Hi Sophie,
This step is about why restaurants Fail – controlling all three of the classic factors of production.
Initially I wasn’t sure if I could relate to this one, but it turned out to be a really interesting way of looking at success in any area of life, and being able to assess if something has what it takes to succeed, or why something failed, and in doing so being able to see patterns that help us make better decisions in all areas of life, and to actually drive our decisions rather than just going where we’re expected to go or taking whatever comes up.
He started out on the premise that restaurants have an above-average failure rate, even though everybody eats food. This is something that I knew, but never looked at in terms of why, other than where they’re located or how good the food is.
I saw a principle in his quote by Aristotle – basically that to be angry is easy, but to be angry at the right person, for the right reason, at the right time, with the right intensity, etc… that is hard.
That’s so true, and something I never really looked at – on the surface something can appear to be so easy, but to do it where it’s actually effective or useful can really be a challenge. I can see that we can look at business, health, whether or not to go to college, etc., using this same principle – it might be right on the surface, but not necessarily the right conditions, not necessarily right now.
He used going to college as an example…. to say people should always go to college, or never go to college – these are brainless decisions. I can really see this – I think the principle is that just doing something because that’s what everybody does or it’s socially acceptable or it’s just ‘what you do’ is totally brainless. What I also never considered is that it totally removes our power, and our responsibility and accountability.
This is how we do basically everything, and as I’m looking at it this just facilitates our becoming a beach ball in the waves. I went to college because that was just ‘what you do’ – you go to high school then you go to college, that’s really the only reason I went, as well as pretty much everyone I went to school with.
Most of us took general courses, because we had no idea what we wanted to do, and then picked something that sounded cool, and we don’t remember any of it. Looking at it in this light, those of us who did it this way had no business being in college… we didn’t own it, didn’t value it, and ultimately didn’t get some great job as a result of what we learned.
I worked around the clock to pay for my tuition, which you would think would have made me value it more, but I really had no direction, no focus, no end goal. It’s so interesting to look more deeply into this and see how many things we do this same way… we apply to a bunch of jobs just because they’re available, pick one that we can manage to get, and stay there floating along like the beach ball, learning whatever someone tells us we have to learn for that job.
We start to date someone, and maybe it’s not that exciting but it’s there and it seems better than being alone, and the next thing we know we’re looking back at a long marriage wondering if this is all there is. We get illnesses, and we go to a doctor because that’s what you do, and then we do what they tell us, without doing our own research and taking an active role in our health… we do this everywhere.
I think there’s a principle in that ‘Sometimes you just have to sit in a chair in a dark room until you come out with a thoughtful, brain-powered idea’… wow, definitely something I never considered, but now that I’m looking at this that would be a great practice to develop. I can see that it’s not always a ‘should or shouldn’t’… in the right time, the right place, the right scenario, it can be a good decision… but it’s not black & white.
I saw for myself that going to college with no focus at all is pretty much a waste of time, we end up not remembering anything. The students who went with focus had a totally different experience – an end goal in mind that gave a context and direction to the whole thing.
This is a really interesting way of looking at things, probably especially for people like me who were raised to see everything as ‘this is just what you do’ or ‘what you don’t do’… a black & white viewpoint. I can clearly see here that it’s not always black and white, and that we actually have a responsibility to look at the decisions we make with some brain power, some contemplation, and to take accountability for how it pans out.
In this light I can say ‘not necessarily’ instead of ‘never’, or ‘maybe’ instead of always, not just in decisions that come up, but in other areas where there’s a stigma of some kind – politics, work situations, it opens the door to seeing other possibilities than what I’ve always seen – I’m seeing here that when you say ‘always’ or ‘never’ you stop looking at other possibilities or options.
He goes on to map out 3 classic factors of production – land, labor and capital, that ultimately are a principle that I now see is applicable to every area…
- Land, representing connections, such as ‘who you know’, or how you’re positioned, is a land advantage.
- Labor, being the team around you and the skills they have, and the skills you build, and
- capital, meaning cash available to use in your business to invest into things or to operate.
This would be a principle, because it applies in all areas… it can apply to our bodies, and actually affect our health, as far as who we surround ourselves with, what information we take in from different people about health, and how much money we have to eat well and take care of ourselves.
Even health takes land, labor and capital.
Who knew – I definitely never looked at it this way. In social life, who are we around? How much do I know about winning friends, and being charismatic and interesting?
As of late I’ve been learning how little I actually know about that… also I never considered capital in terms of How much money do I have for things like gifts, plane tickets, etc., but of course you definitely need some money for those things as well… to take a friend to lunch, help someone out in a rough spot, all of those things. In this light I can see that in every area, in a nutshell it takes the right environment, the right people and skills, and some money to put into it. Very interesting to look at every area in this way, that these three things are actually needed to have happiness in every area of life.
Along these lines I can then see a principle in that when one of these three is missing, whatever area it’s in, it won’t succeed or bring the desired results or happiness. Looking at restaurants, why restaurants fail is they are missing one or more of these three factors.
I can see that in every area of life – Many people are well connected and have skills, but not capital, or lots of capital, but no skills or people with skills for what they want to do.. I see a principle in that in a world of 7 billion people, there have to be some areas where we have an advantage.
