#35 SHOT: How to normalise failure and speed up success

Episode Overview

In their next SHOT, Ryan and Terry delve into an idea from investing that can be used to normalise failure in order to speed up success when starting a business. Then, as a way to apply this idea they share a coveted decision making framework used by the worlds top military strategists, startup entrepreneurs and athletes.

Key Topics
Mentioned Resources

Terry: Hello. Welcome back to the passive income project podcast. We’re here doing another one of our shots. Welcome ryan.

Ryan: Hello, mate. Good. to be back as always.

Terry: Hey, um, we’ve been talking about business and we’re coming to the end of that series and we wanted to do just a short episode on, I think what we say is one of the biggest time wasters… Uh, we dealt with this a lot too. just thinking that the first shot has to be the money shot when it comes to business. Isn’t it? That’s like a real big thing you see where you’re just like, I’m going to get the first thing, right.

Ryan: Oh, yeah. There’s such an emotional investment in that first thing. It’s like your first baby and yeah, I think we place too much weight on it being, as you said, the money shot. And so, Yeah. I like the fact that we’re having this conversation because. We want to relieve the pressure that comes with that first attempt in business. And because I can scare people off if it doesn’t work out. And so we want to remove the power that that can have on you.

Terry: Yeah. And it’s hard because again, we say this all the time, but like our whole education. Conditions as never to fail. And so we’re just, we’re so worried about being precise, that we don’t make any progress. And that’s really what we’re going to be talking about. We’re going to be talking about how to use an investing theory that you already know that we’ve already taught you in the podcast to maximize your odds of success with time.

And we’re also going to talk about how to actually. Put that theory into practice. Uh, and when we discussing a thinking tool that comes from one of the world’s best military strategists to help you improve the way you adapt to uncertain environments. And that’s essentially what you’re doing when you go into business, you’re going into the great unknown, and it’s all very scary. You don’t know exactly what’s going to happen, but you’ve got to keep acting and moving. So I think I’m really excited to kind of get into what that actually means.

Ryan: You know, I think lucky Smith talked about an iterative process when he was talking about business and just that term really kind of hit home for me, that it was like, It’s not about what you learn in the books. It’s not about what you learn at uni or anything that comes before that. It’s about how quickly you can learn and adapt on the run. And so, Yeah, this thinking tool that we’re going to dive into very powerful in terms of being able to adapt evolve, and Use your ability to problem solve, to just improve upon things over time and turn that into a business and obviously create the financial freedom that we’re always talking about.

Terry: Yeah, I think that’s right. Like, I love that saying everything is figureoutable and I don’t even know if that’s the right way to say it, but I like that sentiment. That’s really what we’re trying to get into today, because that is the way that you get off the sidelines. That’s the way you start actually getting enacting, building your confidence. And that’s how you maximize your odds of success, get traction. And, you know, if you use this thinking tool that we’re talking about, you’re going to be very hard to copy in business as well, which is really important because if you’re really easy to copy, that means you’re easy to compete against.

Ryan: Yeah. Yeah, that’s great. Because. If you’re learning based off the feedback that you’re getting as you go and the lessons you’re learning and, also from the mistakes, then ultimately, the way you learn is going to be different from everybody else. If someone’s learned from a textbook, they’re going to have learnt a very different, set of theories, but also if you’re learning on the run and learning from your environment and what the world is actually telling you, then you’re going to learn something very different to what you learned in the textbooks. it’s going to be a lot less about theory and more about what actually makes an impact.

And so, obviously. Connects massively with the overarching theme of this podcast, which is, working towards financial independence and this series around business in particular, which is about, using business as a vehicle for speeding everything up. And so the way we speed up how we learn and adapt speeds up how quickly our business grows, of course, and the sooner we get to that financial independence. So Yeah. really important topic. This one.

Terry: Yeah. The topic. So we’re talking about diversification, right? And you know, this, if you’ve been listening, we’ve talked about diversification in the past, it’s just you spreading your exposure. So if you want to know more about this and you want to access our deep dive. We went into this in more detail in episode seven and eight in season one, and we actually did a real deep dive around the principles, investing and diversification is one of those really important principles. And the reason I think it’s really important is because it sort of shows you that there’s a Powell or when it comes to returns, returns on money and also returns on effort.

