How to Master The Discipline of Product Management (Not the job of Product Manager)

Evergreen is a weekly collection of links to the best learning resources in business, collected by a group of managers, founders, and investors. We contribute resources about one topic each week, which are synthesized and shared in this Weekly Edition. The aim is to learn more efficiently through increased context and focus. Join here to receive the next Edition of Evergreen Business Weekly.

Remember, these are designed to feel like short books, you’re meant to meander and spend ~3 hours on this topic this week. Save some of these links and read them throughout the week. Immerse yourself in this topic and leave the week smarter than you started it!


The Discipline of Product Management

This Evergreen collection of wisdom is not about being a product manager. It is about how to manage a product. How to craft something of value for customers and the artful decision-making required to do that successfully. What you’re about to read isn’t about a role — we will explore the Discipline of Product Management. Something that everyone involved in business can learn and benefit from. This is about understanding the skills necessary to craft a compelling product. (‘Product’ here is inclusive of services, goods, and experiences — anything produced by a company for sale.)

Here’s what we’ll talk about in the following sections:

  • Understanding the customers’ contextualization of your product
  • How to prioritize development of features
  • Communicating and creating unity around a vision

These are skills that are important in any business, and applicable for creating any product. Study and internalize them, and see that anyone whose hands or minds touch the product in your business are fluent in them as well.

The Customer’s Perspective of a Product

Your unique vision of a product is not what will determine its success. Quality products are conceived of by understanding customer’s contexts, and created to enable the customer to accomplish something. I’ve never heard that put better than it was by Kathy Sierra early in her talk, Building Badass Users. (Which I can’t embed for some stupid privacy setting reason.)

Sorry, guess you’ll just have to click through on this one. But it’s worth it!

Watching even the first 7 minutes will give you a great new way to look at your product. Thanks to Greg Drach for the incredible recommendation! Here’s a transcription of the most relevant piece about customer context:

We’re all just a subset of something bigger — the user’s bigger context — the thing they really do care about. The thing that’s meaningful to them. The reason they’re using your product in the first place. It’s not just because they love your product.
[…]
They [customers] don’t want us for the tool, they want us for the thing they’re using the tool to do. That bigger context. We make the tool. Users want the bigger context.
Sustained success lives in the context, not in our tool.
So we should always be asking — what are we a subset of?
[…]
People don’t want to be amazing at our tool. They want to be amazing at the context. It’s not that customers say “I’m amazing at this camera.” It’s that they say “I’m an amazing photographer.”

Crafting the perfect tool is impossible without understanding the context of what a Customer is trying to accomplish. If we don’t enable them to accomplish something, our tool (the product) is of no use.

Asking the Right Questions (and Getting Fat)

To grasp the context, we need to ask a different set of questions. This concept is laid out in the framework from Clayton Christensen (of Harvard Business School), “Jobs to be done

This article, Clayten Christensen’s Milkshake Marketing, is a great application of that formula. It shows the most important question to ask:

The jobs-to-be-done point of view causes you to crawl into the skin of your customer and go with her as she goes about her day, always asking the question as she does something: Why did she do it that way?

In the post, the question is: “Why are 40% of Milkshakes sold by McDonald’s sold first thing in the morning?” The solution came by asking ‘what job are they hiring the milkshake to do?’

If you’re curious about the horrifying reasons that some large percentage of Americans buy milkshakes every morning — you’ll have to check it out. It’s a short, valuable read about how to frame your thinking about the Customer’s Context, and how to discover what features of your product are important.

There’s always an Opportunity Cost

Some context is completely obvious, and universal. As Nathan Bashaw puts it in his excellent post on Medium, Navigating the Product Maze:

The core purpose of any product is to fill some human need. That much is clear. But what’s less obvious is that human needs are fractal: the closer you look, the more needs you find.

The post from Bashaw is unique amongst all the research that I read this week, in that it specifically mentioned Trade-offs, which is a crucial concept to understand in crafting products:

Every time you say “yes” to a new feature, you’re saying “no” to a million others — whether you realize it or not. That’s why I find it useful to think about developing a product in terms of “making changes” rather than “adding features”. It’s like yin and yang: the stuff you add is visible, and how this constrains you and changes the experience is invisible, but they are just two sides of the same coin: impossible to separate.

Pretending that there’s no trade-off in each decision you make is doing yourself a disservice that will ultimately be reflected in the quality of your final product. There’s always a trade-off.

Take 3 minutes to read Navigating the Product Maze, by my friend Nathan Bashaw. It’s the perfect transition into our next section…

How to Make the Hard Choices

A product is the result of all of the decisions that went into it’s creation. What’s unseen are the invisible possibilities of a product, what sacrifices were made in order to create this specific set of advantages. So how do we know which trade-offs to make? What gets left behind in favor of other features or benefits of a product? This is the process of Prioritization.

There are many frameworks that can be used to assess prioritization, and we’ll take a look at a couple of great ones that were suggested this week.

Starting with the Basics

Prioritizing Product Features for Beginners, suggested by Aaron Wolfson, is a good place to start, even if you think you know what’s up. There are a set of possible demands to optimize for, along with pros, cons, and recommendations for how to tackle each kind of prioritization.

Gamechangers, Showstoppers, and Distractions

This post about The Three Bucket Model, by Slava Akhmechet, is the simplest framework for determining whether a feature should be developed. Here’s an excerpt from the post that explains the framework:

A gamechanger. People will want to buy your product because of this feature.
A showstopper. People won’t buy your product if you’re missing this feature, but adding it won’t generate demand.
A distraction. This feature will make no measurable impact on adoption.
Empirically, successful products have one to three gamechanging features, dozens of features that neutralize showstoppers, and very few features that are distractions. Your job is to build an intuition about your space to be able to tell these categories apart.

The obvious challenge is knowing ahead of time which features fall into various categories. Clearly this is not a trivial challenge, but those shortcomings can be addressed to strengthen the conclusions.

A ‘Checklist’ of Questions to Triage Feature Ideas

The most thorough prioritization framework comes from a post from Intercom, called Rarely Say Yes to Feature Requests. This post is centered around a list of questions to ask as you contemplate an addition to your product.

My favorite question of the ten is “Will Everyone Benefit from it?” because it’s the antidote to being distracted by a vocal minority in your customer base:

Beware the “fre-cently” bias. You assume the things you hear frequently or recently should without doubt be road-mapped. It’s a natural reaction caused by your inbuilt empathy for customers. It’s not nice to tell people “no” repeatedly and hear the same responses over and over, so when possible “fre-cently” is used as an excuse to reward yourself. “Sure we’ll build that, I’ve heard it twice today already,” says the founder with 4,800 daily active users, to the unbridled joy of 0.0625% of her customer base.
The danger of the fre-cently bias is that it gives you the illusion of analysis, the sense that you’ve done your homework and this is a rational conclusion you’ve come to. In reality you’ve made a lazy decision to satisfy the whims of a small sample of vocal users without taking a second to investigate how many people really want or need the feature.

While the examples are all based around software development, because of Intercom’s product, the questions themselves are extensible to any business, and any challenging problem about product development. Print this list out, put it on your wall, and give copies to everyone on your team. Use this framework, in conjunction with the others (and with your trade-offs in mind) to be sure you’re being efficient with your resources.

Thanks to Aaron Wolfson, Ben Eddy, and Visakan Veerasamy for recommending Intercom’s post!

Communicate Vision & Scale Discipline

It’s not enough for one person to have a sense of the product. Everyone involved in the process makes their own micro-decisions that will affect the quality of the final product, so communicating the vision of the product is crucial to scaling the discipline of Product Management throughout the team, and ensuring that everyone is working toward the exact same outcome.

Evergreen’s Collection on Internal Communication

To get the full lesson on Communication within a company, check out the previous Edition of Evergreen we did on Internal Communication. It’s overflowing with ways to get ideas across to your team, and mindsets important to communication.

Of course, I’m biased, but I think it’s a fantastic read.

How Amazon Communicates Product Vision

To get an idea of how this works in practice, Ian McAllister of Amazon gives us a detailed breakdown of how Product Managers communicate. They work backwards by using an internal press release with the details of the product. Importantly, this exercise forces the writer into the customer’s perspective, as we saw in the first section.

For new initiatives, a product manager typically starts by writing an internal press release announcing the finished product. The target audience for the press release is the new/updated product’s customers, which can be retail customers or internal users of a tool or technology. Internal press releases are centered around the customer problem, how current solutions (internal or external) fail, and how the new product will blow away existing solutions.

The details of how to write one of these ‘internal press releases’ are in the Quora Answer from McAllister. I love this approach and actually used it when conceiving of the original structure of Evergreen. It was helpful for me to crystalize my thoughts, even with no other audience than myself.

The Ultimate Product Communication: The Thesis

This is the very best piece that I could find about the specific challenge of communicating around creating a Product: How to Write a Product Thesis to Communicate Customer Needs, by my talented friend Jason Evanish.

