Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.
I met up with Ron Davison last weekend and to talk about his book The Fourth Economy. One of the central concepts in the book is systems thinking.
I’d never explicitly studied or read much about systems outside of a chapter in his book, but I sat down and read Donnela Meadows’ Thinking in Systems this week realized that it was actually a concept I’d been dancing around for a long time without ever having a good name for.
Once people understand the basis concept, that systems exist everywhere and it’s the working of the systems that lead to outcomes, it’s both fairly intuitive and revolutionary. It’s in making changes to the system that you change your outcomes.
Someone born in rural Guatemala is going to have dramatically different life outcomes than if they had been born to a wealthy family in New York City. This has very little to do with them inherently and everything to do with the systems that shape them.
One of the concepts central to systems thinking is the idea of levers and leverage points.
In any given system at any given time, certain activities at certain times provide more leverage than at others.
So I started thinking about different mental models of leverage points that I’ve found both in my own experience and through reading.
Here are a few:
Understand Growth before Optimization
(AKA Work in the System before you Work the System)
“The best way to succeed in business is to be in business”
You have to be, or have been, immeshed in a system to understand it before you’re able to work on it and actively shape it.
The highest leverage point for a business is highly dependent on what stage of it’s life that business is in. Applying the wrong techniques at the wrong times doesn’t yield much leverage.
People like to give blanket recommendations in all areas of life like “measure everything.” But that’s only true for certain parts of certain systems at certain stages. There’s a hard cost and an opportunity cost to measuring something. When you have 5 customers in a business, you don’t need to measure anything. You need to call them every week.
This became obvious to me at a trade show we went to a couple of weeks ago. The system we were trying to understand was how to sell portable bars to event rental companies. By immeshing ourselves in the system at the trade show, I would say we learned more about that system in the first hour of the trade show than in the previous year of sitting around split testing headlines.
Charles Darwin spent 5 years sailing around on the HMS Beagle collecting specimens and making observations about ecosystems around the world. He wouldn’t have been able to create the paradigm shift he did in Biology had he not totally submerged himself in the system he was trying to understand first.
Think in Longer Time Horizons
It is important not to confuse ‘goals’ and ‘desires’. Goals are the things that you really want to achieve, while desires are things you want that can prevent you from reaching your goals. – Ray Dalio
One of the (many) ways humans are maladapted for modern society is that it’s unnatural for us to project the implications of our decisions far out into the future. The power of habit formation means that seemingly one-off decisions really lay the groundwork for a pattern of behavior. The compound interest of those decisions have huge implications over the course of a lifetime.
Thinking in 5, 10, or 20 year time frames is one of the better heuristics I’ve found for making important decisions and in differentiating between things I want that are desires vs goals. The decisions you make today aren’t anomalies, they’re laying the groundwork for the life you’ll be leading 20 years from now.
While I’m always (categorically) wrong about what I actually will want 5 years from now, framing the decision on that time frame forces me to consider the true implications.
Societies that survived thousands of years frequently focused on seemingly absurdly long time horizons. Some Native American societies that lasted for thousands of years framed decisions in terms of how it would affect them 7 generations into the future.
One of the striking things reading about George Washington was that he was making decisions and shaping his character in his twenties with the belief that this would set him up for achieving his desired outcomes in his 50’s and beyond. That worked out pretty well.
Focus on Fundamentals
One of the other ways humans are maladapted to modern society is that we’re always looking for novelty and shortcuts and the world and economy we live in is more than happy to sell them to us.
However, there are relatively few fundamental principles and mental models that govern even the most complex systems.
Charlie Munger, one of the wealthiest men in the world, emphasizes that he makes almost all his decisions using a few basic models from physics, psychology and economics.
I love the subtitle to Chet Holmes Book – the Ultimate Sales Machine: Turbocharge your Business with Relentless Focus on 12 Key Strategies.
The entire field of sales and marketing, which has been arguably the biggest driver of economic growth in the last 100 years, can be distilled down into 12 strategies in a 200 page book.
The difficult thing with this leverage point for most people is that the conclusion isn’t very appealing to our novelty seeking brains. It’s the same conclusion Gladwell reaches with his 10,000 hours hypothesis in Outliers.
The leverage in this case is in sitting down and doing the work. A lot of it.
Start with Why
Simon Sinek’s TED talk and book, Start with Why, has a powerful effect on most people because I think everyone realizes that what he’s saying, that changing the purpose of a system creates far more leverage than changing the parts or actions, is correct.
Altering the purpose of a system, can create dramatically different results.
The objective of one of our companies is to sell valet equipment.
I’m not particularly passionate about valet equipment.
I am passionate about supplying business owners with products that lets them run and grow their businesses in ways that improve their lives and the lives of their team and customers.
While the desired outcome (selling more valet equipment) is the same, reframing the purpose dramatically affects how the system (our company) works to achieve that outcome.
I’ve been a long time fan of David Allen’s Getting Things Done. While it’s still a great organization system, it misses out on some of the more holistic, systems thinking aspects of being productive.
That was something I didn’t realize until I discovered Agile Results and realized that before figuring out what to do or how to do it, you have to figure out why you want to do it in the first place or you’ll lack the motivation to get anything done.
Focus on Paradigm Shifts (AKA Table Selection)
I love reading about the daily rituals of people I admire and trying to understand how they live their lives.
One of the things that is striking about many of them to me is that considering what they accomplished, they just don’t seem to have worked that much. There’s lawyers working away on 100+ hour work weeks that will never make a fraction of the impact someone like Darwin did on the world
Yet, for the majority of his life, Darwin only worked 3 hours/day.
His impact was so profound and lasting because he was focusing his effort on shifting the paradigm of his field, doing the deep work so his lever for creating impact was enormously long.
Mark Cuban has said that the difference between most 10 million dollar companies and 1 billion dollar companies is simply market cap. The systems required to successfully grow and run each one are more or less the same. It’s just a question of which table you’re sitting at.
There is an element of Working in the System first here though. The problem with choosing the right table is that’s very rarely clear how good of a table it is until you’ve sat down and played a few hands.
Did you like this essay?
It’s often easy to tell yourself that you need to focus more in order to get things done. But sometimes it’s a little bit more complicated, and it can be harder some days than others.
I know it is for me.
That’s why I have a collection of tools that help me to stay on task and get things done.