Good Life Project - Killing Complexity: The Power of Simple Rules, with Don Sull

Episode Date: May 5, 2015

Imagine this...A financial genius spends his life developing a complex financial model with the intention of telling you what stocks to buy and sell, and when, in order to make the most money and minimize risk.You'd expect that model to out-perform a single rule that says something like "just split your money evenly between 20 stocks." Except, according to today's guest, Simple Rules co-author, Donald Sull, when that very experiment was run, the simple rule beat the expert every time.As amazing as technology and sophisticated systems are, they often end up performing no better than far simpler, yet often ignored simple answers. Same holds true for life. We spend so much time looking for the fancy methodologies, systems and technologies. We assume they've got to better than something that appears so simple. So we ignore the simple and waste tons of time and money building something that makes us feel better, but doesn't beat the easy answer. And that is a huge mistake.In this fascinating conversation, Sull draws on everything from his experience as a bouncer at a biker bar to his experience teaching entrepreneurship at Harvard and building and advising global brands to prove a simple point. With rare exception, from weight loss to wealth, simple always wins. If you've been feeling overwhelmed with complex problems, take a deep breath and listen to this episode.Follow Don:Website | Twitter | LinkedIn"Willpower is a reservoir, not a stream."Check out our offerings & partners: My New Book SparkedMy New Podcast SPARKEDVisit Our Sponsor Page For a Complete List of Vanity URLs & Discount Codes. Hosted on Acast. See acast.com/privacy for more information.

If people walk away from this book or this discussion that we're hoping to spur here thinking only one thought, which is, I have a choice. If I see a complicated problem in my personal life, my organization, society, I have a choice between a complicated solution and a simple solution. If that's all they walk away with, we will be very happy. What if the simplest option was the best option? That's something that a lot of people struggle with. We live in a complex, complicated world

and we tend to assume that to get where we want to go, to build what we want to build, to create amazing things and solve big problems, well, the process, the answers, the rules have to be big and complex too. In this week's conversation with the author of a book called Simple Rules, Donald Sell, we dive into this and we actually really pull back a lot of the mythology and he actually shares some pretty interesting research that shows that in fact, simple very often is best.

I'm Jonathan Fields, and this is Good Life Project. Making it even more comfortable on your wrist, whether you're running, swimming, or sleeping. And it's the fastest-charging Apple Watch, getting you 8 hours of charge in just 15 minutes. The Apple Watch Series X. Available for the first time in glossy jet black aluminum. Compared to previous generations, iPhone XS or later required, charge time and actual results will vary. Mayday, mayday. We've been compromised. The pilot's a hitman. I knew you were going to be fun.

On January 24th. Tell me how to fly this thing. Mark Wahlberg. You know what the difference between me and you is? You're going to die. Don't shoot him, we need him. Y'all need a pilot. Flight risk.

All right, so you threw it out there. So let's, I think this is a fun place to start. So I'm sitting across from the table from a clearly extremely accomplished, you know, like smart, intelligent, academic and professional man. But you have a history as a bouncer and a biker bar of your life. Yeah, so I worked my way through college. And one of the jobs I had was working as a bouncer in a bar and the bar was exactly, almost exactly halfway between Harvard and MIT on mass app. And so if I tell you that, or if I tell most people that they picture some, you know, Ivy covered bar with people sitting around talking about Proust or string theory or

something. Yeah, exactly. Right. Exactly. You know, probably a no alcohol beer, please. Right, right. And this bar wasn't that at all. So it had all glass windows and it had a live band every night. And that turns out is the magic formula for attracting bikers. In this case, the local motorcycle club, the Rumpot Rustlers. And the reason for this is, of course,

they like to listen to the bands seven nights a week. That was great. But also they could watch their Harleys while they were drinking. And this is pretty much, yeah, this is pretty much nirvana for bikers. And the reason I ended up in that job is the owner of the bar was a Harvard alum. And he'd hire folks from the Harvard hockey team and the Harvard boxing club.

And I boxed through college. And so I kind of needed the job. It was great money. It was a pretty rough place, right? Like, uh, you know, I was a middleweight and there were a lot of heavyweights in that bar. So, you know, I was trying to punch above my weight and it wasn't working particularly well. Uh, in my first month on the job, I made two trips to the emergency room.

