Tag: josh kaufman

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Education Lifestyle Productivity

Creating Systems

“Systematize everything, and find peace”

Brandon Turner (The Book on Rental Property Investing)

Why create systems?

Having goals is a fantastic way to be productive and build a life by design, but the most productive results come from having systems. When we have a goal, there are a series of choices we have to make. Usually, goals are things we haven’t done before, so all the choices we’re going to have to make require a lot of attention and energy. Even if the goals have been accomplished before, having to deal with the challenges that arise time and time again can be exhausting.

Systematizing everything makes these processes a lot easier, especially if there are goals that need to be completed regularly. Creating systems gives us the opportunity to make fewer choices and the freedom to do other things. Despite what many people think, our energy is like our time, limited and nonrenewable. The return on saving energy is virtually infinite. Systems allow us to be more productive as well, in terms of quantity AND quality.

Systems also make processes easier when we have to do them. Having a reliable proven strategy for conquering whatever scenario in front of us cuts the effort down tremendously. It’s much easier to just “start the process” than to try really hard just to discover that it wasn’t going to work anyway.

Focusing on systems, not goals, is the key to long-lasting, reliable, and fruitful results.

In order to focus on systems, we first have to understand what they are and how they work. I wrote two posts on systems so far: Gall’s Law & System Components and Analyzing & Improving Systems. I highly recommended checking those out, I go over the fundamental information about systems and how they work. This post synthesizes some of the information discussed in those two posts and emphasizes the concepts that will make creating systems much easier.

When we understand how systems work and how to create our own, then we can engineer our own systems to fit our unique needs perfectly.

Marks of an Effective System

Human beings need purpose and intentionality in order to have fulfilled lives and content with existentialism. I talk a little bit about that in this post. We need something to aim at and a system is no different.

What is the purpose of a system & how we do know if it’s working well?

According to author of The Personal MBA, Josh Kaufman, an effective system does the following:

  • Fulfills its functionality
  • Has great infrastructure
  • Ready connectivity with other systems
  • Versitile
  • Adaptable
  • Reliable
  • Produces benefits which far exceed the initial investment

Keep in a mind, all of these criteria don’t need to be met to have a functional system. A system can work without all of these, however, these are all qualities that a great system can build towards.

How to Create Systems

“If you want to build a system that works, the best approach is to build a simple system that meets the Environment’s current selection tests first, then improve it over time. Over time, you’ll build a complex system that works.”

Josh Kaufman (The Personal MBA)

Keep Gall’s Law in mind when you first start – work on creating a simple system, then add complexity over time. Don’t try to make a system that does too much at once right off the bat.

Creating a complex system immediately will result in failure.

When it comes to building a system from scratch, just try to figure out how to get the task done in the first place. Once we’ve completed the task, we developed a neural pathway that knows exactly how to get that task done. Every single time we work on that task in the future it gets easier and easier. (Exactly like Active Recall.) Once we’ve gotten to this point, it will be much easier to create a system because we will know the steps intimately. Creating a system will speed that process up even more!

Once we know how to get the task done, we need to identify the key components of the system and improve each step of the process so it becomes more efficient and effective. Just make one change at a time. Creating a good system takes time and patience, like building habits.

Systems are almost never correct right off the bat. It takes a few tests to get all the details right and have a system that runs smoothly. All systems start off terribly, but all the best ones improve over time and the only way to objectively improve a system is through experimentation.

Fans of history can probably name a few times human beings have tried to create something but had to revamp the system because they found out it wasn’t working too well. I remember working with a student on history work and I was stunned to discover that this process is the exact process that the American government evolved from. Today, the American government is a massively complex system with multiple branches and precedence for almost every conceivable situation but it did not start off that way. It started off with just the Articles of Confederation, and that system didn’t even have an executive or judicial branch. Then it grew with the Virginia Plan, then the Constitution, then the Bill of Rights, and finally with the amendments we have today. The point is that this extremely complex system didn’t start off how it is today, it grew over centuries through experimentation.

Humans never get anything right the first try.

When I was a noob at creating systems, I thought that I needed to know each step of the process and it had to work perfectly before I even started, but that prevented me from even starting in the first place. There’s no way to know every single step and account for every single variable without testing a system.

All, if not most, problems can be handled with systems. If there isn’t a system for it, then we can create one. We just have to go into the process expecting the system to fail and be willing to make adjustments or we won’t have any systems at all.

Guiding Questions

If you’ve read some of my Importance of Questions post, then you know that I believe questions hold the key to everything we want in life. They can allow us access to other people’s minds as well as guide our thinking to solve problems that we haven’t seen before.

Here are some questions that could be useful when creating systems:

  • How do I make this process easier next time?
  • How can I make this process more reliable next time?
  • How can I prevent ____ from happening again?
  • In a perfect world, how would I want to deal with this situation?
  • How can I make _____ happen again?
  • What is the end result? What am I producing?
  • What are we starting with? What do I need to get this going?

Tips for a Great Checklist

Systems can take many different forms. One of the most simple forms, checklists, have also been proven to be one of the most effective. I talk a little about checklists in my post Analyzing & Improving Systems and in that post, I mention how checklists are fantastic for creating processes that haven’t been articulated yet. Checklists are my go-to method for ordering the chaos and are fantastic simple systems to build upon later.

In Dr. Atul Gawande’s fantastic book, The Checklist Manifesto, Gawande lays out the proof that checklists are more reliable than the instincts of even the highest trained professionals. Pilots, especially when confronted with an emergency, are more than willing to turn to their checklists.

The first tip for making a great checklist is to have normal and non-normal checklists. Normal checklists are for normal everyday situations, things that come up often. Pilots have normal checklists for things like take-off and landing. Non-normal checklists are less often used but are for emergencies or other scenarios that wouldn’t occur on a regular basis. Pilots have more non-normal checklists than normal checklists. They have checklists for all conceivable emergency situations.

There are two types of checklists: do-confirm and read-do. Do-confirm lists are when team members perform their jobs first, then pause and run the checklist to make sure that everything was done correctly. Read-do lists are when people do the tasks as they read them on the list. Do-confirm lists act more like a double-check while read-do lists are more like a recipe. Know which type of checklist you are creating and when to use it.

Great checklists are specific and precise. If a checklist is too vague and inaccurate is becomes hard to use and impractical.

They also need to be short and to the point, if a checklist is too long it becomes another hurdle. Try to keep the length of the list within the bounds of our working memory, 7+2 items (5-9). They can be longer, but keep in mind that if checklists take longer than 60-90 seconds then people start shortcutting and they become more hassle than they’re worth. Focus on the critical few.

They also have to be easy to use in the most difficult situations, keeping it short and sweet helps a lot with this.

Contrary to popular belief, a great checklist should not spell everything out. They just simply provide a reminder of the crucial steps. Operators of the checklist should be trained and know what they are doing. The checklist is just an aid, not an instruction manual.

Checklists must, above all, be practical.

Checklists cannot solve problems for us, they simply help us manage complex processes and clarify priorities. They are not comprehensive guides, just reminders of the critical steps. If we include every little step, then the checklist just adds friction to the system. Checklists are designed to remove friction and add ease and clarity to a scenario.

When creating a checklist, I highly recommend clearly defining a point WHEN the checklist will be used.

Like all systems, checklists have to be battle-tested in real life. Experiment with the checklist and pay attention to what works and what doesn’t. The first drafts never stick and revising is always required.

A Few Systematic Principles

A few principles that I’ve noticed systems follow. It’s helpful to keep these in the back of our minds when planning and executing systems.

The Matthew Effect

“For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away.”

Gospel of Matthew (25:29 Revised Standard Version)

I talk about this in my post The Myth of Motivation, when I talk about aiming for success spirals.

The Matthew Effect is pretty simple — success breeds success and failure breeds failure. The best part is that this relationship is not linearly, it’s exponential. If we do something like writing a book and some people like it, then we’re more likely to write another book which makes it more likely that more people are willing to like it.

We can see spirals like this is so many things. If we get an A on an exam, it’s easier for us to get an A on the next exam. We know the concepts and are more likely to sacrifice because our sacrifice led to a positive outcome last time. Likewise, if we fail an exam, it’s easier for us to fail the next one. We don’t know the concepts, so we’d have to learn those ones on top of the new stuff. The previous failure adds friction to the next challenge. Our actions compound on each other and it can stack up quickly. This is definitely one of the reasons for the massive wealth inequality in the modern world. It’s much easier to make money when you’re already making money.

