"The Personal MBA" by Josh Kaufman is a non-fiction book that aims to provide a comprehensive and practical overview of key business concepts and principles without the need for a traditional MBA (Master of Business Administration) degree. It offers a condensed and accessible approach to learning about various aspects of business.Josh Kaufman is an independent business adviser and the author of two international bestsellers: The Personal MBA and The First 20 Hours: How to Learn Anything, Fast. His website JoshKaufman.net was listed as one of Forbes’ Top 100 Websites For Entrepreneurs.

Summary & Key Learnings

The book is structured into several sections that cover different areas of business, such as marketing, sales, finance, leadership, and more. Kaufman synthesises a wide range of business theories and practices into clear and understandable language, presenting them in a way that anyone can grasp, regardless of their prior business knowledge or educational background.

Throughout the book, Kaufman provides practical insights, actionable advice, and real-world examples to help readers understand and apply the concepts discussed. He emphasises the importance of gaining practical experience and taking action, encouraging readers to apply what they learn to their own ventures or professional endeavors.

"The Personal MBA" challenges the conventional belief that a formal business education is necessary to succeed in the business world. Kaufman argues that by focusing on key principles and developing a strong foundation of business knowledge, individuals can save time, money, and effort compared to pursuing a traditional MBA program.

Overall, the book serves as a comprehensive resource for individuals who want to gain a solid understanding of fundamental business concepts and acquire the skills necessary to excel in the world of business. It offers a practical alternative to a formal business education, providing readers with the tools to navigate the complexities of the business landscape.

Business school: Not only is it extremely expensive – chances are, it won’t pay off.

Despite the high cost, an MBA does not necessarily lead to long-term career success. Researchers from Stanford University and the University of Washington found no correlation between possessing an MBA and measures of success such as increased salary or higher-level positions. Kaufman suggests that learning from experience, conducting online research, and reading books can provide valuable knowledge and skills for a business career.

The perfect business idea balances money and passion.

Kaufman advises against starting a business solely for the purpose of making money and emphasises the importance of choosing a field that you enjoy and have knowledge about. The book mentions that even if a business eventually becomes self-sustaining, it requires a significant amount of work and investment to set up.

Starting a business in a field you like increases the likelihood of sticking with it and allows for better decision-making. Understanding the specific market you're entering enables you to make sound decisions, develop attractive products, and effectively compete. Passion for an idea should be balanced with practicality, as some ideas may not have promising business potential. Explore market entry strategies and the possibility of obtaining the necessary funding.

Leveraging your investments can be rewarding, but it’s also risky.

The book discusses the concept of leverage in investment and highlights its potential for amplifying profits or losses. Leverage refers to using borrowed money to increase profit potential. It explains how leveraging can lead to significant gains with minimal personal capital. For example, by borrowing money to make a big investment, such as purchasing properties, even a small initial capital can result in substantial returns if the investment appreciates.

However, there are risks associated with leverage. While borrowing more money may increase potential profits, it can also amplify losses. The example given shows how a decline in the value of the properties could result in significant losses, exceeding the initial capital invested. Leverage can be a powerful tool in investment, but it carries inherent risks. Investors must exercise caution and be mindful of the potential for amplified losses, as demonstrated by the financial crisis of 2008, which was partly caused by excessive leverage.

We’ve all got needs, and a product that satisfies them will sell.

In order for a product to sell, it must fulfill customers' needs, and the quality alone is not enough. It provides examples such as a vampire having no interest in a solarium and a desperate hiker being willing to pay anything for a bottle of water in the desert. Successful businesses meet one or more of their customers' needs.

Harvard professors Nitin Nohria and Paul Lawrence identified four common human needs or drives:

1. The desire to acquire and collect things, including stamps, shares, and social status. Businesses such as retailers and investment brokerages cater to this need.
2. The drive to bond with others and feel valued and loved. Dating services and companies that enhance desirability, such as perfumeries and beauty salons, fulfill this need.
3. The need to learn and satisfy curiosity.
4. The drive to defend ourselves, loved ones, and property. Security firms and companies selling alarms address this need.

Entrepreneurs are encouraged to consider which of these four drives their business idea can cater to in order to effectively meet customers' needs.

A great product deserves great marketing.

It's important to capture the customers' attention in today's age of social media and information overload. To stand out, businesses need to offer something remarkable and memorable. The medium through which the message is delivered to customers matters. Making the customer feel that the message is personalised and specifically tailored to them increases the likelihood of getting their attention.

