(highlight:: The Disconnect Between How We Work Today and How We Should Work
Summary:
The way we work is inherited from generations before us.
It was born during the time of the factory floor when reliability and consistency were important. But most of the problems we solve today are not cornflake problems, so it's time to choose how we work and make decisions.
Transcript:
Speaker 1
Well, I think the problem with work is that most of the way that we work is inherited from the generations that came before us. The way we work today, when you think about hierarchies and bosses and managers and boxes and lines and gantt charts and schedules and quarterly plans and budgets, all that stuff came About roughly 80 to 120 years ago. It came about in the time of the factory floor when we were trying to make sure that size nine shoes fit the same across the country and cornflakes wouldn't kill us. Everything was about reliability and consistency and scale. That entire operating system, that way of working was born for that purpose. Now, here we are 100 years later, most of the problems we solve are not cornflake problems. There's a huge disconnect between the way we work today that we think is normal, that we think is inevitable, and the reality that we actually get to choose how we work and how we make decisions And how we organize and how we allocate power and resources.)
- Time 0:04:28
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(highlight:: Chaos to Bureaucracy is not the Only Path
Summary:
Organizations tend to move from chaos to bureaucracy, and in the process, lose creativity and innovation.
The desire for control and certainty leads to a narrowing of space for human judgment and randomness. External expectations compound the problem, leading to a doubling down on structure.
The result is a large, static cash machine that lacks innovation, leading to the acquisition of smaller companies.
However, the acquired creativity is eventually squashed by the larger organization's operating system.
Transcript:
Speaker 1
Essentially we lose our way because we believe in a false choice. Most people believe that the pattern of organizational evolution is from chaos to bureaucracy. You start in chaos with a startup. You have a handful of people around the kitchen table or the kitchen door in the case of Amazon. Everybody's doing a lot of different things. There's no clarity about roles. There's no clarity about what we do for a living. We don't have product market fit yet. Everything is about search and figure out an experiment and try. The level of chaos is quite high. Some people are off put by that. A lot of startup folks are like, that's what I thrive on. I thrive on that energy of all hands on deck. Then you figure something out. Otherwise you die. Either you go out of business and that's that. Or you figure something out. People like it when we do this. We have 10 engineers. We better have somebody to manage them. We have a process that's starting to emerge. How do we hire people? We better figure out a hiring process. As you figure things out, you dial them in because you think I want certainty. I want control. I want reliability. What I'm going to do is I'm going to nail this stuff to the wall. This is the hiring process. This is the business model that we use. This is what we charge. This is what we do. This is what we don't do. You take a lot of joy in clarifying that stuff in those early years because it feels like building a business. It feels like we're getting everything specified. Then what tends to happen is a combination of things. Essentially, you start to figure everything out. There's a rule and a role for everything. Now the space for human judgment and creativity is much, much narrower. It's much smaller and harder to find. When can I do something that hasn't even thought about or planned? When can I do something without permission? When can I do something that doesn't match the strategy we already have? You eliminate the serendipity and the randomness from the organizations, operations, and day-to-day reality. It gets pretty static. Then, to even make things worse, you tend to get expectations from outside players. You've taken on investors or you've gone public or you've been acquired. Someone else is now setting the agenda in terms of the goals. They're hoping for more juice out of the orange. They start to squeeze the orange even in the midst of all that structure. What you tend to do is you double down. You're like, we need a better hiring process. We need even higher goals. We need more engineers. We need more layers. We need to push the managers to manage harder. You turn away from the skid, essentially, and end up making things compounded. Typically, what happens if you don't end up failing for lack of agility is that you end up becoming so big that you realize, all right, we have a cash machine that nobody really loves to Work in. We're missing that innovation. We're missing that spirit, that energy that we had in where you are. What should we do? Let's go buy some companies. You start acquiring that innovation. Then to finish the doom loop that we're talking about, you bring in those acquired companies with all that creativity and judgment, and you squash it by conforming them to your operating System. Then you start over. That's essentially how the economy works.
Speaker 2
You)
- Time 0:09:47
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(highlight:: How Organizations Sabotage Themselves
Summary:
Organizations sabotage themselves by overreacting to incidents, over-optimizing goals, and confusing complicated and complex contexts.