When building a system, try to keep in mind that the actions of the system will affect the actions of the system later. The Matthew Effect also provides a fantastic foundation for another systemic phenomenon, the Pareto Principle.

Pareto Principle (The 80/20 Rule)

The Pareto Principle definitely needs it’s own post because it’s such a pervasive idea and we can dive into it for hours. Famous entrepreneur and investor, Richard Koch was able to write 4 books on the topic! 4 books!! While the principle itself isn’t complex nor long, Koch focused more on applying the principle to every aspect of our lives. I’ll go more into that later.

While there is a lot to say about the Pareto Principle and its accommodations, it can be summed up relatively quickly:

80% of the output of any system is from 20% of the input.

This principle can apply to all domains of human creation. This shouldn’t be a surprise though. For most of us who have worked on a group project, we know that most of the work ends up getting done by a small portion of the group. This also happens in companies too – 80% of the work is done by 20% of the employees.

There are many names given to this idea because it shows up in so many places. The Pareto Principle is also known as the 80/20 Rule or the Square Root Rule: being that 50% of the work is done by the square root of the number of employees. The numbers aren’t perfect, but the idea is the same:

The majority of the results come from a critical minority of effort.

This principle is game-changing when it comes to creating systems. Knowing that the majority of the results comes from a critical few, we can focus our energy on optimizing for those critical few inputs rather than wasting energy on processes or steps that yield a lower rate of return.

I talk a bit about how the Pareto Principle came to be in my post Analyzing & Improving Systems.

Vilfredo Pareto, the 19th-century economist and sociologist, discovered an interesting pattern when analyzing data regarding land ownership and wealth distribution. He discovered that 80% of the land was owned by 20% of the population. Pareto didn’t just find this pattern in wealth and land distribution, he also saw it in his garden. 20% of his pea pods produced 80% of peas.

We can see this in book sales and album sales too, pretty much any domain of creative production. 80% of the book sales are from 20% of the authors. 80% of music streams are from 20% of the artists.

Richard Koch also noticed a similar pattern when studying for his final exams at Oxford. At Oxford, the students are graded by their performance on a final exam which is a collection of essays on a wide variety of topics. Richard determined that in order to prepare for every possible question they could ask him he would have to memorize somewhere around 550 essays. Obviously, this wasn’t reasonable so Richard found another way around it. He analyzed all the past exams and discovered that every exam asked questions on similar topics. 20% of the topics accounted for 80% of the questions. Upon realizing this, Richard figured that all he had to do was prepare for 20% of the topics. This significantly cut down the work he needed to do to prepare for the exam.

Spoiler Alert: he did great on the test.

The best part about the Pareto Principle is that it can apply to all systems, in business and our personal lives. We can a Pareto analysis of our own lives, as well as any systems that we’d like to optimize.

I love doing the 80/20 analysis of everything. I’m constantly trying to figure out what I really need to do. Trimming the fat automatically maximizes our time and effort. It’s much easier to just focus on what is important than trying to find ways to do everything better.

It can apply to happiness – What 20% of things give me 80% of my happiness?

It can also be applied in reverse – What 20% of things are giving me 80% of my unhappiness?

It can be applied to anxiety, relationship satisfaction, costs, food, anything our hearts desire.

This principle helps us optimize.

Whenever I’m creating a system I try to keep in mind that principles are more valuable than knowledge. If we can understand the principles behind something, then we have the ability to predict and manipulate the system across many different scenarios.

Richard Koch likes to ask people:

“What would happen if we spend all of our time on the critical aspects?”

Parkinson’s Law

I first talked about Parkinson’s Law in my post 5 More Tips for Better Scheduling because I first learned it as a scheduling principle but now I see how it can be applied in a broader sense.

Parkinson’s Law states that work expands to fill the time allotted for it.

So if we have a week to get a project done, it will take us a week. If we have a day to get a project done, then it will take a day. Parkinson’s Law helps explain how people are able to finish massive projects the day before it’s due or how an unmotivated student finds the strength within them to get something turned in. It’s not that we aren’t capable of doing the work, it’s that we know we still have time and we’ll use all of it if we can.

What I do to try to account for this is give myself less time than I think I need to complete a task or I set finite deadlines to work on a project. Either way, they both prevent me from spending extra unnecessary time on something.

There’s something about having our backs up against the wall that makes us perform. I’m not sure what it is, but it’s definitely there and we can use it to our advantage if we want.

However, Parkinson’s Law is more than just a cool scheduling hack. It can also apply to budgets and other resources too.

Parkinson’s Law applied to budgets – spending expands to fit the budget allotted for it.

Now, the spending doesn’t have to expand to fit the budget but it usually will.

The resources we allocate for something determines the fundamental perspective of our approach.

If we are pressed for time or if we don’t have a lot of money, then we’ll be on the lookout for creative ways to solve problems that could otherwise we solved with time or money.

Parkinson’s Law really just highlights another quality of human nature which is that humans are creatures of necessity and we will always try to solve problems with the least amount of effort possible. Keeping this in mind when building systems is extremely valuable and perhaps we can go further with what we already have.

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Education Productivity

Analyzing & Improving Systems

“If you are unhappy, your system is broken.”

Brandon Turner (The Book on Rental Property Investing)

In my last post, I talked about Gall’s Law and the different components of systems. In this post, I’m going to discuss ideas surrounding analyzing and improving systems. There are going to be some terms I reference from my last post, so I highly recommend checking that out first.

Josh Kaufman beautifully and simply explains how to do this in his book, The Personal MBA, and I also highly recommend checking that out too. The ideas in this post are mostly from that book as well as my own personal insights.

How to Analyze Systems

When analyzing a system is difficult to know what to look for, especially when dealing with complex systems. It’s also crucial to keep in mind that we all have a bias which could get in the way of analyzing systems. Whenever possible, we need to take steps to mitigate our bias.

Here are some other things to look out for when analyzing systems:

Deconstruction

This is an excellent first move when it comes to analyzing systems. As discussed in Gall’s Law, all complex systems arise from simpler systems, therefore every complex system is capable of being deconstructed into simpler systems. Deconstruction is simply breaking up complex systems into their interdependent parts and understanding how each of those parts works. It’s also helpful to try to identify triggers (what kicks off another system) and endpoints (what makes a system stop). Diagrams and flowcharts are also lifesavers when it comes to deconstructing systems. Recognizing if-then and when-then relationships are also invaluable.

After breaking the complex system up into it’s smaller parts, we can then break down those simple systems even further into their components. Identify inflows and outflows, stocks, interdependencies, and so on. I talk about what those components are in my last post.

Deconstruction makes understanding systems possible. Without deconstruction, we are sure to experience confusion.

Measurement

How does the system collect data? What kind of data is it collecting? Measurement describes the process of data collection in a system. If we can understand the information related to the system, then we get an insight into the system itself.

Paying attention to the measurement is fantastic for dealing with absence blindness — the idea that we have a hard time seeing things that aren’t there.

Let me give an example, measuring someone’s blood glucose levels tells us if someone has too little or too much blood sugar. This number gives us tremendous insight into what is going on inside the body even though we wouldn’t be able to visibly see changes in someone’s blood sugar.

Measuring something is the first step in improvement. I wrote a post, Tracking vs. Loss Aversion, that talks about the importance of measuring ourselves and our progress.

Don’t sleep on measurements. Trust me.

KPI (Key Performance Indicator)

I know I just emphasized how important it is to measure things, but there is such a thing as too much data. If we measure too many things, we end up having a bunch of junk data that weighs us down and doesn’t show us anything. In order to prevent this, we try to keep our measurements to only KPIs or Key Performance Indicators.

KPIs are measurements of the essential parts of a system.

Identifying KPIs can be tricky, but try to limit them to only 3-5 KPIs per system otherwise, we risk measuring too many things.

Garbage In, Garbage Out

This is one of the more straightforward ideas – what we put in is what we get out. The quality of the output is only as good as the quality of the input. You get what you give. There are so many cliche phrases that express this idea.

