Richard Koch Quotes

Those who seize the day become seriously rich.

The way to create something great is to create something simple.

There are people who want to achieve--and then there are sane people.

It may be that you will be happiest in the rat race; perhaps, like me, you are basically a rat.

Not only is happiness not money, it is not even like money.

being mostly correct and decisive typically yields better results than taking the time to figure out what is perfectly correct.

Things that matter most Must never be at the mercy of things that matter least.

We can change the way that we think about external events, even where we cannot change them. And we can do something more. We can intelligently change our exposure to events that make us either happy or unhappy.

Think, think, think.

Almost anyone can think up an idea. The thing that counts is developing it into a practical product. 4 Henry Ford

It is not shortage of time that should worry us, but the tendency for the majority of time to be spent in low-quality ways.

Who you work for is more important than what you do

golden rules for career success 1 Specialize in a very small niche; develop a core skill 2 Choose a niche that you enjoy, where you can excel and stand a chance of becoming an acknowledged leader 3 Realize that knowledge is power 4 Identify your market and your core customers and serve them best 5 Identify where 20 percent of effort gives 80 percent of returns 6 Learn from the best 7 Become self-employed early in your career 8 Employ as many net value creators as possible 9 Use outside contractors for everything but your core skill 10 Exploit capital leverage

from 20 per cent of clients. In the consulting industry that means two things: large clients and long-term clients. Large clients give large assignments, which means you can use a higher proportion

The most successful people change the world not through sweat and tears but through ideas and passion. It is not a matter of hard work or time on the job; it is having a different view, an original idea, something that expresses their individuality and creativity. Success comes from thinking, then acting on those thoughts.

Creativity,” Einstein famously said, “is more important than knowledge.

You might get much better value and happiness out of a simpler and cheaper lifestyle.

The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

Innovation is the name of the game;

80 percent of products, or customers or employees, are only contributing 20 percent of profits; that there is great waste; that the most powerful resources of the company are being held back by a majority of much less effective resources; that profits could be multiplied if more of the best sort of products could be sold, employees hired, or customers attracted (or convinced to buy more from the firm).

THE 80/20 PRINCIPLE AND CHAOS THEORY Probability theory tells us that it is virtually impossible for all the applications of the 80/20 Principle to occur randomly, as a freak of chance. We can only explain the principle by positing some deeper meaning or cause that lurks behind it. Pareto himself grappled with this issue, trying to apply a consistent methodology to the study of society. He searched for “theories that picture facts of experience and observation,” for regular patterns, social laws, or “uniformities” that explain the behavior of individuals and society. Pareto’s sociology failed to find a persuasive key. He died long before the emergence of chaos theory, which has great parallels with

I give people the latitude to express their imagination.

Pursue those few things where you are amazingly better than others and that you enjoy most.

Scientists working with relativity, or quantum theory, or modern mathematics, or systems theory, or chaos, or complexity are at the top of their fields.

The whole ideological assembly line that Richard Fink and Charles Koch had envisioned decades earlier, including the entire conservative media sphere, was enlisted in the fight. Fox Television and conservative talk radio hosts gave saturation coverage to the issue, portraying climate scientists as swindlers pushing a radical, partisan, and anti-American agenda. Allied think tanks pumped out books and position papers, whose authors testified in Congress and appeared on a whirlwind tour of talk shows. “Climate denial got disseminated deliberately and rapidly from think tank tomes to the daily media fare of about thirty to forty percent of the U.S. populace,” Skocpol estimates.

There are proven techniques for exiting feelings of incipient sadness and depression before they become damaging to your health and happiness. Moreover, by cultivating habits of optimism you can help to prevent disease as well as have a happier life.

The Kochs were unusually single-minded, but they were not alone. They were among a small, rarefied group of hugely wealthy, archconservative families that for decades poured money, often with little public disclosure, into influencing how Americans thought and voted. Their efforts began in earnest in the second half of the twentieth century. In addition to the Kochs, this group included Richard Mellon Scaife, an heir to the Mellon banking and Gulf Oil fortunes; Harry and Lynde Bradley, midwesterners enriched by defense contracts; John M. Olin, a chemical and munitions company titan; the Coors brewing family of Colorado; and the DeVos family if Michigan, founders of the Amway marketing empire. Each was different, but together they formed a new generation of philanthropist, bent on using billions if dollars from their private foundations to alter the direction of American politics.

In this kind of situation one might well ask: why continue to make the 80 percent of products that only generate 20 percent of profits? Companies rarely ask these questions, perhaps because to answer them would mean very radical action: to stop doing four-fifths of what you are doing is not a trivial change. What J-B Say called the work of entrepreneurs, modern financiers call arbitrage. International financial markets are very quick to correct anomalies in valuation, for example between exchange rates. But business organizations

In addition to the Kochs, this group included Richard Mellon Scaife, an heir to the Mellon banking and Gulf Oil fortunes; Harry and Lynde Bradley, midwesterners enriched by defense contracts; John M. Olin, a chemical and munitions company titan; the Coors brewing family of Colorado; and the DeVos family of Michigan, founders of the Amway marketing empire. Each was different, but together they formed a new generation of philanthropist, bent on using billions of dollars from their private foundations to alter the direction of American politics.

According to one recent study [...] the [climate change] denial-espousing think tanks and other advocacy groups making up what sociologist Robert Brulle calls the “climate change counter-movement” are collectively pulling in more than $ 900 million per year for their work on a variety of right-wing causes, most of it in the form of “dark money”— funds from conservative foundations that cannot be fully traced. This points to the limits of theories like cultural cognition that focus exclusively on individual psychology. The deniers are doing more than protecting their personal worldviews - they are protecting powerful political and economic interests that have gained tremendously from the way Heartland and others have clouded the climate debate. The ties between the deniers and those interests are well known and well documented. Heartland has received more than $ 1 million from ExxonMobil together with foundations linked to the Koch brothers and the late conservative funder Richard Mellon Scaife. Just how much money the think tank receives from companies, foundations, and individuals linked to the fossil fuel industry remains unclear because Heartland does not publish the names of its donors, claiming the information would distract from the “merits of our positions.” Indeed, leaked internal documents revealed that one of Heartland’s largest donors is anonymous - a shadowy individual who has given more than $ 8.6 million specifically to support the think tank’s attacks on climate science. Meanwhile, scientists who present at Heartland climate conferences are almost all so steeped in fossil fuel dollars that you can practically smell the fumes. To cite just two examples, the Cato Institute’s Patrick Michaels, who gave the 2011 conference keynote, once told CNN that 40 percent of his consulting company’s income comes from oil companies (Cato itself has received funding from ExxonMobil and Koch family foundations). A Greenpeace investigation into another conference speaker, astrophysicist Willie Soon, found that between 2002 and 2010, 100 percent of his new research grants had come from fossil fuel interests.

