I have 3 main hypotheses: 1) Information influences politics because it is indigestible by a government’s justifying story; 2) the greater the diffusion of information to the public, the more illegitimate any political status quo will appear; 3) Homo informaticus, networked builder and wielder of the information sphere, poses an existential challenge to the legitimacy of every government he encounters
There is a deep connection between online universities and democratized information that increases unrest and insurgencies
I found strong demographic and behavioral affinities: they are young, middle class, university educated and predominantly white, disproportionately anarchists
The most profound consequence of all the uprisings in 2011 was the sowing of the seeds of distrust in the democratic process
In information scarcity, those who have it become authoritarian, as information increases, authoritativeness decreases. Hierarchy, as a structure, has proven transcendentally inept in dealing with digital platforms…Tremendous energies have been released by people from nowhere, networked, self-assembled, from below. That is the structural destiny of the Fifth Wave – the central theme of my story. Democratic government in societies of distrust can choose to ride the tsunami or to be swamped by it. The latter choice will leave government mired in failure and drained of legitimacy. It will leave democracy, I fear, at the mercy of the first persuasive political alternative.
Clash of two modes of life: hierarchical/top down and networked/bottom-up
Center can’t hold and the border has no clue how to handle it
Crisis of authority coming from public awareness of incompetence. The authorities now lack control of the narrative and there are now alternative authorities. At some point around the turn of the new millennium, elites lost control of information, and power arrangements began to flip. Assured of the public’s wrath, elected governments have acted, or failed to act, motivated by a terror of consequences. Legitimacy was equated with the deflection of blame, and the aim of governing became to exhibit a lack of culpability.
Difference between companies and governments: The difference is that failing companies go out of business and are replaced by new companies, while government accumulates failure, making it, systemically , much more fragile
There is a democrat’s dilemma that is no less perilous than the dictator’s. Politicians must promise the impossible to get elected. Elected officials must avoid meaningful action at all costs.
The rise of nihilism
The nihilist is merely reacting to the pressures applied by his environment: which means, in this case, that he is acting to destroy the environment in which democratic governments are burdened with failure, democratic politics are removed from reality, and democratic programs drained of creative energy, and thus hope
I believe here’s a relationship between our fractured reality and the rise of the nihilist – persons and groups that consider destruction and mass murder to be a form of progress. The nihilist lurks in a broken sliver of truth that is impossible to debate or refute. There, he experiences absolute grievance and the absolute negation of the system, the repudiation of everything that stands and of everyone he encounters. Not just politics, but all of humanity, he holds, must be purified and made new. As the last righteous person, the nihilist aims to bring this about in the blood of random strangers. He acts out the violence that so many others perpetrate verbally and virtually on the web: he is, in that sense, the avenging angel of post-truth, and the rant made flesh
The distance between top and bottom is very great. The chasm of distrust will be difficult to bridge. And as elite fear and loathing of the public has increased, so has the craving for distance and isolation. Elites today have no idea how to speak to the public or what to say to it. They have shown little interest in trying. The hyper-educated individuals who ran the Clinton campaign were utterly indifferent to public opinion: they believed in big data
If structure is destiny, then the personal will trump the political. This is far more robust – personal success can be emulated and replicated. Personal failure will not implicate the entire system…Control, however tenuous, and satisfaction, however fleeting, can be found in the personal sphere, not in telescopic numbers reported by the government.
So I come to the abiding paradox that defines our predicament. An affluent, well-educated, hyper-connected public is in revolt against the system that has bestowed all this county upon it. The great motive power of the revolt isn’t economic resentment but outrage over distance and failure. Everyday life is increasingly digital and networked.
In the right relation between elites and the public, the former acts as exemplars to the latter. They embody and live out the master narratives. We can think of George Washington returning to his farm after the Revolution as a striking example…The quality that sets the true elites apart – that bestows authority on their actions and expressions – isn’t power, or wealth, or education, or even peruasiveness. It’s integrity in life and work. A healthy society is one in which such exemplary types draw the public toward them purely by the force of their example. Without compulsion, ordinary persons aspire to resemble the extraordinary, not superficially but fundamentally, because they wish to partake of superior models of being or doing. The good society, Ortega concluded, was an “engine of perfection”…Many are called, few will be chosen
The qualities I would look for among elites to get politics off this treadmill are honesty and humility: old-school virtues, long accepted by the living spirit behind the machinery of the democratic republic, though now almost lost from sight. The reformers of democracy must learn to say, out loud for all to hear, “This is a process of trial and error,” and even, “I was wrong.” Elected officials must approximate the ability of scientists and businessmen – and, for that matter, ordinary households – to identify failure and move on. Honesty means that the relationship to truth, as truth is perceived, matters more than ambition or partisan advantage. Humility means that the top of the pyramid looks to the public as a home it will return to rather than a carnivorous species from which to hide. Truth must be spoken even when it hurts the speaker or the audience. Distance must be reduced to a minimum, even at the risk of physical danger…The crucial move if we are to surmount our predicament isn’t transformation but reorientation, a turn in direction away from top-down control, bureaucratic power, and the high valuation of distance as a reward for political success. Such a reorientation strikes me as perfectly possible.