So, uh, you know, boom. So, uh, I, I realized I was going to have to use a different strategy. Um, and so I remember quite clearly after the second trip to the emergency room, I think, okay, what can I do to manage this situation? Great job. Meet interesting people, great bands, free drinks. What's not good money? What's not to like? But brute force was not working for me.

So I came up with a set of rules. So the first one was don't let trouble in the door. So it turns out it is so much easier to keep a knucklehead out of the door than throw a knucklehead out the door later. The second one was sober beats drunk. So it turns out people think like, you know, when you're drunk, you're a good fighter. The exact opposite is true. You're more prone to fight, but your reflexes are slow and so forth. So I wouldn't start drinking until the bar closed, which, you know, frankly might have been bar policy.

Anyway, I'm not – that might have been what we were supposed to do anyway. The third rule was for certain types of bands, particularly ska, heavy metal, and punk, there were always fights. So I just go to the owner or the manager and say, listen, let's get another guy in the door just for these. But by far the most useful rule was to keep the bikers on site. So like common sense dictated, you don't tick the bikers off because these are guys – They're big guys. They're big guys. They're big guys with nicknames like, and I kid you not, shotgun, mother killer, man mountain, you know. So with nicknames like this, you have to – you want to, you know, kind of keep them on side.

Yeah. It's like you guys, whatever we need to do to be friends, let's figure that out. Exactly. So common sense, you don't want to tick them off. But I went beyond that. You know, if I went to get pizza, I'd buy them pizza. If their friends came, I'd let them in for free. If they had to go out and transact their business, I'd watch their bikes, whatever.

So we had, I don't know if it was quite a friendship, but at least a cordial relationship, which worked out really well. So it'd be a Friday night. The place is rocking. I look over and here's three knuckleheads and they're about to mix it up. Donny Brook is just about to burst out. I'm like, oh, God, not another trip to the emergency room, right? That I don't need. So I'd walk up and I always go to this guy, Manmont, who was terrific.

So he was – Manmont was probably like 6'7", 6'8", huge guy, big bushy beard. Appropriately named. Yes, not ironically named. And he would only wear his vest, not a shirt underneath, not a jacket over, including through the depths of a Boston winter, riding his Harley down Mass Ave. So the point is he was big and had a Boston winter, riding his Harley down Mass F. So the point is he was big and had a high tolerance for pain, right? This guy. So I'd walk over.

I'd say, man, you might come with me. And the funny thing was he was like the gentlest of the lot. I mean, what do you have to prove? You're 6'8", man, man. So I'd walk over to these knuckleheads and they're grumbling, pounding chests and so forth. Testosterone is flying. I'd say, guys, look, you have two options. One, you can leave now.

We're not leaving now, you know. I say, or two, I can introduce you to my friend, Man Mountain. And they look up at him and be like, it never failed. Be like, oh, so sorry. You know, meekly put down their glass and, you know, so sorry, so sorry. And walk out the door. So that's when I really kind of stumbled upon how effective these simple rules can be in everyday life. Yeah.

I had a similar tactic in seventh grade actually, but my man mountain was named Truck. Oh. Great rule. And interestingly enough, I remember back and I'm pretty sure he used to wear a leather vest to school with a t-shirt. We had to wear t-shirts in school, but like through the winter, there's pretty much nothing else. And he was, I think, shaving around fifth grade. But he was my homie. It's like, if I got in trouble, I was not a big kid and I was a lover, not a fighter. So. All right. Oh, that's great. So you get fascinated with this whole concept

of simple rules. And I actually, I want to jump into that. But I want to go back a little bit with you also. And so you worked your way through college. Where did you actually grow up? Ohio, just outside of Cleveland. What kind of place was it? Well, the town, we grew up in the town literally next door to where Leave It to Beaver was set. It pretty much says it all. It was very, you know, kind of small town, you know, kind of quiet. A great place to grow up. Yeah. So how'd you end?