So when it comes to diversification and finances, what you start to see is that you spread your risk across a lot, a little bit. And what you find over time is that a few of those pay off large. Most of them do nothing and a few actually go backwards. And the job of diversification is to help you capture the lion’s share of those rewards that looks after the rest of it. That is diversification. Isn’t it.

Ryan: Yup. Yup. And the reality is it’s hard to get diversification when it’s associated with you starting a business.

Terry: Yeah, that’s right. That’s ironic because when you’re starting a business, you’re actually concentrating your risk.

Ryan: Yeah, absolutely. And what can be a bit of a tough pill to swallow with that realization around a bus vacation is what you said before. The first one might not be the money shot. Yeah. It might be that you have to take 10 attempts and of those 10 attempts, there might be three winners. And so, you know, if I think about it in a sequence of steps, where that first one lands might be at number three, it could be at number one, which is fantastic. And the first one is the money shot, or it could be at number five. The main thing is you do have to tick things off until you do find that money shot and, um, kind of worked through that as you mentioned, there is a power law and you need to find the one that wins and amongst the ones that don’t.

Terry: You can’t do that if you’re only just aiming to take one precise shot, and this is what I would sort of say, like don’t aim for that precision aim for progress, because that’s what kick starts. This whole learning loop, this kind of whole intelligence process. So if you find yourself just continually reading business book after business book, taking course after course and not getting started on the thing, actually. No further yet, probably even further behind you wasted a lot of time, because what I’ve learned

Ryan: I was going to say, you’d have to choke on those words.

Terry: I’m choking on the word smile, because I’ve said this the other day, we’re having this discussion. I said, I just wish we started this five years earlier. because like what we’ve learnt over the past couple of years, orders of magnitude more valuable to me than anything I learned before that from an MBA or a business book or anything like that. So, take it from me, the words of wisdom, knowing what worked for someone else, it’s way less valuable than knowing what doesn’t work.

Ryan: Is that again?

Terry: Knowing what worked for somebody else is way less valuable than knowing what doesn’t work for you. Because knowing what doesn’t work for you is actually how you get to what does and until you start to collect that information, you won’t know what does work for you. And like we’re still in this process now, you know, like this is the second or third iteration, of this business and we’re still kind of evolving things as we go.

Ryan: Yeah. and there’s just so many shiny objects out there that you think, they’re advertising to you, that that is the thing. You grow your business on Facebook ads or YouTube ads, all these different things. There’s always someone telling you that that is the one way to go about it and that’s the way to do it. And so you have to go through. Find out for yourself that, that isn’t the thing and that’s not it and that’s not it. Oh. And then you find something that is.

And I love that quote by the IBM founder, Thomas Watson, Jr. He said, if you want to increase your success rate, you need to double your failure. And, you know, I know that we’ve repeated this quite a lot to each other throughout the last couple of years within our business. Like we just need to fail faster so that we can speed up success and we can learn faster. And so we can adapt faster. And the only way you can do that is by acting a lot. And then assessing, like acting, getting the feedback, reorienting, and then going again and seeing what the next thing has.

Terry: Yeah. if you’re not doing that and you’re just continually reading books going to courses, you might be collecting information, but you’re not gathering until. And they’re not the same thing. You need to gather intelligence to keep making better decisions when it comes to business. And so I think it’s really valuable to read books.

I love reading books, right. But we were talking about this the other day. I think it’s better to read a book when it’s helping you solve a problem at the time, as opposed to thinking, I need to know everything before I get into this thing or else I’m going to fail. Take it from me, that is a waste of time. You don’t need that. You’re a smart enough. You’re a human humans learn by acting and assessing and iterating. And that’s kind of what we’re talking about. This is why it’s so important. Humans are absolute learning machines. If, and only if we have negative feed. Because what that helps us do is it helps us update the probabilities of what the next action is going to help us do.

So we make predictions, based on what we know, we assign a probability to what we think is going to happen. We watch what the outcome is, and then based on that outcome, we update our probabilities again, which improves that whole process. So if you thought that process by just continually just gathering from. You won’t make any progress because you’re just prioritizing precision over that progress and precision doesn’t exist. Like nothing’s perfect is it?

