"Business": Transform 30 classic works into business thinking that everyone can use.

"Business" takes 30 classic works as the entry point to disassemble core issues in business, management, innovation, investment and decision-making. From disruptive innovation to multi-disciplinary thinking models, and further to anti-fragile strategies for coping with uncertainty, these classic ideas not only help us understand the laws of business operation, but also provide new perspectives for identifying opportunities and managing risks. 

When the market keeps changing, what truly matters is not just pursuing growth, but seeing through the logic behind the changes and building a mindset that can cope with uncertainty. 

This article is selected from *Business: Making Profits Easily in a Complex World*.

Why large enterprises get defeated by "small gadgets" — *The Innovator's Dilemma*

New things that seem insignificant may subvert the entire market.

In the 1990s, Kodak once controlled more than 70% of the global film market. In 1975, Steven Sasson, an engineer at Kodak, invented the world's first digital camera, but it did not get enough attention from the management. For Kodak at that time, film was a critical source of profit, and the development of digital technology meant potential impact on its core business. 

After that, Sony's digital cameras, Nokia's camera phones and the iPhone gradually changed people's way of recording images. Early digital cameras and camera phones did not deliver ideal imaging effects, but they had a prominent advantage: convenience. People did not need to buy film or wait for development, and they could view the photos immediately after taking them. With technological progress, the originally insignificant new products gradually reshaped the market pattern. In 2012, Kodak filed for bankruptcy protection. 

A similar story happened to Nokia. The technological and market advantages accumulated in the feature phone era did not help it adapt to the changes brought by smartphones in time. 

Why can enterprises with strong strength and mature management also lose their advantages in the wave of innovation? *The Innovator's Dilemma* reveals an important issue: enterprises may not lose to stronger competitors, but be restricted by the successful experience they have relied on for a long time. 

Mature enterprises usually focus on profit margin, gross profit margin, average customer unit price and the demands of core customers. Such business logic can help enterprises improve efficiency, but it also easily excludes new products with limited profits and small market size. The better an enterprise is at managing business according to existing standards, the more likely it is to ignore opportunities that are not profitable for the time being but have development potential. 

Real subversion often starts from the edge of the market. Early digital cameras had low pixels, and the iPhone was once questioned for its high price and short battery life, but they met users' demand for convenience. When mainstream customers think existing products are already "good enough", and when young people begin to accept seemingly immature new things, these changes may all indicate new market opportunities. 

While operating the current business, it is also necessary to explore new growth curves.

An enterprise's resources, processes and values can not only help the organization build advantages, but also become restrictions on innovation. After the scale of the enterprise expands, talent allocation, approval processes and value judgment are often formed around mature businesses. When new businesses cannot meet the existing profit standards, even if they have potential, it may be difficult for them to obtain sufficient resources. 

Therefore, new businesses sometimes need a relatively independent development space. The original book takes Amazon Web Services (AWS) as an example, illustrating that while operating the retail business, the enterprise can explore cloud computing through an independent team, so as to have the opportunity to develop a new business pillar. 

Behind this is the "double-curve survival method": one curve maintains the existing business to provide a stable operating foundation for the enterprise; the other curve explores new technologies, products and markets to create growth opportunities for the future. Enterprises cannot expect a mature business to bring growth forever, nor can they easily deny the value of new businesses just because their short-term profits are not high. 

*The Innovator's Dilemma* reminds us to stay sensitive to changes. The market will not stop evolving just because an enterprise succeeded in the past, and the once effective management methods may not be applicable to the future. Only by seeing those immature demands and leaving exploration space for new businesses can we avoid making existing advantages become obstacles to transformation. 

A small tool to reduce mistakes — *Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger*

Understand complex issues with multi-disciplinary thinking models.

In 2013, Adobe announced that it would shift a number of its software products to the Creative Cloud subscription model and no longer sell traditional perpetual licenses. This decision initially aroused a lot of doubts, but the subscription system changed users' usage habits: users began to use the software more frequently and try new functions, and services such as font library, file storage, plug-in marketplace and team collaboration were gradually integrated into the Creative Cloud ecosystem. 