And then at some point you end up going to, well, you also said you were a boxer. Yeah. Yeah. Was that something you were doing younger as a kid? I did. I really started seriously in college or as serious as I ever got as my, you know, as my coach. He used to remind me, don't lead with the chin. Don't lead with the chin. So, you know, it was with more to remind me, don't lead with the chin, don't lead with the chin.

So, you know, it was with more enthusiasm than skill, I have to say. So you end up at some point then at Harvard. What were you studying undergrad? I started as a classics major. And then I realized that was seriously interfering with my drinking, at which point I shifted to government, which was a much less onerous major. So, yeah, that's what I ended up doing. So from there, what was interesting to you about – I mean, obviously, it's Harvard, so you want to go there. I'm kind of funny because I'm thinking about some of my friends who I went to school with who ended up in Harvard and where they ended up afterwards.

Because it's funny. I think there's this public perception that if you go to Harvard, the path from there is sort of very mainstream. You either go into investment banking or consulting or a lawyer. But what was interesting to me is that when I looked at sort of your path, at some point, you turn around and you become a professor of entrepreneurship at Harvard, which just felt odd to me. Because I've never looked at Harvard as sort of saying, okay, I want to be an entrepreneur. I really want to know about it, and that's the place to go. Yeah, so I would not describe my path as linear. There were a lot of twists and turns and setbacks and adjustments. But yeah, so I did end up teaching entrepreneurship for a while at Harvard.

And it is interesting. Historically, I think Harvard Business School has been kind of a bastion of the establishment. So if you go to Spangler Hall, which is a new building on campus, it just looks like, you know, when there is a revolt against the 1%, they're going to attack there first. You know, it kind of sends this country club entitlement. But the reality is there has always been an undercurrent, starting with a guy named Howard Stevenson, who was a great mentor to many of us who are interested in entrepreneurship, of family businesses, startups, technology-based startups. And that's grown and grown. And I can't remember. It was one of the major business magazines, Fortune Forbes, Businessweek, one of them.

It might even have been the New York Times, actually, recently ranked business schools by their specialty. And this was in the past month, I think. And they said if you want to become an entrepreneur, Harvard Business School is the place to go of all the business schools. So, yeah, it is kind of surprising. But there's been a big investment. The new dean or the current dean, Nitin Orya, has made a big investment. There's a strong faculty there. So, yeah, surprisingly, it's a pretty good place for folks who are interested in pursuing that path.

So what makes you interested in that? Well, I guess at some – let's kind of fill out your path a little bit here. So you go from undergrad in government affairs, it was? Yeah, government. So at Harvard, they don't teach political science. That implies you're studying it. They teach government. That implies you're doing it.

You know, like go off and be a senator man words matter yeah um so did you actually go into government in any way shape or form or you went no so i you know after i graduated uh my then girlfriend now wife and i uh kicked around europe for a year um we had basically a friend of mine and i had this harebrained scheme that we're going to import harleys to europe and resell so i'm seeing this common theme around motorcycles. Yeah. Motorcycles and, yeah, and pain. So, you know, I started a little moving company.

Anyway, so that, you know, basically my then-girlfriend, Teresa, you know, gave me a choice, which is either you get like a real job, i.e. 9 to 5, not 5 p.m. to 9 a.m. or we part ways. So I went and got a job with a consulting firm called McKinsey and did that for a couple of years. And that was great. I learned a ton. Very good. Great learning experience, especially for me. Like I literally every day – because I was complete – I was working in a bar.

I was boxing. My friends were all knuckleheads. I was a knucklehead through college and before. So I kind of expect every day somebody from McKinsey would jump out and say, surprise, the gig is off. Here's your severance pay. The joke is up. So I was very focused on doing a good job because it was clear to me I was a hiring mistake. So I did that for a couple of years.

Again, by kind of fortune, I met somebody kind of Chuck Ames and had an offer to go work in private equity at CDR. And which was terrific because what was neat about that firm was you not only invested. So I was an investor. You know, the big deal we did at that point was Uniro Goodrich, a big tire company, but was also part of the management team sent in to run this company. So I learned a ton. But I just it wasn't quite for me. ton. But it wasn't quite for me. Consulting wasn't quite for me. Private equity wasn't quite for me.

