Rework. This book will explain to all of you the simplest and most effective methods, which come from the direct experience of the author. On the market, there are many business management books that talk about how to manage human resources, financial management, investment, setting strategies, or business plans, and so on.
But this book is different from the rest. When you open the first page, the author writes, "If you want theories about business management, please put this book back on the bookshelf. It's not for you."
This book doesn't teach you how to manage a big business, nor does it teach you various business theories like other books. The layout is also different. The book has over 280 pages in English, divided into short and concise articles. Each page only has a few words and an accompanying picture. The readers of this book aren't just businesspeople, entrepreneurs, or small business owners. It's also suitable for employees and those who want to start a business. This book can be summarized in one word: Simple.
The author summarizes from their personal experience that to manage a business well, you don't need to work day and night, nor do you need to find brilliant people to come work for you. You don't even need to spend time preparing complex strategies or holding big meetings. You don't even need a physical office. As long as you can make a product or know how to sell the service you have, and you know how to make money, that's enough. Hearing this, you probably don't quite believe the author. If it were that easy, everyone would have started a business already.
This is why this book is so different from others. In it, the two authors, Jason Fried and David Heinemeier Hansson, co-founders of the company 37signals, describe their real, short but impactful experiences. Most people don't really know this company because it's a small company and a technology company. And at the time the authors wrote this book, their company had only 16 employees. But the size of a company, big or small, doesn't necessarily determine its potential. Even though this company is small, it can provide services to more than 3 million customers and generate tens of millions of dollars in revenue every year.
Although many internet companies have been created over the past 20 years and have fallen just as quickly, the company 37signals continues to stand firm in the market to this day. However, the authors' experience in business management is most suitable for small-scale businesses and new startups, and not so suitable for large corporations. Next, we will summarize the key points contained in this book to see what important content it brings and what kind of benefits it offers us as business owners. We will summarize this book into four main points.
First point: related to the culture within the company. Planning, working hard day and night, and various rules within a company may seem very important. But in reality, these are factors that hinder the growth of the company.
Second point: related to the size of the company. A small company shouldn't necessarily be expanded into a large company. Small companies and large companies are two different types of entities. They should have different cultures, ways of working, and rules. They cannot learn from and follow each other. Third point: use of human resources. You must choose people who are a good fit, not just those who are the best. Reduce unnecessary hiring processes. This way, everyone will have enough time to unleash their own potential. Fourth point: business relationships. In business, you must have good relationships with customers and partners. Maintain your own principles and don't easily sway according to short-term market demands. Be flexible with the circumstances and provide the best possible value to customers.
We now come to the first point. The culture within the company, the planning, and the hard work day and night, along with various rules in the company, may seem very important. But in reality, these are factors that hinder the growth of the company. The biggest goal in business is profit. The creation of rules, strategies, or various decisions must be in line with this one goal. If a business activity does not generate profit for the company, there is no need to continue doing it, no matter how good it may seem.
Simplicity and work efficiency are the most important points in managing a business. The authors raise four important points, which are:
Planning. No matter how small a company is, it surely has its own plan. But the authors believe that planning is just a waste of time, merely a guess. Because there are many things we cannot control, such as market fluctuations, competitors, the social context, and target customers, which are all factors we cannot control. Making plans in advance and analyzing the future because we think we can control it—some factors, in reality, are different from what you think. And this can cause a business to fail. For example, you plan to go to the market to buy only two or three items, but in the end, you come back with many things. You think the trip will only take 30 minutes, but in reality, it takes up to two hours. If you can't even control something as small as this, how can you analyze the future of the company?
Second, the authors state that meetings without a clear purpose actually reduce work efficiency. Some matters that can be discussed and finished in 5 minutes end up taking half an hour of meeting time. For example, a meeting with 20 participants that requires one hour from each person means the company will lose a total of 20 hours. Therefore, meetings should only be held with the people who are directly involved. And there is no need to drag out the time. Or book a big meeting room. You should meet right where the problem occurs and discuss it with the people involved. Only important and necessary matters will lead to an increase in work efficiency.
Third, let's talk about workaholics. You probably think that a workaholic who works a lot is a good thing and a great human resource for the company. But the authors of this book believe that people who are addicted to work not only make work inefficient but also waste time and have a negative influence on their colleagues. Some reports only need an hour and a half to complete, but some employees drag it out for half a day. It may look like they are working hard, but in reality, they are working inefficiently and without creativity. As a habit, being a workaholic is not a good thing; it actually has a bad influence on the whole institution. Fourth is about the rules within the company. Creating too many rules and regulations in a company can actually prevent the company from moving forward, getting stuck on minor issues with employees.
If an employee does something wrong, you should tell them not to do it again, and that's enough. You don't need to scrutinize them or try to catch their mistakes all the time. For example, if an employee wears flip-flops and shorts to work, just tell them not to do it again, and that's it. There's no need to set a formal rule. Unless the mistake happens over and over again, then you can take measures or set a rule in the company. With the points raised above, the authors just want to show us that setting strict rules in a company is really not necessary. Because the most necessary thing is to generate profit for the company. Other things are just secondary.
