thinking about
4(a) Eliminate the cue. -Many cues are directly within our control. -The quickest way to stop a response is to simply eliminate the cue. -Eliminating cues is powerful because it requires no willpower. 4(b) Design an alternative response that delivers the same reward – If some cues are not possible/ practical to eliminate then adopt major external changes for instance starting a new school, getting married, moving home, changing job etc.
Thus, all you require to change a habit or adapt a new one is willpower, dire perseverance and consistency. You just have to align your three loops viz cues, response and rewards and everything will fall into order.
So, what’s the new habit that you’re going to welcome?
This book has four parts. In all parts of the book the author suggests various ways/ principles to make people like you and how to win people to make your way of thinking. Moreover, these principles are escorted with some quotes mentioned in the book to taste the real essence of these principles.
Part 1: Fundamental Techniques in Handling People
Principle 1: Don’t criticize, condemn or complain
“Criticism is futile because it puts a person on the defensive and usually makes them strive to justify themselves.”
Principle 2: Give honest and sincere appreciation
The deepest principle in human nature is the craving to be appreciated.
Principle 3: Arouse in the other person an eager want
Of course, you are interested in what you want. But no one else is. The rest of us are just like you: we are interested in what we want.
Part 2: Six Ways to Make People like You
Principle 1: Become genuinely interested in other people
There is only one way under high heaven to get the best of an argument – and that is to avoid it.
Principle 2: Smile
There is nothing either good or bad, but thinking makes it so.
Principle 3: Remember that a person’s name is to that person the sweetest and most important sound in any language
The average person is more interested in his or her own name than in all the other names on earth put together.
Principle 4: Be a good listener. Encourage others to talk about themselves.
If you want to know how to make people shun you and laugh at you behind your back and even despise you, here is the recipe: Never listen to anyone for long. Talk incessantly about yourself. If you have an idea while the other person is talking, don’t wait for him or her to finish: bust right in and interrupt in the middle of a sentence.
Principle 5: Talk in terms of the other person’s interests
The royal road to a person’s heart is to talk about the things he or she treasures most.
Principle 6: Make the other person feel important—and do it sincerely
If we are so contemptibly selfish that we can’t radiate a little happiness and pass on a bit of honest appreciation without trying to get something out of the other person in return – if our souls are no bigger than sour crab apples, we shall meet with the failure we so richly deserve.
Part 3: How to Win People to Your Way of Thinking
Principle 1: The only way to get the best of an argument is to avoid it
There is only one way under high heaven to get the best of an argument – and that is to avoid it.
Principle 2: Show respect for the other person’s opinions. Never say, “You’re wrong.”
You cannot teach a man anything; you can only help him to find it within himself.
Principle 3: If you are wrong, admit it quickly and emphatically
Any fool can try to defend his or her mistakes – and most fools do – but it raises one above the herd and gives one a feeling of nobility and exultation to admit one’s mistakes.
Principle 4: Begin in a friendly way
A drop of honey catches more flies than a gallon of gall.
Principle 5: Get the other person saying, “yes, yes” immediately
Socrates kept on asking questions until finally, almost without realizing it, his opponents found themselves embracing a conclusion they would have bitterly denied a few minutes previously
Principle 6: Let the other person do a great deal of the talking
If you want enemies, excel your friends; but if you want friends, let your friends excel you.
Principle 7: Let the other person feel that the idea is his or hers
Principle 8: Try honestly to see things from the other person’s point of view
There is a reason why the other man thinks and acts as he does. Ferret out that reason – and you have the key to his actions, perhaps to his personality.
Principle 9: Be sympathetic with the other person’s ideas and desires
Three-fourths of the people you will ever meet are hungering and thirsting for sympathy. Give it to them, and they will love you.
Principle 10: Appeal to the nobler motives
The way to get things done is to stimulate competition. I do not mean in a sordid, money-getting way, but in the desire to excel.
