Cashflow Quadrant. Guid to Financial Freedom

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Robert Kiyosaki is an active investor in real estate and specializes in the development of small-cap companies. He teaches business and investment principles and shares some of his knowledge through his book, CashFlow Quadrant.

The Cashflow Quadrant describes the four ways income can be generated:

EMPLOYED: Working for someone for a paycheck.

SELF EMPLOYED: Working for yourself, receiving an income that depends on you.

BUSINESS: Owning process/system, i.e., work happens without them being present, so they get a paycheck even when they are not present.

INVESTMENT: Making your money work for you. none or little interaction is needed for getting a paycheck.

Robert does a great job explaining the complicated financial and economic concepts in a very simplistic way. He offers a plan for those on the left side of the quadrant (employed and self-employed) to move to the right side of the quadrant (business owners and investors). The right side of the quadrant is where the rich focus all their attention in order to become financially independent. As part of his plan, Kiyosaki explains that it is not enough to be making a lot of money. What is really important, what makes the difference, is to be financially free. Being financially free is the difference between a medical doctor, a highly paid employee and Jeff Bezos, wealthiest man in history.

Robert Kiyosaki’s main point is to earn enough financial literacy to move from one quadrant to another.

The quadrants are:

EMPLOYEE: This is probably the most challenging quadrant in which to become financially free. Most people fall into this quadrant because of the way their mindset has been programmed since childhood. They get the same suggestion from their parents while growing up, “study hard, find a high paying job and have a secure life.” Your parents’ advice, coupled with schools and colleges is designed to create employees who need security, live from paycheck to paycheck and depend on allowances. There is very small proportion of children who get advice from their parents to start investing or open their own business.

To this group, job security is more important than financial freedom. Although you can become rich in this quadrant, it is quite tough compared to other quadrants.

SELF-EMPLOYED: Those in this quadrant have the mindset of “if you want to do it right, you have to do it yourself.” They are sometimes referred to as “solo-people.” They own their job and often do their work because of the perfectionist mindset, and they do not trust anyone else with their job. A few examples are the retail shop owner, small company, doctor, etc. They trade their time for money. Unlike employees who enjoy the benefits of medical allowances and paid leaves, the earnings of a self-employed is very fragile. If they get sick, it would be hard for them to make an income. The self-employed have to devote more time if they want to earn more. Their income is directly dependent on how much work they can do, i.e., their time equals money. Also, their freedom is more important than their financial independence.

BUSINESS OWNERS: This quadrant allows the best opportunity to become financially free. Those here are people who own the system or process where people work for them. According to Forbes, big companies are those with over 500 employees. However, in recent times, this rule is no longer valid. There many big companies which do not require 500 employees to work. For example, Whatsapp is a multi-billion company with less than 50 employees. Unlike the self-employed who can not stop working if they want a regular  income, the business owner does not need to trade his time for money as he owns the system. Even in their absence, their employees will work for them.

INVESTORS: This group of people make their money work for them. Investors are the fourth and highest level of the cashflow quadrant. You cannot jump into this quadrant without being successful in one of the other three quadrants mentioned above. The investors are one of the most financially free groups who make their money work for them. They invest in business stocks, real estate, etc. Most times, they do not need to get involved in the working of the business or asset they’re investing in; hence they get plenty time, money and freedom.

In conclusion, it is comparatively easier and faster to become wealthy when you’re working on the right-hand side of the quadrant. You do not need to shift to another quadrant entirely at once. You can keep your feet in two or more quadrants. However, the best way to get rich is to stay on the right side of the cashflow quadrant.

 

THE BIG THREE – KEYPOINTS

Key point #1: The self-employed believe if you want to do it right, do it yourself.  Often self-employed people think they have a business, but if your business requires you to be there in order to keep generating an income, you don’t own a business, you own a job.

Key point #2: If you own a process/system where others work for you, you’re a business owner. As a business owner, you are more comfortable to reach the ultimate goal, financial freedom by having your money working for you as an investor.

Key point #3: Everyone has money problems. For most people, money leaves faster than it comes. For others, they have money but cannot reinvest it fast enough. For those who can reinvest it, more money comes in. Yes, the rich do get richer.

One Last Thing:

“A lot of people are afraid to tell the truth, to say no. That’s where toughness comes into play. Toughness is not being a bully. It’s having  backbone.” ~ Robert T. Kiyosaki, The Cashflow Quadrant.

How Did I Not See This Coming?

