Ask Nigel Rawlins a question or send feedback, click the link to text me.
In this episode of the Wisepreneurs Podcast, I spoke with Cedric Chin, the founder of Commoncog, to explore his unique approach to accelerating business expertise.
Cedric shares his journey from leading a startup in Vietnam to establishing Commoncog, a platform that rigorously tests business ideas against real-world scenarios.
The discussion delves into key concepts like cognitive agility, Lia DiBello's triad model of business expertise, and the challenges of mastering business skills quickly.
Cedric also draws parallels between his experiences in Judo and business, offering valuable lessons on mental strength and strategic thinking.
Key Themes:
- Testing Business Ideas Against Reality: Cedric’s approach to validating business concepts through real-world application.
- Cognitive Agility: The importance of adapting to new information and changing market conditions.
- The Triad Model: Understanding the three essential legs of business—Operations, Market, and Capital.
- Lessons from Judo: How Cedric’s intense training regimen influenced his business approach.
- Expertise Acceleration: Strategies for speeding up the acquisition of business skills.
Mentions:
- Commoncog: Cedric's platform focused on practical business education.
- Leo DiBello’s Triad Model: A framework for evaluating business expertise.
- Naturalistic Decision Making: A method Cedric discusses for extracting tacit knowledge from experts.
- Deliberate Practice: The limitations of this method in business contexts.
Guest Offers:
Cedric invites listeners to explore the resources available on Commoncog, where they can find in-depth articles, case studies, and a wealth of knowledge on business expertise. Sign up for his newsletter for regular updates and access to free content, including articles on expertise acceleration and case studies that ground theory in real-world examples.
Contact Details:
Wisepreneurs Newsletter: Thrive at 60+ with Purpose & Strategy
Smart, Sustainable Support for Women Entrepreneurs Beyond 60
Sign up here: https://wisepreneurs.com.au/newsletter/
Support the show
Connect with Nigel Rawlins
website https://wisepreneurs.com.au/
Linkedin https://www.linkedin.com/in/nigelrawlins/
Twitter https://twitter.com/wisepreneurs
Please support the podcast
https://www.buzzsprout.com/2311675/supporters/new
Stay one step ahead with The Wisepreneurs Insider newsletter
As a subscriber, you'll get:
- Sneak peeks at upcoming must-listen podcast episodes and guests
- Bonus wisdom straight from recent guest experts
- Marketing tips to attract your ideal clients
- Productivity hacks to streamline your independent business
- And more exclusive insights are delivered right to your inbox!
- Don't miss out on these invaluable resources
- Subscribe now and gain the edge you need to survive and thrive as a wisepreneur
offers valuable insights tospeed up your business
expertise.
Join me as we explore the art ofbusiness with Cedric Chin.
Cedric, welcome to theWisepreneurs podcast.
(00:42):
Could you tell us somethingabout yourself and where you're
from?
Cedric Chin (00:45):
Hi, I'm talking to
you from Singapore, and I came
from, Malaysia, an island thatyou may or may not have heard of
called Borneo.
I was born there, and I thinkwe're talking because I write a
website, it's basically a mediacompany, but, you know, if I
want to be absolutely honest,it's a blog.
(01:05):
If I want to sound fancy, I sayit's a media company, and it's a
blog about, acceleratingbusiness expertise.
It's basically a twin pronged,uh, publication about how do you
get good at business and how doyou get good at business faster.
And I think we're gonna talk alot about the ideas in that
blog, because you are a memberand we've talked before about
(01:28):
the audience for this podcastand the topics that you cover.
And I think they, it should bequite interesting,
Nigel Rawlins (01:33):
Well, I think
you're being very humble about
Commoncog.
It's way more than a blog, thisis my second year of membership.
When I read it, it just blows mymind about how you think about
things and how you write aboutthings.
And you go very deep into stuffthat, you know, in some cases
I'd never heard of.
And then when I read it, I go,this is fantastic.
(01:55):
So So, tell us how Commoncogcame about, because it's way
more than a blog.
Cedric Chin (02:01):
Right.
Yeah.
So the, origin for Commoncog wasthat I ran a business in Vietnam
for a boss, and we basicallybuilt the business up from
nothing to 4.
5 million in annual revenue, uh,completely bootstrapped, didn't
raise funding and when I leftthat company, uh, so it was a
(02:22):
point of sale company, whichmade, you know, point of sale
systems.
Most of the customers were inSingapore, um, but the
engineering team which I ran andbasically, uh, uh, much of the
actual product building happenedout of Vietnam.
Because we were an outsourcingcompany, and he actually hired
me to change from an outsourcingcompany, uh, which is not great
(02:42):
in terms of, uh, you know, asfar as businesses go,
outsourcing companies are notthat great.
You're basically trading timefor money, and try to transform
it into a product company.
But anyway, I helped him buildthat, and, you know, now the
company's doing a lot bet Imean, even better than when I
left it, and he's basicallyretired, or he can retire
anytime.
Um, and then I, I left to startmy own company.
(03:03):
You know, he, he told me, do youwant to stay for another year or
another couple of years?
And I was like, no, I want, Iwant what you have.
I've helped you build it forthree years.
Um, and I, and it's a wonderfuljourney.
I want what you've experiencedfor myself.
And when I left, I, I had allthese experiences dealing with
counterparties from the regionwho were, I call them
traditional Chinese businessmen,but every culture has their own
(03:26):
terms for people like this,right?
These are people who are notvery educated.
Maybe most of the time theydon't learn anything about
business from school.
They learn from the school ofhard knocks.
They learn from operatingbusinesses in the real world and
failing, right?
And taking the lessons from verypainful trial and error.
Um, and these were ourcounterparties and in many cases
(03:46):
they ran circles around us.
Um, of course, in some cases we,we did this defeat them.
I mean, we were, we had, we wereoperating in a very fierce,
competitive space, and we did,we did do better than our
competitors.
But when I started writing, soI, I, I left and I took stock of
my skills.
And one of the things thatquickly became clear to me was
(04:07):
that.
I may know how to run a companyoperationally.
I may know how to do softwareengineering and run an
engineering team and deal withall the mess and the corruption
that is Vietnam.
Um, but, uh, I didn't know howto do marketing and I didn't,
and I knew I was bad at sales.
And the reason I knew I was badat sales was because my boss,
(04:28):
uh, put me on some deals andthat didn't go too well.
So I told myself that I neededto get good at either sales or
marketing.
And I decided to get good atmarketing, and I started a blog
to sort of make sense of thebusiness experiences that I had.
And also to sort of reflect andhave an outlet for some of the
ideas that I had around careers.
And, was how Commoncog gotstarted.
(04:49):
It was really a, an avenue toexercise and to learn content
marketing.
But over time, I need to creditlike a business mentor.
So sometime during the pandemicin 2020, this business mentor
sort of said, you know, youshould just turn on paid
memberships.
Because I didn't realize thatthe entire Substack newsletter
boom had been going on due tothe pandemic.
(05:09):
And I turned on memberships, andat the time I was helping
another company with theircontent marketing because I was
starting to get good.
Um, I wasn't sure if I was goodenough, right, so I was sort of
practicing in Commoncog andpracticing in this SaaS company.
SaaS means Software as aService.
And, um, uh, and whatever Ilearned in one area, I would
apply to another area.
(05:30):
And, at that point in time,right, I turn on subscriptions
and very quickly it turns outthat there were people reading
who liked it and they startedpaying.
And so now Commoncog isbasically, um, this paid
membership site.
There are free articles, butmany of the articles are paid.
And increasingly over the pastyear or so, Commoncog now comes
(05:52):
with a case library of businesscases.
So many of the concepts that Ifind are incredibly theoretical,
you need to have some groundingin real world stories, real,
real world events to have anunderstanding of how to actually
put to practice these conceptsin your business.
And I think the big thing that Idid correctly from the beginning
was that I had this very strongnotion of, uh, Everything that
(06:19):
Commoncog publishes has to betested against reality.
Uh, and if it's not testedagainst reality, I will say that
it's not tested against reality.
Because as a business operatormyself, um, I only really want
ideas that work.
And there are lots of people outthere who will sell you a shiny,
nice, articulate narrative,right?
Or, or framework that hasn'tactually been put to the test.