Principle 11: Dramatize your ideas
Principle 12: Throw down a challenge
All men have fears, but the brave put down their fears and go forward, sometimes to death, but always to victory.
Part 4: Be a Leader—How to Change People without Giving Offense or Rousing Resentment
Principle 1: Begin with praise and honest appreciation
Beginning with praise is like the dentist who begins his work with Novocain. The patient still gets a drilling, but the Novocain kills the pain.
Principle 2: Call attention to people’s mistakes indirectly
Principle 3: Talk about your own mistakes before criticizing the other person
Admitting one’s own mistakes – even when one hasn’t corrected them – can help convince somebody to change his behavior.
Principle 4: Ask questions instead of giving direct orders
People are more likely to accept an order if they have had a part in the decision that caused the order to be issued.
Principle 5: Let the other person save face
I have no right to say or do anything that diminishes a man in his own eyes. What matters is not what I think of him, but what he thinks of himself. Hurting a man in his dignity is a crime.
Principle 6: Praise the slightest improvement and praise every improvement. Be “hearty in your approbation and lavish in your praise.”
Praise is like sunlight to the warm human spirit – we cannot flower and grow without it. And yet, while most of us are only too ready to apply to others the cold wind of criticism, we are somehow reluctant to give our fellow the warm praise of sunshine.
Principle 7: Give the other person a fine reputation to live up to
If you want to improve a person in a certain aspect, act as though that particular trait were already one of his or her outstanding characteristics.
Principle 8: Use encouragement. Make the fault seem easy to correct
Be liberal with your encouragement, make the thing seem easy to do, let the other person know that you have faith in his ability to do it, that he has an undeveloped flair for it – and he will practice until the dawn comes in the window in order to excel.
Principle 9: Make the other person happy about doing the thing you suggest.
So the key to being a leader and master of the art of human relations is to adapting these principles in your life is to practice them. This will change your attitude towards life and people without arousing resentment.
Peter Thiel segregates progress into two distinct forms viz Horizontal progress and Vertical progress. Horizontal Progress refers to small incremental progress in a field in terms of economic activity. Companies following horizontal progress simply imitate others. Thiel calls this pattern one to many. Vertical Progress refers to achieving dimension shifting progress in a field i.e. a progress which gives the company unique competitive advantage. It is achieved either by inventing something novel, or by tremendous unusual improvement in a field. According to Thiel this pattern is referred as “Zero to One.”
Party like It’s 1999
In this chapter, the author highlights the psychology of both the entrepreneurs and investors behind dot com bubble in the late 1990s. Entrepreneurs and investors took four learnings from this event: 1. Incremental changes are the safe path. 2. Lean and Flexible 3. Improve on competition 4. Product is more important than sales
Thiel advocated and asserted that entrepreneurs and investors took the wrong learning from the dot com bubble. Therefore, Thiel listed following learnings: 1. It is better to risk boldness rather than negligible things. 2. It is always better to have a bad plan rather no plan. 3. Competitive markets destroy profits. 4. Sales matter as much as product. Thiel wants the reader to think for themselves because reactions to past mistakes can be as wrong as the mistakes made. So, try to adopt a pragmatic approach.
All Happy Companies Are Different
According to Thiel, one of the biggest economic lie told by the economists is that the state of perfect competition leads to market equilibrium. The reality is, there is no perfect competition, and it eats away from the same pool of potential profits. Let’s consider the case of Google. It is advocating responsible business ethics since its outset. However, it’s made possible due to the fact that Google enjoys a monopoly in the internet search market. In contemporary times, we seldom hear someone saying let me Bing that? Non-monopolist exaggerates their uniqueness by describing their target market as the intersection of various smaller markets. In contrast, monopolist disguises their monopoly status by describing their target market as the union of large sectors. Monopoly is the condition of every successful business.