On the surface, this is just an adjustment of the business model; at a deeper level, it involves people's motivations, behavior habits and path dependence. Users' choices are not always completely rational, and the development of enterprises will also be affected by incentive mechanisms. 

*Poor Charlie's Almanack* collects speeches, articles and reflections of Charlie Munger over the years, compiled by Peter Kaufman. It does not simply teach investment skills, but helps readers build a thinking framework for understanding the world. 

The multi-disciplinary thinking model proposed by Munger emphasizes that complex problems cannot be explained by relying on a single discipline. Fields such as economics, psychology, mathematics, engineering and biology all provide different tools for understanding reality. Connecting these models can help people examine problems from different perspectives and reduce the limitations caused by a single view. 

For example, to judge whether a business model is feasible, we should not only look at revenue and profit, but also consider user behavior, incentive mechanism and long-term competitive advantage; to evaluate a decision, we should not only look at the result, but also analyze whether the judgment basis at that time was reasonable. 

The value of the multi-disciplinary thinking model does not lie in mastering as much knowledge as possible, but in being able to mobilize different thinking tools to verify each other when encountering problems, and avoid rushing to conclusions based on single experience. 

Rather than blindly pursuing success, it is better to learn to avoid failure first.

Munger attaches special importance to reverse thinking. Instead of only asking how to succeed, it is better to first figure out which behaviors will inevitably lead to failure, and then avoid these traps as much as possible. 

In investment and operation, this means that we should not only focus on potential returns, but also check whether the business model is feasible, whether the risks are controllable, and whether the worst result is bearable. Facing seemingly attractive opportunities, identifying the factors that may lead to failure first is often more important than acting hastily. 

The circle of competence is also an important principle in Munger's thoughts. Everyone's knowledge and experience have boundaries. Knowing what you really understand is more valuable than pretending to know everything. For fields you lack understanding of, you should not bet rashly just because of market popularity; for things you can judge, you also need to make judgments on the basis of full analysis. 

Munger also emphasizes the influence of incentive mechanisms on behaviors. People's actions are often driven by rewards and punishments. If an enterprise only assesses traffic, employees may pursue short-term exposure; if customer service staff are only required to shorten call duration, they may ignore whether users' problems are truly solved. Therefore, to judge an organization, we should not only look at what goals it claims, but also look at how it designs the incentive mechanism. 

In addition, the margin of safety reminds people to leave room for uncertainty, and not to put all resources on a single judgment. Reputation also needs long-term accumulation. If short-term benefits are obtained at the cost of reputation, it may bring losses that are more difficult to make up for. 

The core of *Poor Charlie's Almanack* is not to ensure that every judgment is correct, but to help people reduce avoidable mistakes. Only by broadening horizons through multi-dimensional thinking, identifying risks through reverse thinking, clarifying cognitive boundaries through the circle of competence, and reducing the cost of decision-making errors through reasonable incentive mechanisms and margin of safety, can we retain more opportunities for long-term development. 

Do not take stability as the goal — *Antifragile*

Growth in scale does not equal real security.

In 2015, Li Shanglong and his partners founded the online education platform Kaichong, focusing on English CET-4 and CET-6 preparation and postgraduate entrance examination tutoring courses. Relying on low-cost live courses, Kaichong quickly accumulated users. By 2017, the annual sales of CET-4 and CET-6 courses reached 250,000 person-times, and the postgraduate entrance examination tutoring courses also sold 100,000 person-times. The company's valuation once reached 400 million US dollars. 

However, with the development of business, the team began to expand into fields such as overseas study, foreign language learning, and teacher qualification certificate examinations, hoping to enhance competitiveness by expanding the scale. Post-event review found that blind expansion dispersed resources, cost control was not precise enough, and the core courses with original advantages did not get sufficient investment. New businesses failed to build solid competitive advantages, and old businesses gradually lost their original advantages. In early 2023, Kaichong announced its closure. 

