Your Next Five Moves: Master the Art of Business Strategy

by Patrick Bet-David

The software may be cool, but have you calculated how long it will take you to pay back your investment? Have you taken the time to figure out the true cost of a new hire (salary and benefits are only part of the equation) as well as the expected revenue bump that person will create?

Having three different proposals/cost estimates helps stretch the dollar. Having three proposals gives you options for maximizing the value of whatever action you take. And don’t tell me that we have only one option. If you think that, you’ll inflate rather than stretch your dollars. Next, figure out your time frame. For instance, if you spend $100,000, you can get something done in six months, but if you spend $200,000, you can finish it in three months. Then you can ask yourself: Is it worth spending twice the money to get the project done in half the time?

After you have calculated the cost and time, figure out the return. Let’s say a project that costs $200,000 and will take a year to complete will lower your risk of losing clients by 8 percent. You are currently writing 30,000 orders a year. Thirty thousand contracts times 8 percent equals 2,400 contracts. If each contract is worth $200, the total return is $480,000.

It does mean that you can’t be lazy with the numbers and you need to think about several different outcomes, which is how you should always think. ITR is a critical skill and one that you’ll use time and time again.

Every master, both in chess and in business, learns more from studying the moves that led to defeat than the ones that led to victory.

The people I know who are expert processors have very different personalities and business strategies, but they share the following eight traits: 1. They ask lots of questions. Having more data leads to making better assumptions. What caused this? How can we solve it? How can we prevent it from happening again? 2. They don’t care about being right or wrong. They’re interested only in the truth. Great processors want to handle the situation and move on. If someone else has a better idea, great. Ego doesn’t become an obstacle to making the right decision. 3. They don’t make excuses. Wasting time and effort on why things went wrong isn’t their style. 4. They like to be challenged. Their priority is handling a situation quickly and effectively, and if other people have a solution—even if it differs from their own—they want to hear it. They relish people who cause them to consider alternatives or defend their position. 5. They’re curious. You can’t solve problems without knowledge. Processors are always learning more about their business and how it works. They love critical details as much as big ideas. 6. They prevent more problems than they solve. People who are really good at processing issues are also really good at spotting yellow flags before they turn red. 7. They make great negotiators. Curious problem solvers use logic to find a win for all parties involved. 8. They’re more interested in permanently solving a problem than putting a Band-Aid on it.

It’s not a coincidence that great processors who possess these qualities become leaders. As they build a track record of processing issues logically and efficiently and meet people’s needs, they earn the trust of everyone who works with them. Expert processors don’t fear issues. They welcome them and treat them like a game.

Your mindset is everything. When you start viewing a crisis as an opportunity, you are winning the game.

Make processing best practices part of your company culture, and this ability will seep into the heads of your people, who will get better and better at using it. It will improve the bottom line, sure, but it will also produce better leaders and better human beings. All the world’s problems are issues to be processed, and though you may not be in a position to solve world hunger, you can solve issues in the world in which you live and work.

Burning platforms: Hot problems that you have to deal with immediately Golden gates: Bright opportunities that you need to enter quickly

Once you’ve identified the real issues, start asking “Why?” Keep doing so until you reach a point where you can’t ask “Why?” anymore—or when you’re forced to repeat an explanation you’ve already discovered. That is your deepest why and the real cause of your problem. For example: We lost our top customer. Why? A competing product costs less. Why? Because it has fewer features. Why? Because most customers don’t need all of the features in our product. Aha! Now you’ve identified one of the main reasons why you didn’t hit your numbers: because your product doesn’t fit your customer’s need. Solving the problem, then, becomes relatively easy: you need to offer a less expensive version of the product that has fewer features.

great processors look for causes—because causes lead to solutions.

Offense. The opportunity to make money or advance your business or career. The choices here often revolve around growth, expansion, marketing, and sales. 2. Defense. The opportunity to solve a problem, to stop losing money, or to stop moving backward in some way. The choices here frequently involve legal matters such as compliance and protection against competitors or market corrections.

Playing offense involves looking for opportunities to make money or advance growth, expansion, marketing, and sales. Playing defense involves solving a problem, preventing the loss of money, or going backward. Issues such as compliance, legal, and financial hedging fall into the defense category.

