Transcript: Now in many cases, we're making the performance of the part worse to improve the performance of the whole. But I've never seen a manager who acknowledges that. But there's one profession that knows it intimately, and that's the architect. See, I used to be an architect. That's where I started before I was saved. I was working in an office when the first opportunity I had to design a house came about. Family came in. They bought a lot of the country. It was a beautiful lot in a heavily wooded area in the side of a hill, leading to a ravine and a lake. It was just beautiful. They said, we want to build a two-story house into the side of the hill, enter from the upper level, where we'll have the living quarters. Down below we'll have the other stuff. There'll be deck out at the lower level of the hill. Upstairs, we want three bedrooms and two baths. We want a powder room, a utility room for laundry, a living, dining room, and kitchen all in one big open area-- separated functions but open area. Down below, we want a large room for the kids to play in or to hold parties. We want a work room-- an office for the master of the house that can double as a guest room with a bed, a utility room for the furnace and air conditioner. We want a two-car garage with a workshop at the back end of it. We want it to be contemporary architecture, built out of wood so it blends in with the forest. This is how much we would like to spend. I said, give me a week, and I'll have some sketches for you. Come back. Have you ever watched an architect work? Well, it's interesting because we learn a lot by doing it. What does he do? Does he draw a picture of the rooms and then say, how do I put them together into a house? We can guess that's what he does. What does he do? He draws the house first. It's got no parts. He draws a picture of the whole without parts. Now he has a conception of the whole and he puts rooms in. Then he looks at the rooms. Say, boy, this bedroom-- it comes out, it's too long and narrow. It's not a comfortable room. And it doesn't have cross ventilation. So I'm going to have to change the room to improve it. But now he employs the systems principle. I will only improve the room in a way which improves the house. If I can make the room worse and make the house better, I will do it, because the objective is to build the best house not to build the best room. Now you say, that's good academically but doesn't happen in practice. Well, sure as hell does. And I wanted to give you an example because it happened in that house. After the design was completed and the family was happy, we let it out for bids. Got a contract. And they were ready to build it when the housewife called me one day. She said, Russ, I can't wait till we move into that house. I just love it. But there's one part of it that really worries me. You say the playroom and the party room is down below the kitchen. And I'm going to be running up and down the stairs all the time carrying drinks and hors d'oeuvres or cookies for the kids or breaking up fights. I'm going to be up and down the stairs all the time. Can't we put a dumbwaiter in? You all know what a dumbwaiter is? Said, sure you can put a dumbwaiter in. But the only way I can do this is by taking counter space away from the kitchen. That will make the kitchen harder to work in. She said I don't care. I want a dumbwaiter. She got it. Now, look what she did. She made the kitchen worse but that house a lot better. Now even management that doesn't recognize that, they do this occasionally. What's a loss leader? Every supermarket has loss leaders. There were studies done several years ago. They found that housewives on the average only know the price of six products. They think they know the price of everything. But they only know the price really of six, including bread, milk, baby food, and stuff like that. So the supermarket will deliberately sell those products at below cost to get the housewife in who will then buy the profitable products. That's sacrificing a part for performance of the whole. That's a consequence of systemic thinking, of focusing on the effect of changing parts on the whole. Have ever heard of a manager of a unit in a company telling one of the subunits, next year we want you to perform less well because of the whole? It's never that. And the corporation's always, we want you to behave as well as possible. And told us, when every part behaves as well as possible, you may destroy the corporation. Now that's easy to see-- can be proved vigorously. But if you took the 457 different automobiles available in the United States and tested them to see which one had the best motor, I suspect the Rolls-Royce would come out as the best. Now try the transmission-- probably be the Mercedes. Then try the fuel pump, well maybe it's the Lincoln. And you take every essential part of an automobile, find out which is the best one available. When that list is complete, take those parts off those cars and put them together into the best possible automobile-- will consist of all the best parts-- the Rolls-Royce motor, the Mercedes transmission, the Lincoln fuel pump, and so on. Will you get the best car? You won't even get a car. Why? The parts don't fit. Performance of the system depends on how the parts interact, never on how they act taken separately. And so the fundamental thing that management and the new age must learn is how the parts of the system they manage interact, not on how they act taken separately. And business schools have to teach interactions, not actions. Not how marketing works, but how marketing interacts with finance and personnel and production. That's what's critical. You see that particularly in the next point. This one's always a shocker. There isn't any such thing as a production problem or a marketing problem or financial problem or a philosophical problem or a religious problem or a health problem or a social problem. There are no such things. Those adjectives in front of the word "problem" tell you something. But they don't tell you a damn thing about a problem. They tell you about something but not about the problem. And the significance of that is tremendous. Let me get at it indirectly, by using a medical analogy for the moment. How many of you have never had a headache? Good. Nobody. You never had headaches. Wonderful. You're the first person in two days to say that. That's