By Keith J. Cunningham
Most of the comments included in the following text are taken word for word for the book
Chapter 1 “The Dreaded Dumb Tax”
“Emotions and intellect work inversely. When emotions go up, intellect goes down. Optimism is a deadly emotion in the business world.” The author states that the cause of most of our problems and ensuing “dumb” decisions is our “excessive optimism and emotional belief in magic pills, secret formulas, and financial tooth fairies.”
Chapter 2 “The Discipline of Thinking Time”:
“I insist on a lot of time being spent thinking, almost every day, to just sit and think That is very uncommon in American business. So I do more reading and thinking, and make less impulsive decisions.” (pg 5)
“Attempting to win the game of business by trial and error is about the stupidest way to learn anything…To excel, we need a coach or an advisor to watch our swing and provide candid advice about what we are doing wrong and how we can do better.” (pg 6)
Chapter 3 “The 5 Core Disciplines of Thinking Time”
For the past 25 years the author has devoted 30-45 minutes of uninterrupted concentration (his “Thinking Time”) to think through issues. Each session starts with a high-value question(s) that he creates prior to a session, and he’s found that the better the question the more “robust” the answers.
Core Discipline 1 – Find the Unasked Question: The reason we don’t find the right answers to questions is that we’re not asking high-value questions. He often frames his questions as “How might I…so that I can…?” Example, “How might I generate an additional $20,000/month in profits so that we can afford to invest in a new building and double our capacity.” (pg 10). “A great question always has three common characteristics:
1. It provides insight on what the actual problem is that needs to be addressed
2. It simplifies the problem and makes it solvable
3. It expands the number of possibilities available to solve the problem or improve the situation
Core Discipline 2 – Separate the Problem from the Symptom: “Most people when asked to pinpoint their biggest problem, erroneously identify their problems as the gap between where they are and where they would like to be…The gap is not your core underlying problem; it’s the symptom. The symptom is what indicates something is wrong, but it does not shed any light on what is causing it to show up…The key to defining the root problem is discovering the obstacle (it resides in the gap) that is impeding your progress from here to there.
If you ask the wrong question by looking into the symptom you will misdiagnose the problem and therefore create a solution to a problem that isn’t. Example, when confronted with weak sales we often ask what marketing initiatives should we undertake or do we need better sales people. But inadequate sales are the symptom of customers not buying enough or not enough customers, or not enough prospects, or no clarity on target markets etc.
Three questions gain clarity about the root problem/obstacle
1. “What are the possible reasons I am noticing this symptom?
2. What isn’t happening that, if it did happen, would cause the perceived gap (symptoms) to either narrow or disappear?
3. What is happening that, if it stopped happening, would cause the perceived gap (symptom) to narrow or disappear”? (pg 15)
Core Discipline 3 – Check Assumptions: “Thinking Time give me the opportunity to test the validity of the assumptions…What none of us see are the assumptions we make about the problem we have, the solution we create, or the opportunity in front of us.”
Core Discipline 4 – Consider the 2nd Order Consequences: 2nd order consequences are the possibility of the decision being a wrong one. A decision that does not identify possible risks is a decision “with a high likelihood of creating drama.” (pg 19).
3 questions to think about before acting:
1. “what is the upside?”
2. “What is the downside?” What could go wrong?
3. “Can I live with the downside?”
Core Discipline 5 – Create the Machine: “It is literally a waste of time to think about a machine [solution] and not simultaneously think about the execution and the essential resources required to operate the machine.” (pg 21).
Chapter 4 “Thinking Time: The Process”
The author developed a process for his Thinking Time.
1. Develop great question(s), write down prior Thinking Time – don’t need deal with each
2. Clear calendar for 60 minutes which usually results in 45 minutes of good thinking time
3. Create questions based on one of the following; “1) a new question; 2) a prior question that could use additional thought; or 3) use an answer from a prior Thinking session to refine original question.
