Rigging the Game
Rigging the Game

Rigging the Game

Notice that it’s multiplicative instead of additive, meaning that uncertainty and powerlessness amplify each other exponentially; a tiny increase in uncertainty and a tiny increase in the feeling of powerlessness will compound into massive amounts of anxiety. (Location 203)

Financial Anxiety = Financial Uncertainty x Financial Powerlessness (Location 207)

Once you have the context behind the success you want to model and the necessary mental framing and action steps to implement it in your own business, the mystery surrounding financial certainty and risk reduction becomes a lot less intimidating and frightening and instead becomes something you can feasibly conquer. (Location 210)

Successful people don’t necessarily win all the time—and what we tend to label “good luck” is actually just preparedness for the known unknowns; put another way, they have rigged the game for the unknown. (Location 224)

is not enough to protect us (Location 245)

While we are wired for biases, most design their systems to assume they are not subject to biases. Or that this time, they will try harder, as if trying harder is the simple solution to everything. (Spoiler alert: It’s not). (Location 247)

It’s better to build a system where you can run consistently at an average pace. And when you run faster, it’s a bonus—but not the expectation. (Location 266)

Not only does this approach set you up to win—and even overachieve—it allows you to let go of the shame and guilt of not achieving perfection every time. (Location 267)

The Human Mindset is Kahneman’s System 1 and establishes that without a system or solid framework to make decisions, you will lean heavily on your hardwired biases. (Location 271)

The Champion’s Mind is Kahneman’s System 2 and is oriented toward success. The Champion’s Mind is not set or fixed. While a select few seem to come naturally inclined to adopt the Champion’s Mind, it’s not a birthright. It can be honed with intentional practice, and while it doesn’t have first dibs, it does have the final say if we have the tools to put it to work when necessary. (Location 277)

On the other hand, System 2 is the slow, controlled, analytical and thoughtful method where logic and reason dominate. (Location 290)

In the words of Viktor Frankl, Holocaust survivor, neurologist and psychologist: “Between stimulus and response, there is a space. In that space is our power to choose our response. In our response lies our growth and freedom.” (Location 300)

Let’s say you’ve achieved a seven-figure business and then no longer have a seven-figure business. But you’ve anchored yourself to the idea that you have a seven-figure business and now you need to take every action to avoid the loss of having to say that you don’t actually have a seven-figure business. This is an expression of the anchoring bias or the cognitive bias, which causes us to rely on the very first piece of information we’re given about a topic. (Location 305)

Indexing, at its most basic, is a way of sorting data into categories (most commonly into a database or table for later use). (Location 315)

Group indexing, on the other hand, is based on averages. You’re likely pretty similar to the average example of someone in your demographic for age, height, weight and the area in which you live. (Location 320)

This isn’t necessarily to eliminate them because that’s not realistic. But you can build those biases into the systems you use to make decisions so that those systems are perfectly designed to generate the outcome that serves you and your priorities best. (Location 325)

Any time you go from zero to one, the relative change is undefined. But we try to build a system where the change is zero to 1,000. (Location 330)

So unless you have the unique disposition to maintain extremes in perpetuity (it’s prudent to assume less than .1 percent do), it’s better to build the system assuming that you are subject to biases. Then, if you aren’t subject to any biases, that just creates an additional upside. (Location 331)

Unfortunately, business owners work the same way—they are unknowingly beating themselves by trying to push harder on the gas without releasing the emergency brake. (Location 373)

Since this book is all about rigging the game in your favor, let’s look at people who figured out that business is a game in the first place. (Location 379)

We know them for setting their own rules and not playing anyone else’s game. Do you think Oprah decided to twiddle her thumbs and do as she was told until she hit her big break? (Location 383)

Every success story you’ve heard about enigmatic leaders such as these is rooted in personal passion. Ask yourself: What allows you to play your game? In other words, express yourself for who you are before you were told you had to be someone else to “make it.” (Location 388)

I’m saying you need to play your own game. In researching this book, I read a lot about extraordinary leaders and there was no single data point that correlated success with being agreeable. In fact, the consequence of playing your game is that you end up saying “no” a lot. (Location 401)

The point is that we don’t have to conform to one way. The cognitive load is much too great to pretend to be someone else. It’s a bit hyperbolic, but you would have to be a sociopath to yield consistent results over a long duration of time while playing someone else’s game. It’s a fragile and thus unsustainable construct. (Location 420)

