Month: July 2018

Wednesday, 9:44pm

Sheffield, U.K

Unless you’re completely switched off from the news – you know there is a trade war going on.

The US, China and the EU have their gloves on – and they’re not playing nice.

So, how does a trade war work, what does it mean for businesses, and what’s it going to mean for us?

In these situations, I find it useful to trot out a model from Robert Fritz’s book Corporate tides.

Basically, in any situation you have tension and resolution, yin and yang.

And, when you work through a sequence of tension and resolution steps – you are left with a feeling of despair at the futility of “solving” any problem – let alone one so complex as global trade.

So… let’s step through what happens.

One country, in this case the US, feels that it’s being taken advantage of by another – China, the EU, the rest of the world really.

US businesses are suffering. Not all of them, of course. Mostly the pain is felt by more mature industries that make commodities – things that can be manufactured anywhere in the world.

The people that work in those businesses are hurting.

So – any politician will do what is needed to help his people – and the obvious answer is to impose tariffs on all that foreign stuff.

Make it more expensive, and then the locals will be competitive, have room to breathe, have room to raise prices and the workers will be happy.

Only the foreigners will lose market share – and who cares about them anyway?

Well, they do. The foreigners do.

They’ve got people hurting as well – especially now.

So they retaliate with their own tariffs on the stuff that the US makes.

The US imposes tariffs on steel. China retaliates with tariffs on soybeans.

China steelmakers lose half their market. US soybean producers lose half theirs.

Now what happens?

Costs rise. They rise because imports are more expensive because of the tariffs. And they rise because local providers have room to increase prices.

Input costs for businesses go up and what do they do?

Well, they’re not going to watch their profits evaporate. All they can do is raise their selling prices – put the retail price up.

And what happens when things get more expensive for us consumers?

We feel poorer. Our money doesn’t go as far, and we wonder what’s going on and perhaps we should cut back on spending.

And businesses do worse.

Which, when we go back to where this all started – with the desire to make things better for businesses – is a bit of a let down.

All that’s happened at the end of all this is trade is down – and it’s going to fall by around $800 bn – as set out in this rather detailed play by play review of what’s happened so far.

This is the fundamental irony of economics.

Anything we do to try and “control” things usually results in something nasty happening somewhere else.

People in charge don’t like that – they want to be in control and make things happen.

Markets don’t take that well.

James Carville once said: I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.

It’s taken hundreds of years to learn that.

Try and control the market and everyone becomes poorer.

Set it free – and people get richer.

The current move across the world – towards protectionism, isolationism and lots of other isms – are more likely to make things worse instead of better.

But… it’s not all bad news…

There’s always opportunity when things start to go wrong and people panic.

The question is – what will uncertainty mean for your business. Will you do better or worse?

And what can you do now to prepare for the inevitable slowdown?

You could do worse than remember the words of Charlie Munger – Warren Buffet’s business partner.

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

Or… as the Hitchhikers Guide to The Galaxy might put it .

DON’T PANIC

Cheers,

Karthik Suresh

Monday, 8.19pm

Sheffield, U.K.

I’m reading Brian Tracy again, and the points he makes about leverage in his book, Focal Point.

Leverage is about getting more output for the same amount of effort.

I was talking to a friend today about knowledge.

Many people have learned their trade and craft over 30 years on the job – they have experience.

They make decisions drawing on what they have learned over time. It’s possible that they don’t know why something is the right thing to do, but their gut tells them – and they have learned to trust their gut instinct.

But – that doesn’t mean we should take 30 years to learn the same things.

Many experienced people reflect on their experience and share their knowledge – in books and articles – and we should make the most of this.

Acquiring knowledge can help us skip years of experience. Experience still matters – but we can go so much further as a result.

Then there is energy.

We only have so many hours in a day – so many productive hours we can put in.

We should try and get the best out of each hour – and that means using other people’s energy to do everything that they can do better than us.

If you’re not practical – outsource all the jobs to someone who is. If you’re practical, get your bookkeeping and marketing done by someone who’s good at those things.

Robert Kiyosaki writes about money in such a simple and direct way that it hurts.

How long would it take you to save a hundred thousand dollars?

For most people, we’re talking years.

How long would it take you to borrow a hundred thousand dollars?

For many people, that could be pretty fast. Perhaps online.

The point is that if you’re good at borrowing money and investing it in something that gives back a higher rate of interest than you’re paying – you’re onto a winner.

Watching other people and learning from their successes and failures is crucial.

How many people do you know that have become successful and then spectacularly failed?

What made them do that?

Once again, all the information is out there. We just need to spend the time watching and learning and then picking the things that led to success and avoiding the things that led to failure.

It’s hard coming up with good ideas. So we should learn from those that other people have.

