Always be prepared to absorb a big hit. Always be focused enough to create a big win.
/By Duncan Anderson. To see all blogs click here.
Reading time: 12 mins
Summary: "Always be prepared to absorb a big hit. Always be focused enough to create a big win. Diversified enough to survive, concentrated enough to matter." - James Clear
Areas I believe you should be prepared to absorb a big hit but also be resourced enough to create a big win
Work - financially
Work - personally
Non work - financially
Non work - personally
Work - financially how much money should one have on hand at a company (or conversely how much money should one raise in a funding round)?
Ideal = 1. Money to weather a crisis + 2. Money to invest in known high value projects + 3. Money for emergent new opportunities
Ideal - L1 = 1. Money to weather a crisis + 2. Money to invest in known high value projects
Ideal - L2 = 1. Money to weather a crisis
Ideal - L3 = Cannot weather crisis. This means it’s a matter of time till you die.
Work - personally
I’ve found a proper work crisis is ~1 month long, sometimes longer.
I think you want to build ~5 work relationships to the point where someone would support you deeply for ~1 month.
I think you want to have ~5 work relationships where you would happily support someone deeply for ~1 month.
“To have a friend, first be a friend.” One key path to having people who will be there to support you? Support them first.
Jingle: If you want work to be a hit, be prepared to absorb a big hit. If you want others at work to help you win big, be prepared to help others when they are taking losses!
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Details
Work - financially: how much money should one have on hand at a company (or conversely how much money should one raise in a funding round)?
I’ve written about part of this before in “why having a Plan Z should mean you’ll never be dead”.
It’s not “hope for the best, plan for the worst”.
It’s “plan for the worst, so you can do your best”.
Planning for the worst => lowering stress as you can see how to get through the worst case scenario
Lower stress => execute better (do your best) so it’s much less likely that worst case scenario will occur
Plan Z = Running the worst case scenario to see what you do and how everything will be ok (ie not death of company).
If your company dies under the worst case scenario occurring then IMO you are operating without enough reserves and / or spending too aggressively.
What I think is ideal:
Enough money to weather any storm. Not doing this you are going to die unnecessarily. Ie have a Plan Z.
Enough money to be investing in your top 1-3x projects.
Enough money to capitalise on emergent new opportunities.
In taxonomy form:
Ideal = 1. Money to weather a crisis + 2. Money to invest in known high value projects + 3. Money for emergent new opportunities
Ideal - L1 = 1. Money to weather a crisis + 2. Money to invest in known high value projects
Ideal - L2 = 1. Money to weather a crisis
Ideal - L3 = Cannot weather crisis. This means it’s a matter of time till you die.
Comment
Stress = Death… ok a slight over exaggeration.
But to me why wear unnecessary stress? I’ve found building a business like Edrolo is a huge amount of energy, you have to get so many things to work, to me you are fighting against the odds in so many places. If you can, why put extra stress on due to financial overengineering (ie not having enough capital to be at ‘ideal’)?
When Edrolo raises capital I try to make sure we are at ‘Ideal’.
Work - personally: What kind of work relationships should you try to cultivate? What kind of support should you provide others?
I like this from Friends: Understanding the Power of our Most Important Relationships by Robin Dunbar
“The important thing about friends is that you need to have them before disaster befalls you. One reason is that, as we shall see later, people are only likely to make the effort to help you if they are already your friend. We are all much less likely to help strangers or people we know only slightly – despite what we sometimes claim. Making friends, however, requires a great deal of effort and time."
This is an oversimplification and the numbers are more to be illustrative vs something hard and fast.
Types of time:
Normal = No support needed. IMO one should level up oneself to be able to be ‘self sufficient’ in normal times. If normal times are too much then either 1. Grow yourself or 2. Change job etc.
Support needed = Only if extenuating circumstances make it so (note for me extenuating circumstances can be internal work or external work driven). Support provided here is ‘positive sum’ ie in the best interest of the common good.
Support not needed but support asked for = “You get exactly the behaviour you allow.” Support provided here is ‘negative sum’ ie not in the best interest of the common good.