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One thing is clear to everyone who has been exposed to management… management is tough. In this book, Katy Tynan speaks about the misconceptions that many new managers have regarding what management is all about. Told in the form of a story, it follows the journey of fictitious character, Julie, a recently promoted team leader in a software development company. She’s just run head-on into a brick wall realizing that, even with the best of intentions, she has been doing things wrong.

Most new managers approach their new role optimistically. They believe that all they need to do is work harder and stay on top of all the tasks their team is responsible for. They aren’t thinking about leading a team, they are thinking about keeping track of a lot of tasks.

The first thing Julie learns is that it’s less about tasks, and more about articulating a sense of shared purpose, or a vision. Consider the values that your team members have in common, and how your work contributes to the goals of the whole company. Having a clear understanding of that purpose and vision is the key to prioritization, and to resolving conflicts.

The second challenge most new managers face is the realization that they don’t (and probably can’t) know everything. Before becoming a manager, you may have been an expert in a certain area, but once you make the transition, it’s not about expertise. It’s about your ability to help the people on your team do their best work. Managers most often need to focus on the “what” and not the “how”, which means leaving the details up to your team.

This leads to the third thing that Julie discovers in her journey. While most people who become managers know that goals are an important tool for tracking a team’s progress, they sometimes overlook how important it is to not just have goals but to align them with the vision and with the needs of the people on the team. It’s important to master the mechanics of setting and tracking goals, but they won’t get you very far if they aren’t connected to the larger objectives of the team and of the organization.

Goals are a little like ingredients when you’re cooking. If you go to the grocery store and pick up a random selection of vegetables, you can throw them all in a pot with some water or stock, and you will end up with something that looks like soup. But if you want to make a specific kind of soup, you have to get the right ingredients, combine them with the right spices and cook them for the right amount of time.

The fourth secret is that we all make mistakes. Sometimes it’s a project that goes off the rails. Other times it’s a tough day that makes you lose your cool when your goal as a manager is to have a calm and stable demeanor. The truth is that nobody is perfect and putting pressure on yourself to be perfect or feeling like a failure when you make a mistake is not going to help you in a management role. Keeping your focus on learning from mistakes and fostering a culture of learning rather than a culture of blame is one of the most positive changes you can make in your approach to leadership.

The fifth truth that Julie learns about management is about trust. Leadership comes from mutual trust. Trust is the foundation upon which everything else is built. Your team has to believe that they can trust you to keep your commitments, to tell them the truth and to go to bat for them if need be. You have to trust that your team members are doing their best, that they care about the work they do and the team as a whole. When trust breaks down, it becomes almost impossible to achieve any goal, no matter how well-aligned or constructed it is.

So to sum it up, this book covers five key truths about management:

  1. Vision: Define the values your team shares and measure everything against those values.
  2. Team: Know the strengths of your team members and focus on clearing the obstacles to their success.
  3. Goals: Focus on the output and recognize achievement.
  4. Learn and Adapt: Develop the habit of learning from each day’s work and focus on growth vs. perfection.
  5. Trust: Without trust there is no team.

This is a great book for new managers. There are many takeaways from this book and can only be acquired by getting a copy. It’s an invaluable tool and a great investment that you’ll not regret.

THE BIG THREE – KEY POINTS

Key point #1: Most new managers go into the role with good intentions, but they don’t know what they need to do differently to be a great leader. New managers need training and support to make the transition successfully.

Key point #2: The most important thing a new manager needs to do is create a vision and clearly articulate how the work the team does ties into that vision. From top to bottom, everything the team does needs to support those shared goals.

Key point #3: Today’s work environment is constantly changing. We all need to learn new skills and have a growth oriented mindset to be successful. The manager’s role is to facilitate that learning process, and to create an environment of trust where people can feel safe enough to learn and grow.

 

One Last Thing

The distinction between leading and managing is important. Managing consists of overseeing people who work for you, along with their time and money. Leading refers to your ability to influence and motivate those you oversee; you lead their energy. A great leader understands the difference and balances both. ~Anonymous

Unfuck Yourself

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Gary John is a personal development expert in the industry. His “Urban Philosophy” approach represents a new trend of empowerment in both personal career and life mastery that has provided miraculous results for people in the quality and performance of their lives.

The author focuses on giving the readers the best way of living their best life and helping the reader find everything they have ever wanted residing within them. In this book, Gary differentiates assertive self-talk and narrative self- talk or affirmation. Instead of telling yourself “you’re not going to be great” rather tell yourself “you’re great.” Self actualization has a great impact on self-perception. Take control and be the captain of your own ship. Stop limiting yourself to the reality you choose. To succeed, you have to prove those firmly held (negative) beliefs WRONG. And believe me, there is a solution for everything.