Ideology of Competition
It’s not only the economists that are fooled by competition; our society is driven by it! Bright students at a young age start competing for admissions to elite institutions. Once they reach there, competition intensifies. Once they land at prestigious jobs, competition reaches new heights. This vicious circle continues until the intensity of competition reaches to a level that sucks life out of them. Competitive attitude leads to a situation of war, which can turned out to be a costly business both in terms of time and resources. So it is always advisable and worthwhile to avoid war. In the case that war is worth having, and then you should strike hard and end it quickly. There are no half measures in war.
Last Mover Advantage
One of the ways to escape competition is to build a monopoly, but it should be defensible.
The characteristics of a Monopoly as listed by the author are: 1. Proprietary Technology 2. Network Effects: As the number of users increase, it makes the product as a whole more valuable. As more people join the network, it becomes more valuable and further enhances the monopoly position. 3. Economies of Scale: Firms get stronger as sales grow because fixed costs can be spread over a larger quantity of sales. 4. Branding: Every company has a divine right to monopoly with their branding. A strong brand connection and faith built over time with customers is a powerful way to obtain monopoly.
So Thiel advises startups to start with small, well-defined target demographics which are clustered in a small geographical area. Large markets come with cut-throat competition. For instance, Amazon started by selling books, then moved into DVDs and CDs before it became a store of everything. Lastly, avoid disruption because Media is obsessed by disruptive technology. Disruption attracts the attention of competitors as well as regulators.
You Are NOT a Lottery Ticket
This chapter discusses the four different attitudes to future: 1. Definite optimism: Future can be predicted and it will be better. 2. Indefinite optimism: Future can NOT be predicted but it will be better. 3. Definite pessimism: Future can be predicted and it will be worse. 4. Indefinite pessimism: Future can NOT be predicted and it will be worse.
Only hardwork and smart work makes you luckier. Victory awaits him who has everything in order. Western world is in a state of indefinite optimism right now, compared to definite optimism of the Renaissance, Age of Enlightenment and Industrial Revolution period. Lack of concrete plans make people to hold a portfolio of various options. This is the dominating viewpoint of Western world now. Thiel advocates for the definite optimism. That’s how great companies will be built.
Follow the Money
In this chapter Thiel introduces the well-known Pareto Principle also known as the power law or 80/20 rule. Italian economist Vilfredo Pareto showed that 20% of population owned 80% of the land in the country like in business management field wherein 80% of your sales comes from only 20% of your clients. In order to maximize process efficiency, you should focus on 20% of the opportunities which would return 80% of the gains. Whenever you plan to spend some time taking an action, think of the 80/20 rule. That is, take fewer actions with bigger impact.
This chapter states that secrets are the magic ingredient which makes a business great. Great companies might become a source of conspiracy because when you share your secret the recipient becomes a fellow conspirator. In order to uncover secrets, you should be looking for them. Many say there are no secrets left in the world to discover and that’s exactly why they won’t be finding any. If you ever come across a secret then you either keep it to yourself, or you share it with others. The author suggests that it is always better to keep some secrets rather than telling everybody everything you know.
This chapter focuses on the Founding principles because it is difficult to change them once set. Co-founders It is very important to have a strong foundation. You would not start a company with a stranger. Complementary skill sets and personalities of founders matter, but how well founders know each other and how well they work together matter.
The dealignment in the following three dimensions leads to conflicts in startups: 1. Ownership- who legally owns company’s equity. (founders, employees and investors) 2. Possession- who controls day to day operations of the company. (founders and employees) 3. Control – who formally govern company’s affairs (board of directors and founders) So adequate representation of each stakeholder in your startup should not be ignored.
Boardroom of a Startup The author suggest a board of 3 is ideal for private companies. It is because it is easier for directors to communicate, reach consensus and to exercise oversight in smaller boards. However, it is quite easy for small boards to object management easily.
Cash is NOT King You should avoid cash incentives and bonuses because it will encourage short term thinking rather than long term value creation. In such scenarios equity is considered a preferable medium so as to keep all stakeholders aligned for long term vision. So either by taking the lowest salary or a modest one, a CEO should also set an example.
