Transcript
Speaker: Lex Sisney, thank you for joining me. Where it does today's recording find you? I'm in Santa Ynez Valley, California. Geographically, it's a beautiful day. Sun is out, horses and vineyards around me.
Speaker: Mentally, emotionally, I'm at a, it feels like a plateau, like a curious plateau. That's very interesting. So I hope you're going to tell me about that. Maybe you will do that here or we'll get to it. But would you mind telling me a bit about yourself?
Speaker: So I'm a business scaling coach. That's something I've done for about 20 years now. it's not it's a It's not a business, it's a practice. okay So i I ran a business, several businesses earlier in my career.
Speaker: ah and out of that developed a framework. called organizational physics. And you know through life's twists and turns, what ended up being my calling was rather than being an entrepreneur myself, is to teach and guide other entrepreneurs at a certain stage of development that kind of break through.
Speaker: applying some principles of physics, principles of systems theory. If you were to kind of get organizational physics in a nutshell, like a lot of great entrepreneurs and thinkers through history have, you know, reinforced this idea of, hey, think from first principles, right?
Speaker: And that to me always felt a little abstract. oh Okay, well, I kind of get that, but how? How do I actually do that? And when? And what setting? And so you can think of organizational physics as a intro to intermediate level of working from first principles and thinking from first principles and you apply it to your business where you can really ah see results.
Speaker: I heard you on my friend, Jess Villegas's podcast, and then I've also read your two books. So I have a little bit of this background, but yeah for the listener, can you explain organizational physics to me?
Speaker: I want to give a caveat. We're living in an era of bite-sized blips and information coming at us all the time. Okay. And organizational physics is more of a framework to catch all those things, but it takes a little bit of depth of understanding and application like like any framework does in order to have the foundation to really make it work.
Speaker: So I can lead with the first principle. Perfect. And there's others that cascade from there. But the first concept is really important concept for everybody. I think to take away is that each one of us has a finite energy in time, finite energy in time. So that's true for you, your marriage, your family, your health, your business, your society, everything.
Speaker: And this is based off the first and second law of thermodynamics. If you want the technical, aspect, but just set that aside and go, okay, what that means is that I have a combination of energy gains and drains in my life and work.
Speaker: And most of us are conditioned in life, in our modern society to just fight through the drains, you know, fight through the problems, the friction, the disappointments. Yeah.
Speaker: Grind it out, fight through, break through. Okay. But because we have finite energy and time, it's like walking around with a bucket with a hole in it. Okay?
Speaker: You have finite energy and time, so that means the leaks are leaking out. Like the friction points, the obstacles, the blockers, the drains, they're actually stealing from your top-line performance.
Speaker: That doesn't make sense of a metaphor. Think of a boat. Okay. We're sailing the boat of our life, our business. Where do we want to go? You know, want to put a new sail on this thing. I want to get a new crew.
Speaker: want to go to cool, unexplored new locations. Yeah. But oh my gosh, under the waterline is a hole. It just like, if you were a wise captain, you'd stop to go up.
Speaker: Okay. That's all good. I'm going to take a moment to recognize and plug the hole. Okay. So at this fundamental level, organizational physics is a way to look at your life and work and suss out where the energy drains or energy gains are coming in. Okay. And why? And where the energy drains are flowing out and why?
Speaker: And give you a system to plug the leaks. Now, it applies to all systems of all levels, you know, startup to scale up. I happen to work in scale ups. And a typical scenario where I come in is, you know, a company has product market fit with its core business.
Speaker: It's kind of being pulled forward by market demand. Revenues might be, you know, 100, 500 million. And the company's launching a new product line.
Speaker: secondary product line or entering new markets. and Can you just kind of feel the complexity that starts to emerge there? Yeah. Yes. And the leader realizes, oh, like my current approach, our current structure, team dynamic is my gut tells me it's not going to scale.
Speaker: Or maybe we've tried to launch that second market or that second product line and we're having trouble with it. because we're just not set up to manage that new level of complexity. So I get brought into those scenarios to help the team look from first principles at the situation and design a new business that will accomplish that mission or accomplish that strategy.
Speaker: That's interesting. So a couple of analogies, I guess, came to mind as you were speaking about it. I suppose the most obvious is a situation like a, you know, a leadership team identifies that they need to grow from whatever it is. They need to grow from 10 million to 12 million next year. And Potentially, it sounds like you might assess the situation and say, you wouldn't need to grow 12 million. You could actually improve your profitability if you plug to these leaks. Is that one aspect of of things you would look at?
Speaker: Yeah. Well, it makes sense to me how my orientation around like leaks would lead towards all, how do we create greater efficiency? But I want you to think more of leaks on all areas of your life and work, right?
Speaker: So inefficiencies are certainly one point, but what about just like, uh, there's a conflict between you and your spouse feel the energy drain there in the relationship or scan your, uh, physical body and your health. You feel like you're getting energy from your health or it's costing you energy.
Speaker: yeah right Or look at the friction between go-to-market and operations. like If you just feel the conflict and the tension there between one side's trying to get more customers, the other side's trying to keep existing customers happy.
Speaker: yeah So the profitability orientation is ah is an important one, but it's a short-range efficiency one. There's also long range, like what is the strategy we should be pursuing at this stage of our development?
Speaker: Yeah. Right. There's a lot of things we could do, but what must we do? Then there's a a structural component to it. Like, okay, our our current structure grew up out of our first our first business.
Speaker: Yeah? And if we don't change the structure to pursue this new strategy, we'll keep getting the the old strategy, right? Because inertia is a real thing. So if you don't change the functions of the business and get them in the right relative location, you will get more of what you're getting.
Speaker: Yeah. The, as things grow in complexity, you have to evolve your, your decision-making processes. Yeah. So you can push autonomy close to where the work's happening.