Investing in high-quality and personalised ways of informing selected prospective clients, such as hand-addressed FedEx envelopes, can be more effective than spamming mass emails. Additionally, businesses should focus on highlighting the end result or benefit that customers can achieve by using their product. People don't buy products solely for the product itself but for the desired outcome. Testimonials from ordinary individuals who have achieved positive results with the product can be a powerful way to demonstrate the product's value and attract customers.

Even when clients are reluctant, there are ways to make a sale.

It's important to address the customers' fears and objections in the sales process. Understanding and overcoming customers' objections can increase sales.

Customers are often cautious and fear making a bad choice, leading to a major barrier to purchase. To mitigate this, sales experts take on the risk by offering guarantees or return policies, allowing customers to try out products and return them if they are not satisfied. This strategy helps build trust and encourages customers to make a purchase.

Identifying and addressing standard objections, such as concerns about price, product benefits, or timing, is crucial in persuading customers to say "yes" to a purchase. By providing persuasive arguments and countering their objections, salespersons can convince customers that their concerns are unfounded and that the product or service is the right choice for them.

Understanding customers' objections and effectively addressing them through tailored strategies can significantly improve sales outcomes.

To strike a great deal, it helps to prepare.

The book highlights the different stages of a negotiation and emphasises the importance of preparation. The key takeaway is that a successful negotiation involves more than just the final discussion at the conference table.

1. The first stage of negotiation involves setting the stage and making early decisions that can optimise the outlook for the negotiation. This includes ensuring you are negotiating with the right person who has decision-making authority and creating a conducive environment by choosing the most effective setting for presenting your offer.
2. Next, it is crucial to carefully consider the terms of your proposal and make them as attractive as possible to the other party. This may involve researching the industry or market to gather data that can inform your decision-making. Anticipating objections and developing an argumentative strategy to address them is also important, along with determining the concessions and compromises you are willing to make.
3. The final stage of negotiation is the actual discussion, where the preparation done in the earlier stages pays off. By investing time and effort in the initial stages, you will be better prepared and positioned to navigate the negotiation successfully.

Overall, effective negotiation requires thoughtful preparation, consideration of the other party's perspective, and proactive decision-making at each stage of the process.

A good leader is a good communicator.

Effective communication in successfully implementing plans and fostering collaboration within an organisation is extremely important. Providing reasons for requests and sharing intentions can significantly increase compliance and support from others.

Kaufman emphasises that when asking someone to do something, it is essential to provide a reason for the request. A study by Harvard psychologist Ellen Langer showed that people were much more likely to comply when a reason was given. Communicating the why behind a task or goal helps others understand the purpose and align their efforts accordingly.

Furthermore, sharing intentions allows everyone to work in ways that support the plan and adapt when circumstances change. By providing a broader context and larger goal, individuals can make informed decisions and take appropriate actions without constant micromanagement.

Kaufman emphasises the importance of respectful communication. Dismissing or putting others down hinders effective communication and collaboration. It is essential to engage in constructive dialogue, exchanging ideas, and creating an environment where everyone feels valued and comfortable contributing.

In summary, effective communication involves providing reasons for requests, sharing intentions, and promoting respectful and open dialogue. By incorporating these practices, organisations can enhance cooperation, understanding, and the overall success of their plans.

Use your day more effectively by listening to your body.

Setting limits and understanding your natural energy fluctuations to maximize productivity is important. Being too busy and taking on multiple tasks simultaneously can lead to reduced performance and increased stress.

Kaufman compares productivity to juggling, explaining that trying to handle too many tasks at once can result in dropping the metaphorical "balls." Each task brings unexpected demands that require additional time and effort, which can become overwhelming if not accounted for in your schedule.

To optimise productivity, it is crucial to pay attention to your energy levels and work with your natural rhythm. People have different energy fluctuations throughout the day, with mornings generally being a more productive time for many individuals. Additionally, energy tends to cycle in 90-minute intervals, with peaks and troughs within that timeframe.

By being aware of these natural fluctuations, you can capitalize on the periods of high energy and focus on important tasks during those times. Conversely, recognising when your energy is low allows you to take necessary breaks and recharge, preventing burnout and maintaining overall productivity.

In summary, setting limits, understanding your energy fluctuations, and aligning your tasks with your peak productivity periods can help you work more efficiently and maintain a healthy work-life balance.

