The Personal MBA.md

The Personal MBA: Master the Art of Business

by Josh Kaufman

The principles to understand, start, and improve a business presented in small concepts.

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Table of Contents

• 1. Introduction: Why Read This Book?
• 2. Value Creation
• 3. Marketing
• 4. Sales
• 5. Value Delivery
• 6. Finance
• 7. The Human Mind
• 8. Working with Yourself
• 9. Working with Others
• 10. Understanding Systems
• 11. Analyzing Systems
• 12. Improving Systems
• Appendix A: How to Continue Your Business Studies
• Appendix B: 49 Questions to Improve Your Results

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1. Introduction: Why Read This Book?

• A few things might be holding you back from starting a business:
  • business angst ("How do I bizness?")
  • certification intimidation
  • impostor syndrome
• Conquer these fears by learning a few simple concepts

You Don't Need to Know It All

• Build a scaffolding on core principles
• Experience distilled from solo to Fortune 50 multinationals
• You'll learn:
  1. How businesses work
  2. How to start / improve a business
  3. How to accomplish personal goals w/ business skills

No Experience Necessary

• 226 simple concepts in more practical form vs. MBA curriculum

Questions, Not Answers

• Not techniques, figuring out how to ask the right questions

Mental Models, Not Methods

My "Personal" MBA

• Carl H. Lindner Honors-PLUS program at UC: "essentially an MBA at the undergraduate level"; after college, management @ P&G
• Instead of an MBA, put the time & energy into self-improvement

A Self-Directed Crash Course in Business

The Wheat and the Chaff

The Personal MBA Goes Global

Munger's Mental Models

Connecting the Dots

For the Skeptics

• Next sections cover pros/cons of b-school

Should You Go to Business School?

• Thought: "I want to become a successful business person. Where should I get my MBA?"

  Skip business school. Educate yourself.

• (Underwhelming...)

Three Big Problems with Business Schools

Delusions of Grandeur

Your Money AND Your Life

Breaking Out the Benjamins

What an MBA Will Actually Get You

Where Business Schools Came From

In Search of Distribution

Playing with Fire

No Reason to Change

The Single Benefit of Business Schools

I Owe, I Owe — It's Off to Work I Go

A Better Way

What You'll Learn in This Book

How to Use This Book

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2. Value Creation

The Five Parts of Every Business

Economically Viable Skills

The Iron Law of the Market

Core Human Drives

Ten Ways to Evaluate a Market

The Hidden Benefits of Competition

The Mercenary Rule

The Crusader Rule

Twelve Standard Forms of Value

Form of Value #1: Product

Form of Value #2: Service

Form of Value #3: Shared Resource

Form of Value #4: Subscription

Form of Value #5: Resale

Form of Value #6: Lease

Form of Value #7: Agency

Form of Value #8: Audience

Form of Value #9: Loan

Form of Value #10: Option

Form of Value #11: Insurance

Form of Value #12: Capital

Perceived Value

Modularity

Bunding and Unbundling

Prototype

The Iteration Cycle

Iteration Velocity

Feedback

Alternatives

Trade-offs

Economic Values

Relative Importance Testing

Critically Important Assumptions (CIAs)

Shadow Testing

Minimum Economically Viable Offer (MEVO)

Incremental Augmentation

Field Testing

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3. Marketing

Attention

Receptivity

Remarkability

Probable Purchaser

End Result

Qualification

Point of Market Entry

Addressability

Desire

Visualization

Framing

Free

Permission

Hook

Call-to-Action (CTA)

Narrative

Controversy

Reputation

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4. Sales

Transaction

Trust

Common Ground

Pricing Uncertainty Principle

Four Pricing Methods

Value-Based Selling

Education-Based Selling

Next Best Alternative

Three Universal Currencies

Three Dimensions of Negotiation

Buffer

Reciprocation

Damaging Admission

Barriers to Purchase

Risk Reversal

Reactivation

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5. Value Delivery

Value Stream

Distribution Channel

The Expectation Effect

Predictability

Throughput

Duplication

Multiplication

Scale

Accumulation

Amplification

Barrier to Competition

Force Multiplier

Systemization

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6. Finance

Profit Margin

Value Capture

Sufficiency

Four Methods to Increase Revenue

Pricing Power

Lifetime Value

Allowable Acquisition Cost (AAC)

Overhead

Costs: Fixed and Variable

Incremental Degradation

Breakeven

Amortization

Purchasing Power

Cash Flow Cycle

Opportunity Cost

Time Value of Money

Compounding

Leverage

Hierarchy of Funding

Bootstrapping

Return on Investment (ROI)

Sunk Cost

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7. The Human Mind

Caveman Syndrome

The Gas Tank

The Onion Brain

Perceptual Control

Reference Level

Conservation of Energy

Guiding Structure

Reorganization

Conflict

Pattern Matching

Mental Stimulation

Interpretation and Reinterpretation

Motivation

Inhibition

Willpower Depletion

Loss Aversion

Threat Lockdown

Cognitive Scope Limitation

Association

Absence Blindness

Contrast

Scarcity

Novelty

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8. Working with Yourself

Monoidealism

Cognitive Switching Penalty

Four Methods of Completion

Most Important Tasks (MITs)

Goals

States of Being

Habits

Priming

Decision

Five-Fold Why

Five-Fold How

Next Action

Externalization

Self-Elicitation

Counterfactual Simulation

Parkinson's Law

Doomsday Scenario

Excessive Self-Regard Tendency

Confirmation Bias

Hindsight Bias

Performance Load

Energy Cycles

Stress and Recovery

Testing

Mystique

Locus of Control

Attachment

Personal Research and Development (R&D)

The Growth Mind-set

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9. Working with Others

Power

Comparative Advantage

Communication Overhead

Importance

Safety

Golden Trifecta

Reason Why

Commander's Intent

Bystander Apathy

Planning Fallacy

Referrals

Clanning

Convergence and Divergence

Social Signals

Social Proof

Authority

Commitment and Consistency

Incentive-Caused Bias

Model Bias

Pygmalion Effect

Attribution Error

Option Orientation

Management

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10. Understanding Systems

Gall's Law

Flow

Stock

Slack

Constraint

Feedback Loop

Autocatalysts

Environment

Selection Test

Uncertainty

Change

Interdependence

Counterparty Risk

Second-Order Effects

Normal Accidents

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11. Analyzing Systems

Deconstruction

Measurement

Key Performance Indicator

Garbage In, Garbage Out

Analytical Honesty

Context

Sampling

Confidence Interval

Ratio

Mean, Median, Mode, and Midrange

Correlation and Causation

Norms

Proxy

Segmentation

Humanization

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12. Improving Systems

Optimization

Refactoring

The Critical Few

Diminishing Returns

Friction

Automation

The Paradox of Automation

The Irony of Automation

Standard Operating Procedure (SOP)

Checklist

Cessation

Resilience

Fail-safe

Stress Testing

Scenario Planning

The Middle Path

The Experimental Mind-set

Not "The End"

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Appendix A: How to Continue Your Business Studies

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Appendix B: 49 Questions to Improve Your Results

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