Planning, being a workaholic, and creating rules within the company may seem like important things. But in reality, they cause work efficiency to drop and deviate from the company's goals. Therefore, the manager of an institution must reconsider this point. Simplicity is what allows an institution to move forward quickly and hit its targets. The authors state that because the company 37signals could do this, it allowed the company to grow quickly and continue to provide excellent service to its customers. Even though this company is small, it can serve a huge number of customers. So, the next point is about the size of the company. A small company can also generate profit and achieve goals much faster than a large company.
Most company managers are likely asked the question: "How many employees does your company have?" Usually, the bigger the company, the more employees it has, which shows the company's growth. But having many employees and a big company is not always a good thing. The authors do not see it that way. Big doesn't necessarily mean good. Opening many company branches or hiring hundreds of employees doesn't mean it's a company that makes a lot of profit. Therefore, having many employees does not mean the company is good or big. Sometimes, a small company with 4-10 employees can also achieve big goals. The authors state that every entrepreneur doesn't need to aim for the direction of a large company. Instead, they should find their own source of revenue and a good position to stand in the market. As for employees, it's the same. You don't have to look for only big companies. A small company can also offer a future and good work experience.
For example, the authors' company, 37signals, with its 4-10 employees, serves over 3 million customers very well. And that's enough; there's no need to expand further. There are many other companies like Craigslist, which is an online advertising platform, that has only a few dozen employees but can make tens of millions of dollars in profit every year and has changed the traditional advertising landscape in the United States, capturing a large market share from traditional advertising companies as well. Of course, the company and the number of employees can grow depending on the type of business, such as transportation companies or manufacturing factories. They need a lot of employees to be able to expand.
Small companies or large companies are both good. But what the authors want to remind us is that a company doesn't have to be big to be successful. A small company can also achieve big goals. On the other hand, entrepreneurs should think carefully about the path they have to walk on their entrepreneurial journey. Many entrepreneurs who start businesses often face the problem of insufficient working capital. They need to secure capital to continue their business.
If these companies are restaurants or manufacturing factories, of course, they need a lot of capital to buy materials or labor. But if they are service companies like consulting firms and technology companies, they don't need much capital to get started. For this type of company, the fewer people, the better. And it's best not to use investors' money. Because more people means more potential for trouble. We also risk losing our entrepreneurial spirit if we encounter investors who don't understand our shared goals. The authors' advice is simply to say in a short sentence: if it's not necessary, don't take other people's money to run your company at all.
Coming to this point, you might think, "Okay, I won't take investors' money. But where do we get the money to pay employee salaries, rent a workplace, and buy office supplies?" The authors answer that these needs are not truly necessary needs. For example, a business manager doesn't need 10 employees. Three employees can also get the work done. You don't even need to rent a workplace; you can work from home. Perhaps an accounting software program can replace an accountant. Like the company 37signals, in the beginning, they even had to share their office with others. They didn't spend money on advertising, but their employees shared their knowledge on the internet to attract customers. But these were not hindrances to the growth of 37signals.
The authors believe that adapting to a favorable situation is what makes a business grow sustainably. For example, the airline company Southwest Airlines has only one type of aircraft, the Boeing 737, which makes maintenance easy and simplifies the training for pilots, flight attendants, and maintenance staff. This results in lower costs but allows them to generate profits comparable to other large airline companies. A company's size, big or small, is not determined by the number of employees, but by the number of products or services they produce. The authors advise: do only one thing that you do better than anyone else, and that's enough. You don't need to do too many things. In a book by Gordon Ramsay titled "Kitchen Nightmares," it says that the menus of failing restaurants often have too many dishes.
So, when Gordon Ramsay goes to be a chef at a new restaurant, the first thing he does is remove some dishes to avoid having too many, and keeps only the special ones, making them even more special than before. In business, it's the same. Doing only one thing and doing it better than anyone else in the market is what makes that business go far and have an advantage over competitors. Like Japanese car manufacturers. They have maintained three principles: cheap, durable, and safe. And these principles have not changed, even for decades into the future. Just as the company 37signals maintains one principle, which is to produce software that is easy for customers to use. At this point, the authors want to tell us that they are not denying the expansion of big companies. But you have to look at the market situation and your own favorable conditions. Make your products or serve your customers well. Generate a lot of profit.
Small companies or large companies can both be successful. Maintaining principles and easily generating high work efficiency is what makes a company grow fast. Another point: about hiring, you shouldn't be too hasty. If a person cannot create value in the company, don't accept them at all.
A business manager who knows how to use people to their full potential and gives them enough opportunity to express their abilities is a good business manager. Having many employees does not show the vision and profitability of a company. Unless the company has many services to fulfill, then you can hire more employees. If the company can use existing software to simplify tasks, there is no need to hire more people to do the same job.