If you want a thriving business, your product should cater to the core needs of your customers. By communicating confidently and cleverly, you can convince your clients to buy, your employees to cooperate and your business partners to sign your deal.


Actions speak louder than words.

The next time you have to hire a new employee, don’t go for the applicants who performed best in an interview. Instead, do some extra research and find out how an applicant has performed in past months or years. Past performance is the best predictor of future performance.

'How Innovation Works' by Matt Ridley, offers a systematic examination of this incredibly important but poorly understood phenomenon. What is innovation? According to Ridley, it is much more than invention (something often mistaken for innovation). Invention is the act of discovering an idea; it is merely a beginning, an inception point. Innovation is much more, it is when the invention is taken into the world and made practical. Innovation is the creative reconfiguration of multiple inventions and ideas into something new. Innovation is the act of fully exploring the consequences of that new thing and disseminating and integrating it into society and general use. 

Matt Ridley argues that we need to see innovation as an incremental, bottom-up, fortuitous process that happens as a direct result of the human habit of exchange, rather than an orderly, top-down process developing according to a plan. Innovation is crucially different from invention, because it is the turning of inventions into things of practical and affordable use to people. It speeds up in some sectors and slows down in others. It is always a collective, collaborative phenomenon, involving trial and error, not a matter of lonely genius. It still cannot be modelled properly by economists, but it can easily be discouraged by politicians. Far from there being too much innovation, we may be on the brink of an innovation famine.
Matt Ridley, 5th Viscount Ridley, is a British science writer, journalist and businessman. He is best known for his writings on science, the environment, and economics.

Key learnings

Innovation isn’t an instantaneous creative act practiced by lone geniuses. It’s actually a long, messy, and complicated process. Innovation occurs when chance encounters and serendipitous insights are shared, remixed, and built upon by countless individuals. New inventions are slowly and incrementally improved over time as people find practical uses for novel ideas. If we want more innovation in the future, we need to foster the open exchange of knowledge and take big risks as individuals, organizations, and nations.

Innovation is a complex, messy, and collective process

The Industrial Revolution – the giant leap in productivity that kicked off the modern era – began when humans first harnessed the power of steam to automate work. To do this, they used a new machine called the atmospheric steam engine. So, who do we thank for this astounding achievement? A man named Denis Papin. Or, wait, maybe we should thank Thomas Savery. Or, hold on, maybe a fellow called Thomas Newcomen deserves our praise? The truth is, all three men deserve some credit, but none of them can claim all of it. That’s because, around 1700, Papin, Savery, and Newcomen all produced their own working models of the atmospheric engine. To this day, it’s unclear who was truly first or how much each inventor influenced the others.

We often associate a new invention with a single creator. However, that’s an oversimplification of how innovation operates. Even the most creative people don’t work in a vacuum. They’re always influenced by the tools, technologies, ideas, and social structures that surround them. This often means multiple forces contribute to an innovation, even when one person takes the credit. Let’s consider the case of the atmospheric steam engine. This relatively simple device heats and cools water in a metal cylinder. The changing pressure caused by steam creates movement that can be used for work, like pumping water out of mines. Could Papin, Savery, or Newcomen have invented this completely on their own? Not really. The basic ideas behind the device were already hot topics of discussion in scientific circles at the time. Papin and Savery, both educated men, refined their thinking by exchanging letters and papers with other inventors. Moreover, Newcomen, who built the most successful version of the engine, relied on previous advances in blacksmithing technology to complete his machine. Thus, each man’s invention was also a product of their backgrounds and influences.

This principle applies to all innovation. While Thomas Edison gets credit for inventing the light bulb in 1879, the truth is, more than 20 other creators patented similar contraptions in earlier decades. All these thinkers were responding to ideas and technologies circulating at the time. Of course, some of these attempts were better than others, but none of these innovations happened in complete isolation.

Medical innovations offer high risks and even higher rewards

While the atmospheric steam engine kicked off the Industrial Revolution, medicine evolved with its own innovative procedures, like the following: Step one: Find someone recovering from smallpox. Carefully scrape some pus off one of the many open lesions caused by the disease. Step two: Using a knife or needle, cut an open wound into your own skin. Not too deep, but deep enough to draw blood. Step three: Rub the infected pus into your wound.