I see another principle in his quote from The Art of War… basically that one of the things that makes you win is knowing the terrain. It gives positional advantage. That’s definitely a principle that applies to every area. It’s definitely true that you can’t beat someone at their own game… I see this as similar to the last step, we don’t want to TAKE advantage of others, but we are each trying to survive and make our way, and I’m seeing this as ‘if I don’t take care of myself, who will’? More as my responsibility, doing my part to survive.
Another principle is that we can choose things where we have an advantage to find areas where we can thrive. I see another principle from that book ‘Managing Oneself’ – that you can’t build on weakness. That’s something I really never thought about…. we can shore up our weaknesses so they hinder us less, but there’s no way to BUILD a life on them, nothing to use as a springboard forward.
I think another principle is that it’s not about taking advantage, but more of having an objective advantage in order to succeed, and that We are actually happier, if we can find that state… ‘the zone’…. we can get there by knowing our advantages, and operating more & more with our advantages… We can get better at persuasion techniques, cognitive bias, whatever it is, to get there. I’m looking at the few times where I felt in ‘the zone’… there aren’t many.
One was playing volleyball. If I look at that, we practiced constantly so we had the skills, we had great coaches and teammates, and it even required some capital, because our parents had to buy shoes, kneepads, and whatever else… our team was pretty successful, and it did have those three components. And looking more at that, there was a lot of happiness, camaraderie, and of course victories… I can see other areas where it’s clear these three pieces are in place, in every area.
Looking at Labor… where the easiest way to succeed here is in terms of increasing personal skill, or building a skilled network of people – what’s really interesting is to look at this in terms of getting to where you DESERVE IT – I definitely never looked at building skills in this way, but this really makes me want to take the responsibility to build the skills to DESERVE it, as opposed to passively waiting for it to come.
They do say that ‘the more you learn, the more you earn.’, I see that as the more you learn, the more you deserve to earn… I see that as a principle, it definitely applies in every area. Another principle is ‘To get what you want, we have to deserve what you want, the world is not yet a crazy enough place to reward a bunch of undeserving people.’… I really like that quote.
I also see a principle in the Law of 5%… out of a scale of 1-100, we have to try to get to at least a 95 to have an advantage in order to stand out in a world this competitive. This is another new way to look at it, seeing how much competition there is out there in pretty much every area.
Looking at Cash… selling something, raising capital… making sure you’re a good STEWARD of the money you have. This has definitely been a weakness of mine, and I can definitely see a principle in looking at ‘you get what you deserve’, in terms of money.
This is a habit I need to acquire. I’m not surprised to hear that capital is the one that hits people the most. I think there’s a principle in ‘Many successful people start with no money, or raise money, but the best way to start is to be a good steward of the money we have.’
That makes total sense – how would anyone trust us to give us capital if we haven’t proven that we can handle it well? I have seen this myself in business. This is another area where they don’t show the process anywhere… people who scraped and saved for 10-20 years or really sacrificed in some way, often their families or time with their kids… we don’t get to see that part. I’m seeing becoming a good steward of the money we do have also as a skill to build in order to succeed. It’s so interesting to look at these things in terms of looking at whether or not something will succeed…. looking at businesses, individuals, a product that takes off, a product that fails… are there successful habits there? Unsuccessful habits?
It will be interesting to look at those different things and people that have succeeded and failed to see which of the three things was missing – This is a totally new way of looking at things in terms of will they succeed, why did something fail, looking and learning to isolating patterns, to where we can make good decisions and not have to worry about failing because we understand these three things.
Looking at imagining that we want to compete with Warren Buffet -taking a look: Do we know more people than Warren Buffet or Charlie Monger? Do we have any skill in comparison to the skills they have built? What about capital? Looking at it, I can see that we would conclude we probably don’t want to go up against them. But if we choose a totally different area they are not familiar with, we probably have a better chance, because we’re not competing with them.
It’s so interesting to look at these three things in terms of if I’m not happy where I am, in any area do I not have one or more of these advantages? Did I go too broad in competing with people? Did I have enough capital? I see a principle in ‘Look for something with an all-encompassing approach… do I have all three things’? And not to be great at all three, but to be good in COMPARISON to the other options that customers have in that area… I think that’s a good principle as well, in any area, because I could see the tendency just to focus on the being good part without taking the competition into consideration.
I can see where you would want to have all three of these before taking big steps in any area. LOOK first… at LAND – am I connected? Do I know a lot of people? If I’m looking for an advantage, do I know more people than my competition? Am I more connected?
So maybe we wouldn’t choose to compete with someone like Warren Buffet in those areas, but maybe he’s weak in one area… can we be good at that area? Maybe we choose an area where we can actually compete or have an advantage. If I fail, I can look – did I have an advantage in an area? Which one did I miss? I guess the principle is ‘Have an all-encompassing approach, where I can have an advantage in all areas, in comparison to my competition.’
I really see this step as such a useful one, this can be applied to any scenario, not just to consider all areas in terms of success, but also in shedding light on areas where I can take responsibility, take steps to take care of myself where no one else will, and again to take the power rather than giving it away by just going through the motions. I will look for these in every area, to help develop patterns to look for, with the goal of being able to at some point recognize the patterns and use them to make brain-powered and thoughtful decisions rather than being the beach ball in the waves. This was really a good one.
-Jodie