What I got out of it
Gurri is a prescient and beautiful writer. He makes really important points and will be fascinating to see how networks vs. hierarchies continue playing out
Practical techniques to improve your ability to think clearly, creating accurate “verbal maps.” To be happy and successful, we must base our plans on maps that fit the territory. Only an adequate map will have the necessary predictability that will allow us to plan, to choose, to decide what is best for us to do. Clear thinking help you to predict the future. It enables you to make plans that will get you what you want out of life. We can think of all the knowledge and memories we have filed away in our heads as “mental maps.” Truth simply equals a verbal map that represents the territory. However, truth is an elusive sprite that is hard to keep penned up
Steps / Tools for clearer thinking
Think in terms of verbal maps – ineffective people attempt to project onto the territory the verbal maps they cook up in their heads. They are unable to open their minds and observe clearly what is before them. They think they know what things are like without checking. What they think they know blocks them from evaluating sanely
Survey the territory for yourself – one look is worth 1,000 reports
Scientific Method – This is what scientists tell us to do – surveying the territory provides predictability that characterize accurate verbal maps. This is the essence of the scientific method. When a scientist tries to find out which verbal map is the most adequate, he looks at the territory. He observes; he uses his sense; he opens his mind and his eyes
Best way to understand/learn is to teach others
Practice in small ways every day
“So far as I know” – nobody knows everything, be open, humble
Those who learn most, fastest are honest of their ignorance
Up to a point – think in terms of degrees
Think along a spectrum, avoid either/or, all/none, binary – “the narrower the mind, the broader the statement”
“To me” – look who’s talking
We see reality through a mirror that partially transmits and partially reflects. We see things that are outside of us, but we see them bathed in “reflections” from our own minds
The What Index – differences that make a difference
Don’t think in groups, but in individuals
Distance makes for seeing similarities: nearness helps us to see differences (Galilean Relativity)
The When Index – keeping up to date
When was the territory surveyed?
Knowledge keeps no better than fish – Alfred North Whitehead
Old age plants more wrinkles in the mind than in the face – Montaigne
The Where Index – when environment changes, expect other things to change to
Men are apt to be much more influenced by words than by the actual facts of the surrounding reality – Pavlov
All truly wise thoughts have been thought already thousands of times; but to make them truly ours, we must think them over again honestly, till they take root in our personal experience. – Goethe
Little babies cannot fight as well as grownups. A new, baby idea coming into our head cannot compete with the old grown-up ones we have been embracing all our lives. We have to let the new ideas come in, grow, and mature. Frequently, it is necessary to try to understand new ideas for days, weeks, or even years. When we feel we have done our best to understand a new point of view, we should then unleash our old ideas and have a real battle royal…A closed mind is not a mind – it is a machine. It automatically spouts what is already in it
What I got out of it
Really practical book that I’ll reference often as I’m making decisions
Darwin coined the phrase “natural selection” as the “preservation of favorable variations and the rejection of injurious variations…The slight advantage in one being…over those with which it comes into competition or better adaptation in however slight a degree to the surrounding physical conditions, will turn the balance.”
