Liu Run, born in 1976, is one of China's most influential business consultants. He served as Microsoft China's Director of Strategic Partnerships for 14 years. After leaving Microsoft, he founded "Runmi Consulting," providing strategic consulting services for dozens of top-tier companies including Tencent, Baidu, Haier, COSCO, Henderson, and PepsiCo.
But what truly made Liu Run China's "national business teacher" was his "5-Minute Business School" column on the "Dedao" App. This program used 5-minute daily audio episodes to translate complex MBA textbook theories into plain language anyone could understand. With over 500,000 paid subscribers, it became a phenomenal product in China's knowledge economy.
"The Underlying Logic" is Liu Run's distillation of years of business consulting experience. He attempts to answer a fundamental question: Why does the same methodology work for some people but not others?
His answer: Because most people only learn the "methodology" without learning the "underlying logic" behind it.
Methodology = Underlying Logic + Environmental Variables
Environmental variables change with the times, geography, and industry. But underlying logic is a timeless truth that transcends time and space. If you only learn methodologies, you're lost when the environment changes; if you master the underlying logic, you can derive new methodologies anywhere.
The book is divided into five chapters, each exploring the underlying logic from a different dimension:
We are taught from childhood to "distinguish right from wrong," but Liu Run says there isn't just one standard for right and wrong. Facing the same event, people from different positions will arrive at completely different conclusions about "whose fault it is."
| Role | Judgment Criteria | Core Logic |
|---|---|---|
| The Jurist | Looks at evidence and law | Whoever broke the law is at fault |
| The Economist | Looks at social cost | Whoever can solve the problem at the lowest cost should be responsible |
| The Businessperson | Looks at losses | Whoever suffers the greatest loss is at fault (because you should be most responsible for yourself) |
A lures B into C's unlocked construction site, and B falls to his death. Whose fault is it?
A's fault. A deceived someone, which is illegal. Regardless of how naive B was or how negligent C was, A's actions constitute a crime, and A should bear legal responsibility.
C's fault. A lock for the site gate costs just a few dollars. Locking the gate would have prevented the entire tragedy. Rather than educating every A not to deceive and every B not to be gullible, having C lock the door is the lowest-cost solution for society.
The Businessperson's Answer: B's fault. Why? Because B suffered the greatest loss -- he lost his life. A can be punished by law, C can be fined, but B's life is gone. If B had taken responsibility for his own safety from the start and hadn't trusted others blindly, the tragedy would never have happened.
This isn't "victim blaming" -- it's a self-protection mindset: When you can't change others' behavior, the most effective thing you can do is take responsibility for your own safety.
A tycoon's son was kidnapped. Upon hearing the news, the first thing the tycoon did wasn't blame the kidnappers or the bodyguards -- he first admitted fault: he had been negligent about security measures.
Why? Because he was the one with the most to lose. Cursing the kidnappers was useless; blaming the bodyguards was useless -- none of that would bring his son back. Only by first accepting "this is my responsibility" could he immediately enter damage-control mode -- negotiate, pay the ransom, ensure his son's safety.
A person should hold all three perspectives on right and wrong simultaneously. See the world through the jurist's eyes to understand justice; through the economist's eyes to know what's most effective; through the businessperson's eyes to know what's most realistic.
When most people face a problem, their first instinct is to "find the answer." Liu Run says this is wrong. The correct first step is: Determine whether you're dealing with a "fact" or an "opinion."
| Type | Definition | Example |
|---|---|---|
| Fact | An objective statement that can be verified or falsified | "The temperature today is 28°C" |
| Opinion | A subjective judgment based on facts | "It's hot today" |
| Position | An opinion influenced by self-interest | "The AC should be set to 26°C" (because I'm sensitive to heat) |
Many arguments are unsolvable because both sides treat their "opinions" as "facts." You feel hot, they feel cold -- this isn't a matter of who's right or wrong; it's two opinions clashing.