This technique is called engraftment. In most cases, it’ll make you immune to smallpox. If it seems gross and dangerous now, just imagine how it appeared to a European in the 1700s. They didn’t have a scientific understanding of why it worked, yet it did work. So, as the century progressed, the practice caught on. It saved countless lives and eventually led to the discovery of modern-day vaccines.

An interesting fact about innovation is that the biggest revelations don’t always come from deliberate discovery or sound scientific theory. Instead, they develop piecemeal over time through random chance, as well as trial and error, as people look for practical solutions to their problems. In the medical field, this is a particularly risky process, but it has resulted in many life-saving practices.

Consider Jersey City’s water supply. In 1908, rapid industrial development tainted the city’s water with unsanitary runoff. The result was serious outbreaks of cholera and other diseases. In a rush to fix the problem, Dr. John Leal added chloride of lime, a disinfectant, to the water. At the time, adding chemicals to drinking water was considered repulsive. Local citizens were outraged. But Leal had heard rumors of it working in European cities, so he tried it anyway. Within months, the experiment paid off, and disease rates plummeted. Soon, communities all around the country were following Jersey City’s example.

Are such open-ended experiments occurring today? Of course. Take the example of electronic cigarettes, also known as vaping. For many, picking up a vaping habit is the first step toward quitting smoking. Since tobacco use is a major cause of death, this could save many lives. Yet, we don’t fully know the health effects of vaping, so their use remains controversial. In some countries, like the United Kingdom, government agencies encourage their use. In contrast, other countries, like Australia, have banned it. Which country takes the right stance on this innovation? That remains to be seen.

Travel innovation is all about incremental improvements

The Salamanca, the Puffing Billy, the Sans Pareil. These names sound silly now, but in the early 1800s, each represented a small step toward improving the way we move. You see, at the dawn of the nineteenth century, the horse was the king of transportation. However, inventors believed a machine, the steam-powered locomotive, could take its place. The tricky part was figuring out how to build one. So, engineers tried a great deal of different designs, giving each new prototype a bold new name. Not every device succeeded, but some made subsequent improvements in speed, safety, or reliability. By 1829, the Rocket, a locomotive built by Robert Stephenson, was capable of transporting 13 tons of cargo at 30 miles an hour – and the world was on its way to a railway boom.

Throughout history, humans have always looked for faster, more reliable ways to travel. However, no new mode of transportation ever emerged in a completely perfect form. For example, the sleek, efficient machines that carry us around today are the result of countless individuals making innumerable small design improvements over time.

Look at the evolution of today’s automobiles. Most rely on the internal-combustion engine for power. Isaac de Rivaz, a Franco-Swiss artillery officer, built this machine’s earliest ancestor back in 1807. It ran on hydrogen and oxygen and was loud, clunky, and prone to explosions. In 1860, a Pennsylvanian man named Jean Joseph Lenoir updated the design to run on petroleum. This was a step-up, but the device was still very inefficient.

Next, in 1876, Nikolau Otto, a grocery salesman, refined the machine by adding a four-step cycle of compression and ignition. Dubbed the four-stroke engine, this model allowed for smoother operation. This design was adopted by the German inventor Karl Benz. In 1894, he amped up the engine’s power and used it to drive a three-wheeled machine called the Motorwagen.

While the Motorwagen was a hit with the rich, it remained a novelty. It took another inventor, Henry Ford, to bring the automobile to the masses. In 1909, his assembly-line manufacturing process made the Model T car affordable to more people. Soon, cars were one of the most popular forms of transportation around. It took decades of slow, steady improvement, but the engine had finally conquered the horse.The humble potato is the basis for so many popular snacks and dishes we love today, but this wasn’t always the case. At least, it wasn’t in Europe. That took some innovation. First cultivated more than 8,000 years ago in the Andes Mountains of South America, the potato didn’t arrive in the Old World until the mid-1500s. However, for decades, Europeans regarded potatoes with suspicion. The church in England banned them. People in France believed they caused leprosy. Still, slowly, people learned to love this robust, nutrient-rich crop. The idea of eating potatoes first caught on in Belgium. Then the idea spread throughout the entire continent. By the 1800s, most European countries had made the potato a new staple of their cuisine.

Often, the concept of innovation gets reduced to invention. That is, we think of innovation as the process of making new tangible items like labor-saving machines or electronic gizmos. However, some of the most influential innovations of all time aren’t objects at all. Instead, they’re ideas that open up new ways to approach the world or solve problems.