Instead, these individuals attained the success they have because they have been playing their own game and no one else’s since long before we even knew their names. (Location 428)

The most successful business owners—rather, the ones who consistently get what they want—are the ones who make moves that bring them closer to what they prioritize rather than focusing on activities that maximize shareholder value or bring them more clients, resources or revenue. (Location 432)

So how do you figure out how to stay in your own lane, in a game built entirely for you? You have to go beyond saying who you are and take massive action. Success isn’t made by thought alone. Unless you’re a sociopath, how can you expect to consistently get results while acting like someone you’re not? (Location 440)

In order to achieve the success that they have, these business owners had to adopt a paradigm, a set of assumptions that allowed them to play at the highest level possible without thinking through every little detail. (Location 453)

The values people think are driving them are not the values or principles they actually use in their everyday lives. (Location 459)

With a sound operating system like the one I’m going to teach you in this book, and a little bit of awareness, you can start to recognize the inconsistencies in your behavior and put our espoused values to the test. (Location 461)

Instead, we should take from it not that we should copy their toolkit, but rather we need to create our own toolkit. (Location 482)

It’s how we modify or combine those tools that creates something unique to us. But, we are all starting with the same base set of options. (Location 491)

People who seem to win constantly aren’t better than you. Yes, they have identified their biases and play by their own rules, but they are also using a different toolbox than you are. (Location 519)

To build a working system, we must tell it what we want it to accomplish. And for that system to work, we need a new orientation. That orientation is toward the least amount of effort, the least amount of risk and the most amount of optionality. (Location 552)

The consequences of maximum effort and maximum risk is that we are left with no options. We’ve backed ourselves into a corner where now everything has to work or we are doomed. (Location 558)

That creates a fragile system. Instead, we need to acknowledge that what we want will change and create a system dynamic enough to adapt. (Location 578)

All too often, I see business owners doing exactly that—unknowingly optimizing for the wrong things. At the root of this is a lack of base assumptions to reference under all conditions. (Location 586)

“The greatest test of your expertise is how explicitly you understand your assumptions.” (Location 589)

These Commandments power the entire operational system, so we will regularly come back to them. In any situation we’re faced with, we need to use our toolkit to determine whether or not we’re about to violate our Commandments. (Location 594)

Every action we take needs to get us closer to what actually matters. (Location 609)

Instead of focusing on more, we need to get clear on what we want. Not what someone else wants because, remember, we aren’t playing someone else’s game. Remember to create a system that is optimized for your rolling average so anything above is a bonus. (Location 612)

Dr. Jeff Spencer’s number-one piece of advice for high performers is a single word: restraint. He explains that “the key word in the champion’s vocabulary is restraint. We have our best day, our best week or our best month, and at that point we are at the highest risk of pushing just a little too far and blowing ourselves up.” (Location 634)

Unfortunately, amid the joy at how well the organization is growing, the risk of bad things happening is also increasing. And those “bad things” often show up in sleepless nights for you, constant metaphorical fire drills and a slew of other issues that begin to pull you away from the goals you want to reach. (Location 676)

You hire a new employee based on the idea that the extra manpower will save you time in the long run. But inevitably, the new reports coming from that new employee will require more management time each week—on average, four hours more. (Location 696)

More accurately, you may be trying to outspend or outsell something that can’t be solved with either of those approaches or indeed with any approach that values adding more of anything. (Location 708)

The point is that the business decisions we’re facing are preference-based. That means you have to get clear on what it is that you actually want. (Location 761)

See, not only do the answers to questions like these vary, they depend on your specific preferences. You need to ask yourself: What are you prioritizing? (Location 779)

You apply friction to it, thereby reducing acceleration. So what is the friction that exists in our business? It’s us. (Location 793)

Momentum is everything in business. The term “momentum” refers to the quantity of motion that an object has. Any object with momentum is going to be hard to stop, and it’s much easier to steer, pivot or direct an object with momentum behind it. One of the serious consequences of binary thinking is that it can be a complete and total momentum killer. (Location 798)

The spreadsheets have a use but they’re a momentum killer if we haven’t first run the questions through the filter of what we want. (Location 807)

Cognitive burden is an unaccounted-for cost. This isn’t something that’s taught in business school because there are teams that exist to handle each component of the business. (Location 812)