Liu Run believes all effective thinking follows the same underlying structure:
Hypothesis → Verification → Conclusion → Adjustment
This isn't some profound methodology -- it's simply the scientific method. The problem is: most people skip steps one and two entirely and jump straight to step three -- they start with a conclusion, then look for evidence. This is called "confirmation bias."
Liu Run proposes a standard for judging whether someone truly understands something: See if they can make a good analogy.
If you can explain a complex concept using a simple analogy, it means you truly understand the "shared underlying structure" between two things. If you can only explain jargon with more jargon, you've only memorized the surface.
"Why" is ten thousand times more important than "what." "What" only lets you know a single point. "Why" lets you understand a line, or even an entire plane. Knowing "apples fall down" is useless. Knowing "why apples fall down" lets you figure out why satellites don't fall down.
This is the most "practical" chapter of the book. Liu Run proposes a core formula for personal growth:
Life's Business Model = Ability x Efficiency x Leverage
These three variables determine how much value you can create and how much return you can earn in your lifetime.
Ability consists of three layers:
Many people only invest in "knowledge" -- buying books, taking courses, watching videos. But knowledge that isn't transformed into skills through practice is just "data stored in your brain," no different from a dusty PDF sitting on your hard drive.
Choosing wisely matters more than working hard. "Doing the right thing" is always more important than "doing things right." You can climb a ladder with the world's most efficient technique, but if the ladder is leaning against the wrong wall, the higher you climb, the further you get from your goal.
Efficiency isn't about "moving fast" -- it's about "heading in the right direction." Many people stay busy their entire lives, only to look back and realize they spent all their time on unimportant things.
Leverage is a tool that amplifies your ability. Liu Run categorizes leverage into four types:
| Leverage Type | Principle | Example | Multiplier |
|---|---|---|---|
| Team Leverage | Using others' time | Managing a 10-person team | 10x |
| Product Leverage | Produce once, sell infinitely | Writing a book, building an app | 100x ~ 1000x |
| Capital Leverage | Using others' money | Investing, fundraising | Unlimited |
| Influence Leverage | Using others' attention | Personal brand, media presence | Unlimited |
Most people only use one lever their entire lives -- trading their own time for compensation. But time has an upper limit: there are only 24 hours in a day. True growth means jumping from "selling time" to "using leverage."
People who can help you are not your network. People you can help are your network.
Many people spend enormous amounts of time "building their network" -- attending social events, exchanging contacts, handing out business cards. But effective networking isn't about how many people you know; it's about how many people think of you when they need help.
In other words: The level of people you can help determines the level you're at.
So instead of spending time "expanding your network," spend that time "improving yourself." When you're strong enough, your network will come find you.
Liu Run says most communication failures aren't caused by "poor delivery" but by "getting the order wrong."
Most people start by stating the What: "We should go with Plan A." Then they spend a long time explaining the How: "The specific steps are 1, 2, 3, 4..." The result? The other person is confused or outright opposes it.
Solve the other person's "Why" first, and your "What" will matter.
If the other person doesn't know "why they should listen to you," "why this matters to them," or "why it needs to be done now," everything you say about What and How is just noise.
The correct order is: Why → What → How. First make them feel "this is relevant to me," then tell them "what it is," and only then explain "how to do it."
Many people say "I know, but I can't do it." Liu Run says this statement itself is wrong.
It's not "I know but can't do it" -- you simply don't truly "know."
Wang Yangming's "Unity of Knowledge and Action" is not a moral imperative ("Since you know, you should do it") but a factual description ("True knowing and true doing are inherently one and the same").
For example: Do you "know" that fire burns? Of course. So would you stick your hand into fire? Of course not. That's "unity of knowledge and action" -- when you truly know, you naturally act accordingly.
Those things you "know but can't do" -- knowing you should sleep early but scrolling your phone until midnight, knowing you should exercise but never moving -- it's not that you "can't do it," but that your understanding isn't deep enough. When you truly comprehend the cost of staying up late, you'll naturally go to bed early.