Jason details the exact things your team needs to know, and how to communicate them without getting lost in the details or distractions. He picked up this method from Josh Elman:

Fortunately, when I joined KISSmetrics, Hiten and I got to learn from Josh Elman, who worked on product teams at Twitter, Facebook, and Linkedin. Josh taught me about the Thesis, which is a lightweight way to communicate all the essential details your product team needs.
Now that I’ve used the Thesis on dozens of projects and tweaked it based on what I found worked best, I’m going to teach you how to write your own thesis for the next feature or product you build.

Use the Thesis to guide your own thinking, and then to craft your communications, and you’ll be sure to have your whole team in stride and get a quality product produced smoothly.

One Last Thing…

Of course, the greatest thing ever put to paper on the subject of Product Management was penned by Ben Horowitz in a moment of pure frustration at the lack of definition of Product Management in his company. It still stands as an incredible resource on the perfect Product Management Mindset.

Read it five times: Good Product Manager, Bad Product Manager

As before, while some of those points sound specific to the role or to the industry, most of the knowledge is generalizable and valuable no matter what the challenge. Many thanks to Jason Evanish and Greg Drach for making sure that Ben’s incredible piece was included in this collection.


Thank you

Massive appreciation for all contributors to this Edition of Evergreen: Kenny Fraser, Ninan Thampy, Aaron Wolfson, Nathan Bashaw, Danny Sauter, Gregoire Clermont, Dan O’Gorman, Richard Muscat Azzopardi, Stephen Forbes, Jason Evanish, Teddy Zetterlund, Greg Drach, Nitya, and Ben Eddy.

Many thanks for being a part of this project! Not every suggestion is able to make it to the final edit, but every single suggestion is read and appreciated.

Never Enough

As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.

To share your thoughts, improvements or additions: Email or Twitter.


Follow me on Twitter for interesting questions and terrible jokes.
Join to receive our next Edition in your Inbox, or contribute your own ideas
Here’s all of the previous Editions of Evergreen.

Inspirations

This Edition of Evergreen, along with all of my others and the ideas behind this project, are inspired by the excellent content created online every day. To name a few that hold particular places in my heart:

If you liked this, check out previous Editions of Evergreen:
How to be a Great Employee:
How to Start a New Job: Handling Career Transitions like a Boss
How to Master the Discipline of Product Management
Building the Business:
How to get good business Ideas: Mental Alchemy of Ideation
Product/Market Fit: What it really means & How to Measure it
How to Failure-proof your business with Customer Development
How Strategy and Psychology Work Together to Perfect Pricing
The Most Important Equations in Business - CAC (Part 1)
The Simple Math Behind Every Profitable Business - CLV (Part 2)
How Psychology behind Word-of-Mouth Works
The Secret Core of Every Successful Business--Distribution
The Most Important Lessons in Sales
Strategy and Competitive Advantage:
How to Master the Craft of Strategy
Competitive Advantage: How to Build a Winning Business
The Power of Network Effects
How Cost Leadership Builds Powerful Businesses
Why the Best Brands Stand Out
Building and Managing a Team:
How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
Why Employee Onboarding is holding you back
How to Boost Employee Retention
Secrets to Perfecting Organizational Communication
How Performance Reviews can be Reinvented
How to Fire an Employee
I've also written about How & Why we started Evergreen:
How a prototype's failure created the next iteration
Mission & Method of Evergreen
Follow me on Twitter: @EricJorgenson
And Please... Join Evergreen.
Next Story — How Barriers to Entry Confused Me Terribly, and What I Figured Out So Far
Currently Reading - How Barriers to Entry Confused Me Terribly, and What I Figured Out So Far

How Barriers to Entry Confused Me Terribly, and What I Figured Out So Far

Evergreen is a Bi-weekly collection of links to the best learning resources in business, collected by a group of managers, founders, and investors. We contribute resources about one topic, which are synthesized and shared in this Collection. The goal is to learn more efficiently through increased context and focus.

Join here to receive the next Edition of Evergreen Business Weekly.

Remember, these are designed to feel like short books, you’re meant to meander and spend ~3 hours on this topic this week. Save some of these links and read them throughout the week. Immerse yourself in this topic and leave the week smarter than you started it!


Ok, this one might be a little different from all of the other Evergreen Collections, for a few reasons:

  1. Barriers to Entry are written about much less often than I anticipated.
  2. Where they are written about, they are often hopelessly conflated with Competitive Advantage.

This leaves me in a weird spot, which is to either A) pass on what I consider unhelpfully vague information, or B) try to create my own bumbling patchwork of ideas which may not make any sense. (which is not usually the purpose of this project.)

I’m going to go with option B.

Read on knowing that this is a little more personal speculation than these collections are normally, and maintain a healthy skepticism for the ideas. If you see something off, wrong, or plum dumb, please let me know so I can change it before anyone else reads it. (jk. kinda.)

Barriers to Entry vs. Competitive Advantage

I always thought (with no citation) that these were two distinct things. Competitive Advantage was a trait developed by a company to distance itself from rivals. Barrier to Entry was more like a trait inherent to an industry, which determined how hard it was for new firms to enter.

This definition holds up, according to Investopedia:

Barriers to entry are the existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business.

(It seems important to point out that it makes no distinction as to whether the obstacle is inherent to the industry or created by competitors)

Many of the resources (and very smart people) who are writing about this lumped Barriers to Entry and Competitive Advantage together as ‘business obstacles’, referring to the whole group as competitive advantage, moats, barriers, etc.

But I think there is a benefit to making a more precise attempt at a definition, because each has its own implications and deserves to be thought of independently.

A quick metaphor, because I like metaphors:

Barriers to Entry: What it takes to get a car, get entered into the race, get it to the start line, and get off the line when the light turns green.

Competitive Advantage: What it takes to win (or survive) the race.

Now, clearly you cannot win without first getting to the line and starting the race. However, to step away from the metaphor, there are many different ways to ‘win the race’ and that is the purpose of Strategy.

Evaluating how likely a business is to succeed requires understanding both the Barriers to Entry (how to get in the game, and what it will cost) as well as Competitive Advantage (how to win, or make your own kind of victory).

These are different processes, with different goals and different purposes.

A little more complicated now…

Barriers to Entry are obstacles to starting the business, and Competitive Advantages are obstacles to beating rival companies.

Ok, so they are different concepts. But there are some obstacles which fit well under both concepts. Network Effects, as an example, are constructed by a incumbent company. Yet they can be considered inherent to an industry as well (social networking will always have Network Effects.)

In fact, if we list out the possible Barriers to Entry, and the possible Competitive Advantages, we can see the almost all of them can be reasonably classified under both, depending on how you look at them.

Purely Competitive Advantages:

Purely Barriers to Entry:

  • Licensing and Legal Barriers
  • Capital Requirements

Reasonably considered a Competitive Advantage AND a Barrier to Entry:

  • Proprietary Technology/Process
  • Network Effects
  • Economies of Scale
  • Scarce Ownership or Access
  • Exclusive Supplier Agreements
  • Exclusive Distribution Agreements
  • Protected Intellectual Property

In this last category, each of these dynamics is an obstacle erected by a rival company. And each of them both makes it harder to start your business and harder to win against them.

Looking at this, it is no wonder Barriers to Entry and Competitive Advantage are so terribly conflated, they have about an 80% overlap in what concepts make them up.

Though these concepts can fit under both perspectives, it is a costly oversimplification to only think of them as a Competitive Advantage.

Understanding the strengths of competitors and the challenges of the industry are both distinct, crucial aspects of success.

Beyond that — evaluating Barriers to Entry can be a very helpful guide to disrupting a competitor (or an industry).

The Barrier-to-Entry Targeting System

For every advantage on that list, we can name a company that has been disrupted despite having that barrier up. In fact, some of them have been subverted on the very points where they thought they were most secure.

Taxi medallions have given Taxi operators security and steady profits for decades — Uber flaunted that regulatory barrier and undermined their entire business.

Craigslist destroyed the profitability of local newspapers by sidestepping the distribution obstacle that incumbents had benefitted from.

Knowing where the obstacles are and where competitors believe themselves to be safest makes for a very handy map for a disruptor. Attack the weak spots, and subvert the strengths by creating new angles to approach.

Subverting Barriers to Entry

This Harvard Business School case about Tesla is the most extreme example I could find of Barriers to Entry being overcome, avoided, or subverted. The auto industry had become notoriously impenetrable. From the case:

Thirty-five years ago, Porter wrote: “In the auto industry economies of scale increased enormously with post-WWII automation and vertical integration — virtually stopping successful new entry. At that time, GM, Ford, Chrysler, Honda, Nissan, and Toyota constituted six of the seven top-selling car companies in the US, and the same is true today.

The case goes on to detail all of the ways that Tesla worked their way into the market and eventually got enough of a hold to grow and prosper.

Rather than looking at the market and assuming that matters will always be that way, Musk saw and unmet need and used innovation to fulfill it. Starting with a minimum viable product, partnering with other firms, recycling capital, and subsidizing aspects of the electric vehicle network, Tesla has altered the landscape of the auto industry.

This is an (admittedly extreme) example of the power of startups. Nimble, original, and able to maneuver under or around obstacles that seem so solid.

The Threat of New Entrants

Michael Porter has the best exploration of this topic — one of the Five Forces of his famous framework is “Threat of New Entrants”, which assesses the ability of new firms to enter an industry.