Speaker: Yeah. If you try to keep the same decision-making processes and approach as your business grows, it'll implode. And so all of these are are ways to look at the overall business for its success now and over time.
Speaker: And where I would get brought in is not so much on an operational efficiency basis, but like looking at the whole and you know, what does this system need and how do we all see it?
Speaker: Like the light bulb goes off collectively. So we go, oh, this is obviously what we should do. Yeah. Could be any of those things, strategy, structure, key processes, key people. In my example of, you know profitability, efficiency, then it sounds to me like that is probably not the the use case, you know the felt need that you are asked about, but that you're asked about bigger picture or maybe more fundamental understandings and resetting of a business. And then maybe whether it's you or someone else that
Speaker: an application of some of your work would be, well, if we're going in this direction, and you've helped understand the direction, the goal, whatever it is, if we're going there, then here are the objectives, here are the the the tactics that we would have to execute upon.
Speaker: There's a couple things there. Let's reinforce. ah So look at the the tagline of your podcast, right? Unfolding Thought. Love, that's a ah an amazing brand. Okay, that is really cool.
Speaker: And then the tagline is think past the obvious. Right. So we have a short range profitability problem. That's obvious. OK, I guarantee you that's not the root cause.
Speaker: OK, the root cause is several levels deeper and interconnected that that's where we want to work. Right. We want to look past the obvious to get down there. What are the causal levels and solve those?
Speaker: and then short-range profitability will should improve it would be the difference between let's reduce costs and optimize this process you know here where profitability is manifesting but missing the structural process cultural people issues underneath that so you always want to try to go down to the root cause Of course, that's first principles thinking.
Speaker: And what organizational physics does is it gives some maps, you know, so the leadership team can go, oh, duh, you know, we've all been saying the same thing in slightly different ways, but the core issue is here.
Speaker: Typically, the kinds of things that are showing up, like that are more more manifested in an organization that's ready for this kind of work is ah we're growing revenues, but ah our profitability has gone down. That's certainly one.
Speaker: the left hand and the right hand don't seem to be in alignment. That ah things just, what used to be fast and easy now feels complicated and hard to get done.
Speaker: You just feel the complexity adding up, you know? yeah And the team used to feel like an A team, but now it's feeling like a B, C team. And honestly, it's not really so much about the people, but more about their orientation in the structure and how they're making team-based decisions and getting the work done. So those are the kind of the palpable things like, oh, I see this big opportunity, but man, we got we We got to reorganize and realign in order to capture it.
Speaker: Yeah. And I would say that every business goes through that at a certain stage. sometimes many times. So Lex, you said that you had run a couple of businesses and I would, i I have some information about the businesses that you've run because of reading your books, but I would love a reminder of that. And then it i i suppose at some point that'll lead into my next question, which is at what point in this journey did organizational physics as a, I guess, a framework start to develop?
Speaker: So I'm most known for, uh, and my earlier entrepreneurial life for, um, being the the co-founder CEO and chairman of the world's largest affiliate marketing company. And that was a exponential growth curve.
Speaker: And at that time I was in my, my late, late twenties, early thirties. I'm 56 now. Uh, and. I want you to kind of walk in my shoes where it's my first real success.
Speaker: It's growing like crazy. I'm really passionate and committed. I've got a board and investors and a management team and everybody's got an opinion, you know, and I'm trying to do the right thing. But what I'm finding is I, I take what sounds like a good idea and and implement and And then rather than it being successful, it's just like there's blowback, you know, or there's unintended downstream implications that I i didn't have the visual.
Speaker: i just just couldn't see, you know, I didn't know. But my default mode is work harder, fight harder, you know. So I just keep right hammer and nail, bam, bam, bam, you know, and it's just creating more and more more chaos.
Speaker: And ah ah my ego had broken down enough where I was really looking for help. Cause I just felt like I had this visceral feeling like everything was running me. I wasn't running anything, you know? And like, this was important to me. i needed to be ahead of it, you know, really leading it, influencing it, anticipating what's coming next. Yeah.
Speaker: And so the birth of organizational physics came out of that because I i was fortunate to work with a group called the Adizes Group. And Ichak Adizes and his partner Sunil Dovedy had helped transform like Porsche, Bank of America, Marriott Hotels, Domino's Pizza in the eighty s when they they got caught in this tumultuous time that I was in.
Speaker: What he he they were really experts in is is corporate life cycles. And it's this recognition that every system goes through a series of predictable steps, just like a child, you know, or crawl, walk, run, you know, baby, teenager, adult.
Speaker: And I hadn't, I didn't ever heard, I'd never heard that before. So I was taking all these tidbits of advice And I didn't have a ah framework to sift them. You with me?
Speaker: So i was applying the right thing, but at the wrong stage. It was like, um I have a three-year-old child. i'm I'm doing what I'm doing, training them like they're 23. Or heck worse, vice versa. You know, they're 23 and I'm treating them like they're 13, like yeah conflict, destruction. Right.
Speaker: So that was very eyeopening to me to go, oh, just put the right framework up here. And now you freaking know what to do. That is like so liberating you with me. And that inspired a a quest to go, well, what other frameworks and methods and metaphors are out there?
Speaker: And that physics is an amazing forcing function. You with me? Yes. Like in systems theory, although more complicated, is an amazing forcing function. And so I just started to like look and and quest for methods and models and frameworks that I could kind of tie to a metaphor of of physics or systems theory and and make it applicable to a hyper growth business and a key requirement was to be able to teach a team this so that everybody saw it because there's like most companies don't realize they they bring in a leadership group you know or a founding group and everybody's got their own visual orientation needs motivations history you know and they all bring that
Speaker: together. And unless you create a, like a reef, like reformat the collective hard drive, you're it's going to have a lot of conflict and miscommunication. You got to have like a common lens to know what to do next. So that that's really the genesis of organizational physics.