4. Often multiple Thinking Time sessions needed to fully think through breadth of question
5. Close door, turn off the phone, computer and other distractions, set timer and sit still
6. Keep a Thinking journal with question(s) and solutions he thought of
7. Don’t judge or evaluate thoughts during Thinking Time
8. Ideally one thought leads into another…follow the train of thought where it takes you
9. After session read journal and capture thoughts
10. Have at minimum 2 and at maximum 3 Thinking Time sessions each week.
Chapter 6 “The 4 Hats of Business”
There are 4 primary roles that must be performed with successful businesses; 1) Artist (Creator), 2) Operator (Technician) – focused on getting it done – mistakenly believe harder work leads to more money; 3) Owner (Business) – add value by leveraging their team and measurements like KPIS and financials, and 4) Board (Investor) – focused strategically not involved in doing. Typically, the challenges of growing a small business, cash-flow and operations, cause the owner to lose focus on the latter two roles. As the business grows people are hired to leverage the performance of any of these 4, freeing the owner up to spend more time focusing on #s 3 and 4.
“A word of caution: Believing passion and operational excellence will trump business skills and risk assessment is a guaranteed prescription for a breathtaking dumb tax.” (pg 35).
Chapter 7 “Culture is King (You Get What You Tolerate)”
“Culture is how we treat each other, how we talk to each other, whether we trust each other, and how we handle conflict…[it’s] about accountability, measuring, a bias for urgency, a focus on solutions…The problem is that the culture we currently have in our workplace relationships is rarely a culture we consciously created. Rather, the culture in our businesses is a culture we have tolerated because of a lack of courage to address the problems of back-biting, smack, cliques, excuses, blaming, procrastination being late, missed deadlines and more.”
Chapter 8 “Generalizations Kill Clarity”
“The primary reason most goals are never achieved and most budgets are never attained is because they are hollow, generalized statements of hope and not rigorous nonnegotiable standards, plans, and measurable drivers.” (pg49) The questions to ask in creating your plan always start with “How, What, or Who”
1. How will we achieve this outcome?
2. What specific activities are required to be performed?
3. Who is going to perform them?
4. What are the critical drivers that must be consistently executed to achieve this outcome?
5. How frequently must these critical activities be measured and reported to be successful?
6. Who owns the outcome?” (pg 52)
Chapter 9 “A CEO Should Never Delegate…”:
Successful CEOs has seven jobs that she can’t delegate.
1. Clarity on Point A and Point B – clearly articulate where biz is and its vision for future
2. Identify the Gap and the Obstacle – identify the obstacles that are causing issues
3. Design the Plan and the Machine – once obstacle ID’ed coordinate and design how to resolve
4. Allocate Resources
5. Top Grade for A Players – hire A players and don’t tolerate mediocrity
6. Build the Organization Chart
7. Create the Culture
Chapter 10 “A Crisis Is a Terrible Thing to Waste” “A mistake is not a sin unless it is not admitted.’ (pg 59) “Never delay taking corrective action once the problem has been recognized. Hoping for better conditions in the future so the problem will solve itself is a fool’s game.” (pg 63)
Chapter 11 “Ordinary Things Consistently Done, Produce Extraordinary Results!”
"We self-sabotage when we look for the one massive thing that can be the game changer. We tend to want the results immediately. We want to get from where we are to where we want to be in fifteen minutes - no fuss, no muss, no sweat. ...it's irrational to believe that you will unwind these problems in the blink of an eye." (g 70)
Chapter 12 "O Baby!"
The author identifies the 3 most powerful principles to attract customers and gain significant traction.
Chapter 13 “Help Me Understand”
Leading an organization is like being a coach while the role of the manager is more like being a sheriff. Employees who don’t do what we want is often because we have poorly communicated our expectations. If you want a high performing culture be very specific about what you expect. If the employee doesn’t meet your expectation sometimes discipline is good and other times not. Avoid creating an organization run by fear.