I found this to be especially true when I started cooking. I used to watch Gordon Ramsey cooking videos to try to learn how to cook (I even watched his Masterclasses), but I could never make my food taste good until I spent the extra money on fantastic ingredients. Now, I try to only cook with fantastic ingredients. It really makes all the difference.

One of the best ways to improve the quality of a system is to pay attention to what we start with.

Tolerance

This can be thought of as the range in which the system is working normally. If the system is performing within that range, then it’s within tolerance.

Tolerance can either be loose or tight. A loose tolerance is when there is a considerable amount of leeway and small mistakes don’t make a huge difference while a tight tolerance is when there’s little room for error or change, this is usually the case for essential components of a system.

Analytical Honesty

In order to properly analyze a system, we must acknowledge our propensity to make things look better than they are. We have to be able to apply objective judgment to our data which means that the best analysis of a system will come from someone who isn’t personally invested in it.

As I mentioned in my post, Our Unconscious Filters, human beings view the world through their bias and it’s hard to shake them, even if we’re aware of them. Having an outsider provide analysis is the only way to completely prevent our bias from contaminating our observations.

Context

Most measurements are meaningless without context. Context is all of the information we use to understand if measurements are favorable or not. Setting goals for arbitrary numbers like a 20% increase or 3 new deals are meaningless if we don’t know the performance of the system in the past and it’s projected performance in the future.

Trying to oversimplify how a system operates by judging it off one measurement will blind us to other important changes as well. Context is crucial for an accurate understanding.

Sampling

Sampling is what we do when we try things. We’re simply taking a small part of the output and using it as an example for the entire system. Sampling is great for catching errors without needing to check the entire system.

Just like all other methods of analysis, we have to consider our bias, and sampling is prone to bias. A way to control for it is to make sure the sample is random.

Margin of Error

Of course, not all samples will be perfect representations of the entire system. The margin of error is how much the sample deviates from the whole. The higher the margin, the more inaccurate the sample. The more samples we have, the smaller our margin of error.

Ratio

Ratios are fractions. Somethings divided by something else. It’s a simple way of measuring multiple variables at once. Ratios are also great for letting us know how a particular measurement changes.

For example, ROI is a percentage ((Returns/Investment)*100%) or comparing MPG (miles/gallons) or unit price of groceries. You know a ratio is involved in you hear the words per.

Typicality

In order to analyze a system properly, we need to know how it would operate normally. Kaufman suggests that we can measure typicality through calculating mean, median, mode, and midrange or various measurements.

Correlation & Causation

Causation comes from the idea of cause and effect. One part of a system is causing another part of a system to act. Correlation, on the other hand, is not always causation. Sometimes variables may seem the act like one causes the other, but that won’t necessarily be the case. For example, 100% of people who drink water die. Does the water cause the death in this case? Probably not. Water and death are simply correlational.

So how can we determine is something is correlational or causational?

By adjusting for known variables. If we control for as many variables as possible, we can see the relationship between each more clearly. As systems grow more complex, this becomes more and more difficult. The more we can isolate a variable, the more confidence we have that the changes are causational.

Proxy

Proxies are measurements of something by measuring another thing. A proxy is useful when we cannot measure something directly. The closer the proxy is to the original, the more accurate the measurement. We have to be mindful about correlation and causation when measuring a proxy.

Segmentation

Segmentation is grouping data into separate subgroups to get a more comprehensive context. I do this with all of my blog posts! That’s why I have titles and headings and subheadings. It gives all the (seemingly) random information I’m spewing a more detailed context.

Segmentation plays a huge part in how we understand complex and large amounts of information.

Humanization

When looking at data is easy to see it as an inanimate object, but when analyzing systems we have to keep in mind that the data tell us information about human beings. They are insights into real people — their behaviors, experiences, and thoughts. It’s easy to disconnect from data about a system because it seems so abstract and inanimate, but it’s quite the opposite. If we pay enough attention, the data lets us understand people on a deeper level.

When I worked at Kohls, they always emphasized selling to “her.” Her being a personified collection of the average data on their customers. They used average household income, gender, family size, and other variables to create their typical customer and found ways to satisfy that person.

Our data tells us what’s up with other people if we look hard enough.

Other Things to Look Out For

“If something in your business is causing you stress, most likely, you either don’t have a system for that issue, or you are not following your system.”

Brandon Turner (The Book on Rental Property Investing)

Pay attention to environmental changes and selection tests. I talk a little bit about these in my last post. These changes give smaller players a chance to outperform larger players. Identifying selection tests gives us a competitive edge.

Some questions to ask while looking out for these things could be: How is the environment changing? Who is unable to adapt to these changes? What can I do differently from those who cannot adapt? Who is taking advantage of these changes? What can I do similar to those who are doing well?

Always keep an eye out for the “black swan.” I first heard about this idea from Chris Voss, an ex-FBI terrorist negotiator. The “black swan” is any information that if discovered would change everything. Back in the day, people would say swans are white and if anyone said otherwise they would be crazy because swans are white. Eventually, someone discovered a black swan and everyone had to change how they saw the situation. Systems are the same way, try to keep an eye out for the information that would change everything. There’s always a piece of information that, if known, would change everything This is excellent for accurately identifying and balancing risk and uncertainty.

It’s also helpful to keep in mind that we process the unknown the same way that we process threats. We literally see and respond to what we don’t know as a threat. Expect to encounter threats, but instead of responding to it, we can respond with curiosity to learn more.

The last thing I want to mention about analyzing systems is to analyze close-calls when they happen to minimize accidents. Sometimes shit happens, but most of the time we can prevent it from happening. If we can notice when things almost go wrong, then we can take the steps to make sure that it doesn’t happen again or prevent the conditions that allowed it to happen in the first place without having to deal with the fallout of the accident.

How to Improve Systems

“Anyone who understands systems will know immediately that optimizing parts is not a good route to system excellence. For example, let’s build the world’s greatest car by assembling the world’s greatest car parts. We connect the engine of a Ferrari, the brakes of a Porsche, the suspension of a BMW, the body of a Volvo. What we get, of course, is nothing close to a great car; we get a pile of very expensive junk.”

Donald Berwick (1946 – )

Now that we’ve discussed analyzing systems and have a base framework for understanding systems, let’s talk about some of the ideas useful for improving systems. Most of these ideas are also included in Kaufman’s The Personal MBA.

Intervention Bias

This is the idea that human beings tend to add changes to a system just to feel like we have more control. So when we set out to improve a system, we have to entertain the thought that we might be implementing a new change just to feel in control. If we don’t, we risk adding unnecessary complexity to the system.

The best way to account for intervention bias is to analyze through a null hypothesis – what would happen if we did nothing? What if the situation was simply an error?

If the null hypothesis experiment determines that we’re better off doing something than nothing, then we will have minimized our chances for intervention bias to take hold. Examining the null hypothesis isn’t our natural reaction, especially since human beings have a proclivity to doing something rather than nothing, but it’s crucial for actually improving systems.

When improving systems, first think about what would happen if we did nothing.

Optimization

Optimization is what people usually think of when it comes to improving systems. This typically involves maximizing output or minimizing an input. Optimization is usually focused around the KPIs.

Kaufman suggests when optimizing a system to focus on one variable at a time. Optimizing a system across multiple variables will almost always lead to disaster. System interdependencies and second-order effects make it challenging to change more than one thing at any given time.

Refactoring

This refers to changing a system’s process so that it can perform the exact same result but in a more efficient way. This is most obvious in coding. Some programmers will pride themselves on performing the same actions in fewer lines of code.

To the average person, refactoring may seem insignificant, but more efficient systems run faster and require fewer resources which could be redirected elsewhere.

Some questions to ask when refactoring a system could be: What are the essential processes to achieve the desired objective? Do these processes have to be completed in a certain order? What are the constraints of the system?

Critical Few

If you’ve heard of the Pareto Principle (a.k.a. The 80/20 Rule), then you understand the concept of the critical few. Essentially, 19th-century economist and sociologist, Vilfredo Pareto, discovered an interesting pattern when analyzing data regarding land ownership and wealth distribution.

He discovered that 80% of the land was owned by 20% of the population. Pareto didn’t just find this pattern in wealth and land distribution, he also saw it in his garden. 20% of his pea pods produced 80% of the peas.

