Systems thinking (E)

0:00It's an interesting question. Betty Crocker, of course, isn't a real person. Duncan Hines left us a long time ago. But if you're going to buy brownie mix at Walmart, you're going to have to take a hard look at how systems have changed our world. Salut, c 'est John de Glasgow en Écosse. Et vous écoutez un épisode spécial des archives d 'Akimbo.

0:25Let's start with Duncan Hines. Duncan Hines was a traveling salesman. He sold printing back in the 1920s. Being a traveling salesman in the 1920s wasn't easy. Cars weren't that reliable. Hotels weren't that nice. But restaurants? Restaurants were a real problem. That's because very few people went out for dinner. If you were from town, you either went to the pub or you ate at home. So the only people who were eating at the kind of restaurants that Duncan Hines could afford were people from out of town. And there wasn't a health department actively working at public safety, which meant that the chances of getting food poisoning were non-zero.

1:10Well, Duncan, a good eater, one time he got stranded in a snowstorm and had the breakfast of five men the next morning, felt like he could do something about this. At the same time, he thought he could get away with a cheap Christmas gift. So when Christmas rolled around, he sent everyone on his list a few papers stapled together, listing, by city, restaurants you could trust. As you can guess, there were a lot of requests for reprints. And month by month, year by year, the list got bigger, until one day Duncan quit his job as a printing salesman, used his knowledge of printing, and made what was the first restaurant guidebook for travelers in the United States.

1:55It caught on, and as it spread, restaurants wanted to tell the others that they had been approved by Duncan Hines. So Duncan Hines made his first fortune by licensing restaurants the right to put a sign out front of their restaurant announcing that Duncan Hines himself, had approved their restaurant. Later, because of his interest in food safety, he was open to the idea of licensing his name to a company that made canned goods and ultimately brownie mix. But we're here to talk about the system that Duncan was part of. Because his idea wouldn't have worked in 1860 or 1880 or even 1900 because the system changed.

2:43It changed because people were driving around in cars. People were going from one city to another. This created a demand for exactly what Duncan was bringing to the public. The system was largely responsible for his success. And what about Betty Crocker? Well, Betty Crocker, the fictional Betty Crocker, at one point was getting thousands of letters every day because she had a radio show. Yes, the fictional Betty Crocker's radio show was super popular. It turns out that the system of mass media enabled a company to invent somebody who could fill airtime because airtime needed to be filled. And the system that led us to travel around in cars that made us more transient meant that people were looking for national brands.

3:38And the system that had more and more women working out of the home meant that there was more demand for convenience food. All of those things enabled Betty Crocker brownie mix to even exist. What about Walmart? Well, Walmart, a retailer worth eight times more than Amazon, exists because of a system, a system that was built 63 years ago. 63 years ago, the container ship was created. Why does the container ship matter? Well, it turns out that if you have a company with a trucking fleet, you could unveil and motivate and yell at your drivers to go a little bit faster. But the fact is they can't deliver the stuff by truck much faster.

4:29And if you have a fleet of boats, same thing is true. So how do you improve what it means to ship something? Well, it turns out you can't make the trucks faster. But what you can do is change the interface between the trucks and the boats. That what you can do, as Toby Leckie of Shopify has pointed out, is create a container so that you can load it once, put it on a truck, bring it to the ship, not unload it, just move the whole container onto the ship, and then the ship will bring it to a truck on the other side, cutting down by days and by many thousands of dollars the cost of shipping something.

5:15For many intents and purposes, the cost of shipping basically disappeared. So when Sam Walton showed up and said, I'm going to build a store with everyday low prices, his insight was to say, we want to be the kind of business that lowers its prices, not seeks to raise them. But the system that enabled him to get away with this, he didn't invent. He just showed up when the system needed someone like him to bring these low-priced goods from far away to consumers who wanted to pay less. He built an organization that interfaced with the system. You are listening right now to a podcast. This podcast would have been impossible 25 years ago.

