The Biggest Lesson From Studying Billionaires (Part Two)
This is part two of a two part series on the biggest lesson from studying billionaires and titans of industry. I recommend checking out part one to get the full context, but here’s a brief summary if you want to dive right in.
I’ve studied many of the most successful people in the history of our planet from titans of industry like John D. Rockefeller and Andrew Carnegie to modern day financial wizards like Warren Buffett, Charlie Munger, and Ray Dalio.
What I’ve discovered from studying such a wide array of incredibly successful individuals is there are some striking similarities between what enabled a 19th century oil baron to succeed and what makes modern day billionaires like Bill Gates and Elon Musk thrive.
In fact — there is a core principle that holds the secret to what these uber-achievers unlocked — and it’s something I call “high leverage thinking.”
In part one we talked about the first strategy billionaire high leverage thinkers use — mastering the Art of Decision-making. Click here to check that part out.
Here’s What Rockefeller & Carnegie Do
We just went deep on The Art of Decision-making — now let’s look at the other big strategy used by high leverage thinkers like Bill Gates, John D. Rockefeller, and Andrew Carnegie — hiring people to replace yourself.
Hiring people and constantly replacing yourself is one of the single greatest ways to continuously gain higher and higher leverage on your time. Too often entrepreneurs get caught up in the trap of having to (or feeling like they have to) do it all themselves. This is a dangerous road to walk — and while it can be useful in the early days — it quickly becomes a detriment and ends up bottlenecking your growth.
You often see the most high leverage people doing things that an average person would think is “wasting money” — like hiring someone to do their grocery shopping, paying for lawn care services, having a maid, hiring a handyman to do the work around your house, or paying for a virtual assistant. But it is exactly because a high leverage persons time has become so valuable — that they cannot possibly fathom investing it in an activity that they could outsource for 1/10th or less of their own hourly rate.
This applies in your business too. Anything that anyone else can do 80% as good as you can — in order to leverage your time as effectively as possible you have an obligation to replace yourself as quickly as you can.
I want to share two of my favorite quotes on this topic from some serious titans of industry.
The first is from the book Andrew Carnegie by David Nasaw:
“When A.B. Farquhar, a Pennsylvania businessman, boasted that he was in his office every morning ‘by seven in the morning’ and was the last one to leave in the evening, Carnegie laughed at him. ‘You must be a lazy man if it takes you ten hours to do a day’s work. . . . What I do . . . is to get good men, and I never give them orders. My directions seldom go beyond suggestions. Here in the morning I get reports from them. Within an hour I have disposed of everything, sent out all of my suggestions, the day’s work is done, and I am ready to go out and enjoy myself.’”
The playbook for success has been out there for a long time — over a hundred years ago some of the most successful individuals in history where sharing their exact strategies for how to leverage your time as effectively as possible. But, Andrew Carnegie was only the second wealthiest person in modern history. Let’s hear from the wealthiest.
The next quote is from John D. Rockefeller (from the book Titan by Ron Chernow) when he was speaking to a young recruit at the Standard Oil offices:
“Has anyone given you the law of these offices? No? It is this: nobody does anything if he can get anybody else to do it . . . As soon as you can, get someone whom you can rely on, train them in the work, sit down, cock up your heels, and think out some way for the Standard Oil to make some money.”
That is high leverage thinking in a nutshell. As soon as you can — find someone you can train, replace yourself, and spend your time thinking, reading, learning, and focusing on the big picture — as Michael Gerber would call it — working on your business not in your business — that is the essence of being becoming high leverage.
As Carnegie notes above — you want to hire good people to replace yourself, and that’s not always easy. Going deep on the hiring practices and strategies is well beyond the scope of this post, but I did want to offer a great resources for that journey. The book “Who: The A Method for Hiring” by Geoff Smart and Randy Street is a great starting point for learning how to both source and evaluate talent when hiring people.
Let Go (Of The Need To Do Everything)
One of the first big steps to replacing yourself is letting go of the need to do everything. Needing to do everything is the same thing as knowingly becoming a bottleneck to your own success. It’s rooted in perfectionism and does nothing but hold you back.
Sadly, this is actually more of a curse for people who are very talented — because they know they can do a great job at every piece of the puzzle — they often can’t tolerate when someone doesn’t do it just as they would have liked. The end result, however, is that these people end up frazzled, trying to do 3 people’s jobs at once, and mired in busy work and minutia that they have to do “just right” — missing the bigger picture and destroying their ability to achieve leverage on their time and output.
The sooner you can let go of the need to be in the middle of everything, and realize that it’s OK if someone else does it a bit differently — the faster you can start leveraging your time. As Tim Ferriss notes “what you do is infinitely more important than how you do it.”
