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A quick Guide to Everything You’ll Learn in Two Years of Business School


If you want to be happy in your job your need to hit the sweet spot. You need a balance of competence (really good at something), passion (need I say more), and opportunity (there is a market need).

Although it is hard to change people, nothing changes people faster than changing their environment. Their environment then shapes the culture.

4C’s of team performance:

  • Context. It includes the reward system, goals, culture, tone, and environment that the team will be working in.
  • Composition. It includes who is on the team and their skills and personalities to get the job done.
  • Competencies. They include having the right people whose combined skill can solve the problem.
  • Change. It includes the team’s ability to adapt to rapidly changing circumstances while working towards the goal.

Corporate financial reporting

Accounting is the language of business.

Assets = Liabilities + Equity. That is called the “Accounting Equation”.

Revenue – expenses = net profit.

Common sized financial statements are a great way to figure out how you are doing over time, or to compare in a similar industry with another.

Financial ratios are a great way to compare how you are doing over time. Here are some of them:

  • Debt-to-equity. Total Liabilities/Shareholder Equity
  • Current Ratio. Current Assets/Current Liabilities
  • Return to Equity. Net Income/Shareholder Equity
  • Net Profit Margin. Net Profit/Net Sales

Dupont Framework is ROE= Net Income/Sales x Sales/Assets x Assets/Equity

Entrepreneurial management

Entrepreneurial Management is about solving unknown problems (pain) with unknown solutions (innovation). The key to solving uncertainty is by identifying pain, and the key to finding the right solution is by experimentation.

Your ideas need to be desirable, feasible and viable.

Pain is any problem or unmet need that customers will spend their time or money to solve.

Gaining broad adoption takes a balance of price, benefits, ease of use, and ease of purchase.

The simple solution to the core problem is Elegance.

Maximize your revenue by mapping it out. Identify which activities and customers it is coming from. Also look at reducing any friction points for receiving the revenue. Pricing is one of the most critical aspects of creating new products.

Managerial accounting

Managerial accounting is for internal use.

CVP analysis is about cost, volume and profit.

Revenue – cost = Contribution Margin

Contribution margin is just a fancy word for what you have left over per unit after subtracting the cost to “contribute” to paying your fixed cost.

Activity Based Costing is important in understanding the overhead costs that happen in the normal course of business.

The Management Process is fairly straightforward. Planning (CVP analysis, operational budgeting), Controlling (activity-based costing), and Evaluating (investment centers) will help inform your decisions.

Business finance

The capital chain starts with capital that is used to buy assets to cerate products that generate sales and increase net income.

The value of an asset is driven by the utility of an asset. For cash utility is the future cash flow.

You calculate present value of something by discounting the total cash flow received in the period by yearly discount rate (that presents uncertainty) for the time period. Formula is PV = CF (total)/(1+r(discount rate))t(time period).


Marketing is about promoting products and services. First rule – you don’t try to serve everybody. Marketing makes its money in segmentation. Get focused on who your target is and then position it from there.

The creation of targeted market is a process. It starts with total population, next you define potential market (interest in buying product), next is available market (has money to buy), then you define qualified available market (segment to find most valuable target), next step is targeted market (who we decided to serve) and the final step is your penetrated market (your current customers).

Laddering is a great way to map out your product, see how it connects with your target. Ask your biggest fans what they like (a particular feature), why they like it (product benefits), why that matters (personal benefit), and how that connects to a high-level personal value. The link between the product and personal benefit is where the magic happens.

Ladder goes like this: product feature to product benefit to personal benefit to personal value.

Manage your brand by managing your touchpoints.

What we do, how we do it, why we do it. We think people care about what we do, or how we do it. Actually, they don’t. People care about WHY we do what we do.

Operations management

Operations management is broken into 3 parts. You are designing, managing and improving a set of activities.

Understand the current operation. Understand the performance. Understand performance required by customers.

