10/ So I've just described my learning progression in business.
All of these are obvious things — most people learn that Supply and Demand are things because they realise they have to make a widget to sell the widget, and then they learn all the hard bits of both. But!
Conversation
11/ If you read a lot of business biographies, you'll begin noticing something strange. There are a whole class of moves in business that allow you to win that AREN'T related to Supply or Demand. Those moves are basically Capital.
My goto story is John Malone's.
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12/ Malone was early in realising that junk bonds were a thing, and then realised that he could a) rack up a ton of debt, b) never make a profit c) use that to buy MOAR cable businesses, d) use the cash flows to service debt, and e) use the losses to shelter those cash flows
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13/ It's an old story, and it's really cool because Malone invented EBITDA in the process to explain what he was doing. I retell it here:
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14/ Anyway, once you realise that Capital is a thing with its own playbook, you begin to see stories of businesspeople using it everywhere. Here's Michael Dell doing some savvy financial kung-fu to save his company:
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15/ And you find books like The Outsiders, which is basically a collection of CEOs whose edge is mostly in Capital. (They shore up their Supply and Demand pieces by delegating operational bits to their second in command). goodreads.com/book/show/1358
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16/ Again, this is old hat if you've been in business for a bit, or if you've been an equity investor for any amount of time.
What DiBello's triad mental model confirms for me is that there are JUST three legs to the expertise of business. Before I read her work, I wasn't sure.
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17/ Anyway, what this gives you is the shape of the expertise to pursue, if you want to get good at business.
And it gives you a lens to evaluate the mental models of good business people, since the way the triad is expressed is different depending on the industry.
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18/ If you want to read the paper where DiBello extracted the mental model, start here: wtri.com/wp-content/upl
You may also read my blog post on the findings:
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19/ Follow if you'd like more threads like this. Or sign up for my newsletter, where I cover better business and career decision making: commoncog.com/blog/subscribe
Of the practical sort, not the rubbish 'ooh, have you heard about this mental model?' sort.
Thank you for reading!
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Replying to @ejames_c
I love the drawing! Truthfully, you can meditate on this triangle for years before realizing that it's the living dynamic between the nodes that matters. E.g., demand goes down, it instantly changes the opportunties/constraints in the other two.