When we encounter others' behavior, our first reaction is usually to "judge": what they did is right, wrong, smart, or foolish. But Liu Run says, judgment stops your thinking; understanding lets you go deeper.
When you try to understand "why" someone behaved a certain way, you can truly see their environment, constraints, and logic. You don't have to agree with them, but you'll see the full picture more clearly.
This final chapter is the book's conclusion and its most ambitious in scope. Liu Run proposes the "Three Laws of the World," attempting to explain the underlying structure of human social collaboration.
| Law | Scope | Core Principle | Example |
|---|---|---|---|
| Law of Nature | Individual competition | Survival of the fittest | Animals in the jungle |
| Law of the Tribe | Intra-group collaboration | Sacrifice some individual interests for the group's benefit | Companies, armies, families |
| Universal Law | Inter-group collaboration | Cross-group consensus: integrity, justice, contractual spirit | International trade, global cooperation |
The progress of human civilization is essentially the evolution from the "Law of Nature" toward the "Universal Law." The more primitive a society, the more it relies on the Law of Nature (might makes right); the more civilized a society, the more it relies on the Universal Law (those who keep their word win).
Credibility is a person's greatest asset.
In a world governed by the Universal Law, credibility is your "passport." With credibility, you can mobilize resources far beyond your personal capacity; without it, you can't even get a single opportunity to collaborate. Credibility isn't a synonym for "moral virtue" -- it is the most powerful tool for reducing transaction costs.
Liu Run makes a seemingly counterintuitive point:
Profit doesn't come from winning the competition -- it comes from the elimination of competition.
In a perfectly competitive market, profits approach zero. Because as soon as you make money, others will enter and undercut you until there's no excess profit left. Real profit comes from "moats" -- something you have that others don't and can't replicate.
Business models with near-zero marginal costs are the most powerful.
Having read the entire book, we can re-examine Liu Run's system of thought from a first principles perspective.
Liu Run's "Underlying Logic" is essentially a Chinese expression of first principles thinking.
Elon Musk says: "Don't reason by analogy; reason from first principles." Liu Run says the same thing in a more accessible way: "Don't just learn methodologies; learn the underlying logic."
Let's break down the correspondence:
| Liu Run's Language | First Principles Language | Meaning |
|---|---|---|
| Underlying Logic | Unchanging fundamental principles | Laws of physics, human nature, economic laws |
| Environmental Variables | Changeable external conditions | Era, technology, policy, market |
| Methodology | Specific solutions | Application of underlying logic in a specific environment |
| Ability to distinguish the two | Ability to see through to the essence | The core of first principles thinking |
This question itself has an underlying logic:
The human brain is naturally biased toward the "effortless" path. Copying methodologies is far easier than deriving underlying logic on your own. But the problem is: when the environment changes, methodologies fail. Only underlying logic enables you to quickly derive new methodologies in a new environment.
This is why the countless "success" books on the market never work -- because the author used Underlying Logic X in Environment A to derive Methodology A1, but you're in Environment B. Directly copying A1 naturally won't work. What you need is to learn X, then derive B1 on your own.
In 219 AD, Guan Yu was killed through a scheme devised by Lu Meng, a general under Sun Quan. This event triggered a classic clash of "three perspectives on right and wrong" within Liu Bei's inner circle.
Result: Liu Bei's eastern expedition ended in devastating defeat (Battle of Yiling), and Shu Han never recovered its strength.
The Lesson of History: All three perspectives on right and wrong must coexist and balance each other. Liu Bei used only the "businessperson's thinking," ignoring the jurist's and economist's perspectives, and ultimately paid the price of his kingdom. Conversely, if Liu Bei had only listened to Zhuge Liang's "rational analysis" and disregarded brotherhood, while he might have preserved strength in the short term, he could have lost his army's morale long-term. True wisdom lies in finding balance among all three perspectives.
Sun Tzu said: "Know yourself and know your enemy, and you will never be defeated." This saying has endured for over two thousand years, becoming a phrase that almost everyone "knows" but few truly "practice."