Creatures systematically overproduce their young, all creatures vary, the sum of that variation is inherited
Success means fitting the conditions of life
Darwin is a better guide to competition than economists
Scatter new breeds around your core product – fill up the potential product spaces so that newcomers can’t move into these niches
Fisher found that the larger the variance in fitness, the faster the average growth of the population. Greater variation implies greater improvement and therefore faster growth
Learning = doing better things with fewer resources
Competitive Exclusion – each separate niche sustains just one specialized type of plant or animal
Your firm needs unique niches, places where no one else can go because they aren’t exactly like you
“Competitors who prosper will have unique advantages over any and all competitors in specific combinations of time, place, products, and customers. Difference between competitors is the prerequisite for survival in natural competition. These differences may not be obvious. But competitors who make their living in exactly the same place at the same time own’t prosper.” – Bruce Henderson
If you can invade your competitor’s niche and the competitor can’t, you should
Humans are wired for fairness above efficiency
“It is a rule of evolution..that the more cooperative societies are, the more violent the battles between them. Humans may be among the most collaborative social creatures on the planet, but we are also the mos belligerent.” – Matt Ridley
The main lesson is how to cooperate effectively in pursuit of entirely selfish ends. Game theory started when von Neumann published his mathematical Theory of Parlor Games in 1928. Game theory deals with games where your chances of winning depend no what your opponent does, and vice versa; it attempts to simplify the world and produce the best mathematically derived outcome for any particular situation. Along with Morgenstern, they invented the concept of the non-zero-sum game, where it pays to collaborate and form coalitions
Cooperation is about comprehending how to make the pie bigger, on the understanding that when we have to divide it, we will behave reasonably, within the context of a long-term relationship
What accounts for tit-for-tat’s robust success is its combination of being nice, forgiving, and clear. Its niceness prevents it from getting into unnecessary trouble. Its retaliation discourages the other side from persisting whenever defection is tried. Its forgiveness helps restore mutual cooperation. And its clarity makes it intelligible to the other player, thereby eliciting long-term cooperation. – Anatol Rappoport
The currency of cooperation is commitment, trust, and love
Cooperate with the best cooperators, build a reputation as someone who is totally trustworthy, always cooperate first, be willing to take turns in extracting advantage, cooperate daily (cooperation is the highest form of self-interest)
From Newton’s 3 laws (inertia, F=ma, reciprocation), and Galileo’s law of uniform acceleration, Newton arrived at the concept of gravity
Competition is the economic equivalent of gravity. Just as gravity depresses objects and stops stars from moving in a straight line, so competition depresses returns on capital. “Margin gravity” depresses managers and investors. The extent of margin gravity is proportional to the proximity and power of competitors. Weak gravity indicates to distant or tangential competitors. Strong gravity implies close, in-your-face-challengers…If we increase the distance between us and our competitors or increase relative size, the impact on profits will be non-linear. Increase the differences in your stages of value added and in the customer types, product types, and geographic regions that you serve
Einstein’s challenge is this: think of time, or the reduction of time, as part of what you offer customers. Think product-time. Think service-time. It’s all part of the same thing. Never think “product” or “service” independent of time. Time is a key dimension that must be embraced to achieve success
Godel demonstrated that, even in a very simple system like arithmetic, statements could be written down that could neither be proved nor disproved within the rules of that system. Any consistent numerical system generates formulas – like “a number is equal to itself” or “zero is a number” – that cannot be proved, except by importing axioms from outside the system. Godel’s proof was not confined to mathematics. Reality, he demonstrated, is a construct, not a given. One implication is that the very process of thinking adds to what we think about…so the process can never be completed. No finite language or system can capture all truth
Discovering causes of poor performance may be less productive than trying a whole new experiment as there may be too many variables to isolate, initial conditions will always vary, etc…
Most things have negative value. Best way to become more effective, rich, efficient, etc. is to stop thees negative activities – achieve more with less, apply the 50/5 principle and then move onto the 80/20, make things as simple as possible, identify the scarcest, most valuable resource in your organization, think about and measure value subtracted as well as value added
Alliances > Acquisitions
Own less, do less, but more profitably – always consider “Return on Time and Effort Employed”
Path of Least Resistance –> Principle of Least time
Often the easiest and simplest innovation opportunity lies in the unexpected. The unexpected is often a tremendous clue to developments that are reaching their tipping point. It is very much cheaper and more effective to latch onto social trends that are already developing, rather than to try to create them from scratch. If something unexpected is happening, this means that an unplanned trend is at work. Exploit it to the fullest!
Arbitrage – consistently seek to move resources to where they can be most productive. This type of arbitrage is easier than innovation. Everyone should be capable of something that could benefit from economic arbitrage, or identifying resources that could be used more effectively
Typically appear when a system has high up-front costs, network effects, customer groove-in
Two long-standing rules of business strategy have only become more important: do whatever is necessary to move ahead of competitors, and cut your losses when someone else has reached that point. To these we may add 2 new rules: 1) identify and dominate the industry sweet spots by establishing new standards there, orchestrating others to do the donkey work in the bulk of the industry, and 2) defend the dominance by dividing and ruling the orchestrated, and by continual innovation to find the next industry sweet spot
Aim to create the new standard, the standard of value
Don’t play in network markets unless you can win
The theory of second best
Reaching an optimal outcome in individual markets may lead to a suboptimal overall outcome. For example, if free markets led to an optimal position in all individual product markets, but left an economy with 40% unemployment, this would not really be optimal. The theory therefore says that instead of seeking optimality in each part of the economy, we should go for the best overall solution, which may imply “second best” solutions in individual markets. Stripped of economists’ usual obsession with equilibrium and optimality, two very elusive goals, the theory of the second best is really just saying that the economy is a system, and that actions in one area may have unintended consequences in another. It is a useful idea because it tells us that we may have to compromise, and that pursuit of one objective may be myopic, like the speed bumps.
Set clear, explicit, positive, and multiple goals. Pursue several goals at once
Microsoft is an ideal model for any type of business: a dictatorship of ends, a meritocracy of execution, and a collegiate “democratic” style that respects intelligence and insight at every level, so long as it does not challenge the basic strategy
What I got out of it
A true “latticework” of a book. Love how Koch was able to tie together disparate ideas into a business context. The “how to apply” section at the end of every chapter was great too!
