Have you ever wondered what secrets lie behind the success of top business leaders? In a world full of uncertainties, how can one find a path to success? The Underlying Logic 2 reveals the answers by teaching us how to use mathematical principles to solve complex problems in the business world.

Exploring The Underlying Logic 2

The Underlying Logic 2 is authored by Liu Run, a renowned business consultant in China who previously served as the Strategy Director for Microsoft China and has provided consulting services to major companies like Tencent and Baidu. This book, a sequel to his earlier work The Underlying Logic, delves into the intersection of mathematics and business, offering a fresh perspective on strategic thinking.

Liu Run breaks down complex business models into basic mathematical concepts, ranging from addition, subtraction, multiplication, and division to Cartesian coordinates, probability and statistics, and even game theory. These mathematical tools, far from being mere exam subjects, become powerful weapons for solving problems in the business world.

The Magic of Mathematics in Business

The Collaboration of Addition and Multiplication

The book begins by introducing fundamental mathematical concepts—addition, subtraction, multiplication, and division—and emphasizes their application in business collaboration. Liu Run illustrates the different effects of "addition" and "multiplication" in partnerships.

Addition Collaboration:

Traditional "addition collaboration" is akin to a 4x100-meter relay race, where each person runs a segment, and the results are summed up. In business, this is like having each salesperson independently develop clients, with their results added together, offering limited growth potential.

Multiplication Collaboration:

"Multiplication collaboration," on the other hand, is entirely different. Liu Run presents the "universal sales formula," where each component is multiplied rather than added. When every team member responsible for different areas improves their part, the overall performance grows exponentially, not just linearly.

For instance, imagine a company with four salespeople, each responsible for different aspects—traffic, conversion rate, average transaction value, and repurchase rate. If the company initially generates $4 million in revenue, and the salesperson responsible for traffic doubles it, revenue jumps to $8 million. If the conversion rate also doubles, the revenue surges to $16 million. The power of multiplication in collaboration is astounding.

Cultivating Probability Thinking

Liu Run emphasizes that "probability thinking is the dividing line between experts and ordinary people." While ordinary people prefer certainty, experts excel at finding opportunities in uncertainty. He uses the example of a scam phone call to illustrate how scammers use "probability" to filter targets and improve success rates. The same thinking applies to business and entrepreneurship—focusing on high-probability strategies avoids wasting time and resources.

Consider a scammer who knows that 20% of the population is easily fooled, with a 60% success rate among them. The remaining 80% are hard to deceive, with only a 10% success rate. If the scammer tries to deceive everyone, the success rate is just 20%. However, by focusing solely on the easily deceived group, the success rate increases to 60%, meaning the scammer succeeds in three out of five calls—a threefold improvement in success rate.

The Mathematical Formula for Entrepreneurial Success

Liu Run introduces a formula for entrepreneurial success: "Overall success rate = 100% – (100% – base success rate) ^ number of attempts." This formula shows that the base success rate is influenced by multiple factors, including the entrepreneur's ability, industry characteristics, and competition level. By persisting and continually trying, the overall success rate gradually increases, underscoring the importance of learning and continuous improvement.

Enhancing the Base Success Rate:

The book mentions that each entrepreneurial experience can be applied to the next, improving the base success rate. For example, the lessons learned from a failed first venture can benefit the second, and if that fails too, the accumulated experience helps in the third attempt. As a result, the entrepreneur’s base success rate gradually improves, leading to a higher overall success rate.

Personal Insights from the Book

The mathematical thinking presented in the book has made me reassess my business decisions. I recall a project where my team and I tried various strategies, but none were particularly effective. After reading this book, I began applying its mathematical principles, focusing on high-probability strategies and gradually eliminating less effective ones. This not only improved our success rate but also saved a significant amount of time and resources.

Slow Reading and Deep Reflection

The Underlying Logic 2 is a book that requires slow reading and deep reflection. Liu Run explores the application of mathematics in business, helping us understand the core principles of business operations. While the book involves some mathematical formulas, Liu explains them with vivid examples and simple language, making them easy to grasp.

The book also includes an intriguing example—the story of the wheat and chessboard. An ancient Indian minister invented chess and asked the king for a reward: one grain of wheat on the first square of the chessboard, two on the second, four on the third, and so on, doubling each time. The king agreed, but soon realized that the entire country’s grain reserves couldn’t fulfill the demand. This story illustrates the power of exponential growth—a concept that applies to business as well. By sticking to the right strategies, the cumulative effect over time can lead to immense rewards.

Whether you are a business novice or an experienced entrepreneur, this book offers new perspectives and ways of thinking. If you’re willing to take your time and savor its contents, you’ll find valuable insights and mathematical secrets that can guide you toward success.

Conclusion

If you’re curious about the principles that govern the world or want to know how to increase your chances of success, The Underlying Logic 2 is a must-read. By learning mathematical thinking, you’ll be better equipped to tackle business challenges and achieve your life goals. This book not only provides theoretical insights but also practical methods to help you find your path in the business world. Regardless of where you are in your career, this book will be a valuable resource, helping you navigate further in the vast ocean of business.