Learning from Entrepreneurs, Rickshaw Drivers and Poker-Players
The two founders of WhatsApp applied for a job at Facebook back in 2009, but their applications were rejected. Instead they went on to start a company that they eventually sold to Facebook for $22 billion.
Jan and Brian did not start WhatsApps with the plan on selling to Facebook, of course. They simply hammered down on an idea they believed in, used their skills, and probably benefited from a bit of luck. They “exited” successfully — not that exiting was ever the goal.
But imagine if they had started the company with the goal of being bought out within a specific time for a specific amount of money. It’s likely that they would have put the wrong incentives in place, like trying to monetize too quickly or sacrificing product quality. In the end, they probably would have also low-balled themselves.
If that’s the case, then is focusing on money always counter productive to achieving big dreams?
We still need to set goals, but how do we even start to create goals when we’re venturing into unknown territory?
Why do so many of us never get started on pursuing our big dreams?
Goals, Systems, Habits and Dreams
The marathon is coming up in 6 months and we want to finish within a certain time. We make a daily, weekly and monthly exercise plan that is actionable and trackable. It guides us towards the outcome. Compare this approach to someone who decides to just train “whenever they feel like it.” Clearly, if you’re not deliberate about what you do, then you can’t expect to improve. Right?
The time-specific goal-setting approach has its shortcomings. It works well in certain situations, like the marathon training, but setting a time-specific goal to “disrupt the pharmaceutical industry in the 10 years” or to “make X millions of dollars by the age of 28” is a trickier endeavor.
We need a different way to think about goals. If we think that achieving big dreams requires creating specific, time-based goals and checking them off the list, then we’re likely to take this approach wherever we go. This is just one mental model, and is an all too common approach — but there are alternatives.
But first: The language of goal-setting can be confusing as people interchangeably use words like systems and habits, or dreams and goals. So let’s define some terms.
Systems are processes or tasks that you do every day. They’re not time-specific and not aiming at a specific outcome. The system is not something that will come naturally. You have to deliberately set it up. For example, your system could be to do any sort of exercise every day, whether that’s going for a walk, jog or even a few push-ups at home. Scott Adams, creator for the Dilbert comics, sums it up:
“If you do something every day, it’s a system. If you’re waiting to achieve it someday in the future, it’s a goal.”
Habits are activities that you’ve come to do naturally. Starting with a system of doing some form of exercise, eventually you don’t need to set alarms to remind yourself: exercising becomes a desirous activity and common part of life. The system transforms into a habit at the stage where you no longer have to consciously push yourself to do it. In the Power of Habit, Charles Duhigg says,
“Champions don’t do extraordinary things. They do ordinary things, but they do them without thinking, too fast for the other team to react. They follow the habits they’ve learned.”
Goals are time-based and specific, which make them very different than systems and their parents, habits. Once you build up a habit of exercising, you can start to set more specific, short-term goals to deliberately improve. For example, now that going to the gym is a habit, you can set a goal to run 4 kilometers, or do 100 pull ups every Monday. (compare that to just waking up one day, without a consistent exercise routine, and declaring that you are going to do 100 pull ups every Monday. It’s unlikely to happen.)
“Set realistic goals, keep re-evaluating, and be consistent.”
Dreams are aspirational; we’d like to get there one day. Your dream could be to start a business, run a marathon, or develop a cool mobile app using the codings skills we haven’t learned. Dreams are far out into the future and differ from goals in that they’re not time-specific, and they’re usually not well-defined. We should all have dreams, even if we don’t know exactly when or how we’ll get there.
“To accomplish great things, we must not only act, but also dream; not only plan, but also believe.”
How to do Anything in 4 Steps: Flipping the Goals-first Model on its Head
You have big dreams to write a sci-fi novel. You don’t have a habit of writing every day, and you’re really busy with work. How will you take the first steps? Wake up one day and just start writing 2 pages every day? No, that’s not realistic.
Instead, you create a system; you set your alarm to wake up an hour early every morning to write. The first few days are tough, and you don’t write much.
But after a few weeks, you’re waking up naturally without the alarm. Your body has adjusted, and it has become a habit.