Unfuck yourself also talks about embracing uncertainty. We often steer away from uncertainty because of the need to feel safe. And today, this instinct can give rise to a negative effect. The author believes that if you want to win, you have to be willing to let others judge you. The worst decision is making no decision. The absence of decision leads to the absence of experience and  that ultimately boils down to the absence of learning. This can lead to the worst regrets in life. Another important way of getting out of your head and into your mind is to conquer fear. If you want to improve be comfortable to be thought of as foolish and stupid. There is no destination, there is always an exploration. You have to believe that you are what you do and not your thoughts. Who cares about your thought? Focus on your deeds. You don’t have to feel that you like it in order to do it. This mindset is the only way to happiness.

The author explores the art of relentlessness. You have to take what you want out of life. Do not wait to be given to you. It will be painful but nothing worth having comes easy. Be focused. Destroy obstacles one after the other. Expect nothing and learn to accept everything. Disappointment is an unmet expectation. The idea is to accept reality as it comes and deal with it with no emotional bias.

Love what you already possess and be in control of your emotional state. Dispute your beliefs. Dispute your interpretation of things. Accept and act. Own your reactions. Real life has more value to your outcomes than the narrative you have about it. Make a habit of questioning your mind, always put things in perspective. There is always a solution to everything.

Keep your mind set on winning. You are wired to win. If you find yourself suddenly struggling with something you normally excel at or you’re stuck in a shitty relationship, remember that you always have a choice to change the game. Just understand the rules of the game and understand the players, including yourself. Do not limit yourself to the reality of your choices. Do not stop doing what you want to keep winning, as the only way to unfuck yourself is by getting the reaffirmation of your greatness as you keep winning. When you lose, see it as a learning experience and win again.

 

THE BIG THREE – KEYPOINTS

Key point #1:  Be relentless. Don’t give up and be prepared for disappointments.

Key point #2: Expect nothing and accept everything that keeps you moving towards your goal.

Key point #3: Embrace uncertainty and strategize as most as possible.

 

One Last Thing:

“Life won’t stop for your pauses and procrastination. It won’t stop for your confusion or fear. It will continue right along without you. Whether you play an active part or not, the show will go on.”

― Gary John Bishop, Unfuck Yourself: Get Out of Your Head and Into Your Life

You Are a Badass

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You Are A Badass is a book which explains how and why we are the way we are. The author shows how we can embrace our inner badass, how to get over our own badass and finally, how to get out there and kick some ass!

Jen Sincero says, “My subconscious made me do it!” She emphasizes the important role the subconscious mind plays in every decision we make. She describes the subconscious mind as the blueprint for our lives; essentially comprising we consider to be our beliefs. She went further emphasizing  the importance of embracing the moment and being present. Doing it will let you lead a richer, joy-filled life. She says “being present gets you out of your head and connects you to source energy, which raises your frequency and attracts things like frequency to you.” And all the high-frequency things and experiences are already here, just waiting for you to be part of the party. All you have to do is shut up, show up and usher them in.

You Are A Badass also describes ego as a false self, the self that is essentially being an asshole. Ego is a big snooze because if your ego is acting up, it’s because we are still asleep and yet to realize how amazing we are and how wonderful the world is. The big snooze will do everything it can to stop you from changing and growing, especially since you’re attempting to obliterate the very identity that you and everyone else has come to know as ‘you’. The author took a step further by offering some thoughts to prevent the ugly ego from acting up. Some of which are:

-Stop at nothing

-Have faith

-Stay on course no matter what happens

-Believe that you are awesome

Jen prioritizes the concept of self-love, believing you can’t be unhappy with self-love. You have to start appreciating how special you are, drown yourself in affirmations, do things you love, let the love in and don’t compare yourself to others. You have to stop worrying about what others think and stay true to yourself. You can’t control people’s perception about you because it says more about them than it does you. What you can control is what you say and do. So keep being you and celebrate you.

This book also talks about the act of positive thinking. Through your life, send awesomeness to everyone around you. It can be as simple as smiling or by complimenting people and making them laugh.

