Entrepreneur Patrick Bet-David believes the key to sustained success in business is the ability to plan your next five strategic steps ahead of time. He draws on the approach of chess masters, who always anticipate what their rivals will do and devise their next five moves to block attacks, defend their territory, and achieve victory.
Bet-David recommends approaching every activity in life with a five-steps-ahead mindset but dedicates the book to learning how to think five steps ahead specifically in entrepreneurship and business. Bet-David breaks the process of becoming a better business strategist into five steps: learning about yourself and your desires, learning to solve problems more efficiently, creating a top-notch team, growing your business healthily, and positioning yourself as a leader in your industry. In each step, Bet-David shows you how to enhance your planning and strategic thinking skills, so that, by the end of the five actions, you’ll be able to create your company’s own next five strategic steps.
(Shortform note: Bet-David’s organization of the five strategic business steps is effective because it reflects the way businesses themselves grow. Most companies begin at a small scale and gradually scale up, adding team members, departments, procedures, and so on. Similarly, Bet-David starts his steps at a small scale—personal aspirations—and then scales up to consider problem-solving skills and good leadership. Another reason this organization works is that in each step, you gain the tools you need to tackle the next step. For instance, you must know how to assemble a team before you think about becoming an industry leader.)
In this guide, we’ll walk through each of Bet-David’s five steps that will turn you into a successful strategist.
Bet-David believes that the first step of your strategic plan toward long-term success is to understand yourself. Let’s break this process of self-discovery into three sub-steps:
Understand who you are now because this allows you to accept yourself fully, writes Bet-David. Only when you accept yourself can you begin to confidently pursue goals and paths aligned with your truest desires and greatest strengths.
(Shortform note: Bet-David proposes you learn about yourself but doesn't propose specific aspects of your personality to understand. You could assess yourself based on the Big Five personality dimensions: extraversion, neuroticism, agreeableness, conscientiousness, and openness to experience. Each dimension exists on a spectrum, meaning you fall somewhere on the spectrum between high and low neuroticism, for instance. It seems that both your genetics and environmental factors affect where you land on the spectrum for each dimension and that your traits don’t change much over the course of your adult life. Learning how much of each trait you possess may help you set goals that better suit who you are.)
To understand who you are, Bet-David advises asking yourself probing questions, like: How does the world see you, and how does that differ from how you see yourself?
(Shortform note: Asking probing questions is more than a way to get to know yourself: Posing a series of increasingly personal questions is a recommended way for two people to develop rapid intimacy.)
Also, consider which of the following four factors motivates you most: accomplishment (the desire to reach a goal), uniqueness (the desire to live life on your terms), hustle (the desire to compete and prove others wrong), or duty (the desire to positively impact the world).
(Shortform note: In Drive, Daniel Pink proposes a different, arguably simpler way to categorize human motivation. He argues that some people are more motivated by external rewards—money, recognition, and so on—and others are motivated by internal rewards—an intrinsic desire to get better at something. He adds that those motivated by internal rewards have greater sustained success.)
Once you understand who you are and what matters to you now, figure out who you want to be in the future, writes Bet-David. Your strategic steps depend entirely on what future you want to achieve, so reflecting on this is key. Bet-David adds that it’s fine not to know this clearly right now, as long as you dedicate energy toward thinking about the question.
(Shortform note: Bet-David advises understanding who you want to become but doesn't provide advice on how to do this. Richard Nelson Bolles’s What Color Is Your Parachute? contains a self-reflective exercise that can guide you toward your ideal future career, specifically. The exercise asks you to consider seven facets of your personality: your sociability, preferred workplace, assets, life goals, your existing knowledge, preferred salary, and where you want to live. Your answers should inform the career direction you take.)
Bet-David claims that it’s not enough to know who you want to be in the future: Behave now like the person you want to become. Even if you don’t have the resources to realize your future goals, acting as if they’re a reality gives you the mindset to accomplish them. For example, if you aspire to own your own successful pet store, start behaving like a business owner now by talking up your business idea to others, consuming industry news, and attending industry networking events.
(Shortform note: In Atomic Habits, James Clear takes a different approach to personal change than Bet-David. While Bet-David advises acting as if you already possessed all the good habits you one day wish to have, Clear argues that to develop good habits and become the person you want to be, you should make small, incremental changes to your behavior. These small changes that add up over time may be easier to achieve than Bet-David’s total mindset shift.)