Now that it’s easy to wake up and write, you can set a specific goal to write 500 words a day, and a longer term goal to finish your first draft in 9 months.
Your dream to publish a novel is inching closer and closer.
The problem is, most people don’t do it this way…
They skip this crucial step of creating a system and jump directly to pursuing audacious goals. When we skip the important step of making a system, it’s like dreaming about writing and then deciding we’re going to wake up early every day and just write. Our will-power may be strong, but we can’t just expect to develop a Stephen King-esque routine in a few days. It’s a process.
The reason skipping systems doesn’t work:
It can be really hard to define what those specific goals are, and they’re often too big of a leap for us to take, especially if our dreams are really big. We can fall short of achieving our dreams because we don’t know what next action to take: the void is too big for us to bridge.
Building a certain set of systems, that turn into habits will be necessary before we can even define a goal.
I might realize that waking up early is important but I am uncertain how much I can write in one day. I need to build this habit of waking up, and then I can gauge that roughly 500 words is doable for me, instead of the 1,000 words goal I had previously set. In other words, we need to be careful not to start setting goals left and right.
By the way, it’s likely you’re already part of some systems even if you don’t think about it that way. For example, you probably went to college. Most people don’t know what they’re going to do after college, but simply going there increases your chances of getting a job. That’s a system — moving from a place of low odds to high odds.
We need to reverse the dreams-goals model we are so accustomed to, switching it to a dreams-systems model.
The Dreams-Systems Model
In one study on process vs. outcome, novice players were split into three groups for a game of darts. The first group only focused on the outcome — winning a specific number of points in the game. The second group set their attention to only the step-by-step process of learning how to play darts — the aim, the flick of the hand and basic rules. And the third group focused on getting the process down, and then looking at the bigger picture goal/score.
The third group scored significantly higher than the first group and was the most enthusiastic about the game. In other words, only focusing on the outcome will set us up for failure, and only looking at the step by step process is not motivating enough.
But when we master the process first and then take a bigger picture view of the goal, our appetite for action and dreaming collide.
Of course, this doesn’t mean you shouldn’t set goals at all; goals and systems can be complementary. The system, in turn, will snowball into increased motivation, little by little. You have to crawl before you can walk; walk before you can run. The systems you set up will transform into habits after a few weeks. Then these habits can be used to create more specific goals.
It goes something like this:
Imagine Dreams → Create Systems → Develop Habits → Define Specific Goals → Build Skills → Achieve Dreams
People set their New Year Resolutions with good intentions, but often fail because they are unrealistic. They start with imaging a dream but skip over systems, habits and jump straight to goals. While there are certainly times where we would benefit from being more specific, an obsession with the outcome can actually be counterproductive.
Instead of vowing to lose 30 pounds by the end of the year and giving up after a month, we should start with defining a simple system, like only eating protein and no carbs for breakfast. Once that becomes a habit, and we see some initial results, this small win and boost will make it easier for us to set specific goals.
Yes, I’m saying forget about losing the 30 pounds by next year. That number is too specific, and it’s demotivating if you don’t hit it. At least at first. You can and should revisit the goal once you’ve actually developed a system and built good habits.
People can lose pounds — they can hit those weight loss goals. But most people gain those pounds right back after they finish the diet. Why? Because they haven’t made it a system nor a habit. It turned into a number, “30 pounds,” and once they completed the goal, it was back to the same old unhealthy routine.
Just because we make something a goal doesn’t mean it be comes a healthy habit, and it doesn’t mean it’s sustainable over the long run.
I don’t know about you, but I’d rather focus on building great habits that make me a better person, instead of always chasing the next goal.
My point is that you have to setup a system to get off your butt consistently before you can push your limits — consistency, not huge goals, is the first step. Running becomes a habit, and then you set goals to improve. Then this moves into the realm of skill and eventually, you can run an ultra-marathon, becoming a vegan and have great skin even at the age of 55, like this guy. Or whatever your big dream might be.
But how do we know when to take a goals-first approach or a systems-first approach?
