I believe that clarity in business and life starts with a first-principles approach. Below are some statements that have helped me make better decisions.
Value Is A Pyramid
People and things are valuable because they help us achieve some outcome. That outcome can be physical (like keeping you warm when it's cold out) or emotional (like creating a feeling of confidence) or both. Value is recognized and sought out by human beings – businesses exist because certain people have figured out ways to deliver personal value to thousands or millions of other people. This is the bottom of the pyramid.
Some things can be more valuable than other things which achieve the same outcome. A good movie is usually more valuable than a bad one because the good movie will create some desired emotions faster, more often, with more intensity, and with a higher likelihood of your peers having the same experience. People have limited time, energy, and risk tolerance but are willing to trade those for valuable outcomes. Things become comparatively more valuable if they create the same outcome as something else but require less time, energy, and risk to do so. This is the middle of the pyramid.
A small number of people may find themselves needing to create the same valuable outcomes far more often than the average person might. The amount of time, energy, and risk involved becomes unsustainable as the number of outcomes scales upwards. As a result, these people seek systems of efficiency to offload the physical costs of achieving each outcome. Additionally, it's common for these systems to exist in a shared environment with other systems that create loosely-related outcomes. People seek integrations between these systems in order to multiply the benefits regarding the type, efficiency, or volume of outcomes. This is the top of the pyramid.
It seems like the lifespan and growth potential of a business is predicable based on how the outcomes it creates stacks up against this pyramid. Companies that are too early to market with innovative solutions have managed to create valuable outcomes that cost too much time, energy, or risk to be accessible. Companies that focus their efforts on integrations without creating direct outcomes for consumers are at risk of being built out of contracts as their customers who started at the bottom of the pyramid start their climb to the top.
Outcomes Are The Goal And The Currency
It's easy to get wrapped up in the details of your craft. It's even more common to mistake attributes or behaviors as the reasons behind overwhelming successes (for example, the fact Bill Gates dropped out of college). Biases aside, those details only matter because they help improve the chances of creating specific valuable outcomes.
For example, what is the real value of an aircraft? It's true that they can fly, but millions of people step into vehicles made by Boeing and Airbus because modern engineering and industry innovation now allows a person to travel thousands of miles in less than one day for an affordable price and with a near-guarantee that the plane will not crash. In other words, the valuable outcome of air travel is arriving safely with time and money to spare.
Growing businesses need to innovate constantly. In order to do that, they must focus their energy on the outcomes their products create. If you own the outcome, you own the market. If anyone can create the same outcome with their product, then you better be able to create the outcome in less time, for less money, and with less accepted risk. If the market is full of products that do the same thing for nearly the same cost, the suppliers are selling a commodity.
Three Attributes For Progress
For any team to be successful at the above, I keep an eye out for the following baseline attributes:
Access to New Knowledge
Is the team reading books, learning new skills, or keeping tabs on news about similar products? Are team members bringing their outside knowledge and discoveries into the office to share? A constant exchange of new information is the only way that teams can avoid being outgrown by their market, their organization, or their teammates.
Clear and effective communication between people takes practice and energy to do right, which is why it's not the norm. The best communicators manage information, emotion, and expectations all at once. Poor communicators can create uncertainty for themselves at best and, at worst, can ruin important opportunities for the whole team. High-performing teams are based on a culture of excellent communication.
It's important that everyone on a team understands what role they play and what is expected of them. In the absence of being given a list of expectations, high performers are quick to define those for themselves. I don't believe that everyone needs to be a rogue, but team members that are unable to work without constant guidance and reassurance are at risk of driving in the wrong direction when the pressure is on. I believe that feeling personally-responsible towards being a valuable contributor to a high-performing team leads to more empathy and faster personal growth.
Aside from experience, I also have read a lot of books about these topics. Head over here to see my recommendations.