In life, we get to choose and experience and in essence, our reality which comes down to choosing to create a life you want to live. Let go of things that don’t serve you well and change your reality to one filled with joy and happy experience. Jen said “most of the time, it’s not lack of experience that’s holding us back but rather lack the determination to do the needful to be successful. We put so much energy into coming up with excuses why we can’t be, do or have the things that we want, so our next step is, designing the perfect distractions to keep us from our dreams.” Jen highlights procrastination as one of the key ways you constantly self-sabotage.  All it takes to turn the fear factor around is learning to be comfortable instead of terrified of the unknown. And this is done through hope, the greatest gift to us humans is to belief in things not seen. So, we have to take a leap of faith into a real realm that you strongly desire to be in. Demand of yourself that you rise to the occasion and start living your damn life already.

As a closing argument, Jen sums it up by saying “give yourself the permission and the means to be who you are, regardless of what anybody else thinks or believes is possible. You are powerful, you are loved and you are surrounded by miracles. Believe what you desire is here and you can have it all, yes, all!  If haters going to hate, then doers going to do. So start doing!

THE BIG THREE – KEY POINTS

Key point #1: Don’t worry what people think about you. Keep doing what needs to be done. as a principle, only actions bring reactions. Do productive and positive actions.

Key point #2: Forgive yourself. Mistakes along the way are learning experiences. Perfection is an illusion for the ego.

Key point #3: Don’t let your ego or any one’s ego gets in the way.

 

One Last Thing

“We only get to be in our bodies for a limited time, why not celebrate the journey instead of merely riding it out until it’s over?”

― Jen Sincero, You Are a Badass: How to Stop Doubting Your Greatness and Start Living an Awesome Life

Hacking Work. Breaking Stupid Rules for Smart Results

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The authors identified the most straightforward way of working smarter and faster and therefore decided to expose the workaround codes that enable people to work more intelligently. The system is HACKING, that is, how to break free and really get stuff done.  Once staff members learn how to hack their work, they accomplish more in less time.

What many business leaders missed to admit, or probably afraid to explore is, that businesses structures and processes as we know it, is broken. Although hacking work is not new, technology is creating vast of opportunities to work smarter and faster.  Leaders that encourage new ways of doing things are outcast, outliers and judge by their C-suite counterparts, leading to isolation and accusations. This is a cruel reality that leaves most of us screwed and feeling helpless about change. We have become slaves to our infrastructures, to business controlling tool, procedures, and mandates.

The authors, write about some real-life examples from ordinary day folks like, Elizabeth a manager whose bosses would not approve her customer satisfaction project, even though the entire senior team deemed it crucial because of payoff wouldn’t be realized for at least four fiscal quarters. So she secretly videotaped customers voicing their complaints as well as their wish lists for enhancing the company’s product lines and posted it on YouTube. Within days, there was enough public outcry that senior management reversed their decision and approved her project.

Also, Matt, a new hired, that disagreed with his employer’s assessment process, he Googled “performance assessment” and built a seventeen-question mash-up that matched his career goals— not just the company’s goals for him. His boss and the HR department were shocked and pissed off, but he had spent months refining his performance tool. He did his homework, seeking advice from one of the gurus in the assessment field whom he’d contacted through LinkedIn. With the support of his co-workers, Matt stood his ground, and management ended up using his assessment in conjunction with their own.

These are not isolated incident. Bill and Josh are outing the most prominent open secret of the working world. Today’s top performers are taking matters into their own hands. They are bypassing sacred structures and breaking all sorts of rules just to get their work done. They are set to expose the cheat codes for work and to share them with the world.

Want to work smarter not harder? Start hacking. Wanting to leave a legacy that makes a difference? Start hacking. Wanting to be a better manager, leader or entrepreneur? Start hacking. Hackers never stayed within the lines of their coloring books neither do they allow childlike wonder to be squeezed out of them. They tend to figure out why anyone would give up digging their fingers into everything just to learn how it works and how they could be changed, that’s the core to any hackers drive: unleashing the untapped potentials in everything, reworking the status quo, so it works better.

Hacking work speaks to all workers who feel defeated by overbearing and outdated bureaucratic rules, regulations and old school paradigms that prevent work from getting done smoothly and efficiently.  Hacking work is a forbidden innovation. It is the act of getting what you need to do by identifying loopholes and creating workarounds.

It is taking the usual ways of doing things, and creating a bypass to produce improved results. Once employers know how to hack theory work, everything is up for grabs.

The authors dedicated this book to the benevolent hackers and introduced two things about benevolent hackers. Firstly, benevolent hackers challenge outdated rules and procedures. Secondly, see the future and pulls us towards it in whatever way works best.

