Do you know that an MBA program can set you back by a 6-digit figure, yet there’s no strong evidence that an MBA improves business or career success? In fact, many of the MBA concepts are outdated in our fast-changing business world. Josh Kaufman recommends that you save on MBA program fees, and use the time and resources for real-life education instead. In this book, Josh Kaufman provides 248 short, vital business concepts, presented in layman terms, to help new entrepreneurs and experienced executives alike to fast-track their real-world learning for better results. In this free version of The Personal MBA summary, we’ll briefly outline these concepts in 3 parts: how businesses work, how people work, and how systems work.
Our mental models shape how we view the world, the actions we take, and the results we achieve. The concepts in this book are meant to help us filter and shape our real-world experiences.
How Businesses Work
Every business involves 5 essential parts – Value Creation, Marketing, Sales, Value Delivery, and Finance. For this article, we’ll briefly outline what each of these 5 areas entail. Do refer to our full version of The Personal MBA summary for more tips, concepts and ideas.
Value Creation
This is about assessing the attractiveness of markets (e.g. using the 10 Market Evaluation Questions), understanding what people want and how they evaluate value (e.g. knowing the 4 core human drives, and 12 forms of economic value), how to translate an idea into a viable offer (e.g. testing critical assumptions, creating prototypes and a minimum viable offer, and improving using “iteration cycles”).
Marketing
To get your prospects’ limited attention, you need to present your offer in a way that connects it with an existing desire. This aspect of business is about framing your offer, triggering prospects’ interest (e.g. through visuals, hooks, free gifts) and sustaining it, and focusing your limited resources in the right areas (e.g. the most-profitable customers).
Sales
A transaction is essentially an exchange of value. This part of business involves knowing how to build mutual trust and common ground, setting the right prices, structuring the right proposals and fallback options, and addressing barriers to purchase.
Value Delivery
Happy customers are more likely to buy again and refer you to others. This aspect of business is about increasing satisfaction, and mapping out your value-stream so you can identify ways to improve your throughput, duplicate and multiply your value delivery.
Finance
Finance is about knowing how the money flows in and out of a business, so you can decide how to allocate it, and assess if it’s producing the desired results. Kaufman explains several key financial concepts, including what it means to achieve sufficiency, how to increase profits, how to look at Customer Lifetime Value (CLV), ways to finance your business, understanding opportunity costs/ sunk costs/ time value of money etc.
How People Work
Businesses are created by humans, to serve humans. Hence, it’s vital to know what makes people tick. The book covers numerous tips and concepts in 3 sub-parts, which we’ll broadly outline below. You can get a more detailed synopsis from our complete The Personal MBA summary.
Understanding The Human Mind
The human mind drives perceptions, choices and behaviors. To be effective with people, we must understand how the mind works. The book covers a wide range of concepts like unconscious “references levels” that we use to keep our perceived world within acceptable limits, the fast-but-inaccurate shortcuts that our brains use to respond quickly, and how we respond to threats, large numbers of people etc. It’s also important to understand our brains’ limitations, and how we make decisions e.g. managing our limited amount of willpower, the natural human absence blindness, tendency to compare and contrast, loss-aversion etc.
Working with Yourself
Learn how to manage your energy and be the most productive. The book addresses various tips e.g. how to get in flow, minimize cognitive switching penalty, process your to-do list, use stimuli, set goals & establish habits, use good questions etc.
Working with Others
Working with others effectively involves many other considerations, e.g. being sensitive to social signals, ensuring people feel safe and important, growing your influence, using the right incentives, getting the most from teamwork etc.
How Systems Work
Every business is a complex system, that exists within other systems. In order to grow and operate your business smoothly, you need to develop an understanding of systems and how to manage/ optimize them:
Understanding Systems
In a nutshell, a complex system is made up of interdependent parts, arranged to self-perpetuate and form a unified whole. The book explains the typical components of a system, the types of feedback loops, and how to identify and address bottlenecks in a system. Due to the number of interconnected parts, complex systems are hard to manage, and the book also touches on the importance of minimizing critical paths, counter-party risk, and managing changes and risks.
Analyzing Systems
To improve systems, we must first know how they’re performing. This segment of the book explains how to deconstruct your complex system into its smallest possible sub-systems, measure the performance of your core and sub-systems, and collect and assess data in context.
Optimizing Systems
With the right understanding and data about your system, you’re now ready to optimize it, i.e. maximize the overall system output and/ or minimize the required inputs. Some concepts covered include refactoring, diminishing returns of improvements, removing friction from the system (via SOPs/ automation), building resilience and your ability to recover from (inevitable) system failures. There’s a need to balance your efforts so you use your resources wisely, avoid unnecessary measures, and can manage the systainable cycles of expansion-maintenance-consolidation.
Getting the Most from The Personal MBA
In this article, we’ve briefly outlined some of the key insights and strategies you can use to achieve desired change. For more examples, details, and actionable tips to apply these strategies, do get our complete book summary bundle which includes an infographic, 16-page text summary, and a 30-minute audio summary.
In the book, Kaufman explains more than 200 business concepts (including brief definitions and examples), in short segments averaging 2 pages each. This summary provides a quick overview of the various components. Kaufman recommends that you zoom in on the parts that’re most relevant for you, apply them, and revisit the book regularly as a reference material. If you like the brief overview in this article, you can purchase the book here for the full details, visit www.joshkaufman.net, or refer to personalmba.com for more resources and recommended reading.
[Some useful resources you can use to start digging into how businesses work include: Blue Ocean Strategy, The 22 Immutable Laws Of Marketing, and The Ultimate Sales Machine.] [To dig deeper into understanding the human mind, do also check out Thinking, Fast and Slow, Influence, and Decisive]. [Other good related resources on working with yourself include: Finding Flow, The 7 Habits of Highly Effective People, The One Thing, The Power of Habit, and A More Beautiful Question]. [Besides the tips in this book, check out: Emotional Intelligence 2.0, Crucial Conversations, The New One Minute Manager, and Drive to learn how to work with others].
About the Author of The Personal MBA
The Personal MBA: Master the Art of Business is written by Josh Kaufman–an author, speaker and business coach, who has been featured as the #1 bestselling author in Business & Money, as ranked by Amazon.com. He also conducts independent research in business, entrepreneurship, productivity, behavioral psychology, systems design etc., and focuses on helping people learn how to make more money, get more done, and have more fun in daily life.
The Personal MBA Quotes
“Skip business school. Educate yourself.”
“Business is not (and has never been) rocket science – it’s simply a process of identifying a problem and finding a way to solve it that benefits both parties.”
“Ideas are cheap – what counts is the ability to translate an idea into reality.”
“Your job as a marketer isn’t to convince people to want what you’re offering: it’s to help your prospects convince themselves that what you’re offering will help them get what they really want.
“Your prospects know you’re not perfect, so don’t pretend to be.”
“Value-based selling is not about talking – it’s about listening.”
Click here to download The Personal MBA book summary and infographic