Finally, pursue business ventures aligned with what your strengths are and who you want to be, writes Bet-David. The best place to do this is in untapped markets where you have unique strengths. For example, if you’re passionate about animals and want to start a pet supplies business, you might focus on the untapped market of pets with disabilities using your personal experience of having a dog with a disability.
(Shortform note: Bet-David advises you to start your identity-aligned business in an untapped market where you have unique skills. But how can you shift to this new market if you currently work in an industry or position that isn’t aligned with your identity and strengths? In The Science of Getting Rich, Wallace D. Wattles argues that you can make your desired career transition by strengthening your current business or position so that new opportunities open up to you. For instance, if you own a business unaligned with who you want to become, strengthen your company so you can sell it and start fresh in your niche of choice.)
Now that you’ve taken the first step to understanding who you are and want to be, it’s time to take the second step, writes Bet-David: learning how to solve problems effectively.
Good problem-solving distinguishes a beginner from a master businessperson and is key to success in business and life. Bet-David defines good problem-solving as the ability to think through all options, envision possible consequences of every option, and make beneficial choices based on sound information. The better you become at solving problems, the more success you’ll find because you’ll start thinking of ways to prevent problems.
(Shortform note: Bet-David’s definition of good problem-solving is detailed and exhaustive. However, he doesn’t mention one important reason why learning how to problem-solve is useful: Solving problems makes you happy. In The Subtle Art of Not Giving a F*ck, Mark Manson argues that solving problems is intrinsically satisfying and improves your life. Instead of trying to live a life without problems, Manson contends that you should focus on only solving good problems—ones that have a clear solution and that will noticeably improve your life.)
To solve a problem, see yourself as an active agent in it, stresses Bet-David. Consider how you might have contributed to the problem and take ownership of the solution. This allows you to learn from mistakes and improve as a result of them.
(Shortform note: In Extreme Ownership, Jocko Willink and Leif Babin take the idea of responsibility for problems to another level: They claim that to become an exceptional leader, you must take responsibility for even your employees’ problems and errors because it’s your responsibility to prepare and train them well.)
Let’s now turn to the two parts of effective problem-solving:
First, identify the core problem you’re trying to solve, says Bet-David. Often, the problem you think you need to solve is merely a symptom of a deeper, hidden problem. You need to figure out what the true problem is to effectively solve it.
Identify your core problems by asking “why” questions about the problem until you can’t distinguish a further cause for it—this is the core problem. For example, you might note that you’re receiving complaints about your customer service. Why? Because the department is understaffed. Why? Because customer service agents take lots of time off. Why? Because they aren’t happy with their hours and benefits. Why? Because they need more stable hours and better benefits to have a sustainable lifestyle. You’ve thus identified the core problem.
(Shortform note: Bet-David recommends asking specific questions to get to the core of a problem, but if you get stuck, you may need to switch between focused and broad thinking. In A Mind For Numbers, Barbara Oakley argues that you solve problems most effectively when your brain toggles between focusing on the details of the problem and stepping back to see the problem in a bigger-picture context. Take a break and focus on something else for a while to activate this big-picture mindset.)
The second part of problem-solving is to devise three possible solutions to the problem you’ve identified and calculate the investment cost, time cost, and benefits each solution offers, writes Bet-David. Then, compare the calculated costs and benefits of each solution and pick the one that offers the most benefits for the lowest cost.
(Shortform note: Bet-David recommends investigating three possible solutions to the problem you’ve identified. However, it might not always be worth immediately pouring that much time and energy into solving a problem. in The Lean Startup, Eric Ries writes that you can instead apply smaller, incremental fixes to a problem. Such an iterative approach is best applied the first time you encounter a problem because it allows you to learn about a problem you don’t have much information on. You may find that it takes much less effort to fix than you initially assumed.)
Once you’ve learned how to solve problems well, tackle the third step: assembling a winning team, says Bet-David. To succeed in business, you must work with a team—not alone—and manage it well so they’ll want to stick around.
(Shortform note: Bet-David doesn’t list the specific advantages of teamwork over solo work. These include greater creativity and skill, as multiple employees bring a wider swath of ideas and competencies than any individual can.)