For an intimidatingly thorough and non-conflated exploration of Barriers to Entry, this book is the original and still champion.

Thanks to Grzegorz Nowak for contributing this classic book!

Entry by Industry

The classic paper by Michael Mauboussin, Measuring the Moat, is a great resource for many things, and there is a section where he applies the theory behind Barriers to Entry to practical investment decisions.

There is a strong correlation between the rate of entry and exit for each sector. For instance, manufacturing has low rates of entry and exit, while construction has very high rates, suggesting that the manufacturing sector possesses stronger barriers to entry and exit.

Well worth a read, this paper is full of small gems that deepen the applicable understanding of Barriers to Entry (and many other things along the way).

Thanks to Edson Rigonatti for suggesting this great paper!

That’s all I got.

I’m going to resist writing any more about this, because I already feel I have over-spoken relative to my understanding. I do feel good about the effort of detangling Barriers to Entry from Competitive Advantage, though I still don’t feel like this is a complete or successful attempt.

I welcome and appreciate all corrections, subtractions, and additions as we work together to build a meaningful and reliable resource library for all.


If you enjoyed this, you’ll get more like it fortnightly by joining Evergreen.

Are you willing to buy me a burrito?

Bringing you Evergreen takes dozens of hours each week. If you find anything helpful and interesting here, please consider buying me a burrito($9 here in San Francisco), or really anything between a coffee and a good dinner. Thank you very much! ❤ ☺

Thank you

Massive appreciation for those who suggested pieces of content (or wrote something new) for this Edition of Evergreen: Itamar Goldminz, Edson Rigonatti, Benjamin Kinnard, Mahesh Bhatia, Grzegorz Nowak, Christian Schierenbeck.

Many thanks for being a part of this project! Not every suggestion is able to make it to the final edit, but every single suggestion is read and appreciated.

Never Enough

As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.

To share your thoughts, improvements or additions: Email or Twitter.

If you liked this, check out other Editions of Evergreen:
Building and Managing a Team:
How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
Why Employee Onboarding is holding you back
How to Boost Employee Retention
How Performance Reviews are being Reinvented
Secrets to Perfecting Organizational Communication
How to Manage Scale, and Operate in Scaling Organizations
How to Fire an Employee
What you actually need to know about Company Culture
Strategy and Competitive Advantage:
How to Master the Craft of Strategy
Competitive Advantage: How to Build a Winning Business
The Power of Network Effects
How Cost Leadership Builds Powerful Businesses
Why the Best Brands Stand Out
Scale as Competitive Advantage
Building the Business:
How to get good business Ideas: Mental Alchemy of Ideation
How to Choose the Right Business Ideas
Product/Market Fit: What it really means & How to Measure it
How to Failure-proof your business with Customer Development
How Strategy and Psychology Work Together to Perfect Pricing
The Most Important Equations in Business - CAC (Part 1)
The Simple Math Behind Every Profitable Business - CLV (Part 2)
How Psychology behind Word-of-Mouth Works
The Secret Core of Every Successful Business--Distribution
The Most Important Lessons in Sales
Why Value Creation is the Foundation of Business
Why Value Capture is the most important idea you haven't read about
The Misunderstood and Underestimated Genius of Advertising
How to be a Great Human:
How to Start a New Job: Handling Career Transitions like a Boss
How to Master the Discipline of Product Management
The Ancient Origins of Storytelling, and how to Apply Them
I've also written about How & Why we started Evergreen:
How a prototype's failure created the next iteration
Mission & Method of Evergreen
Follow me on Twitter: @EricJorgenson
And Please... Join Evergreen.
Next Story — How To Choose The Right Business Ideas
Currently Reading - How To Choose The Right Business Ideas

How To Choose The Right Business Ideas

Evergreen is a Bi-weekly collection of links to the best learning resources in business, collected by a group of managers, founders, and investors. We contribute resources about one topic, which are synthesized and shared in this Bi-weekly Edition. The aim is to learn more efficiently through increased context and focus.

Join here to receive the next Edition of Evergreen Business Weekly.

Remember, these are designed to feel like short books, you’re meant to meander and spend ~3 hours on this topic this week. Save some of these links and read them throughout the week. Immerse yourself in this topic and leave the week smarter than you started it!

A good business (and a good life) is made of good decisions. Where to invest, what to prioritize, and which ideas to work on. Opportunity cost is everywhere, and we only have a few years to leave our mark.

So the most fundamental question is how do we decide which businesses to work on, which products to launch, and what companies to build?

That is the goal of validation — to put some rigorous thought around where to spend your time and effort to achieve the greatest results.

Where Validation Fits In

Validation of a business idea can be a fuzzy concept. It lives somewhere between “I have an idea” and “I’m going to invest in testing this idea.”

Ideation → Validation → Customer DevelopmentProduct-Market Fit

To me, it is the step that answers an important set of questions: Does this idea suck? Will this Business succeed? Should it? Where does this lead?

Too often, businesses are begun without enough consideration. Validation is meant to create pause for thought and reflection, to examine the opportunity before you and think hard about investing years of your life into solving a specific problem.

This isn’t always about whether or not the business will be successful, but whether or not YOU are the person to build it, and what it will mean for your life, your family, and your future.

Pitfalls of Business Ideas

The most helpful kind of tool for this type of thinking is Inversion — making a good decision by NOT making a bad decision. It is often easier to avoid stupidity than achieve brilliance.

This section is dedicated to dynamics that can kill your business in its crib.

Path Dependence, Infrastructure, and Entrepreneurship

This post does a great job of explaining why some industries and products are so resistant to change. If you’ve ever wondered why some technologies get disrupted, and some seem to never change — Path Dependence and Infrastructure.

Not that anything is impossible, but operating in each area requires a different strategy.

You find markets where disruption will tend to run rampant where infrastructure costs are high and interdependence is low (i.e., Hard drives). You find markets that require full stack innovators to attack an entire ecosystem, where interdependence is high but infrastructure costs are relatively low (i.e., automobiles). You find markets where both infrastructure and interdependence is high, often resulting in collective inaction (i.e., Utilities). And finally, you find very adaptable markets where there’s low infrastructure and interdependence (i.e., professional services).
Knowing where you sit tells you whether you need to integrate up and down the stack, delivering everything from product to post-sale services. It tells you whether you can expect collusion from incumbents. And it tells you whether venture financing or public investment provide more realistic paths towards rollout. It’s not as simple as just having a superior technology. If you’re in a market where you’re fighting the entrenched interests of the entire ecosystem, having a 10x cost advantage relative to your direct competitors might not even be enough.

Starting a business in certain industries is a death wish, because of hidden, seemingly illogical anchors that are only obvious to those with a familiarity with the industry. By studying and understanding these concepts and the space you would operate in, you can avoid this trap.

Thanks to the man/myth/legend Nick Seguin for suggesting this post.

Low Situational Awareness

This is a very benign-sounding term, but in this post from Simon Wardley, the danger of Low Situational Awareness is put very sharply. (Especially if you love chess metaphors.)

His point is that much of business is conducted through reasoning by analogy, or testing of hypotheses (“X worked for Y, so we’ll try X”)

Most businesses exist in low-level situational awareness […]. They have no context, they are rife with meme copying, magic sequences and are dominated by action. We already know that this has an impact not only from individual examples but by examination of a range of companies. It turns out that high levels of situational awareness appears to be correlated with positive market cap changes over a seven year period.

From my read of this post, ‘context’ is a deep understanding of the industry you’re in, and the mental fortitude to reason (and build) from first principles. The power of High Situational Awareness comes from thorough research and understanding, experience working in the space, and the mindset to avoid lazy, analogous thinking.

This is a great post to scare you into pursuing businesses where you have High Situational Awareness, because of the absolute futility of operating against someone who sees the game in dimensions you cannot.

Thanks to veteran Evergreen contributor Itamar Goldminz for the addition.

The ‘Do You Solve a Real Problem’ Test (Value Creation)

For a business to be successful, it must do two things: Create Value, and Capture Value. Value Creation is the most basic fundamental of business — what work a business does to create a product that has utility for people.

Here is a whole Edition of Evergreen about Value Creation, with great resources to go deep on the concept.

Understanding how businesses create value is a good model to apply to your business idea — in the simplest terms, ‘How will you create unique value for customers?’

The ‘Can You Actually Make Money’ Test (Value Capture)

The sister concept to Value Creation is more subtle, and often overlooked. Which is probably a huge reason that the failure rate of new businesses is so high — people think about whether they can create and sell a product, not about whether they can make a profit creating and selling the product.

We also have a whole Edition of Evergreen dedicated to thinking about Value Capture in different ways, which would be a valuable set of tests for evaluating a new business idea. It will help you avoid traps like commoditized industries, businesses that require reinvestment, and market-price-setting sectors.

Here is some of what is covered in the Value Capture Edition:

  • The Relationship Between Value Creation & Value Capture
  • How Required Reinvestment Destroys Value Capture
  • Why Not All Revenue is Created Equal
  • How Pricing is the True Test of Value Capture

The Value Capture test is what can save you from starting a commoditized, easily duplicated business that will yield a low margin, and have you working harder and harder just to stay in business with an ever-decreasing profit staying in your pocket.