One intangible innovation you use every day is the Arabic numeric system, more commonly known as numbers. Yes, even the idea of using 1s, 2s, and 3s was once revolutionary. This counting system was first developed by Indian scholars around 500 AD. It was then adopted by Arab traders in the ninth century, and finally found a foothold in Europe in the 1200s thanks to an Italian author known as Fibonacci. Fibonacci advocated for using Arabic numerals because they were more practical than the Roman numerals popular at the time. Their key advantage was their positional system. While the Roman numeral V always means five, the Arabic five changes value based on its position in a sequence. So, a five followed by a zero means 50, a value ten times greater.

This seems like a small change, but it opens a whole new world for mathematics. With Arabic numbers, it’s possible to do more advanced calculations like multiplication, division, and algebra. It’s also much easier to keep financial records and do accounting. Adopting the idea of Arabic numbers was an innovation essential to launching Europe into a new age of trade, commerce, and scientific discovery.

Our desire to communicate drives rapid innovation

Baltimore, Maryland, 1843. The Whig Party holds a convention and nominates Henry Clay for president. It’s big news, and usually, it would take a train more than an hour to deliver the results to Washington, DC. But, this year, the message arrives in seconds. How? Thanks to the telegraph, a brand-new invention installed by Samuel Morse. It transmits information by sending electrical signals through a suspended wire. It’s the first practical innovation in the emerging field of electrified communication technology. The telephone arrives a few years later, in 1876. The wireless radio soon follows in the 1890s.

By the turn of the century, distant people are more connected than ever before. However, this is just the beginning. Over the following decades, innovations in communication and information technology will revolutionize the world. Before Morse tapped out the first dots and dashes through a telegraph, communication was either conducted face-to-face or through physical objects like letters and books. Ideas spread more slowly, and accessing information depended on which printed materials you could actually get your hands on. However, the advent of electronic communication like the telegraph, telephone, and eventually computers changed everything – and fast.

It’s hard to overstate how quickly new communication technology was adopted. The first telegraph line was completed in 1844. By 1855, there were 42,000 miles of lines in the United States alone. By the end of the 1870s, telegraph cables stretched across the Atlantic and Pacific oceans. Broadcast radio has a similar trajectory. It began with a single station in 1900 and grew to be the dominant form of public communication by the 1930s.

Computers also became an essential part of daily life at an astounding rate. This is partially due to how quickly computer technology improved and miniaturized. A computer’s processing ability is determined by how many transistors it has. Incremental improvements make transistors smaller and easier to produce, steadily allowing for more transistors to be housed in less space. This phenomenon is sometimes called Moore’s Law. So, in 1975, the average computer chip had 65,000 transistors. Today, that number is in the billions, and they’re much cheaper.

With the internet now connecting all the world’s computers, sharing information is easier than ever. This innovation has changed the political landscape by giving a huge amount of power to those who control communication technology. Now, the world’s most influential companies are search engines like Google and social media empires like Facebook.

Innovation relies on chance, collaboration, and recombination

The non-stick pans in your kitchen, the Gore-Tex coats worn in extreme environments, the fluorine gas chambers in the first atomic bombs. What do these all have in common? They’re all innovations based on polytetrafluoroethylene or PTFE. PTFE was first synthesized in 1938 – by accident. A scientist researching refrigerants stored tetrafluoroethylene gas at sub-zero temperatures. The chemical solidified into a hard substance that was unusually stable and heat-resistant. It didn’t work as a refrigerant, but other scientists found that in other contexts, it could be used for so much more. This story of PTFE is useful because it demonstrates the complex way innovation actually works.

Every story of innovation is different, but if you look closely, you’ll see they often follow a similar pattern. Many of the greatest innovations begin with a bit of serendipity. Someone has a lucky break, an unusual insight, or random occurrence. Then, others pick up on the discovery and apply it to new situations. Through trial and error, they apply the new idea or invention in different contexts until they find a practical use.

Consider the modern practice of using DNA as forensic evidence in criminal cases. No one set out specifically to create this innovation. Instead, it began in 1977, when Alec Jeffreys, a scientist at Leicester University, tried to develop a method using DNA to diagnose diseases. While collecting samples, he saw that DNA was a lot like fingerprints – that is, everyone’s genetic code was different. A chance discovery.