(06:40):
And the people that are talkingor like writing these very nice
essays or, uh, sounding veryintelligent on podcasts, right,
like what I am doing now, um, IWhen you go take a look at their
work, right?
They actually haven't done verymuch.
And so Commoncog has always hada focus on testing the ideas
against reality.
And as a result, uh, I think thequality sort of speaks for
itself.
Now a lot of the membership arebusiness operators, uh, but also
(07:04):
hedge fund managers andinvestors of various stripes.
I think that's a verylong-winded answer to sort of
explain what Commoncog
Nigel Rawlins (07:10):
I think it's a
perfect one.
So basically Commoncog is abusiness now.
And, I guess you could call it amedia, uh, empire, I suppose,
because it is selling someinteresting information.
Well, let's talk about expertisein business and your focus,
which is about acceleratingexpertise.
Where would you like to startthere?
(07:30):
I mean, we could talk with, uh,how you came across Leo
DiBello's triad, which I thinkis very interesting.
Where did it start where youstarted getting into some of the
deeper topics that I findfascinating?
Now, interestingly, you're halfmy age.
And I've been running abusiness, a marketing services
(07:51):
business for 25 years and I'veworked with a former very
strategic business mentor whotaught me a lot about business
and then when I read your stuff,unfortunately he's passed away
and if he was alive today Ithink you would have a
fascinating conversation withhim.
So let's talk about how do yougain more expertise in business.
Cedric Chin (08:15):
This is, uh, I can
go on and on about this.
So, I was interested inexpertise acceleration, because
I wanted to get good at businessquickly, right?
And there had to be betteranswers than what I was coming
up by myself out there, watchingthese people, these incredible
traditional Chinese businessmen,you know, the phrase that I use
for them.
Watching them in action, they'reincredible.
(08:37):
They're really, really good.
But they took a lifetime to getgood, and they took some hard,
I'm sure they had some hardknocks on the way to their
expertise, right?
So I, I think the best place tosort of start is just sort of to
talk about my quest for, um,expertise research.
So I started digging into theliterature with the belief that,
(08:59):
hey, there's probably people whohave figured this out faster
than I have, better than I have.
How do you accelerate expertise?
And expertise of all kinds,right?
And if you Google, um, about,uh, how do you speed up or
accelerate expertise, it's verylikely that you come across.
Uh, something called deliberatepractice.
Now, deliberate practice is areal thing.
(09:19):
It's a technical term.
It doesn't, it does not meanpracticing deliberately.
It is a technical term, uh,describing a specific type of
practice with a specific numberof properties.
Alright?
And the problem with deliberatepractice, if you've looked into
the research, right, and notjust sort of like gone off of
pop psychology books, uh, likeMalcolm Gladwell's like 10, 000
(09:39):
hour rule, uh, if you actuallydig into like what the expertise
research says, uh, and this is,deliberate practice was
discovered by a researcher namedK.
Anders Ericsson, who sadlypassed away, I think, last year
or the year before, quiterecently.
You will find, by the way, thatdeliberate practice, as good as
it is, as much as it's stillconsidered the gold standard for
(10:03):
accelerated skill acquisition,um, it's impossible to apply to
business.
And the reason it's impossibleto apply to business is because
it requires you to have a coach,first of all.
Secondly, it requires you tohave, um, it requires that
domain to have a history ofpedagogical development.
And pedagogical development is ahighfalutin word for, um, there
has to be a known set ofpractices, exercises, uh, for
(10:26):
skills.
And you basically, all theskills that you have in
business, or in tennis, or inchess, right, or in, you know,
violin, um, can be broke downinto subskills.
And pedagogical developmentmeans that there is a history of
practitioners, instructors,coaches who have worked out what
the optimal drill is for thatsubskill and then have worked
(10:47):
out how to combine the practicefor those subskills into the
overall skills.
And that's the only way you cando deliberate practice, right?
Don't, don't believe any ofthese blogs that you read online
saying that you can applydeliberate practice to investing
or businesses.
It's not possible, becausenobody has done the hard work of
figuring out the pedagogicalwork, you know, practice for the
sub skills to combine into thetop level skills.
(11:09):
That isn't to say that you can'tuse some ideas from deliberate
practice, but this is a lotharder than you might think.
And we can talk about that ifyou want, because I've also
investigated that.
Now, if you want to get good atexpertise, it turns out that the
US military figured this outthree decades ago, so around
1987, in 1989, they startedrealizing that it was not
(11:31):
possible to use deliberatepractice to accelerate skills
for their soldiers, right,because they wanted to make sure
that their soldiers were goodenough to not die when they are
sent to the battlefield.
And so they funded thisalternative approach to
expertise called NaturalisticDecision Making.
And it's a terrible name for avery interesting field of study
(11:51):
that is still relativelyunknown.
And the reason it's relativelyunknown is because it's it's not
highly regarded amongst theelite psychology departments,
which tend to be a bit more datadriven.
They only take researchseriously if you can provide a
randomized controlled trial,something with proper
(12:12):
statistical testing.
Naturalistic Decision Makingtakes an ethnographical
approach, like observing expertsin the real world, which is very
messy, and you can't reallyisolate things, uh, you know,
you can't really isolate thingslike in a controlled experiment.
But anyway, um, NaturalisticDecision Making gave me the
(12:32):
answers I was looking for,because the approach that NDM
uses, right, is that they'vedeveloped a method to extract
tacit mental models of expertisefrom the heads of experts.
And tacit here means that itcannot be Uh, explain through
words, right?
Think of riding a bicycle.
Uh, as much as you want toexplain how to ride a bicycle to
(12:54):
a kid, uh, you can't communicatehow to ride a bicycle, right?
There's something else going onthat cannot be captured by
words.
And a lot of expertise is likethis, right?
A lot of expertise is, uh, youask an expert, how do you know
what to do?
And they'll say, it just feltright.
And that's the most you can do.
Well, NDM experts, NDMpractitioners have figured out a
(13:15):
way to extract this invisibledecision making process that
happens in the heads of expertsand turn that into training
programs, right?
So this is a very long windedanswer for like, how do you
accelerate expertise inbusiness?
And maybe I should pause herebefore I explain how NDM ties
into business.
Nigel Rawlins (13:33):
I think you're on
the roll there because, um,
you've already grabbed two of,two of my things, the
Naturalistic Decision Making andtacit knowledge and expertise.
You're on the right path therebecause the interesting thing
for business is, as you said,you were observing the Chinese
businessmen who, um, I guessthrough trial and error, got
(13:54):
good or failure, and don'tforget, um, a lot of people
would have failed and theydisappeared.
Or maybe they're working forsomebody else.
So, do you think you were ableto observe what they were good
at, these Chinese businessmen?
Cedric Chin (14:10):
I wasn't able to
observe then, I think.
So I knew that there werecertain cues, there were certain
things that were happening thatI didn't understand.
But now, now, with, um moreknowledge with, uh, the work of
Lia DiBello, which I should talkabout next, I suppose.
It's actually possible to take alook at their expertise and
(14:31):
identify aspects of theirexpertise, right, and also
identify bits of their expertisethat are not so good.
Um, so, Uh, to sort of tie thistogether, and if anybody
listening to this is a bigreader and you want to dig into
this yourself, um, there are twohuge, very big, very expensive
books.
I think it's like a thousandpages, uh, each.
Um, the deliberate practiceapproach is typified by the
(14:53):
Cambridge Handbook of Expertise,and the NDM approach, the more
interesting approach, the more,practical if you're investing or
business, right, and you can'trely on an established syllabus
to improve, is the OxfordHandbook of Expertise.
So I highly recommend both.
I recommend if you're apractical sort of person who,
you know, doesn't read thatmuch, I recommend the Oxford
(15:14):
Handbook of Expertise more.
But it's a very academic book,and it's basically each chapter
is a contribution from adifferent researcher summarizing
their life's work.
And in this book, there is achapter by Lia DiBello called
Expertise in Business, andthat's how I found her, right?
It was like you open the tableof contents, there's like
Expertise in Intelligence,Intelligence Services, meaning
(15:36):
like the CIA, right?
There's Expertise in, um,whatchamacallit, in all kinds of
vocations.
