It’s been a year since I read Peter Senge’s The Fifth Discipline and yet, I’ve been reminded almost every single day of the lessons from the book.
My company Barrel recently celebrated 13 years of being in business. My co-founder Sei-Wook and I have been there for all 13 years, and I feel like it’s only been in the past year that the two of us started to take a less reactive approach to running the business and to start being aware of the structures and systems that influence our behaviors and outcomes.
I wanted to mark the milestone of entering our 13th year in business with a re-read of the eleven “Laws of the Fifth Discipline” that Senge outlines in his book and to relate them to our digital agency business.
Law 1: Today’s problems come from yesterday’s “solutions.”
The inability to fully consider the ramifications of certain decisions, especially when they feel like “quick fix” solutions in the moment, can bog an organization down in the future as it causes stress later on either for the people who made the very decision or to other parts of the organization.
At Barrel, I’ve personally been the culprit of many quick-fix schemes that felt great and brilliant in the moment but backfired later on. Of course, there’s nothing more egregious than the “solution” of taking on poorly scoped and poorly defined projects at low budgets to keep cash coming in the short term. The problem? Weeks or months down the line, our team is still stuck working on a project that’s way over-budget with no chance of profit while the client is unhappy that we’re trying to push back on vague scope.
Law 2: The harder you push, the harder the system pushes you back.
Law 3: Behavior grows better before it grows worse.
Senge describes the concept of compensating feedback: “the more effort you expend trying to improve matters, the more effort seems to be required.”
One very clear case of compensating feedback at Barrel has been instances when we took on too many poorly-priced projects (i.e. we promised to do too much for the allotted budget) in order to win new business and keep cash coming in. The more projects we took on, the more people we needed to hire to get the job done. By hiring more people, our expenses shot up, creating the need for us to land more projects by any means necessary, which meant underbidding on price to win. This would then lead to more low budget projects that needed to get staffed, the vicious cycle continuing. The harder we pushed, the more effort was required.
The challenge with compensating feedback is that it’s largely invisible when it’s happening. What’s also challenging is that things actually look and feel better in the short term. Instead of recognizing the big picture, we celebrated the many new business wins, we were excited by the hiring of new talent, and we praised those who put in extra hours and worked around the clock to meet the deadlines of multiple projects. What was hard to spot was that we were merely playing right into the system of our own making, unable to see the trouble coming up ahead.
Law 4: The easy way out usually leads back in.
One of the symptoms of taking on too many poorly-priced projects in the past has been the pressure put on the Producer role at Barrel. Our Producers are the project managers who oversee schedule, budget, and day-to-day communications with our clients. They ensure that projects are on track and are usually the first to address any issues that may come up.
During the times when we were underwater with too many projects, we leaned heavily on the Producers to juggle multiple projects without falling behind. A few of them were able to excel and handle the load, but many faltered and either burned out and quit or were forced out (you can see the carnage in our poor Glassdoor reviews during these times). Our solution to this at the time: just hire better Producers. We instituted more stringent screening requirements and put in various tests to ensure that our Producer hires would be fit for the intense work.
This approach is what Senge says is “pushing harder and harder on familiar solutions” and “a reliable indicator of nonsystemic thinking”. What we would find later is that we lacked proper on-boarding and support for our Producers, especially those who were unfamiliar with our processes. An even bigger revelation was that Producers, charged with running an incredibly tight ship on low budget projects with zero margin for error, were doomed to fail from the start. Their only way of succeeding was to know the ins-and-outs of our complex processes, but without proper training and no buffer to make mistakes, any slip-up would be scrutinized and seen as incompetence.
As we say to remind ourselves nowadays whenever we spot such systemic malfeasance on our part: Failed to set up, set up to fail.
Law 5: The cure can be worse than the disease.
Senge writes: “Sometimes the easy or familiar solution is not only ineffective; sometimes it is addictive and dangerous… The long-term, most insidious consequence of applying nonsystemic solutions is increased need for more and more of the solution.”
Hiring, especially when done to solve a short-term staffing problem and without the proper financial considerations, has been an example of a dangerous solution for us at Barrel. Not only with the Producer role as mentioned above, but across all the disciplines, the automatic reaction to turnover or staffing needs has been to hire with the hope that we would land a transformative individual who can contribute and have positive impact.
And when we do get lucky and land someone who is great, hard-working, and impactful, our dependence on this person grows so much that we end up giving them too much work, which then leads to slips in performance, burn out, and ultimately, attrition. And at this point, we have yet a new gaping hole to fill and a new round of hiring to “solve” the problem.
Having tasted the panacea of a competent hire, we’ve often fallen into the addictive pattern of hiring to solve rather than asking ourselves the tough question of why we need to hire, why we can’t rely on the existing team to step in, and why we can’t develop a pipeline of talent internally by nurturing juniors into more senior roles. In our better moments, we’ve even explored and instituted systems to ensure that work gets done regardless of who is tasked because we’ve put in better guidelines and processes that doesn’t depend on heroic efforts to achieve.
Law 6: Faster is slower.
Systemic changes take time to implement and to see results from those actions. We’ve learned that incremental work at the systems level takes patience but that the work we put in now will have profound impact 3-6 months down the line.