This leads to mismanagement and failure in building successful teams and culture.
Transcript:
Speaker 2
What are the ways that organizations sabotage themselves from the inside?
Speaker 1
Essentially, what tends to happen is that you have a few things that go on. The first thing is that we tend to do what Jason Friedkulls scarring on the first cut. So when something doesn't work or goes wrong or there's an issue or somebody steals a laptop, the organization freaks out and it immediately reacts with a policy or a procedure or a new Security protocol or something.
Speaker 2
Just fire the person exactly, right?
Speaker 1
Like just let it go and then move on. They don't wait for patterns, right? We don't wait for patterns generally. We just overreact and try to systematize everything. So that tends to sabotage us quite a bit. The other thing that we do is that we really get stuck focusing on metrics that become incentives, that become ways to drive mismanagement. And so there are many different names for this law. But when a metric becomes a goal, it ceases to become a good metric. And the idea is that we're optimizing for something that is a proxy for reality instead of reality itself. And again, we're putting our judgment down and just focusing on like click-through rate. Like I just have to hit this click-through rate and I'll do whatever it takes to get it. And so that sort of over-optimization on proxies or abstract goals rather than absolute principal driven goals is really problematic. And then I guess the last one is that we, and I talk about this a ton, but we confuse the context that we're operating in. So I talk a lot in my work about the difference between complicated and complex. And you've had some people on your show talk about complexity before as well. But the complicated context is like the engine of a car or a watch. It is predictable. There's cause and effect inside it. The parts fit in a way that if you're an expert, you kind of know how to take it apart and put it back together again. And so if there's a problem, it can be solved and it can be delivered and it can be working again, no problem. There's very high confidence in solutioning in those areas. But in a complex system, which would be like weather or traffic or gardens or six-year-olds, they are dispositional. So they have an attitude, a way they're trending, but you can't fundamentally predict them. You can't be sure what'll happen if you try something. And if you bring that complicated approach, the checklist, the Gantt chart, the quarterly goals, the objectives, the management to that context, you tend to really struggle and fail. And what we see is that organizations tend to just over index on everything must be complicated. And so we're going to treat everything that way. And I routinely get brought into boardrooms with executives and teams that are like, look, we changed our company values and behaviors last year. We put them on coffee mugs and posters all over the world, all over the office, and nobody's behaving differently. Why? It's like, well, because you're yelling at the weather, right? You're yelling at the garden. That's not how these sorts of systems work. If you have a manufacturing problem where you don't have a tolerance, get that checklist out. If you have a broken engine, take it into the dealership. But if you're trying to raise a human being or build a successful team or create a culture of trust, that playbook doesn't work. And so we sabotage ourselves by constantly bringing it to the table and being like, the culture change initiative will be done in June of 2024. And we will achieve these five metrics along the way. And those are our pillars. That's just all complicated talk brought to a complex party.)
- Time 0:19:43
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(highlight:: Compliance and Bureacracy Causes People To Optimize for What's Defendable Instead of What's Trult Optimal
Summary:
Following procedures can lead to circumventing judgement and absolving oneself of accountability.
It's a common trade among people to be compliant with rules to avoid responsibility. However, this often leads to mediocre outcomes.
It's important to know when to deviate from procedures and exercise judgement.
Transcript:
Speaker 2
One of the things you said there was sort of like we put procedures in place to lower variation to reduce mistakes because we're trying to avoid mistakes at some level. One thing I noticed is that procedures eventually circumvent judgment. And so what happens is if you follow the procedure, you never get in trouble. Even if what you're doing is absolutely the wrong outcome and you should know it's going to lead to the wrong outcome, you can just throw your hands up and be like, well, I followed the Procedure. So therefore, I'm absolved of all accountability for exercising judgment.
Speaker 1
Yeah, I mean, that is 100% what happens. And in fact, I believe there's a German word for that that you are essentially saying it's I'm compliant. So it's the bureaucracies fault. It's the systems fault. And that's because you've given away your right to think or your right to be accountable. You're right to be responsible in the ecosystem. And it's a it's a lovely trade for most people because they're like, here, I just have to be compliant. And then when things don't work, it's not my fault. And it's, you know, we have the term C Y A cover your ass in business for a reason. People do a lot of things to see why and and it doesn't tend to lead to good outcomes. So we have a lot of models that we use to explain this to people and to try to get them thinking about different ways of accomplishing the same goal. But yeah, it's as soon as you get into process and compliance theater, everything goes downhill pretty quickly.