Today, we can see his 80/20 split in almost everything. In systems is useful to know that 80% of the output is from 20% of the input. In businesses, typically 80% of revenue usually comes from 20% of customers. 80% of the work is done by 20% of the people. 80% of our time communicating is with 20% of people we know.

Focus on the 20%. That is where the biggest changes will happen. Identify which parts are critical and give it attention or starve it of attention, whichever is required. The idea is to not try to focus on the whole thing, but the smaller parts that matter.

I do this with my students. 80% of my income comes from 20% of my clients and my attention and efforts are split accordingly. I give the clients who matter more attention and I starve the ones who don’t. After practicing these methods, I’ve eliminated a lot of headache clients and I’ve strengthened my relationships with the ones I do like. 80% of the problems came from 20% of the clients.

Focus on the critical few.

Diminishing Returns

This is the idea that after a certain point, adding more starts to cause more harm than good. This is common when optimizing high performing systems, people tend to try to push the system even more to the point where the system breaks.

“The last 10 percent of performance generates one-third of the cost and two-thirds of the problems.”

Norman R. Augustine (Aerospace Executive & Former U.S. Under Secretary of the Army)

A way to control for diminishing returns is to apply Ramit Sethi’s infamous “85% Solution” from his fantastic book I Will Teach You To Be Rich. Simply get 85% of the problem right and move on. Yeah, we can really hone in on getting that extra 15%, but then we risk diminishing returns.

Is it worth doubling the effort just to squeeze out that extra 10-15%?

It might be, but not every time. It’s better to spend our energy getting the big wins, than trying to squeeze out every little bit.

Friction

Friction is something I pay a lot of attention to. I spend a lot of time dedicated to removing friction from my life because it stops me from doing so much. Friction is any force or process that removes energy from a system. Remove the friction, increase efficiency.

Amazon Prime is a perfect example of a company removing friction to make a system more efficient. If you have amazon prime, then you know how easy it is to purchase things. That’s intentional. The ease of use creates more cash flow for the business.

If a system has a lot of friction, it can still perform but it will require much more energy. If we don’t add more energy, then the system will eventually slow and stop.

For me personally, when I encounter friction while doing an activity that I don’t enjoy, then I won’t do it at all. So if I can help it, I try to remove as much friction as possible whenever I’m doing something difficult or something I don’t want to do.

Sometimes introducing friction is what’s needed to improve a system. When I want to prevent myself from performing certain actions, I introduce friction because I know it will stop me. Some business makes it cumbersome for a customer to return their product so they are less likely to return it.

Automation

The gold standard of no friction. Automated systems operate without human intervention. Automation is best for repetitive tasks.

Be mindful that automating a system tends to magnify the efficiencies and inefficiencies. If the system is already efficient, then automation will make it faster. If the system is not efficient, then automation will slow it down.

When it comes to understanding automation, we want to be familiar with the Paradox of Automation: the more efficient an automated system is, the more critical the human inputs are. While automate reduces the need for human intervention, the small amount of human intervention that occurs becomes increasingly significant.

Automation makes our actions count more, not less.

On that note, I also want to mention the Irony of Automation: the more reliable a system is, the less attention humans pay to it. Reliable systems train absentminded operators. This is dangerous because if something goes wrong, we aren’t likely to notice and the automation will propagate that error.

The best way to avoid automation errors is to perform consistent sampling and testing.

Standard Operating Procedure

SOPs are predetermined processes for completing certain tasks or solving common problems. We save cognitive load and cut down the number of decisions we have to make in a day if we have a preselected method that’s known to work.

Using SOP helps us spend our energy on improving a system, rather than solving repetitive problems over and over.

Kaufman recommends reviewing the SOPs every two to three months to keep it running effectively.

SOPs can look many different ways. For example, I have a set price for certain students, and certain times I will tutor. But it can go further than that, I have predetermined phrases that I say when talking to clients to make communication easier when it comes to scheduling or other common tasks. I also have predetermined methods for dealing with certain kinds of students so we have a simple system for us to start with and build upon.

Focus on creating go-to methods for things you encounter often. You’ll find that it can seem like a lot of work upfront, but it will streamline the process in the long run and it’s so worth it.

Checklists

I can’t talk about checklists without referencing Dr. Atul Gawande’s The Checklist Manifesto. That book beautifully describes the power of checklists. Checklists have been a vital part of pilots take off routines and are the reason for their high success rate. Checklists have also played their role in minimizing infection rates in hospitals all over the world. The secret to repeatedly completing complex tasks perfectly is writing it down as a checklist.

Checklists are simplified SOPs for specific tasks. They’re fantastic because they create systems for processes that haven’t been articulated and minimize our chances of skipping critical steps.

I always make a checklist for my students who are struggling to “manage the chaos.” Transforming the glob of craziness that is school work into a list that can help us narrow our focus works for every single student I have ever worked with. Seriously, I haven’t come across any academic situation that a checklist could not solve.

Checklists are so critical for entropy management that I use them whenever I’m feeling overwhelmed. Whenever I’m feeling stressed and swamped with work, I ask myself “What’s the 80/20 I need to tackle here?” then I made a checklist to conquer the critical few.

I’ll probably write another post on checklists because they’re so damn powerful, important, and useful.

Checklists are also great because once we have a good one, we can delegate or automate it — which frees us up from doing the work! Checklists tend to be the first step to freedom.

Cessation

This refers to the idea of stopping something intentionally. Sometimes a system may be going haywire and the best thing to do is to stop a process. As I mentioned earlier, humans have a proclivity to do something to improve a system, but sometimes the best choice may be to not do anything or stop altogether.

Cessation is not our natural reaction when we want to improve systems and it’s usually an unpopular choice when dealing with a group, but keep in mind that it’s a valid option.

When analyzing and improving systems, I entertain the idea of cessation after I’ve tried the null hypothesis. If both of those options are determined to be ineffective, then I’ll start doing something to improve the system.

Resilience

The resilience of a system is determined by how much change it can withstand. The ability to weather change and adjust plans means the difference between disaster and survival.

Resilience usually comes at the price of optimal performance. A system can increase its resilience through leverage. For example, if a business needed some money to weather the storm it will be more resilient, but that money can’t be used more efficiently. Resilience comes at a cost.

Another way to boost resilience is to prepare for the unexpected. Having plans for different/unexpected scenarios or extra supplies on hand are great ways to make a system more resilient. Fail-safes and backups are great for that also. A fail-safe is a backup system designed to prevent or recover from the original system failure.

Stress Test

This is the process of identifying the boundaries of a system by changing the environment. Testing different extremes on a system can help determine which variables affect which processes.

When I stress test my systems, I try to break them. This is the part when we want to try and test out our “what-if” scenarios. Scenario planning is at the heart of any effective strategy. Rather than trying to predict the future, we can prepare for a handful of imagined scenarios and be ready for what comes next. A proper stress test can really help with a system’s resilience.

Sustainable Growth Cycle

This cycle is a pattern that systems follow when undergoing consistent growth without any major issues and it’s split up into three phases:

The Expansion Phase – this is when the system is focused on growing. This is a creation phase. New components and strategies are implemented and dedicated to growing the system and collecting data.

The Maintenance Phase – this is when the system focuses on executing the strategies and maintaining the functionality of the system. Pressing play on the system, so to speak.

The Consolidation Phase – this is when the system is focused on analysis. All the data that was collected is now put into context. Things that work are given more resources and attention while things that don’t are cut back or reworked.

The Middle Path

This idea comes from the fact that the balance between too much and too little are constantly changing. Balancing what systems need requires constant reevaluation. The best approach usually lies somewhere between too much and too little.

Experimentation

No one has everything figured out and determining the best choice when it comes to improving a system is a difficult task. This is when experimenting comes in handy. Frequent experimentation is the only way to accurately determine what improves and system and what doesn’t.

I like to treat experimenting is play. I love trying to new things, changing stuff up, and seeing what happens. The more we experiment, the more we learn about our systems.

More Methods of Improvement

“A man with a surplus can control circumstances, but a man without a surplus is controlled by them, and often has no opportunity to exercise judgment.”

Harvey S. Firestone (Founder of the Firestone Tire and Rubber Company)

A personal note for improving systems – I like to have stock built up for projects with continuous deadlines like blog posts and beats. Having more stock makes me less anxious about meeting a deadline and I can focus on making good music or writing a good post. To increase stock, simply increase inflows and decrease the outflows. In this case, I increased how many beats I made in a week, but released only 1 (I usually release 2). After a while, I started to build a stock and the beats I made later were of higher quality. My end goal is to make high-quality music while enjoying the process, so I modified my system to make that happen.