An example: we’ve been working for over six months to hone our Discovery process on new engagements. It’s undergone many iterations, and I’ve sensed frustration from the team at times on its fluid status because we’ve changed many things about it as we’ve gathered feedback from the various test cases. However, because we’ve made incremental progress all this time, we have in place today a much more robust and data-backed system that we can confidently take clients through.
Had we rushed and tried to get it 100% right the first time, we would have been discouraged and perhaps abandoned the effort altogether as we have countless times with other initiatives. An excuse may have been something like: “Clients hate Discovery, it’s impossible to sell, and they never feel good about the outcome.” Instead, because we went in with the mindset that this was a work in progress and that setbacks were fine as long as we could adjust and keep trying again, we’ve learned a great deal while now having an effective way to engage and scope projects collaboratively with clients.
Law 7: Cause and effect are not closely related in time and space.
When problems, the “effects”, manifest, they are the result of “causes” or decisions made weeks or even months ago. When I think back to rough financial moments in our business, we used to solely blame the fact that we lost out on X and Y bids for projects and that’s why we were in a cash crunch when in fact, there were several decisions regarding hiring, staffing, and project management that all factored into the problems. But because these were harder to see, we tended to blame the most visible thing (losing a recent project bid) and also hanging our hopes that winning the next one would bail us out (more immediate cause and effect).
These days, we ask ourselves what we need to do today in order to avoid being in a tough spot the next quarter or six months out. And when it comes to competing for new projects, we try our best only to actively pursue those that we feel we have a front-runner position to win, and for those that seem like long shots, we typically pass on them altogether or submit a very stock proposal (that takes no time to produce) with zero expectations of winning. Taking one more step back, we don’t obsess much over individual opportunities but take greater notice of the volume of opportunities on a weekly and monthly basis along with the aggregate value of proposed work in our pipeline vs. those that make it into contract stage. This way, we can better spot trends and sense a slowdown or pickup in business activity much sooner.
Law 8: Small changes can produce big results–but the areas of highest leverage are often the least obvious.
Senge writes: “Tackling a difficult problem is often a matter of seeing where the high leverage lies, a change which–with a minimum of effort–would lead to lasting, significant improvement.”
I wish I could highlight a really impressive and memorable small change that led to a big result. The truth is, there are numerous small changes that we make on a daily and weekly basis. Some of these lead to incremental improvements while others are quickly forgotten. I’ll have to keep my eye out for a good one to report back on in the future, but my corollary to this law would be that, because areas of high leverage are not obvious, the ability to quickly and efficiently make many small changes improves the chances for a high leverage change to hit.
Law 9: You can have your cake and eat it too–but not at once.
Senge illustrates this law by describing the example of American manufacturers and their dilemma of choosing between low cost and high quality. What they didn’t consider was that adhering to high quality could help avoid costly rework and reduce customer complaints, allowing brand loyalty to become greater while bringing down customer acquisition costs, which in turn could allow for products to be priced lower. However, going for quality requires upfront investment and costs may go up before they come down.
This is a dilemma not too different than one we’ve grappled with. We’ve wanted to create websites for clients that were of high quality but would be easier for our team to produce (and also at lower prices for the clients). This is still a work in progress, but we’ve found that investing in building base modules and creating design systems and processes to streamline certain aspects of projects can help lower our hours spent on the most basic parts of projects, freeing the team up to focus on more value-add elements all while staying within budget. However, the discipline to commit to working on something that won’t see immediate results is always tough.
Law 10: Dividing an elephant in half does not produce two small elephants.
Senge writes: “What makes this principle difficult to practice is the way organizations are designed to keep people from seeing important interactions.”
Earlier this year, our company went through a workshop with AgencyAgile, a training organization that teaches digital agencies a framework to improve team and client communications while giving them the tools to accurately scope and estimate projects. This was an excellent investment for us as it has allowed us to land projects at higher rates all while raising both team and client satisfaction.
Senge also shares a Sufi tale about three blind men who touch different parts of an elephant and all describe it very differently. They are all correct about what they feel, but on their own, they cannot guess that it is an elephant. Likewise, what AgencyAgile helped us to see was that when our approach of having the new business team lock in scope with the client and toss the statement of work over to the project team to execute was akin to having a blind man touch the elephant’s leg and tell people that we’re dealing with a thick pillar.
After the AgencyAgile training, we’ve adopted an approach where members of the project team–the designers, developers, producers, and whoever else–play an active role in asking questions, bringing up potential risks, and learning together about the nature of the project with the opportunity to reshape scope and approach. This has allowed us to capture value in the interactions that take place between the disciplines. The collaborative creation of the scope, in the form of a roadmap, has also been great in demonstrating our thoroughness with clients.
Law 11: There is no blame.
We’re all part of a single system and we all play a role in how things turn out. Once we accept this, it’s much easier to work in a manner where we continually find points of leverage and tweak the system to work in our favor.
We are far from having figured things out. However, I’ve enjoyed myself quite a bit and even though I’ve worked on the same company for what seems like a long time, the game itself feels very different and there are so many more levels to go.