Mental Model Posts ‘Reductionism’

The Story of Les Schwab and His Pride in Performance

Schwab Close

Photo by ocad123

Business often comes down to a core set of principles.  And the story of Les Schwab is no exception.  Keeping things in their simplest form (Reductionism) is what allows us to arrive at a core set of principles, but this is often difficult to do. Reductionism is a key aspect of understanding anything.  If we apply this concept to business, it always comes down to people.  It really comes down to decisions, but decisions are made by people.  And what I love about the Les Schwab story is that he so clearly understood the importance of this.  He loved people.  And if you’re in business, it really helps to love people – no matter how weird, how exotic, how aloof, or how awkward.  Read More »

How to Build an Empire: The Story of Harvey Firestone and His Tires

Firestone Tire

Photo by Desert Bug

In 1926, Harvey Firestone sat down to write Men and Rubber: The Story of Business.  It outlines his philosophy on how to succeed in business, and to this day it’s still the best and most comprehensive story on how to build a business from nothing.

Firestone’s philosophy is quite simple.  It says that honesty is the fundamental principle of any business.  It says that a business must exist for a reason, and the single reason for the existence of any business must be that it supplies a human need or want.  “To make money” is not a good enough reason to be in business.  If fact, if all you want is money, Firestone advises you to get out of business as quickly as you can, and go work for someone else.  You are destined to fail otherwise.

Firestone was clear that a business must exist to supply a human need or want, and this philosophy can be further explained through Maslow’s Hierarchy of Needs.  The primary need for all humans is physiological, followed by safety, love/belonging, esteem, and self-actualization.  Humans seek to satisfy needs in this order.  Firestone was supplying tires, or facilitating transportation.  Transportation, depending on its intended use, could fall under physiological needs (driving to the grocery store for food), safety needs (driving to the office for work), or love/belonging needs (driving to family).  Either way, Firestone was clearly satisfying human needs with his tires.

This logic applies today as well.  For example, Mark Zuckerberg’s reason for starting Facebook (“to meet girls”), while it hurts my heart, does provide for the love/belonging needs that all humans naturally have.

That’s the end of my Zuckerberg digression – now back to Firestone…   Read More »

But What If It Isn’t Cool?: The Story of Eric Ries and IMVU

IMVU

Photo by pixelsebi

Eric Ries, with a few others, started a company called IMVU in 2004.  As in IM (Instant Message) VU (view) – the novelty of the concept was the introduction of avatars to instant messaging.  He tells his story through the following five core principles of the Lean Startup Movement:

  1. Entrepreneurs are everywhere: in other words, the constraints to being an entrepreneur are minimal, if they exist at all.
  2. Entrepreneurship is management: or, a start-up requires a different set of management principles than a mature company does.
  3. Validated learning: One of Ries’ core concepts, basically stating that start-ups exist to learn how to build a sustainable business
  4. Build-Measure-Learn: a critical feedback loop that Ries developed – he advocates that all successful start-up processes should be geared to accelerate this feedback loop
  5. Innovation accounting: traditional accounting doesn’t properly measure what matters to him (and on this, I wholly agree with him), so he set up a different process to measure progress, set up milestones, and prioritize work.

Eric and his colleagues eventually grew IMVU to annual revenues of more than $50 million in 2011 (and some level of profitability, which he doesn’t disclose).  It’s important to note, however, that Ries is in no way shy about admitting the repeated mistakes that he and his team made at the outset.  You can read all about his adventure in The Lean Startup.  One of the more amusing issues was the unwillingness of test users to tell their friends about it.  After all, it was new to them, and they weren’t quite sure whether or not it was cool.  And as well all know, it’s totes obvi that you gotta protect your rep.

Of course, there is another way to look at what Eric did to create his organization.  Eric’s success can also be deciphered through mental models…   Read More »

Why Cute Ideas Die: The Execution Factory

Execution Factory

Photo by Stuck in Customs

Mental Models Used: , ,

There’s this myth that all you need in business is a good idea and you’re going to be rich.  I’ve never seen it work out that way.  Derek Sivers (formerly of CD Baby) made this a lot easier to understand when he explained his version of the difference between ideas and execution in this blog post.  He basically says the value isn’t in the idea itself, but in the execution of the idea.  And in my experience, he’s right.  Read More »