In every system, there’s always a limiting reagent. Finding that constraint and removing it will improve a system’s efficiency. Israeli author, Eliyahu Goldratt, suggests using the “Five Focusing Steps” to identify and eliminate constraints:

  • Identification – examining the system to find the limiting factor
  • Exploitation – ensuring that the resources related to the constraint aren’t wasted
  • Subordination – redesigning the entire system to support the constraint
  • Elevation – permanently increasing the capacity of the constraint
  • Reevaluation -after making a change reevaluating the system to see where the constraint is located

When dealing with systems that involved other parties, we introduce counterparty risk. The best way to deal with counterparty risk is to have a plan of action in the event that the other party doesn’t deliver on their end of the deal.

These ideas are foundational for analyzing and improving systems but the methods are endless and I recommend that you go out and find concepts and methods to build upon your knowledge of systems. Remember Gall’s Law, all complex systems evolve from simple systems, and these ideas are the components of creating a simple system to analyze and improve other systems. How meta.

However, the most important concept for analyzing and improving systems is understanding that we can always learn more and education never stops. Systems can be complex and there is always something more to learn about a system or systems in general

Gall’s Law & System Components

“One essential characteristic of modern life is that we all depend on systems—on assemblages of people or technologies or both—and among our most profound difficulties is making them work.”

Atul Gawande (The Checklist Manifesto)

Systems are everything.

Our body is a system of organs, chemical reactions, and energy. There are a bunch of little integrated things happening within us all the time. Every cell inside our body is a system, every organelle is a system, ever molecule is a system, all the way down to the subatomic level there are systems.

But it doesn’t stop there, we can see systems on the macro level too. Our neighborhoods, cities, countries, and the entire planet are all systems. Systems can even be as big as galaxies, or the universe!

Systems also exist on a conversational level. In some of my other posts, I talk a little bit about how people live in the physical world, but also in the world of conversation. Some of these conversations share our reality. An example of these types of conversations are businesses. “Where is a business?” is a tricky question. The business doesn’t necessarily lie in the people, or the physical headquarters, but in an agreement and understanding between two people. Similar to our bodies and communities –

“Businesses are complex systems that exist within even more complex systems—markets, industries, and societies. A complex system is a self-perpetuating arrangement of interconnected parts that form a unified whole.”

Josh Kaufman (The Personal MBA)

Understanding systems, as an abstract idea, gives us the ability to apply our analysis and understanding to all other systems.

I learned a lot about systems when I was studying chemical engineering and used that knowledge to dive deeper into other fields.

I used my knowledge of systems to help me understand music, mathematics, medicine, social dynamics, education, economics, investing, writing, gaming, and so much more.

Understanding systems help us understand everything. Most systems have the same parts, can be analyzed and improved in similar ways, and follow the same set of rules.

Gall’s Law

“A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: a complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a simple system.

John Gall (Systems Theorist)

Most of the systems we’ll encounter are complex. Way more complicated than we know, but according to systems theorist John Gall, all complex systems started from simple systems. This idea became known as Gall’s Law and is extremely useful when it comes to understanding systems.

Every system starts off simple and adds complexity over time.

I’ve watched this happen with the development of smartphones over the years. First, we started with just phones that just did good ol’ phone calls. Then we developed phones that could text, then play music, then browse the internet, then take pictures, then take videos, and now…they can do everything. My smartphone is my camera, periodic table, phone, tv remote, thermostat controller, and an infinite amount of other things.

The bottom line is that my devices are extremely complicated systems that can do a lot of amazing things, but they didn’t start off that way. In the beginning, they were just simple systems that did one thing, and over time we just added one thing here and one thing there and now we have miraculous systems.

I find keeping Gall’s Law in mind helpful when creating new systems. When I’m first starting something I just want to keep it short and simple, then add a little more over time.

How Understanding Systems Can Make Us Rich

I used Gall’s Law to create a money management system that allows me to accumulate wealth over time automatically, rather than constantly worrying about “trying to become rich” or “not having enough.”

The key is to start simple, then make it complex over time. I’m not going to go into too much detail here about how I manage my money (partly because my system has grown to be pretty complicated), but I will share the simple system I started to build my complex system upon. I put a percentage of my money in an investment account, and I don’t touch it. I don’t even have access to it unless I want to wait 3 days. I don’t want to touch the money, because I will need it later to build a more complex system later.

Now I know this doesn’t seem exciting or sexy, but this is how complex systems are built. One thing at a time, over a long period of time.

The key is to start with a simple system.

When I started my blog, I just tried to write 20 minutes every day and release 1 post per week. This is still the fundamental system of my blog today, but I write for 48 minutes per day 5 days a week instead.

When I started my YouTube channel, I just tried to make music for 20 minutes every day and release 2 beats per week. Over time, I started adding beat making videos, links to my beat store, and playlists of other videos. Now, my channel is much more complex than it was when I first started and I would not have been able to create that level of complexity right at the start. Trust me, I tried to and it ended in fire.

Components of a System

So what actually makes up a system?

Josh Kaufman does a beautiful job laying out how to understand, analyze, and improve systems in his book, The Personal MBA, and I highly recommend checking it out. Most of the stuff from this post are from his book. I’ll definitely be adding it to my Must-Read Book List once I get a chance.

If we want to build a simple system, then we have to know what the components of a system are. These 14 components can be found in every system, regardless of what the system does. We can find examples of each component in all industries.

Flow

Flow is easily thought of as the movement of resources through the system. Inflows move into the system. Outflows move out of the system.

Money is a common resource that flows in and out of business systems and water is a common resource that flows in and out of biological systems.

Stock

Stock, in the sense of systems, is a reserve of resources. Stock can be different for each system. For a business, stock can be money waiting to be used. For a restaurant, stock can be extra food in the back.

Slack

Slack refers to the amounts of resources available in the stock. On a personal note, I love slack. Slack isn’t inherently good, or bad. It depends on the system. For me, I’ve noticed that I make better creative work when I have more slack in my stock. I make better music and write better blog posts when I’m not up against the clock.

Constraints

Constraints are what prevents systems from achieving their goal. Israeli author, Eliyahu Goldratt, suggests that all systems always have at least 1 constraint limiting their ability to reach their goal. Eliminate the constraints and performance increases, simple as that.

Feedback Loops

I remember taking a biology class in my 2nd year of college and my professor explaining feedback loops to me for the first time. He said that if we can wrap our heads around feedback loops, then we’ll understanding 80% of biology. He was so right, understanding the feedback loop made learning biology a lot easier, but it also provided a framework for understanding so many other things too.

A feedback loop occurs when the output of a system is also an input. An excellent example of this is with the heart and blood pressure. Blood pressure is an output of the heart, but it’s also one of the inputs as well. The human body needs to maintain a certain blood pressure to survive. If it gets too low, then the heart will pump harder to get it back up. The blood pressure is determined by the heart, but the blood pressure also provides feedback to the heart.

A positive feedback loop is when a system receives feedback and produces more of its output as a result. We can see this in the example with the heart and low blood pressure. The heart is pumping more as a result of the feedback.

A negative feedback loop is when a system receives feedback and produces less of its output as a result. Our bodies also have negative feedback loops (because they’re systems!). Typically when our bodies become hot we start to sweat to cool us down, but if we were to become severely dehydrated then our bodies would stop sweating in order to keep as much water inside as possible. Our bodies will also shut down our ability to pee, just to keep in that water too! The body stops releasing water as a result of the feedback.

Autocatalysis

This describes a system where the outputs are the raw ingredients of the input.

Advertising is a great example of this. We spend $1000 dollars to make $2000 dollars. Now we can use $1000 again to buy more advertisements and make another $2000. Rise and repeat.

After reading a bunch of business books, I realize that a lot of entrepreneurs use autocatalysis type of systems to build wealth.

Environment

This is everything else that that system isn’t. Usually, the system lies within the environment. There is typically some sort of flow between the environment and the system. No system exists in the vacuum…unless you consider the entire universe as a system.

Selection Test

This refers to the environmental constraints that determine which systems perpetuate or end.

