This book is so good I read it twice, and probably will read it again within a year. There is just so much insight and it rings to true to me.
This book is about finding what self-made Billionaires have in common. Searching answers for questions like. What skills, habits, talents or life experiences distinguish Self-made Billionaires from the rest?
Judgement and Imagination
When we looked more closely at self-made billionaires, we found that sound judgment was not in short supply. These are people who have dealt with the world as it is, made excruciating choices, and placed bets based on hard realities. But what truly makes them stand out is that their judgment is balanced by extraordinary imaginative vision.
Cultivating a balance of judgment and vision is a challenging task. Findings from neuroscience suggest that for most people, judgment and imagination sit on opposite ends of a mental spectrum. The more skilled one is at seeing things as they are (judgment) the harder it is to see things as they might be (imagination). But somehow, the population of self-made billionaires manages to defeat the binary mental spectrum that places judgment and imagination in opposition to each other.
Dispelling common myths about self-made Billionaires
Previous systematic study’s about self-made Billionaires have often come to contradictory conclusions. Naturally, people theorize a lot about this topic so there are many myths which need to be addressed. Here are a few findings from the data, quoted from the book.
- For more than 70 percent of the sample, the idea or transition that catapulted them to billion-dollar success happened after age thirty
- Less than 20 percent of our sample of self-made billionaires came from tech.
- Billionaires are believed to sail in “blue oceans.” There’s no question that exploring new market spaces has the potential to yield large profits, but it’s not the route that most self-made billionaires chart. More than 80 percent of our sample of self-made billionaires earned their billions in red oceans—highly competitive, mature industries.
- Luck alone does not explain the success of self-made billionaires, given that more than 90 percent of them have launched multiple successful businesses.
- Many self-made billionaires reach extreme success only after many years of professional investment and commitment to a particular market space.
- The billionaires’ early ventures provided a great deal of practice in a couple of key areas, which improved any skills they already had. Seventy-five percent or more had direct sales experience;
Dual habits of mind
The most defining commonality of self-made billionaires is their ability to hold on to multiple different perspectives at the same time and then act on them to produce something customers want.
Left with a clean slate, we began searching for what is truly different about self-made billionaires. We looked at the data through the lens of our premise—that self-made billionaires approach the challenge of creating new value differently from most corporate managers and leaders. Somehow, self-made billionaires vault over the same obstacles to value creation that trip up the vast majority of executives.
We expected to find that self-made billionaires encountered a set of common external factors early in their lives—certain experiences or circumstances—that led them to act or behave in particularly driven ways. Maybe the majority had to contend with existential challenges early in life. Or they came from disadvantaged backgrounds. Or perhaps the opposite is true and most of them came from extraordinarily privileged homes. It became quickly apparent, however, that there were no trends in the data to suggest that a shared tenor of circumstances or experiences ran throughout the population. An equivalent number grew up extremely poor as grew up quite rich; an equal proportion failed to finish college as earned PhDs.
As we probed deeper, it became clear that the connection lay not in external circumstances but in what we have come to define as internal “habits of mind.” Self-made billionaires are able to integrate ideas and actions that most individuals and organizations keep separate or even hold in direct tension to one another. We refer to this coexistence of forces as a duality. Self-made billionaires effectively operate in a world of dualities—they seamlessly hold on to multiple ideas, multiple perspectives, and multiple scales.5
These distinctive habits of mind that we observed in self-made billionaires play out in a variety of ways. We have already mentioned the ability to cultivate imagination—that ability to envision what could be—while maintaining judgment—the ability to see things as they are. Similar dualities apply to the way these billionaires approach managing their time, executing a business idea, handling risk, and balancing the talent pool in their own organizations. These dual habits of mind and action enable them to function as what we term Producers: they envision something new, bring together the people and the resources to create it, and sell it to customers who didn’t know they needed it.
Performers & Producers
If envisioning something and then acting on it is so important, why don’t corporations exhibit more producer mindset? In fact, in general they focus on the opposite end of the spectrum.
In contrast, the modern corporation has evolved to separate many of these dualities into different functions, which are then run by talented people who excel at optimizing within known systems. We call these leaders Performers. Performers are often very good at what they do. But they are celebrated and elevated precisely because they perform so well in one arena. That single-minded talent for reaching otherworldly heights within a defined environment—so necessary in many aspects of business—reinforces function-driven systems that discourage the integrated habits of mind and action necessary for Producers.
The science fiction writer Thomas Disch once wrote that “creativeness is the ability to see relationships where none exist.” In fact, it is part of human nature to look for relationships, but creating something brand-new requires that a person not only be able to see relationships but also be able to separate the real relationships from the false ones. In other words, not all ideas are good ones. Recognizing when you have gold and when you just have rocks requires an integrative approach. It’s about seeing relationships that matter to customers and from there unveiling a new empathetic insight.