Speaker: So when you are brought into a business, in order to start understanding, or sorry, in order to get to the point that you can begin to understand where the gains and the drains are and begin making decisions about You know, and we have an understanding of these things, but which of them are we going to work on? Which of these align or don't with our goals and so on?
Speaker: Is there a certain place that you start and then stages you go through? There is. and it's actually a little bit even more more um so subtly important.
Speaker: that um Marc Andreessen had a great quote you know there's there's two kinds of problems in the life of every business pre-product market fit problems and post product market fit problems okay yeah so i specialize in post product market fit problems the kind of problems that most companies don't even get get the chance to experience okay So until you have product market fit, literally, like he's right, nothing else matters. Don't even entertain me, okay?
Speaker: the The important subtlety here, though, is if you try to apply post-product market principles too early, you'll actually cause yourself failure.
Speaker: Like if you, like, and it's natural. Like imagine you're an astute entrepreneur. Like I want to anticipate my future problems and solve them now. okay But what happens is you put too much structure, order, ah principles, processes in place too early, and you can't adjust then to changing market conditions, and you'll fail. So it's really important that you...
Speaker: just get product market fit, be pulled forward by market demand. And then you've earned the right to solve this next set of problems. And congratulations, right?
Speaker: When someone has gotten to that point that they have the, I think it was, is it post market fit? Was that it? oh Post product market fit. Yeah. It just means that, we We found a, we have a compelling solution right for a niche of customers and they're saying, yes, we want that and we want more.
Speaker: So once someone has gotten to that point, then they're the scaling phase, I believe, because I think you said that you work primarily with businesses that are ready to scale or are scaling.
Speaker: I'm going to just give you a nuance of definition here. ah pilot it, nail it, scale it. okay Technically, they're a stage earlier when they have product market fit. It's called mid-nail it.
Speaker: So we've nailed the core product market offering. We have to build out the rest of the business to to really scale and capture the market opportunity. And it's just like being a teenager. If you're parenting like that mid nail it stage is just like a teenager. It's awkward. It's hard.
Speaker: Yeah. you know, you can go through it as quickly as you can, but you got, you can't skip that stage of really systematizing how we sell service and deliver. Let's just say that i have developed a product of some type and i've found people will actually buy this thing.
Speaker: yeah Then i get to the point whether I'm raising around, you know, investment or I'm bootstrapping, whatever it is, wherever it is, I get big enough that I'm starting to say all those things that I wish I had built a year ago, but yeah they just weren't practical.
Speaker: at that time you know now it's time to go back in in one way or another and build the foundation that way we can go from whatever the numbers are let's just say to for nice round numbers that way we can go from a million to 10 million and have a sustainable business in some ways yeah okay so what do you look at first when you're brought in well, what do I look at first? Um, when I brought in, I actually, let me give a little color context to your, your analogy. Okay. Okay. Yeah. Growing the business is never by the tech, like a textbook.
Speaker: Okay. It's grit and art and luck and gumption. Yeah. Uh, as you have that initial product market fit, but you want to keep that going in many entrepreneurs, myself included go too fast, too soon.
Speaker: And there's always a bottleneck somewhere. The bottleneck can often become the founder. Like now I'm doing having to do customer service and and go to market and operations and finance, right? You feel them like collapsing under the pressure of all these things, you know?
Speaker: And so you don't always need funding. right The funding has to come from somewhere. It can come from ah customers. okay But you always want to be trying to anticipate a couple steps ahead and say, okay, well, where's the next bottleneck?
Speaker: And how do I systematize that now so it doesn't hurt me? right So I can scale more smoothly without without skipping a stage. right now where do i work at so i'm coming into an organization that's um that's growing usually growing quickly and there's been increased complexity so we're now looking for the simplicity on the other side of complexity and i always start with strategy and i always start with strategy based on where you are
Speaker: in your life cycle development, always. right So most of my clients are across you know every industry you can think of, but they're in that mid to late nail it stage. okay So they have they have product market fit, they have sales, they have customers.
Speaker: They're probably struggling with systematizing some aspect of how they sell, service, and deliver. But based on where you are, we want to identify what is the next set of you know key strategic imperatives.
Speaker: Imperative is a do or die. That will take us from this stage of our our development to the next stage. That's it. Don't try to come up with a big, hairy, audacious goal that 10 years want to be this. mean, you can do that, but that's not really strategy, right? The strategy is what must we you know do or die to go from this stage to the next stage.
Speaker: And once we're at that next stage, we can pick up the next strategy. Right. With me. Okay. Okay. Got to start there. And then you look at structure. yeah So structure is not the org chart. People conflate it with the org chart.
Speaker: But ah one metaphor is think think of a structure as like the musculoskeletal system of the body. Okay? I've got my brain is in my head for a reason, not my ass, right?
Speaker: If I've got a twisted spine or hip, it doesn't matter how much I go to the gym. I'm going to be in pain. So got to get that in alignment with the right functions, you know, function, sales, marketing, engineering, just like brain, heart, lungs, they each have a function to perform.
Speaker: Yeah. You got to get them in the right relative location to each other for that strategy. If you don't design the structure for the strategy, you're going to just get what you've been getting.
Speaker: And that's hard because why? Well, because the structure has grown up organically around the the founders and the team. And so we're used to hey Frank doing this and Sarah doing that. And oh my God, how can we take that away from Frank or take that away from Sarah? what a There'll be massive amount of disruption you know and hurt feelings.
Speaker: wait Sorry, you don't have a choice. You got to put Frank and Sarah aside. okay For this strategy, for this stage, what is the structure we need?
