PDF Summary:Your Next Five Moves, by Patrick Bet-David

What do master chess players and master businesspeople have in common? Both always plan five steps ahead. In Your Next Five Moves, entrepreneur Patrick Bet-David argues that what distinguishes exceptional business leaders from average ones is their ability to anticipate future events and plan effectively for them—ideally by thinking five steps ahead. To turn you into a master business planner, Bet-David presents five strategic steps you must start taking now: learn about yourself, improve your problem-solving skills, create a winning team, expand your business, and position yourself as an industry leader.

In each step, we’ll describe how you can enhance your ability to strategize for long-term success. We’ll also connect Bet-David’s ideas to those of other entrepreneurs and business leaders, such as Eric Ries (The Lean Startup) and Gino Wickman (Traction), so you get the greatest insight on how to build a successful long-term strategy for your business.

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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.)

Task 3: Build the Right Culture

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.)

The Fourth Step: Grow Your Business the Right Way

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:

Part 1: Raise Funds

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.)

Part 2: Find Ways to Grow Both Steadily and Aggressively

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.)

Part 3: Press Employees to Grow Along with the Company

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.)

Part 4: Build and Maintain Momentum

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.)

Method #1: Build Internal Trust

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.)

Method #2: Always Focus on Increasing Speed

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.)

Method #3: Plan to Maintain Momentum in the Future

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.)

Part 5: Track Your Growth Using Metrics

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.)

Part 6: Put Your Knowledge Down on Paper For Posterity

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.)

Part 7: Stay Alert As You Grow

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:

Way #1: Don’t Cede Control to Temptation or Your Ego

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.)

Way #2: Obtain the Input of Experienced Business People

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.)

The Fifth Step: Position Yourself as an Industry Leader

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.

Take Down Behemoth Competitors in Your Industry

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:

Tactic #1: Take Down the Behemoth Gradually

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.)

Tactic #2: Tell Your Story Effectively

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.)

Negotiate for Sustained 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:

Method 1: Prepare Extensively for Meetings

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.)

Method 2: Be Firmly Convinced of the Value of Your Product and Your Position

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.)

Method 3: Develop Negotiating Power by Seeking Many Options

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.)