Close work friends (close doesn’t seem better than best haha) = 5 in number & will wear ~1 month of supporting someone… and for the right people often a lot longer.
Best work friends = 15 in number & will wear ~1 week of supporting someone
Good work friends = 50 in number & will wear ~1 day of supporting someone
Work friends = 150 in number & will wear ~1 hour of supporting someone
Acquaintances = 500 in number & you likely shouldn’t be asking these people for support
Done well, the value of a unit of support received = more valuable than the cost to provide a unit of support.
Let’s say Person A needs support for 1 month in a year. During this one month, Person A is taking a big hit and as such is in a crisis.
Person B provides support for this month.
The value of the support provided to Person A in this month is worth 2 units to each 1 unit it costs Person B to provide, as Person B is ‘not in a crisis’.
Later in the year Person B needs support as they are in a crisis. This time Person A provides support. The support for Person B is worth 2 units for each 1 unit it costs Person A to provide.
If done well, support is a positive sum outcome. Done well, it means you are stronger together… just hope everyone doesn’t have a crisis at the same time!
Non exhaustive list of types of help:
First of all, sometimes someone just needs to let someone know there is a lot going on but that nothing else needs to happen.
Helping Humans Handbook - don’t just support, also push, intervene and leave alone!
When someone came along with things not going well, 5 years ago Duncan would almost always try to provide ‘support’. Now I attempt to think about whether one should ‘support vs push to lift vs intervene vs leave alone’.
Conscious complaining is also something 5 years ago Duncan wasn’t really aware of. Done well, conscious complaining is the ‘self explanation effect’ for your problem / big hit / crisis. Self-explanation is a powerful learning strategy because learners “generate inferences about causal connections and conceptual relationships that enhance understanding” by talking through the problem in front of someone. Done poorly complaining is endorsing a counter productive narrative of events.
Taking something off someone's plate:
In short, try to make sure all mission critical components of a business have at least two people who can do them.
Problem solving help - let’s build a plan together (see this blog)
Confidant - can have off the record conversations about anything and everything
Counsellor - this is more problem solving for emotional headspace, mindset, etc etc.
True sounding board = 1. Will tell you when what you say is fair and reasonable + 2. Will tell you when what you say isn’t fair and reasonable (tough love).
Trust = Consistency * Time
To have a friend, first be a friend.
Ideally I think you want to have “5x Close work friends who you would happily wear ~1 month of supporting them”.
So to me relationships don’t have to be symmetrical, ie what is a ‘close work friend for you’ might not be for someone else… but you don’t want to be more than one level away. Ie someone might be a ‘close work friend’ to you but for them you are a ‘best work friend’. If you’ll wear 1 month of support for someone and they would only do 1 day for you then I don’t think things are great.
To get to be a ‘close work friend’, normally you first need to level up through the other stages. How things might look:
“Good work friends = 50 in number & will wear ~1 day of supporting someone”
For anyone in my direct team this is the starting level. Frankly if someone is in your immediate team and you aren’t willing to support them for 1 day we will be having a discussion.
“Best work friends = 15 in number & will wear ~1 week of supporting someone”
Normally we are talking about working together for 6-12 months+ AND having been through a 2-3x rounds of providing support for each other for ~1 day. Ie 2 rounds or receiving support AND of giving support too reach this level.
“Close work friends (close doesn’t seem better than best haha) = 5 in number & will wear ~1 month of supporting someone”
For me it normally takes years to get to this stage. Like 2-5 years of working together AND multiple times of ‘1 week long support being provided by both sides’.
If you change companies every 3-4 years you might never have built a ‘close work friendship’. Before Edrolo (which I’ve been doing for 8.5 years full time) I think I had in total 2 ‘close work friendships’.
In some respect, Friendship quality = Trust level = Time * What you have been through
Comment
I think I now have 1. High quality ‘Close work friends’ & ‘Best work friends’ + 2. A full compliment in each bucket (ie ~5 close work friends and ~15 best work friends).