Build a winning team by completing three tasks:
Do due diligence on potential hires by asking mutual colleagues about them, recommends Bet-David. Don’t trust your gut but rather rely on hard facts that indicate whether they’re a good fit. Additionally, question your initial impression of the person by asking yourself what appeals to you about them, what skills they lack, if there are red flags on their resume, and if the background check revealed anything negative.
(Shortform note: Bet-David recommends questioning your gut instincts about a potential hire: in other words, working to remove your personal bias from the hiring process. According to Jennifer Eberhardt in Biased, reliance on bias increases when you’re under time pressure and you lack specific criteria by which to judge candidates. Therefore, in addition to asking mutual colleagues about a potential hire, slow down the hiring process and establish set criteria to increase your chances of making the right hire.)
Furthermore, ensure applicants have a compelling reason to join your company, advises Bet-David. Think about what you can offer them: benefits, a unique work experience, exceptional leadership, or the opportunity to improve.
(Shortform note: Bet-David recommends listing the benefits you can offer employees. But it’s also worth asking what benefits employees want and obtaining them if you can. Private health insurance, flexible schedules, and generous and flexible annual leave are highly desirable to most employees.)
Next, retain employees through an attractive compensation plan, counsels Bet-David. Compensation plans are attractive when they motivate employees to help the company reach its goals and reward them for doing so. For example, salespeople may earn commission on every sale they make. Determine what you want your employees to accomplish, and pay them more for doing it successfully.
(Shortform note: We can see compensation plans as a way of putting employees’ skin in the game, a concept Nassim Nicholas Taleb describes in his book by the same name. Having skin in the game means you stand to lose something if a situation turns out poorly, and this threat of loss makes you work hard to prevent that poor outcome. Similarly, when employees risk losing compensation if they perform badly, they’re motivated to work hard—like a salesperson who earns less when they fail to close sales.)
Bet-David thinks giving employees the opportunity to earn equity is the best form of compensation because they’ll feel they have a stake in the success of the company and will work harder to make it succeed—a win-win.
(Shortform note: In Zero to One, Peter Thiel provides additional context for why equity is a good form of compensation. He argues that when employees—Thiel focuses in particular on CEOs—work for equity, they shift their thinking from short-term to long-term, which leads to healthy, sustained growth for the company.)
Once you’ve hired the right people and incentivized them to stay, build a company culture, says Bet-David. Culture is critical because for employees to put in their best effort, they must identify with the company and its values.
(Shortform note: In his book, Bet-David lists culture as the third step of creating a winning team, after retaining employees. However, others see establishing a strong culture as preceding the successful retention of employees. This is because when employees feel like they’re part of a culture and community, they’re more likely to stay.)
According to Bet-David, you can build culture by creating a set of company principles (for instance, honesty and diversity) and acting on them (for example, by leading CEO Q&A sessions and establishing a diversity, equity, and inclusion committee). Behaving in accordance with your principles lends you credibility in your team’s eyes.
(Shortform note: In How Will You Measure Your Life?, Clayton M. Christensen agrees with Bet-David that it’s critical to enforce your cultural values. If you don’t, the values and methods employees currently use will become the culture. If those values and methods are undesirable (or even illegal), then you’ve lost control of the culture and possibly the company.)
Additionally, encourage constructive honesty by communicating your expectations and whether employees are meeting them, writes Bet-David. Tell your team to create healthy conflict by challenging each other to improve based on the company’s principles.
(Shortform note: Kim Scott’s concept of radical candor is arguably a more nuanced look at Bet-David’s constructive honesty, which Scott applies mostly to supervisor-employee relationships. Scott breaks radical candor into two components: showing care for the employee and showing a willingness to have difficult conversations that improve their work. When it comes to inter-employee relationships, Scott believes employees should practice radical candor in a healthy debate culture. By teaching your subordinates to demonstrate care and honesty toward each other during debate, you encourage them to improve each other’s ideas without draining anyone’s emotional energy.)
In the first three steps, you learned about yourself, developed the ability to solve problems, and learned how to create a winning team. With these pieces in place, let’s now move on to growing your company. According to Bet-David, there are seven parts to this growth process:
To grow, first, think about how to raise funds, counsels Bet-David. How you do this depends on the degree of control you want to maintain: The more money you raise from outside investors who then gain a stake in your business, the more control you sacrifice. Conversely, funding yourself means maintaining control but risking running out of money. Bet-David believes outside funding gives your company a huge security boost and recommends this route.