Expertise in the military,Expertise in strategy, right, in
a military context, and thensort of tucked away in one of
the chapters is Expertise inBusiness, and I was like, oh,
what is this?
And it turns out that LiaDiBello comes from a business
(15:56):
family, and she's well trainedin these methods of extracting,
you know, tacit, uh, mentalmodels for expertise.
And she decided, in the late2000s, with the help of a grant
from the National ScienceFoundation, to do a project
extracting, uh, the expertise ofbusiness from the heads of
experts, of expert businesspeople.
And she discovered that everygreat business person has the
(16:17):
exact same model of business intheir heads, right?
And I found that mind blowing.
And then I, you know, I thenwent on to read every single
thing she'd ever published.
Um, and then I went and reachedout to her and I interviewed
her.
And then I proceeded to organizeall of Commoncog according to
this extracted mental model ofexpertise that she'd found,
right?
Um, so, uh, Where do I begin?
(16:41):
I guess I should describe whatthe extracted mental model of
expertise is instead of teasingit.
So she discovered that businessexpertise are, uh, two, two
things.
They consist of two things.
And we'll talk about the firstthing, which is actually not, I
mean, it's quite obvious, Ibelieve.
Um, good business people are,uh, they have a property that
she calls, um, uh, cognitiveagility, which means they're
(17:04):
able to change their minds whennew data, new, uh, evidence
presents itself.
And I'm sure anybody who has runa business for any amount of
time will know that that's verynecessary in business.
You cannot lie to yourself.
When things change, the marketchanges, you hear things from
customers, you have to decidelike, hey, um, is this something
(17:24):
that I have to take seriously?
Or, you know, do I have tochange my beliefs about the
world, about the market that Ioperate in?
This happens a lot, right?
And business is particularlyharsh to people who cannot do
something like that, and inpractice, when I've worked with
business people like that, myresponse has been to fire them.
I can't work with people likethis, and it's especially true,
(17:45):
I think, in smaller companies.
I think it's more acceptable inlarger companies.
Anyway, so cognitive agility, Ithink that's quite obvious.
The second piece is the moreinteresting thing that's not
that obvious.
She points out that business isa domain that consists of three
legs, right?
So she calls this three legs ofa triad, right?
(18:06):
And her names for it was Supply,Demand, and Capital.
And I used to use herterminology, but then my readers
complained that they didn'tunderstand what this meant.
So I changed it to Operations,Market, and Capital.
And that basically describes thethree legs of the triad,
regardless of which industryyou're in, if you're running a
business you need to know how torun your business, right?
(18:27):
Operations.
So for me, it was software.
It was like, how do you run asoftware engineering team?
How do you build product foryour market?
Um, if you're running a factory,then obviously you need to be
somewhat versed, well versed, inthe runnings of your factory.
Like, how do you make yogurt orhandbags or whatever?
And Market is basically anunderstanding of your market,
(18:48):
understanding of who yourcustomers are, what they want
from you, what service do youactually provide for them, who
your competitors are inproviding this service, and
where the impact is.
Areas of new opportunity are andwhere the areas of risks are in
your market meaning like there,you know It could be new
entrants to come in and threatenyou And finally Capital, capital
(19:12):
is the least obvious, I think tobusiness novices.
It was certainly the leastobvious to me starting out,
right?
In fact, if you grab a randomperson off the street and ask
them to describe businessThey'll probably be able to talk
about the market, uh, which isyou know, your customers and
competitors And they'll probablyalso going, your mind is going
to go to operations becauseobviously you need to know how
(19:33):
to run a business and managepeople and do whatever it is
that your business does.
But it takes a while beforepeople notice that there's
actually a capital component tobusiness.
And capital is an accelerant tomarket and operations.
Um, there are things you can doif you are good on the capital
side of the triad.
(19:54):
Uh, and it's a bit hard todescribe in a podcast, but I
wrote an entire series, many ofthe pieces are free, called the
Capital Expertise in Business.
And I recommend that you go takea look at that on commoncog.
com.
Uh, the job of that series is tosort of lay out how do you
recognize capital expertise whenyou're dealing with business
people.
And very good business peopleare have are they're decent at
(20:17):
all three legs of the triad,right?
And if they're not great at oneleg of the triad, they know to
hire people to augment them inthe leadership of their company,
um, on the other legs of thetriad.
And the most important thingthat Lia DiBello points out is
that good business people aregood at one or two legs of the
triad, right?
Um, but great business peopleare able to predict, uh, how
(20:39):
changes in one leg of the triadaffect the other two legs.
So for example, if you're in acyclical industry, and the
capital cycle turns, right, uh,suddenly capital is more or
less, uh, uh, available.
They immediately know what to doon the operation side, and they
immediately know what to expecton the market side, and they
(20:59):
will start making changes,right, in preparation for, ah,
maybe now the capital cycle hasturned, capital is less
available, weaker, less well runcompetitors will go out of
business, and now is my time tosnatch away their market share,
or to buy them up for pennies onthe dollar, right?
So that's like a trite example,but there are more sophisticated
examples if you know how tolook.
So, uh, that's a very longwinded explanation of what the,
(21:23):
uh, mental model of expertiseis, and yes, I guess I should
stop there.
Nigel Rawlins (21:27):
Oh, no, no, I was
going to say that we should, for
some people, capital is probablynot a word they use.
It's really money, isn't
Cedric Chin (21:35):
Yes, yes.
Nigel Rawlins (21:36):
money is becoming
scarce because there's less
people buying or the economy isgoing down.
In the most simple terms forsmall businesses, it's cashflow.
There's some money coming
Cedric Chin (21:47):
Oh, yes.
Nigel Rawlins (21:48):
and for anyone
working for themselves is, you
know, you, you want to earn somemoney to, to run your business.
Otherwise, you can't afford todo stuff.
Okay, so you spoke to LiaDiBello and she mentioned that
the way she teaches people aboutthat is she plays, she creates
simulations.
Is that how she teaches?
(22:09):
I was going to say that thementor I worked with used to
create simulations as well andthat's how I learnt a lot about
business.
A simulation's probably a betterway to learn about business than
to actually muck the business upyourself.
Cedric Chin (22:23):
How, how did he,
uh, do simulations with you?
Nigel Rawlins (22:26):
The way he viewed
business is he had a framework
to think about business and avery simple framework which he
called it the five line model.
Every business has to haverevenue, there's a cost of goods
sold, so it costs money to makeor buy or provide the service,
then there's a cost of selling,so there's the marketing costs.
(22:49):
There's the, and I'll come backto your restaurant article that
you wrote about in a moment.
There's the cost of running thebusiness.
So four.
And then the final part'sprofit.
So there's five things thatevery business shares.
Every business is the same.
They do those five things.
Now for the smaller business,when I talk to people, is
they're the five things thatyou've got to, well, you don't
(23:11):
do five things.
You've got to get revenue andyou've got to be profitable.
But there's three things whereyou actually have to work in the
business.
And that's where youroperational and your financial
comes into it.
So that's, that's a muddled wayof describing it.
But he was able to scenarios ofcompanies where things would
(23:31):
happen, as you know in business,nothing is really predictable.
So he might have several peoplecompeting, but unfortunately he
was trying, before he died, hewas trying to get it online, but
unfortunately he died before itfinished.
Cedric Chin (23:45):
So, it's five
things.
It's revenue, cost of goodssold, cost of sales.
Nigel Rawlins (23:50):
When they say the
cost of goods sold, it's sort of
like the profit and lossstatement,
Cedric Chin (23:54):
hm.
Nigel Rawlins (23:55):
So, with the 5
line model, you actually start
dividing up more accurately,where does the cost come from.
So, in terms of making aproduct, you've got machinery,
for example, if you make aphysical product, you've got
electricity, you've got parts ofthe factory, you've got people.
So that's your cost of goodssold there.
(24:16):
Cost of selling, uh, is maybeyou have an office, you have a
computer, so in other words,you're trying to allocate funds
to the actual area.
And then you work on thepercentages.
revenue is 100%.
Ideally, cost of goods sold tomake or buy or produce your
service is 50%.
If you can get it lower, evenbetter.
(24:36):
And then you can spend so muchon your cost of selling.
Now, in the ideal model, it's25%.
