Compendium 29 — Your Next Five Moves
“Every master, both in chess and in business, learns more from studying the moves that led to defeat than the ones that led to victory.” ― Patrick Bet-David
📖 Brief Overview
Your Next Five Moves by Patrick Bet-David is a business and strategy book that provides actionable insights for individuals seeking success in their professional lives. Drawing on his own experiences as an entrepreneur, Bet-David offers practical advice on strategic thinking, decision-making, and planning. The book emphasizes the importance of anticipating multiple moves in business, rather than just one or two, to outmaneuver competitors and achieve long-term success. Bet-David introduces concepts such as the "Rule of Three" and the "Investment Time Return (ITR) formula" to guide readers in making informed and strategic decisions. Bet-David also explores the significance of staying adaptable, learning from diverse perspectives, and aspiring to greatness by emulating heroes.
Your Next Five Moves serves as a guide for individuals at various career stages, providing them with tools and strategies to navigate the complexities of the business world.
🏆 Main Takeaways
Strategic Thinking for Business Success: Anticipating Five Moves Ahead
Strategic Thinking for Business Success:
Effective strategy in business goes beyond short-term moves. Thinking one or two moves ahead is amateurish; the key is anticipating multiple moves and being ready for market or competitive reactions. Transitioning from a sales role to a CEO involved learning to think at least five moves ahead. The sweet spot for thoughtful strategy and swift action is five moves, preventing paralysis by analysis. Successful leaders master the macro-level strategy, focusing on five essential moves for business success.
The Power of Multi-Move Planning:
Binary thinking, where answers are limited to yes or no, oversimplifies business challenges. Strategic thinking involves understanding that answers are a series of moves deployed in sequence. Planning is crucial, and enthusiasm must be coupled with a multi-move strategy. Shifting from one-track thinking to foreseeing many moves ahead is essential for reaching the next level. Regardless of your career phase, the ability to think five moves ahead sets shrewd strategists apart. The key is anticipation, resembling military leaders planning ahead or poker players sacrificing early to win the long game.
Sequencing and Self-Awareness in Career Moves:
Many fail to recognize the sequence of moves in business and lack strategic planning. Enthusiasm without proper planning can lead to premature moves. Recognizing your identity and goals is the first move, crucial for effective planning. Shifting from one-move thinking to multi-move anticipation is necessary for career advancement. Quitting a job may be a later move, and there's a sequence based on individual circumstances. Shrewd strategists, regardless of their career phase, excel in anticipating future moves, reflecting self-awareness and long-term planning.
Versatility in Business Paths:
The beauty of business lies in its adaptability to individual paths. Whether you're a CFO, an entrepreneur, or a freelancer, there's a strategic path for everyone. The common factor is self-awareness and the willingness to think five moves ahead. Shrewd strategists understand that success comes from anticipating future moves, much like military leaders, fighters, and poker players who plan ahead. Even in business, akin to Warren Buffett's approach, sustained success results from patient, strategic moves designed for the long game rather than immediate gains.
Aspiring to Heroism: A Visual Odyssey
Aspiring to Heroism:
To elevate your ambitions, strive for heroism. Consider the actions of your heroes and ask, "What would they do?" This mindset, exemplified by books like "What Would the Rockefellers Do?" prompts strategic thinking and challenges you to embrace greatness. Bet-David, emphasizing personal commitment to this idea, shares a unique office painting titled "Dead Mentors," featuring influential figures like Albert Einstein, John F. Kennedy, Tupac Shakur, and Marcus Aurelius. Each mentor embodies distinct traits, symbolizing diverse philosophies, approaches, and lessons in leadership and life.
A Personal Council of Luminaries:
Bet-David’s office painting, "Dead Mentors," serves as a visual reminder of heroic traits embodied by influential figures. From John F. Kennedy and Abraham Lincoln to Tupac Shakur and Marcus Aurelius, these diverse personalities offer lessons in leadership, resilience, and humility. The painting symbolizes the Bet-David's commitment to learning from varied perspectives and approaches. The inclusion of an empty seat suggests the ongoing quest for wisdom, inviting contemplation on one's personal assembly of mentors, dead or alive, who offer valuable perspectives and counsel.
Challenging Yourself to Emulate Heroes:
Surrounding oneself with images of heroes serves as a powerful source of inspiration. Bet-David's painting and custom bookshelf in the office create an environment that prompts big thinking and clear decision-making. The act of plotting the next five moves in this inspiring space reflects a commitment to heroism and the ideals of those being emulated. The message is clear: aspiring to be a hero involves actively embodying the desired traits and acting as if you are already on the path to becoming the person you aspire to be.
The Impact of Heroic Surroundings:
Our heroes inspire us, and surrounding ourselves with their images reinforces their influence. The more we see these figures looking at us, the more likely we are to act heroically. Bet-David prompts introspection, asking, "Who do you want to be?" Emphasizing the importance of clarity about the desired life, the conclusion suggests that embodying that vision immediately transforms one's actions, aligning them with the hero they aspire to become.
Strategic Decision-Making: The Power of ITR
Strategic Decision-Making with ITR:
Successful decision-making involves a meticulous consideration of both time and money. Amateurs often let emotions guide their choices, reacting impulsively. Bet-David emphasizes the importance of applying the "rule of three" and the Investment Time Return (ITR) formula. This entails creating three different proposals for an issue with varying costs, allowing for informed choices. The ITR formula involves assessing the time frame, calculating costs, and determining the return on investment.
The Rule of Three in Decision-Making:
Implementing the "rule of three" in decision-making requires creating three distinct proposals for addressing an issue, each with different costs. This approach encourages financial flexibility and maximizes the value derived from any chosen action. Bet-David contends that having only one option limits financial options and advocates for a comprehensive assessment of various proposals. The rule of three fosters strategic thinking and prevents hasty, emotion-driven decisions.
Consideration of Time Frame and Urgency:
When employing the ITR formula, understanding the time frame is crucial. Evaluating the cost and time relationship allows for strategic decision-making. Bet-David suggests weighing whether spending more to expedite a project is justified, emphasizing the interplay between cash flow, project urgency, and the potential return on investment. By factoring in the urgency and cost of capital, businesses can make informed decisions that align with their financial capabilities.
Calculating Return on Investment:
The ITR formula involves calculating the return on investment by considering costs, time, and projected returns. Bet-David provides an example where a $200,000 project, taking a year to complete, reduces the risk of losing clients by 8 percent. By calculating the potential return based on existing business metrics, such as the number of contracts and their value, businesses can make informed decisions. Bet-David advocates for a comprehensive approach, including assessing potential downsides and worst-case scenarios before committing to a project.
Realistic Assumptions and Breakeven Analysis:
One common pitfall is relying on best-case scenarios. Bet-David urges businesses to be realistic in their assumptions and conduct a breakeven analysis before committing to a project. Even if the investment saves only a modest percentage, a thorough understanding of the breakeven point ensures that businesses can make financially sound decisions. The emphasis is on practical application of the ITR formula, requiring careful consideration of various outcomes and avoiding complacency with positive projections.
Critical Skill: Investment Time Return (ITR):
The Investment Time Return (ITR) formula emerges as a critical skill in decision-making. Contrary to needing advanced mathematical skills, businesses are urged to think through the ITR formula by considering costs, time, and potential returns. This skill is positioned as essential for strategic decision-makers, emphasizing the need for a nuanced understanding of financial implications and the ability to anticipate multiple outcomes.