HINT 3: ONLY WORK FOR AN 80/20 BOSS What is an 80/20 boss? Someone who consciously or unconsciously follows the principle. By their works you shall know them: They focus on very few things—the ones that make a BIG difference to their customers, and, if they still have them, their bosses (hopefully a temporary arrangement—the best 80/20 bosses are not themselves constrained by a boss). They are going places fast. They are rarely short of time, and never flustered. They are usually relaxed and happy, not workaholics. They look to their people for a few valuable outputs. They pay no attention to inputs such as time and sweat. They take the time to explain to you what they are doing, and why. They encourage you to focus on what delivers the greatest results with the least effort. They praise you when you deliver great results, but are constructively critical when you don’t—and suggest that you either stop doing something unimportant or do something important in a more effective way. When they trust you, they leave you alone and encourage you to come to them when you need guidance.

businesses that could benefit from the way networks behave, and this approach yielded some notable successes. Richard came from a different slant. For twenty years, he was a ‘strategy consultant’, using economic analysis to help firms become more profitable than their rivals. He ended up co-founding LEK, the fastest-growing ‘strategy boutique’ of the 1980s, with offices in the US, Europe and Asia. He also wrote books on business strategy, and in particular championed the ‘star business’ idea, which stated that the most valuable venture was nearly always a ‘star’, defined as the biggest firm in a high-growth market. In the 1990s and 2000s, Richard successfully invested the money he had made as a management consultant in a series of star ventures. He also read everything available about networks, feeling intuitively that they were another reason for business success, and might also help explain why some people’s careers took off while equally intelligent and qualified people often languished. So, there were good reasons why Greg and Richard might want to write a book together about networks. But the problem with all such ‘formal’ explanations is that they ignore the human events and coincidences that took place before that book could ever see the light of day. The most

This book should never have happened. If it wasn’t for the most bizarre and twisted sequence of events involving a diverse array of people it wouldn’t have. Let us explain. If someone we, the authors, had wanted to impress - a publisher, say, or a book reviewer - had asked us how it had emerged, we could have come up with all kinds of things to establish our credentials for writing it. But they would have been only a small part of the story of how it came about, and not the interesting bit either. The truth is much more human and fascinating - and it also gets to the heart of the book and shows how networks really work. Greg has always been fascinated by ‘network theory’ - the findings of sociologists, mathematicians and physicists, which seemed to translate to the real world of links between people. Early in his professional life at Auto Trader magazine in Canada he got to see an extraordinary network of buyers and sellers in operation. Later, when he became a venture capitalist - someone who invests in new or young companies, hoping that some of them will become very valuable - he applied what he’d learned. He invested in businesses that could benefit from the way networks behave, and this approach yielded some notable successes. Richard came from a different slant. For twenty years, he was a ‘strategy consultant’, using economic analysis to help firms become more profitable than their rivals. He ended up co-founding LEK, the fastest-growing ‘strategy boutique’ of the 1980s, with offices in the US, Europe and Asia. He also wrote books on business strategy, and in particular championed the ‘star business’ idea, which stated that the most valuable venture was nearly always a ‘star’, defined as the biggest firm in a high-growth market. In the 1990s and 2000s, Richard successfully invested the money he had made as a management consultant in a series of star ventures. He also read everything available about networks, feeling intuitively that they were another reason for business success, and might also help explain why some people’s careers took off while equally intelligent and qualified people often languished. So, there were good reasons why Greg and Richard might want to write a book together about networks. But the problem with all such ‘formal’ explanations is that they ignore the human events and coincidences that took place before that book could ever see the light of day. The most

Christopher Morley extolled philosophical laziness … the kind of laziness that is based upon a carefully reasoned analysis of experience. Acquired laziness. We have no respect for those who were born lazy. It is like being born a millionaire – they cannot appreciate their bliss. It is the man who has hammered his laziness out of the stubborn material of life for whom we chant praise.7

15. phân tích 80/20 thật vô cùng hữu ích nhưng phần lớn mọi người không quen phân tích và thậm chí những nhà phân tích cũng không thể dừng lại để khảo sát dữ liệu mỗi lần họ đưa ra quyết định, điều này sẽ khiến công việc ngừng lại đột ngột. Đa số các quyết định quan trọng chưa bao giờ và sẽ không bao giờ được thực hiện nhờ vào việc phân tích cho dù máy vi tính của chúng ta thông minh đến thế nào đi nữa. Do đó nếu muốn nguyên tắc 80/20 trở thành kim chỉ nam trong đời sống hàng ngày, chúng ta cần một cái gì đó yêu cầu ít phân tích hơn và dễ dàng thực hiện hơn lối phân tích 80/20: đó là tư duy 80/20. 16. Khi tôi còn là một sinh viên non choẹt tại Đại học Oxford, giáo sư hướng dẫn bảo tôi đừng bao giờ đến giảng đường làm gì. Ông giải thích “Đọc sách giúp lĩnh hội kiến thức nhanh hơn nhiều. Nhưng đừng bao giờ đọc một cuốn sách từ đầu chí cuối, trừ trường hợp thấy vui thích. Khi anh học, hãy tìm ra những gì cuốn sách đề cập thì nhanh hơn cách anh đọc toàn bộ cuốn sách. Hãy đọc kết luận, rồi nhập đề, rồi kết luận một lần nữa và rồi để mắt đến những đoạn thú vị”. Điều giáo sư này thực sự muốn nói là 80% giá trị của cuốn sách có thể được tìm thấy ở 20% số trang sách hay thậm chí còn ít hơn, và tiếp thu nội dung của sách chỉ trong 20% tổng thời gian mà hầu hết mọi người phải bỏ ra để đọc trọn cuốn sách. 17. Có lẽ không hay ho gì nếu những con số 80 và 20 cộng lại thành 100. Điều này tạo ra kết quả trông quá đẹp (chẳng hạn kết quả là 50/50, 70/30, 99/1 hay nhiều kết quả khác như thế) và hẳn nhiên rất dễ nhớ, nhưng điều này khiến nhiều người cho rằng chúng ta chỉ xử lý một nhóm dữ liệu, đó là nhóm dữ liệu được qui sang dạng phần trăm. Sự thật không phải như thế. Nếu 80% con người thuận tay phải và 20% thuận tay trái thì đây không phải là một quan sát kiểu 80/20. Để áp dụng Nguyên lý 80/20 bạn phải có hai nhóm dữ liệu, cả hai qui thành 100 phần trăm, và trong đó một nhóm đo lường một biến lượng được sở hữu, được nêu ra hay gây ra bởi số người hay vật tác động cấu thành nhóm 10% kia. 18. Joseph Ford đã có lời bình luận thế này: “Thượng đế chơi trò gieo súc sắc với vũ trụ. Nhưng đó là một cục súc sắc không đồng đều. Và mục tiêu chính yếu là tìm ra quy luật của sự ‘không đồng đều’ ấy là gì và chúng ta có thể vận dụng như thế nào quy luật ấy để phục vụ cho mục đích cuối cùng của mình”.16 Nguyên lý 80/20 có thể giúp chúng ta đạt được đúng mục tiêu ấy. 19. Joseph Ford đã có lời bình luận thế này: “Thượng đế chơi trò gieo súc sắc với vũ trụ. Nhưng đó là một cục súc sắc không đồng đều. Và mục tiêu chính yếu là tìm ra quy luật của sự ‘không đồng đều’ ấy là gì và chúng ta có thể vận dụng như thế nào quy luật ấy để phục vụ cho mục đích cuối cùng của mình”.