Are You The Right Person For This Business?

This is the question that brings you into consideration. Many business ideas can be good for certain people, yet terrible for others to pursue.

There are two concepts that come together here:

  1. Knowing yourself well enough to know your strengths, weaknesses, interests, and triggers for impatience.
  2. Knowing your potential market well enough to understand all of what building a business in this space will entail.

This is a concept called Founder/Market Fit in the Startup world. Chris Dixon has a short post that explores what it means and shows the impact that has on a startups success.

In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee calls “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.

This is not only about the success of the company, but your happiness is at stake as well. If you have no patience for kids, maybe your idea to revolutionize daycare would make you miserable, and inevitably lead to failure.

An important piece of Dixon’s post is that this is NOT a static relationship. Markets change and people can learn — no one is born with Founder/Market Fit. You can earn your way there by working in market and learning about it, but expect to invest heavily until you have some obvious expertise.

What Good Ideas Look Like

So what does an actual good idea look and feel like? How do I know if I have one? When should I feel confident about starting a business based off of my idea?

Bad news for you… you won’t know until you’ve already won.

Why?

Good Ideas Look Like Bad Ideas

The tough thing about finding a good business idea is that there is a tough paradox where often the best ideas look like bad ideas. If 100/100 people think your idea is good… it is probably actually bad.

This 20-minute talk by Chris Dixon at YCombinator’s Startup School covers this well, and explains the nuance of a good idea through some interesting Silicon Valley history.

If you’d like a short, text version, there are some condensed notes here.

As a part of this exploration of your business idea, keep in mind that there is a near-100% chance that someone has tried something similar before. This is a tremendous opportunity to learn more about the space, the challenges, and the ‘maze’ you’re about to enter (more on that in a second).

Thanks to Edson Rigonatti for contributing this video and notes!

Go Talk To Some Veterans

To anonymously quote a VC who gave this great advice to a friend of mine:

Most people don’t go searching for who’s tried your idea in the past. You’re more interested in finding who failed than who succeeded because there are a lot more of them, but their stories aren’t told.
Unless you do the effort to talk to those who’ve tried to go down the road you’re about to take, you haven’t done your homework. And if you can’t do this exercise, you probably don’t care enough about solving the problem to see this through to the end.

I believe in both of those statements — there are people out there who know more about the maze you are evaluating than you do, and if you don’t take the time to learn from them, you are choosing a particularly dangerous kind of ignorance.

Huge caveat here — just because they failed doesn’t mean you will. They’ll have scars and biases from their attempts, and will unconsciously try to scare you off from the space. Just remember in those conversations to adjust for their (probably very strong) personal beliefs.

Thanks to Jon Stenstrom for sharing this advice with me.

The Idea Maze

So what is up with the Maze metaphor?

Chris Dixon (yes, again) has another great short post about ‘The Idea Maze’. This is a great way to visualize the challenge of coming up with a business idea, because a good business idea is not ONE idea.

Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes.

Good business ideas are actually many ideas, with many different contingencies and alternate routes planned if ‘Plan A’ does not work out as intended (because it won’t).

The Maze reminds you that good business ideas unfold over years, and it is impossible to plan it all out perfectly from the start. It shows you that you have to get the best map and guides you can find, but that you will still have to make hard decisions with little information, hit dead ends, retrace steps, and bump into some walls on your way through.

Oh, and don’t run out of money while you’re inside the maze.

Thanks to Andrew Brown of Oyster & Google for suggesting this post.

The Book To Read

Last and possibly most important — The Innovator’s Dilemma, by Harvard Business School Professor Clayton Christensen.

This book is the classic read in crafting and evaluating industries, and how to go about entering and disrupting them, starting successful businesses with potential to grow.

Importantly, it also tells you when to ignore all of the advice previously covered in this Edition:

Much of what the best executives in successful companies have learned about managing innovation is not relevant to disruptive technologies. Most marketers, for example, have been schooled extensively, at universities and on the job, in the important art of listening to their customers, but few have any theoretical or practical training in how to discover markets that do not yet exist.

This book was a known favorite of Steve Jobs, and it is clear reading it what the power of these ideas were for him, and we can historically see them applied within Apple.

Thanks to Jason Evanish of Lighthouse for suggesting this piece of canon.

To Sum Up

To boil it down to one sentence: “Don’t underthink your business idea.”

First, try not to pick a shitty idea that will lead your business into an early grave.

Second, try to pick an idea that is uniquely well-suited to you, and likely to make you a happy person even if it doesn’t succeed massively.

Third, you will never 100% know that you have a great idea. It will always involve some uncertainty.

Fourth, even great ideas require continuous refinement and reinvention. Be ready to keep working on it for years to come.


If you enjoyed this, you’ll get more like it fortnightly by joining Evergreen.

Are you willing to buy me a burrito?

Bringing you Evergreen takes dozens of hours each week. If you find anything helpful and interesting here, please consider buying me a burrito($9 here in San Francisco), or really anything between a coffee and a good dinner. Thank you very much! ❤ ☺

Thank you

Massive appreciation for those who suggested pieces of content (or wrote something new) for this Edition of Evergreen: Pui Kit Choi, Jason Evanish, Andrew Brown, Jon Stenstrom, Itamar Goldminz, Edson Rigonatti, Anne-Marie Lemoine, Julie Lyle, Matt Veryser, Luke Swanek, Vikas Lalwani, and Nick Seguin.

Many thanks for being a part of this project! Not every suggestion is able to make it to the final edit, but every single suggestion is read and appreciated.

Never Enough

As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.

To share your thoughts, improvements or additions: Email or Twitter.

If you liked this, check out other Editions of Evergreen:
Building and Managing a Team:
How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
Why Employee Onboarding is holding you back
How to Boost Employee Retention
How Performance Reviews are being Reinvented
Secrets to Perfecting Organizational Communication
How to Manage Scale, and Operate in Scaling Organizations
How to Fire an Employee
What you actually need to know about Company Culture
Strategy and Competitive Advantage:
How to Master the Craft of Strategy
Competitive Advantage: How to Build a Winning Business
The Power of Network Effects
How Cost Leadership Builds Powerful Businesses
Why the Best Brands Stand Out
Scale as Competitive Advantage
Building the Business:
How to get good business Ideas: Mental Alchemy of Ideation
Product/Market Fit: What it really means & How to Measure it
How to Failure-proof your business with Customer Development
How Strategy and Psychology Work Together to Perfect Pricing
The Most Important Equations in Business - CAC (Part 1)
The Simple Math Behind Every Profitable Business - CLV (Part 2)
How Psychology behind Word-of-Mouth Works
The Secret Core of Every Successful Business--Distribution
The Most Important Lessons in Sales
Why Value Creation is the Foundation of Business
Why Value Capture is the most important idea you haven't read about
The Misunderstood and Underestimated Genius of Advertising
How to be a Great Employee:
How to Start a New Job: Handling Career Transitions like a Boss
How to Master the Discipline of Product Management
I've also written about How & Why we started Evergreen:
How a prototype's failure created the next iteration
Mission & Method of Evergreen
Follow me on Twitter: @EricJorgenson
And Please... Join Evergreen.
Next Story — How to Master the Craft of Strategy — Why One Decision can Make your Company and How to Get it Right
Currently Reading - How to Master the Craft of Strategy — Why One Decision can Make your Company and How to Get it Right

How to Master the Craft of Strategy — Why One Decision can Make your Company, and How to Get it Right

Evergreen is a weekly collection of links to the best learning resources in business, collected by a group of managers, founders, and investors. We contribute resources about one topic each week, which are synthesized and shared in this Weekly Edition. The aim is to learn more efficiently through increased context and focus. Join here to receive the next Edition of Evergreen Business Weekly.

Remember, these are designed to feel like short books, you’re meant to meander and spend ~3 hours on this topic this week. Save some of these links and read them throughout the week. Immerse yourself in this topic and leave the week smarter than you started it!


Oh man, I’m so excited for this Edition. I distinctly remember the first moment I got a loose grasp on Business Strategy, and it was instantly illuminating. Getting the basics of strategy ingrained will have you seeing the world differently.

We’ll start by taking a look at the core of Strategy, the basics that are applicable for any business, with frameworks that you can use immediately. To dive deeper, we’ll see some different ways to think about Strategy that will give you completely new perspectives on your company.

Strategy 101 — Definition and Basics

Among all of the possible definitions of Business Strategy, this set of points(from Ray Stern) seem the most precise and descriptive. Read it slow:

Ray was kind enough to share a deck that he made for internal training during his tenure at Intuit. It’s a fantastic resource and you’ll see more from it shortly.

Know enough to be Dangerous

If you only read one thing in this post — it should be this section, about the book by Richard Rumelt: Good Strategy, Bad Strategy. This was the first book that really made strategy accessible to me.