Integration is counterintuitive in many organizations. Decades of focusing on optimization and efficiency have led many to specialize in breaking down problems and forming functions to manage the separate parts. They elevate Performers to optimize and excel in those separate functions. Producers, by contrast, revel in bringing clashing elements together.
Operating in a world of dualities is not the same as managing competing demands such as “deliver on time and under budget” or “satisfy the customer and keep costs down.” Corporations are constantly putting objectives in tension, creating challenges, and establishing stretch goals. But in most places it is clear that two requirements that seem to be in tension really aren’t. The official corporate mandate may be to “do both” but everyone knows which metrics matter. If you hit quantifiable, short-term goals, the organization will support you.
Many Producers have to search for the right Environments to operate in
As highlighted in the opening passage of this chapter, a large number of self-made billionaires worked inside established organizations before they left to pursue their own ideas. Some viewed these jobs as way stations, places to learn from before they set out on their own. Many were fired, pushed out, or quit in a wave of frustration because their way of thinking and ideas were not recognized or valued. In all cases, the firms that employed them were not environments that supported creating massive value.
Dual habits of mind present in most self-made billionaires
Ideas — Empathetic Imagination
Producers are able to see the wants and needs of customers, often before they themselves know exactly what they need. And they have the imagination necessary to explore, test and develop new ideas.
Perspective—Patient Urgency
Producers cannot predict the exact time to make an investment or bring a product to market, but they are willing to operate simultaneously at multiple speeds and time frames. They accept that timing is not under their control, and so they work fast, slow, super slow, or in all these modes at the same time. They urgently prepare to seize an opportunity but patiently wait for that opportunity to fully emerge.
Action—Inventive Execution
Producers create value by bringing an integrative and inventive mindset approach to execution. The same mindset they use to come up with those ideas in the first place. Most businesses separate creative functions from operations, which leads to their disadvantage. Steve Jobs was good at integrating different departments of his companies.
Attitude—Taking a Relative View of Risk
Most companies focus on absolute risk, not so producers. They tend to focus on relative risks. They are less concerned about losing what they have than of not being part of a bigger future and they have the attitude to endure setbacks.
Leading—Leadership Partnership
Perhaps the producers most important skill is to build partnerships and mutual trust between individuals with complementary skills. Contrary to the archetype of the solo genius, producers are highly competent and dependent on teamwork and complementary skills.
Many people with differing talents find themselves threatened by or in competition with one another, their opposing strengths creating a clash of worldviews. By contrast, the self-made billionaires we studied put a premium on the skills and perspectives of their complement. They have the confidence and insight to value the skills of the right partner who brings something necessary and distinct from what they have to offer.
Divergent thinking
Our research shows that Producers generate ideas through a mode of creativity known as divergent thinking. Divergent thinking involves the free flow of different ideas and associations for the purpose of identifying solutions to a problem. Everyone at the strategic levels of business must engage in some divergent thinking. The difference in the quality—or, rather, the imaginativeness—of the outputs depends on the quality and variety of the inputs and the relative emphasis the Producer places on imagining what could be and judging it based on what already exists. Imaginative people are able to do both with near simultaneity—they can imagine new ideas and evaluate how the idea can be improved and enhanced.
Full Imaginative thinking
Most people tend to play it safe. We are more comfortable with incremental progress. Producers allow themselves to imagine dramatically different outcomes. Exponential change, instead of incremental change.
True Producers don’t operate that way. They don’t shut down an idea just because it is outrageous or improbable or hard to execute. They are capable of full imaginative ideation, developed over a lifetime of honing expertise, cultivating curiosity, and empathizing with the customer. As a result, they are able to escape automatic modes of thinking and have insights capable of creating explosive value.
Curiosity
Experience counts for a lot in generating practically creative ideas, but experience might bring little benefit without a sense of natural curiosity, that impulse to ask “why” companies or markets operate a certain way, or “what if” about new, seemingly strange ideas. In our research we observed a direct connection between a habit of curiosity in the billionaire population and the discovery of an idea that created a billion-dollar business.
Mark Cuban is a great example of how beneficial curiosity can be.
