## B Side Thoughts ![[Photos/Pasted image 20210106143601.png]] ## Risk/Reward Risk/Reward Ratios - and its BFF cost-benefit analysis are kind of foundational to evaluating whether or not any particular scenario is worth pursuing. The bigger the Reward, the bigger the Risk. Nine out of ten times the goal of the entrepreneur is to reduce risk, and we are going to walk through two common theories surrounding this. The first one is the Barbell strategy - popularized by Nassim Taleb. This operates on putting 90% of your assets into a zero or ultra low-risk option. I speak of zero risk in that it will go to zero, which we will call ruinous - this might mean you could lose all your wealth in the project or a ruinous decision at the grand scale would lose all of your wealth and potentially your life, either would be ruinous. The second option is traditional investing, and it’s looking for options that have low chances of ruinous scenarios, but that still have them but they will provide a much more stable return rate. So, you could think of this option as a job in that the job at the time will tie you to a single source of income. That - in turn - ties you into stock investments or some other long term portfolio built on the idea that you have a constant stream of income, and if you’re putting your assets into Stock, while it appears to be very low risk over the long term - at least in the US - it is in fact very high risk in that systematic shock like Coronavirus - or a recession a decade prior - could radically shift your balance and cause ruinous scenarios that can occur. So, the idea of the Barbell is to coordinate your risk and the subsequent rewards until the point in time at which you are able to reap the reward - in the process, reducing your overall risk exposure, where 10% of your assets might have aa 60% risk of ruin instead of 95% of your assets having a 3% risk of ruin. This concept of understanding Risk/Reward ratios is fundamentally vital to evaluating both the scenarios that you’re planning and to evaluate the cost-benefit analysis of pursuing any one scenario. #### Asymmetric Risk/Return: Different things have differing risk/return ratios. The best ones have returns that are orders of magnitude larger than the risk. A classic example of this is companies, like startups where your rewards are likely 100-1000 times your investment if it succeeds. That is an asymmetric reward where you need to only win once. Look for and play games with low risk and high reward, those are the things where you risk the least and you stand to gain the most - this may seem very simple, but it’s actually very complicated in application. If you want to avoid these ruinous decisions and avoid ruinous scenarios, then splitting your assets so that 90% of the assets are entirely protected, and 10% is placed into much higher risk, much higher reward endeavors such as entrepreneurship. **** #### Cost-Benefit Analysis Cost-benefit analysis is the activity in evaluating or analyzing the costs and benefits or the risks and rewards in any decision or in pursuing a particular scenario. Cost-Benefit Analysis is a core step in every research phase. During cost-benefit analysis, we will be forced to create a model that explains why we believe this is the right course of action for ourselves as compared to the other ways we can deploy the given resources. When doing Cost-Benefit Analysis. It is important to take a few things into consideration: 1. Choose and record the decision framework you'll use for final evaluation. 2. Research your costs for each potential option (Real and Opportunity costs). 3. Consider the benefits associated with potential success/failure scenarios for each option. 4. Consider the likelihood of success/failure for each option. 5. Use your chosen decision framework to pick the best option. ## Management, Leadership, Coaching, Recruiting - Scaling Your Time With Team Building One of the most important things to understand about effective leadership is that the leadership style has to be effective for the organization as a whole, which means that the organizational structure has to match the leader. So, an organization where everyone operates very independently, the Leadership style might take the form of similarities to the Marines - in the way that they have their goal in mind, but they are largely in the blur of the haze of the battlefield. When you can no longer contact your commander and are awaiting orders, they have complete autonomy to move ahead. Speaking from a Big Five personality set, a Leader must be low in Neuroticism, the reduced output of negative emotion can be helpful - as well as the output of positive emotions. As someone who gets too happy, or too sad, or expresses emotion too deeply won’t be able to make the decisions that are required of them. There are three types of authorities: * Best in Class * Simplifier * Motivator I am going to use myself as an example. From a podcasting perspective, I am 100% a simplifier, that is the core expertise I have in Call for Content, and that is why my team follows me as an entrepreneur. I am an operator in the fact that my skill set is in the development and the management of processes is a growing concern. To break down that growing concern, an existing business, it has to be up, running and stable. The management of the processes means that it has to have repeatable systems in play, and my job is to develop those systems so that it can scale more effectively - I do that with Technology-enabled operations. This all lends my authority to my leadership. All of this combined with