And regarding the hiring of employees, the authors also state that the hiring process should be done slowly, not hastily. To give an example: if you attend an event where all the participants are people you don't know, you will probably only talk about small things here and there. You won't dare to express your views, critiques, or discuss and analyze any problems.
In a company, it's the same. If new people keep coming in, there will probably not be much discussion, debate, or argument about big problems. It might look like the work is harmonious and good, but in reality, work efficiency will drop, and the company will not develop. However, slowing down the pace of hiring new employees is one thing. The important thing is what kind of person to hire to make a good fit.
You probably think that a person with high knowledge and a lot of experience is good. But the authors don't see it that way. Speaking of knowledge, the authors believe that an employee's knowledge is not that important. The authors did a study that showed that among the CEOs of the top 500 largest companies in the United States, 90% did not receive a formal bachelor's degree education. Do you all think that those CEOs have no high-level knowledge? It's not possible. Because education cannot determine a person's level of knowledge.
Another point is about work experience. You probably think that when hiring, it's better to choose someone with a lot of experience. Some companies require employees to have at least five years of experience. In reality, for a job, six months of experience is enough. The authors believe that someone who can do the work in two to three months and does it well is sufficient. Someone who can't do the job, even if they work their whole life, will get nowhere. Therefore, when hiring, you should choose people who have ability, talent, and a shared vision, not just look at their knowledge and experience. After hiring employees, some managers scrutinize them, check their attendance, and monitor whether they are working or not, and whether they are productive. The authors believe you shouldn't do this. As long as an employee provides shared value to the company, they are considered a capable employee. You don't need to watch over them every day.
In summary, for the points above, the authors state that in hiring people, you need to take time and pay attention. You should look at the individual's ability rather than just their experience, and leave space for the team to express their creativity to be able to create maximum value for the company. Human resources are an internal matter of the company. Business relationships with partners and customers in the market are external matters. In the book, it states that in the market, an institution must maintain its principles firmly. It should not sway according to short-term market trends. There are two things a manager of an institution must pay attention to: attracting customers and dealing with competitors.
Speaking of customers, the authors suggest that you should provide good services or sell your own products well. Maintain your principles and your own core values. Don't easily sway according to customers' wishes. You should make customers come to you, not you going to the customers' homes. As for competitors, you don't need to worry too much about them. Because when you focus on your competitors, you will deviate from your own vision. Day in and day out, you only think about the activities of your competitors. What are they doing? You forget to think about what you yourself need to do.
And in the end, you only end up with a similar level to your competitors or become exactly like your competitors. You might say, "I don't care about others, but what if others copy me, copy my business model, what should I do?" The authors also thought about this point. He said that if you want to make it difficult for others to copy you, you must make yourself a part of the product or service. How to do that? For example, there is a factory in the United States that produces organic feed for cattle and poultry. This factory adheres to one principle: not to add any chemical substances to the feed for its chickens and cows. It's 100% natural.
And later, he started investing in cattle and poultry farms and sold the meat in the market. The brand of his beef and chicken meat became famous in the market because of his organic feed. Customers can visit his farm freely and see his natural farming methods. Looking at the cattle and poultry farm, in reality, he is selling a feeling. He is selling health, and his brand makes it difficult for competitors to copy. This is called making yourself a part of the business.
Now let's talk about customers. The authors raise a point: you don't have to accommodate customers' wishes too much. You have to learn to say no to customers. The king of the US automobile industry, Henry Ford, said, "If I had asked people what they wanted, they would have said faster horses." Because at that time, there were no cars; there were only horses. "If I had listened to what customers were clamoring for, there probably would be no Ford cars in history."
It sounds a bit arrogant, but it's true. Sometimes customers don't really know what they want until you produce a product, and then they think, "This is what I really want." We don't need to change ourselves for a small group of customers. If you are easily swayed by customers, you will lose what is yours. Maintain your values and continue to do what you believe is right.
Below, we will summarize the important content in this book. First, we talk about the culture within the company. Setting plans, meetings, creating various rules, and working too much may seem like indispensable things. In reality, they are things that slow down the company's operations. And they are not necessary in the company. If you really have to do those things, you should consider whether they really help your company generate more profit. If not, you shouldn't waste your time on them.
Second point: a company doesn't need to have many employees. Expanding to be big... a small company can also accomplish big tasks and generate profit. Do what is within your favorable conditions, use the resources you have, and do what you can do first. Third point: regarding hiring, you don't need to hire only those with knowledge and high experience. As long as they have the ability and a shared goal, walk the same path, that's enough. Knowing how to work and create value for the company is the most suitable human resource.
Finally, a company must maintain its own principles firmly. It should not change itself according to customers or competitors. You should make it so that competitors cannot easily copy your business model. You must pay attention to your products and services, make them good, and make them even better.