Liu Run's discussion of "the underlying logic of understanding others" is essentially a modern version of Sun Tzu's "know your enemy." But Sun Tzu said something even more important:
"Know neither your enemy nor yourself, and you will be defeated in every battle."
Notice the order: it's not just "not knowing the enemy" -- it's "knowing neither the enemy nor yourself." Sun Tzu grasped a truth over two thousand years ago -- most people fail not because they don't understand their opponents, but because they don't even understand themselves.
This resonates with Liu Run's concept of "unity of knowledge and action": You think you know your abilities, your weaknesses, and your needs, but do you really? If you truly knew you weren't suited for entrepreneurship, you wouldn't have blindly quit your job to start a business. You "knew" but did it anyway, which means you didn't truly "know" at all.
This sounds cold and transactional, but it's the underlying logic of networking.
You met 500 people at various social events, but when you actually need help, how many will answer your call? The answer depends on how much value you've created for others in the past.
Action Guide: Take 80% of the time you spend "expanding your network" and use it to "improve your abilities." When you're strong enough, your network doesn't need to be cultivated -- it grows on its own. You don't need to know Jack Ma; you need Jack Ma to want to know you.
Most entrepreneurs think about this question every day: "How do I beat the competition?"
Liu Run says the question itself is wrong. The right question is: "How do I make it so I have no competitors?"
How? Three approaches:
Case Study: Apple never competes with Android on "whose phone is cheaper." It built a closed ecosystem (iOS + App Store + iCloud + Apple Watch + AirPods) that makes it hard for users to leave once they're in. This isn't "beating the competition" -- it's "eliminating competition."
Is your current business model's marginal cost rising, falling, or approaching zero? The answer determines your ceiling.
| Business Model | Marginal Cost | Ceiling | Example |
|---|---|---|---|
| Selling time | Constant | Low (limited to 24 hours) | Lawyers, consultants, tutors |
| Selling products | Decreasing | Medium (economies of scale) | Factories, restaurant chains |
| Selling digital products | Approaching zero | High | Software, online courses, e-books |
| Selling influence | Approaching zero or negative | Very high | Platforms, brands, IP |
Action Guide: No matter what you're doing now, find ways to push your business model toward "lower marginal costs." If you're a consultant, can you turn your experience into a book? If you've written a book, can you make it into an online course? If you've created a course, can you build a community platform? Each step lowers marginal costs and raises the ceiling.
If you consistently "can't do" something, don't blame your willpower. Ask yourself: "Do I truly understand it deeply enough?"
An example: Many people know they should "invest in themselves," but they spend every dollar as soon as they earn it. It's not that they don't know the importance of investing -- it's that they don't understand the "cost of not investing in themselves" deeply enough.
If they could truly see two versions of themselves ten years from now -- one who continuously invested in learning vs. one who spent money on instant gratification -- their behavior would naturally change.
Action Guide: For things you "know but can't do," don't rely on willpower to force it. Instead, deepen your understanding. Read more related books, talk to people who've done it, calculate the cost of inaction. When your understanding reaches a certain depth, behavior follows automatically. This is the underlying logic of "unity of knowledge and action."
"The Underlying Logic" is not a book that tells you "what to do." It tells you "why."
Why do some people see opportunity while others see danger when facing the same situation? Because they interpret it using different underlying logic. Why can some people adapt no matter how much the environment changes? Because they've mastered the unchanging underlying logic, not methodologies that expire.
Methodologies are the fish; underlying logic is the art of fishing. But Liu Run goes even further -- he says you don't need to learn how to catch each type of fish one by one. You only need to understand "why fish bite the hook."
The greatest value of this book isn't in teaching you five "underlying logics" -- it's in training your "underlying logic thinking." When facing anything, first ask: "What is the unchanging part? What is the changing part?"
Once you develop this thinking habit, you no longer need to chase every new methodology, every new trend, every new hype cycle. Because you've already seen the hidden cards.
Those who see the hidden cards are no longer players at the table. They are the ones dealing the cards.