Mental Models

The most important part of knowing a field is understanding the valuable fundamentals.

Value Stream

A value stream is basically a combination of your value creation and value delivery processes.

Predictability

Predictability can be an amazing thing for your reputation, or the reputation of your product. If you always deliver on time and do it right every time, that's a great thing. However, it can also go the opposite way. Customers rely on predictability to make decisions. This is also related to bounded rationality & the mere-exposure effect: we tend to choose what we are used to/familiar with.

Throughput

Throughout measures how effective your value stream is. You take rate/time and that's your throughput.

In essence, it's how fast your system achieves its goal. Using this measurement lets you understand how fast you can deliver value to your customers.

The Toyota Production System

The Toyota production System follows Kaizen.

Kaizen focuses on the continual improvement of a system by eliminating muda (waste) through lots of small changes. This accumulates to huge results.

Amplification

Making a small change to a scaled system produces a huge result. The bigger the system, the more noticeable the change.

Systems

Systems are processes that are clarified and made repeatable. It's a series of steps, I.e., an algorithm. You can write about them, map them out in diagrams, or whatever you want, but they're always externalized.

If you can't systematize a process, you can't automate it.

Environment Design

Changing your environment is one of the best/easiest ways to change your behavior.

Make it such that you don't have to expend willpower to do what you want to do (remove friction). And reverse for what you don't want to do (add friction).

Loss Aversion

People respond twice as strongly to potential loss than potential gain. This is loss aversion. We could find $50 on the street but lose $10 and proceed to feel mostly sad.

Performance Load

Performance Load: when you try to do too many things at once, your performance decreases substantially.

Set limits. For your own sake. It's more sustainable, and you'll get more done.

Time Management

Good time-management takes your energy cycles (fluctuations in energy throughout the day) into account. Adapt your schedule to this.

Incentive-Caused Bias

Where people people are biased because of their incentives.

“Don't ask the barber if you need a haircut.”

Modal Bias

Modal bias: we assume our idea is the best idea.

Management vs. Leadership

Management is doing things right; leadership is doing the right things.

— Peter Drucker

You need both.

Similar to entrepreneur vs. manager in The E-Myth Revisited. The leader sets the vision. The manager ensures we get there.

Feedback Loops

A feedback loop occurs when some of the outputs of a cycle feed into the inputs of another cycle.

Reinforcing feedback loops amplify the system's output with each system cycle. Like compounding.

Balancing feedback loops dampen the system cycle's output, which brings it to system equilibrium. Like a bouncing ball slowly bouncing less and less, until it finally stops.

Autocatalysis

Autocatalysis is from chemistry and is a reaction that, as its output, produces the raw materials necessary for an identical reaction.

In systems theory, and autocatalyzing system is a compounding, positive, self-reinforcing feedback loop. It continues to grow until it changes to produce less output.

Selection tests

Selection tests are evolution at work. If you satisfy them, you can go on. If not, you die.

If your business can't meet changing market needs, it dies. If you can't become profitable, you die.

Optimization

Optimization is either to maximize output (focusing on throughput), or it is to minimize required inputs to a system.

Checklists

Checklists are great. They allow you to think through a process, identifying errors therein or finding oversights. They also help prevent the effects of willpower depletion (ego depletion).