Speaker: What functions do we need to energize? Where should they be? okay Then you can add in back the team. Oh, there's actually a perfect role for Frank.
Speaker: Oh, Sarah actually does have to make a compromise. Oh, we actually have a glaring gap in our structure. We're missing this role. No one's been energizing it. No wonder we're struggling.
Speaker: And then the next step for me is always process. So process if the structure is like the musculoskeletal system, process would be the circulatory neural net that makes the organism come alive.
Speaker: And they're not the same. lot of people, like structure is a loaded term. like okay But most people conflate structure. The skeletal and the the neural net is the same thing. They're not. They're interdependent, but they're so they're separate. They're distinct. And you've got to treat them like that.
Speaker: But what you do is energize a new process in the system so that we have information transparency, we can push authority to where the work's happening. There's a there's a way to make important decisions and to delegate less important ones.
Speaker: And that brings the organism alive in that new structure to support that new strategy. That's the high level approach. The the sequence matters. Some of what you said reminded me of a meeting from, it could have been 15 or more years ago in my career that I think of actually quite often where there were a number of us sitting around, you know, a creative director, a copywriter. I was the strategist and I can't remember who else. And we were talking about this nonprofit fundraising campaign and we had been going for
Speaker: I don't know how long, let's say an hour, hour and a half on some some problems that just didn't really seem like we could adequately solve in this campaign. How are we going to do the email, the ads? Oh, wait, when we change this, then that's going to cause a problem for another channel or whatever it was. You know, we were really in the weeds of some of this stuff. And my boss at the time, I remember him saying And I can even imagine what was going on in his head at some point. He was probably thinking, what are these people talking about? But the question that he asked was, he just interrupted everybody and he said,
Speaker: what's the goal of this campaign? What are we ultimately trying to do here? And that was a really clarifying question because as sensitive as we probably all were to that question, we had sort of just gotten off on the track of what we're supposed to do X and Y and Z or my piece is X. And so I'm only gonna be focused on that. But when you ask that kind of like a vision or a goal or whatever question,
Speaker: It was, like I said, really clarifying. And you, as you were talking, that felt to me like an aspect of some of organizational physics or some of your focus, let's say.
Speaker: You're right. I can actually add one one element to that meeting you experienced. So we've all been in ineffective meetings and it's one like one of my pet peeves. ah So I've spent a lot of time like diagnosing and in training, like how to run like highly effective meetings for, especially for decision-making.
Speaker: But that, ah so if you think about going back, So let me say that if you're in a meeting that feels like it's in the toilet bowl, like you were, that first question is really important. What's the goal or the purpose of this project? Okay.
Speaker: There's a follow-up question though, like who's the implementer? Like who is ultimately accountable for the success of this campaign or project or initiative or whatever.
Speaker: And by doing those two things, What should happen is if we're doing it right is that the orientation should shift to, let's say Eric is eric is the implementer. He's accountable.
Speaker: Eric, here's what I'm thinking. What do you need? you know Here's what you should consider, Eric. How can I help? Eric, I think you're being a big idiot here, but let me know how I can support you. you know yeah It shifts from the circular debate to orientation. oh Okay, well,
Speaker: Here's the goal and Eric's implementer and I'm here to support. how can I support you? Yeah. You know, and the better I am at supporting you, the better you, you know, more open you are to supporting me later. and it doesn't, that implementer role doesn't have to be a fixed role, right?
Speaker: We try to push it down to where, who, who really is in charge of the implementation, but those two things, like what's the goal and of, there's a third one, if you don't mind, like,
Speaker: Where is this project at in its life cycle? Really, really important. Because you'll see like, oh, we're we're we're in the piloted mode with this project, but we're treating it like we've already scaled it. yeah We got to come back and make sure we've really done the right things to pilot it and nail it before we try to go to scale it.
Speaker: ah Who's the implementer and you know what's the big objective? Anybody should have the authority to raise those questions up if you're in a meeting that feels like it's an energy suck. Like save yourself and everyone else.
Speaker: I would love to know if I'm imagining a common, um, a common trajectory, let's say, or common set of circumstances that you go through. But I imagine that you come into a new organization and after some amount of work, you know, you are presenting or you're you're coaching them through whatever you you have a, you get alignment around, okay, here's what we need to do.
Speaker: The organization structure or who knows what. I imagine that you must deal with people getting defensive or territorial, you know, because, well, that's my job. And we have these barriers. We have these, we've drawn boxes around areas of responsibility. And, but I would also like to think, Lex, that after you have gone through some of the change that at least some of your clients, if not a good portion of them, would have people that are maybe less defensive or however we want to describe it, and because they're more oriented around those bigger picture vision and and and goals, I should say.
Speaker: yeah yeah so of course i have a lot you know of resistance and there's couple couple things here one is that once you've changed structures it becomes much more fluid it's not such a big deal like all the fear and anxiety around titles reporting lines all that stuff just gets much much less can get much much less That said, some companies change structures to too haphazardly.
Speaker: you know that there's always there's not a There's always a polarity here. right like you yeah you know i ah I believe you should really only be changing structures if there's a change in lifecycle stage or there's a material new strategy.
Speaker: and then like Those are must change. But the rest is more deck chairs, Titanic, like if it's happening haphazardly or frequently, it's just the CEO kind of trying to, it's like a desperate, you know, NFL coach, like just playing whoever it can, you know? Okay.
Speaker: So I have found after a lot of years of doing this and okay, this is, this is going to be a nuance and I don't, I hope it comes across. My orientation as a leader and a coach is full transparency.
Speaker: Okay. If I was going to do a change initiative, I would take the time to gather what I call gather the mass, right? Get in a critical mass of people, Reveal, you know, go through, understand the data, generate insights, decide what to do make it very, very transparent.