20. Có hai con đường đi đến mục tiêu này. Một là tái phân bổ những nguồn lực từ những áp dụng kém hiệu quả qua những áp dụng hiệu quả cao, một bí quyết của tất cả mọi nhà doanh nghiệp qua mọi thời đại. Hãy tìm một cái lỗ tròn cho một cây đinh tròn, một lỗ vuông cho một cây đinh vuông, và một hình dạng phù khớp cho tất cả những cái khác tùy theo hình dạng của chúng. Kinh nghiệm cho thấy rằng mỗi nguồn lực đều có “đấu trường” lý tưởng của nó, ở đó nguồn lực ấy có thể trở nên hiệu quả gấp mười, gấp trăm lần nếu so với những “đấu trường” khác. Con đường thứ hai – là phương pháp của các nhà khoa học, bác sĩ, những người thuyết giảng, những chuyên viên thiết kế hệ thống máy tính, những nhà giáo dục và những người làm công tác huấn luyện và đào tạo – là tìm kiếm những phương cách để làm cho những nguồn lực không hiệu quả trở nên có hiệu quả hơn, ngay cả trong chính những áp dụng hiện tại của chúng; làm cho những nguồn lực yếu kém trở nên mạnh mẽ hơn; bắt chước, nếu cần thiết thì học thuộc lòng thật tỉ mỉ, từng ngóc ngách vi tế, những nguồn lực có hiệu quả cao. Những cái thuộc số ít có hiệu quả cao cần được xác định, chăm bón, nuôi dưỡng, và nhân rộng. Đồng thời, những cái lãng phí – là đa số những cái lúc nào cũng chỉ dừng ở mức giá trị thấp – cần phải loại bỏ hoặc mạnh tay cắt giảm. 21. Con đường thứ hai – là phương pháp của các nhà khoa học, bác sĩ, những người thuyết giảng, những chuyên viên thiết kế hệ thống máy tính, những nhà giáo dục và những người làm công tác huấn luyện và đào tạo – là tìm kiếm những phương cách để làm cho những nguồn lực không hiệu quả trở nên có hiệu quả hơn, ngay cả trong chính những áp dụng hiện tại của chúng; làm cho những nguồn lực yếu kém trở nên mạnh mẽ hơn; bắt chước, nếu cần thiết thì học thuộc lòng thật tỉ mỉ, từng ngóc ngách vi tế, những nguồn lực có hiệu quả cao. Những cái thuộc số ít có hiệu quả cao cần được xác định, chăm bón, nuôi dưỡng, và nhân rộng. Đồng thời, những cái lãng phí – là đa số những cái lúc nào cũng chỉ dừng ở mức giá trị thấp – cần phải loại bỏ hoặc mạnh tay cắt giảm. 22. Lý do làm cho Nguyên lý 80/20 có giá trị đến thế là do nó đi ngược lại với những gì chỉ cảm nhận bằng trực giác. Chúng ta thường cứ hay nghĩ rằng tất cả các nguyên nhân sẽ dẫn đến những kết quả với một tầm quan trọng gần như nhau. Rằng tất cả các khách hàng đều có giá trị như nhau. Rằng mỗi doanh nghiệp, mỗi sản phẩm, và mỗi đồng tiền kiếm được từ lợi nhuận doanh số đều có giá trị ngang nhau. Rằng, với chúng ta, tất cả các nhân viên đều có giá trị gần như nhau. Rằng tất cả các câu hỏi và cú điện thoại đều cần được đối xử như nhau. Rằng trường đại học nào cũng tốt như trường đại học nào. Rằng tất cả mọi vấn đề đều có một số lượng lớn những nguyên nhân, do vậy không đáng phải khu biệt riêng một số nguyên nhân quan yếu. Rằng tất cả mọi cơ hội đều có giá trị gần như nhau, do vậy chúng ta đều xử lý chúng như nhau. 23. Mặc dù tôi dành cả cuốn sách này để nói về việc dọn dẹp, nhưng không nhất thiết là phải dọn dẹp. Bạn sẽ không chết nếu nhà cửa không được dọn dẹp và có nhiều người trên thế giới này không thực sự quan tâm tới việc khiến nhà mình được gọn gàng, ngăn nắp. Tuy nhiên, những người như thế sẽ không bao giờ cầm cuốn sách này lên. Mặt khác, số phận đã dẫn dắt bạn đọc cuốn sách này thì điều đó có nghĩa là bạn chắc chắn có nỗi mong muốn mãnh liệt để thay đổi hoàn cảnh hiện thời, tổ chức lại cuộc sống, cải thiện lối sống, giành lấy hạnh phúc và tỏa sáng. Chính vì vậy, tôi có thể đảm bảo rằng bạn sẽ có thể khiến ngôi nhà của mình trở nên gọn gàng, ngăn nắp. Giây phút bạn cầm cuốn sách này lên với ý định dọn dẹp nhà cửa, thì lúc đó bạn đã thực hiện bước đầu tiên. Nếu bạn tiếp tục đọc, bạn sẽ biết mình cần làm điều gì tiếp theo.

you can change the way you feel by what you think.”7

Avoid hard work. Don’t push water uphill. Be very selective in what you do. Have a great life.