Speaker 2
I always noted this and I wasn't sort of familiar with the cover your ass thing before, but the way that this sort of seemed to me is like, we would always do what's defendable, even if we Should be doing what's right. But what's right might be complicated and hard to explain. And it could even be a feeling, right? It could be an intuition in some cases. But you know that following the procedures easily defendable. And so you follow that path and you know the outcome before you even follow it. And in certain cases, you should follow the procedure, but you that the judgment comes from sort of knowing when to deviate from that procedure.
Speaker 1
We)
- Time 0:24:13
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(highlight:: Shurhari - A Japanese Framework to Explain the Difference Between the "Default" and the "Standard"
Summary:
Standards and defaults are two different approaches to doing things within a company.
A standard is agreed upon and people must comply. A default is a starting point for those who don't know any better but are allowed to experiment and veer off course.
This creates room for innovation and learning which can be incorporated into the default over time.
Transcript:
Speaker 1
Talk a lot about the difference between standards and defaults at our companies. And so no talk to me. Yeah. So a standard is the idea that we've all agreed that this is kind of the bar, like this is the way we're going to do it. You could replace that with like the word policy or procedure or, you know, bright red line, red tape, whatever. But the standard is basically saying this is it. This is this is the only way. And so you expect people to comply. A default says, if you don't know better, try this. And so a default would be like, if we're doing a workshop, the default agenda is this and then this and then that. So that's the default agenda. If you're brand new to our company, if you're brand new to this industry, that's a real good place to start. Like that's that's kind of have you heard of the framework called shoe harry? No. Yeah. So shoe harry is a is a Japanese idea in terms of like a ladder of mastery. And so the shoe level is play by the book. So you kind of learn the martial art or the or the art form or how to make tea or whatever it is. This is the by the book way to do it. And then the high level is I'm going to break the rules occasionally. So occasionally I will improvise occasionally. I will do things a little differently. And then the real level is I'm going to write a new book. I'm going to write new rules. So I'm actually innovating so far beyond the category that I'm now creating a new art form. And now it'll be I mean, sort of like Bruce Lee with his jit kundo, like he's inventing a next level thing. And so in any art form, in any function, in any skill, those levels of mastery exist. And the fun thing about the default is it basically says, we just want you to start. Here's the shoe level way of doing this. Now, if you've got five years of experience, if you're doing podcasting, for example, it would be like put it out every week. That's the shoe way to do a podcast. But if you're Shane, you might be like, I have a better I have an idea. I'm going to break that rule a couple of times because whatever. And then you can you can sort of improvise. And then if you're somebody who is like gone gone beyond all of us, then you're like, I'm going to actually reinvent podcasting. And it's going to look like this. And then everybody's going to kind of follow in my stead. And you see that happen with TV shows and movies and Olympians and all kinds of stuff like that, where they kind of reinvent the art form. So so default says, if you don't know, better do this. And then in cultures that I work with that do that well, they have an expectation of announcing when you're veering from the default and why. So like, I'm not going to do the default workshop. I'm going to do this other design and I'll get back to you on how it goes. And so what you're actually allowing is you're allowing a system to have these veered off experimental spaces, sort of a barbell strategy, like the way to lab would talk about it. Like you have the safe bets. And then 10, 20% of your workshops are different agenda. And so you get the benefit of like, yes, some of them won't work, but they won't be that bad because the person that veered at least knows their stuff so they can kind of manage the fact that They improvise. And then the ones that actually work, you bring back to the whole group. Hey, I did this other module and it crushed. I tried this other way of designing and it was absolutely phenomenal. And then the team can incorporate those learnings into the default over time. And you can have what we call a steward or an owner of the default that's like incorporating those experimental learnings over time so that five years later, the default is 100% different. But every)
- Time 0:26:18
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- [note::Suhari in a nutshell: "The young man knows the rules, the old man knows the excuses"]

(highlight:: Principle-Driven Organizations are Better Than Value-Driven Organizations
Summary:
Organizations operate based on beliefs and principles, which guide their actions.