So if you're turning over 100,000, cost of goods sold 50, 000,
uh, 25 percent for cost ofselling, which is 25, 000.
Running your business, your,admin cost, you're trying keep
that as small as possible.
(24:57):
And then you've got your profit.
So the ideal is, is managing allof that,
Cedric Chin (25:02):
Mm.
Nigel Rawlins (25:03):
To ensure your
profit.
And the thing is, the clearstatement about profit is, and,
and in Australia we've had thisthing where people prefer to get
cash in their business becausethey're trying to avoid paying
tax.
In Australia, if you've got acompany, you only pay less than
30 percent tax on the profit,which is what's left over after
all those costs.
(25:23):
So, people muck up theirbusinesses by being silly and
hiding money and all that.
So they have no idea what'sreally going on, but the ideal
business, has got a clear idea.
And that's a business modelbecause once you put money in
there, it's a model, but thatwas a framework to think about
it.
And so when I talk to peopleabout small business, I say,
(25:44):
well, there's three thingsyou've really got to be doing.
When I read about your triad, Ithought, wow, this is a
fantastic way because those twosort of work together.
So one, you've got to be smartabout your money.
Now, when you talk aboutcapital, you're really talking
about fairly big businesses whoreally, really smart with what
to do with money.
(26:04):
For a little business, oneperson business, well, it's cash
flow mainly.
Cedric Chin (26:08):
Mm.
That's true.
No, this is a good model.
Nigel Rawlins (26:10):
That was a, a
long winded one too.
Cedric Chin (26:13):
That's great.
I'm very curious about the waypeople teach and talk about
businesses.
And that's, uh, I like that.
I mean, it's simple enough.
it's good enough.
Nigel Rawlins (26:22):
That's where
you've got to spend your time, I
keep telling people, because Iwork with, say, independent
professionals who work forthemselves, is you can't always
be doing work because you dohave to allocate some of your
time and your money to themarketing, and you do have to
allocate your time and somemoney to running the business.
(26:42):
And then obviously if you'remaking something or you're
providing a service, you have achoice.
You can do it yourself or you dosome outsourcing.
So, there's cost involved.
So, that's that's how I sort oflook at it.
But I love the fact that youbrought up the triad model from
Lia DiBello.
Cedric Chin (26:59):
I think the other
sort of thing is that, uh, the
five line model is sort of thebasic principles of running a
business and making sure youdon't die.
And, you know, lots of techstartups that are never
profitable, they just raisemoney from venture capitalists,
would do well to learn the fiveline model a
Nigel Rawlins (27:16):
business.
It's simple.
isn't
Cedric Chin (27:18):
It is, it is
simple.
It is, no, it's simple in theright way, you know what I mean?
Like, because it tells you whereto focus your attention on.
But the other sort of bit that Ithink is interesting here is
that, um, once you know, onceyou've got the five line model
under your belt, right, youstart looking at other business
people and then you realize thatthey're able to do things with
(27:38):
that five line model that youdon't expect, right?
And so the example that I give,like, the essay that I've heard
has been eye opening for a lotof people, who think that they
know business, right?
Is an article that I wrotecalled The Games People Play
with Cashflow And I was justtrying to point out that
Cashflow is not profit.
You can be cashflow positive andhave no profit and your business
(28:00):
is perfectly fine.
And if that's, if you'relistening to this podcast and
you're sort of going like, wait,wait, what does that mean?
I recommend that you go read theessay.
Um, because there are games thatyou can play with cashflow,
right?
Um, one example of this, andmaybe I'll give two examples
because this tends to be a bitlike catnip for the right kind
of people.
Costco, for example, pays itssuppliers net 30.
(28:20):
I think it's net 30.
Could be net 60.
Um, but, uh, if it buys itsproducts, right, most of its
products are sold out before 30days, right, and then they ask
for the next shipment, whichmeans that Costco has cash on
hand before they have to paytheir suppliers.
And that's a remarkable positionto be in, because you can use
(28:41):
that cash to fund other things,to pay for salaries, to pay for
facilities management, orwhatever.
That's a remarkable businessmodel to be in, and it's a very
deliberate move by the peoplewho run Costco to run Costco in
that way.
Another example would be, we allknow that margins are incredibly
(29:02):
low in the restaurant business,right?
But there's this remarkablerestauranteur, which I profile
in an excerpt in the essay, theCashflow essay, where he
discovered that because he runsa fine dining restaurant, he
asked for cash up front forbookings in the fine dining
restaurant.
(29:23):
And people said he was crazy.
But as a result, he had cash onhand before the diners come in,
which means that he has a floatof cash in the business.
And then he could go to hissuppliers and say that instead
of paying you net 60, If Iprepay you, how much of a
discount will you give me?
(29:44):
And, uh, the first person hecalled up, I think, was a, was
a, uh, beef vendor.
His beef supplier.
And he would be like, Hmm,nobody has ever asked me this
question before, let me get backto you.
And he called up the next dayand said, I'll give you 50, a 50
percent discount.
I was like, what?
I said, why?
I'll pay you, like, anadditional, like, 100 just to
tell me why.
He said, well, if you thinkabout it, right, I, when the
(30:04):
beef comes in, I only have acertain number of days, uh,
where I can sell the beef.
And then plus another threedays, maybe it's pet food.
And then after that I had tothrow it away.
So it's actually, really goodfor me if I know up front
exactly how much beef I have tosell.
That's a predictability in mybusiness that I don't have, and
I paid net 60, right?
And so as a result, thisrestauranteur was like, oh my
(30:26):
god, just asking for cash upfront for bookings for this
restaurant allows me to go toall my suppliers and increase my
profit margins by, in somecases, 50 percent in some case,
well profit margins, the cost,reduce the cost by 50 percent
and increase the margins overallin the restaurant business by a
crazy amount.
I think he got it up to 30percent at one point, I'm not
sure.
(30:47):
I have, because I went off andresearched like where else did
he talk, what other podcasts didhe go on, right?
But he took the margins in thebusiness to a level, you know,
that other people couldn'tbelieve was possible in the
restaurant business.
And there's an example of agame.
Yes, you're working with thesame five line item, right?
But this is an example ofexpertise, right?
People making moves that thatyou can't imagine as a novice,
(31:11):
right?
That's a marker of expertiseright there, right?
So I think that's a good, nice,concrete story for your
listeners to chew
Nigel Rawlins (31:18):
Oh yes.
Now, I think it's fabulous.
And that's the issue with abusiness.
It does revolve around money.
So let's go back to Lia, howdoes she teach about the triad?
Cedric Chin (31:33):
Right, she didn't
teach the triad.
She used the triad to evaluatebusiness expertise.
And so she developed a Profiler,an assessment that she could
administer.
She was, she would be brought inby the boards of companies,
right?
She says that she knows a lot ofchairman, and my guess is that
that's how she would be broughtin in those early years after
(31:54):
she had developed this mentalmodel of expertise, right?
And the way that she wouldadminister it was that she would
come in to all the executives,right, and they would have no
choice but to go through theassessment because the board of
directors is the one asking forit.
And they would be given five,year by year, five years worth
of annual reports of acompetitor in the same industry,
(32:16):
and this will be taken frompublicly available information
like annual reports, uh, youknow, every year public
companies have to submit anannual report, and she would
excerpt out various, uh, bits ofthe annual report and the
financial statements, um, pluswhatever they've said on, you
know, shareholder calls, andpresent this information to the
executives and say that, giventhis information, um, what do
(32:39):
you think would happen next?
In the next year, right?
And these questions will beexcerpted from all three legs of
the triads, from operations,from the market, and from, uh,
capital, from the capitalperspective.
And you would answer, you know,uh, here's what I expect to
happen to this competitor in thesame industry that I am, uh,
next year.
(32:59):
And then she would present youwith the second year.
And then she would say, huh, yousee, now you've got some
feedback, right?
Some of your guesses were right,some of your predictions were
wrong.
What do you expect to happen inthe next year?
And then she would do it forfive years.
And at the end of it, youranswers will tell you how good
you are, based on how able youare to predict things, on each
(33:19):
leg of the triad.
And it will also test yourcognitive agility because it
would test whether you were ableto self correct when it when you
realize that hey, I I'm gettinganswers wrong, you know on this
particular aspect of thebusiness, right?