The phrase “survival of the fittest” is what people usually think of when they think of selection tests, but “death of the unfit” is probably a more accurate phrasing.

Selection Tests are absolute. If a system cannot adapt to the test, then it fails. If the system can adapt, then it thrives. Simple as that.

Uncertainty

Uncertainty is inherent to all systems. No one knows for sure what will happen in the future. But there is a distinction to be made from risk. The risk lies in the known unknowns, the things we know that we don’t know. Uncertainties are the unknown unknowns, the things we don’t know that we don’t know.

It’s helpful to keep in mind that we process the unknown the same way that we process threats. We literally see and respond to what we don’t know as a threat.

I know it’s hard, but try not to be completely afraid of the unknown.

Change

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

Charles Darwin (1809 – 1882)

All systems have some dynamic quality to them — they are always changing. Knowing this, training ourselves to handle different kinds of circumstances is our best bet. If things are always changing, then we need to be resilient to match.

Interdependence

Some systems are linked to other systems. The more connected the systems are the more failures and delays will affect other systems. When we are dealing with systems, it’s crucial to keep in mind their effect on other systems and the systems that affect it. These connections are also known as dependencies.

The fewer dependencies the systems have, the lower the magnitude of effect on the other systems.

Some systems may not affect each other at all, but are both required to run a larger system. These systems are known as parallel processing.

Here’s a fun thought experiment that gets crazier the longer we think about it — the next time you get on a bus, think about all of the things that must have had to happen in order for the bus to get there on time. I promise, there is always more.

Counterparty Risk

Counterpart Risk describes the risk associated with the other party not following through on their end of the deal. Most systems require multiple parties and there are consequences when one party can’t or won’t deliver on what they promise.

If we outsource a task to a contractor and they don’t deliver their end, our entire project will get held up. Spotting counterparty risk is crucial in preparing for potential undesirable events as well as identifying good deals. Finding ways to mitigate this risk helps us keep our plans on track and lowers the chances for our systems to get derailed.

However, counterparty risk tends to increase when people try to plan for them. The best way to deal with counterparty risk is to have a plan of action in the event that the other party does not deliver on their end of the deal.

Second-Order Effects

These describe the consequences of the consequences of our actions, hence second-order. Every action has a consequence, and those consequences also have an affect on other things. Second-order effects are typically difficult to predict, stop, or reverse, but they always exist.

With this in mind, it’s wise to proceed with caution when we make changes to systems, especially complex ones. We may even get the opposite of what we expect.

Normal Accidents

We all know shit happens, and it’s no different in systems. Some days things don’t go the way we want. Especially in systems with high interdependence and complexity. The more interdependent and complex a system is, the more likely an accident is to occur.

Normal accidents can give us enormous insights into system interdependence and possible second-order effects.

Systems are everything and understanding their parts is crucial for building our own.

Gall’s Law shows us that we can create complex systems from starting small and gradually growing over time.

Each of the components I’ve gone over can be found in all (if not, most) systems, and I urge everyone who reads this to find other components of systems if possible. I’m not a systems theorist and it’s more than likely that there are other components I left out. These were the system components that Josh Kaufman went over his book, The Personal MBA, and they are a great foundation for building any kind of system you desire.

Identify these components in other systems. Use these as building blocks to create your own. What we can do with these tools is truly unlimited.

Types of Habits and Designing Our Lives

“Most habits take on one of four common forms: things you want to start doing, things you want to stop doing, things you want to do more, and things you want to do less.”

Josh Kaufman (The Personal MBA)
My habits in their natural habitat

Before I dive into this post, I have to make a few honorable necessary mentions. Most of this information is from James Clear’s amazing book Atomic Habits, which I highly recommend. He explains the importance of developing systems and focusing our attention at the level of the habit in a seemingly effortless and powerful way. I also have to mention Josh Kaufman’s The Personal MBA, a must read book for entrepreneurs looking for well packaged high quality information. I think my must read book list needs some updating. Kaufman goes over more than just business, he also lays out a wealth of knowledge regarding habit formation and lifestyle design.

Intentionally creating our own lives starts with understanding our every day actions and how they develop into habits. I like to think of habits as belonging to the four categories mentioned above – Things We Should Start Doing, Things We Should Stop Doing, Things We Should Do Less, and Things We Should Do More. Meditating on these categories and articulating which habits fall into each category is a fantastic exercise in identifying key habits. Identifying which habits we want to start, stop, or change is the first step in creating our lives by design. Another way I like to identify habits is to categorize them as Old Habits – things I want to do less or stop all together – or as New Habits – things I want to do more or start doing.

The Habit Cycle

Understanding the Habit Cycle is like learning the anatomy and physiology of habits. The Habit Cycle explains how habits come to be and what we can do to make that process easier or harder.

According to Clear, habits have 4 stages that they follow. Cue. Craving. Response. Reward. Understanding each stage will help us intentionally create habits that we want in our lives and destroy the habits we don’t.

The Cue is the external stimuli that triggers the brain to start the behavior. When we see a cue, we get a Craving, which is the motivational force behind the habit. The Response is action or set of actions we take to potentially satisfy the craving. The Reward is what makes it all worth it and the last stage, the satisfaction of the craving.

The Habit Cycle – James Clear

Let me give an example to ground this in real life.

Let’s say I’m working on a blog post and I reach an issue in articulating what I want to say. Cue – I encounter a difficult situation. I start feeling stuck and my motivations change. I just want to be relieved of my frustration. Craving – yearning for relief. Despite my best intentions, I reason with myself that I am going to die sooner than I’d like and my experience of life is all that truly matters so I should stop blogging and play video games. I save my blog post, turn on my PS4 and have a good ol’ time. Reponse – leaving the challenging situation to play games. I feel delighted that I get to play my video games and my relief has come. Reward – obtained relief from tension caused from blogging. In this case, I layed out my provility to play video games when I’m confronted with difficult situations. Identifying the steps in this habit cycle helps me take the steps I need to ramp this up or turn it down depending on what I want for my life. For me, I love developing myself to overcome challenges in anyway possible so I’m going to try to break that habit and replace it with a new and more positive one.

If we pay enough attention to what causes our cravings, then we can take premeditated steps to intentionally create our ideal lives. We do not have to let the habit cycle run over and over, we can stop it at any point. We just need to know how.

Breaking Old Habits

Breaking old habits is a skill worth practicing. On our journey, we pick up ways of being or thinking that may have been useful in the past, but no longer serve a purpose to us in the present. I know I have more than a few habits holding me back from bringing about my Jungian Self.

The first thing we need to do when we’re breaking habits, is identifying the things we do that are not bringing us closer to where we want to go. Once those habits are identified, we can practice a few things to make those habits more difficult for us to live out.

Harness Friction

One of my favorite ways to break bad habits is to add friction to the mix. Friction can be thought of as obstacles preventing us from completing an action.

I’ll give an example to bring this down to Earth.

Let’s say we have a habit of spending too much time on our phone in the morning. The first thing we do when we wake up is check out phone and we end up losing track of time and it throws off our whole day.

Analyzing this situation in terms of friction, we can see that we are only partaking in the “bad” habit because there’s nothing stopping us from doing it! If we were to set our phone on the other side of the room before we go to bed, then there will be a lot of friction between us and checking our phone in the morning.

Those small, yet big, steps of getting out of bed and walking over to your phone gives you enough time to develop the willpower necessary to not act out the habit. Friction is what makes or breaks my habit formation 90% of the time. I’m so sensitive to friction, but I choose to use my susceptibility to measure the effectiveness of my environment.

I love using friction to my advantage. I can increase the friction to prevent actions that I don’t want, or I can decrease it and it’ll be easier for me to build the habits I desire.

Invert the Habit Cycle

Another effective way to break old habits is to invert each step of the habit cycle.

The first step is Cue. If we can cut out the cue completely, or at least make it invisible, then we have a fighting chance to break that specific habit loop. Let me give an example, if I see my PlayStation controller in my room I’ll get an urge to play and I’ll have to use willpower to fight off the craving. Instead of using willpower to break the habit cycle, I put my PlayStation controller in a place that makes it difficult for me to see it and the craving never exists in the first place.

Out of sight, out of mind.

Now, I still may get cravings to play video games, but this way I can control for at least 1 variable. To break the habit cycle at the cue stage, we can make our cues invisible.