Both terrific occupations, just wasn't a great fit. So from there, what makes you say, okay, it's time to split? Yeah. The funny thing was it's so odd. So I had a great job. I'm very fortunate that I had this opportunity to work at Clayton, Dubler & Rice and, you know, a job that a lot of people would love to have had. And I realized, like, I would be getting up early in the morning to be reading and writing. I just thought this is odd.

Like, I should, you know, like I should be so happy to be going to this job. But I've always really liked, you know, kind of understanding how things work and reading what other people have to say and, you know, kind of providing my own thoughts. You're one of Gladwell's mavens. Yeah, I guess. Yeah. Or maybe just, you know, not cut out for the real world or something. But so anyway, I was kind of drawn towards academia. But, you know, given my college academic record, you know, a PhD in classics was not in the offing. So I thought, like, yeah, business, you know, there they have professors there.

That seems like a good idea. I know a little bit about business I'm interested in. So I went to business school and then right from there got, went and did the doctorate and then became a professor after that. What's, I mean, it's so interesting to me. My dad's been actually just retired um but he basically was the guy who had you know one job he was a professor oh great research human cognition so he largely ran a lab for probably 50 years i guess wow um that's really cool and i'm

always amazed when at the world of academia because um i'm i'm somebody who's so wired my when i whenever i take a strength type of test you know love of learning and however the language it always comes up you know number one or two so i love i just love devouring knowledge um and i love teaching also but the sort of the formal world of academia has always seemed just so layered i have a background for a short period of time i work for with the federal government too. So there's something about bureaucracy that kind of gives me hives. But I think it's a fascinating world because you get these institutions where, you know, people come and they're just, they're green and they want to learn. And you're in just

constant learning environment where your job, I mean, literally you're getting paid to just learn constantly and then turn around and share what you're discovering and then try and put pieces together that, you know, in a way that somebody else doesn't see to create something new and then share that. And it's it's it's I think it's such a powerful path. I mean, that whole world is changing so quickly now. Also, academia. I don't even know what it's going to look like in 10 years. Yeah. No, I. Boy, I don't even know what it's going to look like in 10 years. Yeah, no, I, I, oh boy, do I hear you? So, you know, a couple observations.

One, the real pain in the neck is getting your union card. That is to say like going through the doctorate and you know, that's, that's really tough. And then you're, you know, you're kind of your apprenticeship as an assistant and an associate professor. So that, you know, that can be, that is hard, no question. And there is a lot of bureaucracy and a lot of, you know, there are a lot of forces that actually push people away from doing really interesting research. But I think what I found just, you know, I've been in this long enough to see the folks

who have really thrived in that environment and not just thrived professionally and done well, but also enjoyed it themselves. What I found is that in a funny way, they're entrepreneurial. I bet like your dad, you know, they find something, a question they're really interested in and they can tune out all the noise and the distraction and they can manage their bureaucracy, frustrating sometimes what may be, and just hone in. And so I think it's ideal for folks like that. And, you know, that's, I mean, just to give one example, that's what really, that's when I knew that I loved being an academic. So one of the deals we did in Clayton, Dubler, and Rice was Uniroi Goodrich Tire Company, where we bought this tire company and ended up selling it off to Michelin. It was a great deal, thank God.

And, you know, the question that plagued me, so we lived in Akron, Ohio for two years. I got to know a lot of these people in this industry. What was so interesting was Michelin came along with a much better technology, the radial tire, like twice as good as the old technology. Everybody in those companies, Goodyear, Firestone, Goodrich, you know, they all saw this coming because Michelin first basically destroyed the tire industry in Europe because their technology was so much better for a decade. Then they came to the U.S., build a plant, we're selling in Sears and so forth. And so there was this very deep question, which is, these are smart folks who know their industry, you know, and this is a threat that's coming. And everybody sees it coming. It's not like scribbling on, you know, it's the writing on the wall is 20 feet high in

neon. Trains moving in slow motion straight towards you. And how could it possibly be that they could respond as ineffectively as they did? And that was a question that kind of motivated my first seven, ten years of research. But it was really – there was a lot of other noise going on in my career, but I just wanted to understand that. And so I think – and I suspect your father would be the same way and we find something he loves. And I mean, he locks onto a question and just, you know, he's, he's locked. There's probably one overriding question that's driven him for years and, you know, for decades now. And,

