Timothy Ferriss - The 4-Hour Workweek - Escape 9–5, Live Anywhere, and Join the New Rich - Expanded and Updated

1. $20 per hour is how much you are paid or value your time. This would be the case, for example, if you are paid $40,000 per year and get two weeks of vacation per year ($40,000 divided by [40 hours per week x50 = 2,000] = $20/hour). Estimate your hourly income by cutting the last three zeroes off of your annual income and halving the remaining number (e.g., $50,000/year p $25/hour.

2. Estimate the amount of time you will save by grouping similar tasks together and batching them, and calculate how much you have earned by multiplying this hour number by your per-hour rate ($20 here):

3. Test each of the above batching frequencies and determine how much problems cost to fix in each period. If the cost is less than the above dollar amounts, batch even further apart.

For example, using our above math, if I check e-mail once per week and that results in an average loss of two sales per week, totaling $80 in lost profit, I will continue checking once per week because $200 (10 hours of time) minus $80 is still a $120 net gain, not to mention the enormous benefits of completing other main tasks in those 10 hours. If you calculate the financial and emotional benefit of completing just one main task (such as landing a major client or completing a life-changing trip), the value of batching is much more than the per-hour savings.

If the problems cost more than hours saved, scale back to the next-less-frequent batch schedule. In this case, I would drop from once per week to twice per week (not daily) and attempt to fix the system so that I can return to once per week. Do not work harder when the solution is working smarter. I have batched both personal and business tasks further and further apart as I’ve realized just how few real problems come up. Some of my scheduled batches in 2007 were e-mail (Mondays 10:00 A.M.), phone (completely eliminated), laundry (every other Sunday at 10:00 P.M.), credit cards and bills (most are on automatic payment, but I check balances every second Monday after e-mail), strength training (every 4th day for 30 minutes), etc.

Empowerment Failure: Rules and Readjustment

The vision is really about empowering workers, giving them all the information about what’s going on so they can do a lot more than they’ve done in the past.

—BILL GATES, cofounder of Microsoft, richest man in the world

Empowerment failure refers to being unable to accomplish a task without first obtaining permission or information. It is often a case of being micromanaged or micromanaging someone else, both of which consume your time.

For the employee, the goal is to have full access to necessary information and as much independent decision-making ability as possible. For the entrepreneur, the goal is to grant as much information and independent decision-making ability to employees or contractors as possible.

Customer service is often the epitome of empowerment failure, and a personal example from BrainQUICKEN illustrates just how serious but easily solved the problem can be.

In 2002, I had outsourced customer service for order tracking and returns but still handled product-related questions myself. The result? I received more than 200 e-mail per day, spending all hours between 9–5 responding to them, and the volume was growing at a rate of more than 10% per week! I had to cancel advertising and limit shipments, as additional customer service would have been the final nail in the coffin. It wasn’t a scalable model. Remember this word, as it will be important later. It wasn’t scalable because there was an information and decision bottleneck: me.

The clincher? The bulk of the e-mail that landed in my inbox was not product-related at all but requests from the outsourced customer service reps seeking permission for different actions:

The customer claims he didn’t receive the shipment. What should we do?

The customer had a bottle held at customs. Can we reship to a U.S. address?

The customer needs the product for a competition in two days. Can we ship overnight, and if so, how much should we charge?

It was endless. Hundreds upon hundreds of different situations made it impractical to write a manual, and I didn’t have the time or experience to do so regardless.

Fortunately, someone did have the experience: the outsourced reps themselves. I sent one single e-mail to all the supervisors that immediately turned 200 e-mail per day into fewer than 20 e-mail per week:

Hi All,

I would like to establish a new policy for my account that overrides all others.

Keep the customer happy. If it is a problem that takes less than $100 to fix, use your judgment and fix it yourself.

This is official written permission and a request to fix all problems that cost under $100 without contacting me. I am no longer your customer; my customers are your customer. Don’t ask me for permission. Do what you think is right, and we’ll make adjustments as we go along.

Thank you,

Tim

Upon close analysis, it became clear that more than 90% of the issues that prompted e-mail could be resolved for less than $20. I reviewed the financial results of their independent decision-making on a weekly basis for four weeks, then a monthly basis, and then on a quarterly basis.

It’s amazing how someone’s IQ seems to double as soon as you give them responsibility and indicate that you trust them. The first month cost perhaps $200 more than if I had been micromanaging. In the meantime, I saved more than 100 hours of my own time per month, customers received faster service, returns dropped to less than 3% (the industry average is 10–15%), and outsourcers spent less time on my account, all of which resulted in rapid growth, higher profit margins, and happier people on all sides.

People are smarter than you think. Give them a chance to prove themselves.

If you are a micromanaged employee, have a heart-to-heart with your boss and explain that you want to be more productive and interrupt him or her less. “I hate that I have to interrupt you so much and pull you away from more important things I know you have on your plate. I was doing some reading and had some thoughts on how I might be more productive. Do you have a second?”

Before this conversation, develop a number of “rules” like the previous example that would allow you to work more autonomously with less approval-seeking. The boss can review the outcome of your decisions on a daily or weekly basis in the initial stages. Suggest a one-week trial and end with “I’d like to try it. Does that sound like something we could try for a week?” or my personal favorite, “Is that reasonable?” It’s hard for people to label things unreasonable.

Realize that bosses are supervisors, not slave masters. Establish yourself as a consistent challenger of the status quo and most people will learn to avoid challenging you, particularly if it is in the interest of higher per-hour productivity.

If you are a micromanaging entrepreneur, realize that even if you can do something better than the rest of the world, it doesn’t mean that’s what you should be doing if it’s part of the minutiae. Empower others to act without interrupting you.

SET THE RULES in your favor: Limit access to your time, force people to define their requests before spending time with them, and batch routine menial tasks to prevent postponement of more important projects. Do not let people interrupt you. Find your focus and you’ll find your lifestyle.

The bottom line is that you only have the rights you fight for.

In the next section, Automation, we’ll see how the New Rich create management-free money and eliminate the largest remaining obstacle of all: themselves.