Benevolent hackers are on a mission to save the business from itself and you from the business.

In conclusion, benevolent hacking is the duct tape of the work. It is the universal solution to every poorly designed and corporate centered procedure, tool, rule, and process.

THE BIG THREE – KEYPOINTS

Key point#1: Hacking work is not new

Key point#2: Hacking is bypassing, reworking, and bending the rules that keep you from doing your best.

Key point #3: Hacking work is not just for techies sometimes it involves simple changes in a relationship, sharing information differently or using tools you already have.

One Last Thing

The manager accepts the status quo; the leader challenges it.

 ~Warren Bennis

The Art of Thinking Clearly

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The Art of Thinking Clearly translates complicated results from cognitive bias experiments, interprets and synthesizes them into short, easy to understand summaries.  Humans experience diverse reasoning patterns out of which many are limitations to logical thinking. Most cognitive errors made by humans are standard and can be identified when you know what you have been and are dealing with.

Knowing these will help you to minimize them, and then you can open yourself up to logical alternatives. The author opens up the reader’s mind to human psychology, reasoning and how to avoid cognitive errors for better decision making.

Among the logical errors, Dobelli explores survivorship bias or systematic overestimation of the chances for success and social proof or feeling that an action or decision is right because a lot of people are doing it. You come across survivorship bias when dealing with money and risk. It becomes especially pernicious when you become a member of the winning team. The author suggests an amazing solution to help clear your mind against survivorship bias, which is a frequent visitation of graves of once-promising projects, career and investment.

Clustering Illusion: When it comes to recognizing a pattern, we are oversensitive. However, it is best to regain your skepticism. If you or someone, close to you, thinks you have found a pattern, first take in consideration that may be pure chance. If it seems too reasonable to be true, see a mathematician and have the data tested statistically.

Social Proof:  It dictates that individuals tend to think they are behaving correctly as long as they act the same as other people.  In other words, the more people follow a particular idea, the better we think the idea is, and therefore support it.

Outcome Bias: Attributing positive outcomes to our capabilities and blaming external issues on external circumstances. This attribute was tested by having two groups of subjects take a personality test then arbitrarily assigning good or bad scores. The students with positive outcome believed the test results were fair and reflected their abilities. The students with the not so good score, on the other hand, found the test was garbage and didn’t reflect their personality. An excellent way to overcome your judgment is to listen to honest feedback and to learn from it without taking it personally.

An illusion of attention:  We often think that we notice everything around us but this couldn’t be farther from reality. As a Harvard study found, it is easier to lose attention than what we think. The experiment had subjects watch a video of students passing balls back and forth while counting how many times the player in white shirts passed the ball.  Later they were asked if there was something unusual that caught their attention. Half of the subjects did not notice anything unusual, unaware of the fact that in the middle of the video, someone dressed as a gorilla walked across the room pounding his chest. We tend to remember things which happen at the beginning and end of a stream of information forgetting what comes in the middle.

Lastly, amongst others is alternative blindness. Whenever people think about an offer, they become blind to alternatives. However, to be able to make the right decision, you have to go out of your mental limit.  

To overcome these cognitive errors in reasoning, we have to be aware of them and take a conscious effort to defeat them.

THE BIG THREE – KEY POINTS

Key point #1: Cognitive biases cause simple errors in most of our day to day thinking.

Keypoint #2: Facts do not cease to exist because they are ignored. Therefore, make decisions based on facts, only lazy minds are comfortable with the illusion that perception is reality, perception is perception, reality is reality.

Keypoint #3: We are drunk on our own ideas. To sober up, take a step back now and then and examine their quality in hindsight.

 

One Last Thing

“If you ever find yourself in a tight, unanimous group, you must speak your mind, even if your team does not like it.”

― Rolf Dobelli, The Art of Thinking Clearly: Better Thinking, Better Decisions

Principles

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Ray Dalio believes an idea meritocracy (a system that brings together smart, independent thinkers and has them disagree to come up with the best collective thinking and resolve their disagreement in a weighted believability way) is the best decision-making system because it requires honesty and leads to continual improvement.

 

The first part of Principles, Where I’m Coming From, primarily reflect Dalio’s biography. Here are a few points:

 

  •    Meaningful work and meaningful relationships are better than money.
  •    Bad times with good reflections provide the best lessons.
  •    The most significant success is having others do well without you.
  •    Happiness comes from struggling well.