Meanwhile, the local police were struggling to solve a grisly murder. They wondered if Jeffery’s discovery could help solve the mystery. So, the scientist and the police worked together. They began collecting and analyzing more than 5,000 genetic samples from local suspects. They then compared them to DNA found at the crime scene. Eventually, they found a match. Case closed.

Because so much innovation follows this same pattern, it’s possible to identify conditions where it’s more likely to happen. Innovation thrives when people can cross paths, mingle, and exchange ideas. That’s why, throughout history, universities, trading hubs, and major cities have consistently produced novel innovations. By bringing different people with different expertise, perspectives, and cultures together in one place, these contexts foster the type of interactions that push innovation forward.

Innovation doesn’t always come from the top down

In 1924, the British government wanted to build a civilian airship capable of traveling across oceans. This raised the question: should the task be handled by the government or by private industry? They decided to try both approaches. Parliament contracted a government lab and a private firm, Vickers, to build two ships. How did this experiment play out? Well, by 1930, Vickers had designed the R100, a light, fast, and efficient aircraft. It traveled to Canada and back with no problems. Meanwhile, the government lab built the R101, a heavier, more costly ship. On its maiden voyage to Karachi, Pakistan, it only made it to France before crashing, killing 48 passengers.

These two very different outcomes illustrate an important point. When it comes to innovation, direct government oversight and control isn't always the answer. There’s a popular notion that innovation requires guidance and funding directly from the state. This argument posits that private industry, in a constant quest for easy profits, will avoid the costly research and development necessary to create truly new ideas. Instead, firms will hoard their patents and simply rehash old products. But is this true? Not exactly. While it’s true that government-directed research makes great discoveries, it often takes the ingenuity of private enterprise to turn them into practical innovations. Consider the internet. The basic components of computer networking were created by the Defense Advanced Research Project Agency, an American government lab. However, the world wide web didn’t take off as a household necessity until private firms like Cisco began to experiment with the technology in the 1980s and 1990s.

This dynamic occurs because big government projects often aren’t sensitive to the needs or desires of everyday people. Additionally, they can be slow to adopt new, outside-the-box ideas. However, big companies can also suffer this tendency. That’s why even giant firms are sometimes usurped by plucky start-ups.

Remember Kodak? This company was once the undisputed master of the photography industry. Film cameras were their flagship product. So, in 1975, when one of their scientists built an early version of a digital camera, his innovation was ignored. The higher-ups just didn’t see the potential in his bulky, electronic gizmo. Yet, smaller companies did. And they developed their own products, which took over the market. Thus, Kodak missed the digital photography revolution and filed for bankruptcy in 2012.

Innovation will always face resistance

Take a stroll through your grocery store’s dairy aisle. Here, you’ll see a wide selection of both butters and margarines sitting side-by-side in perfect harmony. The choice of spread is up to you. This wasn’t always the case. When margarine was first invented in 1869, it caused an uproar. The oily spread was both cheaper and more stable than butter. The dairy industry, fearing the competition, launched a vicious campaign against it. The National Dairy Council even faked studies showing it was dangerous. By the 1940s, two-thirds of American states had banned this innocuous staple.

Of course, the fervor eventually subsided, and margarine became an accepted foodstuff. Yet, this butter battle shows that even harmless new creations can stoke controversy. When a truly novel idea or invention arrives on the scene, it will often be rejected. This is because everyday people often fear change. Also, established industries don’t want to risk losing their supremacy. This is why horse breeders fought against tractors, ice-harvesters tried to stifle refrigeration technology, and some musicians initially wanted to ban radio stations from playing recorded music.

One way interest groups try to slow innovation is by sowing fears about safety and security. Consider the case of genetically modified organisms or GMOs. GMOs, such as vitamin-A-enriched golden rice, have the potential to bring cheaper nutrition to people all over the world. Yet, groups ideologically opposed to genetic modification, like Greenpeace, lobby hard against their production, citing sometimes flimsy evidence that these foods are dangerous.

Another way innovation is held back is through the overly aggressive application of intellectual property laws. When applied correctly, these laws, such as copyrights and patents, incentivize innovation by giving creators exclusive use of their ideas for a short time. This allows the original innovators to profit.

Yet, as we know, innovation requires sharing ideas and building on the work of others. Unfortunately, copyrights have been steadily extended, making this process more difficult. In the United States, a copyright used to last 14 years. In 1976, it was extended to last the life of the author plus 50 years. In 1998, 50 was extended again to 70 years. These laws no longer benefit the original creator post-mortem, but they do keep good ideas locked away from potential new uses.