Most employees want to be successful. You as the leader must assess what needs to happen for each employee to be successful at his/her job. (pg 81) When dealing with employees the two most power phrases are: 1) Help me understand…, and 2) What do you recommend? (pg 83)
Chapter 14 “Opportunity Without Structure is Chaos”
“Leverage is the single greatest point of difference between owning a job and owning a business…Leverage means doing more with less.” Without leverage businesses move towards chaos and the urgent.
Chapter 15 “Mann Gulch”
“When the environment radically changes and you are confronted with moments of uncertainty and danger, clinging to the old ‘right’ ways might seem like a good idea, but it can frequently be deadly.” (pg 90) “New circumstances always require new skills and tools, fresh training, innovative solutions superior team members.” (pg 91)
Chapter 16“Dreams and Demand”
Goals are ideas but not plans. “The vast majority of my goal-setting friends stumble at the beginning of the process because of a desire to dabble rather than burn the ships and commit.” (pg 95) Setting goals is important but your focus should be on what needs to get done to accomplish the goal rather than the goal itself.
“Don’t let the obsession with your dream get in the way of noticing the demand.” (pg 97) We are surrounded by change, some of which could present real growth opportunities for you, which you might not see if you’re obsessing about your rigid vision.
Chapter 17 “The Big 8”
Leaders inspire…managers control. Small business owners spend the majority of their time controlling, which is the least enjoyable activity for them and their team. The author presents a sequential model for controlling processes but not people.
1. What – the specific measurable outcomes that owner has prioritized for business.
2. What – the primary obstacle (found in gap between Pts. A and B) – clarity on gap critical.
3. How – the plan you and your team develop to overcome the obstacle.
4. How – identify the resources, training, personnel, systems etc. required to drive result.
5. How – develop outline that clearly identifies deliverables and involves your “A” players.
6. How – identify the critical drivers and standards that must be executed and analyzed.
7. How – create dashboard to measure actual performance against established benchmarks.
8. How – the candid accountability and coaching conversations with team members to keep on track – “without coaching and consequences, good intentions become the excuse du jour” n
This model helps the author create “clarity, ownership, accountability and consistency with my team…The owner primarily focused on the “What” questions and team on the “How”. (pg 104)
Chapter 19 “The Only Constant in Business is Change”
Companies lose their relevance because they continue to grow but don’t evolve. To be conscious of the need to evolve keep an open mind, be flexible and have a “healthy degree of paranoia”. (pg116)
Chapter 21 “The 3 Pillars of Success”
1) “Write down your major outcomes every day.” This focuses us on our significant accomplishments. 2) “Plan your day before it starts” 3) Be accountable to someone for your plans, commitments and results”. The higher you want to go the greater the commitment to an accountability partner.
Chapter 22 “The Advantage of Being Small”
“What creates opportunity for the small guys (entrepreneurs) is the inflexibility of the big guys to treat each customer as a king (instead of a transaction) and every employee as a queen (instead of just another nameless cog)”.
Charles Darwin is famous his theory of “survival of the fittest”. What isn’t so well understood is his definition of “fittest” His definition of fittest isn’t about being the biggest, fittest, strongest…it’s about being the most capable to adapt. In business, survival is dependent how flexible you are to adapt to changes in the marketplace or the environment. (pg 128)
Chapter 23 “Simplifying Growth”
“It is always a mistake to start your thinking with tactical questions like, ‘Why are our sales numbers not twice as big?’ Strategic sounds like ‘What is the core obstacle preventing the doubling of our revenue?’ Asking a tactical question will always result in tactical answers. Solving the problem that isn’t, however, is a waste of time and money.” (pg131)
Chapter 28 “How Am I Going to Play the Second Half”
“I decided to play for keeps. To do whatever I needed to do to achieve the success and fulfillment I wanted in my life. I decided to play at the level of mastery, excellence, commitment, practice, growth…” (pg150)
“There is a big difference between success and excellence. Success is getting there. Excellence is staying there.” (pg 151)
Chapter 29 “Execution”
Great strategies if not consistently applied will fail. Management teams that consistently fix problems first assess what they’re good at (skills, resources) before deciding on the course of action. (pg 154)
Chapter 30 “Strategic Growth”
“Internal Strengths + External Needs = Opportunities” External Needs – knowing your competitors offering and gaps with the needs of the market.