Key terms:

  • Lead time: The time between a request and the delivery of your product to the customer.
  • Throughput: The amount of a product a business can create within a period of time.
  • Cycle time: The total amount of time from the beginning to the end of the process.
  • Capacity: Maximum output from a process, measured in units per unit of time.
  • Efficiency: A business’ performance standard. All processes are leveraging resources in the most optimal way.
  • Bottleneck: A process in a linked chain that is slow, reducing the capacity of the whole.

Strategic human resource management

Systematic hiring:

  • Identify purpose for hire.
  • Put together job definition.
  • Define tasks.
  • Prioritize tasks.
  • Define needed competencies.
  • Ask behavioral questions & rate responses.
  • Hier & onboard.
  • Evaluate employee.

How do you motivate employees?

MPS – motivating potential score. MPS = ((skill variety + task identity + task significance)/3) x autonomy x feedback.

Herzberg’s motivation-hygiene theory.

Performance = competency x motivation x opportunity.

Business negotiation

The negotiation framework is simple yet powerful. Apply this framework and get what you want much more often. Negotiation framework starts with situational factors and bargainer characteristics, then we move to negotiation process and then we have negotiation outcomes.

Sources of individual power can be:

  • Legitimate power.
  • Reward/coercive power.
  • Expert power.
  • Referent power.
  • Personal power.

Attributes of persuasion are:

  • Power
  • Credibility
  • Attractiveness

Situational factors are goals (of buyers and sellers), interests, setting (place and time).

Parties with more alternatives and lower needs have the most power.

Principled negotiation:

  • Separate people from problem.
  • Focus on interests not positions.
  • Look for options for mutual gain.
  • Use fair standards and procedures.

The best negotiators don’t go in linear order.

Think about: what is your goal, who are you negotiating with, what is your incremental plan.


The 5 competitive forces: new entrants, bargaining power of customers, threat of substitutes, bargaining power of suppliers, and rivalry among existing competitors.

Differentiation just takes creativity. Even in commodities business.

Basis of competition isn’t the product. Industry structure matters. If all 5 forces are maximized, stay away.

A company creates a strategic advantage when it has various connected activities that support its core differentiating value.

Perspectives from customers or competitors. VRIO framework: valuable, rare, cost of imitate and organized. Running your idea through the VRIO framework can help determine whether or not you will have the chance for a sustained competitive advantage.

Alliances are critical in expanding your business, but they need to add value that you couldn’t get on your own.

Business ethics

When in doubt ask yourself, “Would I be okay if this decision ended up on the 5:00 news?” If not, then don’t do it.

Entrepreneurial finance

Entrepreneurial Finance is all about creating value as quickly as possible through a series of strategic activities.

Execution is critical.

Venture life cycle:

  • Development – seed financing.
  • Startup – startup financing.
  • Growth – first round.
  • Expansion – second round, mezzanine, liquidity stage.
  • Maturity (potential exit) – obtaining bank loans, issuing bonds, issuing stock.

VCS care most about management team and market. Their compensation 20 % of profit and 2 % annual payback.

5C’s of credit:

  • Character (credit history and reputation).
  • Capacity (ability to repay).
  • Capital (contribution of the borrower).
  • Collateral (assets put up by the borrower).
  • Conditions (how the borrower will use it).

Judgment and decision making

Decision – be proactive.

  • PR – problem.
  • O – objectives.
  • A – alternatives.
  • C – consequences.
  • T – tradeoffs.

Work on right decision problem. List all your objectives. Brainstorm your alternatives. Think about consequences and tradeoffs.

Heuristics & biases:

  • Availability heuristic – primacy, recency, surrogation.
  • Representative heuristic – base rate neglect, gambler’s fallacy, hot hand fallacy, illusory and invisible correlations.
  • Prospect theory – loss aversion, disposition effect, framing effects, fairness concerns.
  • Anchoring & insufficient adjustment – curse of knowledge, hindsight bias.
  • Overconfidence – Dunning-Kruger effect.
  • Motivated reasoning – wishful thinking, confirmation bias, information pursuit bias, sunk cost fallacy.

