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At the core, every business is a collection of five Interdependent processes, each of which flows into the next: 1. Value Creation — discovering what people need or want, then creating it. 2. Marketing — attracting attention and building demand for what you’ve created. 3. Sales — turning prospective customers into paying customers. 4. Value Delivery — giving your customers what you’ve promised and ensuring that they’re satisfied. 5. Finance — bringing in enough money to keep going and make your effort worthwhile.
Roughly defined, a business is a repeatable process that: 1. Creates and delivers something of value… 2. That other people want or need… 3. At a price they’re willing to pay… 4. In a way that satisfies the customer’s needs and expectations… 5. So that the business brings in enough profit to make it worthwhile for the owners to continue operation.
Every successful business (1) creates or provides something of value that (2) other people want or need (3) at a price they're willing to pay, in a way that (4) satisfies the purchaser's needs and expectations and (5) provides the business sufficient revenue to make it worthwhile for the owners to continue operation.
A counterintuitive way to gain insight into a new skill is to contemplate disaster, not perfection. What if you did everything wrong? What if you got the worst possible outcome? This is a problem-solving technique called inversion, and it’s helpful in learning the essentials of almost anything. By studying the opposite of what you want, you can identify important elements that aren’t immediately obvious. Take white-water kayaking. What would I need to know if I wanted to be able to kayak in a large, fast-moving, rock-strewn river? Here’s the inversion: What would it look like if everything went wrong?
Value can’t be created without understanding what people want (market research). Attracting customers first requires getting their attention, then making them interested (marketing). In order to close a sale, people must trust your ability to deliver on what’s promised (value delivery and operations). Customer satisfaction depends on exceeding the customer’s expectations (customer service). Profit sufficiency requires bringing in more money than is spent (finance).