6:05Seven years ago, when I did my first podcast, it was really popular compared to the other podcasts because there weren't that many. And it's only recently that podcasts have exploded. What changed? People still talk. Recordings are still made. What changed? What changed was the system. And the system was, starting from the idea of the internet, moving on to the idea of moving files from one place to another. Dave Weiner's invention of RSS, which enabled blogs to work and then was connected to the idea of podcasts, enabled people to subscribe. The smartphone in your pocket that regularly causes you to have an itch to scratch of what should I listen to next.

6:50All of these things are part of a broader system. And it's only when we adopt systems thinking, which is about the relationship between and among. Not necessarily the thing we do, but the connections between and among. So if we think about some of the innovations that Amazon has brought to the table, when they first showed up, Jeff simply said, oh, the system is changing. The combination of UPS and FedEx plus the idea of the World Wide Web means that inventory isn't going to be the driving expense of a business and that having a permission-based relationship with people over time will enable a new kind of retailer to exist.

7:40Amazon couldn't cause that system to happen, but they could show up optimized so that as it grew, they could grow with it. But recently, Amazon has adopted several other bits of systems thinking. So for example, if you write code at Amazon. Under the penalty of being fired, you must make it so that your code has an API that enables anybody else at Amazon to tap into your code and reuse it. Systems thinking. Take it one step further. Amazon Web Services said to everyone else on the web, we will host your stuff cheaper and more reliably than anyone else can. And they were willing to lose money doing so because they understood that being at the center of a system of data exchange would enable them to continue to increase their reliability and lower their costs for themselves and for others.

8:41Seeing the system enables you to be part of the system. And now there's a second half here that's related to this idea of between and among. And it's the idea of Slack. Not Slack the software, but Slack the concept. If you ask most people who run a factory or an organization or a sports team, what they are looking for is a taut, firm connection between and among everybody. Everybody busy all the time. That the reason that a bucket brigade is so much more efficient than people running back and forth and back and forth to the source of water is it's easier for people to efficiently pass the bucket from one to another than it is for them to run back and forth.

9:36You will put the fire out faster. But if you've ever seen an efficient juggling troop or bucket brigade or a hockey lineup that's passing, passing as it works its way down to the goal, it's a thing of beauty. And so what we seek to achieve is that idea of synchronization. And I'm here to tell you that you cannot maximize system efficiency by eliminating slack from the system. It feels like you should, but you can't. And the reason you can't is because of variability. Variability says that someone might be five minutes late for their appointment. Variability says there might be a custom order coming through that's worth it for the organization to take on.

10:26Variability says that some customers need to be treated differently than others. And when a system like that exists, if you have removed all of the slack, then when switching costs kick in, the whole system falls apart. What's the alternative? The alternative is a fire department with firemen who eat chili for three hours waiting for the alarm to ring. If you were trying to get rid of slack, what you would do is say, let's have exactly the right number of firemen so that when the average number of fires are happening, all of the fires are being addressed, which works great, except when the above average fires start to happen.

11:11And when the above average number of fires show up, you don't have enough firemen to go around. And so what we have the opportunity to do as we organize our lives, as we dance with these systems, is to intentionally build slack into our systems. A buffer, a cushion to avoid the emergency. Because in that buffer, we can work on the long-term stuff. The firemen aren't really eating chili. the firemen are inspecting houses to make sure they're not going to burn down next week. They're teaching kids what to do in an emergency. They are using their downtime in a slightly productive way. But mostly what they're doing is standing in reserve, waiting for when the emergency shows up so they don't have to say, oh, sorry, your house burned down.

12:03So what we have is the opportunity to look deeply into the systems in our lives, the ones that are changing and also the ones that aren't. What we might be able to do is let ourselves off the hook just a little bit for not sprinting all day long. You know, when you think about Roger Bannister running the mile in four minutes, he had no slack in his system. Every footstep was measured. He was on pace. If he hadn't been, he wouldn't have been able to do it. But that's not really the way our lives work. We are not optimizing for a four-minute mile all the time. Instead, what we're doing is building resources and finding assets so that when the system points to us, we are ready for it.

12:52And so we come full circle. Once we start looking at between and among, as opposed to the individual pieces on the board, we realize that we are all part of a system, part of many systems. And your job is to learn to see the system and to build enough slack, enough buffers into your interaction with the system so that you can continue to be productive without running around like a crazy person. systems thinking is the shortcut to creating productivity and impact. Thanks for listening. We'll see you next time.

