The 21 Maxims, in full.

What it is

Great businesses are not built by staring at spreadsheets of targets. They are built by people chasing an idea interesting enough to get out of bed for. Targets follow ideas; the reverse rarely works.

How to apply

Before setting any KPI, write a single sentence describing the idea at the heart of your business. If you can't, you haven't got one. You've got a budget. Invite your team to improve the idea before they improve the numbers.

Example

Airbnb didn't start with a target to disrupt the $600bn hotel industry. It started with an idea: 'your spare room is an asset.' The numbers turned up later, uninvited.

What it is

Most firms run themselves like engineering projects: specify the output, execute to plan. But business is closer to science. You propose hypotheses about customers and markets, and reality tells you which were wrong. Confusing the two is the category mistake.

How to apply

Reframe every strategy as a falsifiable hypothesis: 'We believe X because of Y, and we'll know we're wrong if Z.' Reward the people who kill bad hypotheses fastest, not those who defend them longest.

Example

Reed Hastings ran Netflix as a series of experiments: DVDs, streaming, originals, games. Blockbuster ran itself as an engineering problem: optimise the stores. One is now a verb. The other is a cautionary tale.

What it is

'Thoughting' is the corporate art of moving information around without ever troubling it with a thought. Meetings. Decks. Dashboards. Real thinking is rarer, slower, and considerably more profitable.

How to apply

Protect time for genuine thought. Ban PowerPoint for a week. Ask the sharpest question you can think of, then shut up long enough for an answer to arrive. Judge output by insight, not volume.

Example

Jeff Bezos replaced slide decks at Amazon with six-page memos read in silence at the start of meetings. Output per minute of meeting time went up dramatically. Slide builders were heartbroken.

What it is

When a business is stuck, the problem is almost never the strategy. It's the beliefs underneath the strategy. The assumptions so old they have become invisible. You cannot out-execute a belief that is wrong.

How to apply

List the top ten things 'everyone knows' to be true in your industry. Now imagine each is wrong. Which new strategy becomes possible? The most valuable moves live in that list.

Example

'Everyone knew' you couldn't sell expensive shoes online because people need to try them on. Zappos decided not to believe that, invented free returns, and sold to Amazon for $1.2bn.

What it is

If your strategy could plausibly be written by any of your competitors, it isn't a strategy. It's a memo. Real strategy breaks at least one rule the industry holds sacred.

How to apply

Write down your strategy. Underneath, list the industry norms it accepts. Now write a second strategy that contradicts at least three of them. The second document is where the money is.

Example

Ryanair violated every rule of airline hospitality and became Europe's most profitable airline. IKEA asked customers to build the furniture themselves. Heresy, correctly deployed, is a business model.

What it is

Hierarchies allocate resources by authority. Markets allocate them by evidence of value. Inside most firms, the hierarchy has a near-monopoly, which is why capital, talent and ideas get stuck in the wrong places.

How to apply

Create internal markets for the three scarce resources: capital (let teams bid for funding), talent (let people choose projects), and ideas (let the organisation vote on them). Shrink the veto power of the org chart.

Example

Haier, the Chinese appliance giant, broke itself into thousands of tiny 'microenterprises' that buy and sell from each other. Revenue and innovation both shot up. The middle managers did not.

What it is

In most organisations, performance flows upward, toward whoever writes your review. But value flows outward, toward customers. When those two arrows disagree, customers lose and so, eventually, do you.

How to apply

Redraw your org chart with the customer at the top. For every role, ask: who is the next person downstream? How would they rate your work this week? That answer matters more than your line manager's.

Example

At Ritz-Carlton, every employee (from concierge to cleaner) is empowered to spend up to $2,000 per guest per incident to solve problems, without asking a boss. Service scores speak for themselves.

What it is

Competing on price is a race where the finish line is bankruptcy. Competing on meaning (being demonstrably better, or different in a way people care about) is a race with no finish line at all.

How to apply

Before cutting prices, ask: could we instead raise the perceived value? Can we become 10% more remarkable? Discounts are easy to copy. Distinctiveness is not.

Example

Porsche has never been the cheapest sports car. Toyota never tried to be Ferrari. Both make money. Meanwhile, generic carmakers slug it out on margin and complain about the weather.

What it is

Most strategy is a long answer to 'why' and a short answer to 'what'. But 'what' is the only thing customers can see. Get the 'what' clear and bold, and the 'why' and 'how' take care of themselves.

How to apply

Describe your strategy in terms of what customers will experience that is different. Not values, not mission, not process. The concrete, visible 'what'. If you can't, you're still in pre-strategy.

Example

Tesla's 'what' is simple: make electric cars that people prefer to petrol ones. That single sentence produced a decade of decisions. 'To accelerate the world's transition to sustainable energy' got them going, but the 'what' kept them honest.

What it is

Quarterly profit is a thin, flattering mirror. Market value, the present value of your future cash flows, is the honest one. Maximising the first often destroys the second.

How to apply

For every decision, ask: does this raise or lower the net present value of the enterprise? Short-term profits purchased by long-term damage (cutting R&D, brand, or culture) should fail that test, and therefore the decision.

Example

Amazon reported microscopic profits for decades and became one of the most valuable companies on earth. Rivals who maximised last quarter's P&L are now footnotes. Long-termism, properly applied, is a superpower.

What it is

People who bear no consequences for their decisions make different decisions than people who do. If your colleagues have no real ownership, they are, in the technical sense, playing with other people's money. And it shows.

How to apply

Give every employee some meaningful upside in the outcome. Equity, profit share, real bonuses tied to real performance. Then give them the authority to earn it. Skin and control must come together.