Emotional engagement is essential to progressing up the ladder of skill acquisition. Handling negative emotions that come with failure is hard and this book sets out to provide a guide for how to cope in these tough times
Moods & Learning to Learn
Outline a taxonomy of moods to build a self-awareness and know how you are progressing, where you are, and how to overcome obstacles. This process helps develop the meta-skill of acquiring skills, the art of learning to learn
Learning how to recognize moods, then shift to productive moods is the skill you ultimately want to develop
We can begin developing the skill of learning to learn at a very young age by encouraging children to experiment, to take risks, and to make mistakes. School can play an important role in cultivating this ability
A mood of defensiveness often shows up when we hear what we interpret as criticism
In a world where uncertainty and rapid change are the norm, where we cannot control changes in technology, regulations, or the environment, but where we need to cope and navigate with these on an ongoing basis, learning to learn appears all the more as an essential skill we are called to cultivate
Learning to learn requires that we be in a mood that is conducive to learning. Often we are not. Moods are “attunements” to the situation we find ourselves in at any given moment which predispose us to certain actions. Moods are windows to our assessments and to the standards that support them. If we become sensitive to our moods, we may be able to open the curtains and observe how we see things, and discover whether our automatic predispositions help us achieve our learning objectives or block us.
Moods that get in the way of learning (pg 25) – confusion, resignation, frustration, arrogance, impatience, boredom, fear/anxiety, overwhelm, lack of confidence, distrust or skepticism
Moods that are conducive to learning (29) – wonder, perplexity, serenity/acceptance, patience, ambition, resolution, confidence, trust
Learning to shift from unproductive to productive moods is a critical aspect of learning to learn. As we learn to become aware of our moods, and are able to observe ourselves in a negative mood that blocks us from achieving what we want to achieve, such as resignation, we can choose not to remain hostages to this mood, and take action to cultivate an alternative mood that is more conducive to achieving what we set out to achieve (reflect on your learning objectives and why that gives you energy)
List of learning to learn resources on page 149
Contrast in handling mistakes! Comparing healthcare vs. aviation and the difference that learning from your mistakes makes
Every time an plane accident occurs, there is a deep dive into what happened. However, in healthcare, any sort of feedback loop seems lacking. Consequently, in contrast to the 400,000-500,000 premature deaths per year in healthcare, in 2013, 210 people died as a result of plane crashes
Others’ expectations and what we ‘should’ know serve as roadblocks
Common categories of assessment that get in the way of learning – important to be competent, efficient, independent, self-reliant, useful, prepared at all times
A master reinvents the rules; generates new discourses and disciplines from anomalies in the domain. A master is willing to override the perspective that they intuitively experience and choose a new one for the sake of learning and contributing to their field. A master is willing to regress to earlier stages in the learning scale for the sake of taking risks and learning
Masters deal with wonder, resolution, ambition and need to concern themselves with arrogance and resignation
Education is not simply about the transfer of knowledge and the ability to apply concepts. When it comes to acquiring skills, particularly communication and relationship skills, education is about enabling others to take new actions that they weren’t able to take before. Second, as the Drefyus brothers argue, in order for someone to acquire new skills successfully, they must be emotionally engaged. A person must be involved
The essential elements of an offer
Conditions of fulfillment
Background of obviousness
Offer/Promise – action to be performed in the future by person making the offer/promise
Specified time for fulfillment of the offer
Trust = combination of sincerity, competence, reliability, engagement/care
Easterners perceive things holistically, viewing objects as they are related to each other or in a context, whereas Westerners perceive them analytically in isolation; Easterners use wide-angle lens; Westerners use a narrow one with a sharper focus.