Here are two situations where we should focus on systems:
I. We want to achieve dream-big goals with no clear path.
One fascinating study explored the effects of setting short, mid and long term goals. The first point of interest is that goal-setting influences increased systolic blood-pressure, which is interestingly linked to activity in the amygdala (part of our brain) that drives us to take action. They found that realistic but challenging goals were linked to a moderate increase; simplistic goals are associated with a small increase in blood pressure; and huge/unrealistic/unachievable goals are associated with the smallest increase in blood pressure.
In other words, when the goals are ‘dream big,’ even our bodies don’t take them seriously, so they don’t prepare us for action.
We might have a dream-big goal and the general direction is apparent (move to Japan and get a job!), but the path is murky, unclear (Is someone like me even employable in Japan? What kind of jobs can I get?). Our belief of what is possible to achieve, what we can do, is determined by our current understanding of the world. This makes it tricky to imagine what we are truly capable of since our capabilities are constantly expanding as we move forward in time.
Let’s take Juho Tuomainen, for instance, who left Finland for Japan, only with the dream to live there and a copy of Japanese for Dummies in his back pocket. To make ends meet he took on several odd jobs in Kyoto, a city known for housing some of Japan’s oldest Buddhist temples. He never imagined that he’d end up as the first non-Japanese person to carry passengers around the town in a traditional wooden rickshaw.
Of course, he never explicitly sought it out as a goal when he got to Japan. How could he possibly have known? Juho held a strong belief that he could do something else other than the typical English teaching job, but he didn’t know what that job was. All he had was that dream big goal of staying in Japan. He did not need to — nor could he — define specific goals as to what that job would be because he was new the country and there were too many unknowns (the how is hard to define). Indeed, the cards aren’t always face-up in life; we must navigate in a sea of uncertainty.
The process, or system, of finding various job opportunities was his solution. Juno created a simple system: to say “yes” to any and all job opportunities that would contribute to his goal of staying in Japan long term. Ultimately, this led to finding his own niche in an interesting field — rickshaw-driving.
Similarly, if you find yourself looking for a change of industry and career, there will be a lot of unknowns. Taking Juho’s experience into mind, remember the following:
- Don’t define exactly what your next role is going to look like. An open mind will allow you to consider other job titles, companies and departments.
- Keep the time-target relatively flexible. You can’t ‘decide’ you will get a job by X date, as there are factors outside of your control. View the opportunity to change careers as a journey.
- Stay patient. If you have a big, hairy audacious goal, the path is unlikely to be a paved one; it’s more likely a dirt path in the jungle somewhere.
You can identify systems to help you increase the likelihood of discovering that dream job. For example, you could: 1) Go to networking events as often as possible and 2) Cold-email someone everyday and request a coffee meeting to learn about their industry.
These activities will help you develop a network and open up doors over the long run. Even though you don’t know when you’ll succeed, nor is there a deadline to stop these activities, you have started the process to get you closer.
The point: When you’re taking leaps and dreaming big, keep an open mind and don’t over-define goals.
II. High-stakes decision-making with uncertain information.
Shedding a few pounds or running a marathon have proven formulas for success — follow them to the tee and you are likely to come out victorious. However, the greater number of variables there are that could affect the outcome, the more difficult it becomes to predict what will work and what won’t.
A concept I’ve picked up from the cryptocurrency trading world: Traders who set financial goals almost always lose. Why? Because you can’t control the market. People try and force their will on the market to no avail (I want the market to go up in price so it benefits ME), resulting in emotional decision-making, like panic-selling when the market plummets.
It’s the person who screams “buy bitcoin, it’s going to the moon!” when the price is at an all time high of $20k, then loses his life savings a couple of months later. The market doesn’t care what he thinks. It’s like going to the poker table saying “I will make X amount of money today!” It just doesn’t make sense because we don’t have that kind of control over the universe.
Instead of trying to make the market fit your financial goals, the wiser choice is to create systems that allow you to make higher-probability winning trades. In the case of trading, that might mean always setting a “stop loss,” where if the price goes below a certain point, you always agree to sell. That way you avoid being completely annihilated and losing all your money. The other system could be to wait 24 hours before executing a trade, that way you avoid emotional decision-making. Similar to replying to a heated email, this tactic will allow you to think things through and remain cool-headed. It comes down to setting up systems for success.