The general manager’s role

General management is all about solving problems and resolving issues – all being accomplished with only limited knowledge.

Structuring the problem begins by first coming up with a SMART problem definition. Learn to ask great questions. Solve the problem with highest benefit and lowest cost.

Change is about unfreezing, change, re-freezing steps.

How to get people through the change:

  • Sell the problem (emotion), not the solution (cognitively).
  • Identify who will be losing what.
  • Accept the reality of subjective losses.
  • Treat the past with respect.
  • Breaking with the past ensures continuity of what really matters.

Every beginning ends something.

4P’s of change:

  • Purpose – why are we moving.
  • Pictures – what will it look like.
  • Plan – how will we get there.
  • Part – where do I fit.

When introducing people to the process of change, help them understand the purpose, picture, plan, and their part.

Large organizational change needs to be strategic, calculated, and precise. It can’t be a shotgun model; it has to be more like precise rifle shots.

Strategic thinking

“Success is going from failure to failure without loss of enthusiasm.” Churchill

Counseling together is different than collective decision making. One is about gathering the best insight to help inform a decision the other only leads to “temporizing” (or meeting in the middle), which is ineffective. Strong leadership listens but also knows when to make a decision.

Creativity and innovation

The problem today is most people spend time consuming versus creating. Divergence is having a lot of ideas; convergence is to get to the best idea.

Become a “t” person. Be an expert in something and constantly grow your breadth.

Associative thinking methods: twilight thinking, brainstorming, mindmapping, idea log, six thinking hats.

Problem – gap between what is and what should be.

Pain – personal cost to me. Any problem or unmet need that people will pay to solve.

Systematic Inventive Thinking (SIT) is a technique to take existing products and create new innovations from them by applying 5 different thinking models. Using approaches like substracting, multiplying (same objects used in different jobs), dividing, unifying tasks, breaking symmetry.

Startup marketing essentials

Five ways to find great ideas:

  • Solve everyday pain.
  • Ride the wave of interest.
  • Stretch or entertain to the extreme.
  • Build on a core product. (Make them the best or most fun.)
  • Cool hunting. (What is the most profitable in other countries that we aren’t doing here?)

Think about what about your product will get people to talk.

Questions to ask for new products:

  • Is it unique?
  • Is there a large addressable need?
  • Does it dominate a specific usage situation?
  • Is its distinction and/or benefit easy to see?
  • Is there quantitative evidence of product superiority?

The competitive angle has three parts. A – helps someone over a hurdle, B – is distinct, C – creates a positive personal connection.

The reality is, most customers are using your product for reasons other than you originally thought.

The best product is one where you know who is going to buy the company before you even start.

Situation statement: (Target Customer) wants to (resolve pain-point/enjoy fun-point) but can’t because of (hurdle); (product) gets (target customer) over the (hurdle) by (value innovation).

Performance and incentives

The agency theory states that the agent will want to maximize utility for one’s own benefit. Goal incongruence is when the principal and the agent’s goals don’t align. The reality is that people want the most amount of money while doing the least amount of work.

Organizational architecture is built on three pillars: decision rights, performance measures and incentive systems.

Watch out for surrogation. This is when the measure itself becomes the end.

Global management

Global management is about taking your product or business out to the world while being aware of the local needs and cultures in order to increase your chances of success.

CAGE distance framework: cultural differences, administrative differences, geographic differences, economic differences.

Putting it all together

Start. Find out who to serve. Come up with an idea. Experiment. Validate your idea. Plan. Map your strategy. Decision making. Branding. Business entity setup. Launch. Marketing. Measure & diagnose. Refine your product & marketing. Problem solving. Leadership. Ethics. Building teams. Performance improvement. Employee retention. Managing change. Grow and invest in the business. Global expansion. Operations.Negotiations.

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