Any business owner who received a fairly traditional business education (business schools, coaches) probably spends a lot of time building elaborate spreadsheets to keep track of costs and expenses. (Location 827)

A common way for this effect to manifest is to assume that your time is “too valuable.” That assumption often projects that certain tasks are beneath you, or projects and tasks that seem simple to you are a waste of your time, energy and resources. (Location 886)

Then when we look at the profitability of the business, they are barely getting by—or worse, they are losing money, month after month, year after year. (Location 892)

Take your profits plus your wages and divide that by how many hours you work. For example, if your profits plus wages total $100,000 and you work 2,000 hours per year, then the value of your time is $50 per hour ($100,000 / 2,000 hours). If your profits plus wages are a negative number, say -$50,000, and you work 2,000 hours, then every hour you work is -$25. (Location 894)

How can I leverage the time I’ve freed up so that I get a better return? (Location 903)

In other words, the data suggests that you are putting in too much effort because you’re not working on the tasks that yield the highest leverage in your business (because if you were, you’d have a higher hourly rate). (Location 904)

The biggest risk is that we don’t get what we want out of our life. Full stop. (Location 914)

What this demonstrates is that any step in the process that is less than 100 percent reduces the overall reliability of the plan. (Location 943)

The simple truth is that business is basically gambling and we’re essentially 100 percent commission. (Location 965)

No matter how smart or meticulous you are, if you are an entrepreneur, you are a gambler. You’re going to have to make more than a few bets as you go along, and believe it or not, there are ways to assess these bets and determine whether they might be worthwhile. (Location 967)

As it relates to asymmetric risk, there are two sides: asymmetry to the downside and asymmetry to the upside. (Location 976)

It allows us to mask what we’re really doing—we are making a bet. And when you’re betting, you’re gambling. (Location 986)

But, alas, the data says that most businesses don’t survive past five years and even fewer make it past 10. (Location 989)

First, there’s significantly more upside than downside. The best entrepreneurs out there are constantly on the lookout for asymmetric bets. Here is an expanded version of Jeff Bezos on risk: Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. (Location 996)

Second, we must not risk complete ruin. Another way to think about this is that we must be okay with the worst possible outcome. (Location 1004)

Don’t make bets that include the possibility of destruction to your business, your finances, your goals or your life in general. If you go all in on a game of Russian roulette, the worst outcome is that you lose your life. There are no second chances if you have a bad round. That would be the major problem with choosing to play the game. (Location 1007)

In less extreme terms, consider a night at the regular roulette tables. Each round, you place a bet. Logically, knowing the odds of the house coming out on top, you have to be aware of the risks involved when you go “all in.” If you lose, you lose big. But you put your bet on the table. So you have to be okay with the worst possible outcome that may result from the decision you made. (Location 1014)

Once we’ve thought through these assumptions and made a mental place for them moving forward, we can begin to take some more concrete steps to decide on the real-world things (and situations, certainties and wealth) we want to reach and fund. (Location 1020)

Now, as I’ve already established above, the biggest risk of all is the risk that we don’t get what we want out of our life. (Location 1023)

The most common answer I receive when I ask someone why they wanted to start a business is: freedom. When I drill down on that further, it’s usually expanded to, “I want to have the option to work with whom I want, when I want.” (Location 1030)

That is, you’re able to work on your terms because you don’t actually need to work to maintain your lifestyle. (Location 1033)

When all your bets have more downside than upside, you’ve constructed a system with chaos built in. (Location 1035)

Changing your orientation toward making asymmetric bets to the upside doesn’t guarantee that you won’t go through that same cash flow roller coaster. (Location 1040)

Most of us just aren’t wired to naturally see asymmetry to the upside. No judgment. I would include myself in that statement, and I don’t feel any shame about it. (Location 1043)

The rest of us just need to acknowledge that it’s a blind spot and be intentional about finding asymmetry to the upside. (Location 1046)

When you take on too much risk and the bets don’t pay off, you burn through resources. When you have limited resources, you have limited options. (Location 1054)

For example, if you find you operate better when there’s less money in your business bank account, transfer the funds somewhere that you can’t see the balance and it’s difficult to access the funds. (Location 1061)

And if you eliminate all the bad stuff, then you’re only left with either things you’re okay with or things that are good. (Location 1063)

think about how you can create the motivations you need to get the outcome you want without the associated risk. (Location 1065)