Then there is the serial entrepreneur Mark Cuban, currently the owner of the Dallas Mavericks, who credits his appetite for information as the source of his success. Cuban’s habit of getting as much information as he can dates back to when he was a kid trading stamps and baseball cards. Even then his curiosity helped him gain an edge over other buyers. “I remember staying up till three, four, or five in the morning reading about stamps,” he told us when we spoke with him at his offices in Dallas. “I memorized the value of everything so that when I went to a stamp shop, I’d know. I learned early on that most people don’t do the work and that if I was prepared, I would have an edge. It was same with baseball cards. What was the demand for baseball cards? I probably was ten and there’s a park down the street where I grew up and I would repackage baseball cards that I bought and go down there and I could charge a premium. I was doing the math so I could make money. I just think I was wired that way.”
Inspiration & Reading
Reading has had many positive impacts on my life but the fastest to notice often is inspiration. Reading about other people’s experiences, failures and successes is just so inspiring. Turns out I’m not alone in that habit.
Reading was the most popular method used by billionaires to get inspiration. The billionaire home builder Eli Broad, for example, read multiple newspapers every day when he was a twenty-year-old accountant. It was the 1950s and the postwar baby boom was under way and a subject of heated discussion in the news. Broad’s reading habit catalyzed his imagination and he started thinking about twenty-year-olds of the future and how the changing demographics of the United States would create burgeoning demand for affordable homes for young up-and-comers. This empathetic insight into the wants and needs of the baby boom generation allowed him to imagine an affordable home-building business, which he honed and refined with his partner, Don Kaufman, an experienced home builder who happened to be a family member (Kaufman was married to a cousin of Broad’s wife). Together, the two created a new firm designed to capitalize on the opportunity.
Focus on your Product
It is easy to fool ourselves by being busy working on a lot of things. But usually companies become highly successful through certain killer products. You should focus on those.
“You don’t really have a business here,” Taylor recalled telling his boss. “It is just not a business. We don’t have a product or anything like that.” When Mr. Carlson asked Taylor what he thought could be the company’s product, he said, “Maybe our product could be wedding stationery.” Why wedding stationery? “It was really the only thing that I thought he was making money on,” Taylor told us when we met with him in his offices in Minnesota. It seems a brash comment for a junior employee to make to his boss, but Taylor had by then already earned the trust of Mr. Carlson. He had the man’s ear, earned by doing what Producers do—making connections and seeing opportunities that others ignore.
Taylor built and grew the business around the customer’s needs, not around a narrower conception of what his company “did.”
In ten years Taylor had transformed Carlson from a small local print shop into a growing, regional presence. When Carlson was ready to retire, he sold to Taylor and two other employees—whom Taylor later bought out—for around $1 million, which Carlson agreed to let Taylor pay in installments over ten years. Taylor’s strategy for growing the business and paying off the money he owed Carlson? Use invitations as the hook, and then advertise all of the other wedding accessories.
Create the right environment for New Ideas
Producers are great at finding new opportunities, but companies often reward short-term projects because they show results on paper which performers are encouraged to achieve.
In order to grow big potential, a focus in the long-term is needed without micro-managing the immediate return.
Producers can lead the charge, but they need to be made to feel that they can have big ideas that fall outside the company’s core focus and that those ideas will be taken seriously.
Newly identified, nascent Producers should be given opportunities to test a big idea—sometimes their own—with actual customers. Only through real engagement in the market can the Producer begin to hone, test, and revise to prepare the idea for full-scale execution.
Patient Urgency
This is one of those fascinating characteristics of Self-made Billionaires which always makes me think and try to emulate. Most people including myself find it easy to either display urgency or to be patient. It is hard to be both at the same time. How is that even possible? Urgency in the short-term, and patience in the long-term.
Producers know it will take years for them to achieve big results. But they also know that it will only happen if they act on a consistent basis.
Producers are driven first by an idea with the potential to bring huge value at enormous scale—they don’t waste their time on small ideas. But once they’ve hit on a compelling idea or market space, Producers are sensitive to issues of time. If it’s too soon, the idea may die for lack of demand; too late and another player may have already redefined the market. Our research uncovered no consistent evidence that Producers are better prognosticators than other people—they cannot predict the exact right time to make an investment or bring a product to market. The difference is that Producers are willing to operate simultaneously at multiple speeds and time frames. Producers accept that timing is not under their control, and with that acceptance they come to the market aware—and accommodating of the fact—that time is not static but elastic.
Producers whose blockbuster ideas depend upon an emergent or future trend do not innately know when the time is right. All the Producers we spoke with were entirely forthright on that point—they didn’t know when their vision was going to become a reality. But they didn’t just dive in and hope for the best either. Their faith in the idea itself made them sure that they needed to be ready when the time came, and that readiness required preparation, in a number of forms, from learning about the market to early investments and market positions.
As Case makes clear, patient time spent waiting for an idea to mature is not the same as idle time. Building a business with huge growth potential requires not only a marathon mind-set, as Joe Mansueto put it, but also marathon action—Producers are moving all the time.
