Consider two owners who each work a fifty-hour week, one of whom bakes in her own kitchen while the other directs a company that operates thirty bakeries. Effort cannot be the difference between what they earn, because both of their weeks are full. The difference is the kind of work that each of them spends those hours on. I give those kinds names, because an owner can change which kind she spends her own week on.
I sort every task in a business onto a ladder of four levels, which I call the four levels of value. I place each task on that ladder by asking a single question: how many people receive the value of this hour of work? In the last article I describe the bottom level from the inside. In this one I set out all four of them so that you can place your own week on the ladder before you spend anything on climbing it.
Work that you do with your own hands
The bottom level is implementation, which is the making, the fixing, and the serving that an owner-operator spends her week on. In an hour of it you produce value for a single customer, so what the business earns rises with the hours that you work until you have no hours left in the week. I measure that ceiling in the last article, so I won't measure it twice here. For this map, the property of implementation that counts is that it is the easiest of the four kinds of work to buy. In any trade directory you can find a list of people who sell hours of it, which means that you can usually buy it for the lowest price of the four.
Work in which you organise other people
The second level is unification, which means directing the people who do the implementation. In a week of unification you make nothing that a customer could hold. The manager who spends her week that way still sets how much every implementer under her produces, because she hires them, trains them against a standard, and keeps their output good enough to sell. With one of her hours, she reaches every customer whom her team serves in that hour, which is the first multiplication on the ladder.
That multiplication has a limit of its own. One person can only direct so many others well, so the reach of unification rises with the number of people that you employ, each of whom you have to pay a wage. With an hour of unification you still reach more people than with an hour of implementation, although you add to that reach one hire at a time.
Work in which you explain to many people at once
The third level is communication, which means taking what you and your team know and explaining it to an audience. A baker who works at this level could teach a course, publish her recipes, or explain to a thousand buyers at once why her bread is worth what she charges for it. The hour of effort remains a single hour, while the number of people who receive the value of it rises to the size of the audience. An audience can also grow without your payroll growing alongside it.
Communication depends on the levels below it, because an audience can usually tell whether the person who is explaining does the work herself. The knowledge that you gain at implementation is the raw material, while at communication you multiply the number of people who receive it.
Work in which you decide what the business builds
The top level is imagination, which means deciding what the business makes, who it serves, and why those people would pay for it. The people at the three lower levels spend every hour carrying out a decision that somebody takes at this one, which means that the reach of an hour at this level is the whole business. With a sound decision, every hour that people work below it is well spent, while with a poor one all of those hours go to waste at once.
Imagination is also the scarcest work on the ladder. You can buy implementation by the hour wherever people advertise their trades, while you can find managers and marketers through the usual hiring channels. The people who can choose correctly what a business ought to build, however, rarely offer that skill for a wage.
The ladder in one table
| Level | What you sell with a week of it | What limits the return |
|---|---|---|
| Implementation | Finished work, one customer at a time | The hours in your week |
| Unification | The organised output of a team | How many people you can direct well |
| Communication | One explanation that many people receive | The size of the audience that trusts you |
| Imagination | Decisions that everyone in the business carries out | The quality of the decisions |
If you read the third column downwards, you can see one limit disappear at each step up the ladder. You have only so many hours in a week, and you can employ only as many people as you can pay; however, an audience has no limit of that kind. What you earn from an hour of work usually depends on its reach and on its scarcity. You therefore earn more from the same day of effort the higher up the ladder you spend it, because at each level you reach more people than at the one below, while fewer people are able to do the work.
How far one working hour reaches at each level
Imagination
Reaches every hour worked below it
Decisions the whole business executes
Communication
Reaches an audience of 1,000
One explanation received by many
Unification
Reaches every customer a team of 9 serves
The organised output of a team
Implementation
Reaches 1 customer
Finished work, one customer at a time
Where your week goes is where you stand
The four levels are kinds of work, so you cannot tell from your job title where you stand among them. Consider an owner of five staff who spends her own week driving the deliveries. She is working at implementation, whatever title is on her business card, while an employee of hers who spends a week redesigning the way that the warehouse staff pick orders is working at imagination. A business also needs work at all four levels every week. Your own position is wherever the bulk of your week falls, which you can see if you write down how you spent your last fifty working hours.
If the bulk of your week falls in work that you could teach somebody else to do, then you are up against the same ceiling that I measure in the last article. The way up begins with the first climb, which is paying other people to do that work. That climb is the uncomfortable one, because the wages start going out before the results come back. In the next article I cover what you should hand over first, what you have to put in the written standard behind a handover, and why other people's time is the first purchase that is worth making.