So at the end of the theassessment there would be a
profile of each individual inyour executive team and in
(33:40):
business, business is a game ofdistributed expertise, which
means that it's possible forpeople to be quite less good or
more, you know, or better atvarious aspects of the triad,
but they all shore up eachother's weaknesses.
Because it tests your predictiveability, your ability to predict
what's going to happen in thebusiness.
It actually is quite a goodmeasure of expertise.
(34:01):
Um, and that was how she startedwith a consulting business,
right?
So she eventually stoppedpublishing that much.
Um, and a lot of her more, morethan work, it's actually not
published and proprietary andvery interesting, but you can't
really get it unless you hireher.
But that was how it started, andeventually, she turned it into
full blown business simulations,designed to change the way an
(34:23):
executive team or a businessthought about its own
operations, or thought about itsown business, right?
So, all of this is to say thatthere is some validity.
It's not this person has come upwith an interesting model, and
therefore it works.
The reason why I felt that itworked was because I had already
been noticing such things fromother business people, plus the
(34:46):
original paper where she createdthis model, or she published
this model, came with testingpredictive validity.
And that is one of the markersof like, if something is true in
science, or in epistemology,which is a fancy, uh, uh, two,
dollar word, that means, how doyou know if something is true,
right?
So in epistemology, one of themarkers is, does this have
(35:08):
predictive validity, right?
Can you predict something?
Does it give you the ability topredict something?
And her assessments do have thisproperty.
And that's why I was like, okay,I'm quite confident that there's
something here.
It allows me to organize myexperiences, uh, in business, as
well as my reading in businessin a way that makes sense to me.
(35:30):
Um, so yeah.
Nigel Rawlins (35:32):
Well, what, what
you're saying is what she has
provided was a framework to lookat and understand business, and
that's where we use that fiveline model, is you can go into a
business and you know what tolook for.
But with the triad as well, Ithink that overlays it, so I
think the five line model isprobably more granular.
(35:52):
I can't remember whether it'syour podcast episode you had
with her or whether you wroteit, that she was able to
identify that sometimes it wasthe wrong person in in the
position.
Cedric Chin (36:03):
Yes.
So yeah, that came up in thepodcast.
That came up in a published workas well, actually.
She did this project with SwissRe, which is this large
reinsurance company.
And it's publicly available now,so this is, I feel okay
revealing this information.
Um, she discovered that when sheran this profiler on the
executive team, it was only theCEO with, that had enough
(36:27):
capital expertise and ability tosee around corners in the
reinsurance industry, right,which is, it's a very cyclical
industry.
And, you know, when, when thingslike the 2008 financial crisis
hit, a lot of, you know,Insurance companies found
themselves in trouble.
But Swiss Re did not findthemselves in trouble, if I'm
not mistaken.
I can't remember exactly whenthis profiler was done.
(36:48):
Maybe it was after the financialcrisis.
Um, but they could see aroundcorners because of the CEO, but
nobody else in the executiveteam had this skill.
And so she recommended to theboard of directors that they not
replace the CEO just yet untilthey find somebody else with
equivalent capital expertise onthe executive team.
You just have to have somebodyon the team to have this, uh,
(37:09):
ability to see around corners onthe capital leg of the triad.
The rest were more operationalor marketing or sales oriented.
And those skills, well, youknow, they are operations and
market side.
If you're in a reinsurancebusiness and you're in the
reinsurance industry, it'sprobably important that you know
the capital dynamics of yourmarket, right?
(37:30):
I think the other thing that'sinteresting about the triad is
that it gives you a syllabus,right?
So, uh, one of the things thatLia says is that good business
people can recognize other goodbusiness people by recognizing
the facility with which they'reable to reason about the
relationships between the threelegs of the triad, right?
So, a yogurt billionaire couldtalk to a mining billionaire and
recognize that they're both goodat business because they're able
(37:52):
to talk about how to navigatethe economic cycles or the
capital cycles in theirparticular industry.
And they're able to sort oftalk, map out like, here's my
market, here's my customers,here's the emerging threats,
here are the emergingopportunities, and here's how
I'm going to fund operations orexpansions into these various
opportunities, and here's howI'm thinking about my company
operations, and here's thepeople that I have, and here's
(38:13):
how I'm thinking aboutallocating resources to match
the capital climate and theopportunities in the market that
I see, right?
And this facility with whichthey are reasoning across all
three legs of the triad and theyknow how each leg of the triad
interrelates or changes thingsin the other legs, right?
It's how they recognize otherpeople who are good at business.
Um, and I've noticed this aswell.
I've noticed this when I'mtalking to good business people,
(38:34):
right?
Uh, they can pick out when youare good or when you're missing
certain bits of business.
You're not, you're literally notable to see, and more novice
people in particular are notable to see.
one or more legs of the triad,right?
And I think the other sort ofthing that was super interesting
about her model is that itpredicts your blind spots.
(38:54):
So I came up on the operations,the, like, basically running a
business like an entrepreneur.
Um, I'm a bit more blind on thecapital side of the triad,
right?
Uh, if a, if a company issuesbonds or does an equity swap or
does M& A, I'm a bit confused,or at least I was.
I'm, I'm, I'm quickly trying toshow up that the, uh, That side
of the knowledge.
So I can use it as a syllabus,um, but you can, when you have
(39:17):
somebody who has been inmanagement consulting for a
number of years, you canactually quite reliably predict
that they are likely to be shorton the operations side of the
triad, but they're pretty goodon the market side of the triad.
And they're maybe, you know, notso bad on the, on the capital
side of the triad.
Ditto for investors.
Investors seem to beparticularly bad at
understanding what it actuallytakes to run a business, right?
(39:38):
Because they just deal with thecapital side of the triad and
sometimes they have to analyzethe market side of the triad,
but then you put them in anoperating role and the business
explodes So, Lia's work isuseful both as a syllabus for
yourself, because you candiagnose what bits of business
as a skill you lack.
It's also good as a diagnosis.
So I've had a reader who is aconsultant, and now he goes into
(40:01):
an executive team, and by justhaving a couple of conversations
with each executive, he can havea rough idea of what legs of the
triad they're strong on, andwhat legs they're completely
blind to.
And that helps him, sort of,relate to them when he's
engaging with them.
So the triad is actually a lotmore subtle, a lot more powerful
than you might think.
And the good news is that all mywriting related to Lia DiBello's
(40:22):
work is completely free.
I made it freely available whenI reorganized Commoncog to have
topics and basically all thetopics and essays on Commoncog
and the cases all organizedaccording to the triad.
And as a result, the originalseries that described the triad
is now free.
Nigel Rawlins (40:39):
I think that's, a
wonderful explanation because if
you're an independentconsultant, you've got a skill
and you're getting work, that'sgood, but you're still running a
business.
Just like Commoncog is yourbusiness.
Now I want to go back a littlebit because I, I do know that
you're very interested in judoand you did a little experiment
with your judo.
So tell me something about whatis your interest in judo and how
(41:02):
does that influence Commoncog?
Cedric Chin (41:06):
So for those who
are not familiar with Commoncog
or, you know, you've not beenfollowing along in my writing,
um, at the end of 2022 and thestart of 2023, I took four
months, where I relocated to adifferent city.
And I train, well, maybe fivemonths actually.
November, December, January,February, March.
Five months.
And I train five hours a day,every day, for those five
(41:28):
months, for a judo competition.
The Malaysian Senior Nationals.
I did that for, uh, a smallhandful of reasons.
The first reason was, uh,regret, because I was
competitive as a teenager.
But I didn't get very good and Inever won anything at the
national level.
The second reason was that I wasactually, you know, I'd written
(41:50):
a lot about deliberate practice.
I just gave you a whole spielabout how it's useless, you
know, because I've tried toapply it to business expertise.
And then I discovered that it'squite useless.
But I never actually experienceda good deliberate practice
training program.
And that's partly because I grewup in a small town.
I didn't have access to the bestcoaches.
And partly because, uh, I, Ididn't, I didn't know what
(42:13):
deliberate practice was.
I also couldn't recognize it,even if you, you hit me over the
head with a training program,right?
