318 The Power of Elimination

“Productivity” is meaningless until you define WHAT you’re trying to produce

Examples of goals

More profit, not just more revenue
More quality time, not just more time
Build a team, not just micromanage people who can solve immediate problems
Build a sellable business, not just go for short term cash flow
Differentiate your product, not just churn out “me-too” product

After that, you can measure people, products and processes against your outcomes.
Key question
Does it produce wealth, health or happiness?
“If it doesn’t deliver, it’s got to go!”
Principles to apply
The 80/20 principle
Most of what we do doesn’t matter.
20% of anything will produce 80% of the wins.

Equally, at the other end of the scale, 20% of things will produce 80% of the downsides. Find those and eliminate them.
The Star Principle
If a product is positioned as the market leader in a fast-growing market, it is a star product. Same with an entire business. The rule is “invest invest invest”.

However, if it is a follower in a slower growing niche, it’s a “dog”. Rule? Run for cash! Sell it out then eliminate it!
If a product (or business) is a leader in a slow-growing niche, that’s a cash cow. Rule of thumb here: take as much cash as you can afford from these cash cows and reinvest in the stars.
The “Simplify” Principle
Another Richard Koch book.
This comes in two flavours.

The simplest version is the approach exemplified by Henry Ford.
By the early 1920s, he had boiled down his offering to one model -the Model T -in one colour. “Any colour you want as long as it’s black.”

This meant multiple cost savings in his production process and thus massive price reductions for consumers.
Often eliminating features or processes can do this.

Be warned- simplifying is not the same as “simple”!

It often takes great insight, huge amounts of work and a lot of experimenting. But it’s a proven path to success.

Alternatively, You can simplify the consumer experience -known by Koch as a “proposition simplifier”. The classic example is the iPad. It's ay easier for consumers to use than alternative computers. By the same token, a nightmare to create. This is not realistic for most e-commerce entrepreneurs I know but is possible.
Examples of areas for elimination
Life

Entire careers
Jobs
Job roles
Business
Entire relationship
Property
So-called Financial Assets
Eliminate destructive habits

Eg addictions
-alcohol
Cigarettes

Business
Big picture

Eliminate ineffective business
Business partnerships
Product lines
Marketplaces eg eBay eg will Tjernlund and bro
Companies which will have no future value ( eg based on RA or wholesale relationships ), not just cashflow now

Products

Features that cost business money but don’t add enough value to market
Costs
Eg inspection in the USA
Eg packaging

Overheads

Software
People
Entire processes

Relationships

Business partnerships
Supplier relationships
Ineffective “gurus”
“Masterminds” that aren’t your Peers

Financials

Unprofitable products (not just more revenue)
Indefensible products (no future profits)

Time

Low-value tasks ($10/your tasks)
Value-less tasks
Managing idiots

People

Unproductive team members
Bad business partnerships (hint: don’t assume you’re not the bad partner!)
Low-value or even destructive customers (tricky on Amazon)