THE UNNATURAL “NATURE OF THE INDUSTRY”, PART 7
In our last post we reviewed Intervention Point 3 of the 12 Intervention Points in a System. By addressing Intervention 3: The goals of the system, we were able to identify the importance of aiming our efforts at the correct target.
In this post, we will examine how the interventions we have implemented thus far are ultimately dictated by Intervention Point 2: The mindset or paradigm out of which the system arises, and how we can better understand the choices we make based upon our mental models.
Our mental models control what we are able to see and not see as an opportunity for improvement. Take for instance how the newfound efficiencies discussed in Intervention 3: The goals of the system were leveraged — in one instance profit was realized immediately and in the other the profit was realized more slowly but in a more sustainable, and eventually more profitable manner. It might seem obvious what path to take based on this analysis but we have the benefit of objectiveness — organizations have embedded cultures, beliefs, and mindsets that inevitably control what options are available to them to execute.
For example, if your organization is playing the finite game, then the need to deliver quarterly profits drives decision making and will force your hand to prioritize instant profit over long term sustainability. Whereas if your organization is playing the infinite game, greater future profits can be prioritized over immediate quarterly profits.
To truly optimize your learning system approach, you need to be playing the infinite game. So, how do you tell if your organization is playing the finite game or the infinite game? Let’s take a look…
2. The mindset or paradigm out of which the system arises
Imagine this… a team member is performing work and makes a mistake. What is your organization’s reaction? Do you blame the person and tally it as a loss, or do you run an analysis of the processes in place?
The “person problem” vs “process problem” is a great example of the finite game vs infinite game. If your organization views errors as a tool for assessing individual skill levels, grading them, and trying to build a team of only “A-Players”, then you are in the finite game. If your organization views errors as an insight into your processes and takes the opportunity to eliminate that opportunity for error so it doesn’t occur again, then you are playing the infinite game. The “blame the person approach” completely whiffs on the opportunity to improve your learning system, failing to recognize that the error is a valuable input when analyzing ways to improve your learning system. Instead, it’s being used as a grading metric on an individual bases, which will then result in the rest of the team members still being vulnerable to that error. In order to mitigate the risk of other team members making that same mistake, you have to consider the error itself as an opportunistic input.
Let’s look at another finite game example: trying to hit a quarterly profit.
What’s the quickest/easiest way to get a quick profit margin bump? A reduction in force (RIF). Shedding salaries does help you win the quarterly game and find that target margin, but not without consequences. A reduced staff count will not be able to provide the same level of service/product to clients. Low quality = unhappy clients, and unhappy clients jump ship.
Now, if you’ve already implemented a learning system, your team might be able to take on the additional work, but as we mentioned in the previous post Intervention 3: The Goals of the System the team won’t have the same capability to optimize the learning system since they have no extra bandwidth. Additionally, put yourself in the shoes of a team member who knows that any time the profit margin is at risk of not “winning”, they will be regularly concerned for their job… does that sound like the type of person who would be willing to report errors they’ve made? Of course not. In fact, it emphatically incentivises the hiding of mistakes, which then undermines the ability of the learning system to intake the valuable error inputs needed to eliminate said errors from taking place again. Winning the current quarter could very well lead to losing all of the following ones.
Enter the infinite game.
A willingness to “lose” the current quarter for more sustained success takes the RIF option off of the table straight away. This allows your team to continue to have capacity to do additional optimization work on the learning system. It also eliminates the chance that a stigma around errors and losing your job arises. Instead, the priority is a collaborative effort to improve operations for the future.
The infinite game can be taken a step further by empowering the learning system continually optimize: as the quality of work improves, the organization is going to be more appealing to clients than the “finite game” organization that took the early win but now has a learning system that has either stagnated or worse started to degrade.
Losing a battle to win the war is far from a new concept. And yet regularly organizations fail to apply it. Why?
Their mindset. Playing the finite game will get you a couple of wins in the near-term, but the players in the infinite game will surpass those in the finite game every time.
It’s just a matter of time.
Next post, we will take a look at Intervention 1: the power to transcend paradigms to understand the power of shifting between paradigms in order to adopt a new mental model that can create truly impactful and game changing solutions. It’s the most powerful because it’s the starting point for every single intervention.