 

There are fewer types of people than there are people and far fewer types of situations than there are situations. Hence, matching people and situations is vital.  Dalio realized the best way he could succeed was to seek out the smartest people and identify who disagrees with him so he could understand their reasoning. He learned why not to have an opinion, develop tests and systemize universal time principles and balance risks in a  process that keep significant upsides while capping downsides.

 

The second part of Principles focuses on life principles. Dalio views problems as games and puzzles that he must solve. Ray Dalio says he has learned to become such a fan of reality that he loves fact even when it’s cruel. He furthermore added that we aren’t born knowing what’s true, we have to find that out. He claims that the best way to achieve that is to be radically open-minded and radically transparent. We learn with a feedback loop from our actions and beliefs. He feels radical open-mindedness improves those feedback loops.

 

Radical transparency, on the other hand, means facing the truth and speaking the truth freely. It can be difficult because it opens one up to criticism, but fearing criticism can be tragic because, without it, you will not learn.The more you face criticism, the comfortable you will be.

It is evolution and progress itself that makes us happy and fulfilled rather than achieving the goal or the material wealth. But to evolve, remember “no pain, no gain.” Ray Dalio says there is no avoiding pain, especially when you’re after an ambitious goal. What Ray Dalio wants to give people is not what they wish, which ultimately makes them weaker, but the strength to deal with reality to get what they want by themselves, which eventually will make them stronger and more independent.

 

As you gather it all together, to have the best life possible you have to know what decisions aren’t the best ones, which ones are and dare to make them. To acquire principles that work, it is essential that you embrace reality and deal with it as it is.

 

The third part of this book focuses on work principle. Ray Dalio says for groups to function well, the working principle has to be aligned with the members’ life principles. Not aligned with everything but on to the most important ones. To get the culture right, you have to :

 

  • Trust radical truth and radical transparency, i.e., it is always best to shoot straight and be honest even when the news is not positive. Ray Dalio says he believes in a healthier form of loyalty founded on exploring what’s true
  • Cultivate meaningful work and relationships: i.e., develop a meaningful relationship whereby you care about each other and can have a great time together both inside and outside the organization.
  • Create a culture of learning from mistakes, i.e., making a mistake is painful and okay, but it’s not okay to not learn from them.

 

Pulling it all together, Ray Dalio says, we work together to accomplish three things: more leverage to achieve our goals, quality relationships, and money that allows us to buy what we want for ourselves and others.

 

In conclusion, it is important to highlight that all rules have exceptions and you should use your judgment and common sense.

 

THE BIG THREE – KEY POINTS

Key point #1: Idea meritocracy is the best system for decision making

Key point #2: Radical mindedness and Radical Transparency are the best ways to find out what’s true.

Key point #3: Work Principle and Life principle are the primary focus of Principles.

One Last Thing

“If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential”
― Ray Dalio

The 3rd Alternative

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Stephen Covey is the co-founder and Vice-chairman of Franklin Covey, a global professional service firm. He is a great author and a recipient of many awards, including eight honorary doctorate degrees and the National Entrepreneur of the Year Lifetime Achievement Award for Entrepreneurial Leadership.

The 3RD Alternative shows a way to solve life’s problems. There are two sides of most conflicts; the two opposing sides see their way as the best while another side as wrong. Stephen Covey refers to this as two alternative thinking. Problems are everywhere in the society; religion against science, white against black, liberal against conservative. Each side profoundly identifies their belief with what they believe. Therefore, when the belief is attacked, it is like their self-image is being attacked. Stephen Covey argues that this is why it is so hard for people to get past the 2-alternative mindset; the problem lies in our mental paradigm. Our paradigm governs our behavior which in turn regulates the consequence of our action. “Would you be willing to look at the 3rd alternative we haven’t even thought of yet?” This is a question that is rarely asked during a conflict, yet it seems so simple.

Stephen Covey describes the process of getting to the 3rd alternative as Synergy. He quickly explains that synergy is not a compromise since in compromise everyone loses something. However, synergy deals with the transformation of conflict and not just resolving it, and it is better than just my way or your way.  It is our way.

The 3rd Alternative describes four paradigms and without them, there would be no 3rd Alternative. This paradigm includes: I see myself, I see you, I seek you out, and I synergize with you. Once these paradigms are adopted, you can quickly get a 3rd Alternative.

 

The first paradigm of synergy is I SEE MYSELF paradigm. It sees oneself as unique and capable of one’s own judgment and actions.  This paradigm asks you to think about what you see when you look at yourself. Stephen defines this paradigm as “I see myself as a creative, self-aware human being which is more than the side I favor in a conflict. I might share certain beliefs or belong to certain groups, but these do not define me. I choose my own story.”