Speaker: I have found that structure is such a loaded term and concept that it's actually counterproductive to try to do that. Instead, ah what I've found most effective and in terms of time, energy, an impact is to work with the CEO in his or her right hand and Do a design design phase. Okay, what what is what should this strategy be based on our lifecycle stage? What is the structure we need independently of the people?
Speaker: Yeah. And then get alignment with the CEO of that and maybe a couple couple others. But then ah just deploy, just just change your team-based process.
Speaker: I call it a SET, a strategic execution team. Just get the people in that new structure into a ah team setting where they start energizing their roles without a big hoopla or rollout or explanation. It's not dissimilar to being, imagine you're a football coach.
Speaker: You're with your your your head offense, a defensive coordinator, and you're at the whiteboard drawing plays. Get some good ideas, and this is this strategically makes sense, yeah? Get out on the practice field with the players in their roles and just start playing football.
Speaker: You know, like you'll quickly realize where you had gaps. The team will start to get it because they're actually doing it. It's the same thing here. Like I know it it can sound a little hard to believe, but like,
Speaker: Just don't make a big change initiative out of this. Just get people into the roles you need them to perform. Yeah. You know, and start showing up and repping that role every week on the team. And with some other coaching and and things like that, you'll start to see the the new structure come alive very, very, very quickly without it being a big cost or change initiative.
Speaker: Once the team's been in the field for a little bit, then if you want to roll, know, show them the big structure, do it. But all their questions will be answered and all their doubts will be answered because they're already in it. Yeah. You reminded me of two things. So I'll deal with one around coaching first, but I'll mention the second one, which is PSIU, which I would like to come around to because I feel like that's quite relevant. But first I'll tell you, so I got a coaching license in for for soccer.
Speaker: And so I have a certification for coaching in business. And, you know, there are things that you learn depending on your particular focus, you know, but there are things like it pretty much any coaching certification you get, they're going to talk about active listening, for example. Sure. And there might be an inside out focus or who knows what, but ah empathy maybe. so But one of the things that yeah even before you mentioned football that I was thinking about is, i think it's USA soccer, whatever it is, the licensing body in the United States, they have this model that or this philosophy, I don't know what to call it. it's And it you should structure your training sessions around play, practice, play.
Speaker: And so you play a game, then you'll actually practice something. And then you go back to playing. And the basic idea is that you learn a lot more from actually trying to do the thing than you do from, let's say, a classroom session or maybe for soccer, it's not a classroom session. It's just all the kids sitting down on the field and me telling them, well, first you go here, then you go there and so on. And I have, I don't know how much I think about it exactly like that, but I worked with some futurists for six and a half or so years of my career. And one of the things that I really liked in working with these folks was that they were heavily focused on
Speaker: facilitation of activities and exercises where people would get up and move around and they would try things out rather than somebody just standing and presenting.
Speaker: And it was so sort of energizing to me when I first started working with these folks because it felt like at at a much higher rate than when I walk into a room and just give a presentation, at a much higher rate, people would express insight or excitement or like, I really got something out of this. And it seems like these sorts of things are showing up in the the ethos of this approach.
Speaker: I am listening to you ah struggling to think of anything that wouldn't benefit from play practice play any new skill development, any new framework adoption. Right.
Speaker: I love that as awesome. And it's true. You know, like if you think of play and then practice is what, you know, developing capabilities, but also reinforce and reflect and then go play again. And it's exactly right. And i mean, you could transform the world of education and personal development with those three words. So that's awesome.
Speaker: I agree with you. Okay. So tell me about PSIU, because as I said, I feel like this comes, this is relevant to what we were talking about. Yeah. So the idea behind organizational physics is that there's some core principles that are at all systems, all levels. Yeah.
Speaker: Okay. And that's hard to get your mind i around at first. But if you can build in the framework, you start to see, oh, all systems, all levels have these same dynamics. Yeah. Okay. Personal level, marriage level, team level, business level. Okay.
Speaker: Uh, because of finite energy and time, every one of us has developed a way to get energy from the environment, you know to, to manage the complexities of our environment. If we we can't manage the complexities of our environment, no new energy is going to come in and we're going to perish.
Speaker: Yeah. And so it it ends up being a ah typing model for like personalities and team dynamics or organizational functions, but it's not based on Carl Jung, you know, or Myers-Briggs or Enneagram or any of those kind of classic psychiatry-based or psychologically-based type indicators. It's just like systems theory. Yeah.
Speaker: And its advantage is that it's really easy to apply in a fast-paced setting. And ah when you're with somebody, understand what their you know goals, orientations, and blind spots are.
Speaker: And so the PSIU, just think of PSI love you as way to remember these four kind of dimensions. And each of us has all four at some level. But because of finite energy and time, there's always a trade-off. So if I have more of one polarity, I'm going to naturally have less of another.
Speaker: P stands for the producing force. So like you'd want to a heavy producing force or high producing force in like your head of sales, you know, hunting, closing deals, your head of engineering, like ship, ship, ship, you know, healthy, high producing force is what brings that focus on getting stuff done.
Speaker: And then the S is the stabilizing force, right? So that's what brings order out of chaos. Right. It's what allows us to systematize and create efficiencies.
Speaker: and So you'd want to see a healthy stabilizing force in your head of quality, you know your controller, operations. yeah And notice that...
Speaker: a function in your business can't just be one force, but like you, like you'd want operations to be producing output and systematizing how it does it. That, that creates efficiency and profitability. Yeah.
Speaker: And notice that head of operations could have be a really high P producer, like crack the whip, drive the trains, but they'd lack the stabilizing capability to do that repeatedly, if effortlessly, efficiently over time, yeah?
Speaker: So you just start to observe things through this lens of, oh, like we are lacking a stabilizing force here.