Pareto principle? Named after an Italian economist who observed an interesting pattern of wealth distribution in nineteenth-century Italy, it’s now more commonly known as the 80/20 principle thanks to a blockbuster book by Richard Koch written in 1998. The general idea is that the majority of the results come from a minority of the causes. The key is identifying which things matter the most.

star business has two attributes: ★ it is the leader in its market niche; and ★ the market niche is growing fast, at least 10 per cent a year.

A star business is the leader in its market niche To be the leader simply means that it is bigger intheniche than any other firm. We measure size by sales value (also known as revenues or turnover). If the venture has sales of $1 million and there is nobody whose sales in the same niche reach $1 million, then it is the leader. Note that ‘leadership’ is objectively defined by sales, and has nothing to do with competing claims about ‘being the best’ or being most highly rated by customers, which are difficult to judge and not as important anyway. The thing that matters most is how customers in the niche vote with their money. Has a question just popped up in your mind? ‘Ah,’ you may say, ‘but how do you define what the market niche is?’ That is indeed a profound question, and I will answer it with several examples throughout the book. It is possible to get the definition of the niche wrong - as I sometimes have. But the basic idea is very simple. For a niche to be a separate market, it must have different customers, different products or services and a different way of doing business from the main market or other market niches. Finally, the ranking of competitors is different in a valid market niche - the leader in the niche is different from the leader in the main market. If there is no difference in how competitors fare in the niche versus the main market, the niche is not really different.

Red Bull is another case. In America and Europe, Red Bull invented the ‘energy drink’ category. All attempts by the Coca-Cola Corporation and other soft-drink makers to compete with Red Bull have failed. Energy drinks are a separate niche and Red Bull is a valuable star. There is another clue as to whether or not a niche market is viable, and it is simply this: is the niche highly profitable? Does it generate a lot of cash? Leadership in a niche is not valuable unless, sooner or later, the niche is very profitable and gushes out cash. For sure, if your product is very good and you give it away, you can attain leadership in a niche. Free newspapers, for example. But unless you have some other way of taking in cash - through advertising in this case - your niche business will be unprofitable and gobble up cash. It follows that you can tell whether or not niche leadership really exists by seeing whether the niche leader is very profitable and cash-positive. If not, there is a kind of theoretical niche leadership, but the niche has little or no practical value. It will never qualify as a star business. Is Dr Pepper’s niche leadership valuable? Is Red Bull’s? You bet!

The market niche must be growing fast A venture is not a star unless the niche where it operates is growing by at least 10 per cent a year. More precisely, the niche must grow at least 10 per cent a year, on average, over the next five years, and preferably for decades. Why is growth important? Because the power of compound arithmetic is such that, in a high-growth venture, sales - and profits, when they appear - will multiply quickly. It is quite different from the great majority of firms, which grow only slowly, and where profit growth is difficult and far from automatic.

A business with sales of $10 million that grows at 3 per cent a year - roughly the rate the economy grows - will increase by 34 per cent over a decade, to just over $13 million. What will a business that grows at 30 per cent a year - ten times 3 per cent - grow by in the same time? You might assume is it ten times 34 per cent, which is 340 per cent, and add a bit for the effect of compounding, to take the growth to perhaps 500 per cent. If this were true the sales after ten years would have grown to $50 million. But the correct answer is nearly $138 million. Such is the magic of compound interest, which Albert Einstein called ‘the most powerful force in the universe’.

Si aprovechamos bien tan sólo el 20 % de nuestro tiempo, no nos quedaremos cortos.

Finalmente, as parcelas mais simples do negócio são provavelmente as mais próximas do cliente. Há menos administradores no meio do caminho. Os clientes podem ser ouvidos e sentem que são importantes. As pessoas não se importam de pagar mais por isso. Para os clientes, a busca por se sentir importante é tão relevante quanto a busca por valor. A simplicidade eleva os preços assim como derruba os custos.

Proporcionar todas as formas de autosserviço gera opções, economia, rapidez e vendas.

Não há oferta de excelência a menos que você goste do que está fazendo.

George Bernard Shaw lo expresó a la perfección: «El hombre sensato se adapta al mundo. El hombre insensato insiste en intentar que el mundo se adapte a él. Por lo tanto, todo el progreso depende de hombres insensatos».

When W. Clement Stone, an insurance magnate and philanthropist, gave $2 million to Richard M. Nixon’s 1972 campaign, it caused public outrage and contributed to a movement that produced the post-Watergate reforms in campaign financing.” Accounting for inflation, Balz estimated that Stone’s $2 million might be worth about $11 million in today’s dollars. In contrast, for the 2016 election, the political war chest accumulated by the Kochs and their small circle of friends was projected to be $889 million, completely dwarfing the scale of money that was considered deeply corrupt during the Watergate days.

tactics” books include Guy Kawasaki’s The Art of Start, Richard Koch’s The All-Day Energy Diet and The 80/20 Principle, and Robert Kiyosaki’s Rich Dad Poor Dad.

A melhor maneira de examinar a lucratividade de sua empresa é dividindo-a em segmentos competitivos.

EL PRINCIPIO DEL 80/20 LE DA LA VUELTA AL CONOCIMIENTO CONVENCIONAL La aplicación del principio del 80/20 implica que deberíamos hacer lo siguiente: • Celebrar la productividad excepcional, en lugar de aumentar esfuerzos mediocres. • Buscar el atajo, en lugar de recorrer todo el circuito. • Controlar nuestras vidas con el menor esfuerzo posible. • Ser selectivo, en lugar de exhaustivo. • Perseguir la excelencia en pocos ámbitos, en lugar de un buen rendimiento en varios. • Delegar o externalizar cuanto sea posible en nuestra vida cotidiana y ser alentado, en lugar de penalizado, por los sistemas impositivos por hacerlo (contratar a jardineros, mecánicos de coche, decoradores y otros especialistas siempre que podamos, en lugar de hacer el trabajo nosotros). • Escoger la profesión y las empresas para las que trabajamos con sumo cuidado y, de ser posible, emplear a otras personas en lugar de ser nosotros los empleados. • Hacer únicamente aquello que hacemos mejor y con lo que disfrutamos más. • Mirar más allá de la superficie de la vida, para descubrir ironías y rarezas. • En todas las esferas importantes, descubrir qué 20 % del esfuerzo puede conducir al 80 % de los resultados. • Relajarnos, trabajar menos y marcarnos un número limitado de objetivos valiosos, donde el principio del 80/20 trabaje para nosotros, en lugar de perseguir todas las oportunidades que se nos presenten. • Aprovechar al máximo los escasos «golpes de suerte» de la vida, cuando estamos en el punto de creatividad máxima y las estrellas se alinean para garantizar el éxito.