Setbacks are part of the game
“You only have to win once,” I love that quote. It takes away the pressure to not fail. Producers know they can’t possibly create something big without failing along the way.
We spent a lot of time mapping the career trajectory of Producers, an exercise that clearly revealed that the most common path was a long progression of steady growth that includes significant setbacks and even business failures, as well as steep gains and accomplishments. Many billionaires are serial entrepreneurs, hitting the mother lode not on their first but on their second, third, or fourth try. Building value over an extended period of time when the outcomes are not guaranteed requires a willingness to be ready, all the time, for the opportunities yet to come.
Using the “wait time” efficiently
Producers know their ideas will take time to flourish because the conditions like the market have to be just right. The time has to be right. They use the time until the time is right to prepare themselves. That’s the time to acquire that crucial expertise needed to execute on the vision.
Giving yourself time to be Creative
There is an almost inverse relationship between being busy, and creativity. Producers know what’s up.
People at all levels of business justify overwork by saying it makes us more efficient, or that time pressure spurs creativity, but the reality is more insidious. In fact, time pressure can suppress the imagination necessary to come up with blockbuster ideas. There are physiological mechanisms at work when people are engaging in imaginative thought processes. Rex Jung, a neuropsychologist from the University of New Mexico, posits that creative people are able to turn off the evaluative functions of their brains in order to allow themselves mental freedom to invent.8 He calls this process transient hypofrontality, which is just a technical way of saying that the analytical mechanisms of the brain take a break for a while to let imagination run free.
The results showed an inverse relationship between time pressure and creative output. Employees often got more done on high-pressure days—meaning that they were more efficient—but the level of creativity in their output was low. This finding alone is important to our understanding of the relationship between time and business creativity. But even more compelling was the fact that the low creative output persisted. One day of high time pressure resulted in lower creative output for days after.
Understanding the relationship between time and creativity gave us insight into a tendency that we observed firsthand in the billionaires we met. That habit could be best described as being present.
This trait is almost universal among the billionaires we interviewed. They were focused, attentive, and entirely present as we spoke.
We all seem to be doing three things at once in addition to having a conversation with someone. Not so with the billionaires. They appear far less busy than most executives, and we suspect that isn’t an accident of seniority. They intentionally guard their time, doing away with extras, distractions, and nonessential activities so that they are able to support their most vital work. By guarding their time preciously billionaires are able to constantly cultivate and grow their innate curiosity. It gives them the time to read or converse widely on the subjects that let them make remote connections.
Inventive Execution
Bringing big ideas to the market required more than imagination. It required the ability to act on those ideas. Those blockbuster ideas often are something the world hasn’t seen before which is why Producers have to be creative in the process of execution.
The typical organization is specialized, which means that the people who come up with the idea for a product eventually step off and turn their attention to the next idea, leaving other departments to decide how it will get built and sold. This specialization is manifestly not the Producer’s way. On the contrary, Producers want to stay involved. They want to see their ideas actualized according to the vision they set out for them, without the compromises that inevitably take over when an idea touches too many hands that have too little invested in the original concept.
See the Relative Risk
Contrary to most people, producers view risk as relative, not absolute. They assess their options based on what they might loose if they don’t act, not just what they might risk by acting.
The Producer-Performer duality. Find your complement
Creating billions in value requires both: the Producer’s ability to bring together divergent ideas and resources into a blockbuster concept and inventive business design, and the Performer’s ability to follow through on details needed to make the business work.
Which is why most of the top producers form a partnership with a performer. In a partnership with a great performer, a producer’s abilities are amplified. It is about creating something scalable. And scale required top class performers.
Closing words on Producers
The reality is that Producers don’t always fit. They think differently from others around them. The ideas they propose move against the standard approach you are following, and that friction is what you need to achieve breakthrough value. If you don’t see some people leaving—frustrated because you still aren’t moving fast enough—then you aren’t pursuing enough Producer-friendly recruitment.
Ideas and enthusiasm do not make a Producer unless they come with the desire to see the idea manifest. Joe Mansueto, Morningstar’s founder, said that he looks for follow-through in young recruits. The degree unfinished or the business idea unlaunched signals for him—especially if there is more than one abandoned milestone—that the raw materials of imagination are there, but without the fortitude necessary to work through the difficulty of execution.
Producer recruits also need to be very self-contained. Leadership is lonely, especially while pursuing something truly new. You don’t get regular positive feedback. If things go wrong, there is rarely someone there to share the heat with you. Successful Producers need to be sufficiently internally focused to operate for long periods motivated only by confidence that the idea is right and needs to become real.