Decrease Complexity by Reducing Relationships
One of the highlights of the Rich Dad weekend was a 3 hour presentation by Tom Wheelright of Pro Vision Wealth.
Tom shared a lot of material with us about creating wealth, but one nugget that made a very large impression on me was this formula, which was developed by Buckminster Fuller
“r” represents the number of relationships and “N” is the number of people that are involved in your company (or any other team).
Here’s a walk through of a typical situation (I’ve reduced some of the groups, like employees to one person for this example).
R in the example above ends up being 64 – 8 / 2 = 28 Relationships!!!
Geez, no wonder I’m not getting any work done.
In the example Tom presented the team he outlined was a wealth building team but the example of a business sure fits for me.
As anyone who has read the E-Myth Revisited knows the key to solving this time crippling situation is to get “You” out of the center of the picture.
In Tom’s example the new picture looked like this:
By placing someone who’s job it is to manage relationships into the center of the picture, you now have gone from managing 28 relationships to managing 1; the one between you and the coach or manager.
I’m seeing that this is a key strategy for building a real business and having success in almost anything.
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Comments ( 7 )
Kimber added these pithy words on Mar 23 07 at 6:50 amWell, that’s why I have a financial advisor.
He takes on much of the co-ordination
and I merely have to lead.But note that having someone else in the middle
usually costs more
(in my case 2%).
Michael added these pithy words on Mar 23 07 at 7:50 amVery interesting. Also shows why a lot of meetings break down and are unproductive.
Mathematical bit though, when you paraphrase your equation it should be (64-8) / 2. 64 – 8 / 2 would actually be 16 according to order of operations. Sorry for being anal about that kind of thing.
Great stuff though. Thanks!
KNau added these pithy words on Mar 23 07 at 9:21 amWhile I agree in principle, it’s by no means a licence to hand over your business to someone else. It’s worth noting because of the number of people who hand their life savings, career, etc. over to a manager who manages their way into the poor house.
My understanding of the E-myth concept was that you shouldn’t hand off a job until you know exactly how it’s done inside and out. Then you’ll know when you have the right candidate for the job.
J added these pithy words on Mar 23 07 at 1:53 pmYou create the system first then pass it off to someone else and they don’t deviate from it. It should be detailed enough that whomever is going to perform it shouldn’t ask questions.
-J
Jscott added these pithy words on Mar 23 07 at 5:48 pmMetaphors are difficult to work with and cross apply. I dug some of Tom’s relationship numbers. Also might be of importance to tie in Anthropology and Sociology which almost always reduces the number of people in order to have an effective organization.
You can still have a very large organization but within the size there will be sub-groups that have a bit of autonomy. Meaning, as a biz grows the role of said company is to break off smaller companies.
Jon added these pithy words on Mar 23 07 at 9:25 pm@Michael, not anal at all…and to think I was once an honors calculus student at uni. Man, the brain deteriorates with age
Thomas Chappell added these pithy words on Mar 27 07 at 6:38 amJust thought you should be aware that this computation is actually used in the business environment for conducting analysis into communications channels when developing communication network models.
The use is adapted to be used to more personal approach. No real great science behind it though I love it when business people use mathematical modeling for analysis. This and other useful models can be found in MBA type modeling books, project management books, and management type seminars.