 

The second paradigm is the I SEE YOU. This is about seeing the other person as a person not as a thing. When you look at others, what do you see? Do you see them as unique human being with diverse talents? In the I SEE YOU paradigm, you and I are uniquely powerful because your strengths complement each other. There is no combination like us anywhere else. When one embraces this paradigm, they see the other person as complex human being, their respect for that person is authentic, and they can look past the side of the conflict.

 

The third paradigm is I SEEK YOU OUT.  This paradigm is about actively seeking out different views instead of avoiding them. It is significant to see conflict as an opportunity to learn something rather than defending yourself and your side. It is important to listen to someone who does not agree with you. They key however is actually listening to them. During a conflict, we are usually thinking about our side and are not listening to the other person talk. An empathic listener seeks to understand the thought and feelings of others.

 

The fourth paradigm is I SYNERGIZE WITH YOU. This is about coming up with a solution that no one has ever thought of yet. In the synergize paradigm, we look for the 3rd alternative. But this stage is impossible without the first three stages. Once these three paradigms are met, synergy will definitely occur.

 

This book focuses on conflict resolution. By adopting the paradigms necessary for synergy and creating the 3rd alternative, a better solution to any conflict can be reached.

THE BIG THREE – KEY POINTS

Key point #1: A 3rd Alternative requires no concessions at all because it’s truly a better deal for everyone.

Key point #2: Synergy occurs when the first three paradigms are adopted.

 

Key point #3: The 3rd alternative can only be reached by opposing sides when there is synergy.

 

One last thing:

“It’s not only natural but essential for people to have different opinions. I’ve said many times over the years that if two people have the same opinion, one of them is unnecessary. A world without difference would be a world of sameness where no progress is possible.” –Stephen R. Covey

THE SPEED OF TRUST

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The speed of trust is coined out of Mr. Covey’s experiences he has seen over the years in leadership and while working with companies. It focuses on helping individuals in building and infusing trust in and around them. The Speed of Trust starts off with the “Economies of trust”. The author uses this formula to demonstrate his point: When trust is low, speed goes down and cost goes up; when trust is high, speed goes up and cost goes down. The author equates trust to paying taxes. As a taxpayer, we know a certain amount of money must be paid to IRS annually as a tax but when it comes to trust or lack of trust, we are paying a tax and we may not be aware of it.

 

The other equation the author offers is the product of strategy and execution.

Strategy * Execution = Results

 

But then he goes on to say the product of strategy and Execution and Trust gives Results

(Strategy * Execution)*Trust = Result

 

Trust is a multiplier. You can have a good strategy and a great execution plan but without trust, the project can get derailed. Trust is a key ingredient for all relationships and it’s one of the most powerful forms of motivation and inspiration. People want to be trusted. The author goes further to break down trust into five waves:

 

  1. Self-trust, which deals with confidence we have in ourselves, in our ability to set and achieve goals, keep a commitment, to walk the talk and also with our ability to inspire trust in others; a person who is worthy of trust.
  2. Relationship Trust, which is about how to establish and increase trust with others, to enhance relationships and achieve a better result.
  3. Organizational trust, deals with how leaders can generate trust in all kinds of organizations like businesses, not for profit organizations, etc.
  4. Market trust, is about reputation, whereby everyone clearly understands the impact of trust; and lastly,
  5. Societal Trust is about contribution and focuses on creating value for others and society at large.

                          

The first wave is about the four dimension of credibility. These are the foundational elements that make people believable to themselves and to others. They are: integrity, intent, capabilities, and result.

 

The second wave is about the thirteen different ways leaders behave. Covey believes that these behaviors are common to high trust leaders and individuals worldwide. These enhance one’s ability to establish trust in all relationships. The first five flow from character, the second five flow from competence while the last three are the combination of both character and competence.

