Roger Hamilton explains the concepts of value and leverage by giving the analogy of a river:
“Water flows because of a height differential – from high ground to low ground. Money flows because of a value differential. All money flow is the result of a value exchange, and when you double the value, you double the speed at which money flows. Leverage, on the other hand, is not about the height of the river, but the width. When you increase leverage, you don’t change the speed of money flow, but you do change the volume at any one time.” – Roger James Hamilton
All money flow is as a result of value and leverage, and when you know how to control both, you can control money flow. But both come in opposites. Try crossing your arms, and see which way you naturally cross them. Left arm over right arm? Or right arm over left arm? Now try doing the opposite.
The opposite doesn’t come naturally. It feels like hard work. And as with all opposites, when you’re doing it one way you can’t be doing it the other. Value has two opposites, based on two different thinking dynamics – and one is the one you do most naturally, intuitive thinkers (who are ‘head in the clouds’ most naturally deliver value through innovation. People like Steve Jobs and Richard Branson create value this way. Sensory thinkers (who are ‘ear to the ground’ most naturally deliver value through timing. People like Warren Buffett and George Soros create value this way.
Roger Hamilton continues, with the two opposites of leverage, based on two different action dynamics. Again, one of these is your most natural action. Introvert activators (who naturally ask ‘how can this be done without me’) leverage through multiplying. They make things simpler, and make many. People like Jeff Bezos and Mark Zuckerberg leverage this way. Extrovert activators (who naturally ask ‘how can this only happen with me’) leverage through magnifying. They make things more complicated, and make only one. People like Oprah Winfrey and Donald Trump leverage this way.
Knowing your natural path ensures you focus at the simplest way to create value and leverage it – without it feeling like hard work.