These principles form the foundational infrastructure of the company and give a benchmark for evaluating one's actions. Principles like transparency and autonomy allow for flexibility while still providing a framework for operation.
Transcript:
Speaker 1
About and teach principles constantly. And in fact, we even get pretty aggro about not talking about values because it's the reality is that human beings have values and can hold values. But organizations don't really they have ways of operating and beliefs about how the world in reality works. And so it's a little bit more in the Dalio school of like the way reality works is this. And so my principle is going to be measure twice cut once. And that's going to be how I operate or I'm going to have a principle about transparency. And so we're just going to say like default to transparency. So we have a whole host of principles and in fact, our whole business, both businesses are are built on a stack of principles. That are what we call agreements about how we operate in the world, but they found they form this like foundational infrastructure for the company. So the principle of transparency says unless there's a good reason for it not to be transparent, make it transparent. And so that gives you something or the principle of autonomy says, you know, you have the right to kind of control your own work life and what you do. And when you do it, unless you make an agreement that says otherwise. And so or unless we have an agreement that says otherwise. And so like these principles do create a lot of room, but to your point, they do also give you a benchmark to say like, are you upholding this agreement? Are you upholding this principle in your in your activity? And that's what makes us us.
Speaker 2
Transparency is)
- Time 0:30:37
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(highlight:: The Check In Round: A Simple Idea That Can Change the Dynamics of a Meeting
Summary:
"Change the system. Not the people" is our battle cry. To address diversity and inclusion challenges, we use a practice called the check-in round.
This involves asking each person a question at the beginning of every major meeting or podcast to give everyone a chance to speak and disrupt the pattern of one person dominating the conversation.
This creates equal talk time and improves communication throughout the meeting.
Transcript:
Speaker 1
I mean, change the system. Not the people is definitely our battle cry. And it's it's my favorite example of this is probably in the DEI space, where you see a lot of people talking about inclusion and share a voice and bias and things like that. And it's like, we got to make sure that we, you know, give a give part of the stage to other people and people that don't look like us. And what is so challenging about that, if you think of it from a change, the people side is you're like, OK, great. I'm just going to go coach Shane and Aaron until they stop talking so much and stop, you know, jumping in front and having ideas and whatnot. And the and the reality is like, if you've done that before, good luck. Like it works OK for a minute when you're being watched and when you're reminded of what's happening, but you go back to your natural way of working real fast, because it's hard to hold All that in your brain and still execute at the same time. It's like we're trying to change your golf swing or how you're jumping on the trampoline with a technique. Only in the moment of holding it in your head, can you really do it? But but we have this practice that we use on the podcast and with clients and in our own organizations that is called the check in round. And we do it at the beginning of of every major meeting and of every podcast with the guest. And the check in round is a very simple idea. It's just we're going to ask a question. Doesn't really matter what it is, but could be interesting, could be boring. And everyone's going to have a chance to check in in turn and answer the question in a few sentences. Seems like such a fundamentally simple and boring idea. You're just like, yep, everyone's going to answer a question. And it's almost it almost reminds you of that bad trope of like the corporate meeting where it's like, I'm Phil and I'm the VP of finance and I like, you know, the color red. But actually done well when the question is like, what has your attention today, personally or professionally or, you know, what's what's your favorite season? What's something that has surprised you? What's something you're looking forward to? What have you learned this week? Whatever it might be, getting everyone to answer in turn starts a pattern. And the pattern is everyone's talking. So the very first thing that has happened in this meeting is it wasn't the EVP talking for five minutes. And then we started meeting. It was everybody talked for a few seconds. And now we start a meeting. And so the pattern has already been disrupted. And what we find is that empirically for the rest of the meeting, that equal talk)
- Time 0:43:43
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(highlight:: The Check In Round: A Simple Idea That Can Revolutionize Your Meeting
Key takeaways:
(* The check in round is a simple idea that helps to start a pattern of everyone talking., * It helps to break the ice and get everyone talking.)