Rumelt describes Bad Strategy, which probably sounds familiar to you:

Bad strategy is not simply the absence of good strategy. It grows out of specific misconceptions and leadership dysfunctions. Once you develop the ability to detect bad strategy, you will dramatically improve your effectiveness at judging, influencing, and creating strategy. To detect a bad strategy, look for one or more of it’s four major hallmarks:
Fluff: Fluff is a form of gibberish masquerading as strategic concepts or arguments. It uses “Sunday” words (words that are inflated and unnecessarily abstruse) and apparently esoteric concepts to create the illusion of high-level thinking.
Failure to face the challenge: Bad strategy fails to recognize or define the challenge. When you cannot define the challenge, you cannot evaluate a strategy or improve it.
Mistaking goals for strategy: Many bad strategies are just statements of desire rather than plans for overcoming obstacles.
Bad strategic objectives: A strategic objective is set by a leader as a means to an end. Strategic objectives are “bad” when they fail to address critical issues or when they are impracticable.
[…]
Not miscalculation, bad strategy is the active avoidance of the hard work of crafting a good strategy. One common reason for choosing avoidance is the pain or difficulty of choice. When leaders are unwilling or unable to make choices among competing values and parties, bad strategy is the consequence.

If this describes your company, you better go look for a new job, or roll up your sleeves and get to work.

Now here are the details for good strategy:

Good strategy is coherent action backed up by an argument, and effective mixture of thought and action with a basic underlying structure I call the kernel. A good strategy may consist of more than the kernel, but if the kernel is absent or misshapen, then there is a serious problem. Once you apprehend this kernel, it is much easier to create, describe, and evaluate strategy.
The kernel is not based on any one concept of advantage. It does not require one to sort through legalistic gibberish about the differences between visions, missions, goals, strategies, objectives, and tactics. It does not split strategies into corporate, business, and product levels. It is very straightforward.
The kernel of a strategy contains three elements:
A Diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies that often overwhelming complexity of reality by identifying certain aspects of the situation as critical.
A Guiding Policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.
A set of Coherent Actions that are designed to carry out the guiding policy. These are the steps that are coordinated with one another to work together in accomplishing the guiding policy.

If you understand the definition of strategy and these two explanations well enough, you know enough strategy to make an impact today.

This book is the perfect place to start learning about strategy. The approach of codifying and explaining bad strategy alone makes this a crucial read. Avoid the traps of bad strategy, and you’re likely to do fine.

If you’re more of a video/audio person, this lecture by author Richard Rumelt at the London School of Economics is fantastic.

Good Strategy, Bad Strategy and this video were also suggested by Graham Moody of Ansarada, who has had Richard Rumelt speak to their company.

Meg Whitman’s Favorite Book (CEO of Ebay & HP)

When Zaarly, the startup I’ve been working on for the past few years, was transitioning into a new business model, we got some advice from our board member Meg Whitman, former CEO of Ebay and current CEO of Hewlett Packard. She recommended we go buy copies of Playing to Win for our team, and use that framework to refine our strategy.

Co-Authored by the Dean of Rotman school of Management and AG Lafley, former Chairman and CEO of Proctor & Gamble, it blends two approaches to strategic thinking: stories from the trenches and theories from Academia.

The core of the book introduces the framework that P&G has used countless times to create successful brands, products, and new product categories.

A strategy is a coordinated and integrated set of five choices:
- A winning aspiration
- Where to play
- How to win
- Core Capabilities
- Management systems

Here it is in graphic form with some additional notes:

Each of these decisions must respect the others — they are not made independently. Together they form a playbook and create the focus that will unite a team‘s efforts.

This is a great book for a company currently navigating some strategic challenges. Sitting down to answer these questions with some of the book’s examples fresh in mind can create breakthrough ideas.

The Opposite of your Strategy must be a Strategy

One simple and powerful test of your strategy is that the opposite must also be a reasonable strategy. Otherwise, you haven’t made any actual decisions at all, you’ve just stated the obvious.

This is what Erik Martin, former GM of Reddit, had to say:

“Execute well” is not a strategy because no business would willingly say that their strategy is to “Execute poorly”. Whereas “focus on local markets” is a strategy because the same business could reasonably choose to “focus on national markets”. Strategy has to be a choice between viable options.

This short post from Roger Martin on Harvard Business Review goes into a little more detail on this test, and has some stunning examples:

The senior team of a large player in the global wealth management business recently asked me for my opinion on their strategy. They had worked long and hard at coming up with it. Their “Where to Play” choice was to target wealthy individuals who wanted and were willing to pay for comprehensive wealth management services. Their “How to Win” choice was to provide great customer service across the breadth of their wealth management needs. I pushed and probed, but that was it.
Sadly, like the majority of strategies that I read, this firm’s strategy failed my sniff test and for that reason I would bet overwhelmingly that it will fail in the market as well. The test I apply is quite simple. I look at the core strategy choices and ask myself if I could make the opposite choice without looking stupid. For my wealth managers, the opposite of their “where” choice was to target poor individuals who don’t want and aren’t willing to pay for comprehensive wealth management services. The opposite of their “how” is to provide crappy customer service.
The point is this: If the opposite of your core strategy choices looks stupid, then every competitor is going to have more or less the exact same strategy as you.

If you’re thinking “Yea, Duh.” I’m right there with you, but it happens every day. Just don’t let it be you.

Strategy is what creates Competitive Advantage

If there is a prerequisite for understanding Strategy, it’s understanding Competitive Advantage. Strategy is how we create a Competitive Advantage, how to make the decisions we make that get us closer to the destination.

To understand Competitive Advantage, check out the Edition of Evergreen on it, How to Create a Winning Business, which includes wisdom from Peter Thiel, Warren Buffett, and Sam Walton. Also, the classic from Michael Porter, The Five Competitive Forces that Shape Strategy.

Peter Thiel’s lecture at Stanford, Competition is for Losers, was suggested by Victor Sowers, and has some great thoughts on how competitive advantage creates monopolies.

More Perspectives on Strategy

There are a lot of emerging opinions on Strategy, and new ways to think about it. There are examples and metaphors from nearly every discipline, all fascinating in their own way.

Center vs. Periphery Strategy

One interesting pattern that came up was the flow of new ideas from the periphery to the center. This post from the archive of BCG has an excerpt that captures this concept well:

Strategy requires regular visits to the periphery in order to explore and learn. The periphery is the realm of opportunities that an organization has not yet discovered. It is a vast greenfield in which modest and prudent investments can produce huge payoffs for the center.
Structurally, those investments can take a variety of forms — the purchase of promising new start-ups, the funding of skunkworks completely separated from the center, the establishment of competing development teams, the hiring of experts from the periphery. The key for organizations at both the center and the periphery is to calculate the costs of bridging the distance between the two poles.
Strategy is a continuous movement between new centers and new peripheral businesses. As the history of great innovators such as Apple, Google, and Microsoft demonstrates, a business might begin at the periphery and, as it increasingly enjoys success, end up at the center. Then, once it occupies the center, it will soon face new competitors at its periphery.

This model shows us the rise and fall of companies in many industries, and it’s a narrative that dominates strategy, especially in innovative sectors. It also explains why companies in the center are so determined to tame or defend themselves from the periphery.

This guy knows how to operate from the Center.

Jeff Bezos has an amazing quote about this strategy in this fantastic interview with Henry Blodget. Thanks to Mike Smith for the contribution!

I’ve made billions of dollars of failures at Amazon. Literally billions of dollars of failures. You might remember Pets.com or Kosmo. It was like getting a root canal with no anesthesia. None of those things are fun. But they also don’t matter.
What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence. Whereas companies that are making bets all along, even big bets, but not bet-the-company bets, prevail. I don’t believe in bet-the-company bets. That’s when you’re desperate. That’s the last thing you can do.

This also bears an interesting relationship to the classic concept from Clayton Christensen, The Innovator’s Dilemma. Defending the center is not impossible, but it’s extremely hard over time. This short video explains the concept, and how the theory can be translated to all businesses.

Thanks to Ray Stern for suggesting this video, and directing me to the BCG archive, which was full of good stuff.

Emergent Strategy

This incredible post on Harvard Business Review, called Crafting Strategy makes the important distinction between strategic planning and execution, and proposes that the two should be iterative and intertwined.

Virtually everything that has been written about strategy making depicts it as a deliberate process. First we think, then we act. We formulate, then we implement. The progression seems so perfectly sensible. Why would anybody want to proceed differently?
My point is simple, deceptively simple: strategies can form as well as be formulated. A realized strategy can emerge in response to an evolving situation, or it can be brought about deliberately, through a process of formulation followed by implementation.
While it is certainly true that many intended strategies are ill conceived, I believe that the problem often lies one step beyond, in the distinction we make between formulation and implementation, the common assumption that thought must be independent of (and precede) action. Sure, people could be smarter — but not only by conceiving more clever strategies. Sometimes they can be smarter by allowing their strategies to develop gradually, through the organization’s actions and experiences. Smart strategists appreciate that they cannot always be smart enough to think through everything in advance.

Crafting Strategy is a beautifully-written series of thoughts on including execution, testing, and iteration into your strategic thinking. This post is a great balance to the frameworks we’ve been looking at so far.

“However beautiful the strategy, you should sometimes look at the results”
— Winston Churchill

A huge thank-you to Kenny Fraser for suggesting Crafting Strategy.

Strategy is Context-dependent & Ever-changing

All decisions are dependent on their environment. Obvious as it may seem, it’s always worth remembering that both ‘turn right’ and ‘turn left’ are either correct or deadly depending on the situation. Strategic decisions share this trait, as John Hagel explores in his blog, Edge Perspectives.