Thiel quotes a noticeable story of Aaron Levie, CEO of Box. Four years after founding Box, he paid himself lower than everyone else, lived in a one bedroom apartment 2 blocks from the office. Thus, this shows good CEOs lead by example.
The Mechanics of Mafia
Thiel advocates that you should focus on hiring like-minded people with similar interests and similar passion regarding the problem domain you’re working on. In order to foster a strong culture, Thiel proposes attention to these 4 dimensions: 1. Imagery 2. Slogans: Catchy-phrases and inside jokes help foster stronger relations among the team members. 3. Advocacy: Is your company actively publicizing its efforts towards your problem? 4. Obsession: Are team members obsessed regarding solving the problem?
If You Build It, Will They Come?
This chapter focuses on measures to increase your sales. Advertising doesn’t make you buy a product instantly, but it creates recurrent subtle impressions which will drive sales in future. If you have invented something but you haven’t figured out a way to distribute it, you have a bad business on your hands.
How to sell a product? For assessing effective distribution one need to keep an eye on two metrics. viz Cost of Acquiring a customer (CAC) and Customer Lifetime Value (LTV). To have a profitable business, you’ll need to satisfy this equation: LTV > CAC Lifetime value extracted from a user should be higher than the cost of acquiring them.
Distribution Spectrum Depending on the value of each product/service you sell, your distribution effort would fall somewhere in the below mentioned spectrum: 1. Complex Sales Deal Size: $1m – $100m Target: Government, Public Corporations etc. If the deal size ranges from $1m to $100m, CEO needs to be involved at every such deal. 2. Personal Sales Deal Size: $10k – $100k Target: Consumer or Companies
3. Dead Zone Sales Deal Size: around $1k Target: SMEs Since, the target audience is likely to be small businesses rather than individuals, conventional forms of advertisement is hard to exploit as well. 4. Small Sales Deal Size: around $100 Target: Individuals or businesses. Traditional sales and marketing channels are effective for this type of deals. 5. Viral Sales Deal Size: around $1 Target: Individuals. This will be achieved by leveraging network effects.
This is called the “power law of distribution” i.e you need to pursue channels which determine majority of your sales.
Man and Machine
Thiel’s outlook regarding AI is optimistic as, he beliefs, man and machine have complementary skill sets and will build the future by working together. Palantir – Thiel’s new company is adopting a hybrid approach, which uses AI/ML driven techniques to gather and analyze data, but relies on human analysts to provide causal explanations and unique insights. Machines can’t replace humans instead it will empower them.
Thiel states that the Clean-tech bubble failed to deliver results because these companies failed to answer any of 7 questions which every business needs to answer. 1 – The Engineering Question Is it possible for you to create path breaking technology/ innovation instead of incremental improvements? 2 – The Timing Question What is the correct time to start your particular business? 3 – The Monopoly Question Are you starting with a defensible market share for your product? 4 – The People Question Do you posses the required competent team? 5 – The Distribution Question Do you have the right approach to deliver your product apart from creating it? 6 – The Durability Question Will you be able to sustain your position in the market in coming 10-20 years? 7 – The Secret Question Do you posses a unique idea that others don’t see?
If you don’t have reasonable answers to these seven questions then you’ll run into failure. But if you nail all 7, you’ll master fortune and success.
The Founder’s Paradox
If you have extreme character qualities you’ll find yourself in the company of such people, which will further enhance those qualities. The paradox of being a founder is that they might seem poor and rich, genius and idiot or hero and villain at the same time. So be tolerant of the extreme qualities of founders, this is how they can lead companies beyond mere instrumentalism.
Conclusion: Extinction or Singularity
According to Thiel, there are only 2 possible options for existence of humanity.
First one is that, we’ll go into a horrible decline with the extinction of humankind due to global warming, populist politics, nuclear war and global famines. The other option is, the rate of advancement of technology will keep accelerating leading to an exponential take-off. Nobody can predict the future, but we all play our parts to shape the earth.