Speaker: So P producing, S stabilizing, I is for innovating, and it's what allows a system to evolve and adapt and disrupt an ecosystem or a marketplace over time.
Speaker: we'd want to see a high innovating force in your branding, you know, in your R and d in your strategy. Yeah. Why not? Why not? And then the, U is the last force unified is what brings team cohesion, camaraderie, a feeling of unity.
Speaker: Okay. And all these forces are in conflict. in ourselves and they definitely show up in conflict in communication styles management with others you know like if i'm a big producer and i go to a high stabilizer with tasks notice that i'm in a hurry like i'm light on details get this done and the high stabilizer is like whoa what is this what are implications here what about the other projects i'm working on you know you feel the tension uh and you know one one one quick way to bring this alive is like just do a thought experiment of a rowboat at your feet on the water and a big producer comes at you on the dock they're like
Speaker: you know, high energy intensity, you put him or her in the rowboat and say, row. They're like, ah, you know, think, get put my back into this, I'm out of this meeting, like, let's go. They don't ask a lot of questions.
Speaker: A high stabilizer comes at you on the dock. They're like aware of all the implications and details. If you put him or her the rowboat and say, row, they don't just start rowing. Right? Well, what is the water conditions? What's the temperature? What's the wind? Where's the water? Where's the food? Like,
Speaker: What are the implications? What's the most efficient stroke? Then once they have all the data, then they'll start to row very efficiently. You're on the dock, a high innovator comes at you, now they're going be like higher energy. Why not? Why not? Let's do this. Let's get creative. Let me put my stamp in the world. Let me make a dent in the universe. Put him or her in the rowboat and say, row. They're going whoa, okay, let's let me put a sail on this baby.
Speaker: Or let's you know put glass bottom on it. That would be cool. you know Something like, why not? Why not? High unifier on the dock, they're attuned to the situation and they're very people and we-oriented.
Speaker: you put him or her in the rowboat and say, row, they're going to be like, oh, let's get a team together. I just want to call out that again. All of us have all these dimensions. Yeah. There's always a trade-off and you'll, you need some metaphor to assess your people, teams and functions.
Speaker: And the advantage of this model is that it's just based on thermodynamics. It's not based on psychological theory. And you have a quick way to go, oh, we're missing a unifying force here. Or if we want to hire this person,
Speaker: They're a high innovator. We need them to be a high producer. What do we do? yeah Should we hire them? Maybe we need to change the role. Make those trades. So it's all always trade-offs all the time. And I'm just trying to bring light language to where we can ah consciously make the trade.
Speaker: Where does and understanding or an assessment of PSIU, suppose, either for the individual or for the team, yeah play into,
Speaker: i guess mapping out a new structure for an organization or a structure that will facilitate scaling. And then also, i think we have this other factor in here of the play sort of example that we talked about, you know, where we get people into a workshop or whatever it is, and we start having them just play out the roles without necessarily specifying ah we've identified you are a producer unifier whatever it is and we've identified we want you to play the cfo role i'm wondering where which each of these things come in and or how they work together maybe yeah it's a good good question and um here's here's how they work together is because it's the same forces at all levels when we're doing a new structure we just label ah
Speaker: PSIU ratio for each function. So for a CFO, we want a high stabilizing, innovating yeah force. Oh, we have a CFO who's a producer unifier. Yeah.
Speaker: Okay. Well, like like first of all, that's just valuable to have the the lens to go, oh, strong fit, weak fit, you know ah but also in the structural design itself, you okay we don't want to violate some core principles yeah like we don't want uh we wouldn't want to take a long-range function like brand marketing or r&d we intuitively we'd never put it under a short-range function like operations right you know like people do that they like they go against their gut and go well
Speaker: You know, i i just, we just got to get more control over this. So we'll just put it here and now we'll ask operations to do it all. And now look at operations. It's imploding because it can't do it all. So PSIU tells you like, don't let long range fall prey to short range pressure.
Speaker: Also, though, another one is don't let efficiency, which efficiency is doing things in the right way every time, repeatable. Tune in with me. No errors, high quality, same widget every freaking time. Yeah, that's necessary.
Speaker: But you don't want efficiency to overpower effectiveness. Effectiveness is be disruptive, try things, innovate, iterate, create. Yeah, break glass. So you you wouldn't, if you wanted to be successful over time, you wouldn't let efficiency dominate effectiveness in your org. Right. PSIU will tell you that.
Speaker: So what it's doing is just giving a language to look at everything independently of the people and go, oh, okay, here's where we need these functions to support this strategy. Don't let short range overpower long range. Don't let efficiency overpower effectiveness. Don't let centralized control overpower decentralized autonomy.
Speaker: Get that right. What's the PSIU code or you know mix we want in each part of the org? ah Now we can look at people and go, oh, or agents. Like, oh okay, here's here's a good mix. Or, oh, we have a glaring gap here.
Speaker: That's good to know. I'm glad you brought up efficiency and effectiveness because I forget if it was in your conversation with Jess or if it was in one of your books, but I'm remembering now that sort of statement that you said in one place or another, something to the effect of,
Speaker: most of the time, efficiency is going to beat out effectiveness in terms of like, that's what people are going to choose for, or that's what they're going to optimize for, perhaps. And you can correct me if I'm wrong there, but the i i'm at once you brought that up, then i was reminded of the the question A question that I had for you when I was going through, i think it was one of your books, was how do you deal with that tension?
Speaker: you know like I remember, Lex, watching a TED Talk, I think it was could have been 15 years ago, and this project manager was saying that You know, our operations manuals for a lot of businesses have gotten to be extremely thick. You know, they're like a textbook. And why are they like that? It's because every time there's a problem, we go and find where there was a problem and we make a rule.
