Daniel's notes on Personal Mba 10th Anniversary Edition

A successful business, roughly defined, provides (1) something of value that (2) other people want or need at (3) . price they're willing to pay, in a way that (4) satisfies the customers needs and expectations so that (5) the business brings in sufficient profit to make it worthwhile for the owners to continue operation.

At the core, every business is a collection of five Interdependent processes, each of which flows into the next: 1. Value Creation-discovering what people need or want, then re-ating it. 2. Marketing--attracting attention and building demand for what you've created. 3. Sales- turning prospective customers into paying customers. 4. Value Delivery-giving your customers what you've promised and ensuring that they're satisfied. 5. Finance- bringing in enough money to keep going and make your effort worthwhile.

In practice, I prefer Clayton Alderfer's version of Maslow's hierarchy, which he called "ERG theory", people seek existence, relatedness, and growth, in that order, When people have what they need to survive, they move on to making friends and finding mates, When they're vatisfied with their relationships, they focus on doing things they enjoy and impros ing their skills in things that interest them. First existence, then reized ness, then growth.

All human beings have four core human drives: 1- The drive to Acquire 2- The drive to Bond 3- The drive to Learn 4- The drive to Defend 5- The drive to Feel (Bonus) The better you articulate how your offer satisfies one or more of these drives, the more attractive your offer will become.

Form of Value #1: Product Providing value in Product form is valuable because Products can be Duplicated. This book was written only once, but individual copies can be created and delivered millions of times to readers around the world. As a result, products tend to Scale better than other forms of value, since they can be Duplicated and/or Multiplied

Form of Value #3. Shared Resource A Shared Resource is a durable asset that can be used by many people. Shared Resources allow you to create the asset once, then charge your customers for its use. In order to create a successful Shared Resource, you must: 1. Create an asset people want to have access to. 2. Serve as many users as you can without affecting the quality of each user's experience. 3. Charge enough to maintain and improve the Shared Resource over time.

Form of Value #8: Audience Aggregation Audience Aggregation revolves around collecting the attention of a group of people with similar characteristics, then selling access to that audience to a third party. In order to provide value via Audience Aggregation, you must: 1. Identify a group of people with common characteristics or interests. 2. Create and maintain some way of attracting that group's attention. 3. Find third parties who are interested in buying the attention of that audience. 4. Sell access to that audience without alienating the audience itself.

The most valuable offers do one or more of the following: • Satisfy one or more of the prospect's Core Human Drives. • Offer an attractive and easy-to-visualize End Result. • Command the highest Hassle Premium by reducing end-user involvement as much as possible. • Satisfy the prospect's desire for Social Status by providing Status Signals that help them look good in the eyes of other people.

Bundling and Unbundling Bundling occurs when you combine multiple smaller offers into a single large offer. An example of Bundling occurs in the mobile phone industry, where a mobile phone (a physical Product) is bundled with a monthly service plan (a Subscription) for a single price. Similarly, buy-one-get-one-free offers at the grocery store are a form of Bundling. Unbundling is taking one offer and splitting it up into multiple offers. A good example of Unbundling is selling downloads of a single song instead of the entire album. Customers may not be willing to pay $10 for the album, but they might be willing to pay a dollar or two for the songs they like. Unbundling the album into individual units opens the way to sales that wouldn't otherwise happen.

The Iteration Cycle is a process you can use to make anything better over time. Iteration relies on the scientific method, which has five general steps: 1. Observe what's happening and identify something that you'd like to improve. 2. Design an experiment and identify indicators that will tell you whether or not the prospective change is an improvement. 3. Conduct the experiment and collect data. 4. Evaluate the results of the experiment. 5. Accept or reject the change as an improvement.

The faster you move through the Iteration Cycle, the better your offering will become- -that's Iteration Velocity. If you're good, you can move through the process several times each day. 'The key is to keep each iteration small, clear, and quick, basing each iteration on what you learned via previous iterations.

There are nine common Economic Values that people consider when evaluating potential purchase. They are: 1. Efficacy- how well does it work? 2. Speed--how soon does it work? 3. Reliability-can I depend on it to do what I want? 4. Ease of use- how much effort does it require? 5. Flexibility-how many things does it do? B. Status- how does this affect the way others perceive me? 7. Aesthetic appeal- how attractive or otherwise aesthetically pleasing is it? 8. Emotion--how does it make me feel? 9. Cost_ how much do I have to give up to get it?

Shadow Testing is the process of selling an offering before it exists. As long as you're up front with your potential customers that the offering is still in development, Shadow Testing is a very useful strategy you can use to test your Critical Assumptions with real customers.