(Shortform note: Bet-David asserts that often when you accept outside funding, you cede a degree of control to the investor. To help determine whether to accept an investment from a party that wants control over the company, ask yourself if you’d be okay ceding control if you and the investor agreed on major decisions about the company. If you agree on major points, then giving up some power won’t entirely transform your company in a way you’d dislike. If you still wouldn’t be happy ceding control, ask yourself how urgent the investment is and if you can afford to continue looking for a less controlling investor.)
The best way to gain access to funding is through mentors with connections, claims Bet-David. Explain to them why you must raise money, how you’ll use it, if you want investor input, why you’re worth investing in, and if you plan to eventually sell the business. Knowing this shows them you’re serious and worthy of being connected to investors.
(Shortform note: Even if you provide your mentor with the information Bet-David recommends, they still might not want to connect you to investors unless you give them something in return. In Never Eat Alone, Keith Ferrazzi proposes that in exchange for their help, you can offer your mentor loyal support in the future. For example, if they embark on their own business venture, you can loyally support them by using your social media platforms to promote their work.)
According to Bet-David, use your funds to grow both linearly—through steady progress in areas like supply chains and administrative protocols—and exponentially—by making significant, rapid progress in areas like leadership development and innovative business ideas. Inspect your weaknesses and determine where there’s an opportunity to grow linearly and exponentially.
(Shortform note: Bet-David presses you to find areas of your business you can expand both steadily and aggressively. But in Blitzscaling, Reid Hoffman and Chris Yeh argue that if your company is in an internet technology-based field, you should only focus on rapid expansion. This is because internet companies have the potential to grow much more quickly than traditional companies. If you don’t take big risks to scale as quickly as possible, other internet companies will dominate the market ahead of you.)
The third part of growing your business is to press employees to meet the career goals they’ve set for themselves, says Bet-David. This compels them to rise to the challenge and grow along with the company. Additionally, when you pressure employees to improve, they do the same to each other. This elevates the competency level of the entire organization, leading to sustained growth.
(Shortform note: In The Oz Principle, Roger Connors and Tom Smith agree with Bet-David that employers should hold employees accountable for achieving goals and that employees should hold themselves accountable for achieving those goals. To encourage this kind of accountability, Connors and Smith suggest teaching employees that accountability doesn’t mean blaming themselves for everything that goes wrong. Rather, it means doing whatever is within your power to improve your odds of success.)
To grow as a business, you must build and maintain momentum, asserts Bet-David. Here are three methods for doing so without letting the momentum get out of control:
(Shortform note: Bet-David recommends building momentum but doesn’t clearly define what “momentum” means to him. We can conceive of momentum in business as the continually increasing ability to succeed easily in whatever new venture or campaign a company attempts.)
Build momentum by fostering trust among employees, writes Bet-David. Trusting employee relationships lead to speedier internal operations, which, in turn, helps sustain momentum.
(Shortform note: Bet-David doesn't clearly indicate how building trust speeds up internal company processes. A possible explanation is that when employees trust each other, they don't feel compelled to check others’ work or verify that a coworker completed a task. This makes workflows faster and smoother.)
According to Bet-David, you can also build momentum by constantly devising new ways to perform faster in every area of your business. To do this, look at different speeds at the company—speed of internal processes and speed of the customer purchase process, for example—and shorten the duration of those processes by removing steps.
(Shortform note: While Bet-David focuses on increasing the speed of internal company processes to maintain business momentum, you could also aid momentum by increasing the speed of your personal processes. In The Effective Executive, Peter Drucker outlines ways to do this, including cutting tasks that don’t yield useful results from your schedule.)
Finally, maintain momentum by planning for eventual future growth, advises Bet-David. Do this by first thinking about what the business might need or want in the future. Then, take calculated risks that increase the chances of achieving that future. For example, in the future, you’ll need to hire more employees to expand the business. You might thus hire an HR specialist now who can onboard future employees.