In addition to the Kochs, this group included Richard Mellon Scaife, an heir to the Mellon banking and Gulf Oil fortunes; Harry and Lynde Bradley, midwesterners enriched by defense contracts; John M. Olin, a chemical and munitions company titan; the Coors brewing family of Colorado; and the DeVos family of Michigan, founders of the Amway marketing empire. Each was different, but together they formed a new generation of philanthropist, bent on using billions of dollars from their private foundations to alter the direction of American politics. —

By 2009, [Richard] DeVos's son, Dick and daughter-in-law Betsy were major donors on the Koch lust and facing a $5.2 million civil fine of their own for violating Ohio's campaign-finance laws.

As the New Yorker columnist and bestselling author Malcolm Gladwell has shown, word of mouth can flare up and quickly die or it can reach the ‘tipping point’ where no force on earth can arrest the product’s relentless forward march. The art of the entrepreneur is to get word of mouth to the tipping point.

MOST OF WHAT EXISTS IN THE UNIVERSE—OUR ACTIONS, AND ALL OTHER FORCES, RESOURCES, AND IDEAS—HAS LITTLE VALUE AND YIELDS LITTLE RESULT; ON THE OTHER HAND, A FEW THINGS WORK FANTASTICALLY WELL AND HAVE TREMENDOUS IMPACT. —Richard Koch

In the same interview, Koch described, without any self-consciousness, how he had recently promoted his son, Chase, to the presidency of Koch Fertilizer and how at “every step, he’s done it on his own.” The possibility that his son, like he and his brothers, Richard Mellon Scaife, Dick DeVos, and the Bechtel boys, to name just a few in his network, might have benefited from a job in the family’s business or a huge inheritance, rather than having been “condemned…to a lifetime of dependency and hopelessness,” because “somebody” had given “them something,” seemed not to have crossed his mind.

The big advantage with price-simplifying is that it is often possible to build a huge mass market and a business system that cannot be imitated and out-scaled easily – at least not after the early days – which effectively shuts out all rivals. The price-simplifier is likely to end up with much higher volume than the proposition-simplifier, for the latter relies on the customer’s willingness to pay a premium for a demonstrably superior product. The rub for proposition-simplifiers is that they need to keep ahead of their rivals through constant innovation and new product development – otherwise, they will lose market share and suffer falling margins. Yet they may be able to build an extremely valuable, loyal following and brand among the middle to top of any given market. The price-simplifier must price down the experience curve, passing on cost savings and keeping margins tightly constrained. In contrast, the proposition-simplifier can – sometimes – hang on to fat net margins: up

Customers play ball not just because of extremely low prices but also because IKEA offers them advantages and an experience that other retailers do not. Are there ways in which your firm – or a new venture – could offer customers advantages that would not cost you very much, or would even increase profits?

So, if you invent a way of price-simplifying that works, be sure to roll it out internationally before local rivals have a chance to copy it.

A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away. Antoine de Saint-Exupéry

Richard Koch, the author of Living the 80/20 Way, Work Less, Worry Less, Succeed More, Enjoy More, made similar observations in his book, and had a simple proposition in regards to handling our money.   He

would like to thank his colleagues, particularly Andrin and Helen, for their generous encouragement in his book-writing. Finally, he is most grateful to Christina, who, against all his instincts, got him to buy a house on a hill in the middle of nowhere. It has turned out to be a place in the middle of somewhere very special indeed, and a perfect place to write. And to his six-year-old daughter Zoe, who has taught him more than

Un gerente liberador debe ser por completo honesto con su gente; debe apoyarla, ser amistoso y también muy exigente.

Es mejor liberar que esclavizar; y la liberación es el único camino que permite a los equipos y a los individuos llegar al máximo nivel de logro placentero.

(Courtesy of BioVir Laboratories, Inc.) Three years after Koch and Hesse switched to agar-based media, another assistant in the laboratory, Richard J. Petri, designed a shallow glass dish to ease the dispensing of the sterilized molten media. The dishes measured a little less than a half-inch deep and 4 inches in diameter. This Petri dish design has never been improved upon and is a staple of every microbiology lab today. The size

George Bernard Shaw put it well: “The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

The French economist J-B Say coined the word “entrepreneur” around 1800, saying that “the entrepreneur shifts economic resources out of an area of lower productivity into an area of higher productivity and yield.

Equality ends in dominance: that is one of the messages of chaos theory.

The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards.

All the time we tell ourselves stories about ourselves. We have to: there is no objective truth. You might as well choose positive rather than negative stories. By doing so you will increase the sum of human happiness, starting with yourself and radiating out to others.

Our doubts are traitors..." William Shakespeare

And very profitable for LEK. The ‘kids’ were cheap. They worked long hours with no payment for overtime. We charged a lot for their work. Competitors didn’t have our bottom-heavy staff structure, so couldn’t imitate us economically.

The delivery formula has been cracked when all the following events always happen. ★ Products are delivered to the same high standard, on time, every time. ★ This year’s product is measurably better than last year’s. ★ This year’s product costs at least 5 per cent less to make than last year’s. ★ Volumes can be doubled within a year without panic or loss of quality. ★ Work is delegated to the lowest-level person who is fully competent to do it. ★ Everyone increases his or her skill level significantly each year and works better and faster. ★ The workplace exudes calm, order and discipline. ★ Standards and procedures are written down, clear, unambiguous - and observed! ★ Logos, colours and designs are attractive and consistent. ★ Budgets are always met or exceeded. ★ Cash is always higher than planned. ★ The firm is a machine - smooth-running, reliable, relentless, self-maintaining and self-improving. ★ Nobody is indispensable. If the best people leave, the firm rolls on regardless. New leaders come to the fore.

