To Succeed as an Innovator and Entrepreneur, Always Consider the Entire System
The following is adapted from Learning to Build.
“Do you know the difference between correlation and causation?”, one of my mentors, Dr. Taguchi, asked me one morning as we shared breakfast while traveling for work. I was still early in my career, and I relished the opportunity to pick his brain.
“I use correlation to find causation; they’re the same thing?” I responded.
“No. They’re very different, and if you confuse them, you may end up doing more harm than good.” Then he proceeded to tell me an old Japanese story about the…wind.
Apparently, hundreds of years ago, Japanese cultures believed that trees caused the wind. Because they needed the wind for fishing, they prohibited people from cutting down any trees for any reason.
It was not until they understood that it was, in fact, the wind that caused the trees to move that they could move forward and make progress. That’s correlation versus causation. The wind and the trees moving together is correlative, but which comes first — the cause — is way more important. Causal structures are rooted in the notion of cause and effect.
The Importance of Cause and Effect
There’s a mystic quality to seeing cause and effect, especially for innovators and entrepreneurs. People have said to me, “You’re a fortune teller.” The truth is, I have no magic; I don’t have telepathy. But I do have a framework for seeing causal structures, which allows me to put the right pieces together and say, “When this and that happen, here’s the effect…”
Innovators and entrepreneurs skilled at causal structures understand the cause and the effect as well as the sequence of events that need to happen. If I were to build an icon for causal structures, it would be dominoes falling. What are the dominoes that have to fall before people say, “Today’s the day…”?
Innovators and entrepreneurs skilled at causal structures don’t panic in uncertain times because they can see what others can’t, and can therefore reasonably predict how events will unfold. They may not know exactly when things will happen, but they understand how. They’re not anxious; they’re confident and able to make better decisions as a result.
Use Causal Structures to Help Make Progress
Causal structures are so embedded in my thought process that I apply them to everything in my life. Maybe you already do this as well.
Think about the last time you and your spouse got dressed up for an event. “Wow, you look amazing,” you say enthusiastically. But despite your praise, their response is mild, “Thanks,” they say, largely unmoved. At first, you think nothing of this interaction, but then you arrive at your event and a friend pays them a remarkably similar compliment. “You look stunning!” This time, however, your spouse is overjoyed.
Now on one level, this could bother you, right? But not if you understand the underlying causal structure. When you get familiar with people, they discount your responses because they know what you’re going to say. I call it the spousal discount.
It’s the same reason we have outside consultants in business. I can go into a company and say the same thing somebody on the inside has been saying forever, but when I say it, people respond like it’s new and novel: “That’s amazing!” It has nothing to do with me and everything to do with the relationship. Once you recognize a causal structure, you can use it to your advantage to help people make progress.
Unpack Cause and Effect with Systems Thinking
If you are skilled at causal structures, you can observe the cause-and-effect phenomenon and utilize it to help you make progress. However, to see causal structures you need to be able to take a step back and see the whole as a system.
Causal structures are a fundamental view of how something works, which is ultimately about systems thinking. So what is a system? It may help to imagine a black box where all the action takes place. There are inputs to the black box, there are outputs from the black box, and there are outcomes. Taken together, these make up the system.
Think of a car’s braking system, for example. When you want the car to stop, you press the brake. That’s the input to the system. When the car slows down — deceleration — that’s the output from the system. The outcome is to slow the car to make a turn. In between the input and output resides the system where all the action takes place — the black box.
Innovators and entrepreneurs skilled at causal structures take a step back and see the whole. Not only do they understand the inputs (resources), outputs (products), and outcomes (results), but they also understand their sphere of influence: control factors and noise factors.
Control factors are parameters of a system you can change that impact the system’s performance, and you have the ability, responsibility, and control to set them (specifications). Noise factors are the parameters that impact the system that you cannot control, choose not to control, or are too expensive to control (operating limits).
Find Your Sphere of Influence
Systems thinking is crucial when you’re building a product or trying to solve a problem. Unless you have a system to unpack causal structures, you will struggle to find success. I learned this early on, when Taguchi taught me that to solve a problem, I needed to look at the system as a whole and ask myself the following:
- What are the inputs?
- What are the outputs?
- What are the outcomes?
- How do I understand my sphere of influence?
- How do I design it to work in the face of noise factors?
- What do I measure?
But it goes deeper than this. The system is part of a bigger system called the “super-system.” Additionally, there are “subsystems.” Understanding your system with inputs, outputs, noise factors, and control factors gives you a 360-degree view. Add to that an understanding of your thing within the larger context of super-systems and subsystems, and now you have a 720-degree view — an omniscient perspective.
When you conceptualize your thing in this manner, you can clearly see the boundaries, which naturally shows you your sphere of influence; I have these inputs, I want these outputs, and I am responsible for what’s going on in between.
Create Through Right to Left Thinking
Systems thinking is a critical tool for innovators and entrepreneurs because without it, you don’t know what to work on. But you must go one step further: you must learn to utilize right to left thinking.
Most people tend to think about the system like they do time, from left to right — the way we read in the US. There’s the input, the system, and the output. They think of cause and effect in the same manner: cause, then effect. They then tend to design and build with that direction: what do I have, what do I need, what can I build, who needs it, and what do they value?
But the output goes to a customer who takes that output and tries to do something with it; their intended outcome. And it’s that outcome that innovators and entrepreneurs should start with. I call this right to left thinking.
In other words, understand the outcomes and the context by which customers are going to use the product first. This creates a set of technology-agnostic specs (what the customer wants without a solution) for the outputs that you need to create to enable the customer to make that progress. Then ask yourself, “What systems and inputs do I need to then create those outputs?”
Ultimately, when you design something new, you want to move from right to left, but when you sit down to build it, everything happens left to right. So, when designing any product, remember: while considering the entire system, begin with the outcome in mind, translate it to outputs, and then take the time to design, build, and test.
For more advice on how to make progress using causal structures and systems thinking, you can find Learning to Build on Amazon.
Bob Moesta is a builder, teacher, entrepreneur, author, and co-founder of The Re-Wired Group, a design and development firm based in Detroit, Michigan. Early in his career, Bob received an education in building and launching new products from renowned innovators Dr. Clayton Christensen, Dr. Genichi Taguchi, Dr. W. Edwards Deming, and Dr. Willie Hobbs Moore. The worldview he gained has enabled him to work on and launch thousands of new products over the last thirty years, be the founder of ten different companies, and become a mentor to the next generation of builders and problem solvers. Bob is an adjunct lecturer at the Kellogg School at Northwestern University and a guest lecturer at Harvard Business School, and MIT’s Sloan School of Management.