 

These 13 behavior characteristics are:

  1. Talk Straight:  Be honest and tell the truth. Let people know where they stand and use simple English while communicating.
  2. Demonstrate Respect: Demonstrate respect, don’t fake caring and don’t attempt to be efficient with people.
  3. Create Transparency:  create transparency by telling the truth, don’t have hidden agendas or information, get real, be genuine, open and authentic.
  4. Right Wrongs: Make things right when you are wrong, don’t cover things up. Demonstrate humility  and apologize quickly.
  5. Show Loyalty: you show loyalty by acknowledging the contributions of others and giving credit freely. Don’t bad mouth or disclose others private matters.
  6. Deliver Result: this is done by getting the right things done. Make things happen, don’t over-promise or underdeliver. Always be on time and within budget.
  7. Get Better: Don’t assume today’s skill will be sufficient for tomorrow’s challenge. Constantly improve your capabilities and don’t consider yourself above feedbacks.
  8. Confront Reality: Lead out courageously in conversation, address the tough issues directly. Don’t bury your head in the sand instead take issues head-on.
  9. Clarify Expectation: Disclose and reveal expectation, discuss them validate them, renegotiate them. Done violate expectation or assume that expectations are cleared or shared.
  10. Practice Accountability: Hold yourself accountable, hold others accountable. Take responsibility for results. Don’t avoid or shirk responsibility. Don’t blame others or point fingers when things go wrong.
  11. Listen First: Listen before you speak. Understand, diagnose and listen with your ears and eyes and heart. Find out the most important behaviors are to the people you’re working with. Don’t assume you know what matters to others. Don’t presume you have all of the answers or all the questions.
  12. Keep Commitment: Say what you’re going to do or do what you’re going to do.
  13. Extend Trust: Extend trust abundantly to those who have earned your trust. Extend trust conditionally to those who are earning your trust. Don’t withhold trust because there is risk involved.

The speed of trust affirms that to inspire trust is to create the foundation on which truly successful organization/relationships stand. This ability is the prime differentiator between managing and leading.

THE BIG THREE – KEY POINTS

Key point #1: Trust can be efficiently taught and learned, and it can become a leverageable strategic advantage

Key point #2: Trust is one of the most powerful forms of motivation and inspiration.

Key point #3: Trust is a function of character and competence

One Last Thing

“None of us knows what might happen even the next minute, yet still we go forward. Because we trust. Because we have Faith.”

― Paulo Coelho

Grit: The Power of Passion and Perseverance

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This book falls into two different categories because of the content that it presents. It is a self-help book as well as a guide for those who are in the business market. This book tells different stories which assists the reader in seeing the results of grit and the power of this particular habit.

​The book discusses how the people should not depend on their intelligence as the basis for their success. It is true that a natural talent at something could take a person far in that field, but with passion and perseverance, the person can go even farther than that. Duckworth goes on to explain that without grit, even the most talented people are unable to complete their job. They need to keep going in order to be the best at what they do. She takes the examples of many different authors and uses their point of views to explain the concepts.

There are four characteristics of the Grit model, which one must possess to make it in the field that they want. 

  • Interest: This is the single most important thing which can assist one in being gritty. This is because without interest one could never be truly passionate about a subject.
  • Practice: One must practice the work that has been given to them so that they can achieve mastery of that skill.
  • Purpose: This is important because, without purpose, one can lose the sight of their goals and get lost along the way.
  • Hope: This is significant because, without hope, people find it easier to give up. Those who are hopeful, even when the times are tough can endure all the problems and make it through the storms they are facing.

The story about hope has been explained through the words of Pete Carroll, and how hope is real. Those who give up on hope, simply give up on life and that is not the mindset of those who are full of grit. Being gritty is not in the control of ordinary people, and that is why one must understand the emotional aspects of this phenomenon as well. She explains that grit is physical as well as mental, which is why the people must learn to focus on both the aspects. She does a great job by explaining through the example of SAT exams and those who have been successful in these tests. Through her formula, these test results, as well as those of other official tests, could be predicted easily. Those who put through effort into the preparation would merely achieve better results, even if the time they spent on the work has been shorter.

Lastly, the book talks about how people who are grittier have the passion for mastering the skills that they are working on. These people practice again and again, and that is their decision to do so. Many people, when reaching a goal would sit back and relax, which could assist them in developing the habit of relaxing. While on the other hand, those people who have grit practice their aims again and again even after they have achieved it. This is because they enjoy doing that work and get satisfied with what they are doing. That is why they become so successful and the masters of what they are doing.

THE BIG THREE – KEY POINTS​

Key point #1: Grit is not just about the act of perseverance. It takes a lot more than that to become successful in life.

Key point #2: Passion is one of the leading points, those who have it, will persist longer than others. It is the internal motivator of all.​

Key point #3: Without purpose, passion would not take one anywhere! It is the external motivator and urges the person to complete their goals.

One Last Thing

“Our potential is one thing. What we do with it is quite another.”
― Angela Duckworth