What I got out of it
This book should be better known. The idea of matching not only time and energy, but also mood, seems like a superpower to learning effectively. This book helps you understand why and how to do this
The “purple cow” concept is at the core of JB Hunt’s culture and way of thinking. Essential products and services that can’t be copied, unique,, doing things differently, earning above the cost of capital, an intense focus on solving the customer’s problems , embrace the more difficult business, do stuff that other people have trouble doing, be adaptable
Beware overcrowded spaces – have an intense desire to offer specialized and unique services that allow you to do what others wouldn’t or couldn’t
Differentiation, better customer service, a refusal to stand still, natural expansion with homegrown talent
Boring things – even if excellent – quickly become invisible
JB Hunt’s founder was impatient, wanted to maintain frantic growth at all costs, an idea man, was all over, didn’t want to let go
You learn a whole lot more from the struggles in the valley than you do on the mountaintop
Never feed problems while starving opportunities
Decision theory makes it clear that for a given set of costs and benefits, selecting alternatives with lower down-side risk, other things being equal, increases the expected payoff
We’ve never been concerned about cannibalizing one part of a company to offer a better solution to the customer. If there’s a better solution for the customer, we need to offer it. most companies won’t do that. We are not in business to support our trucking company. We are in business to support our customers with the best answer possible in that market
Must constantly adapt and iterate so that you never become stale and optimized for an environment that no longer exists. How you perceive a business segment can affect how you change the curve of the product life cycle
The customer is most certainly not always right. They are always to be respected, listened to, and served, but only when a return is generated
3 criteria needed to develop core competencies: provides potential access to a wide variety of markets; that it makes a significant contribution to the perceive customer benefits of the end product; and that it is difficult to imitate by competitors
Selling JBHT rather than just one segment results in more satisfied and loyal customers. Our bonus structure rewards leaders based on the company’s overall performance. When the company performs well as a whole, everyone reaps the rewards. Ironically, one of the things the original DCS leaders rebelled against was that bonus structure. There are legitimate arguments to do it other ways, but we find our approach fosters a one-for-all-and-all-for-one mentality. We incentivize the company’s success, not just the success of any one part of it. Sharing the wealth with those who helped create it has worked for JBHT for nearly 40 year.
We measure the quality of a team’s results against its peer groups, not against other JBHT units, so we put the emphasis on being “best in class” not “best within JBHT.” We’ve found this helps eliminate the popularity contests, lead to better decisions, and allows us to celebrate contributions that otherwise might get overlooked
Growth is key, growth is oxygen
A good message is clear, actionable, consistent. Give the what/why, not the how
What’s unique is that variables like time, growth and the influx of new people haven’t caused an erosion of our culture. Instead, they have added to it and strengthened it. We’ve been open to change, while staying true to our core; flexible enough to stretch with new ideas, but solid enough to maintain our identity. I credit this to the dynamic interplay between our culture and our leadership and management.
Intermodal – more than one mode of transportation to reach the final destination (ship to train to truck…)
Trucks first complemented and then competed with the railways
“partner with the enemy” became the right choice for railways and trucks as it gave the customer more options, increased efficiencies, grew the pie (win/win/win)
Developing Intermodal opened up new business lines that are now multi-billion dollar segments
Grassroots and top-down – go to local colleges and universities to recruit good students and home grow them. From the top-down, Hr goes to the company’s leaders and asks them for the names of 2-3 people they have in mind as their successor. Having a good understanding of the existing talent pool also allows us to know when we need to look outside the company, as was the case when we shifted our approach toward technology and engineering. Growing organically is really healthy and really great for your culture, but you do have to inject outside thinking strategically and purosefully from time to time.
What I got out of it
A great look inside the culture of a compounder who has grown steadily for decades now
The author argues that the standard account of monetary history is precisely backwards. We did not begin bartering, discover money, and then, lastly, create credit systems. It was the absolute opposite – debt and credit systems came first, then money, and then, in some places, barter systems
To argue with the king, you must use the king’s language
Interesting that it seems to be a universal that humans feel a moral duty to repay any loans made. In this sense, obligations are also thought of as debt. This book will discuss at length money‘s capacity to turn moral obligations into simple arithmetic. This ability has allowed for specific quantification of what is owed. Specific amounts owed is linked inherently to violence as it is now easy to see what is expected and rightfully owed to someone else. Converting human relations into mathematical numbers underlies much of the problems but are dealing with today
The author dispels the notion that a barter society was the foundation of money. This is widely believed, but nobody has been able to prove that this in fact was the system used by any large and thriving group of people
If money is simply a yardstick what does it measure? Debt. It is an IOU. It allows various people institutions and others who want to trade to be able to do so with less friction, come to a mutual agreement as to what constitutes a fair trade. Does not measure the value of the object as much as it does the trust that we have another human beings. The form the currency takes hardly matters as long as people trust it except it as an IOU and the government excepts it as a form of taxation can be considered currency
Unlike commonly thought, markets do not spring forth before governments, but the opposite. This contradicts what Adam Smith and many modern economist say. Governments spend a lot of their time and focus trying to create a market where one currently doesn’t exist. If Adam Smith was right and there was profit to be had, these markets would spring up spontaneously
Markets and taxation seem to have sprung up from the need to support large armies. If you could create or do something of value that the army would pay you for, all of a sudden you’ve created a vast machine to create valuable goods and sustain your army
The foundations of money seem to be things that were originally the most appropriate things to sacrifice to the gods. For example, oxen were often used as the currency the people spoken and they were also the most common sacrificial animal
If reciprocation is at the root of all exchange, debt could be considered the foundation of morality
Debt is a very specific sort of situation between specific people, people who consider each other similar – similar in status and skills in important ways but are currently unequal but there is a way to set matters straight. Hierarchy plays a huge role – if the debtor cannot restore equality, it is likely something other than debt or there is some larger problem. A debt can then be thought of as an exchange that is not yet brought to completion. Debt is what happens between equality. An interesting definition of debt is a situation or two equals decide one will no longer be equal until the debt is repaid
Saying Please and thank you is a democratization of equality, treating everyone the same way that you only used to have to treat lords in the past. “Thank you” derives from “I will remember this” and often times the reply is “it’s nothing” showing that there is no debt, nothing to repay or remember
The author makes an interesting argument that money first surfaced and evolved as a form of repayment for things that truly could never be repaid – human lives, for example
The author makes a distinction between commercial economies and human economies. Commercial economies are what the west is familiar with and human economies use currency as a means of keeping tabs on moral obligations, creating, maintaining and severing relations between people. It is more social than commercial. This is how a debt can start as a moral obligation but lead to immoral behavior and violence. Currency could never substitute for a human but in many cultures as human as a substitute for another human. You had to disentangle and rip the person from their context before they could be made upon or asleep. The person had to be abstract from what they truly are every move from any context and their web of relations never mind if people they were a human being
Times of war correlate with increased usage of precious metals as money whereas times of peace correlate with systems of credit as trust in the other person is enough
The author argues against the implicit assumption that paying back ones debt is akin to morality. In fact, some of our greatest institutions – the us government – have trillions of dollars of debt that it will likely never pay back.