Transcript:
Speaker 1
It works okay for a minute when you're being watched and when you're reminded of what's happening, but you go back to your natural way of working real fast, because it's hard to hold all that in your brain and still execute at the same time. It's like when you're trying to change your golf swing or how you're jumping on the trampoline with a technique. It only in the moment of holding it in your head, can you really do it? But we have this practice that we use on the podcast and with clients and in our own organizations that is called the check in round. And we do it at the beginning of every major meeting and of every podcast with the guest. And the check in round is a very simple idea. It's just we're going to ask a question. It doesn't really matter what it is, but it could be interesting, could be boring. And everyone's going to have a chance to check in in turn and answer the question in a few sentences. Seems like such a fundamentally simple and boring idea. You're just like, yep, everyone's going to answer a question. And it's almost, it almost reminds you of that bad trope of like the corporate meeting where it's like, I'm Phil and I'm the VP of finance and I like, you know, the color red. But actually done well when the question is like, what has your attention today personally or professionally or, you know, what's your favorite season? What's something that has surprised you? What's something you're looking forward to? What have you learned this week? Whatever it might be? Getting everyone to answer in turn starts a pattern. And the pattern is everyone's talking. So the very first thing that has happened in this meeting is it wasn't the EVP talking for five minutes. And then we started meeting.)
- Time 0:44:21
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(highlight:: Permission-Based v.s. Constraint-Based Organizational Culture
Summary:
A constraint-based culture involves setting clear limits and guidelines to focus energy and eliminate risk, which allows for greater innovation and problem-solving.
In this culture, employees are trusted to use their own judgment within the constraints provided, which can be challenging for those used to seeking permission for everything.
Transcript:
Speaker 1
The other option is the culture of constraint, which is the absolute inverse. So you can do anything unless we say that you can't. So now our job with our agreements and our policies and our processes and our roles and our team structures is to clarify what the edges are to actually constrain the system in some way, Shape, or form. So when we create a purpose statement for the organization in a constraint culture, we're actually constraining directionality. We're saying like the vector of this company is towards we're going to be, you know, we're going to get the world on electric cars. So that I've descoped the rest of the stuff that we could do. We're not going to make mops. We're going to make electric cars. I sort of focused our energy and a hiring process is a constraint where I say instead of doing all the possible ways of hiring, we're going to hire this way. A, you know, a policy about harassment, anti-harassment policy is a constraint. It's basically saying don't do this. So I've eliminated this option from the surface area of all possible options. What's cool about building a constraint-based culture is when you eliminate all those risk surfaces that are what we call not safe to try or like fatal, what's left is all this space, All this space to think. So if I say it's not mops and it's not cars, you get everything else. And so the room for people to innovate and use judgment and use creativity and solving problems is just massively higher. And they get to navigate that. Now they're not used to that. So for an example, like we have a constraint in our system that if you spend more than $10,000 on something, you should probably seek advice first. But anything under that, it's like, you know, use your human judgment. We trust you, do what's best for the business, right? Spend the money like it was your own. So somebody engaging with that who's coming from a permission culture is like, I need a new computer. What can I spend? And they freak out and they literally freak out and they start like trying to talk to other people and like, can I get the MacBook Pro? Can I get the extra RAM? Like, what should I do? Give me permission. And the system is like, no, there's no permission for that. You already have permission to do that. You only need to seek advice if you're over a limit. You just need to use your own judgment. And it's this first moment often in many people's careers where they're like, holy shit, I'm 100% trusted.)
- Time 0:53:09
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(highlight:: Consent-Based v.s. Consensus-Based Decision-Making
Summary:
Early business decisions should be based on consent, not consensus.
Autocracy can be innovative but also biased, while consensus leads to average ideas and slow progress. Consent combines input from team members while allowing for efficient decision-making.
Transcript:
Speaker 1
We do is we talk about consent based decision making at the earliest days of the business consent, not consensus. So there are many ways to make a decision. Autocracy monarchy is kind of one way, which is like the boss says. So the CEO just makes the final call. And that has some pros. It's fast. Often it's innovative, but it has some cons too. It's often biased and it's often wrong. And so it's also a little disheartening for everyone else that just kind of has to fall in line. So there's a challenge there. The consensus view is great because it feels like family vibes. Everybody weighs in, everybody shapes it, everybody touches it, but it's slow. And worst of all, it makes the idea average. So, you know, a camel is a horse designed by committee. I don't know if you ever heard that, but it's like, yeah, the rounded corners of everybody putting their mark on something slowly makes it average. And so when you have a consensus operation, you basically have a bunch of average ideas doing average stuff for average people. That's how you end up with some of those companies that you're just like, man, it must be boring to work there. You know, that's really, really wild. And then the third option is consent. And that's the one that we advocate for at least to)
- Time 0:57:08
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(highlight:: Zone of Tolerance in Decision-Making
Summary:
Your zone of tolerance is a circle which accounts for what you can stand and what you prefer.