So, I found a coach in KualaLumpur, which is the capital of
Malaysia, and he was at onepoint, ranked 13.
Like, he got 13 at the WorldChampionships in 1991.
And to this day, I think he'sthe highest rank or like the
person who went the furthest inthe world championship from
Southeast Asia.
And the reason he could achievethat was because he started judo
(42:35):
in the West, and in the Westthey have good training programs
for judo.
So I was like, okay, here'ssomebody who could teach me, um,
and put me through the ringer,uh, with an actual deliberate
practice program and acceleratemy expertise in judo, which is
great.
I'm not, you know, I'm onlygetting older and there's a time
window in which I can actuallydo something like this.
Um, And so, and I think thethird reason was that he had a
(42:59):
very particular strategy for meto win, which I wanted to see if
it could work, which was I wassupposed to win either on the
ground or through penalties.
And this is not something thatyou know how to do unless you
are taught.
In Western training programs inJudo, train you and have
developed drills for how toachieve this, uh, but it's a
secret in Southeast Asia.
(43:19):
It's an open secret in Europeand the U.
S.
It is an unknown thing inSoutheast Asia.
So I went and did that, and thething that I learned is that,
um, I broke.
I broke mentally.
It was very, very toughmentally, and when you've not
been in sport for a while, andyou're a working adult, you
(43:39):
forget how hard it is on thebody and how, how, difficult it
is to maintain mental strength.
And so the story of that, youknow, there's a, there's a long
essay that I wrote, one of themost difficult essays that I
actually had to write, um, thatI've ever written.
It's called Mental Strength inJudo, Mental Strength in Life.
It's on Commoncog.
com.
It's basically the story of how,uh, the arc of my training was,
(43:59):
I went in with all these ideasabout deliberate practice and,
um, excitement of like learningand getting good at judo.
And then I broke down around thetwo month mark.
And then my coach, uh, himself,uh, realized that his training
wasn't working because I wasbreaking down and then he
started giving me mentaltraining And it was a discovery
for both of us, right?
(44:20):
The discovery for me is that,oh, it takes a lot more than
just skill to win.
And the discovery for him wasthat, oh, you know, a coach's
job isn't just to, uh, dotechnical stuff.
But you actually have to providemental training for people who
are, uh, mentally unable to takethe training.
And this was remarkable becauseto me, it was remarkable because
like, shouldn't he know?
But my coach is not a normalperson.
(44:42):
He was a very mentally strongperson, and training me was the
catalyst for him to realizethat, oh, not everybody is as
mentally strong.
Nigel Rawlins (44:53):
did you go
through to the championships?
Did you get through?
Cedric Chin (44:57):
I did, I did.
So I won my first match withexactly using the game plan that
he developed, but over thecourse of the match, the
opposing player dug hisfingernail into my eye, and then
I basically was bleeding overthe mat, and they wrapped up my
eye, so I only had one eye, andI won that match with just one
eye.
But then after that, I couldn'tdeal with losing my vision, so I
(45:20):
couldn't, I mean, I was warmingup for my second and third
matches, and I couldn't blockthe grips, and I went on tilt,
basically.
And no amount of training atthat point in time, you know,
could have saved me from thefact that I was just too scared
after that, and I lost the nexttwo matches.
But it was still a win.
Like, the fact that I managed inthe first match, execute the
game plan, right, even throughall that ordeal, um, was
(45:43):
meaningful to me and my coach.
And I guess, you know, the otherthing that's a bit hard to
communicate was that the matchwas 11 minutes long.
It's like, how a judo matchfeels is like doing burpees.
So imagine doing burpees for 11minutes, yeah.
Well, 11 minutes stoppages, butit's like 7 minutes total, I
think, in match time.
Try doing burpees for 7 minutes.
Nigel Rawlins (46:05):
Well, I can tell
you at my age, try skipping for
one minute.
It's exhausting.
So 11 minutes, was that anunusually long match?
Cedric Chin (46:15):
It was the longest
match of the tournament.
Yes, it was incredibly long.
The other guy could barely getup by the end of the, the match,
right?
But I had the training, andhere's the surprising thing, the
mental training, the thing thatmade the biggest difference, um,
for my mental strength was bodylanguage training.
My coach did not allow me tolook defeated on the, on the
(46:35):
mat.
I was not supposed to slouch.
I was not supposed to slump.
I was not supposed to rest withmy hands on my legs, right?
I was always supposed to looklike, okay, I'm ready.
Go, come, let's fight, right?
No matter even if I was hurting,if I was tired, and he would
yell, he would say, Cedric, bodylanguage, right?
How, how you act is how youfeel.
(46:55):
And to my surprise, it worked,you know?
If you force yourself to standup tall and say, you know, I'm
ready to go.
I'm ready to go another round,right?
Something happens to your brainfrom your body, and then you're
like, you're actually feeling,you actually feel better, and
you're actually feel better ableto cope with the next round,
right?
So I, I don't know what it is.
I'm sure there's like someresearch that shows that
(47:17):
embodied, you know, how you actaffects the way you feel.
But it really worked, and Itrained every day for five
hours, and so I was always inpain.
But it worked.
So Yeah, now, you know, when I'mdoing business, I'm making a
difficult decision.
I just sort of remind myself,like, no matter how hard it is
(47:38):
or how scary it is, it's not asbad as getting choked every day.
Nigel Rawlins (47:42):
Exactly.
That's grounding yourself thatyou did five hours a day for
several months.
I mean, you'll Never.
forget that.
I mean, I ran a marathon oneyear.
Oh, God.
Many, many, many years ago.
I never want to do another one.
But I had done it.
And there's probably things inour life that we've done
physically that, you know, we'reproud of it.
(48:04):
So, do you think that Judo hasinfluenced the way you go about
your work or you think aboutyour work?
Cedric Chin (48:15):
This is a difficult
question that I've thought about
a lot.
Um, when I ended that Judoexperiment, uh, which was, like,
April, last year, April, afriend observed quite wisely
that it would probably take sometime for me to realize how it
has impacted me.
So, the courage with takingbusiness decisions was a big
(48:38):
thing.
I started making a lot morebusiness decisions after the
experiment was finished.
But, the other thing is thatthis one is not that difficult
to talk about, but I wrote anessay called, The Ability to See
Expertise is a mark, it's likesomething worth aiming for, and
I sort of described how in anybusiness, well, any domain of
(48:58):
skill, business and judo, um,there is a level at which you
have to start making up your ownvocabulary, because you start
noticing things that there's noproper English words for, right?
And, before I started the judoexperiment, I was not able to
understand what was going on atthe Olympics or the IJF.
Well, I thought I understoodwhat was going on, but actually
(49:19):
I was missing a whole bunch ofcues.
And now after the judoexperiment, I'm able to watch
the Olympics or the IJF tour,and I'm able to see lots of
things that other people miss.
I know when an attack is fake.
I know when something is donefor strategic, tactical or
tactical reasons.
I know how to create penaltiesnow, I know there are basically
only four ways to createpenalties in, uh, in judo, and
(49:43):
so I can recognize it when ithappens, and many people
watching the same match wouldnot be able to recognize it,
right?
And I think about that a lotbecause it's like there's a
before and after, a verydistinct before and after, in a
just a five month period, um,and in business, there are
probably cues that I'm notseeing, right?
So I think about that a lotbecause I, I, now I'm sort of
(50:04):
like, at the end of that Judoexperiment, I told my coach that
I know what it takes to getworld class at Judo and I know I
will never be good at JudoBecause I know what it costs And
I'm not willing to pay thatcost.
But I want to be world class inbusiness.
And I'm willing to pay thatcost, right?
And so I'm able to see things inbusiness that I am not before,
(50:26):
but given the skill tree of Judoand how high it is I'm also
beginning to think that thereare certain things in business
that are just, you know, they'relying there in plain sight, but
I'm not able to see it yet.
And so I think that this, thisis the more legible, easy to
talk about.
The difficult things to talkabout is like what that mental
training, that ordeal, has doneto me internally.
(50:48):
And maybe it takes a bit moretime to reason about that.
Nigel Rawlins (50:52):
Well, I think the
point you're making there is, In
mastering the Judo you did,you're now able to look at, the
competitions and see things thatnovice can't see.