One of the hallmarks of how most entrepreneurs (including me) operate is that we like to live in states of strategy and execution. We come up with no shortage of ideas we want to implement. We research and we brainstorm or we just start doing stuff. (Location 1078)

Will this solution get me closer to my priorities? (Location 1101)

The Human Mindset gets first dibs, but if we give it a chance, the Champion’s Mind has the final say. Utilizing these frames intentionally can create the space necessary to allow you to choose the Champion’s Mind. (Location 1118)

Parenting Frame: How can I prevent something bad from happening? (Location 1122)

Commissioner Frame: Would I be willing to play by these rules in perpetuity? (Location 1123)

Investor Frame: Given what I know now, would I choose to opt into this particular situation? (Location 1124)

Professional Skeptic Frame: Why? Can you prove it? (Location 1125)

Under the Parenting Frame, we step back and ask ourselves if we have put the systems in place to keep bad things from happening before we start to place blame on factors outside of our control. (Location 1132)

An example of a preventative control would be requiring a signature from the owner on all checks cut to prevent the bookkeeper from misappropriating funds. Another example would be requiring a drug screen as a condition of employment. (Location 1138)

At the small business level, I find the lead domino issue tends to be that the business is built on trust. We hire someone and then trust they’ll do what’s right because we trust our gut (even though the data says that we’re really bad at judging people’s character). (Location 1142)

But in terms of your business decisions, implementing preventive controls means turning a risky (or just bad) bet into a good one by setting up systems to make sure the worst-case scenario that might result from the decision you made isn’t truly all that bad. (Location 1166)

That’s not an intuitive state of mind for most of humanity. Frankly, although we may not always realize it, we love when things go sideways because we love to celebrate a recovery. Think about it this way: (Location 1176)

The Commissioner Frame looks at our business as if it’s a team we own (in a league we also own) and asks: “Does this align with what I want in business? Would I be willing to play by these rules in perpetuity?” (Location 1187)

I’d venture a guess that a lot of us aren’t huge fans of playing games with too many rules. If we have to spend the majority of our time tending to regulation after regulation, we’re probably not having much fun. (Location 1191)

Rules are the hard-and-fast boundaries you don’t cross, and principles are more akin to guidelines. Put another way, if rules are a stop sign, principles are the lane markers you stay between as you drive. (Location 1196)

At its most simplistic, the Investor Frame forces you to step back and ask yourself: “If I had the money required to take this action, would I?” For example: “The business is worth one million dollars. If I had a million dollars on hand right now, would I buy it?” Or: “This employee costs $100,000 per year. If I had $100,000 in cash, would I still make this hire?” (Location 1208)

Another example where the Investor Frame is particularly helpful is what I call “convenience real estate.” Say you want to be a real estate investor. (Location 1215)

That’s another scenario that the Investor Frame can help counteract simply by helping us take a step back, look at the situation with our money, not our emotions, and reevaluate whether adopting that puppy actually makes sense in the long run. (Location 1229)

For businesses that you’re not involved in on a day-to-day basis or other passive investments, the Investor Frame is the default frame for which I view all aspects. (Location 1234)

One of the more common approaches to business (that I’ve witnessed, at least) is the tendency to question everything. People who constantly ask “Why?” fit nicely into the Professional Skeptic Frame. This is often like: (Location 1238)

The outcome we’re in search of is truth, but more importantly, we’re trying to free ourselves of biases. (Location 1245)

Parenting Frame: How can I prevent something bad from happening? Commissioner Frame: Would I be willing to play by these rules in perpetuity? Investor Frame: Given what I know now, would I choose to opt into this particular situation? Professional Skeptic Frame: Why? Can you prove it? (Location 1258)

After all, we know that resources are scarce and a choice to launch one course removes our ability to not only launch the others but work on any other project. (Location 1274)

Essentially, the process involves looking at all the ideas or choices you’re considering at the moment and determining which is going to be the highest-leverage item to implement. (Location 1276)

Just about every business owner knows what it’s like to have to explain a key concept or method over and over again to clients or employees or a webinar audience. Utilizing time savings means finding a way to lay out the confusing information in a permanent manner that answers most (if not all) of the constant questions you receive so that you can conserve your time for new questions that pop up. (Location 1288)

Not only have you saved yourself valuable time, but you’ve also put a measure in place to force her to consciously confront the necessary pieces she needs to complete her task correctly to cut down on errors and a further waste of resources or energy. (Location 1293)