This doesn’t just remove downside (ie mean I have support in the hard times); it also adds mega upside (ie people to have new ideas, people to build things with, people to share wins with, people to laugh with, etc).
For me: Quality work relationships = A core component of quality work!
Quality work relationships = Support in the hard times
Quality work relationships = Better work output
Quality work relationships = More enjoyable work
Non work - financially: no financial buffer = life is a bugger
Now of course people are of different financial circumstances and of course so are countries.
I live in Australia. Australia is widely regarded to have the highest minimum wage on a purchasing power parity basis in the world (link). I think this is a good thing and that the US minimum wage is too low and that this causes heaps of negative second order consequences like high crime, poor health, unnecessary low education outcomes etc.
For me, my Level 1 personal financial goal has been to have ‘1 year’s worth of money saved up’ so that if everything went pear shaped I didn’t have to get a job immediately.
20s Duncan: When I was younger I didn’t have a mortgage or really any ongoing overheads. So my plan involved moving back home with my parents and having enough money to get through a year. If you don’t have to pay rent then your overheads aren’t that high!
House owning Duncan: we’ll I don’t really own the house, the bank does! Now I want to have enough money to be able to not have a job and not default on my mortgage for a year.
Here is my personal money taxonomy:
L1: Have enough money to get through one year of no work
L2: L1 + holiday money for one year
L3: L2 + money to invest in any opportunities that come up (eg startups from close friends)
How does this affect me?
I have set myself clear goals of money I want to save each month and then I manage spend into this. If I didn’t have the savings goal I can pretty quickly find things to spend money on!
Non work - personally: the foundation of a good life is good relationships
“No one gets to tell you what you like, you get to choose.”
IMO there isn’t one way to live a good life, hopefully you get to choose what makes sense for you.
I’m just going to talk about my current thoughts.
From Esther Perel
“Modern love comes with an unprecedented list of expectations. Relationships can of course be a source of amazing connection and joy, but they can also be really hard. We want our partner to be our best friend, lover, confidant, coworker, therapist, and so much more. We want from one person what an entire village used to provide. To take it a step further, we want a soul mate; we want in another human what we used to look for in the realm of the divine. We want that person to help us become the best version of ourselves.” Esther thinks the modern set of expectations are unrealistic, I agree.
“We used to leave a marriage if we were unhappy, now we leave to be happier.”
“The quality of our relationships determines the quality of our lives.”
As with Robin Dunbar above, I think you want ~5x ‘close friendships’ and ~15x ‘best friendships’.
"Always be prepared to absorb a big hit. Always be focused enough to create a big win. Diversified enough to survive, concentrated enough to matter." - James Clear
A non exhaustive list of the types of time:
Absorb a big hit types of time:
True sounding board: person who will do ‘love love’ as well as ‘tough love’ for you.
Confident
Therapist
Support partner - will do heavy lifting for you if needed. See above for not needing support in normal times and ~1 month for ‘close friends’ and ~1 week for ‘best friends’.
Focused enough to create a big win - this isn’t an exhaustive list
Laugh friend
Share good times
I don’t have children, for a lot of people much of their ‘building time’ is growing children. I feel I get much growing time from Edrolo but I do also spend time trying to grow other’s children too!
Non relationship angle: I try to run at 75% of maximum work hours in ‘non crisis’ time so that if something comes along I can flex up to 100% immediately.
The person who does not have time to help has no advantage over the person who cannot help.
Conversely, if there is a quiet week and I can eg finish early on a Friday then I try not to load on more new work but take a bit of time to offset for when I need to flex up to 100%.
If you only take one thing away
It’s mainly to be prepared in all parts of your life to absorb a big hit.
One test measure I have for this: are there ~5 people in your life who you’d happily drop everything for to provide support for ~1 month. If there aren’t then there probably aren’t people who would do this for you.
Also, make sure you have time to help, ie don’t run at 100% of hours in non crisis times.
For me, the biggest hits I normally take are at work, building ‘close work friendships’ then is crucial.