He makes a distinction between ‘Terrain Strategy’ in which you can see where you’re going and navigate toward it, and ‘Trajectory Strategy’ when things move far too quickly to navigate in real-time and the only way to win is to anticipate correctly.

If we just focus on position in the current landscape, we risk being blindsided as the landscape rapidly evolves into something quite different. What looks like solid high ground today can quickly become quicksand, dragging us under.
Perhaps even more importantly, the most advantaged locations in the future landscape often are not even part of today’s landscape and they will tend to emerge and be shaped by significant economies of scale and network effects that will play out very quickly once critical mass has been achieved. Playing a wait-and-see game in the hope that things will become clearer over time can be very dangerous. By the time you see what’s happening, it may be too late to do anything about it. Fast followers in an exponential world will increasingly find that they are on a path to the grave.
Most strategies (strategies of terrain) tend to look from the present out to the future. Strategies of trajectory start with a view of the future and work back to the implications for action in the present.
Here’s the paradox: strategies of trajectory become more and more essential in times of rapid change and uncertainty, while at the same time becoming more and more difficult.

This set of two blog posts, The Big Shift in Strategy, Part 1 and Part 2 are quick reads with great insight. Thanks to Matt Frost of Medallia for suggesting these posts and this new perspective.

What we can learn from the History of Strategy

In Strategy, timeless principles unfold in an ever-evolving modern arena. History is full of lessons that apply to the challenges of today.

There’s a massive amount to learn from the successes and failures of the strategic decisions in our past, as seen in this massive book on the history of Strategy, suggested by Erik Martin.

I’m only a few pages in (out of 600+), and it’s already extremely interesting. Freedman talks about how base strategy is to our nature, and how primates demonstrate strategic thinking for mating and social maneuvers. To learn the lessons of the history of strategy, there’s nothing more comprehensive than Strategy, a History.

Reading Lists for Future Strategy Masters

There’s always another vital lesson out there. The next page might hold the secret to building your business or preventing your next disaster. To keep learning more about strategy, here are two great reading lists that will be instructive in complementary ways.

Harvard Business Review’s 10 Must-reads on Strategy. The best 10 case studies, papers and posts over the past few decades from the most prestigious business school on earth. There’s gold in these pages.

Thanks to Bo Fishback for finding and suggesting this set of papers!

Ryan Holiday’s reading list on Strategy, 24 Books to Hone Your Strategic Mind. An interesting mix of philosophy, military history, and political lessons, this looks like a fascinating blend of perspectives with the promise of insights that will change the set of possibilities you perceive.

Thanks to Aaron Wolfson for contributing this list, and Ryan Holiday for putting it together.


If you enjoyed this, you’ll get more like it every week by joining Evergreen.

Donating = Loving

Bringing you Evergreen takes dozens of hours each week. If you find anything helpful and interesting here, please consider becoming a Supporting Member with a donation of your choosing, between a coffee and a good dinner. Thank you very much! ❤ ☺

Thank you

Massive appreciation for who suggested pieces of content (or wrote something new) for this Edition of Evergreen: Ray Stern, Aaron Wolfson, Bo Fishback, Matt Frost, Erik Martin, Victor Sowers, Graham Moody, Kenny Fraser, Derek Baynton, Itamar Goldminz, Julian Miller, and a special thank-you to Mike Smith, who bought and donated the domain Evergreenlibrary.com to the cause. Thank you Mike!

Many thanks for being a part of this project! Not every suggestion is able to make it to the final edit, but every single suggestion is read and appreciated.

Never Enough

As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.

To share your thoughts, improvements or additions: Email or Twitter.

Inspirations

This Edition of Evergreen, along with all of my others and the ideas behind this project, are inspired by the excellent content created online every day. To name a few that hold particular places in my heart:

If you liked this, check out other Editions of Evergreen:
Building and Managing a Team:
How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
Why Employee Onboarding is holding you back
How to Boost Employee Retention
Secrets to Perfecting Organizational Communication
How to Fire an Employee
Strategy and Competitive Advantage:
How to Master the Craft of Strategy
Competitive Advantage: How to Build a Winning Business
The Power of Network Effects
How Cost Leadership Builds Powerful Businesses
Why the Best Brands Stand Out
Building the Business:
How to get good business Ideas: Mental Alchemy of Ideation
Product/Market Fit: What it really means & How to Measure it
How to Failure-proof your business with Customer Development
How Strategy and Psychology Work Together to Perfect Pricing
The Most Important Equations in Business - CAC (Part 1)
The Simple Math Behind Every Profitable Business - CLV (Part 2)
How Psychology behind Word-of-Mouth Works
The Secret Core of Every Successful Business--Distribution
The Most Important Lessons in Sales
How to be a Great Employee:
How to Start a New Job: Handling Career Transitions like a Boss
How to Master the Discipline of Product Management
I've also written about How & Why we started Evergreen:
How a prototype's failure created the next iteration
Mission & Method of Evergreen
Follow me on Twitter: @EricJorgenson
And Please... Join Evergreen.
Next Story — How to Start a New Job
Currently Reading - How to Start a New Job

How to Start a New Job: Handling Career Transitions Like a Boss

Evergreen is a Bi-weekly collection of links to the best learning resources in business, collected by a group of managers, founders, and investors. We contribute resources about one topic, which are synthesized and shared in this Bi-weekly Edition. The aim is to learn more efficiently through increased context and focus. Join here to receive the next Edition of Evergreen Business Weekly.

Remember, these are designed to feel like short books, you’re meant to meander and spend ~3 hours on this topic this week. Save some of these links and read them throughout the week. Immerse yourself in this topic and leave the week smarter than you started it!


A new job can feel like stepping out into a whole new adventure — a fresh chapter in life with new people, new challenges, and new opportunity. It’s also nerve-wracking, gut-wrenching and insomnia-inducing. That whole first-day-of-school feeling, but with prestige and a paycheck at risk.

This collection is designed as a guide to that transition, to help you make the most of this treacherous period where there’s so many moving parts, and so much at risk.

If you know someone going through a career transition (starting a new job, their first job, a promotion, or considering a move), send this collection their way as a gesture of support — we worked hard to make it helpful for people in their exact position.

Here’s what’s coming up in this Edition of Evergreen:

  • Cultivating the Right Mindset — How to think about this change
  • Doing the Research — What you need to know before you walk in
  • Getting a Head Start — What to do before day one, to start out right
  • What to do on Day One — The most important things to remember
  • The Two most Crucial Books to Read
“Do you know what’s waiting for you… beyond that [first 90 days on the job]? Immortality! Take it, it’s Yours!”

Cultivating the Right Mindset

The first step to a successful transition is to cultivate the proper approach by getting into the right mental space. By keeping a set of simple ideas in mind, you’ll be much more effective.

Know Yourself

Before studying your new context (company, culture, people) you must understand yourself. How do you work best? How to do you communicate best? Who are you likely to work well with?

Knowing where one belongs can transform an ordinary person — hardworking and competent but otherwise mediocre — into an outstanding performer.

This quote is from a short essay by Peter Drucker, called Managing Oneself. It’s a short read — Here’s a link to it HBR, and I bought this nifty little pocket version.

It’s full of good ways to understand yourself in the context of your new environment, and explains how people work differently. Ask yourself:

  • What are my strengths?
  • How do I learn?
  • How do I contribute?

Many people never spend time getting to know themselves. By skipping this step, you’re making any other research meaningless. Without understanding the shape of your puzzle piece, how can you expect to know where you’ll fit?

A Transition for you is a Transition for Everyone

One of the great (but easily overlooked) points from the book The First 90 Days, suggested by Itamar Goldminz, is that if one member of the team is new, it means the surrounding members are in transition in their own way as well.

The fact that you’re in transition means they are too. They quicker you can get your new direct reports up to speed, the more you will help your own performance. Beyond that, the benefits to the organization of systematically accelerating everyone’s transitions are vast.

In an even broader sense: have empathy for the changes that your team is going through. A new person is always a meaningful change, and it’s easy to lose sight of that if you’re the one undergoing the main transition.

Do your Research

It’s a rookie move to show up on day one without any knowledge of the industry, company or team and expect to learn all of that on the job. You’ll have a lot to learn as it is, so it would behoove you to do your research ahead of time to spread out the amount of new information.

For my first job, I created flash cards of 30 people I’d be working with, so I knew all of their names, backgrounds, and what we had in common before I showed up. This was a noticeable advantage and time well spent.

Know your Organization

To start with, learn the obvious stuff. This would include the history of the company, and it’s products. How did it become successful?

Next, learn about the strategy of the company. What are it’s competitive advantages and how does it fit into the landscape of comparable companies?

Beyond those basics, it’s also helpful to understand the culture of the workplace you’re about to join.

This image is from the Slideshare presentation linked below.

There are multiple types of organizations, and the culture and behaviors change for each kind. Know which type you’re joining, and you’ll understand what they might expect of you.

There are two [very different] resources that can teach you this in detail. If you’re into books and Greek Mythology, read Gods of Management, which uses the archetypes of the Greek Gods to explain the types of organization. Alternatively, Stephen P. Anderson created a slideshare that riffs off this book using different bands and musical groups. Thanks to Matt Dononvan for this suggestion!