Everything we see around us is an idea that has survived the test of time. If you see a business model, a habit, a routine, a process that works – learn it and build on it.

It’s very rare that we see a completely new thing – most of the time we build on, iterate and improve on existing ideas.

Finally, there is the network – other people’s contacts.

Many of us know a few people. But together, we have access to a lot.

Other people can help you reach further through their contacts and connections. As the saying goes, your network is your net worth.

But isn’t all this other people’s stuff just using people?

No.

It’s the foundation of social structure. The bedrock of economics.

If we simply try and use other people – no one will help us. Or they’ll stop once they realise how selfish we are.

If you genuinely try and learn, give business to people, create returns for people, avoid failure and strive for success, search for the best ideas available and create and nurture good relationships – you just can’t help but do well.

Human beings are social animals. We prosper when our society prospers.

As Zig Ziglar said, You can get everything in life you want if you will just help enough other people get what they want.

Sunday, 9.53pm

Sheffield, U.K.

I once listened to a Professor of Public Philosophy talk about work.

The whole idea of work is very poorly defined, she said. What exactly is it and how can we tell when we’re doing it?

Work has a few characteristics. First – it’s something we have to do, rather than something we want to do. In other words, there is a reason for doing it and we’re not just playing.

Then, it’s something that we do in exchange for money. If there is no money involved, it’s something other than work.

You may agree or disagree with her definitions and my memory may not be exact – but she said something else that was interesting.

Do you work for the sake of the work you do, or do you work for money?

Some people love what they do – they feel involved and committed and would do it even if they weren’t paid. Although they would then need to do some other work to actually get paid…

But others work for the money, or so they say. What do they want out of work?

Well, the Professor said, if you work for money, then before you can ask what you want out of work, you have to ask what you want out of money.

What is it that money gives you? Is it the ability to go on holiday? To buy nice things? Are you ok working at a job you dislike for the money that gives you the things you want out of money?

But that isn’t really the focus of this piece.

For many of us, we don’t work for money, and we don’t have the perfect job that we would do for free. So what is it we want?

One of the things we crave is mastery. The others, according to Daniel Pink, are autonomy and purpose.

So, how do we achieve mastery?

The author Robert Greene has written a book on the topic and, in this interview, sets out some of his ideas on the topic.

The place to start is with deliberate practice. As Zig Ziglar said, you don’t wander about and find yourself at the top of Mount Everest.

Whatever you do – sport, business, writing – the way to get better is to practice. And that practice needs to be deliberate, breaking down everything you need to do and working to improve each part.

But how do you know what to do?

You need to become a learning machine. There is information out there on everything. There are books, experts, resources.

The question is whether you have a system to take all this knowledge and process it, analyze it and internalise it. Make it your own.

There is a second part to doing anything. It’s easier to do something when you have a deep connection.

If you’ve entered a profession because your parents wanted you do but really don’t like it at all, you can end up living a life that doesn’t fulfil you.

It’s better to work on something that interests you, something that truly makes you happy.

Or you can settle for being happy by taking the money and doing fun stuff. Your choice really.

But how do you stand out?

Some people do that by knowing more and more about less and less. Academics can fall into this trap, where they know everything about something two other people in the world care about.

That’s great from a knowledge point of view – but don’t expect to get rich that way.

A better option is to combine two or three skills and create a niche that no one else is doing.

Scott Adams writes about this. He says he was an average cartoonist, an average storyteller and knew a little about engineering.

When he put all three together, he created one of the most loved comics in the world.

But it also takes time to get started.

We need to be grounded in reality. Realise that when we start we are an unknown, a small cog in a big machine.

We need to pay our dues, do the grunt work needed to be known and trusted enough to be given responsibility and chances.

That’s an apprenticeship we need to go through on the route to mastery.

And along the way we will meet people.

If we can maintain good relations with them, we are more likely to prosper.

We’ll find colleagues who will support and teach us, friends who will be there for us and mentors who will pull us up.

As the saying goes, your network is your net worth.

And what happens at the end of all of this?

At some point, you are so good at something that it’s self sustaining.

You work on something you love, get better every day, work with people you like, admire and trust and make a good living.

You’ve achieved mastery.

If you’ve guessed training – then you’re on the right track.

What is the point of investing in a training programme?

It might make sense if you have a defined role – perhaps a safety critical one.

We want pilots to be trained. Surgeons. Bus drivers.

There are some roles where you’re putting your life in the hands of someone else – you definitely want them trained to the highest possible standard.

You’ve heard the old joke – why do pilots follow procedures and checklist so much more than surgeons?

Because surgeons are involved while pilots are committed.

As a pilot, you’re on board with the passengers. If you screw up – you don’t get to escape.

Many other professions looks like they also see training as important – lawyers, for example. Financial advisers. Accountants.

These professions have long qualification periods and exams to pass before you’re allowed to practice as one.