A good rule of thumb here is that if someone can perform as task 80% as well as you can, go ahead and give it to them and move it off your plate. Peter Drucker makes this point abundantly clear in The Effective Executive:
“[The effective executive’s] first look at the time record makes it abundantly clear that there just is not time enough to do the things the executive himself considers important, himself wants to do, and is himself committed to doing. The only way he can get to the important things is by pushing on others anything that can be done by them at all.”
Design A System — And Let Your Team Execute It
It always amazes me to see the same themes and ideas echoed across centuries. Ray Dalio is describing the same strategy that John D. Rockefeller espouses — designing and managing a machine that lets you get what you want. A key part of that strategy is constantly replacing yourself in any area where you are weak.
Ray Dalio is a billionaire who was named by Time as one of the 100 most influential people in the world and named one of the 100 wealthiest by Forbes. Ray is known for his unrelenting pursuit of truth — and provides great insight, in his book Principles, into why you should constantly focus on understanding your own strengths and weaknesses and replace yourself with someone as quickly as possible:
“Let’s imagine that your goal is to have a winning basketball team. Wouldn’t it be silly to put yourself in a position that you don’t play well? If you did, you wouldn’t get what you want. Whatever your goals are, achieving them works the same way.
If you see that you are not capable of doing something, it is only sensible for you to have someone else do it. In other words, you should look down at you and all the other resources at your disposal and create a “machine” to achieve your goals, remembering that you don’t necessarily need to do anything other than to design and manage the machine to get what you want. If you find that you can’t do something well, fire yourself and get a good replacement!
You shouldn’t be upset that you found out that you are bad at that — you should be happy because you have improved your chances of getting what you want. If you are disappointed because you can’t be the best person to do everything, you are terribly naïve because nobody can do everything well. The biggest mistake most people make is to not see themselves and others objectively.”
You don’t have to be the person working any given part of the machine — but you must be the one designing it and managing it — guiding it towards the goals that you ultimately want to achieve.
Once you have a system and a trusted team — delegate and give them a large dose of responsibility. In the book The Outsiders by William Thorndike the author examines eight companies that outperformed the SP500 by an average factor of 20x — and uncovers the strategies their management team used in order to achieve such incredible results. One of the core strategies used by these unconventional CEOs was described as “delegation to the point of anarchy.”
Constantly Replace Yourself
I consider myself a pretty lazy person — and that’s why I’ve always loved the Bill Gates quote:
“I always choose a lazy person to do a difficult job, because he will find an easy way to do it.”
In fact — I’ve been able to wield my laziness as a weapon to constantly and relentlessly replace myself in anything I am doing that is not my absolute zone of strength. Whenever a task lands on my desk from one source or another — the first thing I ask myself is how can I delegate this, and if I can’t — the next question I answer is how can I build a system so that it’s possible to delegate this in the future.
It is only by continuously asking “it is really necessary that I do this” that you can start to free yourself from the self imposed constraints of perfectionism and move forward with building a system and a team to execute it — freeing your time to focus on bigger and more important issues.
Focus On Your Strengths
By building a team and replacing yourself — you can focus on your true areas of strength, and spend the most possible amount of time living and working in your strengths. By doing this you achieve a double compounding effect — more if your time is spent in your strengths and you are getting better at those strengths (by investing that time in the Art of Decision-making). Once you truly start to move down this path, you begin to achieve more and more leverage.
It’s been said many times, but I think Peter Drucker sums it up wonderfully in the Effective Executive when he says:
“Making strengths productive is therefore much more than an essential of effectiveness. It is a moral imperative, a responsibility of authority and position. To focus on weakness is not only foolish; it is irresponsible. A superior owes it to his organization to make the strength of every one of his subordinates as productive as it can be.
But even more does he owe it to the human beings over whom he exercises authority to help them get the most out of whatever strength they may have. Organization must serve the individual to achieve through his strengths and regardless of his limitations and weaknesses.”
Focusing on your strengths not only lets you be more high leverage — its literally a moral imperative to only do what you’re good at, and surround yourself with other people who’s strengths fill in your weaknesses.
Becoming A High Leverage Thinker
So there you have it — the essence of becoming incredibly high leverage. These are the major tools and strategies used by history’s most successful individuals. The common themes between a 19th century oil barron and a modern day hedge fund master of the universe are no accident — these principles are the timeless strategies that top performers use to become exponentially more effective than an average person.
Just like compound interest, these changes accrue very slowly, almost imperceptibly, at first, but before you know it — you will look back and be shocked at the incredible leaps and bounds you’ve made and find it hard to pinpoint the exact moment of departure, when you become a High Leverage Thinker too.
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