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December 19, 2012

Effectiveness | Bluffing - Part 2

Effective people can bluff their way out of many demanding situations of life. Faced with the unknown, the unexpected, the unseen, the unheard of, they bluff. Instead of waiting for more evidence, more certainty, more security, they bluff. They try to make a good decision on insufficient data. Thus they prove effective even in murky, fluid situations.

I've talked about such honorable, honest bluffing before. I will do many more posts on bluffing since this is an essential, important skill.

Here comes an honor roll of famous bluffers.

1. Upstarts defines an entrepreneur as someone who has figured out a way to be all right in the end despite making many mistakes along the way.

2. The Humble Hound article remarks, " good leaders realize that every move is a potential partial failure to be corrected by a next move ... "

3. Deng Xiaopeng is famous for ad hoc arrangements and for "groping stones across the river."

4. Richard Branson even titles one his books "Screw It."

Welcome the Mistakes
We'll make mistakes. Even now we may be making some mistakes. That shouldn't scare us for the following reasons.

Mistakes are our old friends. Future mistakes are no different from our old ones. When we made some mistakes in the past, how did we recover? Luck, other people's mercy, God's invisible hand may have played a role.

If you recovered because of such things, then count these mistakes out. We want those mistakes from which you recovered because you had designed the mistakes in such a way that you could recover from them conveniently. It will pay high dividends to study how you designed such mistakes.

The answer is ludicrously simple. Let's listen to Sir Richard again: "Don't bet the farm." He means that if the bet equals the value of your whole firm, you should just walk away from the table. As long as you don't bet the farm, you'll be all right with whatever bluffing you want to do.

Actually you'll realize that Sir Richard has structured his business in such a way that he can bet any frim in his dukedom. I'm referring to his "atomized" corporate structure. Under one group or company, there are many companies. Let call them sub-companies. When Sir Richard wants to do deals, he can give you whatever share you want of any relevant sub-company.

The same concept goes under such terms as "portfolio," "staged bets," "phased bets," "reserves," "pots" and so on.

Therefore, the bottom line is : Bluff and keep your bets safely small.

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