And what we're talking about interms of business, there's
aspects of ourselves.
For example, I've been running amarketing services company for
(51:13):
25 years.
This year, I've spent severalthousand dollars on training
myself in marketing in differentareas that I've just let go.
You know, I'm coming back aroundto things that, you know, people
say, you've got to do this,you've got to do this.
I haven't.
And then I'm thinking, I'm nowseeing them, how relevant they
(51:33):
are.
So in other words, I guess withLia DiBello's Triad mental model
and my five line model, is we'reable to look with a framework to
maybe focus on something a bitmore clearly.
Now, the other thing that Ithink you wrote about, I think
you had a quote from Deemingabout knowledge,
Cedric Chin (51:55):
Mm.
Nigel Rawlins (51:56):
That there is no
such thing as truth in business,
only knowledge.
And so I think all of thisinforms us.
Now, you know, people areprobably listening to this, who
are independent consultantsworking for themselves are
probably wondering, well, youknow, this is all fairly
highfaluting.
How does this apply to me?
(52:16):
But, you know, they are inbusiness.
So let's go back to Commoncog.
Commoncog is basically you,isn't it?
And got people you hire to help.
Cedric Chin (52:26):
Yes, I've got a
bunch of part timers, and, well,
by this time next year, I shouldhave some full timers.
Fingers crossed.
Nigel Rawlins (52:33):
So you're running
a business.
Now, it's not a big business.
I mean, I don't know how manysubscribers
Cedric Chin (52:38):
not a business.
Nigel Rawlins (52:39):
got.
So it's you, and you'remanaging.
So, you know, you're going tohave to go operational.
You've got to do the financials.
You've got to do the marketing.
How does, all of this influenceyour business?
Cedric Chin (52:51):
Oh my
Nigel Rawlins (52:51):
What you know
now.
Cedric Chin (52:52):
Everything,
everything.
The, the neat thing aboutCommoncog is that whatever I
write about or whatever I test,I test on Commoncog itself.
And so when the ideas work, itresults in more money, which I
can then use to operationalizethe company so that I can go try
out new ideas.
And then, and then it works.
(53:13):
There's this nice little cyclewhere the ideas I try work, and
then the business becomesbetter.
Um, and then I apply the ideasinto the business again.
I buy myself more time to applythe ideas into the business.
So, I'll tell you what I'm doingnow.
Um, I think the single biggestchange that, uh, the single
(53:34):
biggest change to the way I runcompanies has been working with
Colin Bryer, who was Jeff Bezossecond shadow.
So a shadow is the technicalassistant was the formal name.
Basically you followed around,uh, Jeff as he went out about
running the company.
And the first shadow is, isfamous because he's now the CEO
(53:56):
of Amazon, Andy Jassy, right.
And Colin Bryer was the secondshadow and Colin Bryer taught me
how to be data driven.
He taught me something calledthe Amazon Weekly Business
Review.
And of course I've written aboutthis over the past year or so,
as I've been putting it topractice in my business.
And it has transformed the waythat I run my business, because
for the first time, given thefact, you know, even setting
(54:16):
aside that I've been involvedwith two businesses before this,
and both of them have, you know,ended in multi million dollar
outcomes, it's for theprincipals involved, not for me.
This is the first time that I'mactually running a business that
I actually understand end toend.
I know what causes my businessto grow.
I know what levers to pull.
I know how to monitor thingsthat are affecting the business
(54:36):
in the environment, right?
And all of this is from Deming'swork, and I won't go into it
because it takes too long, butthere is a way of looking at
numbers that is not reductive,that is in fact expansive, that
in fact allows you to put yourfingers on what's actually going
on in your business so that youknow how to manipulate it like
you would a machine, right?
(54:58):
So that's the one big thingthat's going on in Commoncog,
and we are chasing that insightto the to its logical extremes.
So I've hired people to writesoftware to make it easier for
me to instrument the businessand run the WBI every week.
I'm also experimenting, whenyou're building the software,
you're also basically doingprocess improvement, right?
So we're trying to see if thereare better ways to run this more
(55:20):
efficiently.
Um, apart from all theinnovations that Amazon has
figured out over the two decadesthat it's been running this
process.
Um, the other sort of big thingthat I stumbled on is that the
problem with a business likemine is that it's very easy to
get trapped into writing everyweek, and you're working in the
business, not on the business.
And there are actually manyalternative traps as well, uh,
(55:42):
linked to it.
Um, so I wrote a threadrecently, uh, uh, in my private
members forum, I sort of laidout all the potential traps for
creator businesses, right?
People who write or create mediaonline, and they monetize it,
right?
Some of those traps includethings like, you know, you tie
your personal identity too muchto the business.
You cannot step away from it oryou monetize by doing consulting
(56:07):
which ties up some of your timeright in unscalable ways So I've
spent a fair bit of timethinking about how to scale this
business given that it's fairlysmall and it's kind of reliant
on me and the way that I sort ofthought about it is that Um I
need to be able to sell topeople who need the content that
(56:30):
I'm writing, but in a way thatdoesn't depend on me as a
writer.
And one aspect or one thing thatI've been investigating over the
past year is the use of businesscases.
Um, and I think I, we've, we've,uh, you're quite familiar with
the approach.
The approach is basically inbusiness, it's not enough to
(56:50):
look at concepts alone, right?
You need to understand how theyinstantiate in the real world.
Uh, and to that end, uh, it, itactually matters a lot that for
each business concept that youlearn, you have 10 to 20
examples.
And so I'm building andoperationalizing that, right, so
that I'm creating 10 to 20business cases for every single
concept that one might need tolearn.
(57:12):
Um, and then using that asCommoncog's primary direction
for the next year or so.
And so when we're talking aboutmy business, right, that's the
sort of way that I'm thinkingabout it.
I'm trying to figure out waysthat allow me to avoid some of
the traps that I've identifiedwith creative businesses.
At the same time, I am applyingideas that I've learned to
(57:32):
Commoncorg itself and making itbetter.
And so that's the fun thing,because for me, business is
incredibly fun.
You get to try all these things.
Nigel Rawlins (57:40):
Mm.
You're thinking about it andyou're evaluating.
A simple case, as you mentioned,from the restaurant owner who
asked for money up front, not alot of people are going to do
that.
Many, many, many years ago I wasan elementary or primary school
teacher and I was a viceprincipal in a primary school.
(58:01):
I quit 25 years ago or more.
I decided that it would becheaper if I trained to be a
first aid trainer and then Icould train all the staff and it
would save us lots of money.
So I became a, trainer in firstaid had no experience.
And the people who were the besttrainers were ambulance drivers
(58:21):
because they could tell you thestories and they just know how
to do it.
And that's the problem.
You can learn all the theory oryou can do all the book learning
but without the actual practiceand without the actual
experience it's absolutelyuseless and that's the biggest
danger.
At least the people hopefullylistening to this are in
business or doing something inbusiness and have got a sense of
(58:43):
what we're talking about.
And what you're showing isthere's so much more to learn
and, it's probably notcomplicated.
case studies is similar to whatthe ambulance officer said.
They had lots of stories or casestories and I'm sure many
experts would have examples.
The more experienced ones would.
(59:04):
And that's expertise as well,isn't
Cedric Chin (59:06):
it?
Yes, it?
is.
Yes, it is.
Expertise, to some degree, ispattern matching.
And not in a kind of new, like,not in a naive way.
Experts are able to see patternsthat novices cannot, right?
And one of the things thatdifferentiates an expert, and
this is exploited in militarytraining programs, right, is
that experts have seen morecases, they're able to spot cues
(59:29):
across cases, and theyunderstand that concepts that
they learn, say in strategy,right, if we're talking about
the Marines, concepts that theylearn in textbooks, when it
shows up in the real world, canbe incredibly varied.
And so one way that thesetraining programs, the NDM folk,
uh, use cases, right, is theyuse cases to sort of quickly,
(59:51):
uh, uh, whatchamacallit, quicklysee the pattern matching
capabilities that all humanshave, right?
We're all very good at spottingpatterns in, in, in, if, if
we've, you know, been doingsomething for a very long time,
right?
