The Personal MBA distills the most valuable business lessons into simple, memorable mental models that can be applied to real-world challenges.
Getting an MBA is an expensive choice—one almost impossible to justify regardless of the state of the economy. Even the elite schools like Harvard and Wharton offer outdated, assembly-line programs that teach you more about PowerPoint presentations and unnecessary financial models than what it takes to run a real business. You can get better results (and save hundreds of thousands of dollars) by skipping business school altogether.
Josh Kaufman founded PersonalMBA.com as an alternative to the business school boondoggle. His blog has introduced hundreds of thousands of readers to the best business books and most powerful business concepts of all time.
He shares the essentials of entrepreneurship, marketing, sales, negotiation, operations, productivity, systems design, and much more, in one comprehensive volume.
Key Takeaways
Mental Models fundamental business frameworks.
5-Part Business Framework
Without any one of these parts, you don’t have a business. A venture that doesn’t create value for others is a hobby. A venture that doesn’t have proper marketing is a flop. A venture that doesn’t sell the value it creates is a non-profit. A venture that doesn’t deliver what it promises is a scam. A venture that doesn’t bring in enough money to keep operating will inevitably close.
1. Value Creation are we creating something people will actually pay for? The fist thing to understand when building a successful business is understanding what drives people to buy a product or service in the first place.
Two Primary Characteristics that drive buying decisions:
- Convenience quick, reliable, easy, flexible. People pay a premium for convenience.
- High-Fidelity high aesthetic, high emotional impact, high social-status.
You could make a product or service that makes life easier for people, or makes them feel special, but there is still no guarantee they’ll pay you for it.
Rather than going into hiding for a year and building something you think people will value, it’s much better to build an early version of a product and measure your customers response to it. From that point, you can make incremental improvements to the product until it’s good enough for people to be willing to pay for it.
2. Marketing how well are we attracting and holding our customers attention? Any business that can attract their customers, will lead them to the sales process.
3. Sales how well do our customers believe and trust us?
- People aren’t willing to give up their hard earned money unless they believe and trust a business can deliver on their promise.
- One way to quickly build up belief in trust is to get social proof. (recommendations from key influencers, or getting 100 5-star amazon reviews.)
- If a business is unable to build up social proof, it simply needs to perform on a consistent basis and be around long enough for people to trust it.
- The more trust a business has, the more sales the business makes.
4. Value Delivery are we exceeding the customer’s expectations?
- Customer expectations have to be high enough for the customer to purchase in the first place, but after the purchase is made, the performance of the offering must surpass the expectations if you want the customer to be satisfied, come back and buy again, and recommend the business to their friends.
- One way to exceed customer expectations is to build highly efficient systems that deliver high-quality products in a fast and reliable manner.
- Another way is to have exceptional customer service
5. Finance are we making more money than we are spending?
“You’re simply using numbers to decide whether or not your business is operating the way you intended.”
- If not, then you need to reduce spending in one of the four parts mentioned previously or produce something of greater perceived value.
Being a great business mind is not about knowing all the answers. It’s about asking the right questions and having the right mental models. With this 5-part framework, you can ask the right questions and understand any business.