Debt is the perversion of a promise
What I got out of it
Great books use their specific topic to open up a wedge to a whole world of ideas and topics. Debt falls into that category – such a rich history of human civilization, trade, economics, psychology, and more.
HubSpots head of sales, Mark Roberge, walks us through the early days, pitfalls, and successes of HubSpot’s monstrous growth and how his sales acceleration formula helped achieve it. “The Sales Acceleration Formula completely alters this paradigm. In today’s digital world, in which every action is logged and masses of data sit at our fingertips, building a sales team no longer needs to be an art form. There is a process. Sales can be predictable. A formula does exist.”
The goal: “Scalable, predictable revenue growth.”
“Hire the same successful salesperson every time.” (The Sales Hiring Formula)
“Train every salesperson in the same way.” (The Sales Training Formula)
“Hold our salespeople accountable to the same sales process.” (The Sales Management Formula)
“Provide our salespeople with the same quality and quantity of leads every month.” (The Demand Generation Formula)
These four components represented my formula for sales acceleration. If I could execute on these four elements, I believed I would achieve my mission of “scalable, predictable revenue growth.” For each of these components, I devised a repeatable process, leaned into metrics, and ran calculations, making each of these tactics formulaic in nature.
When the unique strengths of the salesperson align with the company’s sales context, it is a beautiful thing.
The ideal sales hiring formula is different for every company…but the process to engineer the formula is the same.
Step 1: Establish a Theory of the Ideal Sales Characteristics
Step 2: Define an Evaluation Strategy for Each Characteristic
Step 3: Score Candidates against the Ideal Sales Characteristics
Step 4: Learn and Iterate on the Model while Engineering the Sales Hiring Formula
There were five traits that correlated most significantly with sales success. Coachability Curiosity Prior success Intelligence Work ethic
Intelligence: the ability to learn complex concepts quickly and communicate those concepts in an easy-to-understand manner.
Don’t hire a recruiting agency. Don’t build a corporate recruiting team. Build a recruiting agency within your corporation.
“The most critical value from your first sales hire comes not from the first customers or revenue she generates, but from her ability to accelerate the company toward product/market fit.”
Defining the Three Elements of the Sales Methodology: The Buyer Journey, Sales Process, and Qualifying Matrix
The buyer journey represents the general steps through which a company progresses as it purchases a product. Once the buyer journey is defined, the sales process can be created. The sales process supports the customer along his buying journey.
A very common qualifying matrix that has been used for many decades is BANT. BANT stands for “Budget, Authority, Need, and Timing.”
“Exams and certifications add predictability to the sales training formula. They also provide the platform to learn from and iterate on the formula.”
The other advantage of having this structure in place was the establishment of a baseline foundation from which to measure and iterate. The sales training formula needs to be constantly evolving, reacting to changes in the business, just like the sales hiring formula.
In this new buyer/seller paradigm, salespeople must prove their worth by adding more value to the process. Sales is no longer about memorizing the call script, the price book, and the top 10 objections. It’s about being a genuine consultant and trusted advisor to potential customers. Modern selling feels less like a seller/buyer relationship and more like a doctor/patient relationship.
The best-trained salespeople have experienced the day-to-day job of their potential customers. In the first few years of HubSpot, we targeted marketing professionals. Therefore, my sales training goal was to teach our new sales hires what it was like to be a marketer. New sales hires did not spend their first few weeks in sales training, memorizing scripts and discussing objections. Instead, our new sales hires spent their first few weeks at HubSpot developing their own website, writing their own blog, and creating their own social media presence.