So, uh, in the case of theambulance driver, because
they've seen so many examples ofa heart attack, they know that
(01:00:11):
every heart attack is somewhatunique, but there are certain
ERR patterns, some underlyingpatterns that unite all of them,
right?
And so the question is, how doyou accelerate, doctors who are
straight out of medical school,right, they just learn from
textbooks, to experienceddoctors who understand deeply
like, hey, a heart attack canshow up in a thousand different
ways, and you need to be able toto evaluate and immediately
(01:00:32):
diagnose, right, if you see anyone of those thousand ways.
And the way that they acceleratethis, the military and, you
know, these NDM augmentedmedical training programs, is
that they, they give you lots ofcases quickly.
right?
And they force you to grapplewith the fact that reality is
this incredibly complex,incredibly varied thing, right?
(01:00:53):
So with the Marines, they giveyou lots and lots of scenario
simulations and, and, and thenthey ask you to reflect and
introspect, like what conceptsdo you use or what concepts came
up here, uh, when, say acommander came in and give their
answer, right?
For the tactical situation,simulation that you were under.
And for the doctors, thisparticular, I mean, we can't get
(01:01:14):
into it now, but I've coveredthis particular approach of
creating training programs, andif you're interested, you should
go to commoncog.
com and look up Learning in IllStructured Domains, or Cognitive
Flexibility Theory is the namefor the theory.
It's another two dollar word,but it's, it's, It gives you
(01:01:36):
something very valuable.
The way they do that is thatthey give you a lot of cases of
different medical situations,right, for say heart attack,
right, and you're supposed to gothrough 10 to 20 of them, and
then they give you a new case todiagnose, where you're
referencing these 10 to 20 casesthat are very varied or some of
them are similar and some ofthem are very different, right?
And then immediately when youstart doing exercises like that,
(01:01:58):
right you as a medical studentquickly internalize that hey,
know I should expect theunexpected here.
Symptoms can look very differentbecause human beings are very
different and and you know, theyactually do accelerate to get
good results accelerating doctorperformance through these these
methods and Commoncog is tryingto apply this approach of
(01:02:19):
training to business.
And I don't know if it'll work.
I mean, I do have some, I've runsome experiments and I do
believe that it does make adifference.
But we'll see.
You know, early signs of somepromise in results doesn't mean
that it would be successful.
But I'm inclined to give it a goand let's see what happens.
Nigel Rawlins (01:02:41):
Well, my feeling
is that I'm learning stuff from
your writing and the depth ofyour thinking.
So, I mean, well, obviouslyyou're very curious to have
searched out many of theseconcepts, and then seeing the
value in them, and then you'veactually tried to explain them.
And they're not simple concepts,but the way you explain them is
(01:03:03):
understandable.
I mean, you know, you'veexplained, Lia de Bello's Triad
model, and you've written aboutit, and I'd highly encourage
people, if they're veryinterested In business like
this, to, to look into it.
Now, obviously, a lot of smallbusinesses or creators who work
for themselves are probably notgoing to need the depth of this.
But, anyone who has a curiositylike mine, an intellectual
(01:03:26):
curiosity to, to go into it.
That's why this is my secondyear.
I think you're the only person Iwould pay to read at this stage
because there's a lot of peopleout there running around
throwing out advice but it, itlacks the depth and it lacks the
the authority that you bring toit.
You're probably one of thesmartest business educators that
(01:03:48):
I have come across.
I would assume that, lot ofbusiness schools, uh, just
wasting the time and the moneyof many of the students who
would be better off out there,subscribing to you and trying to
run a business
Cedric Chin (01:04:02):
Well, my suspicion
is that if you force the
business professors to run abusiness, and to teach only the
ideas that have worked for them,you get something very close to
Commoncog.
So it's not really smart, it'sjust an extreme rigor around
ideas that work.
Our internal policy, that is, Itell the team that I work with,
(01:04:25):
is that we must optimize forusefulness.
We must be useful.
If you're running a business,regardless of size, you should,
when you're reading Commoncog,find something that you can
actually put to practice andhave a good chance of working.
And the way that we prove thatto you is that we actually test
the ideas.
And then we say, hey, we triedthis, this happened, that, you
(01:04:46):
know, this worked, that didn'twork.
Right?
And then people learn from that,because even if we fail, the
fact that we've tried, isvaluable information.
Whereas a lot of businessprofessors, I'm sure some of
them do good work, because youhave to have people who do high
level research on variousbusiness trends, or industry
practices, or what have you.
(01:05:07):
Right?
That's valuable knowledge, butit's not the knowledge that
business operators would want, Ithink.
Um, yeah.
But, you know, that said, ifthere's an business professor
out there with something useful,it's highly likely that
Commoncog will find them andthen test the ideas, and then
profile them, and then interviewthem.
So, yeah.
Nigel Rawlins (01:05:28):
Definitely.
I think that's the case.
Cedric, how would you likepeople to find you?
I will put all these in the shownotes, but how would you like
people to contact you right nowif there's somebody listening
here and they, ooh, I need totalk to Cedric.
I don't just mean to have a chator anything like that.
find out more about yourself.
Cedric Chin (01:05:48):
Yeah, I think, uh,
if you want to find out more
about Commoncog, I highlyrecommend signing up for the
newsletter.
So I send a newsletter nearlyevery week.
Some weeks are a bit later thanothers, like this week, for
example.
If you want to reach out to mecan just send me an email at
cedric at commoncog.com com.
I can't promise that I willreply, but I will read every
email.
(01:06:08):
And if you sign up to thenewsletter, you get basically
updates every time there's newcontent or new cases on the, on
the blog, right?
And some of the cases that we'regoing to cover at the end of
this year, I'm really hopingthat we get to it.
We're going to start coveringAsian conglomerates.
So all these traditional Asianbusiness people, you know.
(01:06:28):
It's a bit curious how, in Asia,the vast majority of the large
companies are conglomerates.
That run like, you know, they'rejust like, they make
smartphones, and they sell fish.
And they do construction, andthey have shipyards, right?
They do a gajillion things,which is really strange.
And so we're going to startdoing cases on those, right?
And I don't think, I don't thinkthat many business thinkers or
(01:06:50):
writers focus on Asianbusinesses, but that's a, that's
an interest of mine because,well, I'm Asian and I live in
Asia.
So I'm hoping that I can get tothat, but in the meantime, like
the ongoing stuff that's onCommoncog that may be
interesting to readers would bethe Becoming Data Driven series,
I know multiple execs have readit and some of them have turned
(01:07:11):
it into assigned reading fortheir teams.
Some people have told me thatthat's actually been a life
changing series of essaysbecause it makes them look at
running businesses verydifferently.
And it's tested.
It's all tested.
I've applied it to Commoncog andit works.
I know exactly how to doublerevenue this year.
And the other piece that we'resort of covering is a bunch of
(01:07:33):
cases around, um, I would sayCapital Allocation.
It's not clear actually ifyou're looking at the case by
case like I've written aboutrestaurants and in a couple
weeks we'll be publishing somecases about cosmetics but the
point with all those cases isthat it's trying to build up
like this picture of what itlooks like when you're
allocating resources and takingrisks, right?
(01:07:56):
And and this might not be maybethat relevant to your particular
audience, but it's somethingthat I've always been interested
in, because like, when you'rerunning a business, right, how
do you think about allocatingcapital or resources to
something that might not panout, right?
And so, and so I'm publishingcases along that trend, um, with
the expectation that at somepoint, very soon, I'm going to
(01:08:18):
write a synopsis piece of thingsthat I've noticed of all these
cases.
And that's one of the wonderfulthings that you can do when
you're publishing cases.
You can like, Hey.
Haven't you noticed this weirdpattern that shows up again and
again, right?
I really enjoy, uh, doing thatand then, you know, usually it
sparks some interestingdiscussion as well.
Nigel Rawlins (01:08:35):
That's fantastic.
Well, thank you, Cedric, forbeing my guest.
It's wonderful to talk to you.
It's been amazing reading allyour materials and seeing your
newsletters and now talking toyou.
So, I really hope that peopleare picking up on what we're
talking about here aboutbusiness because, you know, it's
actually quite a veryinteresting area when you get
(01:08:57):
into it.
So, thank you, Cedric.
Cedric Chin (01:08:59):
You're welcome, and
thank you for having me on.