Speaker: That way in the future, we don't have to blame anybody for having a problem because you just follow the manual. But I think the essence of it was that then will we stop being creative? You know, it's sort of, I think it was, I can't remember if it was Deming or Taylor or one of these, you know, scientific management sort of people said that, you know, basically the the worker is not meant to think.
Speaker: Yeah. So, and I don't know, Lex, if the question is, how do you generally deal with a tendency towards efficiency versus effectiveness? Or if it's, you know, how have you dealt with that throughout your career? But I was glad you brought those up because as I was going through the podcast or your book, that question came to mind. Okay.
Speaker: I want you to, the listeners take away that efficiency is necessary for life. Okay. Without stability, efficiency, we had have no, nothing to organize around.
Speaker: Okay. hey So it's good and beneficial, but what happens is an organization grows and ages, it becomes more stiff, more stable, right?
Speaker: It's, it becomes conditioned to the status quo. And yeah, ah principles are few, policies grow exponentially. It's like lawfare in Washington, right? would nut We fought haven't found another law we can't don't want to pass. you know Just grow and grow and grow and grow. And that ossifies.
Speaker: That's why you know civilizations age, cultures age. yeah That inertia is naturally happening. okay Just think of your life. like Think about how flexible you were when you were 14.
Speaker: yeah Now a more stable, more stiff, more set in my ways. It's just a fact of life that's happening. i believe as a leader, your job ah is to ah only allow enough stability, just enough efficiency to keep the organization out of harm you know and be ah you know be efficient, agile.
Speaker: But you've got to constantly fight and prevent this stabilizing force from taking over because it will. Left to its own inertia, it will... grow until the organization can't respond to change and it dies.
Speaker: Okay. So a stiff, stiff, stiff, stable, stable, stable death. Okay. Your job as a leader is to keep it healthy, agile, you know, uh, stable in the sense that I can respond and adapt, not so stable that I can't.
Speaker: And it's a constant fight. And the easiest thing to do is just to acquiesce to that fight. Like that's why remember Nordstrom's in the eighties, you know, before they, they went bankrupt, but they had like a one word or one sentence employee handbook, you know, i do the right thing by the customer done.
Speaker: That's a principle. Okay, then what happens? Lawyers, HR admin, you know, here's our employee handbook. It's, it's you know, this thick. And like a leader, you want to lead by principles, but there's this fear and systemic risk of not having policies, you know because you can't defend yourself in a lawsuit or you can't justify it in public. like So that's what happens. and you got But you got to be courageous and you got to fight against it.
Speaker: or reap the consequences. Do you see that something like artificial intelligence or technology change more broadly is changing the efficiency versus effectiveness tendencies of organizations you're working with?
Speaker: So the common answer would be to say yes, but I think it's wrong. It's, it's, um it's, um, people aren't looking deeply enough. So, you know, talk is AI destroying the organizational structure, right? Like collapse of role collapse. yeah You know, we don't need product product managers anymore. We have engineer, product manager, know hybrids. Okay. All these, this is so laughable because it's just this pattern that repeats in history. Anytime there's this new technology, we come up with these new terms and everything. if you look a little deeper, you'll just see the same fundamental things are always in place.
Speaker: And there's always a tension, always a tension between short range, long range, efficiency, effectiveness, control, autonomy, you know? And so it's going to seem to be different, but it's just like the bottleneck's always going to be somewhere, brother, you know?
Speaker: Like you're just going to find it in a different place of the org in the same People are going to go through the same thing, try things that were you know popular 50 years ago. and it different it just It's the same story, different veneer.
Speaker: that' That's what I'm seeing. yeah I would say that in support of your podcast, like
Speaker: The most critical thing a leader can do is to develop some like tried and true frameworks that they have, they've developed unconscious mastery of.
Speaker: Cause if you, if you lack that, like then you're just going to get buffeted by, you know, constant, constant noise and opinions and blurbs and blips and distraction. And you got to have a way to like sift and ignore what's not essential and lead your team, whether your team is humans or agents or some combination. Okay.
Speaker: Like that's not going away. And if you, it's hard to find that time and capacity to really build those frameworks. It really is. Yeah. It takes play practice and play. And yeah like, you got to apply it in your real life setting.
Speaker: So That I think is, that doesn't go away. That that importance magnifies even more in my opinion. When I talked Geoffrey Moore, he said something along the lines of a framework can help you make sense of whatever it is that you're dealing with, but you will get to a point where something doesn't totally make sense within your framework. And that's actually a really useful time because then,
Speaker: Sometimes you need a new framework. And yeah I don't think he was saying by any means that that that means that your current framework is bad. It's just that your current framework, it might be a way of making sense of the current level that you're at. um ah It could be, let's say you have a framework around, I don't know, understanding individuals.
Speaker: And now you have encountered a challenge where you need a framework that helps you understand organizational dynamics. or whatever else. And I think that, you know, without you or he putting it in terms of frameworks, one thing that I i think is just different words on it is the way that I tend to think about it is what have you made unconscious? And you said something about, you know, mastering the framework at an unconscious level or something like that. I think very often about that. What have you made unconscious? But then being willing to maybe being humble enough or curious enough
Speaker: when you run into that situation where the thing doesn't make sense and or you just can't quite explain it, many of us would, you know, just write off the thing that doesn't fit within the framework.
Speaker: But in particular, if you're a leader, right, or if you have a real vision, then it's you need to stop and say, well, hold on. What might this mean?
Speaker: And then be willing to look for the next framework or figure out how to integrate that thing into your existing framework so that you're not you closing off opportunities for innovation, perhaps.
Speaker: I agree that there's a lot of you know potential in ah growth at the edge, those edge cases that don't seem to make sense. I would also say that if you have a framework that is really based on first principles,
Speaker: that ah you're going be able to sift through the signal and the noise. Yeah. And it's probably going to take you like 85, 95% of the way there. And yeah that's a worthwhile investment for people, for leaders.