Which of those steps required a hands-on method, and which could be run automatically by technology that we could buy or create? We talked about what functions had to be performed by human beings and which ones could be handled by computers.

Every issue you face is going to have its own set of challenges. Solving them is not just a matter of “doing the math.” It’s knowing how to think through an issue so you know which numbers to plug in. ITR is useful only when you make the right assumptions.

each stage of the process, we kept digging to see what other processes we could speed up. With each new finding, the cost of the project increased. The good news was that our processing speed more than tripled, and the long-term savings far exceeded the final cost.

Are you seeing what it takes to be a great decision maker? It’s both art and science. The methodology gives you structure. ITR gives you a specific formula. Your projections give you the numbers to plug into the formula. Staying curious means always looking to improve and tweaking your projections. Your mind gives you the ability to put it all together and make the right decision.

thinking big alone wouldn’t get the job done. I needed the right team to be able to make scaling my business become a reality.

Instead of being selfish and looking to see what I could take from other people, I learned to focus on what I could give them—and I improved my own worth in the process. That paradigm shift—that one decision—changed my life for the better. I stopped asking how other people could make my life better, and instead, I asked: How can I make everybody else’s life better just by the benefits that I offer them?

Think about these three questions: 1. What benefits are you currently offering to others? 2. In what way do people improve by associating with you? 3. How many lives have you changed positively in the past year?

Once you have a track record of people you have enriched, you can start attracting people to your team. Think about who you need to help you, not just to do well today but also to achieve your deeper, long-term objectives. Take care of them, and they’ll back you up.

Questions That People Will Ask (and You Must Answer) When They Are Deciding to Work for You 1. What makes your company distinct from your competition? 2. What separates your leadership from that of others? 3. Do you have a code of honor? Do you embody it? 4. What benefits program will they get from being associated with you? 5. Do people constantly see you growing? Can they tell that you are evolving?

In a Mob family, there is a position specifically designed to provide wise counsel: the consigliere. The same holds true in the business world. Warren Buffett may get the headlines, but Charlie Munger is indispensable to his success. Steve Jobs had Steve Wozniak. Bill Gates had Paul Allen. Mark Zuckerberg had Sean Parker to challenge him to expand the vision and then Sheryl Sandberg to execute that vision.

Insecure leaders surround themselves with “yes people.” Effective leaders surround themselves with people who challenge them. They also find and hire people who are much smarter than they are—especially in areas in which they are weak.

Even though he technically works for me, he wouldn’t hesitate to hold me to the higher standard we had set for the content and the brand. Your future consigliere is likely someone you already know. The key thing to look for is similar values but different temperaments. If you’re impatient and hotheaded, you want someone who is calm and deliberate. If you’re an introvert, find an extrovert. If your inclination is to be judgmental and unforgiving, find someone who is empathetic and accepting. Regardless of temperament, it’s important for him or her to be calm and in control of his or her emotions. Both in business and in life, I’m very choosy about whom I allow into my inner circle.

A Trusted Adviser 1. Is skilled at processing issues, able to think many moves ahead 2. Has values similar to yours but a different temperament (is strong where you are weak) 3. Is calm under pressure 4. Is not afraid to challenge you and point out your blind spots 5. Is loyal, with no personal agenda

If you’re careful to hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing. Most companies spend endless time and money writing and enforcing HR policies to deal with problems the other 3% might cause. Instead, we tried really hard to not hire those people, and we let them go if it turned out we’d made a hiring mistake.

What You Must Recognize in Order to Retain Talent People want to be compensated properly for their efforts. Outstanding performers want to participate in the success of the company. People want to know that they’re part of an organization that’s making an impact. People want to be recognized in front of their peers for the work that they do. People want to know that there’s an opportunity for them to grow within the company. People want to be judged based on a clear set of expectations given to them without the goalposts constantly changing.