(Shortform note: Bet-David argues that you should maintain momentum by planning ahead for future growth points. In The E-Myth Revisited, Michael Gerber outlines potential negative outcomes if you don’t plan ahead for future growth. You might be forced to shrink your business back down to its original size, or you might grow at a pace you can’t control, which exacerbates existing problems in the business.)
To effectively grow your business, learn how to collect and use the metrics that matter to your company, stresses Bet-David. Metrics eliminate ambiguity or personal bias around how the company is performing, giving you a clear view of your status. This clear view then allows you to identify inefficiencies and correct them. For example, if you own a travel agency, you could start tracking how many customer complaints each of your travel agents receive. This objective statistic can help you determine which of your agents are the most and least effective.
(Shortform note: In The Lean Startup, Eric Ries provides additional information on how to work effectively with the metrics you’ve gathered. He recommends presenting metrics in a way that’s both accessible and easily reviewable. This way, company leaders or employees can understand the metrics without needing a background in data analytics, for example.)
Bet-David adds that as helpful as metrics are in identifying problems, you still need the human capacity to analyze the metrics and a human touch to solve the problem the metrics point out.
(Shortform note: Bet-David’s idea that you need human input to analyze and take action on metrics is evidence in support of the argument that although robots are taking over many workplace tasks formerly performed by humans, humans will still be needed to add critical soft and problem-solving skills to the workforce.)
The sixth part of growing your business is to turn your knowledge and experience into a documented system that successors can use, says Bet-David. This ensures the business can grow after you’ve left.
(Shortform note: In Traction, Gino Wickman agrees with Bet-David that every business should document its operating processes. Wickman adds that this not only allows your business to grow after you’ve left, but it also ensures everyone at the company is using the same approach and process right now, which increases consistency and efficiency.)
Finally, even when you’re growing steadily, always behave as though a threat could overthrow your business, counsels Bet-David. Stay alert in two ways:
Don’t fall prey to temptations like gambling, excessive spending, partying, and so on, warns Bet-David. Stay on the straight and narrow to maintain momentum and growth.
Additionally, stay alert by keeping your ego in check and asking friends to tell you when you’re making poor choices, advises Bet-David. Don’t take things personally and let ego-driven emotions, like resentment or vindictiveness, guide your actions.
(Shortform note: Bet-David advises you to maintain control over your ego and your reactivity to temptation to keep your company momentum up. But he doesn’t specify how you can do these things. One good way to master both temptation and ego is to cultivate mindfulness: a sense of connection to what you’re feeling in a given moment. You thus increase your awareness of when you’re being tempted to behave badly or when your ego’s in control and can then actively work to resist temptation or override your ego.)
Adversity will inevitably strike when you start growing rapidly, warns Bet-David. When this happens, seek the counsel of numerous people with differing perspectives and experiences. Ideally, find people who’ve studied or personally experienced the type of problem you have. They’ll give you the most valuable advice.
(Shortform note: If you don’t have a bench of experienced business friends to whom to turn for advice, consider heeding Robin Sharma’s advice to create a committee of imaginary mentors. These mentors can be renowned thinkers or famous figures you admire and can be living or dead. Simply imagine what advice they’d give you in your situation.)
We’ve just talked about the fourth strategic step—growing your company. Now, let’s turn to the last step of your strategy for sustained success: making the bold business moves that position you as an industry leader. According to Bet-David, there are two bold steps you can take: taking down behemoth competitors and acquiring negotiation skills to apply in high-stakes deals. Let’s discuss each.
Though this is a risky move that’s not for every company, you can try to take on the behemoth competitor in your industry, writes Bet-David. This is possible because behemoths, once they’ve grown powerful and complacent, lose agility and the willingness to work hard and take risks.
(Shortform note: Another reason behemoth companies might lose agility is because they’ve fallen out of touch with the customer. Because they’ve been around a long time and have achieved sustained success, they might not be paying enough attention to changing customer needs and trends and can lose out to smaller, more customer-oriented companies.)
To take down a behemoth, use the following two tactics:
Take the behemoth down gradually by committing to incremental growth, insists Bet-David. While you quietly strengthen your company, the behemoth will be resting on its laurels, unaware of your progress. This complacency allows you to emerge as a surprise competitor and conquer.