The second step is Craving. To stop a craving we can use willpower to resist it (but that takes too much energy), we can make the cue invisible, or we can make the craving seem unattractive.

Let me put it this way, let’s say I have a craving to eat a snack at midnight. I can think about how good it will feel to satisfy my midnight craving and how happy I will be enjoying my little snack – thinking like this will just make me want to eat more.

Or I can think about how I’m developing a habit that could lead to an unhealthy lifestyle which consequently leads to a shorter and lesser quality functional lifespan. I can imagine my body failing me in ways that I take for granted now and the frustration I will feel confronting my true powerlessness.

Once the snack is framed like that, it’s much easier to say “How about a hell no.” Making things unattractive can stop a craving dead in its tracks.

The third step is Response. To stop the habit in the response stage, Clear recommends to make the response difficult. This goes hand-in-hand with my “add-friction” tip from earlier. If we add friction between us and our response, then we are much less likely to act out the response. This makes sense when we think about what the purpose of habits are.

We have habits to save cognitive load, and overcoming friction would add cognitive load, which works counter to habits. We have habits to make things easier, so making a response more difficult will cut off the habit before we get our highly sought after reward.

The fourth and final step is Reward. We love the reward because of one simple reason. It is satisfying. If we make the reward unsatisfying, there goes all the power!

Imagine, sacrificing what mean most to you only to receive a lackluster reward. The visceral and lingering feelings of disappointment will power through any urge to perform those sets of actions again. If we feel like what we doing isn’t worth it, then we aren’t going to do it again. Simple as that. Find what makes the reward sweet and ruin it.

Be weary that there aren’t just clever mind tricks that play into our breaking and forming of habits, but our emotional states as well. We tend to break the “good” habits and start the “bad” habits when we’re feeling H.A.L.T. – hungry, angry, lonely, or tired. When we identify with one of these 4 emotional states, we are way more susceptible to aiming down and following through with it. We are pretty tough people, but we only have so much willpower. Save your willpower for when we’re feeling one of the four detrimental emotional states. We should invert the habit cycle whenever we can so we can have the energy to fight when we need to.

Creating New Habits

Once we set ourselves free from our old bad habits, we can finally create new habits! But that poses the question:

How do we create new habits that last?

We can approach this a few different ways. If you’ve read my other blog posts, specifically about studying, then you know I’m all about finding a bunch of ways to do things and modifying them to create my own personalized system.

Optimize to Win

In his fantastic success manual, Tools of Titans, Tim Ferriss talks about the importance of meditating every day. While I do recommended practicing meditation, that isn’t what I want to focus on. People tend to have a difficult time creating a habit from meditation, after all most of the benefits only occur when meditation is being practiced as a habit.

Tim says when you start a new habit, you want to rig the game to win. It takes 5 sessions to make something a habit, and it doesn’t matter how long the sessions are. Keep it simple and make the first 5 sessions short. The first few times stepping up to the figurative plate will take significant willpower, but once we developed a little habit it gets easier over time. Optimize to win. Eventually our actions will eventually become what we are, I talk a little bit about this in my post Hypnotic Rhythm.

We don’t have to stop at making it short, we can make it easy too! When I first started working out consistently, I made my first 5 sessions short and easy and now it feels a little weird if I don’t get at least a little exercise.

Another thing we want to keep in mind when we are trying to create new habits is knowing that we only want to do things when we believe it will pay off for us. If we believe it won’t pay off or it’ll actually harm us, then we won’t do it. To take advantage of this bit of knowledge, we should presence ourselves to why starting this new habit is worthwhile. Be advised, this is different for everyone and requires rigorous self reflection.

Encourage the Habit Cycle

Another effective way to create new habits is to encourage each step of the habit cycle.

The first step is Cue. The cue usually kicks off the habit, but if we’re making new habits we might need a little extra help with this step. Make the cue obvious. I lay out my yoga mat and have my kettlebell out in the open so I don’t have to spend any time setting up. Working out consistently has always been difficult for me, but when I set out my equipment in a place that’s easy to see it’s much easier to just start working out. Making cues obvious can also be thought of as a method of removing friction.

The second step is Craving. This comes after the cue and gives us that feeling that we should be doing something. Craving a good habit is an interesting feeling, but one that we should try to encourage. Encourage the craving by making it attractive. Imagine, actually craving to workout or study. It’s not that hard when you think about how good you will feel once you finish or how much longer you’ll live if you’re healthy. Find reasons to pick the good choice.

The third step is Response. Once we have the craving to do something, our next move is to act. If we want the habit, to stick then we need to make it easy. I’ll use the example of my yoga mat and kettlebell again. Since the mat and kettlebell are already set up in the center of my room, it’s easy to just start working out. It’s actually easier to workout than it is to ignore the equipment! That’s why I put it in the middle of my room. I’m making it harder to ignore working out (stopping the old habit) and easier to start working out (creating the new habit).

The fourth and final step is Reward. This is what makes it all worthwhile. If we want to keep a habit going, we have to make the reward satisfying. Since I absolutely adore my video games, that’s usually the go-to treat for me after doing something difficult. Creating new habits is not easy and responding to those changes takes a lot out of us. I also love watching carefully written television like The Sopranos, Game of Thrones(Seasons 1-4), and Westworld. When I have the time I also love to cook. Sometimes I’ll make a really nice meal to reward myself for creating new habits. Find what makes you happy and indulge once everything is said and done.

Developing New Traits

The best part about knowing all is this is discovering that traits and skills can be developed through simple habit formation. This means we can create habits of traits that we admire in our role models within ourselves!

There was a study at Harvard which suggested that the most productive people don’t wait to be told what to do. Successful people take initiative and we can use the knowledge of breaking and creating habits to create the habit of taking initiative within ourselves!

The best best part – this doesn’t have to stop at initiative!

We can create a habit of being honest, courageous, hard working, dedicated, reliable, or any other trait that we would like. It’s not an easy task by any means, but it is possible with serious attention, dedication, and time.

The Issue of Willpower

Creating habits takes willpower. Sometimes it requires a lot and sometimes it requires a little. If we are trying to create new habits, we. need to find ways to minimize how much willpower we’ll need or designing our lives will be too difficult. We can minimize will power through optimizing our environment. I talk a little bit about that in Strategies for Better Studying Part 4.

If we set up our space to encourage the new habits and add friction to discourage the old habits, then willpower won’t be necessary!

James Clear talks about different ways to minimize required willpower by adjusting our actions to the habit cycle. At first, the changes will requires a huge amount of willpower, but every time we run through the loop we strengthen the neural pathways and the required willpower becomes less and less.

Josh Kaufman also talks about habit cues in his fantastic book, The Personal MBA.

“Habits are easier to install if you look for triggers that signal when it’s time to act. For example, if you want to take vitamins, it’s easier to remember to take them if you use another habitual action as a trigger for the action. Instead of relying on your mind to remember to take your vitamins in the middle of the day, you can use brushing your teeth in the morning or evening as a reminder.”

Josh Kaufman (The Personal MBA)

In addition to building a guiding environment, we can reduce willpower by focusing our attention on one habit at a time. Kaufman also mentions this in The Personal MBA.

“For best results, focus on installing one Habit at a time. Remember, you only have so much Willpower to use each day, and overriding your default mode of action depletes it quickly. If you try to install too many Habits at the same time, you probably won’t succeed at adopting any of them for long. Focus on installing one Habit until taking action feels automatic, then move on to the next.”

Josh Kaufman (The Personal MBA)

Creating and destroying habits takes a bit of practice, patience, and discipline. If these methods don’t work, try longer. We are surprisingly malleable creatures despite our proclivity towards habits and routine. Getting better: at first it’s uncomfortable, but later will be worth it. Perhaps the real lesson is to learn how to internalize discomfort and push forward, for once we do this we can do anything. Feel free to pick and choose which parts of this post you like and go forth to design your dream life!

Start by winning the moment right in front of you.

Understanding Habits and The 1% Rule

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Aristotle (384 BC – 322 BC)

The other day I was thinking about how my life, and everyone else’s, is the accumulation of all the little moments of our lives. A lot of people I’ve talked to, including myself, are waiting for this imaginary future when their lives can finally start, but it’s a delusion. Our lives are happening right now and how we live in each moment decides what our lives actually are. So when I think about lifestyle design, or living my life by my own design the question arises –

How can I have the life I’ve always wanted?