and when he retired, actually, it was less about, um, stopping his research. It was just about sort of like getting to a point in his life where he just really wanted to do it on his own terms. You know, he's got so many Latin affiliations that he can keep researching. He can just kind of like partner up with people who wants to partner up with him. So he has no intention of not doing this anymore. Yeah. Cause it's just, he wakes up and he lives and breathes it. And yeah, there's that hyper-focused state, which I see people, you know, it's interesting, like whether it's a burning state, which I see people – it's interesting. Whether it's a burning question, you see a lot of artists who just become obsessed with a medium or an exploration of light or something like that. And they'll latch onto it, and it just pulls you so deeply from ahead that sometimes to your detriment because the world around you basically doesn't exist anymore.

And you're sometimes destroying everything else but it. But it is, yeah, I guess maybe there are more parallels between people who really go and do that and somebody who starts a company or a business because very often it's that same, there's a burning question or there's a need, you know, and there's a complex problem and I just really want to figure it out or I think I have it. So let me, I kind of have to build an engine around me to be able to give myself the gift of just exploring it full time. Yeah. Yeah. No, I do. I really think there's a lot of – at least people I admire as scholars, I view them as very entrepreneurial.

Yeah. I never thought about it that way. It actually makes a lot of sense. You become obsessed at some point with sort of the interplay between strategy and execution. Is that kind of a bit of what you were talking about with the – Yeah, this is my big question. By the way, you must have been talking to my wife when you say obsessed by this question. You know, it's kind of banned from dinnertime discussion now.

But yeah, I mean, it turns out that – from my reading at least, in my field of strategy, it is the big unanswered question. So we know a ton about a strategy like how a company makes money and how you position yourself in the marketplace and how you leverage resources and capabilities. This we know, Mike Porter, C.K. Praha, a lot. There have been great thinkers, a lot of theory, a lot of empirical evidence. We know a lot. We know virtually nothing on the question of once you have a great strategy, how do you get it done in a large complex organization? By the way, the world doesn't stand still waiting for you to implement your strategy. So that, and again, it kind of goes back to my time in private equity where as a consultant, we'd sit around in the bars, you know, afterwards and, you know, we'd say, we came up with a great

strategy and we'd point, you know, point out, wag our fingers and say, but those clients, they didn't implement it. Well, then you go into private equity where you're not only owned, but you're running the company. You say, we came up with a great strategy, but those, hold on a second, the finger's pointing back at us. And that's where it really became clear to me. Again, a great question. Really talented people with huge incentives, clarity on the strategy. How do you get it done? That's a really hard question.

Yeah. I mean, are there any big ahas that really jumped out at you as saying, okay, this is one, this is one huge point of failure. That's where there's some actually reasonably direct fix or just questions to ask when you're at that point. Yeah, there are a couple. I mean, the, the, the one that comes out in the simple rules book is that, um, uh, a lot of times people try to deal with complex – they see a complex problem and they throw a complex solution at it. And so just to give a non-business example, the one that drives me nuts is the US taxes, right?

So the US economy is complicated and regular policy and so all of these are – it's a complicated problem. The answer is the US tax code, which is for those US citizens who just paid their taxes. Almost four million words, for those U.S. citizens who just paid their tax. Four, almost four million words. Okay. What that means is you could chunk it up into novel-sized books, read one a week. It would take you about 14 months to finish the tax code. And so that's in organizations. So what we see, they're trying to get something done. So they throw the equivalent, the corporate equivalent of the tax code at the problem. But there are some real problems with complicated solutions. So the first one is they're really expensive. So in the US, for instance,

I was shocked when I read the statistic, but I double-checked it. It's true. The number of full-time equivalent tax preparers exceeds the number of police officers and firefighters combined. Now I ask you, is that the optimal allocation of resources in society? I'm going to say probably not. Yeah, probably not. The other thing is these complicated solutions are meant to dispel uncertainty by saying this is what happens and this is what you do. Here's a rule for everything that could ever happen. The problem is they get so complicated like the US tax code that they generate more uncertainty than they resolve.

