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 In fact, many of the MBA concepts are outdated in our fast-changing business world.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. “The Personal MBA” 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 summary, we’ll give an overview of some of 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 the book or our full book summary, for more tips, concepts and ideas.
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”).
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).
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.
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 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.
[Obviously, there’s much more to each of the 5 areas above than can be covered in 1 book. Some useful resources you can use to start digging into these topics include: Blue Ocean Strategy, The 22 Immutable Laws Of Marketing, and The Ultimate Sales Machine.]
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 read more details from the book or a detailed synopsis from our 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:
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.
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.
• 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.
Other Details in “The Personal MBA”
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, do get the book for the full details, get our full The Personal MBA summary bundle for a one-glance outline of the key ideas and tips, and/or refer to https://personalmba.com/ for more resources and recommended reading.
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