Some startups do 100x times better than yours, yet their idea, execution, and people are remarkably average.
Why is that?
A big part of the answer is that systems rule the world. That’s my takeaway from the book Thinking in System by Donella H. Meadows.
Systems have reinforcing and balancing feedback loops – dynamics that make certain things impossible to change and others prone to rapid unstoppable change. This is why some companies grow exponentially fast and some never will; why some feel like a rocketship and most feel like the worst uphill battle in history; why some do 100x better than yours.
No matter what you do, you are operating within multiple systems. And changing them begins with seeing them.
Show Some Respect to the System
The person whose mind you will never change is the one you don’t respect or bother to understand fully. Oddly, systems are the same. You have to show them respect, to fully understand them, to assume that they were not born yesterday if you want a chance at changing them.
I will now show you how understanding a system completely changes how you think about and operate within it. The system is government sales.
You probably think that government sales are just like B2B sales, only way way way slower. But why are government sales so slow?
Governments are risk averse by their very nature
Governments learn and copy from each other
Governments have little incentive to change and lots of bureaucracy to keep them precisely in place
A shallow assessment of these 3 characteristics will lead you to conclude that selling to the government is slow and hard. A deep observation and analysis of the system will lead you to a well-kept secret about government sales dynamics:
Painful start - Your first deals are going to be hard, slow, and painful. It’s a real grind much harder than B2B sales
The race to be second - Once you have a few happy customers to reference, government sales become as “easy” as B2B sales are
Going viral - Here’s the kicker, once you have a critical mass of customers you go viral. Governments talk to and copy each other all the time, they want to do the standard thing everyone else is doing. New customers suddenly come to you
We start seeing how selling to the government can be a great business. If you are willing to stick through phases #1 and #2, you reach phase #3 and go viral. It becomes easier than B2B sales.
The last piece of the puzzle is that these dynamics are regional in nature. You have to get to a critical mass of customers in a region to go viral. This means that the only winning government sales strategy is to gradually open up one small territory at a time. If you spread too wide it will take an eternity to reach critical mass in any one region.
So you see? Selling to the government is not what you thought it to be. It can be faster and easier than B2B sales, or terribly worse if you don’t know what you're doing. A good reason to show some respect to the system.
How to Respect Your System
Now that you viscerally want to respect your system, you might wonder how to.
At the end of the book, Meadows presents practical advice for working in systems. Below are her tactics summarized.
Get the Beat of the System. Before you disturb the system in any way, watch how it behaves. It is guaranteed that you will have crucial misconceptions if you rush this. Zooming out is one way of doing this.
Expose Your Mental Models to the Light of Day
Modeling a system on paper takes only a few minutes. It exposes your assumptions, and flaws, and creates a shared model with your team – a massive return for a few minutes of your time.
Here’s one model, hand-drawn by Jeff Bezos, which propelled a $1T business.
Honor, Respect, and Distribute Information. Meadows suggested amending the 10 commandments with an eleventh one: Thou shalt not distort, delay, or withhold information. Based on her powerful examples, I’d put it as a close second after Thou shalt not kill.
Use Language with Care and Enrich It with Systems Concepts. The humans who work within a system form a system themselves, and they rely on the system of language to interact with each other. That’s a fancy way of saying that the words you’re using to describe your system are as important as understanding the system in the first place. Be international about how you pick and use these words.
Pay Attention to What Is Important, Not Just What Is Quantifiable. “No one can define or measure justice, democracy, security, freedom, truth, or love”. This sentence says it all.
Make Feedback Policies for Feedback Systems. This concept is a bit complicated but powerful. The idea is to set policies that are dynamic so that they can adjust to a dynamic system. Take the government sales example from earlier, you want to implement a strategy that allocates resources according to where you can go viral sooner. If you don’t get traction in a region, leave it. If you get some traction, put in more resources to get to critical mass. If you've reached critical mass, put in fewer resources.
Go for the Good of the Whole. Remember that hierarchies exist to serve the bottom layers, not the top. Don’t maximize parts of the systems or subsystems while ignoring the whole. Don’t, as Kenneth Boulding once said, go to great trouble to optimize something that never should be done at all. Aim to enhance total systems properties, such as growth, stability, diversity, resilience, and sustainability – whether they are easily measured or not. Don’t let the Feel-Good Traps trick you.
Listen to the Wisdom of the System. Think of this as understanding and leveraging the strengths of the system, instead of fighting its weaknesses all the time. Like your employees, the biggest ROI comes from leveraging their strengths to the max, not trying to overcome weaknesses.
Locate Responsibility in the System. Putting a pilot in front of the plane ensures that she directly experiences the consequences of her actions. “Intrinsic responsibility” means that the system is designed to send feedback about the consequences of decision-making directly and compellingly to the decision-makers. Look for the ways the system creates its own behavior, then use this understanding to increase responsibility within the system.
Stay Humble – Stay a Learner. Anybody reading my blog is already a humble, incredible, and beautiful learner.
Celebrate Complexity. Systems are not simple. They grow in complexity faster than they grow in size. Appreciate that you can’t get it all or model it fully, nor understand all the nuances. Simplify away but remember that you’re missing something when you do.
Expand Time Horizons. I love the last paragraph of this section. When you’re walking along a tricky, curving, unknown, surprising, obstacle-strewn path, you’d be a fool to keep your head down and look just at the next step in front of you. You’d be equally a fool just to peer far ahead and never notice what’s immediately under your feet. You need to be watching both the short and the long term – the whole system.
Defy the Disciplines. Systems see no boundaries between disciplines. To understand and work with a system, allow yourself to be interdisciplinary. Don’t stay within the edges of your comfort zone. Be bold and educate yourself in whatever way the system demands.
Expand the Boundary of Caring. Systems are interconnected and your caring should be too. If you just care about yourself and let your employees fail, if you just care about your employees and let your investors fail, if you put bounds on caring, ultimately the system will come back at you. It’s like karma but for systems.
Don’t Erode the Goal of Goodness. If you’re already going through the trouble of changing a system, any system, do it for the goal of creating good. The system will last longer and grow bigger than you might imagine, so leave a trace of good behind you.
If you want to change the world, if you want to change anything, what you’re after is changing systems. Thinking in Systems is a must-have mental model, and book, to acquire.