Ryan: Uh, and reality is negative feedback socks, trying something that not working sucks and you go fuck it is wasted some time and some effort, and sometimes some money on that as well. And then you have to accept that didn’t work. I was wrong. I assigned too much of a probability to that outcome and I was wrong, but that’s where you go, I just learned something and now I know better. Now I’ve actually developed a level of wisdom about what doesn’t work, And sometimes that’s just specific to your business, but sometimes, quite broadly.

Terry: And this doesn’t even just apply to business either. Like, think about this in terms of your career, like you, same thing. You’ve got to keep making decisions, making bets, trying things, doing things better. This is how you speed up that progress, right? Because the more intelligent together, the better decisions you make, the better decisions you make, the better results you get. So don’t throw out the process by just continually gathering information. So now we know what the secret is. Speeding out failure and going through that cycle faster. That’s the secret. How do we go through the cycle faster?

Ryan: Which leads us to the OODA loop. And I know, you know, we’ve been discussing this and I’m digging into this a little bit more just recently. do you want to define.

Terry: Yeah, It’s just a mental model that was popularized by a guy called John Boyd. He was American fighter pilot, and he lied to became one of the world’s top military strategists and he was a fighter pilot. So he needed to figure out a way to make very high quality decisions. I mean, it’s a lot of uncertainty very quickly and that is the skill that you need to build in a business is just making high quality decisions very quickly moving, gathering that intelligence because the sooner you get that intelligence, the faster you make that progress. It was first taught in the military, but it’s Connor proliferate it now.

And if you go into Silicon valley, and you look at like all those, fast-growth startups, they teach. This process, they teach them this mental model because it is so valuable because that’s what we’re doing is we’re literally carving our way through the jungle. We can’t see too far ahead. We can’t see too much the side we’ve just got to keep moving. And this odor loops are really valuable for doing that.

Ryan: it’s pretty much as we’ve just talked about. Right. So OODA stands for, And it’s spelled out O D a, which is observe orient, decide, and then act. And so the different stages that. When you’re observing the information that exists in your environment, the data collection that you mentioned before Arianne is about just assessing the context that you’re making that decision within and thinking about the things that are impacting your judgment, your decision making in that time, you know, your bias also your culture and your conditioning and all of those things. So kind of looking at that as objectively as you possibly can. And this is where, you know, mentors become valuable in business. And then deciding is obviously acting on, the orientation as well as what you’ve observed. And then the action that comes after that, which is where you that feedback that you’re talking about. It gives you new information, new data, and then you have to reorient again. And that’s just that loop that you go into and the big benefits that come with that as we’ve kind of highlighted is, you know, allows you to move fast without being reckless. It allows you to, find comfort. I miss the chaos and really it makes you hard to copy because you’re adapting to a reality that exists right in front. And so you becoming quite authentic and unique as you evolve because of those factors.

Terry: And if you think about it, this is what humans did to get to the top of the food chain. We just got better at this process and all the other species were able to adapt faster and better than everybody else. So if you want to be the human amongst all the, uh, the animals in your kind of area, you’ve really got to make sure this cycle works for you and be really deliberate about it.

It was a really good reminder for me coming back to this, we were talking about this concept of trying a lot of things in business and filing faster because we need to gather that intelligence. And coming back to this model, we were trying to think about how we explain it. I was like, yeah, this is great. We actually need to be even more deliberate about it. This is a decision where we need to keep moving faster. We’re not gathering intelligence right now. We’re just collecting information. So always stress testing. Those two things, just ask yourself all the time.

Am I gathering intelligence or am I collecting information? And if you think that you’re collecting information, then go back to this OODA loop and start to prime that pump and go through the process. Cause, uh, yeah, like we say, it’s the intelligence that’s going to help you evolve and adapt much faster. And that’s ultimately what it’s going to help you find that fit. Cause that’s what we’re trying to do. We’re trying to find a market to product or service fit. And the only way we do that is like you said earlier and iterative process, we don’t guess it and go, everyone’s going to love this.