Touching the Medium
“A common sales management mistake is to overwhelm the salesperson with coaching too many skills simultaneously. Pick one skill and focus.”
As we’d walk through their plans for each salesperson, I’d ask them three questions: What skill will you work on this month with this salesperson? How did you decide on that skill? What is the customized coaching plan you will use to develop the skill?
I needed to keep customer churn in check. I also needed the salespeople to be able to control their own destiny. I asked myself, “What criterion is 100 percent in the control of the salesperson and highly correlated with customer success?” For the HubSpot business at the time, the answer was advanced payment terms for new customers. Our customers who paid month-to-month were less committed to the overall HubSpot service and were far more likely to churn. Those who prepaid annually were more committed to the service and were ultimately more successful. As a result, Plan 3 was designed as follows: Salespeople would earn $2 per $1 of monthly recurring revenue The commission would be paid out as follows: 50 percent on the first month’s payment 25 percent on the sixth month’s payment 25 percent on the twelfth month’s payment Under this plan, if a customer signed up paying month-to-month, the salesperson would need to wait an entire year to earn the full commission from that customer. If the customer signed up paying a year in advance, the salesperson would earn the entire commission immediately. The plan was well aligned with how far in advance the customer paid. How far in advance a customer paid was correlated with high customer success and completely in control of the salesperson. Evaluate a sales compensation design through the lens of three factors: Simple. Aligned. Immediate.
“Sales contests are an effective tool to drive short-term behaviors and build team culture within the sales organization.”
The statement certainly has merit. Of all the professional functions within an organization (e.g., marketing, product, finance, HR, and so forth), sales has the largest variance between the general characteristics that are conducive to success on the front line and the general characteristics that are conducive to success in the management ranks. Sometimes really good salespeople are selfish, egotistical, and competitive by nature. Those traits do not translate well into management.
Flip the Demand Generation Formula—Get Buyers to Find You. “How much are you spending on inbound marketing, such as SEO, social media participation, and blogging?” Here are the two simple actions you need to take in order to drive inbound links and social media following: Create quality content (e.g., blogs, ebooks, webinars) on a frequent basis. Participate in the social media discussions in which your target prospects are already conversing.
So how does long-tail theory apply to your business? As you embark on a content product process, focus on the “long tail,” not on the “head,” especially when selecting target topics. If you sell IT services, don’t focus on phrases like “IT consultant” or “information technology.” These words sit at the head of the curve. Yes, there are millions of searches per month. However, it is extraordinarily competitive to rank for these terms. Furthermore, a small portion of the visitors are actually qualified buyers for your business. Instead, focus on “Sharepoint implementations” or “IT for pharmaceutical companies” or “hosted VOIP implementations.” There are not millions of searches for these terms every month. However, there are still hundreds of them, and the people searching for these terms are much more qualified for your business than those folks searching for the generic, far more competitive phrases. Each piece of content you produce targets a different slice of the long tail. Each piece of content attracts hundreds of highly qualified buyers to your business. The more you publish content along this strategy, the larger the portion of the long tail you can own. As we stated earlier, the long tail can often be more valuable than the head.
Here are the most common mistakes and the most important best practices marketing needs to adopt as they work with sales to convert interest into revenue. The Most Common Mistake: Don’t Pass All the Leads to Sales. The first step in establishing the Marketing SLA was to define when a lead would be qualified to be passed to the Sales team. The decision to pass a lead to Sales is best derived from the Buyer Matrix.
Which type of lead do you think closed at a higher rate—the product collateral download or the active free trial? The active free trial closed at a higher rate, of course! This type of lead was further along in the buyer journey. It was at the “Solution Selection” stage of the buyer journey, rather than the “Solution Research” stage. In our case, active free trials closed at many times the rate of product collateral downloads.
Sales technology creates better buying experiences for customers by capturing customer context and making that context readily available to salespeople.
What I got out of it
Helpful perspective, advice, experiences for anybody trying to better understand how to create an efficient system around sales rather than a manual, grueling process
The authors lay out the leadership principles of what it means to be “Amazonian.” Working backwards is all about starting with the customer perspective, working backwards step-by-step, questioning assumptions until you figure out exactly what you want to build and how you want to deliver it. It is all about seeking truth. This process takes more time on the front end, but it is much less expensive and difficult to course correct in the early innings rather than at the stage where you have an operating business
Especially in the early days, one bad customer experience can influence hundreds if not thousands a future customers. That is why Jeff was so maniacal about customer service. What distinguishes Amazon is that it’s leadership principles are deeply integrated into every person process and function across the company.
The 14 Amazon leadership principles
Invent and simplify
Leaders are right, a lot
Learn and be curious
Hire and develop the best
Insist on the highest standards
Bias for action
Have backbone; disagree and commit
Tensions don’t work, mechanisms do.