great. The rest of you who have had such an experience, how do you usually handle it, by brain surgery? No, of course you don't do it by brain surgery. What? First take a pill, an aspirin or something like that. Contains a chemical-- you swallow it, goes in the stomach where it dissolves. The chemical enters the bloodstream and is carried to the pain center of the brain and deposited there. And the thing goes away. Because somebody understands where the way the parts and biology-- the biological system operates, it knows that the place to attack a problem is not necessarily where the problem appears. So it's a whole lot better to treat the headache by taking a pill than by doing brain surgery. But in a corporation, we always do brain surgery. You see, the marketing manager comes in the morning. He says, sales are going to hell in New England or in the last quarter. I got a marketing problem. And now he tries to solve the problem by manipulating marketing variables. But the fact is, over 90% of the problems that arise in a corporation are better solved somewhere other than where they appear. But you can only find that through an understanding of the interactions. Best place to start anything is where you are. One of the most important principles, and anybody employed can follow, is it's easier to get forgiveness than permission. The only thing harder than starting something new is stopping something old. And if I just start, now one of two things happen. You will succeed. And the thing will spread. You become a hero, hopefully. Or you get fired. There is no way of running a riskless transformation or revolution. Now I can understand why somebody might not want to do it. They may have obligations externally-- got a sick wife or sick kids. The family doesn't want to move. You're not willing to give up the job. I can understand all that. But if you want to create a transformation in an organization, you must be willing to run the risk of initiating radical ideas and facing the consequences, good or bad, that will come with that. Now, I talk from experience because I've been kicked out of three universities for crimes that they wouldn't tolerate. And I finally found one that tolerated it, where I could do what I wanted. And it wasn't easy moving the family from one city to another. It's not an easy thing. But the fact is, if you want to get it done, you've just got to do it.
Thanks for adding this transcript. This video was uploaded many years ago. I appreciate you contributing this addition, especially since some people have asked for the audio quality to be improved (which I cannot do).
The volume is loud enough to hear when played. And there is no way to improve the quality. Since you found the talk "very interesting," you were obviously able to understand what Russ was saying. And isn't that what really matters here... that you learned something?
The volume is plenty loud enough to hear when I play it. There is no way to improve the quality. But the volume is just fine. Please check your equipment.
Transcript:
Now in many cases, we're making the performance of the part worse to improve the performance of the whole. But I've never seen a manager who acknowledges that. But there's one profession that knows it intimately, and that's the architect. See, I used to be an architect. That's where I started before I was saved.
I was working in an office when the first opportunity I had to design a house came about. Family came in. They bought a lot of the country. It was a beautiful lot in a heavily wooded area in the side of a hill, leading to a ravine and a lake. It was just beautiful.
They said, we want to build a two-story house into the side of the hill, enter from the upper level, where we'll have the living quarters. Down below we'll have the other stuff. There'll be deck out at the lower level of the hill. Upstairs, we want three bedrooms and two baths. We want a powder room, a utility room for laundry, a living, dining room, and kitchen all in one big open area-- separated functions but open area.
Down below, we want a large room for the kids to play in or to hold parties. We want a work room-- an office for the master of the house that can double as a guest room with a bed, a utility room for the furnace and air conditioner. We want a two-car garage with a workshop at the back end of it.
We want it to be contemporary architecture, built out of wood so it blends in with the forest. This is how much we would like to spend. I said, give me a week, and I'll have some sketches for you. Come back.
Have you ever watched an architect work? Well, it's interesting because we learn a lot by doing it. What does he do? Does he draw a picture of the rooms and then say, how do I put them together into a house? We can guess that's what he does. What does he do? He draws the house first. It's got no parts. He draws a picture of the whole without parts.
Now he has a conception of the whole and he puts rooms in. Then he looks at the rooms. Say, boy, this bedroom-- it comes out, it's too long and narrow. It's not a comfortable room. And it doesn't have cross ventilation. So I'm going to have to change the room to improve it.
But now he employs the systems principle. I will only improve the room in a way which improves the house. If I can make the room worse and make the house better, I will do it, because the objective is to build the best house not to build the best room.
Now you say, that's good academically but doesn't happen in practice. Well, sure as hell does. And I wanted to give you an example because it happened in that house. After the design was completed and the family was happy, we let it out for bids. Got a contract.
And they were ready to build it when the housewife called me one day. She said, Russ, I can't wait till we move into that house. I just love it. But there's one part of it that really worries me. You say the playroom and the party room is down below the kitchen. And I'm going to be running up and down the stairs all the time carrying drinks and hors d'oeuvres or cookies for the kids or breaking up fights. I'm going to be up and down the stairs all the time. Can't we put a dumbwaiter in?
You all know what a dumbwaiter is? Said, sure you can put a dumbwaiter in. But the only way I can do this is by taking counter space away from the kitchen. That will make the kitchen harder to work in. She said I don't care. I want a dumbwaiter.