Analysis of valuable stars reveals three golden rules of innovation. 1. Innovation is best based on whatyoualready do best and most distinctively. Innovation is powerful when it suits the new category you have invented rather than the main market, because it makes the new category even more attractive to its target customers. 2. Effective innovation makes it impossible for competitors to catch up. This type of innovation never stops. Rivals can’t get closer because the stars are always widening the gap in value delivered to customers. 3. The best innovation reinforces and extends profitable variation. Innovation is not charity. Real, sustainable innovation kills two birds with one stone - it makes customers happier, and it make your venture more profitable. Innovation is hard. It takes deviant thinking and persistent non-routine action. There is no point, therefore, in wasting precious energy on innovation that does not satisfy all three golden rules. The decision to pursue a major innovation is fateful. Bad innovation drives out good.

2. MIGRATE YOUR PRODUCT LEK had to move away from ‘standard’ strategy towards analysis of competitors. This led to ‘relative cost position’ and ‘acquisition analysis’. Your task is to find a unique product or service, one not offered in that form by anyone else. Your raw material is, of course, what you and the rest of your industry do already. Tweak it in ways that could generate an attractive new product. The ideal product is: ★ close to something you already do very well, or could do very well; ★ something customers are already groping towards or you know they will like; ★ capable of being ‘automated’ or otherwise done at low cost, by using a new process (cutting out costly steps, such as self-service), a new channel (the phone or Internet), new lower-cost employees (LEK’s ‘kids’, highly educated people in India), new raw materials (cheap resins, free data from the Internet), excess capacity from a related industry (especially manufacturing capacity), new technology or simply new ideas; ★ able to be ‘orchestrated’ by your firm while you yourself are doing as little as possible; ★ really valuable or appealing to a clearly defined customer group - therefore commanding fatter margins; ★ difficult for any rival to provide as well or as cheaply - ideally something they cannot or would not want to do. Because you are already in business, you can experiment with new products in a way that someone thinking of starting a venture cannot do. Sometimes the answer is breathtakingly simple. The Filofax system didn’t start to take off until David Collischon provided ‘filled organisers’ - a wallet with a standard set of papers installed. What could you do that is simple, costs you little or nothing and yet is hugely attractive to customers? Ask customers if they would like something different. Mock up a prototype; show it around. Brainstorm new ideas. Evolution needs false starts. If an idea isn’t working, don’t push it uphill. If a possible new product resonates at all, keep tweaking it until you have a winner. At the same time . . .

4. MIGRATE YOUR TARGET CUSTOMER BASE Every star venture wants to end up with a unique set of customers, ideally suited to its products and DNA. To migrate towards your ideal target customers, identify: ★ suitable customers you know already or could easily access; ★ customers who are disgruntled with their existing suppliers; ★ customers who need a product you can envision, not currently being provided; ★ customers who give you pleasure; ★ customers who aren’t price-sensitive; ★ customers you know you can help most; ★ fast-growth companies; ★ big and profitable companies; ★ loyal customers, who hate to switch suppliers; ★ customers with whom you can build a ‘thick’ relationship; ★ customers who’ll recommend you to big customers; ★ people within organisations at the most senior level you can possibly reach.

Run from disaster rather than be caught by it. Homer (The Iliad)

To attain knowledge, add things every day. To attain wisdom, remove things every day. Lao-Tzu

TRIGGER 1. YOUR IDEAL PRODUCT DOESN’T EXIST The first trigger is the simplest. Is there a product or service you really want that is not available?

In every star venture I have known, there were in retrospect four formulas that had to be discovered and turned into routine, unique and consistently repeatable business practices: 1. the customer-attraction formula: the way to get an ever-increasing number of profitable customers who buy more and more from you; 2. the commercial formula: the way to lock in fat margins; 3. the delivery formula: the way to forge a machine delivering ever-increasing quantities of consistent and high-quality product; and 4. the innovation formula: the way to make innovation and improvement routine, to keep clear of rivals. The formulas have to fit together and have ‘integrity’ - wholeness, sincerity, consistency, coherence and authenticity - so that each formula is not only consistent with the other three, but also reinforces them. For your venture to be a star, the formulas must be unique and better - better than any formula in the main market, and better than any competing formula in the new category you have created. To remain a star, the formulas must be capable of infinite extension and deepening, so that rivals cannot fully understand them, imitate them or replace them with better formulas. Ultimately, ‘better’ is not a matter of opinion. It is a matter of votes, customers’ votes in the marketplace. A ‘better’ formula is one that is more profitable and achieves higher market share and faster growth than any rival formula.

Could you evolve into a star? Are you Number Two in a high-growth market - BCG’s ‘question mark’ position? The issue here is simple. Can you overtake the leader? Your chances are greater if: ★ your market share is not far below the leader’s; ★ you are gaining on the leader; ★ the leader makes an unexpected blunder; ★ the niche is young; ★ market positions are volatile and one or two large customers can swing it; ★ the market is growing very fast; ★ you understand the customers in the niche better; ★ even though you are in the same market, your approach is different and customers like it better; ★ your people have better empathy with the customers; ★ your approach has fatter margins than the leader, or would do so if you had the same volume of business; ★ you are better financed than the leader; ★ objective observers say your product is better; ★ the leader’s advantage rests on distribution advantages that you can gradually overcome; ★ key employees from the leader are defecting to you; ★ the leader is only dimly aware of the threat you pose.

3. MIGRATE YOUR DNA New products require new capabilities. Equally, new products can result from the unique character and living expansion of your firm. No two species are identical. Neither are two ventures. The mix of founders and early employees is unique. Nobody will ever do things quite the way you do. The more different you can make your firm, the better. Intelligently, of course, ★ hire and promote people who have similar attitudes to the target market; ★ hire people who get on well with each other and go the extra mile for customers and colleagues; ★ hire people who have a high ratio of smarts to cost - younger or from neglected talent pools; ★ hire risk-takers, experimenters, explorers, oddballs, and those with a restless spirit; ★ train on the job; team novices with senior role models; concentrate on the few things customers like most, that can be done with least effort and cost; ★ make your venture bright, quirky, colourful, distinctive, fun and highly commercial - thrilling customers at a high profit for the firm. Encourage smart experiments at every level, in every way, at every time. Make it a way of life in your firm. Then, sooner or later, your star will emerge. LEK did not start by migrating its product. First we migrated its DNA, then we created products we were uniquely able to sell. This goes against the grain, but it works!