the rest of my expertise creates the reason why I am a suitable leader. I am ultra-low in extraversion and neuroticism, I have very low levels of emotion overall, and that is beneficial to me. The only emotion that I really do show is aggravation in varying degrees. So, if things feel off to me in business, if I get that itch of aggravation, I’ve got to stretch it. That makes me a very good problem solver, and that’s one of my core skill sets, as a person and as a leader. If you look at my openness, you will see that I score in the 98-99th percentile top of the charts. I am super creative and open to new ideas. I do look at things in the same direction as other people. That is another one of my benefits as a leader. I have a middle of the road Conscientiousness, which is actually a big downside for me. I am generally the least reliable on the team, and I make that well known about myself. So, I expect better from the people around me. I know my weaknesses, and I hire people with higher levels of Conscientiousness and higher levels of the ability to follow. It is important for an Entrepreneur to know where their strengths and weaknesses lie in order to build around yourself to be strong. I know my weakest areas are in my personal skills because I am not an agreeable guy. I score at the lowest end of agreeableness possible and I know that, and I know that I am not Conscientious in the sense that I am not good at following - or as good at following through as some other people. I follow through on some things when I have the itch, I don’t stop if I don’t want to. So, the combination of that personality profile, I’m a contrarian, I’m super creative - which is essential for logical thinking - there’s a lot of nature in there. I come from generations of Entrepreneurs, likely for that reason it is that everyone in my family is kind of an asshole who doesn’t like to listen to other people. But we are all very smart, when we see the opportunity, we take it. We spoke about roles previously, and this ties in with this as well. I hire people who are fitting to certain roles in comparison to the differentiation and similarities in my personality that they may require in order to do the specified job. **John Maxwell: Developing the Leader in You - Knowledge Project Notes** What surprised you the most during the time you spent teaching? * Maxwell says that one of the biggest surprises for him was that most people do not consider themselves to be leaders, and think of leadership as a title or position. * Leadership is influence, and every person has the capacity to influence. What are the five levels of leadership/influence? * Leadership is a verb, not a noun. * Level 1: Position * This refers to when you are in a position of leadership, you have been given that title. * 80% of people never get off of level one due to no one having made them aware that there are other levels. * Level 2: Permission * This level is all about relationships, this involves when the people that you lead give you permission to lead because there is a mutual like. * Level 3: Production * This is where the credibility of leadership begins. * If you have not been successful yourself, how can you make others successful? * This level is all about being personally successful * Level 4: Work with people * If you want to compound influence, time, money, energy...etc, you have to be able to do it with others and for others. * Level 5: Pinnacle * This is when you have been doing these steps for so long that you become larger than life, a natural leadership figure., * Maxwell teaches these levels to help people be aware that no matter where you are it is a journey, and can still improve upon the level they are in. Is it easy for someone to gain awareness of where they fall in this level of leadership hierarchy? * Maxwell says that he wrote a book in these levels of leadership because he believed that there was a lack of awareness when it came to the levels of leadership. * They were not aware that leadership requires continuous growth. * You can't grow yourself, unless you know yourself. * This system is used to point out flaws and places you can improve upon through pointing things out you may not be aware of. You said that if your level of influence is higher with the followers than the leaders, you are in trouble - can you expand on that? * Firstly, most leaders never develop other leaders. They just have followers. * If you are trying to lead and develop leaders, they will be much less likely to follow, and instead would want to put someone else in that place. ‘ * If you invest in people, they will help you keep your doors open, and you won’t have to do it yourself. * Those who are closest to you determine your degree of success. How did you define success when you said you were not as successful as you wanted to be at 40? * Maxwell believes every person has a dream, or an idea, and you are not sure how it will end up. But when he was 40, and he looked back, he knew he worked hard, and people outside would have considered him to be successful, but he did not believe he achieved his potential. * He did some thinking and realized that he had not been bettering his team, and this meant that the company would not get any better either. Have you had any other insights as you have gotten older and how you determine success, satisfaction or happiness? * Maxwell says when he started out it was all about building his career, but ended up realizing that success and significance is not the same thing. Success is about his career, and how he takes care of his family, but soon realized