In her book about decision making, Thinking in Bets, Annie Duke makes the point that our life is more like poker and less like chess, as we don’t have all of the pieces in front of us.
She goes on to explain:
“Poker, in contrast, is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time. (Not coincidentally, that is close to the definition of game theory.) Valuable information remains hidden. There is also an element of luck in any outcome. You could make the best possible decision at every point and still lose the hand, because you don’t know what new cards will be dealt and revealed. Once the game is finished and you try to learn from the results, separating the quality of your decisions from the influence of luck is difficult.”
There are simply too many factors for you to sit down and confidently say, “Yes, my goal is to become a multi-millionaire by this age.” Especially when it comes to starting a business, often focusing on money is the antithesis to innovation; you earn proportional to the amount of value you are adding.
We also know that chasing after money is unlikely to be a true motivator, at least over the long run. One solution is to focus on adding value, not money, and trust that the road will take you to financial gain. Value could mean lots of things: a product that actually solves a problem, never compromising on quality, or simply always paying your employees fair wages.
Similarly, there is no proven way to meet your sales target every single quarter of the year, no matter how great of a sales person you are. It’s tough to guarantee certain outcomes especially when you’re trying to influence other people.
In a system, there is no time-based goal. Rather, you’re creating an environment where you can increase your odds of success. In the case of improving sales results, one idea is to stand up (and not sit) while making phone calls, as standing-body posture opens up your airways and increases confidence. This is subtle, I know. But repeated over several hundred interactions, you’re likely be more convincing during some calls and thus improve your overall results.
The point: Life is like poker, not chess. When there are several variables involved, we can never have 100% certainty. To improve our odds, we should create systems that serve us in the long run.
We see now that the goal-setting approach can fall flat on its face, particularly when defining monetary goals. To set a time-specific AND number-specific goal for personal wealth goes both ways: It is potentially limiting; indeed, maybe you can make oodles more money than you think! Or, it sets you up for disappointment; maybe you give up and stop short of a big win because the goal is too out of reach, hence demotivating.
5 Systems You Can Develop Today
Like many, I’m interested in financial freedom, optimizing and improving my overall health, and have a dream to make the world a better place. These are all deliciously vague on purpose and might sound familiar to you!
Here are five systems that started to push me in the right direction. Note that I continue to do these activities indefinitely, and by this point they’ve turned into habits.
Read a lot. From Warren Buffet to Jeff Bezos, leaders are all habitual readers. But if you set a goal to read 50 pages everyday for 3 months, this could result in goal fatigue, and you’d likely ‘check-out’ and without processing the content. We want to focus on quality rather than quantity. Instead, create a reading system: read something every day — no matter how short or long. Sometimes you’ll read less than 50 pages, other days a lot more. You’ll average out around the same, without the added pressure, and thus likely increase your actual focus and retention of the material.
The daily journal. The simple act of getting thoughts on paper can give you stress relief, better goal-planning, a higher mode of self-reflection and overall greater happiness. Writing in cursive handwriting also helps conceptual development and memory, so the benefits extend far beyond just getting thoughts on paper.
Morning routines. Having a defined, solid morning routine is one of the most important habits one can build. It’s the proverbial ‘keystone habit,’ or the habit (or more precisely, a series of habits) that can lead to other good habits. If marijuana is a gateway to more drugs, then a morning routine is a gateway to more success; planted firmly on the opposite side of the spectrum, although perhaps no less addictive.
Evenings routines. If you can get good sleep, then you’ll likely feel refreshed in the morning even if your morning routine is just drinking a cup of coffee and reading a few pages of a book. I keep it simple. I turn down the thermostat to a cool temperature, turn my phone on airplane mode, and eat an egg before I go to bed.
Listen to podcasts every day. There’s a wealth of amazing content that is created everyday. Tuning into podcasts will give you new ideas, teach you things you didn’t know that you can use in business and life. I use the Overcast app and listen to all episodes on 2x speed, and some of my favorite podcasts are Stuff You Should Know, TheGreatDebates, How I Built This, You’re not so smart, and 99% Invisible.
So, what kind of systems do you have setup in your life?
I’d love to hear about them so feel free to share in the comments below!
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