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Cognitive Switching Penalty

Cognitive Switching Penalty

Every task requires a certain amount of Attention, energy and focus to complete. 

Keeping this in mind, when many people try to multitask , they assume they are making the most of the given time and maximising their efficiency. But neurologically speaking, it is impossible for the brain to multitask.

In reality , when you are "multitasking" , your brain does not parallel process the tasks, but instead it rapidly switches between them. And this switching has some friction costs attached to it called cognitive switching penalty. This tires the brain out.

A batching strategy is more beneficial .

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Four Methods of Completion

Four Methods of Completion

There are only 4 ways to complete a task:

  1. Completion: doing the task yourself -- All tasks on your to-do-list" do not necessarily fall in this category. Only the tasks which you can do well or have to do fall in this category.
  2. Deletion: eliminating the task -- Assessing the task to confirm whether it is really important enough, and deleting if it is not, is an underrated strategy.
  3. Delegation: assigning the task to someone else -- Hire people who can complete the task at least 80% as well as you can and delegate.
  4. Deferment: putting of until later -- noncritical tasks can be done later.

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It ain't what you don't know that gets you into trouble. It's what you know for sure, that just ain't so.

MARK TWAIN , AMERICAN NOVELIST

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Confirmation Bias

Confirmation Bias

is the general tendency to pay attention to information that supports your conclusions and ignore information that doesn't.

Paying attention to disconfirming evidence is not easy -- it means searching for reasons you might be wrong, and who likes to be wrong?

"Flat Earthers" are dramatic examples for the same. Even after participating in an experiment to prove the earth is flat , their findings concluded otherwise. The result: they said that they were not willing to accept it, and started finding ways to disprove it. 

Being aware to confirmation bais can pay dividents and prevent major errors.

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Hindsight Bias

Hindsight Bias

is the natural tendency to blame yourself for things you "should have known".

Every decision you make will be based on incomplete information available at that point in time. You will always have more information after the decision is taken than before. Feeling bad about things that you "shoud have seen" is not helpful at all. Changing that past is outside of your Locus of control

Hindsight Bias becomes destructive if you judge yourself or others for not knowing the unknowble. 

Analyse your decisions, and take away the key learnings from it. That is it, nothing more than that.

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FRANK HERBERT

A process cannot be understood by stopping it. Understanding must move with the flow of the process, must join it and flow with it.

FRANK HERBERT

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Flow in Systems (Business)

Flow in Systems (Business)

A business will always have Flows -- movement of resources into and out of the system.

Inflows are resources moving into a system : money into a bank account, raw materials into a factory, new hires into a company.

Outflows are resources moving out of a system : money exiting the bank account, finished goods leaving a factory, employees leaving.

Follow the flows and you will understand how the system works in no time.

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Four Methods to increase Revenue

Four Methods to increase Revenue

There are ONLY 4 ways to increase your business's revenue:

  1. Increase the number of customers you serve.
  2. Increase the average size of each Transaction by selling more. (Think about upselling in restuarants). Appetizers , drinks and desserts are offered to you , to increase the size of the transaction).
  3. Increase the frequency of Transactions per customer. (Some products are naturally addictive, like nicotine from tobaco, so the brands selling these products will have high frequency sales. Also think micro-transactions in an app or high number of advertisements on a webpage).
  4. Raise your prices.(Duhh!)

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ALBERT LASKER

The product that will not sell without advertising will not sell profitably with advertising.

ALBERT LASKER

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Qualification of Prospects

Qualification of Prospects

Not every customer is a good customer. Some customers who require more time, energy, attention or risk than they are worth to your bottom line are not worth attracting in the first place. 

Think about car insurance companies. They let customers go through a questionnaire asking them about their education, marital status, past accidents , etc to figure out wether you fall in the "good risk" bucket or the "bad risk" bucket. 

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WARREN BUFFET

You can determine the strength of a business over time by the amount of agony they go through in raising prices.

WARREN BUFFET

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Pricing Power

Pricing Power

If you double your prices, and lose less than half your customers, its probably a good move. Pricing power is your ability to raise the prices you are charging over time. It is related to "price elasticity" in economics.

Businesses that sell goods which are status symbols will probably have a higher pricing power that businesses that sell un-differentiated comodities like generic toothpaste or food grains. 

Pricing power is important as raising your prices allows you to overcome the adverse effects of inflation and increased costs.

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IDEAS CURATED BY

tanmaypatel177

I enjoy learning about novel things

CURATOR'S NOTE

Josh Kaufman's The Personal MBA is a comprehensive guide that offers a practical and accessible approach to learning the core principles of business. It's designed to provide readers with a solid foundation in business knowledge without the need for a traditional MBA program.

Different Perspectives Curated by Others from The Personal MBA

Curious about different takes? Check out our book page to explore multiple unique summaries written by Deepstash curators:

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