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How to find leverage

(by alex) // Posted Sat Jan 27 2024 15:47:18 GMT+0000 (Coordinated Universal Time)

Inputs x leverage = outputs.  Leverage is one of the meta-skils in business.

More leverage, means you get more for any level of inputs. Bulding a great company requires great effort and high leverage.

Here are 3 types + 12 examples 👇

Leverage type 1: Non-linear productivity gains

- The right marketing headline achieves 10-20x higher conversion vs. the average
- The most effective sales reps sell 2-10x more than the average
- An elite programmer codes at 5-10x the average speed
- Iterating 3-5 times increases quality by 5-10x (in most domains)
- Sustained focus increases productivity by 3-5x (via different mechanisms, such as flow and thresholds effects)
- The right org.structure removes dependencies and multiplies productivity several times over

Leverage type 2: Compounding (the long term effect of small but continuous improvements)
- Improved decision making lead do dramatically improved outcomes over time
- Weekly small operational improvements leads to massive gains over a year
- Knowledge builds upon itself and grows exponentially

Leverage type 3: Exponential distributions (processes that fail most of the time but suddenly yields explosive pay-offs)
- One successful innovation can make up for hundreds of failed experiments
- Deep customer interviews may uncover unsolved problems leading to break-out modules or products
- Reading a lot may lead to a discovery that alters a company’s trajectory

There is potential leverage in all areas of a business.

It is a foundation for operational excellence....

 



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