She got it. Now, look what she did. She made the kitchen worse but that house a lot better. Now even management that doesn't recognize that, they do this occasionally.
What's a loss leader? Every supermarket has loss leaders. There were studies done several years ago. They found that housewives on the average only know the price of six products. They think they know the price of everything. But they only know the price really of six, including bread, milk, baby food, and stuff like that.
So the supermarket will deliberately sell those products at below cost to get the housewife in who will then buy the profitable products. That's sacrificing a part for performance of the whole. That's a consequence of systemic thinking, of focusing on the effect of changing parts on the whole.
Have ever heard of a manager of a unit in a company telling one of the subunits, next year we want you to perform less well because of the whole? It's never that. And the corporation's always, we want you to behave as well as possible. And told us, when every part behaves as well as possible, you may destroy the corporation.
Now that's easy to see-- can be proved vigorously. But if you took the 457 different automobiles available in the United States and tested them to see which one had the best motor, I suspect the Rolls-Royce would come out as the best. Now try the transmission-- probably be the Mercedes. Then try the fuel pump, well maybe it's the Lincoln.
And you take every essential part of an automobile, find out which is the best one available. When that list is complete, take those parts off those cars and put them together into the best possible automobile-- will consist of all the best parts-- the Rolls-Royce motor, the Mercedes transmission, the Lincoln fuel pump, and so on.
Will you get the best car? You won't even get a car. Why? The parts don't fit. Performance of the system depends on how the parts interact, never on how they act taken separately.
And so the fundamental thing that management and the new age must learn is how the parts of the system they manage interact, not on how they act taken separately. And business schools have to teach interactions, not actions. Not how marketing works, but how marketing interacts with finance and personnel and production. That's what's critical. You see that particularly in the next point.
This one's always a shocker. There isn't any such thing as a production problem or a marketing problem or financial problem or a philosophical problem or a religious problem or a health problem or a social problem. There are no such things.
Those adjectives in front of the word "problem" tell you something. But they don't tell you a damn thing about a problem. They tell you about something but not about the problem. And the significance of that is tremendous.
Let me get at it indirectly, by using a medical analogy for the moment. How many of you have never had a headache? Good. Nobody. You never had headaches. Wonderful. You're the first person in two days to say that. That's great.
The rest of you who have had such an experience, how do you usually handle it, by brain surgery? No, of course you don't do it by brain surgery. What? First take a pill, an aspirin or something like that. Contains a chemical-- you swallow it, goes in the stomach where it dissolves. The chemical enters the bloodstream and is carried to the pain center of the brain and deposited there. And the thing goes away.
Because somebody understands where the way the parts and biology-- the biological system operates, it knows that the place to attack a problem is not necessarily where the problem appears. So it's a whole lot better to treat the headache by taking a pill than by doing brain surgery. But in a corporation, we always do brain surgery.
You see, the marketing manager comes in the morning. He says, sales are going to hell in New England or in the last quarter. I got a marketing problem. And now he tries to solve the problem by manipulating marketing variables. But the fact is, over 90% of the problems that arise in a corporation are better solved somewhere other than where they appear. But you can only find that through an understanding of the interactions.
Best place to start anything is where you are. One of the most important principles, and anybody employed can follow, is it's easier to get forgiveness than permission. The only thing harder than starting something new is stopping something old.
And if I just start, now one of two things happen. You will succeed. And the thing will spread. You become a hero, hopefully. Or you get fired. There is no way of running a riskless transformation or revolution.
Now I can understand why somebody might not want to do it. They may have obligations externally-- got a sick wife or sick kids. The family doesn't want to move. You're not willing to give up the job. I can understand all that. But if you want to create a transformation in an organization, you must be willing to run the risk of initiating radical ideas and facing the consequences, good or bad, that will come with that.
Now, I talk from experience because I've been kicked out of three universities for crimes that they wouldn't tolerate. And I finally found one that tolerated it, where I could do what I wanted. And it wasn't easy moving the family from one city to another. It's not an easy thing. But the fact is, if you want to get it done, you've just got to do it.
Thanks for adding this transcript. This video was uploaded many years ago. I appreciate you contributing this addition, especially since some people have asked for the audio quality to be improved (which I cannot do).
Thanks for uploading these.
Great series a pity it's so hard to hear.
Very good. Fun to observe succinct, on target information making for quick learning.
Nice staff. Thanks
Very interesting talk, but the audio quality is really poor 😕
The volume is loud enough to hear when played. And there is no way to improve the quality. Since you found the talk "very interesting," you were obviously able to understand what Russ was saying. And isn't that what really matters here... that you learned something?
cant hear, improve the audio please uploader
The volume is plenty loud enough to hear when I play it. There is no way to improve the quality. But the volume is just fine. Please check your equipment.