Chapter 31 “Systems vs. Flexibility”
Systems are valuable especially in a stable and routine working environment but should not be used with customers. Customers want their problems fixed and to feel special. That’s hard for a company rigidly focused on systems to do.
Chapter 34 “If You Want to Grow…”
If customers in your target market who know you aren’t buying it’s probably due to 1 of 4 reasons:
1. Risk – perceived risk of failure or your solutions won’t work for them
2. Friction – the costs of set-up, adoption, de-installation, breaking old habits, for example
3. Confusion – when buyers are confused as to the capabilities of competitive products
4. Value that isn’t perceived – when buyers don’t understand the value of your offering
Chapter 37 “The Triangle of Death”
There are 3 primary “success propositions”
1. Operational Excellence – internal focus is on operational efficiency and costs (Walmart)
2. Customer Intimacy – internal focus on quality of customer relationship + exceptional customer experience (example, Nordstrom)
3. Product Leadership – internal focus on innovation, functionality, features, overall design
It’s a problem when owners try to be more than one – be important where it counts.
Chapter 38 “Mommas Love Their Babies”
A classic business mistake occurs when an owner obsess over their product rather than on customer needs. “You can have a crappy product and still become uber successful. It’s not about the product.” (pg 200) Example, McDonalds.
“Your success will have very little to do with what you do and everything to do with how you do it…Instead of falling in love with our products, we would all be more successful if we fell in love with our customers and their outcomes.” (pg200)
Chapter 39 “Prioritizing Growth Strategies”
There are 8 ways to increase revenue.
1. Keep More Customers – it’s about retaining your customers -1) Find out what they want; 2) Go and Get It – find a means to provide what they want; 3) Give It to Them
2. Increase Referrals and Repeats
3. Define and Enhance Certainty of Success – ask yourself, “What has to happen so the customer will say ‘I’d have to be crazy to do business with someone else.” (pg 209)
4. Enhance/Train the Sales Process – if you don’t have a sales process, develop one
5. Increase Conversion Percentage
6. Increase Transaction Size
7. Increase Frequency – how often they buy
8. Increase Leads
Chapter 40 “Creating Enterprise Value”
In addition to financial risk the author lists 6 critical risks the owner must address to increase the predictability and sustainability of the biz.
1. Concentration Risks: avoid heavy concentration of income from a few clients
2. Sustainability Risks: buyers of a business are interested in the future flow of revenue and risks The potential for disruption would be alarming to potential buyers
3. Business Model Risks: understand the risks of your business model (how you do business)
4. External Risks: competition, regulatory change, interest rates, economic cycle, for example
5. Leverage Risks: adding debt adds risk by stressing cash flow
6. Excess Capacity:
Chapter 41 “It’s Not About the Plan”
“Everyone has a plan until I punch ‘em in the nose.” Mike Tyson. “The value is not in the plan. The value is in the planning.” (pg 125)
“Being intimate with how all the pieces are interconnected and which levers drive specific results is the key to knowing what to adjust when things get off course or delayed.” (pg 226)
Chapter 44 “Cause and Effect” “If you want better mastery over your business you must identify and measure your critical drivers. “Measuring and monitoring your critical drivers gives you the ability to understand what is happening in your business before seeing the financial statements…” (pg 242)
Chapter 45 “What Gets Measured Is…”
Measuring is the primary, fundamental tool used by all pros and experts to excel and win the game.” (pg 245)
Chapter 46 “The Great Question”
“Without prioritization of outcomes there is no prioritization of activities; therefore, resources get consumed in a frantic attempt to do everything instead of the most meaningful thing.” (pg 249)
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