Example

John Lewis Partnership is owned by its staff. Every 'partner' receives a share of the profits. Decades of service levels the competition cannot fake have been the result.

What it is

Annual plans predict the future with all the accuracy of a ceremonial dance, and roughly the same causal effect on the weather. They exist to make planners feel powerful, not to tell the truth.

How to apply

Keep planning (humans need rituals) but stop pretending the numbers are forecasts. Treat plans as hypotheses to be tested, not commitments to be defended. Replan often. Replan cheaply.

Example

Statoil replaced its annual plan with rolling monthly forecasts, radically decentralised budgets and quarterly strategy reviews. Accuracy of decision-making rose sharply. Consultants looked slightly miffed.

What it is

We imagine we think our way into new behaviour. Mostly we do the opposite: we act first, and our beliefs quietly shuffle in behind to keep us company. This is excellent news for anyone trying to change a culture.

How to apply

Instead of launching a workshop on 'the new mindset', redesign one piece of behaviour. Change a meeting, a metric, a physical space. Watch the beliefs arrive a few weeks later, looking surprised.

Example

Paul O'Neill turned Alcoa around by fixating on worker safety. A single behaviour. Within a decade, both safety and profits were industry-best. He never once asked people to 'change their mindset'.

What it is

Economics models humans as calculators. They aren't. People choose on feeling and justify on reason, usually in that order. Firms that understand psycho-logic quietly hoover up firms that only understand arithmetic.

How to apply

For every customer decision, ask: what does this *feel* like? What signals does it send? What story does the customer tell themselves about it? Then design the experience accordingly, even if it's 'economically irrational'.

Example

Rory Sutherland's favourite: the Eurostar sped up its trains at enormous cost. Sutherland pointed out you could, for a fraction of that, have supermodels serve free champagne and passengers would ask for the trains to be slowed down.

What it is

The firm that learns fastest wins. Not the richest, not the biggest, not the oldest. So why do almost no companies measure their own learning rate? Because it's harder than counting money, and more revealing.

How to apply

Every quarter, ask: what did we believe three months ago that we no longer believe? What did we try that failed, and what did we learn? Publish the list. Promote the people on it.

Example

Pixar holds 'post-mortems' on every film, including the successful ones. They deliberately list what went wrong. Twenty-five consecutive box-office hits suggest this is not a waste of time.

What it is

A great deal of what passes for 'prudence' in large organisations is, on closer inspection, cowardice wearing a suit. 'We need more data' is sometimes true. It is often a way to avoid the decision everyone knows they should make.

How to apply

When someone (including you) asks for more analysis, ask instead: what specifically would the data need to say for us to act? If you can't answer, you don't need more data. You need more nerve.

Example

Kodak invented the digital camera in 1975. It was shelved for fear of cannibalising film. Every year more data arrived. Every year was more prudent to wait. Then, one year, there was no Kodak.

What it is

The most productive thinking in most companies happens in the corridor, the kitchen, or (historically) the smoking area. Meetings formalise the structure of conversations while removing most of the useful properties.

How to apply

Replace recurring meetings with scheduled conversations: two to six people, no agenda, clear question, short timebox. If a meeting has more than eight people and no specific decision to make, it's a lecture. Send a note.

Example

At Pixar, John Lasseter designed the Emeryville HQ so that toilets, mailboxes and café were all in one central atrium, forcing serendipitous collisions. Entire Oscar-winning plots have emerged from those accidental chats.

What it is

Treat people as resources and they will behave like resources: inert, extractable, depreciating. Treat them as resourceful, and they do the most useful thing a human being can do, which is surprise you in a good way.

How to apply

Audit your policies for the implicit view of people. Does the handbook assume competence or suspect theft? Do managers delegate work, or only blame? Quietly remove the structures designed for the laziest 5%. They were driving the other 95% crazy.

Example

Netflix's famous 'no policy' policy (no expense rules, no holiday limits) starts from the assumption that adults can be trusted. Unsurprisingly, treated as adults, they behave like them. Costs dropped; talent density soared.

What it is

The modern firm needs fewer employees and more founders. Not everyone will leave to start a company; the trick is to import the conditions (autonomy, ownership, P&L responsibility) so good people stay without going dull.

How to apply

Break the firm into the smallest possible units that can own a customer, a P&L, and a decision. Give each unit a leader, a budget, and a line of sight to the outside world. Then get out of the way.

Example

Morning Star, the world's largest tomato processor, has no managers. Every 'colleague' writes their own job description as a contract with peers. Productivity is several times the industry average.

What it is

Pure commercial logic, relentlessly applied, eventually produces bored people and brittle brands. A little deliberate generosity (to a cause, a community, each other) turns out to be not a cost of doing business, but one of the best investments in it.

How to apply

Carve out a visible, recurring percentage of time, money, or capacity for purpose beyond profit. Make it institutional, not a PR bolt-on. Measure it. Celebrate it. Hire for it.

Example

Google's famous '20% time' gave birth to Gmail, AdSense and Google News. Patagonia donates 1% of sales to environmental causes and has outcompeted its entire category on loyalty. Generosity, rigorously practised, pays.

What it is

Above about 150 people (Dunbar's number) humans stop being a team and start being a committee. Costs of coordination explode, trust collapses, bureaucracy takes over. The largest successful firms are really lots of small firms stapled loosely together.

How to apply

Wherever a team or unit exceeds 150 people, split it. Give each the full set of functions it needs to serve its customer. Connect them through shared purpose and data, not through head office.

Example

W. L. Gore (makers of Gore-Tex) splits every factory at 150 employees. No job titles. No formal hierarchy. Consistently in the 'best places to work' lists, and consistently profitable.