But… is the point of all that to protect people?

The unsaid bit is that a big part of it is to protect the profession involved.

Basically, as a professional, you want to limit the number of people who compete with you. Creating a qualification and training requirement that stretches over years is one way of controlling the number of people who enter the profession.

That control over supply means you can keep prices high.

This kind of training doesn’t result in better quality. In fact, it can lead to worse service. Most financial advisers are better at working out what commissions they can make on a client’s portfolio than really growing it.

These kinds of jobs are the ones that the internet will kill off – as low cost self service options make it possible for people to get the same results at a cheaper price.

But then there is all the rest of business – which dwarfs the bit done by professionals.

Here you have workers and managers, doing jobs in industries from manufacturing to mining.

And, in any business, there are a number of things you need to do well to keep clients happy.

Clients – not customers. A customer is someone who buys something from you. A client is someone you advise and have a duty to.

A company is built around a set of products and services – it takes in inputs and sells outputs.

But how many companies have people in charge who think about the people the serve.

Yes – they serve customers or clients. Clearly those are important.

But what about your team – your employees?

How does your company see them? Are they resources, roles that need to be filled? Or are they people that you want to develop?

It’s like martial arts training. Do you want a company filled with white belts or black belts?

What makes the difference between a white belt and a black belt?

Well, usually one knows more moves than the other – but not that many more. Not thousands of moves. Perhaps 20 key ones.

The difference is that the black belt has practiced those moves thousands of times until they are second nature.

Their trainer didn’t just sit them in front of a blackboard and list out the steps or show them a video.

They also practiced, day after day.

And that’s what training should be. Not a one time demonstration or a presentation.

But regular, ongoing practice.

Not training – but practice. Practice is what turns a white belt into a black belt.

And that’s what will make you and your company better as well.

But – think about it. Does your company invest in training and practice?

And, if not, what can you do about that?

Friday, 2:57pm

Sheffield, U.K.

We all want to be better – spend less time and achieve more.

But many of us find this hard. The pace and responsibilities of modern life, the distractions and the expectations of others all put pressure on us.

In addition, the perfect lives of more organised people showing up on our social media feeds remind us of how we’re not keeping up as they get ahead.

So, what can we do about this? What do we do – and how can we optimize our lives and businesses?

1. The simplest problems can be solved with process solutions

Some of the problems we have can be solved with simple solutions.

That’s usually where most advice on this matter starts. Map out the process and look at where it breaks down or takes too much time.

A manufacturing plant, for example, is usually a fairly simple set of activities.

By mapping the process and identifying bottlenecks, you can figure out where work is piling up and take steps to reduce this.

For example, if it always takes you time to find cereal and feed your kids in the morning while you’re rushing around trying to find clothes to iron – that is a bottleneck.

You could solve this by setting out everything the night before when it’s not a rush and put less pressure on yourself in the morning.

These are the kinds of problems that can be solved by routines, habits, rules and if-then algorithms.

2. More complex problems require a systems approach

Any problem that involves a person other than yourself quickly turns into a systems problem.

You may be perfectly capable of getting ready and out the door in the morning in 20 minutes, but add your other half and the kids into the mix and everything becomes a mess.

At work, the plans and needs of your coworkers and boss will affect your day – as will the availability of materials, resources and how your suppliers and customers act.

These are complex problems – and the ones that involve people, money and stuff are the most complex ones of all.

Here, simple process optimization doesn’t work most of the time.

This is why. Let’s say you set a target that all emails must be answered within 2 minutes.

You’ll find that people will focus on the target, and anything not directly related to the target will be ignored.

Calls will go unanswered. The doorbell will be ignored.

When it comes to targets – especially when they are linked to bonuses – people will do what is necessary to hit the target.

The problem is that the system as a whole may suffer. It will suffer.

A systems approach needs to look at the whole picture, and see how the object of a target is not to meet the target but usually to improve something – probably something related to your happiness or your customer’s happiness.

Have a look here to check how you might look at systems.

3. It’s important to have a clear idea of where you want to end up

I came across the idea of a transition from a present state to a future state here.

This is a nice model – and the idea is that you know where you are right now. You have a concrete picture of your present state.

Now you need to start thinking. Open your mind, brainstorm – go from what you know to exploring new stuff – learn about something new. Engage in abstract thinking.

Then bring it back down to more concrete, future thinking. Get specific about where you want to get to and how.

While the first two approaches – process and system – dealt with improving what is here now – this approach gets you thinking about where you want to be.

Do you want to have more money, more time with the kids, more travel in your life? Do you want to sell your business, grow it, get new partners, pass it to the next generation?

These are questions of strategy, and the state you want to reach in the future.

4. And know when is the best time to do anything

Another way to think about optimization is about timing.