Know the Context of the Transition

In any new job, you’re coming into a unique situation. Each new position is begun in a specific context — what has happened before it, and the current mindset of your new team. There are a variety of possibilities, each of which require their own emphasis.

This paper from CEB, suggested by Sam Whiteman does a great job of breaking out the various situations:

Smooth Sailing — The leader moves into a position according to a previously arranged transition plan under normal business conditions (3% of leadership transitions).
Replacing an Icon — The leader’s predecessor was very successful in the job (18%).
Following a Train Wreck — The leader’s predecessor was not successful in the job (27%).
Jump Start — A static environment where the performance of the leader’s predecessor wasn’t particularly strong or weak, but the organization needs to quickly move in a different direction (19%).
Breaking Ground — The leader assumes a newly created position (31%).

To understand what each of these situations will demand of a new entrant, check out this paper. Do your research to find out exactly which of these environments you’re going to find yourself in, and fine-tune your approach.

Dive in Headfirst!

Getting a Head Start

If you want to impress your new co-workers (and you should), then getting a solid head start is crucial. Work hard before your first day to get yourself up to speed.

Learn the Business (& your Role) from First Principles

Starting a new job is full of snares that will trap your thinking, from multiple sides. It’s common to fall into one of two sets of errors:

  1. Assuming that your predecessor was doing everything right, and follow her lead exactly as instructed.
  2. Assuming that your previous successes are directly applicable and replicable in this new environment.

The antidote to both of these sets of errors is the same: Reasoning from First Principles. As Elon Musk says:

What reasoning from first principles really […] means is boiling something down to the fundamental truths, or what appear to be the fundamental truths, and reasoning up from there, and then having a good feedback loop.

In order to reason from first principles, you must understand the company, it’s strategy, and the role you play in the creation of value. I love how James Whitehurst puts it in this post on Linkedin:

Deeply understand how the business creates value.
Obviously you need to learn how to do your job well, but more than that you need to understand the company’s competitive advantage and underlying value proposition to make sure those things happen.
Don’t assume your predecessor did.
[…]
Don’t assume the way you did your old job, or the way your new job was done before, is the way it should be done now.

Start Meeting & Befriending Co-workers Right Away

An under-appreciated challenge of starting a new job is adopting an entirely new social circle. This is an important part of the transition, to ensure happy working relationships and productive alignment.

Building relationships takes time, and can’t be rushed. As the real work piles up during your first few months, you’re going to be happy that you worked ahead to build relationships before day one.

CEO & Co-founder of Hotel Tonight Sam Shank wrote a great post where he talks about his attitude toward this aspect of starting a new job, and his advice for new employees:

Looking back on the early days of my career, I didn’t spend nearly enough time getting to know my coworkers. I spent more time focused on the work itself, and when I did build relationships, I often built them upward, which was a mistake.

As he notes — make sure you get to know your reports and your co-workers in addition to managers and other adjacent superiors. Shank also has advice on just how many people you should get to know:

Building relationships is key, but don’t wait for your first day. Between when you accept a job offer and when you start, reach out to future peers and begin to build relationships. […]
By Day 90, you should have introduced yourself to the 50 most relevant people in the company (or all of them if the company is under 50 people): know their names, what they do and ideally one personal fact about each of them.
These may be superiors, peers or people in junior or supporting functions, but all of them will be influential in your career and your day-to-day life at work. Try to get to know at least one person from each team.

One more thing to consider here is that you have a perfect window to do this when you’re fresh at the company. It gets harder to say “I’m new and would like to meet, let’s grab coffee” as you stay with the company.

Even though there will be a lot going on, make this a priority, and try to get a head start while you can to make the transition smoother.

What To Do From Day One

Now to the hearty stuff — what to do when you show up on your first day. With an overwhelming amount of things to learn and do, let’s sort out where to start — the most important things. Right after these short posts we’ll get into the two most important books for starting a new job.

Goal One is to Prove Sanity

Ryan Holiday has a collection of advice for young people starting out their first job. I don’t agree with every point, though he covers some basics that every other resource seems to have overlooked. Here are some favorites:

“Calm down.”
“Assess the terrain. Sit there and observe. Figure out who the dominant personality types are, what makes them tick and how things really work. Don’t act, don’t give your opinion, don’t do anything until this has been done. When you understand the people, politics and the business (eg, the terrain) then you can begin to get to work.”
Always say less than necessary.
“The point isn’t just to prove that you’re capable, but also that you’re sane. In fact, if you had to pick between the two, being well-adjusted is the better one. You can teach people how to do things. You can’t make them normal. In other words, leave your crazy at home.”

This last point about sanity is a fantastic one. Be sure and provide copious evidence of being sane and well-adjusted. [As a corollary, do your best not to display any evidence to the contrary.] If you accomplish nothing else during your first few days, this is the most important thing to convey.

I also appreciate Holiday’s point to assess the terrain. Your first instinct should not be to open your mouth. To get started, just shut up and listen.

Feedback is a Gift

You cannot expect to improve at your job and learn and the pace that you need to without Feedback. In cultivating the beginner’s mindset and opening yourself up to being managed, you can begin to see Feedback as the gift that it is — even if it stings in the moment.

Here is a post that excerpts Pam Fox Rollin’s Book for new Leaders. Below are my favorite ideas, steps to cultivate your own feedback channels:

As we say regularly at Stanford in courses focused on interpersonal skills and leadership capabilities, feedback is a gift. And yet, Pam writes, new leaders “can’t count on informal feedback, as many people fear annoying anyone in power. You may not even receive formal feedback, as review cycles are disrupted by job changes — including yours.” So Pam suggest that it’s your responsibility to “Forge your own feedback channels” through the following steps:
Ask: “What am I doing that’s helping you accomplish X?” “When am I a roadblock to you and your team?” “How might I screw this up?” “What issues or people should I be giving more attention?” The higher up you are, the more you have to ask for it…
Initiate it yourself: Don’t wait for an annual process to receive upward feedback. If you can’t hire an executive coach, arrange for a trusted peer to interview your team and summarize key messages back up.
Respond tremendously well: The fastest way to kill your feedback channel is to downplay the feedback, even slightly, verbally or non-verbally.

Unfortunately, not all working environments are well-practiced at crafting and delivering helpful feedback. That doesn’t mean that it’s ok to not get it. It does mean that you’ll have to work harder for it.

Brush up on your Internal Communication Reading

At the risk of being self-congratulatory, we did an Evergreen Edition on Internal Communication that seems to have been helpful for some folks.

Taking on a new working environment is an opportunity to re-set rules and expectations around work communication, so now might be a good time to read it and see what could be applied in your new place.

Read ‘True Professionalism’

Being a ‘True Professional’ is something anyone in the business world should aspire to. It’s the moniker for those who are always honest, capable and engaged — they’re the people that we always look forward to working with and hope to work for.

“Real Professionalism is about attitudes, and perhaps even about character.”

True Professionalism is a book by David Maister, a consultant formerly of Harvard Business School, which dives into the details of mindset, conduct, and character of the true professional. I’ve now read this book twice at various points in my career after a thorough recommendation by Bo Fishback, and gotten something new and valuable out of it each time.

Here are some of the most insightful ideas from my most recent read:

Are you willing to be managed?

To get anything whatsoever done, professionals must voluntarily approve and accept new accountabilities. They must willingly vote (or at least consent) to give up their jealously guarded autonomy. They must agree to be managed.

This is such a fascinating concept to me. A clear setting of expectations at the beginning of the working relationship can set you up for success in your new role — you must agree to be managed, and understand exactly what that means.

If people are not prepared to be held accountable for what they do, it is unlikely that they will achieve much. Without accountability, most of us will ‘cruise along’ at a level far below our real potential.
[…]
To choose a goal without being prepared to be accountable for progress towards it is to choose nothing.

As new members of a team, we should readily accept management, agree to it, and make that contract with ourself. We should view active management as an athlete views a coach — a forcing mechanism to get us to achieve all that we’re capable of, even if it hurts to push ourselves through hard times.

This mindset has the power to reframe nagging reminders or painful feedback into welcome discomforts that we know are meant to make us stronger, smarter, and better.

Why Should Anyone Follow You?

I love this question so much. It might sound like an affront if someone asked you directly, and that’s what makes for such a potent thought experiment. If your new role is as a leader of any kind, you better have a good answer.

Maister has a strong set of answers in True Professionalism that all leaders can look to as a guide. It’s hard to see yourself through the eyes of those you’re expected to lead, and this framework can help.

Here are what Maister lays out as the 4 tests of leadership:

Motives: “I will accept your direction only if you give me evidence that you are primarily committed to the success of the group or institution, rather than your own self-aggrandizement”
Values: “I will accept your influence, guidance and direction if (and only if) I believe that you and I share similar goals. I want you to have a personal philosophy of practice that I can be inspired by and share.”
Competence: “If I am to listen to you, I not only expect but require that you have constructive new ideas on how to improve things.” […] “Telling me that I should do better but not telling me how isn’t leadership — it’s merely offensive. Be substantively helpful to me, and I’ll listen to you.”
Style: “If all of the previous tests have been met, I’ll be interested in your style. Good leaders must be effective coaches, helping both me and my colleagues to stretch and fulfill goals.”

