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Why Putting in Effort Isn't Always Enough

Why Putting in Effort Isn't Always Enough
12 min read
#systems thinking

Picture a car, a complex machine that can be broken down into parts - the engine, wheels, the electrical system - each part interacts with another to achieve a common objective - getting you from point A to B, essentially forming a system.

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Everything is a system, cars, mobile phones, stock markets, you(a biological system). This holistic(reference to the whole) view is important when trying to understand how an action or decision in one area can influence outcomes both in predictable and unpredictable ways in another.

An understanding of the systems at play in our lives and environments allows us to anticipate how actions in one area can ripple throughout our lives shaping various outcomes.

We have all been there, putting in much effort but seeing minimal results. Or success coming out of nowhere all at once after months of stagnation.

People are always under the assumption that their results are more or less directly correlated to their inputs. If I work harder, I will succeed. If I am in school longer, I will make more money. If I am a good person, eventually, good things will find me. These might seem like simple equations but the reality is more complicated than that.

In systems thinking, there are 3 generic systems through which effort(inputs) are translated into results(outputs). Depending on the system, the relationship between the efforts and results changes.

1. Additive Systems.

In an additive system, the effect of each component is independent of others and their combined effort is the sum of their efforts.

When adding numbers, the result is directly proportional to the sum of the individual numbers. The key characteristics of an additive system include;

  • Linear Growth; input directly correlates to output.

  • Predictability; Constant efforts lead to reliable progress.

  • Repetitive; Regular contributions are made towards growth.

The mathematical equation summarizes this phenomenon; Where: a, b, and c are constants and R is the result(output).

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Everyday events can be thought of as additive systems for example; Working a job 8 hours a day for a fixed salary is an additive system, the more the effort the better the result. At the end of the year, your net worth will be directly proportional to the number of hours you put in.

If someone works 40 hours a week and is paid $10 an hour, at the end of the week they have $400. If they decide to put in more hours for cash, say 10 more hours, they now have $100, a total of $500. Note the linear relationship between effort(hours put in) and outcome(money earned).

In any case, when the constant(a, b, c) is higher, this is a high-leverage input that can generate even greater results.

Consistent Effort.

The essence of an additive system lies in the value of consistent effort. It's like climbing a staircase. Each step up a stair counts as progress to the top.

In the context of working hours and salary, maintaining a consistent work ethic leads to steady income growth over time.

In additive systems, slow and steady truly wins the race.

“Sum of Parts” Principle.

The 'sum of parts principle' states that the whole is simply the sum of its parts. This might be true for basic systems, however, real-world systems are interconnected and interact with each other to function.

Systems thinking goes beyond the 'sum of parts' principle by proving not only does each part's contribution matter but the power of a system lies in its interconnectedness.

“Systems can change, adapt, respond to events, seek goals, mend injuries, and attend to their own survival in lifelike ways, although they may contain or consist of nonliving things. Systems can be self-organizing, and often are self-repairing over at least some range of disruptions. They are resilient, and many of them are evolutionary. Out of one system other completely new, never-before-imagined systems can arise. A system is more than the sum of its parts. It may exhibit adaptive, dynamic, goal-seeking, self-preserving, and sometimes evolutionary behavior” Thinking in Systems: A Primer, Donella H. Meadows

Systems thinking tells us that its not just about the parts but how they interact with each other. For example; Picture the gears in a machine. Their individual functions matter, however, how they interact with each other greatly influences the machine’s efficiency.

2. Multiplicative Systems.

In multiplicative systems, the effect of each component is not independent, also, the combined effect is the product of each of their individual effects.

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Where a, b, and c are constants and R is the result.

In multiplicative systems, increasing one constant or one area does not promise significant growth or improvement in the overall system.

The key characteristics of a multiplicative system include;

  • Feedback Loops; the output of one component is used as the input in the next, creating a cycle of interaction.

  • Interdependent Components; changes in one component significantly impact others, resulting in 'multiplied' results.

  • High-leverage Factors; focusing on these variables is key to maximizing efforts. Imagine running a business. You have limited capital to assign to different business aspects, marketing, product, and customer service. Focusing on customer service is the high-leverage variable that yields the best outcome for efforts(capital). First, you learn customers’ needs and wants(outputs) which you use as inputs to improve the product(positive feedback loop).

Multiplicative systems mainly have feedback loops whereby the output of one component is used as the input in the next, creating a cycle of interaction.

Population growth is an example of a multiplicative system whereby as the number of people who can reproduce increases, it leads to an even faster growth over time.

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Any Number Multiplied By 0 is 0.

The collapse of the crypto-exchange FTX serves as a good example of multiplicative systems where the high-leverage factor(a, b, or c) is zero. After managing to build an impressive platform with a strong foundation(large user base, innovative technology), allegations of missing customer funds and questionable accounting practices rendered all their efforts meaningless.

FTX was the third largest cryptocurrency exchange after Binance and Coinbase. Seemingly they had it all, a large user base in a winner-take-all market, cutting-edge -technology, and partnerships with the best in the game, however, it all came crumbling down;

How the dominos fell for FTX - ‘weakest link in the chain’.

  • In early November 2022, Coindesk reported, that Alameda’s(a sister company to FTX) derived its value from speculative cryptocurrency tokens. This was the first domino, the lack of transparency eroded trust in investors.

  • A surge of customer withdrawals followed after concerns over the relationship with Alameda.

  • FTX failed to meet withdrawal demands, hence the true extent of their situation became apparent. This multiplied by the loss of trust (confirmation bias) led to a death spiral - a decline in all previously positive variables(wide adoption, partnerships)

  • Binance their rival exchange and investor not only sells their FTT tokens but pulls their preplanned acquisition after due diligence. This further confirmed the narrative of malice which was essentially a death sentence for FTX.