Three core mechanisms to help translate the principles into action include the annual goal setting, the S team goalsetting plan and annual compensation packages to tie customer service with rewards. These operating plans are meant to intertwine the individual and company goals so that everything is self reinforcing and mutually beneficial. This takes tremendous planning and effort but it helps align every one in the organization.
Amazon is different in the sense that the senior team focuses relentlessly on execution and details, not just strategy. Compensation very much tied to long-term Equity performance which ties to how well the company is serving customers
The bar raiser program is one of Amazon’s most successful and widespread applications. It is used as an efficient way to hire appropriate people in a way that is scalable, teachable, and that contains feedback loops for the team and the interviewee. This ensures a sustainable way to hire great people who always raise the bar for the company as a whole. The interview starts with a phone call. If likely to hire they will be brought in for a behavioral and bar raiser section. Four or five various people interview the candidate and there is a written segment that follows with their thoughts and takeaways. Then there is a group discussion for the feedback is collectively read and the candidate discussed. If the group decides to move forward they will do reference checks and then hire the candidate if they choose to do so
One way Amazon has combated the friction that comes with becoming a large organization is what they call single threaded leadership. This person heads up on autonomous team who does nothing but focuses on this major initiative and they have complete responsibility and accountability for it. The best way to fail is to make that thing somebody’s part-time job
what matters is not quite speed, but velocity (speed + vector)
Be aware of where their exist dependencies – whether technical, organizational, or otherwise – that slow you and your progress down as you have to rely on others to accomplish what you need. Too many dependencies are said to be tightly coupled. Amazon had to shift to small, autonomous teams but are now famous two pizza rule. Micro services are offered by small independent teams that are able to move quickly and independently yet offer great service and features
Amazon does not focus or spend time on morale boosting events. Instead, they focus on attracting world-class talent and empowering them to build things that scale. Focusing on controllable input methods rather than uncontrollable output methods leads to sustainable and meaningful growth. A high morale is an output and not an input
Two pizza themes are most effective in product development and each team is given specific metrics that are agreed-upon which helps keep everyone aligned and on task. However, Amazon found out that it was not the size of the team which predicted predicted success Patty right leader who are the necessary skills experience authority and capacity to build a team and lead to success
The highest salary but Amazon is $160,000. There are no bonuses or anything else any sort of extra compensation if you stock the thus between 18 and 24 months. This is difficult if you’re looking for a short term hip and satisfaction but very lucrative if you believe in Amazon and it’s long-term prospects
Amazon was able to move into a completely tangential business with AWS through its single threaded leader ship principle that ruthlessly iterates and keeps customer service top of mind
What I got out of it
A great, inside look into what makes Amazon, Amazon. Always start with what the customer wants and work backwards from there.
Through Socratic dialogue and real-world life lessons, a successful businessman (Mr. X) shares his wisdom and learnings with a skeptical young student, Nick.
Strategy ROIC > project ROIC
Longer term, more fluid and dynamic
Capital allocation is the study of opportunity cost. This skill is extremely important as it helps usher in resources to the highest return areas. This will not and cannot solve all problems, but if structured and incentivized correctly, can alleviate many ills
What I got out of it
Really fun fiction book that gets across many important capital allocation, business, and financial ideas across in a narrative format. This short summary does not do the book justice – what took several books to convey many financial / capital allocation topics in a dry fashion, this book was able to do in a fun, narrative manner. This could and maybe should be the entry point into the world of finance and capital allocation
The author aims to provide an integrated, unified view of the cosmos – matter, mind, body, soul, art, and everything else. Not reducing things down unnecessarily to matter alone. This endeavor is surely to fail and overgeneralize, but it is a worthwhile journey because a little bit of wholeness is better than a whole bunch of slices that are never integrated or unified
First tier thinking – every level thinks that every other level is wrong, only their way is right.
Second tier thinking, understands that all those games are necessary parts of human evolution of consciousness and people to reach this level are able to think vertically and horizontally seeing the bigger picture seeing things holistic Lee and not as black and white. This is a massive mental and consciously that is necessary to move from silos or integralism
Understanding first year and second-tier situation is important because it is often a subjective and personal experience. People move from first tier to second-tier and no amount of arguing or explaining will do the trick. When the student is ready the teacher appears
Evolution from one spiral to the next is natural and necessary. No one tier gets preferential treatment or is more important. The most effective thing we could do is help the billions of people move up a tier, not getting a select few to the second tier
Human consciousness project – served as the roadmap for our theory of everything
One definition of development could be viewed as a continual decline of ego centrism towards ethno-centrism to world centrism (I, we, it)
High minded social activism can often come from low minded egocentric views and beliefs
It can be helpful to think of hierarchies in terms of dominance hierarchy and actualization hierarchies. The latter is in towards status quo and power the second towards grow confidence and unity
What I got out of it
A bit too out there for me, but the framework of consciousness progressing up a spiral is one I’ll remember