Lessons from Nature Podcast

Business Thermodynamics: 49. Money is Energy. 1985 to today

May 29, 2024 Mark Rubin Season 1 Episode 49
Business Thermodynamics: 49. Money is Energy. 1985 to today
Lessons from Nature Podcast
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Lessons from Nature Podcast
Business Thermodynamics: 49. Money is Energy. 1985 to today
May 29, 2024 Season 1 Episode 49
Mark Rubin

Observation:

The key observation in this story is that businesses, like physical systems, have momentum driven by the flow of money, which is analogous to energy. The story illustrates how reducing friction in business processes can increase this momentum, making the system more efficient. This is visualized through a model where gears represent the flow and velocity of money, indicating the health and efficiency of different parts of the business.

The Lesson:

Efficient management of business processes by reducing friction and optimizing systems can significantly enhance the momentum and success of a business.

How this is Helpful:

  1. Visualization: Helps in understanding complex business dynamics.
  2. Optimization: Guides towards improving business efficiency.
  3. Awareness: Increases understanding of financial health and momentum in businesses.


Questions for Reflection:

  1. What's My Momentum? How can I measure and understand the momentum in my own projects or business?
  2. Where's the Friction? In what areas of my work or life could I reduce friction to increase efficiency?
  3. How to Optimize? What steps can I take to optimize my activities or business processes?


For more ‘Practical Dreaming’, visit https://www.markianrubin.life/practical-dreaming 

Show Notes Transcript

Observation:

The key observation in this story is that businesses, like physical systems, have momentum driven by the flow of money, which is analogous to energy. The story illustrates how reducing friction in business processes can increase this momentum, making the system more efficient. This is visualized through a model where gears represent the flow and velocity of money, indicating the health and efficiency of different parts of the business.

The Lesson:

Efficient management of business processes by reducing friction and optimizing systems can significantly enhance the momentum and success of a business.

How this is Helpful:

  1. Visualization: Helps in understanding complex business dynamics.
  2. Optimization: Guides towards improving business efficiency.
  3. Awareness: Increases understanding of financial health and momentum in businesses.


Questions for Reflection:

  1. What's My Momentum? How can I measure and understand the momentum in my own projects or business?
  2. Where's the Friction? In what areas of my work or life could I reduce friction to increase efficiency?
  3. How to Optimize? What steps can I take to optimize my activities or business processes?


For more ‘Practical Dreaming’, visit https://www.markianrubin.life/practical-dreaming 

00:00

My name is Mark Rubin, and I'm a dream weaver. I hope these widgets help you weave your dreams into reality. This story is about momentum, the idea of momentum, as it relates to energy and energy transfer, and more specifically, business systems. So this one is called Tada. Businesses have momentum. What I mean by that is business can be visualized in a scale model that shows three things, the money flowing through the business, a map of the processes flowing through the business, and a matrix with the performance of the people doing the work at each step in the processes. And all this can be color coded. And each step, red, yellow green, to determine where in the business is working well, and where it needs improvement. And this is called friction. And when everything is green, the business system isn't running optimally. And this relates to this idea of momentum is that like, all systems of business requires energy to work. And that's the same thing as an engine, in a car or a heat engine. And it costs energy to do something called work. And people do this thing called work, we call it work. But it is work in the same way that a horse lifting a rock is a horsepower. Or in the same way that an engine burning gasoline creates the ability to do work, which is moving things around. And we do that with money. That's what we're trading. So our fuel is money. And money in this sense is energy, it acts exactly like energy. And because it acts like energy, there's a potential component, a kinetic component and a theoretical component of it, just like energy. And it's possible to visualize this as it flows around. And I learned this in 1985, when I was mowing lawns. And I had already learned about a model of energy transfer that I saw in a completely different way. But a model of marbles, rolling down ramps, and how they accelerated and how many dominoes they would knock over at the end of the ramp, which is a measurement of momentum. And so I understood these relationships at a young age, I didn't know the words for anything I just, but I knew what they were and how they worked in models. And I also have learned at this time, 1984 ish, five, six, my dad would teach me about money, the basics of money, and the importance of long term planning with money. And basically how money worked. And my dad, every month told me how much money he made, how much money he spent, how much money he lost his decisions, why he thought he lost money, what he could have done better what things cost when they broke, I think the most important lessons there were around losing money and lessons learned because I've lost a lot of money and learned a lot of lessons. But as it relates to momentum, the same is true in business. And so the model of the money in a business is represented by spinning gears that show the proportional value of the money at each step in the process. And the money is measuring the speed of the years is measuring the income velocity, the dollars per hour in the US or currency per hour somewhere else. And the idea is that in terms of measuring the velocity of this money, that when you reduce the friction in the business, you increase the velocity of the money, because you're not burning as much and waste. That's like shoving more gasoline through an engine. It's like a turbocharger. So basically, you make it more efficient by either reducing the number of steps in the business or increase increasing the performance at each step through some kind of optimization, and usually compensation plans and things like that. And so by tuning things this way and seeing things this way, it becomes clear that just like a marble rolling down a ramp has increasing momentum, that a gear that represents money that's increasing in velocity is accelerating, it's getting faster, has increasing momentum. Because you know the size, the spatial size of this imaginary gear that's representing money, because indexed to a value that's equal to revenue, so it's proportional. So, what that means is is that is that it creates a scale model of the flow of money and since energy can always be represented by spinning gears, at different stages in the process, it becomes possible to conclude that the system, the rate that the gears are increasing and decreasing in velocity, as measured this way, and visualized this way, matches the same rate, that they would increase in decrease if they were made of metal, like a real machine, because they're measuring the mass of money spatially So in the same way, if you had a business that had a sales funnel, which is money coming in, and in the first stage, there was like a million dollars of potential customers, you're selling something that cost $100,000. And you and you just needed to sell 10 of them. That's up there. Okay. And 10 people heard of this thing, and that's the value that I'm representing in this gear way. Circle. If it was made of gold, for real, this gear, the mass of it, or weight of it was equal to a million dollars, then the size of that year made of gold would be proportional to a million dollars, I'm saying is if if downstream of that five of the 10 people disappear, and now you only have five people at $100,000 each, then the next gear is half as much mass because the value of it is half as much. So you need half as much gold. And what I'm saying is what's happening in the business is little pieces of gold are moving between these gears is somewhere coming from here, those are called potential customers, and they get moved to the next one. And they increase the size and the rate that this is occurring, conserves momentum. And when I was 15, and I came up with this idea, I didn't know exactly what momentum was, but I knew this. This is what I decided I would do, I would use this idea to launch project honey like. So I built software called visualizer that visualizes businesses in the way that I'm describing here. I have connected it to real data, the data was bad. So I wasn't able to demonstrate the idea that I'm explaining here in terms of accuracy of money, I rebuilt it in a different way and built a software package called Cloud miner that increases the momentum of a business by improving the efficiency of the sales funnel. And that's creating millions of dollars so far in the last two years, by optimizing by reducing friction symbols. And so that's a demonstration of it. And the next phase is to add back the gears on top to prove it visually and spatially. And the plan is to complete that I'd say by 2025 2026. Also, when I build the software, which is in a future story of the box, regenerative business system that's going to operate this this business that I'm designing the interface will be based on visualizer and the people that are operating this business will be clicking on gears and diving into different pieces of their business to understand how it works. And that will also demonstrate that momentum is conserved.