And maybe some people do, right. Maybe you’re the bloke that started. That’s great, but how many of those blogs are there? And by the way, it wasn’t his first business. He’s done many, many businesses beforehand, tried many, many ideas to, hone and refine that instinct so that by the time this one hit it worked. So what we’re saying, if we’re trying to sum this up is try to avoid the trap of thinking that your first shot has to be the money shot. Just getting. Try things try to find one customer. If I was to think about one call to action at the end of this, all your job is to do is to find one customer, one person that’ll pay you for what you do and figure out how you can add value to them. And then see if you can find more of those customers. That’s seriously how, you know, that’s what we did, right? Will one person pay for this? Is there more of those people? And then you just get better at the process.

Ryan: Yeah. Yeah. And this may be a rash comment or maybe a little bit reckless, cause it goes against definitely what Tony Robbins says. He says burn the boats. We actually think just experiment. You don’t only have to do it on a smaller scout. Yeah. Like if you’re on a salary right now, for example, find that one customer outside of those working hours and just start to work with that person, make us some of those bets first then you know, work through a couple of those values. And while they’re still learning on somebody else’s dime. But then once you do find that product market fit that you mentioned, That’s where you dive in and start to diversify your efforts about finding how to gather attention for that one.

Yeah. You got the attraction part of the business, which is building attention, building an audience, helping people see what you’re doing and get eyeballs on it. Then you’ve got the conversion, which is how do you turn those people into customers? And then delivery. So how do you actually solve the problem for them? Give them the product or service, fulfill the commitment or the promise that you made. And then this collection, which is obviously getting paid for what you do. And so, like we were talking before how you kind of connect diversification into that is for a start. If you’re just starting out, you want to on that attraction level, diversify the means in which you attract that first person.

And once you’ve found that one person, you then want to diversify your right. In how you deliver and help solve that problem. And once you have those two, you’ve got the means to attract one person and you’ve got the means to deliver on the promise to that person. You’ve got a business. And so you then start to develop the systems that evolve in each of those four stages in the business.

And the OODA loop is so critical in helping. Worked through the diversification stages of those things, like finding out which one of those things works at each level and then fitting it together, piecing that puzzle together.

Terry: And the cool thing is if you are doing this as a side hustle you don’t have to put pressure on yourself and maybe we can talk more about how we’ve transitioned. We’ve done this pretty uniquely as well. We haven’t sort of gone headfirst into this whole thing. You can do this, gradually do this on the side. I would actually even argue, this is better.

Um, and, we might talk about this when we wrap up this business here, as in terms of how we’ve slowly done this for ourselves. because if you can find that one customer outside of your normal. And you’ve got a little business happening on the side. Now you’ve got a little side hustle. You’ve also learned some really valuable skills that are going to pay off for you in the long run as well. So your. kind of making your skills more diversified as well. You’re kind of spreading your own risk. You’ve got to now sources of income. We only had one. So just to tie it all back to diversification, it’s such a powerful concept and it can be used so many more ways than just spreading your risk when it comes to money, spreading your risk. When it comes to your human capital, spreading your risk, when it comes to your ideas, spreading your risk when it comes to your efforts. And the OODA loop. That’s your secret for actually speeding this whole thing up and accelerating the journey.

Ryan: Yeah.

Terry: Cool. Well, this is another one of those shots. Good job, mate. So what we’re doing from here is we’re going to be doing, one episode, a bit more of a media episode to wrap up our business series, to summarize all the insights we’ve gotten from the mentors, the people that have come in along the way, maybe give a bit more of an insight into our business and how we’re working through it and what we’re learning along the way and what it means.

 so if you’ve got a lot of value from this podcast, hopefully as a short one, but it’s a really impactful one for you. If you’re in that place and it’s helped you kind of think through getting past perfection, moving towards progress would love for you to share this episode.

We are at the moment, we’re always hovering between that sort of in and out of the top 100. We want to be in the top 100 more often, so we can reach more people like you. So do us a favor, write and reveal our podcasts. It actually helps us.

Ryan: It’s up 100, we jumped to 25 this way.

Terry: Yeah, we did. We got to 25. I just didn’t want to brag.

Ryan: Right? Don’t be too humble.

Terry: Okay. We got the 25. We want to stay in the top 25, help us out. Write a review, our podcast.

Ryan: we definitely feel that we’re applying to an investigators on that one. So yeah, it would be nice to stay out there though.

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