How to find your star ★ Make it front of mind every day. When you get up, say to yourself, ‘Today I’m going to look for my star.’ If you make to-do lists, put it at the top. ★ Keep your eyes and ears open. Every moment of the day, be looking for your star. Once you consciously search for stars, it’s amazing how they turn up. ★ Put up a sign. At work, at home, put up a sign that says FIND MY STAR. Place the sign where other people will see it and ask you what it means. Get them looking on your behalf. (If your boss asks, tell him or her that you’re looking for a great new idea or friend. This is true and it won’t get you into trouble.) ★ Look at websites. The Web takes us on magical mystery tours. As you navigate sites of small firms, think, ‘Does this have the hallmarks of a star venture?’ ★ Ask your friends. Every time you see or call a friend you haven’t met for a while, ask them if they know of a new business ‘like this . . .’ ★ Form a Star Alliance with two or three friends, dedicated to finding a star. Choose people you really trust, who also want to find a star. Meet often to track progress.

What to do next What do you do when you’ve found a baby business you think may be a star? ★ Talk to them. Find a reason to talk to everyone in and around the company, to express your interest and learn more. ★ Do them a favour. If you can, buy something from them. Point them towards other customers. Advise them on how to expand. ★ Discreetly verify that it is a star. Ask questions suggested in the section above, ‘What are you looking for?’ ★ Work out a job you could do for them. Don’t wait for them to post a vacancy. Tell them what you can do, why they should hire you. Stress the benefits you bring. ★ Make your mark. When you join the firm, work out one thing you can do within your first month that will visibly benefit your colleagues and the venture. ★ Check again from the inside that it really is a star. If the business isn’t really growing very fast, or doesn’t fit the bill in any other way, don’t hang around. If it really is a star, work out how far the star could rise. ★ Raise ambition within the firm. Sometimes the founders of a star don’t see its potential. Open their eyes.Tell them how valuable the firm could become, if expanded to its maximum potential. Consider whether the idea can be exported to other countries, and/or franchised. Would other channels of distribution (such as the phone with Betfair) enlarge the market? ★ Consider making an offer for the firm. If the founders really don’t ‘get it’, put together a group to buy the firm. Remember the astronomical return Ray Kroc achieved from buying McDonald’s from the founders, when it was already highly successful.

Mark Allin and Richard Burton started Capstone, their book-publishing venture, with high hopes. False modesty aside, they knew they were excellent editors, with a great track record at two publishing giants. I could vouch for Mark Allin’s profit-making abilities, since he gave me the idea for writing The 80/20 Principle, my bestselling book. Richard and Mark envisaged Capstone as a star venture, the leader in a new category of ‘funky business books’. They convinced me that this idea was plausible and I became their financial backer. I reckoned that I had an ‘each-way bet’ - either their star business would materialise, or, at worst, they would pick a few great winners, making Capstone highly profitable. The business appeared to start well. They commissioned a stream of trendy books from interesting authors. The product looked great, with distinctive trendy designs. Mark and Richard were full of ideas and enthusiasm, confidently projecting sales that would give us good profits. The only thing was, the forecasts never materialised. Whenever we looked at the numbers we were constantly disappointed. I kept injecting cash, and it kept vanishing. To this day I don’t know why their books didn’t sell in quantities we could reasonably expect.The favoured explanation was the weakness of the sales force - inevitably, it was difficult to acquire distribution muscle from scratch. Maybe they just had bad luck in not commissioning any smash hits. Whatever the reason, Capstone was a financial black hole. I remember a rather difficult meeting at my home in Richmond some three years after the start. Richard and Mark asked for a further loan to commission new books. I had to say no. We had to face facts. Capstone was not a star; the category of ‘funky business books’ had not established itself. Capstone was a rather weak follower in the business-books arena. Capstone had none of the financial attributes of a star. If it looked like a dog, behaved like a dog and barked like a dog, it probably was a dog.

Ideally, pursue all three ways of varying the market, with the target customers in mind: ★ increasing the benefits that really matter to the target market; ★ creating new benefits that will appeal strongly to the target market; and ★ subtracting benefits that are unimportant to the target market. Betfair ★ dramatically increased value for money in the betting market; ★ provided the new benefits of being able to bet against outcomes, being able to trade bets and guaranteeing that winning accounts would not be closed; and ★ subtracted the ability to bet in retail premises or at the track, or to bet and collect winnings in cash. Betfair’s target market is big gamblers: professionals and serious enthusiasts. The change in profile between what betting exchanges offered and what the main market offered was ideally suited to the target market. ★ Getting great value is essential if a gambler is to win. It is very difficult to win if the bookmaker takes out 20 per cent on each event. If a betting exchange takes out only 1 per cent, a serious gambler has to be only slightly more than 1 per cent more accurate than the market and he will win. ★ It is much easier to bet against an outcome and win than it is to specify the winner. (If there are eight horses in a race and the gambler has a strong view against the favourite, he can back against that horse without knowing which of the other seven will win.) Big gamblers are much more likely to bet against events than small gamblers. Big gamblers are also skilful in trading bets, which can be a risk-free way of making money. Finally, big gamblers are the only people whose accounts are regularly closed down by bookmakers. ★ Big gamblers do not frequent off-track betting shops and are more than happy to bet online and by phone, and to receive payment by bank transfer.

There are disadvantages.You shouldn’t join a star venture if you are lazy, a loner, in poor health, don’t want to be committed, tired of life or in a relationship that is already shaky - it would not survive the competition! Otherwise, it’s a ‘no-brainer’.

What are you looking for?A baby business. Something young and small - under 20 employees if you are looking for a job; and something too small or unproven to attract professional investment if you are an investor. ★ A baby business growing very fast. Any small business growing very fast is likely to be a star. Every star business will be growing fast. So growth is a good first screen of any baby business you find. ★ An original idea. A baby business that has found a gap in the market - the creator of a new way of doing business. A star venture will be doing things differently. ★ Baby is a leader. In its gap, in its own business arena, it is the largest. It may have one or two even younger imitators, but most likely it is still unique. ★ Baby’s customers are different. You can see why the baby business appeals to particular customers, who can’t get anything as attractive to them elsewhere. ★ A baby business that you can imagine being extremely profitable when it grows up. There must be hard economic reasons why the business, when it reaches the size it can, will have fat margins. Its costs must be much lower than the conventional way of doing business, or its prices must be higher, or both.