For example, we know that sleep is important. What we don’t realize is that we can optimize sleep in cycles.

Having a nap during the afternoon or late evening can mean that we need less at night – and given how our days are, this can make the difference between performing well or failing.

There is seasonality in many businesses – what you sell during which part of the year. What time of day is best to reach out to people. When you should plan your creative work time and when you should do management and meeting time.

Breaking the day into periods and working on using each period better is a well known tactic – from the Pomodoro method of working in 20 minute chunks to advice from Ingvar Kamprad, the founder of IKEA, who said:

You can do so much in ten minutes’ time. Ten minutes, once gone, are gone for good. Divide your life into 10-minute units and sacrifice as few of them as possible in meaningless activity.

5. Make sure you’re not simply pushing aimlessly

The goal of optimization should be to make things better.

Not just one thing – everything.

For example, there is little point exercising to the point where you permanently damage yourself.

Or take supplements to lose weight that end up destroying your liver.

The problem with most approaches that are prescriptive is that other things happen as a result that we didn’t expect or plan for.

Look at each thing you do as an experiment. You’re trying to make things better, but watching out and trying to avoid screw ups at the same time.

You won’t get it right the first time, but if that happens you’ve learned something for the next experiment.

Above all, optimization is really about trying a new way to do something – and adopting it if it’s better.

Sunday, 9.10pm

Sheffield, U.K.

I’m reading old sales and marketing books – and one of them is by Frank Bettger called “How I multiplied my income and happiness in selling”.

His writing is to the point – every page has something that you can take away and think about.

For example, he writes about how he was struggling to make it in the life insurance business – after 10 months he was thinking of quitting when he overheard something that had a huge impact on him.

The President of his company said that the business of selling came down to one thing – just one thing. A person of ordinary ability who goes out and earnestly tells their story to four or five people every day just can’t help making good.

Bettger now knew what to do – he had to go out and talk to people.

But that wasn’t enough to keep him going. He was fired up for a while, but then started to get lazy, stop calling – and that showed in his numbers.

Then, he writes, he remembered an article called “A $25,000 idea”.

In the article Ivy Lee, an efficiency expert was trying to sell Charles M. Schwab, the President of Bethlehem Steel Corporation, on how he could teach him to manage better.

Schwab dismissed the idea – he already knew what to do. He didn’t need knowledge but action. What could Lee tell him that would get him and his team to do the things they already knew they ought to do?

Lee gave Schwab a plan.

Start by writing down the six most important tasks you have to do tomorrow.

Now, number them in order of their importance.

Now, first thing tomorrow morning, start on item one and keep working on it till you’re finished.

Then, start on item two the same way, then three.

Keep going until it’s time to quit work.

Here’s the thing – don’t worry if you don’t get finished or do only one or two things.

You’re working on the most important things. The rest can wait.

Do this every day.

If you don’t finish them using this system, you probably won’t with any other system. And without using this method – you probably won’t have decided what is important first anyway.

Now the rest of the story that Bettger recites – which you can read in lots of places – is that the method worked and Schwab gave Lee a big cheque and all was good with the world. Now he knew how to go ahead and be successful.

Except it isn’t the end there really.

There are three more things to think about for you and me to supercharge this system.

The first is that there are things you should always do – every day – that will matter in the long term.

Exercise, for example. Time with your family. Alone time to work on your stuff and projects.

You need to plan those into your day. For the stuff that you need to do on your own, the best time to do them is first thing in the morning and last thing at night – before everyone else is awake and after they’ve gone to sleep.

Next, even though you’re listing the six most important things you need to do tomorrow, there will still be lots of stuff buzzing around in your brain. The 100 other things you need to get done.

Don’t keep them in your brain. Get them on a list – stop what you’re doing if you need to so that you’ve written it down somewhere you know you’ll find it.

Getting it out of your head will let you carry on with the list of important tasks.

And you can get the itty bitty ones done when you’re on a break or need some recharging time.

Finally – most of us have important things to do that are other people’s priorities and important things to do that are our own priorities.

If you have a job – you’re going to have to do things your manager wants you to do. If you have a project, or a side hustle, it’s going to feel like there is never time for that.

Do yourself a favour. Even if items two to six are other people’s priorities, make number one something that is important to you.

It’s like saving. The best way to save is to move the money out of your account as soon as you get paid into a savings account. Then live on what’s left after that.

Pay yourself first.

p.s.

One thing that might have slipped by in the story is that Bettger found out what he had to do (talk to prospects every day) first and then learned from Lee how to do it (make a list and follow it).

It’s important to know what the what is for you.

If you’re a salesperson it’s about making contact with prospects. If you’re a business leader, it’s about managing resources. If you’re an entrepreneur, it’s about innovation and marketing.

If you’re clear on what you should do and how to spend each day – you’re on track for the rest of your life.