In a multiplicative system, neglecting a high-leverage factor is akin to multiplying by zero. No matter how impressive other variables may be, mishandling a critical element renders all efforts futile.

Identifying High-Leverage Factors in Multiplicative Systems.

Just like multiplying by 0 results in a zero, focusing on areas with minimal impact in a multiplicative system is a recipe for wasted effort. For example, when building a startup, raising funds  X(times) finding the best talent X(times) working on the wrong thing truly limits the potential of the business.

Multiplicative systems are about strategic prioritization. It's not just about effort, It’s about directing the right effort in the right areas to achieve the desired outcome.

The key to the success of such systems is in identifying high-leverage factors - elements that have a cascading effect on the outcome;

  • In building a business, this is customer service.

  • In Fitness, it is consistency.

  • In content creation, it's quality.

  • In sales, it's relationships.

Understanding the power of high-leverage factors and strategic efforts in multiplicative systems will allow you to unlock their true potential.

3. Exponential Systems.

Exponential systems are a type of multiplicative systems where the rate of growth increases as time goes by.

An example is the concept of compound interest where interest earned is added to the principle, leading to exponential growth over time.

The key characteristics of an exponential system include;

  • vRapid growth or decline;* exponential systems are ‘dramatic’ in nature. They rapidly increase or decrease.

  • High-base-constant areas; within exponential systems, there exists critical areas where even the smallest of efforts yield substantial results due to the power of compounding.

The following mathematical function represents exponential systems;

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Where exponential results(R) are achieved by multiplying the base(a) by itself x-times.

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In such a case, we can change x(exponent) but regardless of its value if a(base) is a small number. We expect nothing short of sub-optimal results, so we should focus on increasing a(high-base constant), that way a small change in x(exponent) will result in exponential results.

Consider the case of a content creator who produced a piece of content. How good the content is, is the base they are in direct control of. If the media is engaging and resonates with its viewers, the platform's algorithm will push it even more to a wider audience(exponent). In such a scenario, a significant increase in quality(a) and an initial push from the algorithm(x) drive exponential results*(virality)*.

“Once you start to succeed at something, the probability that you will continue to succeed ever more rapidly increases. So there is an exponential function of success. But there is also an exponential function of failure.

Failure and success are like this weird curve where its, Fail → Fail →Die, Or, Succeed → Succeed → Succeed ridiculously!”

— Jordan Peterson

High-Base-Constant Areas

In certain domains, the smallest most insignificant efforts can yield significant results due to the power of exponential growth.

The beauty of high-base-constant areas in exponential systems lies in their early impact. Unlike additive systems where progress is proportional to applied effort, exponential systems have a 'snowball effect' which means small efforts applied constantly can create a compounding base that amplifies future results.

In the world of entrepreneurs, an MVP(Minimum Viable Product) - the most basic functional version of a product or service, is a high-base-constant area. By launching the MVP, entrepreneurs can quickly receive feedback upon which they can iterate from.

To the common eye, the initial impact is marginal however, the feedback(output) gathered from early adopters of the product is what is used as input to build the next iteration of the product for the millions of other users.

Each user gained, and each improvement made contributes to the exponential growth of the product or service. By solving for one, you have solved for all.

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Exponential systems teach us that even small actions, done consistently can have massive consequences. The secret lies in finding high-base areas and focusing efforts on those areas.

The Double-Edged Sword.

Exponential systems are double-edged swords with the capacity to produce both positive and negative outcomes exponentially.

When leveraged correctly they lead to compounded outputs however when neglected or mismanaged, can result in exponential decline and amplified problems where the same compounding force that fuels growth and prosperity becomes the harbinger of ruin.

Social media platforms are prime examples of exponential systems in action. Holding the potential to go viral in a matter of minutes whereby a user likes your content thereby sharing it to their social circles.

However, the very features that fuel exponential growth also have a dark side - the echo chamber, where algorithms designed to keep you engaged prioritize content that confirms your existing beliefs. Over time there is an exponential growth of confirmation bias where you are only exposed to information that reinforces your existing beliefs and worldview creating a distorted perception of reality.

4. Hacking the System.

Different systems respond differently to effort. Understanding the dynamics of different systems is key to maximizing efforts and achieving impactful change.

Each system discussed responds uniquely to our efforts;

  • Additive Systems reward consistent effort. Every action taken, and every completed task is another brick to the wall of progress.

  • Multiplicative Systems require focusing on high-leverage activities for significant improvement. Rather than spreading ourselves thin, in such systems, it is best to concentrate all efforts where they will have the largest impact and amplify results exponentially. To win here is to identify the key areas that will have a cascading effect and put a high priority on them while also avoiding areas that won’t significantly impact the outcome.

  • Exponential Systems are tricky, however, if you find a high-base-constant area, small efforts can yield significant results. Putting our efforts, no matter how small in high-base-constant areas can yield significant results.

Takeaways.

  • Systems thinking is a powerful mental model to understand the complex relationships and dynamics within interconnected systems. By understanding whether a system is additive, multiplicative, or exponential, you can better anticipate outcomes identify leverage points for improvement, and drive meaningful impact.

  • Additive Systems involve a combination of individual elements whereby the whole is a total of its parts.

  • Multiplicative Systems involve interactions where changes in a single component affect other components proportionally.

  • Exponential Systems exhibit growth or decay at a rate proportional to the current value.

References

  1. 6 Fundamental Concepts of Systems Thinking
  2. Thinking in Systems: A Primer, Donella H. Meadows
  3. Additive, Multiplicative and Exponential Systems