Innovation is lacking in the West but booming elsewhere

In much of the world, the past few centuries have been filled with astounding leaps in innovation. In mere generations, Western countries have gone from largely agrarian economies to electrified, industrialized powerhouses. Even now, every day seems to bring novel developments in sectors like communications and computer technology.

Yet, alongside these changes, other sectors are strangely stagnant. In the realm of transportation, not much has changed. In 1958, the average commercial aircraft traveled at 600 miles per hour. Today, they move at roughly the same rate. There have been upgrades around the margins to aspects like fuel efficiency, but the fundamentals are untouched.

The business world, too, is less dynamic. In the United States, new businesses made up 12 percent of the economy in 1980. In 2010, they only accounted for 8 percent. Across the Atlantic, things are even staler. Looking at Europe’s 100 most valuable businesses, only two of them are younger than 40 years old. Most industries seem more focused on protecting current profits than bold new ideas.

So, where is innovation occurring? Mostly in rising nations like China. For the past few decades, this country has poured resources and manpower into urbanization and new technologies. Now Chinese firms like Tencent and Alibaba are at the forefront of growth industries like social media and financial services. Moreover, Chinese universities are making huge strides in fields like gene editing and artificial intelligence.

Can the Western world keep up? Maybe. It would require a renewed spirit of innovation. Companies will need to take more risks, workers will need to put in more hours, and governments will need to foster the free and open exchange of ideas that fueled past booms. All that, plus a little luck, will put innovation back on the agenda.

Image - Bright spark: detail of an 1879 illustration depicting Thomas Edison's lightbulb 

This is a practical guide that contains a library of hands-on techniques for rapidly testing new business ideas. 'Testing Business Ideas' explains how to use experimentation to transform your bright idea into a profitable business venture. It will help you to save precious time and money by testing how feasible, desirable, and viable your plans are. It will help you to dramatically reduce the risk and increase the likelihood of success for any new business venture. This book shows leaders how to encourage an experimentation mindset within their organisation and make experimentation a continuous, repeatable process.

Design

Design the team - The best teams are diverse, open-minded, and entrepreneurial

Team Behaviour

Team Environment

Team Alignment

The Business Model Canvas

The Value Proposition Canvas

To be continued...

Image source: Strategyzer Testing Business Ideas 

 

In 'The Serendipity Mindset - The Art and Science of Creating Good Luck', Christian Busch explains that serendipity isn’t about luck in the sense of simple randomness. It’s about seeing links that others don’t, combining these observations in unexpected and strategic ways, and learning how to detect the moments when apparently random or unconnected ideas merge to form new opportunities. Busch explores serendipity from a rational and scientific perspective and argues that there are identifiable approaches we can use to foster the conditions to let serendipity grow.

Drawing from biology, chemistry, management, and information systems, and using examples of people from all walks of life, Busch illustrates how serendipity works and explains how we can train our own serendipity muscle and use it to turn the unexpected into opportunity. Once we understand serendipity, Busch says, we become curators of it, and luck becomes something that no longer just happens to us—it becomes a force that we can grasp, shape, and hone. Full of exciting ideas and strategies, The Serendipity Mindset offers a clear blueprint for how we can cultivate serendipity to increase innovation, influence, and opportunity in every aspect of our lives.

Dr Christian Busch, is an internationally known expert in the areas of innovation and entrepreneurship. He is the Director of the Global Economy Program at New York University’s Center for Global Affairs, and also teaches at the London School of Economics. A cofounder of Leaders on Purpose and the Sandbox Network – and former co-director of the LSE’s Innovation Lab – he has worked with senior executives around the world.

There are several kinds of serendipity, but they're all different than "blind" luck of the draw - they're about creating "smart luck"

Serendipity is usually about connecting dots that have previously remained elusive

How we interpret or look back upon serendipity is important. In fact, it can make a big difference in the likelihood of serendipity occurring in the future. For example, we shouldn’t think of serendipity as a singular event, even if it is one of those thunderbolt experiences. Instead, we should think of it as a process. Often serendipity is the result of seeds that were planted weeks, months, or years in advance. And it always requires something of you – whether it’s noticing a value that hasn’t been seen before, or drawing a conclusion that hasn’t been reached before.