Well if our lives are the sum of all the smaller moments, then living the life I’ve always wanted means to be the person that lives that ideal life in every moment. Everything I want to be, I ought to strive to be in every moment. If I do this, then over time I will have many small moments of me living out my ideal life and it will eventually be indistinguishable from my life as a whole. I can build my dream life one moment at at time. Thinking about this excited me, but at the same time terrified me.

How was I supposed to keep up with a demand that high?

How will I actually be able to build my dream life?

Through one decision at a time. Every moment I’m confronted with potential and I have a choice to turn it into something good or something bad. All I have to do is choose good every time right?

Yes, but the fact is I’m human, we’re all human, and for whatever reason we won’t always choose the good option.

So what can be do to make up for this peculiar quality?

Build habits. James Clear is a fantastic author who wrote the book, Atomic Habits, which outlines exactly that. Clear suggests that success (or how I like to think of it – ideal lifestyle design) is not a one time transaction, but the product of daily habits. In other words, we slowly build the kind of lives for ourselves one moment at a time. This phenomenon can work in our favor and take us towards our best life or can work to our detriment and create holes for ourselves indistinguishable from Hell.

This idea is relevant to self-talk and our thoughts as well. If we tell ourselves that we are capable and strong people often, then we are more likely to believe it. However, on the flipside, if we tell ourselves that we are weak and not good enough, then eventually we will believe that as well. I try to avoid saying things that make me weak, because my thought habits are pretty easily malleable.

I’ve seen this idea pop up in multiple places. In Atomic Habits, Clear states that habits are the compound interests of self-improvement and in The Slight Edge, Olson suggests that everything is curved in life especially the results from our seemingly tiny decisions.

The Slight Edge Two Life Path

Making the kinds of choices to propel our lives forward is a difficult thing to do and that’s where habits come into play. Building habits will help us stay on the upswing even when we don’t “feel like it.” Typically, making upswing choices takes a lot of willpower and if we are presented with a crossroads and have low willpower, then chances are we’ll make a choice that brings up on the downswing. Habits are our brain’s way of automating familiar and old tasks so it can focus on other areas and mastering new tasks. Put more simply, habits save cognitive load.

Life operates by design or by default, the best part is we get to decide.

The 1% Rule

“Small helpful or harmful behaviors and inputs tend to Accumulate over time, producing huge results. According to Lean Thinking by James P. Womack and Daniel T. Jones, Toyota’s approach is based on the Japanese concept of kaizen, which emphasizes the continual improvement of a system by eliminating muda (waste) via a lot of very small changes. Many small improvements, consistently implemented, inevitably produce huge results”

Josh Kaufman (1976 – )

The idea behind the 1% rule is pretty simple – 1% for better or worse seems insignificant in the moment, but over time it will add up to who we are on a day-to-day basis. Renowned authors James Clear, Josh Kaufman, and Jeff Olsen all noticed the 1% rule independently of each other and I think that means there’s something objectively true about the observation.

YouTuber and Productivity Guru Thomas Frank also brings up the 1% rule in this video!

Thomas Frank is super cool

I love the advice Thomas gives in the video to set a scheduled release date and aim to get 1% better every time. It doesn’t matter what domain you are improving, as long as it is consistently improved we can use time to our advantage rather than our detriment. I did this with music production, with every project I aimed to get better at making melodies, or mixing drums, or sampling and now that it’s been a few years, I can do all of those things fairly well. I also did this with blogging. I have experimented with a different aspect of blogging with every post and over time my blogging skills have improved. I can honestly say that using the 1% rule to approach any new skill is the most effective way to learn something without being let down by unrealistic expectations. Things like The Transition Curve are also things to keep in mind when we are trying to learn a new skill.

While this is a fantastic discovery for those of us who feel up to the challenge, but like I mentioned in my post Tracking vs. Loss Aversion, I talk about the importance of not just chasing a carrot, but also running from a stick. The stick in this case is the compound effect of getting 1% worse every day over time.

Based on a True Story

Getting 1% better for a year makes us about 38 times better than we were when we started, while getting 1% wrose for a year makes us 3% of what we were when we started. If we aren’t getting 1% better, than we’re getting 1% worse. It sounds like a wild accusation, but let me use science to explain.

Since we’re relatively large creatures, compared to subatomic particles, our bodies follow laws of conventional science (non-quantum laws), which means we adhere to the 2nd law of thermodynamics. The 2nd law states that entropy is always increasing. Entropy can be thought of as a measure of chaos or disorder. So the natural state of things is that they decay over time. Which means, if we aren’t actively trying to be 1% better, then we are truly getting 1% worse.

Progress is a Long Game

New habits don’t seem to make a difference until we reach a critical point. We expect to make linear progress, but our progress has more of a logarithmic behavior. James Clear calls this the expectancy curve. I talk more about the Expectancy Curve in my post The Valley of Disappointment.

The point when reality meets our expectations is known as the critical point

In order to notice the powerful outcomes, we have to stick with a skill longer than the valley of disappointment lasts. We must allow time for our habits to develop and not let our own disappointment take us out, especially at the beginning. The best way to avoid disappointment and see massive results is to set up a system that works for you.

Set Up Systems, Not Goals

“How you do anything is how you do everything.”

Dr. Andre Pinesett

Rather than try my hardest at one thing, or only do my best work when I’m blogging, I choose to try to do my best in every little thing I do. I do this for many reasons:

  1. To know myself as someone who always does their best
  2. So I don’t have to try harder than usual at any given time

I’ve developed a habit of being excellent, at least as much as I can be, all of the time. This is because I truly believe that how I do one thing is exactly how I do another. If I half ass a blog post, you can bet real good money that I’m half assing everything else I’m doing too. A big part of designing our lives is to pay close attention to how we decide to approach situations and decide if that is the kind of person that we would like to be.

When I work with my students on math problems, I do not only see how they perform academically, but I also see how they approach new challenges in general. Most get frustrated and try to ignore the problem. Some double down and use even more firepower to get through it. A few of them just lie and tell me that they understand it when they clearly do not. I don’t make judgements on their choices, I see my job as someone who ought to help them elevate their own problem solving skills by meeting them at their level.

I personally believe that the students who double down when they are confronted by challenges will be the most successful and most satisfied with their lives. Life is full of challenges and if we were only allowed to get one thing from our education it ought to be the ability to surmount challenges healthily. Using these tiny, low risk, problems as practice in developing ourselves in this skill is one of the best things we can do for ourselves.

So rather than just trying really hard in one area, we should apply Leonardo’s personal mantra to every aspect of our lives:

“Ostinato rigore” (Constant rigore)

Leonardo da Vinci (1452 – 1519)

We need consistency because we fall to the levels of our training, not to the levels of our goals. If our training is rigorous, then we will fall to the level of excellence. If we’re having trouble changing habits, then we should pay more attention to our systems.

Goals are the results of what we want to achieve and Systems are the processes that get us there. Here are a few reasons why we should have goals, but we shouldn’t focus on them:

  1. Winners and losers often have the same goals. Some people think that winners are more ambitious goals, but that isn’t the case. People who win do not win because they have ambitious goals.
  2. Achieving a goal is satisfying for a moment. The next moment, we need a new goal. If we don’t have one, we can easily spiral into depression. It’s also easy to fall into black or white thinking. Achieve goal and be happy or fail and be disappointed. If we fall in love with the process, rather than the outcome, we give ourselves permission to be happy.
  3. Solving problems on the goal level is usually only momentary. Solving problems on the systemic level will prevent similar problems from occurring in the future.

With all my content creation, blogging, YouTube Videos, and Music, I don’t try to just make 1 song every day, or 1 blog post every day. I aim to produce a little every day or write for an hour every day. Back in college, I used to tell myself that I needed to make a beat a day if I wanted to be a good producer. While its a good goal to have, I noticed that once I made the beat, I wasn’t motivated to keep going. Sometimes I wasn’t even able to make something because looking at the task at the level of making an entire beat was too big! Now I have a simple step by step system that I can run whenever I feel unmotivated or uninspired that produces content. Every step of my content creation process is crystal clear to me so all I have to do is focus on putting one foot in front of the next, rather than just trying to get to the finish line.