It's important to know what you can tolerate, but there are also things you simply cannot stand. When two people's zones intersect, there are opportunities to try new things and learn together.
Transcript:
Speaker 1
So if you think about your zone of tolerance, you have some put a circle around it, like this is everything you could tolerate. If I was like, let's change the knowledge project in this direction. You'd say, I have a range of things that I could stand. And then I have my preference. And my preference is a smaller circle, right? So like the thing you want to do, the thing you think is smart and perfect and genius. That's a small circle. The thing you can tolerate is a bigger circle. And then there's things you can't tolerate. I was just like, we're going to change the name to the Aaron project. You'd be like, I cannot tolerate that. So that's out. That's the biggest outside circle, right? So, uh, or rather, that's the, that's the smallest insight circle. Excuse me. So, so now we both have those planes and they're running into each other. We have two, two Venn diagrams. They're kind of being created here. And in the middle are things that you and I both tolerate, where it's like, you know what? That seems safe to try. That's interesting. That's intriguing. We might learn something from that.)
- Time 0:58:20
- tolerance, persuasion,
- [note::This could be an intersting thing to blog about - "zones of tolerance as applied to social change"]

(highlight:: Spurring Organizational Change Through Your Team
Summary:
Leaders have a variety of options to improve team performance.
When teams operate differently and show success, others want to know their tactics. This leads to engagement and dialogue about improving team work.
Leaders can share successful experiments to improve team performance.
Transcript:
Speaker 1
At a minimum, if at least you're a leader of a team anywhere in the hierarchy, you have a you have a large menu of options of things you can do. And we have found through trial and error that when those individual teams start to operate differently and then interface differently with other teams, it spreads like people want To know when you see a really good dish go by you at the restaurant, everybody's like, what's she having? Like people want to know what that team is doing. And they start to ask questions that allows you to engage them in a dialogue about, Hey, well, what's stopping you from doing the best work of your life on your team? What's stopping your team from doing its best work? And then they say and you're like, well, we did experiment around this. You should try and experiment around that. So you sort of open up the aperture.)
- Time 1:12:59
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(highlight:: Changing the Organizational Culture as an Individual Contributor - Sometimes, You Should Just Look for Greener Pastures
Summary:
As an individual player, it's important to assess if those in power are open to change.
If not, consider making career choices and seeking companies with cultures of permission. Share examples of companies with progressive cultures and find like-minded leaders.
Follow the spark and make the change.
Transcript:
Speaker 1
If you're an individual player, if you're like an IC, I think you have some choices to make really important choices. One of them is to decide if you think the people in power around you are going to be open to any of this or not. And if they're not, then I think you have career choices to make, assuming that you have the privilege to to make career choices. And often people will jump. They will think about like, where can I actually bring these ideas to life in a more meaningful way? And it changes the way they interview. You know, they used to interview for just like, what are the stock options going to be worth? And now they start to interview for like, is this a culture of permission or constraint? You know, they like changed the orientation of their of their approach. So that's a piece of the puzzle. And also you can engage people in conversation and you can be a thought sharer in a system like that in a way that's really, um, that's really quite useful. So just sharing examples of companies where you're like, Hey, look what Patagonia did, look what higher did, look what buffer did, look what Bridgewater did, look what Burning Man Does, look what Mondragon does, look what WL Gore does or Pixar, Netflix or Morningstar, Bert's, it means just like you go down and down and down the list and people start to see a pattern. And then maybe you find a leader, maybe it's yours, maybe it's someone else's who's like, I kind of see the same stuff. Like I'm kind of interested in the same stuff. I'm a rebel too. And that's, that's where you start. That's the spark. So you kind of have to start by sharing and see if there's any pull at all. And if there's no pull, then then maybe look at greener pastures. And if there's any pull at all, you, that's, that's the)
- Time 1:13:39
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