Speaker: Yeah. Not everybody will be is interested and will take it, of course, but like... I like people that are like thinking that way and and wanting to lead a great organization and they're willing to do the work to like, okay, I need a frame up here that will allow me be successful and allow my team to be successful.
Speaker: Right. Yeah, no, I, and I, Although it's not necessarily framework, I think that the outcome in a narrow sense can be similar when somebody says, what are we ultimately trying to do here? you know What's the goal? Having an understanding of the goal of a project, let's say,
Speaker: can have a similar outcome to a framework where you just helping bring clarity to a situation. And i think you make a good point as well about some of these more fundamental or first principles frameworks can help you make sense and then act upon a large percentage of the challenges, even though i suppose, actually, Lex, tell me if what you think about this.
Speaker: that that seems like it must go along with a greater perhaps macro understanding of an organization or a situation. But if you have a first principle sort of framework that maybe when you get down to the micro level, like we are going to execute a narrow a plan in finance, that then you you might need a different framework or a different understanding of the situation.
Speaker: The scale of the org you're managing definitely matters and different frameworks apply. And you know you want to use the right tool for the job. The main thing here is if you're going to do a project in finance, you want to make sure, ensure that it's high value, high ROI and supports the overall strategic development of the business.
Speaker: Otherwise, it's just a distraction and noise. And I suppose after I asked that question, I realized that coming back to the, you know, energy gains and drains, that still applies, as does PSIU. So I'm not trying to say that these things are a solution for everything, but they're still at a micro level, yeah an opportunity for me to understand aspects of a situation.
Speaker: That's right. I think a good framework would do that. yeah Yeah, that's interesting. And I'm going to come back around to artificial intelligence just for a moment, because I feel like so well something you said would be sympathetic to this, though. You didn't necessarily say anything that agreed with this.
Speaker: I was... yeah I was at a one-day event yesterday, and these people at times were talking about artificial intelligence. And as I was driving home after the event, i was thinking about, at least for the moment,
Speaker: In most situations, I still feel like we can we can make the statement that it, quote unquote, is still all about your people.
Speaker: And, you know, whether we want to talk about, you know, ah management or innovation or whatever else that... meant at least as of today, many organizations could have the most amazing technology.
Speaker: We still rely upon people to understand how it can be used, to understand the customer, to to act upon some new process that is enabled by technology. And at least as of today,
Speaker: things like artificial intelligence might create uncertainty, but your if you were coming into consultant organization, all of this this organizational physics framework still applies because of this. I realize this is a narrow application of it, but the energy gains and drains are still very important for the CEO, for the team and so on.
Speaker: You know, what comes up for me listening to you is that ah it's a cliche. It's true. and it's clear you know An organization is it's people, you know and it's all about great people.
Speaker: right How many times have we heard that? So it's true and it's a ccli cliche, but what most organizations don't do is say, okay, well, how do I design an environment to unlock the potential of my great people and attract great people and keep them?
Speaker: Right. So we're all shaped by the environments that we inhabit. And, you know, Deming said it well, he said like a bad system defeats a good person every time. Like, so like all, all these are polarities to manage. Like they're all true, but you got to have a ah systematic approach to go, okay, like I definitely need great people and I need great technology. Right.
Speaker: I need to operate it st you know agility with agile agility. like How do I design that? yeah Start thinking like a designer rather than a doer at a certain at the certain stage, and you'll you'll be in better shape.
Speaker: You... at a couple of points, said things that it's important for the listener to remember. But whether you go back to something that you said already or it's something from your books or anything else, if somebody walked away from this conversation, listening to this conversation and remembered only one thing, is there something you would want to leave the listener with?
Speaker: You know, I'll just reinforce my opening point that your life and business has is a system. It has finite energy and time. If you notice a drain, that relationship or that activity is important to you, don't let the hole stay in the boat, man.
Speaker: like Like just go, ah, it's like a hole in the boat. I i should probably try to close that. How? and i don't know How you close it is unique, but the thought will stimulate awareness. Like it's important. I don't want to let that leak continue.
Speaker: Before we continue, Lex, when you were talking about that, I was, thinking about, and you actually talked about, you know, your, your physical state or your body. And actually the example that I thought of was exercise.
Speaker: And, you know, I reached a point in my life where I was lifting weights and running and all of this stuff and starting to feel aches and pains as you do when you get older and then come a time when i have to go see the physical therapist because i have this shoulder pain that just won't go away yeah and after physical therapy and thinking about it for a while and so on you know i i think i'm two or three years past this i finally realized that you know the when i was doing pull-ups for example that yeah i was still doing the pull-ups but i must have been changing my form over time to adjust to the fact that I had some weak muscles and I thought I was doing the right thing. I was doing what I had always done. I was getting stronger, but really there was this form change that was happening and I wasn't conscious of it all because I was looking maybe at the wrong measure.
Speaker: And so coming back to the boat, what I was thinking of when you were talking about that earlier was sort of like just row faster, right? Rather than plugging the hole or coming up with some other solution, what's the solution? Just row faster.
Speaker: I'm laughing because I'm empathizing with you. Like, I get it so well. Like, dealing with the same things, yeah. Lex, where do you want a listener to go? ah If they'd like to learn more, um there's a world's fastest leadership test at organizationalphysics.com. That's a good entry entry point. Organizationalphysics.com. You can find out your...
Speaker: PSIU style a few seconds and then learn more from there. Well, Lex, I really appreciate you joining me. I enjoyed your conversation with Jess. So I'll have that in the show notes and I'll have links to your website and your book. So thank you for joining me today.
Speaker: Thanks so much for having me. it was a lot of fun. Great to meet you. Cheers.