Being attuned and alert to serendipity means letting go of ingrained biases

Do you ever find yourself being a glass-half-empty type of person? It can happen to the best of us. In fact, having biases and preconceptions goes hand-in-hand with human nature, but that doesn’t mean it’s helpful in life. As far as serendipity goes, having strict, unbending preconceptions can be a big hindrance.

To stay alert and motivated, remain focused on a meaningful north star.

What motivates you on a day-to-day basis, money or something more meaningful? Maslow’s Hierarchy of Needs was developed by the philosopher Abraham Maslow over 50 years ago, but it’s left a lasting impression and continues to influence many of today’s social theories.

You can increase the chances of serendipity in simple ways.

Essentially, you want to create possibilities, and you can do this in a number of ways, no matter what your current circumstances are. There are many people who’ve sent out a mass email to everyone in their contact list, or to people they’ve never met, in the hopes of having a serendipitous result. You may be surprised to know how often this works. Other times, it may be a chance meeting in an elevator or in a Zoom conference, but such encounters require an optimistic willingness to take chances, be sociable, and introduce yourself. Patience is also required. Sometimes, it may take years before the business card you handed someone turns into a case of life-changing serendipity. 

There are easy steps for planting the seeds for serendipity to occur.

Serendipity can take time to develop, so patience is often required.

Another characteristic of the serendipity mindset is grit, or perseverance. The road to serendipity is often paved with rejection, failed experiments, and near misses. Many entrepreneurs will tell you that they were turned away countless times before they finally found the idea that clicked with investors. You need tenacity. Not only because it can take time for the right opportunities to present themselves, but because it often takes time for your brain to connect those important dots. While having a good supply of diverse people around you can be a vital part of setting the stage for serendipity, it also takes patience and perseverance.

Fostering serendipity involves creating a safe space for the mixing of new ideas from diverse minds.

Increasingly, a lot of businesses are wanting to facilitate as much serendipity as possible. They know that things are changing fast these days and relying on stability and consistency just doesn’t make sense anymore. So, what kind of culture and structures do make sense? Basically, you don’t want the kind of company where people are ridiculed for coming up with new or ambitious ideas. You want to create a safe space, where people not only feel free to speak their minds, but where they can also feel free to experiment and fail without fear of being reprimanded or losing their jobs.

Capitalism, Socialism, and Democracy is a book on economics, sociology, and history by Joseph Schumpeter. It's one of the most famous, controversial, and important books on social theory, social sciences, and economics. Back in the 1920s, economist Joseph Schumpeter asked himself, 'Could socialism be an alternative? Should capitalism last forever? And is that even possible? In the quest for answers he came to a startling conclusion: by its very nature, capitalism is bound to destroy itself. In this book Schrumpeter gives his definition of democracy, his theory of creative destruction and his emphasis on entrepreneurship, much of his ideas have defined the economic theory of the twentieth century.

Joseph Alois Schumpeter (1883-1950) was an Austrian-trained economist, economic historian, and author. He is regarded as one of the 20th century's greatest intellectuals. Schumpeter is best known for his theories on business cycles and the development of capitalist economies, and for introducing the concept of entrepreneurship. For Schumpeter, the entrepreneur was the cornerstone of capitalism—the source of innovation, which is the vital force driving a capitalist economy.

Capitalism feeds on a process of creative destruction.

Capitalism itself is constantly progressing. Since it first developed, it has been expanding, accelerating, and transforming. And this is no accident. Indeed, this constant change is in the very nature of the capitalist system. For one, businesses and entrepreneurs are in constant competition with each other – or at least in constant fear of competition. This encourages them to restructure, invent, and innovate at an accelerating pace. You’re never safe at the top for long. Your business strategy may have worked yesterday, but it could easily fail tomorrow. 

There’s nothing to prevent socialism from working.

For most of history, socialism has been considered the only viable alternative to capitalism. In a socialist society, the means of production are controlled by just one central authority, rather than by many private actors. Can this system work in the real world? Many economists have had their doubts.

We need to update our definition of democracy to account for the realities of elections.

How well do socialism and democracy go together? Before we explore this, we need to ask ourselves what democracy is.

Socialism may be as compatible with democracy as capitalism – under certain conditions.

Throughout history, many socialists have said that theirs is the only path to “true democracy.” But some believe that it’s OK to use undemocratic methods – such as violence and terror – to create a socialist society.

The key features of capitalism will ultimately lead to its self-destruction.

Let’s turn to the central question: Can capitalism survive?