You have to state why and how your business is going to be the leader. If the niche already exists, so too does a leader. Displacing an incumbent leader is always possible, but it is difficult. It’s not something to bet on, unless you have a source of competitive advantage that is totally compelling. Typically, star-venture start-ups create their own niche. If the niche proves viable, the venture starts in the wonderful position of ‘born leader’. To create a viable new niche is tough. The large majority of attempts to create a niche fail. Why? Two conditions must be met: ★ There must be a gap in the market. All existing players must have overlooked the gap, or judged it too small, too unprofitable or too implausible. For sure, this is possible. But it is not very likely. ★ There must be a market in the gap. The gap must be large enough to support at least one new venture (yours) profitably. This, too, is not probable.

Let me tell you a secret. Most ‘brilliant’ managers and ‘superstar’ entrepreneurs perform miracles not because of their brilliance, but because they are in the right place at the right time. Almost anyone reasonably competent, sitting where they sat, could have done pretty much the same. And, when successful firms start to fail, the same is nearly always true in reverse. Even the world’s best executive stands a poor chance of reversing the capricious momentum of markets and rivals when they have it in for a firm.

Though it goes against everything we like to believe, everything we read in papers and books, the curious truth is that executives have much less influence than they and we like to believe, once a firm’s positioning is set. One executive versus another is almost completely irrelevant, unless he or she makes a brave and dangerous decision to try to transform a firm’s positioning. This is rare. Even when the attempt is made, it fails more often than it succeeds. The one time when individuals can dependably make a difference and put themselves in a great position is: ★ when they select the positioning for a new or young venture; ★ when they realise that success comes from creating a star firm (this is the only general and reliable reason for business success, since nearly all stars are very successful, so long as they stay stars - and, crucially, the other way round: nearly all very successful firms are stars); and ★ when they determine to start a star venture.

When they buy businesses, all venture capitalists look hard at the technology, the management, the market. They get into all sorts of complex investigation. They hire consultants to assess the technology and the market, accountants to crawl over the books, and lawyers to tie the managers in knots and do whatever lawyers do. I did none of those things. I knew Betfair was a star business. That was enough for me.

All right, as a gambler I liked the idea of Betfair, because it offered better odds than the bookmakers and, if it was successful, it would be a thorn in their side. Every punter loves to hate the bookies. But, then again, I am not a follower of Victor Kiam, who famously bought Remington because he liked shaving with its razor. I never buy into a company because I like its product. For the first couple of years that I was a part-owner and director of Betfair, I didn’t register as a user. To be honest, I’m not very good with technology and I didn’t know how to go online and bet. I remember being ridiculed by some of my fellow Betfair directors when I remarked, nearly three years after making my investment, that I had just started using the site and found it impressive. How could anyone invest in their baby without giving it an extensive road-test first, without understanding how to use it? Wilful ignorance is one of my best investment tools. I don’t want to know too much before making an investment. I don’t want to cloud my judgement, or make the decision difficult. I don’t want to know about all the risks or understand them. I just want to be reasonably sure that it’s a star business. That makes life simple and fun. And profitable.

Only learn to seize good fortune, for it is always there. Johann Wolfgang von Goethe

Again, I violated venture-capital rules, bringing in as new CEO a friend and former LEK consultant, Robin Field, who had no experience in Filofax’s industry (we look at LEK Consulting below). His mission, I said, was to make Filofax a star again and slash costs. Apart from that, I told him, I had no idea what to do. Robin found that the product line had expanded beyond all control. ‘The same basic binder,’ he said, ‘was available in a bewildering variety of sizes and huge assortment of - mainly exotic - skins. I don’t know what a karung is, but I inherited an awful lot of its skin in 1990. Similarly, name a subject - bridge, chess, photography, bird watching, windsurfing, whatever. Filofax had commissioned specialist inserts, had tens of thousands printed, and put them into the warehouse. The result, of course, was not only a huge overhang of worthless stock, not only an administrative burden of vast complexity, but also total confusion among our retailers.

Step 6: When Filofax grew enormously in the 1980s as an expensive, aspirational product, the absence of a generic niche description became a problem for the leader. People began to use ‘filofax’ to describe the category, which meant that every competitor could describe their product as a filofax (note the lower case f ). In 1986 David Collischon wisely coined the term ‘personal organiser’ to describe the category and encouraged everyone to use the term. Marketing experts are adamant that it is easier for us to think first about a category generally, and then about the brand. ‘I need a personal organiser to keep all my bits of paper.What brand should I ask for in the shop? Well, Filofax is the best known.’ This is an easier and more natural way of thinking than, ‘I need a Filofax.’ The clear benefit of a personal organiser was that it helped people be better organised . If the term ‘personal organiser’ had not gained widespread currency the benefit of the new category would have been much less clear, and Filofax’s brand name would have become devalued. Contrast the confusion caused in the electronic-organiser niche. When this developed in the 1990s, the leading brand was PalmPilot. But what was the category name? As Al and Laura Ries comment, ‘Some people call the Palm an electronic organiser. Others call the Palm a handheld computer. And still others, a PDA (personal digital assistant). All of these names are too long and complicated. They lack the clarity and simplicity a good category name should possess. If . . . a personal computer that fits on your lap is called a laptop computer, then the logical name for a computer that fits in the palm of your hand is a palm computer . . . Of course, Palm Computer pre-empted Palm as a brand name, leaving a nascent industry struggling to find an appropriate generic name . . . Palm Computer should have been just as concerned with choosing an appropriate generic name as it was in choosing an appropriate brand name.’9

Coca-Cola’s other profitable variation arose serendipitously. For two years, Candler was pestered by an entrepreneur from Chattanooga, Benjamin Franklin Thomas, who wanted to bottle Coca-Cola. In 1889, Candler reluctantly agreed to Thomas’s plan. The bottling of Coke was an instant success, leading to high profits for the company and bottlers. For Coca-Cola, bottlers created a huge new market without any capital need. By 1904 there were more than 120 bottling plants throughout the US. Coca-Cola may be the first example in history of a company concentrating on its ‘core competencies’ (in this case, product formulation, branding and marketing) and outsourcing all capital-intensive functions. As a result, the company grew enormously without having to raise much external capital. And it all happened by chance. When competing colas emerged, Coke was able to command a substantial price premium. To this day, Coca-Cola has remained highly profitable. It currently has an operating margin of 26 per cent, instead of the 5 to 10 per cent typical in the food and beverage industry.

The 80/20 Principle: The Secret to Success by Achieving More with Less (288 pages) BY RICHARD KOCH