Sunday Email: Progress / Predictability

Read time: ~5.35 minutes

Happy Sunday!

Every Sunday I offer strategies for the week ahead and a thought to fuel your action.

Growing up, I was an avid video gamer.

While I might not have matched the intensity of today's younger generation, I found immense joy in video games.

One game that stands out vividly in my memory is Super Mario Bros. I can still picture myself in the basement, playing the Super Nintendo version of Super Mario for hours on end.

Occasionally, I'd venture outside the world of Mario, heading to Blockbuster to rent a strategy game. The challenge? Beat the game within the five-day rental period.

Naturally, this endeavor was best tackled during summer breaks when school wasn't a distraction.

Video games, especially challenging ones, require persistence and creativity. As the game progressed, the levels became tougher, and I often found myself worn out. My gaming skills would deteriorate the longer I played, necessitating breaks to recharge. Tackling challenging levels forced me to try new strategies. Some worked; many didn't. But each failure taught me something valuable, allowing me to return with fresh insights.

One underappreciated feature of video games is the checkpoint.

Checkpoints allow players to make mistakes and still progress. They acknowledge that advancing through a game isn't a straight, uninterrupted path. There are ups and downs, ebbs and flows. Without checkpoints, the gaming industry as we know it might not exist. Imagine a game like Mario without checkpoints—it would demand perfection, leading to frustration and abandonment.

Consider three potential outcomes if video games lacked checkpoints:

1. Few would start or play these games.

2. Players would become overly anxious, likely making mistakes as they progress in the game due to the fear of starting over.

3. After making progress and failing, most would quit and never play again.

This concept of checkpoints, though often taken for granted in gaming, offers valuable lessons for our personal and professional lives.

Phil Knight, in his book Shoe Dog, eloquently stated, "But first I'd need to change my whole approach. I was a linear thinker, and according to Zen linear thinking is nothing but a delusion, one of the many that keep us unhappy. Reality is nonlinear, Zen says. No future, no past. All is now."

Our lives, much like video games, are nonlinear.

Progress and growth in life and business are nonlinear. The inputs we invest don't always equate to immediate, proportional outputs, and we experience setbacks and failures.

If we build our lives and businesses with zero tolerance for failure or an aversion to trying new things, we create an environment akin to a video game without checkpoints. The result? Frustration and stagnation.

A recent article in The Behavioral Scientist inspired me to delve deeper into the idea of progress. Different tasks and processes follow different production equations. However, the linear model often traps us in our actions and perceptions.

The linear model assumes equal output for each input—a straight upward trajectory. While we understand this isn't always the case, our actions often don't reflect this understanding. We fall into the trap of false linearity, interpreting statistical trends and making predictions based on them. A prime example is a client who panics during a market downturn, projecting the decline to continue indefinitely.

In contrast, the step production model suggests that significant inputs yield no immediate output until a critical point is reached. Consider bridge construction: When you watch a bridge being built to go over a river and you see the first segment go in, there is no value. You still can’t make it over the river with that bridge. Even on the second and third segments, no value has been derived.

Ultimately, in the 50th or 100th segment, the bridge is completed. With that one input, you can now realize valuable output from the bridge. And if you continue to add pieces to the bridge the value of the output is not advanced, it’s done.

Then, there's the S-shaped production curve, where initial inputs yield minimal output. Over time, consistent effort accelerates progress until diminishing returns set in. Understanding these production equations is crucial for innovation and growth.

What’s the point of understanding production equations like this?

As we continue to push to innovate in our industry and are forced to evolve the value we provide and how we provide that value to be more efficient and straightforward for our clients and team, we must understand these production equations.

For instance, entering a new initiative with a linear mindset sets a team up for failure. Progress and innovation aren't linear. Setting goals based solely on actions driving progression misses the point. Despite taking necessary actions, progress may be inconsistent. Innovation is rarely linear.

Alternatively, some initiatives show no output despite numerous inputs. This could indicate a step production journey, where cumulative effort leads to a significant breakthrough.

Most growth and innovation follow the S-shaped model. Initial efforts may seem futile, but consistent progress eventually yields substantial results. As these efforts compound, the output accelerates. Eventually, however, returns diminish, prompting a need for renewed innovation.

Recognizing nonlinear production functions helps us grow rapidly, penetrate markets faster, and increase resilience to volatility.

It allows us to leverage technology and automation, both of which enhance capacity. Implementing these tools requires significant upfront effort with minimal immediate return. But over time, the benefits become apparent.

When we were selling our technology solution, Benjamin, we saw this firsthand—our solution automated processes by integrating data and technology. However, many clients struggled because their processes weren't clearly defined. Effective automation requires breaking down tasks into specific, step-by-step actions.

This granular approach facilitates automation and opens up outsourcing opportunities. Too often, we abdicate instead of delegating because we haven't fully mapped out processes. By defining workflows in detail, we ensure consistent, expected outcomes when outsourcing.

In wealth management, nonlinear thinking can help us in a couple of clear ways:

• To truly innovate in your business, think nonlinearly. The extent of innovation isn’t equivalent to the investment of money and/or time. It’s a journey that is S-like in shape.

• This will force us to define our processes with extreme detail. The most straightforward aspect of a process (like sending an email) should be part of the workflow. Don’t assume any part of the workflow. This detail will open up the ability for automation and outsourcing, creating scale, efficiency, and ultimately greater profitability for the firm.

A business is real life.

Video games are entertainment.

But in our world, processes and progress are our games. If we look to build a business and/or process that doesn’t allow progress to be obtained with small steps, where failing sets you back to square one, or if there is a lack of understanding of each detailed step, then we will lose employees, lack motivation for trying new things, and likely lose clients because of the lack of progress.

As we build our business, we can all use what we learned in video games to improve our production and impact in the longer term.

A Thought To Ponder This Week

Predictability breeds trust.

Predictability relies on a consistent approach.

A consistent approach requires a system or process.

Relying on our memory or willpower to “do it” fails.

The most challenging part of predictability is the component of consistency.

Too often, we try to adjust too much to be consistent.

Or we are motivated by something outside our core values or focuses.

And we start, but then it fails.

As a growing business, it is imperative that we can provide the same service to client 100 as we did to client 1.

And the only way to ensure that happens is to create detailed processes that enable the team to deliver a consistent and repeatable experience.

The more assumptions made, the less likely things will be predictable.

As we head into the week, identify one process used often and try to break it down further than it is already. More simple steps will breed more consistent execution.

The best is ahead!

-Matt