Two points that Maister hits throughout the explanation of these ideas:

  • These concepts cannot merely be given lip service. If you’re not living them, your team will see right through any hypocrisy and you’ll lose authority.
  • Your history counts. Previous records will be evaluated and taken into account. If you aspire to lead, start living these ideals now. Don’t expect to get a leadership position if you’re not, and don’t think you’ll be successful as a leader until you do.

There is a whole chapter that breaks these ideas down further and expounds upon them, and it’s critical reading for any leader, present or aspiring.

While Maister crafted this book specifically for the Professional Services sector (Accountants, Lawyers, Consultants, etc.), the most important lessons are relevant for all of us. (A mental shift to position the client as your employer and yourself as the service provider reframes this book well). The first section of the book is universally applicable, and something any employee would benefit from reading.

Read the first half of this book during your transition and you’ll find yourself sharpening up your professional life, and see the results immediately.

Read The First 90 Days

This is the book that is designed to answer this “How to start a new job” question. Written by Michael Watkins, an absurdly qualified academic and consultant who has dedicated his life to answering this question, it is the must-read from this collection. Thanks to Itamar Goldminz and Clay Patterson for the suggestion.

If you start a new job tomorrow, go buy this book today.

The first half of the book is relevant for 99% of people starting new roles, while the second half is more focused on managers and senior leadership in transition.

We’ll pull out some of the most potent ideas…

Avoid these common failure points

Before you worry about what to do, always know what you have to assiduously avoid. Here’s Watkins’ list of Transition Traps:

Sticking with what you know: You believe you will be successful in your new role by doing the same things you did in your previous role, only more so. You fail to see that success in the new role requires you to stop doing some things and to embrace new competencies.
Falling prey to the “action imperative”: You feel as if you need to take action, and you try too hard, too early to put your own stamp on the organization. You are too busy to learn, and you make bad decisions and catalyze resistance to your initiatives.
Setting unrealistic expectations: You don’t negotiate your mandate or establish clear, achievable objectives. You may perform well but still fail to meet the expectations of your boss and other key stakeholders.
Attempting to do too much: You rush off in all directions, launching multiple initiatives in the hope that some will pay off. People become confused, and no critical mass of resources gets focused on key initiatives.
Coming in with “the” answer: You come in with your mind made up, or you reach conclusions too quickly about “the” problems and “the” solutions. You alienate people who could help you understand what’s going on, and you squander opportunities to develop support for good solutions.
Engaging in the wrong type of learning: You spend too much time focused on learning about the technical parts of the business and not enough about the cultural and political dimensions of your new role. You don’t build the cultural insight, relationships, and information conduits you need if you’re to understand what is really going on.
Neglecting horizontal relationships: You spend too much time focused on vertical relationships — up to the boss and down to direct reports — and not enough on peers and other stakeholders. You don’t fully understand what it will take to succeed, and you miss early opportunities to build supportive alliances.

How many of these have you seen happen in your organizations before? Have you felt the pain of a new leader who had made one of these mistakes? Use this short list to keep yourself on track, and check against if often.

Get a Cultural Interpreter

One of the ideas that was subtle but that jumped out to me was deliberately learning about the language, habits, history, and culture of the new organization. This is an idea expanded from this passage from First 90 Days:

If you have been hired from outside, ask for help in identifying and connecting with key stakeholders or finding a cultural interpreter. These people often are natural historians who can give you insight into how the organization has evolved and changed.

You want someone to get you up to speed on the informal institutional knowledge (and the inside jokes) as soon as possible, so find yourself a ‘Cultural Interpreter’ and bombard them with questions until you feel like a natural. There’s a wealth of knowledge in institutional knowledge — what has been tried before, what has failed, and why things are they way they are.

Every organization has their own languages, and learning to speak it as soon as possible is a good investment of time, as you’ll learn and move faster as soon as you can keep up with the lingo.

The Three Main Goals

There are entire chapters in The First 90 Days dedicated to each of these topics, so these are far more fleshed out in the book, but it’s worth pulling them out in basic form in this post, because they’re each such crucial aspects of nailing your new job.

Each of the three are below, with some of the most definitive excerpts for each idea, to give you an idea of what is intended by the author.

  1. Accelerate your Learning:
The first task in making a successful transition is to accelerate your learning. Effective learning gives you the foundational insights you need as you build your plan for the next 90 days. So it is essential to figure out what you need to know about your new organization and to learn it as rapidly as you can. The more efficiently and effectively you learn, the more quickly you will close out your window of vulnerability.
[…]
The starting point is to begin to define your learning agenda, ideally before you formally enter the organization.
[…]
There is much that bosses, peers, and even direct reports can do to accelerate your learning. However, to enlist their aid you need to be clear about what you’re trying to do and ask how they can help. Critically, you need to be willing to ask in the first place and not feel that you should know everything and be in complete control from the moment you walk through the door.

[In my personal opinion, that last excerpt is the most crucial piece of advice in this entire collection.]

2. Negotiate Success

Negotiating success means proactively engaging with your new boss to shape the game so that you have a fighting chance of achieving desired goals. Many new leaders just play the game, reactively taking their situation as given — and failing as a result.
[…]
Be conservative in what you promise. If you deliver more, you will delight your boss. But if you promise too much and fail to deliver, you risk undermining your credibility. Even if you accomplish a great deal, you will have failed in your boss’s eyes.
[…]
Even if you’re sure you know what your boss expects, you should go back regularly to confirm and clarify. Some bosses know what they want but are not good at expressing it. You don’t want to achieve clarity only after you have headed down the wrong road. So you must be prepared to keep asking questions until you’re sure you understand.
[…]
Assume that the job of building a positive relationship with your new boss is 100% your responsibility. In short, this means adapting to his style.

3. Secure Early Wins

Because your earliest actions will have disproportionate influence on how you’re perceived, think through how you will get connected to your new organization in the first few days in your new role.
[…]
As you strive to create momentum, keep in mind that your early wins must do double duty; they must help you build momentum in the short term, and lay a foundation for achieving your longer-term business goals.
[…]
An early win that is accomplished in a way that exemplifies the behavior you hope to instill in your new organization is a double win.

Conclusion: Put in the Work before Work

The prevailing attitude to starting a new job seems to be to coast into day one — to show up empty-handed and empty-brained and just take it from there. This is not a recipe for impressing your new team.

Putting in some work before day one to get your mind in the right place, and to get organized as to how you’re going to join this new organization is time well-spent. First impressions matter, and remember you’re holding others back until you reach the point of net positive contributions.

By working to make the best of your first weeks on the job (and prepping for it a few weeks before), you’re going to stand out amongst everyone else, and it will quickly set you up for bigger and better things.

Get after it.


If you enjoyed this, you’ll get more like it every week by joining Evergreen.

Donating = Loving

Bringing you Evergreen takes dozens of hours each week. If you find anything helpful and interesting here, please consider becoming a Supporting Member with a donation of your choosing, between a coffee and a good dinner. Thank you very much! ❤ ☺

Thank you

Massive appreciation for who suggested pieces of content (or wrote something new) for this Edition of Evergreen: Itamar Goldminz, Matt Donovan, Joe Bayley, Mahesh Bhatia, Sam Whiteman, Alberto Villa, Matthew Frost, Tim Harsch, Clay Patterson, and Bo Fishback.

Many thanks for being a part of this project! Not every suggestion is able to make it to the final edit, but every single suggestion is read and appreciated.

Never Enough

As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.

To share your thoughts, improvements or additions: Email or Twitter.

Inspirations

This Edition of Evergreen, along with all of my others and the ideas behind this project, are inspired by the excellent content created online every day. To name a few that hold particular places in my heart:

If you liked this, check out previous Editions of Evergreen:
How to be a Great Employee:
How to Start a New Job: Handling Career Transitions like a Boss
How to Master the Discipline of Product Management
Building the Business:
How to get good business Ideas: Mental Alchemy of Ideation
Product/Market Fit: What it really means & How to Measure it
How to Failure-proof your business with Customer Development
How Strategy and Psychology Work Together to Perfect Pricing
The Most Important Equations in Business - CAC (Part 1)
The Simple Math Behind Every Profitable Business - CLV (Part 2)
How Psychology behind Word-of-Mouth Works
The Secret Core of Every Successful Business--Distribution
The Most Important Lessons in Sales
Strategy and Competitive Advantage:
How to Master the Craft of Strategy
Competitive Advantage: How to Build a Winning Business
The Power of Network Effects
How Cost Leadership Builds Powerful Businesses
Why the Best Brands Stand Out
Building and Managing a Team:
How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
Why Employee Onboarding is holding you back
How to Boost Employee Retention
Secrets to Perfecting Organizational Communication
How Performance Reviews can be Reinvented
How to Fire an Employee
I've also written about How & Why we started Evergreen:
How a prototype's failure created the next iteration
Mission & Method of Evergreen
Follow me on Twitter: @EricJorgenson
And Please... Join Evergreen.

Sign up to continue reading what matters most to you

Great stories deserve a great audience

Continue reading