Without shared values, you can’t sustain what you’ve built. It’s one thing to know who you want to be; it’s another thing to mold an entire organization to a set of core beliefs that will remain in place with or without you.

grabbed a pen and piece of paper and said, “Let’s make a list of values and principles that we want to live by. Let’s see how many we come up with.”

our family has a culture. We stand for something. We have principles along with clear values that we repeat over and over. What We Stand For as a Family Lead—because it will be necessary in every situation you face Respect—because everyone has something to teach you Improve—because that’s how you know everything will work out Love—because everyone is dealing with a challenge in life

Our Core Values Courage. Not being afraid to challenge others Wisdom. Making the right choices Tolerance. Knowing that we’re dealing with human beings, who change all the time Understanding. Appreciating and respecting that everyone has different ideas and values

“What are three things you did as a parent that worked?” Her first two answers were the common ones: love your children, and give them plenty of attention. The last one was about credibility. She said, “If you threaten to punish them or take something away from them, do it or else your word loses value.”

“radical transparency.” As part of this principle, people are obligated to call each other out when they believe someone is making a mistake or crossing a line.

Being radically transparent was a nonnegotiable for me. I told Alice I wanted to be different. I’m extremely comfortable being radically transparent; it’s being normal that I can’t stand.

we decided that we needed to find the balance of respect and honesty—while staying committed to being radically transparent.

As I was growing up, I can’t tell you how many times my dad said, “Never be afraid of the truth.” It stuck with me, and I instilled that value in our company. I had studied many other organizations and felt strongly that being direct and painfully truthful were important.

My Business Principles Never compromise our nonnegotiables. Micromanage until there is trust. What brought us here won’t take us to the next level. No one has 100 percent job security, including the founder or CEO. Create positive peer pressure by challenging one another. Beat your prior best. Treat the company’s money like it’s your own. Be radically open-minded but not easily persuaded. Fight any temptation to lower expectations and standards. Create an environment where our team is taken care of financially and professionally.

We need friction in all areas of our lives. It’s healthy, and it stimulates growth, creativity, and learning.

Whether in life or business, it takes both courage and skill to be direct with people. Are you willing to go there in life?

If your primary goal is wanting to be loved by everyone, you’re in the wrong racket. It takes courage to have difficult conversations. If you believe strongly enough in your principles, you’ll find the courage needed to be radically transparent—and, as a result, incredibly effective.

Trust = Speed: The Power of Reliability The more you know each other, the more you know what each other’s thinking, the faster you can accelerate the trust and confidence in one another when you get on the field. —Tom Brady

Whether you sell a product or a service, speed is required to make it, to deliver it, and to go from the sale to a deposit in your bank account. Time is money. How quickly you do everything impacts every part of your business.

the reason to develop trusting relationships is to speed up every element of conducting business.

When you touch people’s hearts, they will move mountains for you. And to touch their hearts, you have to take the time to understand them and know their deepest beliefs and desires.

What you want to know is what makes them tick. I do everything I can to get to know my team members. Mainly, I ask a lot of questions to get to the root of who they are. In this way, I avoid jumping to false conclusions about them and can understand what drives them, what their goals are, and how they like to work. When you push people with questions, you may touch a raw nerve. That’s fine. This is how you get to know them. When they become emotional, they reveal the parts of themselves that they might be hiding. I can’t lead people if I don’t know who they are. I need to know their upbringing and what influenced them as they were growing up.

ones that poke and probe and encourage people to reveal a deeper part of themselves. You’ve got to ask dig-deep questions that help you discover who a person really is. That knowledge is gold, because it will allow you to think several moves ahead in terms of how the person fits into your game plan. It’s what will help you form a productive, long-lasting relationship. In doing so, the trust you develop grows stronger, and speed follows.

Questions to Ask Yourself to Reach Each Individual 1. What makes this person tick? 2. How does this person want to be loved? 3. What makes this person feel appreciated? 4. What’s the most effective way to show that I care? 5. What action will best “land” on this person?

VISION Most people are not visionaries. It doesn’t come naturally to think ahead when they’re busy putting out fires. But they need to hear you talk about vision and the future. Great leaders are always selling the future of where the team is going and what things are going to happen. They talk about what’s next. Great leaders say things such as “Our greatest days are ahead of us.” Employees need to know that their leader is like a grand master who is guiding them in the right direction. You need to paint pictures for people about the future. Especially when they’re in the grind, you have to tap into their senses and create a picture of what they are working for.