there is a higher level of living, and that is living a life significance, and how you are adding value to others life, and how you treat others. * He says he has met many people that were successful, but were unhappy, but people that focused on significance were generally more happy. What do successful people do that others do not? What do successful people avoid that others do not? * Successful people do 4 things very well: * 1 - Highly successful people are good with people. They are good with relationship building. People won’t go along with you if they can’t get along with you. * 2 -They have the ability to form teams and get people on these teams. They then equipped and mobilized them, as well as empowered them. * 3 - Successful people have an attitude - a tenacity to overcome adversity. * 4 - Successful people influence others and know how to lead. Is it accurate to say that all of the habits of successful people are based on choice? * Maxwell says that what he finds most exciting about his writing is that if someone chooses to implement these steps, they will have improvement. Is confidence something we are born with or is it something one acquires? And if we acquire it, how do we do so? * Some people may have a natural leaning towards being confident, and others may have to work harder on achieving a greater level of confidence. * Maxwell believes that no matter the gift or talent, you still need to hone and improve upon it, confidence is no different. * We all need to be committed to a process to improve our lives. Leaders are not made in a day, they are made daily. * If you don’t back up confidence with success, it becomes shallow and hollow. * Leadership culture is all about behaviour. Vision is what you see for yourself in the future, but culture is who you are now. * In confidence, developing a leadership culture where people have an opportunity to come to the leadership table, and get into a leadership environment, it is at that table where they get emboldened to practice leadership and develop leadership skills. * It is important to replace confidence given by affirmation, with confidence given by accomplishment. * You need to be able to lead yourself well before thinking about leading others. What are some mistakes we make when we are trying to lead ourselves that get in our own way? * Maxwell says that most of his self-leadership sabotages came from the fact that he was unaware. * It is important for others to point out your blind spots, because they are blind spots. You are unaware of them. * One of the greatest things you can do for someone is to help them with their blind spots. * Max de Pree said that “the first responsibility of the leader is to define reality.” * Establishing reality allows you to have a foundation to build leadership on. * If you want to reach your dreams, make sure your foundation is solid and built. Why do you think people so rarely point out other peoples blind spots? * Maxwell thinks that people don’t speak into other people's lives because you don’t want them to be hurt, or you want people to like you. * It is important to help people, not try to keep everyone happy. What have you uncovered about learning? * Learning, unlearning and relearning is essential to a person's success. * There is a few important parts to this process: * Do testing - Test ideas and see if they will work. * Experience failure - If you test a lot of new things, you are bound to fail at some things. Failure is not the opposite of success. Failure and success walk hand in hand. You need to fail to succeed. * Learn - Failure has the value of learning. * Improve - The value of learning is to improve. * Reenter - After improving and getting better, reenter, and then repeat the cycle. * Too many people are goal oriented instead of growth oriented. * If you’re goal oriented there is a finish line, but if you are growth oriented, there is no finish line at all. * It is important to grow yourself and your people, not just lead them. You mentioned dark times, but things look like they come so easy for you, what did you do to persevere and overcome? * If you are seeing someone as having things come easy for them, you just have not seen the whole picture. You just see the result. * Maxwell teaches people that everything worthwhile is uphill. * The greatest way to build tenacity in a person's life is to let them know if the beginning things are not easy. * Success begins with the mindset that everything worthwhile is uphill and difficult, and it is important to teach people the value of failure and mistakes and humanness. * Maxwell says that all he learned during his dark times developed his character. He believes that if you do not go through a dark time, you may lack character. How do you go through learning from your past experiences? Do you have a process? * Maxwell believes that evaluated experience is the best teacher. Pull yourself away and consider what did the experience teach you, what did you learn. * Evaluation brings an awareness to oneself. Anything that awakens your awareness and brings it to light is beneficial towards development. * Reflection turns experience into insight. What does a fulfilled life look like to you? * Maxwell believes it is possible to have a fulfilled life. * Maxwell believes a fulfilled life is a life lived for others. * The key to being a good communicator is to get over yourself. Remove how you think people will perceive you, this limits your communication skills. So, if you want to live a fulfilled life, get over yourself. * Valuing people is core to living a fulfilled life.