This experience shows that becoming larger does not equal safety. If an enterprise only pursues the expansion of business scope and organizational scale, but ignores core competence and cost management, it may accumulate risks in the process of expansion. The superficial stability and prosperity cannot guarantee that the system can withstand shocks. 

In *Antifragile*, Nassim Taleb divides things into three categories: fragile, robust and antifragile: fragile things are easily damaged in shocks, robust things can withstand shocks, while antifragile things can grow from fluctuations and changes. 

The real world is full of events that cannot be accurately predicted. Systems that rely too much on a stable environment may operate well in peaceful periods, but expose deep-seated problems when sudden changes occur. Taleb reminds us that instead of trying to predict and control everything, it is better to admit that uncertainty cannot be eliminated, and build a structure that can cope with changes. 

Find growth space in controllable risks.

The "barbell strategy" proposed by Taleb emphasizes balancing stability and exploration in resource allocation. One end is used to ensure basic survival, and the other end is used to try opportunities with high potential returns, avoiding putting all resources in a single direction. 

For enterprises, this means relying on core business to maintain cash flow, and at the same time allocating part of resources to explore new products and markets. For individuals, they can also try side businesses, start-ups or learn new skills while maintaining a stable income. The basic plate ensures survival, and exploration creates new possibilities. 

Antifragility also emphasizes the value of small-scale trial and error. If a system does not allow any mistakes, problems may be hidden until they accumulate to an uncontrollable level. On the contrary, moderate tests can expose defects as early as possible, allowing the team to correct the direction in time. Enterprises can split innovation projects into smaller units. Even if one of the projects fails, the loss can be limited to a local scope, and the organization can still gain experience from it. 

But trial and error does not mean taking risks regardless of cost. What really matters is to control the risk exposure, keep the failure cost within the bearable range, and retain the growth space brought by success. The asymmetric return emphasized by Taleb is exactly to obtain greater returns when favorable situations occur, while the loss is relatively limited when unfavorable situations occur. 

The "via negativa" provides another idea: to strengthen the system, we do not necessarily need to keep adding new methods. Sometimes a more effective way is to first reduce those factors that bring fragility. Instead of blindly launching new projects, enterprises should first examine loss-making businesses, redundant processes and unreasonable costs; instead of chasing every hot spot, individuals should first stop obviously ineffective behaviors. 

The original book also takes Robin AI, a UK legal tech startup, as an example to illustrate that high valuation and external financing do not mean that the business model is healthy. The company adopts the "AI + human" service model, where lawyers review the first draft generated by AI. Although it can meet customers' requirements for service quality, it also brings high labor costs. With the expansion of business, the imbalance between cost and revenue gradually emerged; after financing was blocked and the capital chain broke, the company fell into trouble. 

This case once again shows that enterprises cannot take financing as a talisman, nor can they take scale as a safety cushion. Only by building a sustainable business model, controlling risks and retaining adjustment space can they maintain survivability when the environment changes. 

What *Antifragile* emphasizes is not to actively create crises, but to build a more resilient structure in an uncertain world: hold the basic plate, allow controllable trial and error, pursue asymmetric returns, and remove fragile factors through subtraction. 

Kodak, Nokia, Kaichong and Robin AI have different endings, but they all point to the same problem: enterprises cannot ignore the emergence of new demands just because they succeeded in the past; decision-makers cannot judge complex problems only based on single experience, but should learn to test their ideas from multiple perspectives; in the face of unpredictable changes, we should not pin all hopes on stability, but build the ability to cope with shocks by controlling risks, continuous trial and error and timely adjustment. 

There is no forever effective formula in business, nor is there a standard answer applicable to all scenarios. Understanding the laws is not to eliminate uncertainty, but to see through problems, identify risks and make more valuable choices when changes occur. 

This article is from the WeChat official account "Wu Xiaobo Channel", author: Blue Lion, published with authorization from 36Kr.