(Shortform note: Bet-David suggests that small companies grow incrementally to take down their large competitors, but he doesn’t specify what sort of growth companies should try to achieve. Small companies might grow competitively by committing to superior customer service. Their small size allows them to have more personal interactions with their customers, which boosts customer satisfaction and competitiveness.)
When you take on the behemoth, you’ll be prone to unflattering media coverage and slander because you’re doing something bold, warns Bet-David. To counter negative rumors, share your story through social media, as this is a direct path from you to followers. When doing this, be honest, vulnerable, and consistent: Reveal mistakes you’ve made, solicit input from followers, and share content on a regular basis, so followers know when to expect it.
(Shortform note: To tell your story effectively, consider using a time-tested storytelling formula, as Donald Miller proposes in Building a StoryBrand. Miller’s storytelling formula is specifically designed for marketing efforts, but it can also be applied to tell the company’s narrative. In the formula, you first describe your company’s desire, then the problem hindering you from achieving the desire, and finally how you followed a plan to avoid disaster and find success.)
According to Bet-David, to become an industry leader, you’ll need to become comfortable negotiating high-stakes deals with partners, vendors, and competitors.
(Shortform note: Bet-David argues that negotiation skills are critical for high-powered business leaders, but in Getting to Yes, Roger Fisher and William Ury propose that all employees, no matter how high on the totem pole, must increasingly negotiate in the workplace. This is because companies have begun adopting more democratic and less hierarchical structures, wherein employees have more say over, for instance, where and what hours they work.)
Here are three methods for negotiating in a way that sustains long-term success:
Before you enter a high-stakes meeting, prepare extensively by thinking about the other person’s expectations and needs, what they want to express to you, and how you’ll respond, insists Bet-David. When you’re prepared, you process negotiations more effectively in real time and avoid brash, deal-ending decisions or outbursts.
(Shortform note: While Bet-David insists on extensive preparation before a meeting, others warn of the danger of over-preparation. Over-preparing can be symptomatic of a fear of failure and can lead you to deliver a poor performance because you’re not fully present. Some even argue that to best tackle a new situation or negotiation, you shouldn’t prepare at all.)
To negotiate effectively, believe firmly in your product and the value it will add to the customer’s life, stresses Bet-David. Similarly, when making deals, know confidently what you want and what you can offer, and be ready to follow through on your claims, writes Bet-David. This allows you to act boldly and make deals that greatly expand your opportunities.
(Shortform note: Bet-David recommends having firm conviction in your product and position, but it’s easy to lose that conviction in high-pressure negotiations. If this happens, you might try a power pose: a stance in which you make yourself big by putting your hands on your hips or above your head. Though there’s debate as to whether this tactic increases testosterone and decreases stress hormones, as researchers initially claimed, power posing still might simply make you feel more confident.)
Ensure you get the best deal by having alternate deal options, Bet-David advises. Having options means you don’t desperately need any one deal and are therefore in a more powerful negotiating position. To secure many options, always be looking for new clients, opportunities, and business partners. This ensures you’re never dependent on a single relationship.
(Shortform note: While Bet-David advises you to actively seek out alternative options to gain negotiating power, Roger Fisher and William Ury argue that to succeed in a negotiation, all you have to do is know what your “BATNA” is. A “BATNA” is your single best alternative to the ideal outcome of your negotiation. For example, if you’re negotiating terms with a distributor for your product, your BATNA would be the next biggest distributor willing to make a deal with you. If you know your BATNA before negotiating, you can confidently refuse any deal that would benefit you less than your best alternative.)
Take Bet-David’s first strategic step by understanding who you are now, who you want to be in the future, and how to get there from here.
Being as objective as possible, write down your personal qualities, your strengths and weaknesses, the circumstances in which you thrive, how others perceive you, and anything else that comes to mind about your personality. (For example, you might be extremely sociable, have a hard time focusing on long-term projects, be perceived as a social butterfly, and thrive in fast-paced work environments.)
Next, write down three to five career goals you hope to achieve. (For example, you might aspire to work for a high-profile tech company.)
Finally, write down ways you can take advantage of your strengths (and avoid triggering your weaknesses) to pursue those goals. How can you best leverage your unique personality to realize your aspirations? (For example, as an extrovert who doesn’t like long-term projects, you might achieve your goal of working for a high-profile tech company by seeking roles in public relations, where you’ll need good people skills and projects are short-term.)