13:54Roberta Perry. My question is... And that completes my question. Here's a question from Zoe. Hey, Seth. It's Zoe from the UK again. I have another question for you. Greedy, I know, but I find your riffs fascinating. And I particularly like the one on rules and norms. As the norm is to have guests on a podcast, I'm interested to understand the thinking behind the format you've chosen. Why did you decide not to have any guests? How did you choose the theme? How long does it take to write and produce each one? Do you have a team of helpers? And most importantly, Seth, will you please create another online course for podcasting?

14:33Yeah, okay, that's a whole bunch of questions, but definitely worth a try. Thanks for all your fabulous insights, Seth. You're amazing. Thanks for giving me a chance to riff just a little bit about podcasts. I'll start with this. What are podcasts for? We know what talk shows were for in the 1960s. They needed to fill time cheaply on television, cheap enough that even though not a lot of people were watching the late-night shows at 11.30 or 12.30 in the morning, they could make something that would cost less than the commercials would pay. Talk shows are pretty easy to make. There's always somebody out there who wants to talk about their new movie or their new book.

15:19You can produce them with not a lot of effort. Well, many podcasts have followed in those footsteps. Those are right next to the much more expensive to produce NPR-style podcasts, which are made the way they're made because the kind of person who wanted to make a podcast in the early days came from that NPR, well-produced, insightful background. So those were most of the podcasts that people were listening to. I thought about making a podcast for a bunch of years. I did one long before most people called The Startup School. You can still find it now and listen to it. It was number one in its category for a really long time.

16:04And that podcast wasn't a traditional podcast in the sense that I basically did a two-day live event, and we broke it into 14 chapters that people could listen to. But for this podcast, for Akimbo, I knew that I didn't want to do a standard interview show, for a few reasons. I really like interviewing people. I think I'm pretty good at it. But getting guests, managing guests, figuring out where it goes, and counting on the quality and energy and curiosity of each guest week after week, it just wasn't on my agenda. And my hunch is that a lot of people who listen to podcasts have probably heard enough pretty good interviews from enough pretty good interviewers.

16:52So I wanted to do something that felt different. I knew that I wanted it to be direct. I knew it needed to feel like you were talking to me, that I was the guest on every episode. I also decided to make it short because traditional meetings, traditional TV shows, traditional movies, they are the length they are because that is what the economics of the medium support. As you learned from the Avengers movie, yes, you can have big box office, but it's a long time to sit in the theater. And it doesn't make sense to put on a Broadway show that only lasts for 20 minutes because it's too much of a hassle to get to the theater and park and everything else.

17:37In the case of a podcast, though, most people who listen to podcasts listen to a lot of podcasts. As a result, it doesn't matter if a podcast is short. It matters if it's good. It matters if it resonates with you. It matters if you hear something that helps you see the world differently. That's what we're trying to do with Akimbo. Some of the specifics. Yes, I looked around for a really long time before I found the great guitar riff that is the Akimbo signature. So thank you, Davey, for contributing that. It's really terrific. My question is, how can I translate that? How do you attract? And how much time does it take?

18:22Well, I don't have a script. I think about the podcast all week long, and then I come into my little studio, which is in the back of the office. It's actually in the shower, in the back room. I cover the shower with foam and stuff. And I record the podcast, almost always with one take. Sometimes I'll have to reproduce a paragraph or two if I mess up. But what you are hearing me doing is thinking my way through what I came to talk to you about. After I record it, I do the pre-edit here in my office, and then I send it to the amazing Alex De Palma, who works with Sam, and the two of them polish it up at the last stage, and then you get to listen to it.

19:04I will keep doing it as long as it is resonating with you, and I have something interesting to say, so hopefully that's for a little while longer. And if you feel like sharing it, that would be fantastic. Thanks for listening. If you've got a question, please share it with us. Visit akimbo.link, that's A-K-I-M-B-O dot L-I-N-K, and press the appropriate button. Again, thanks for listening. Go make a ruckus.