So there was a study done a couple of years ago, a nice study. They gave 45 tax preparers an identical one-page tax scenario for a couple. 45 tax preparers, 45 different answers. Now you could say, oh, well, that's just rounding a dollar here. No, no. They range from $36,000 to $94,000. Oh, my God. Yeah. The IRS, by the way, by its own admission, gives bad advice one time out of three.

And it's not because those IRS people aren't trying to do a good job. They are. It's just code is so Byzantine and complicated that it obscures more than it clarifies. And the third disadvantage of these complicated solutions is people check out of complicated solutions, right? So, again, there was another nice study done by a professor of accounting that looked at, I think it was about 45 or 50 countries, and tried to measure what were the factors that influenced

whether people paid their taxes or dodged their taxes. Single biggest factor was complexity of the tax code. Ahead of penalties for noncompliance, whether you're a cash business or not, the absolute tax rate, all the factors you'd think would matter were less important than complexity. And we see this in other domains. For instance, there was a study that was done that looked at diets and basically found people can lose – if they adhere to a diet, people can lose weight on a complicated diet or a simple diet. But they're much more likely to stick with a simple diet.

That makes sense. Yeah. Because – so I think this was one of the – this on the, on the big question of execution, which I'm, you know, chipping it away at, uh, uh, but on, on that big question, how you execute strategy, what we talk about in this book is how you can actually have very effective, simple rules to manage critical activities, uh, that allow you to translate your strategy into action and avoid all these costs of cumbersome Byzantine. So really the separation between strategy and execution is not real then.

I mean, because essentially to have an executable strategy, then the simplicity has to be dialed into the strategic conversation, or else you're just, you're going to come up with something that sounds really cool and covers every possible base, but nobody's ever going to be able to do anything with it. And that's like you said, that's business, that's art, that's life, that's behavior, that's weight loss, that's everything. Yeah. Um, it's interesting actually, when you were talking, one of the things that popped into

my head was, um, iTunes, you know, they weren't first to the market with, um, with downloading music, you know, there was Napster and there Napster and everyone was doing it illegally for I guess it was a couple of years. And I think the big lesson was that people were like, well, once iTunes comes and you have to pay a buck a song or whatever it was when they started, it's going to fail because people can do this for free. And I think the big shock to the system was everyone started paying. It was never that people didn't want to pay. It was just that there was nothing that was so straightforward and simple where you could actually just hit a button, pay your money, feel good about what you were buying. And it just, boom, it loaded onto whatever device you wanted to listen to. Everything else was so complex. So they went to the simplest thing available then which

was the peer-to-peer networks rather than you know the commercial offerings which were kind of a disaster at the time and just people couldn't figure them out and then where's my song when i download it but as soon as as soon as you know there's itunes becomes introduced and it's just there's a massive amount of simplicity in the system you know people actually start paying for that where they were getting it for free on the side. And I think that was, I mean, for me, I thought it was a really fascinating experiment. Yeah.

Well, we, it's, it's a terrific point. And, you know, I sometimes in, in explaining simple rules to people, I use exactly that metaphor, which is to say, if you look at how people, just as you were saying, look how people downloaded music before the iPod, right? And it was, you know, you had hardware, you had software. It took you hours to get things configured. Then you needed, you know, you need to get the songs. You need to get them right.

And so the system was very complex. A lot of moving parts that had to work together for you to get what you wanted, listen to music. And what the iPod did beautifully was presented user interfaces, very simple, very intuitive, that managed the complexity. The complexity didn't go away in the sense you still needed to get your music. You still need the hardware. You still need the software. But the interface was simple, intuitive, human, usable. And that's what simple rules are.

The systems we deal with remain complex, but we provide – they provide an interface that allow people to manage that complexity in a more intuitive, natural, effective, but also human way. Yeah, and I think we see this really being exalted in technology these days, especially user interface, UI, UX. UI UX 10 years ago and design, the importance of those three things even 10 years ago, I think they were kind of like, okay, we need those. We'll hire them. But they're kind of sunk costs. But now, the people who are great at it, I mean, these are the people who everybody looks to to say, how do we take this and make it so it's just simple? Anyone can just play with this and it feels light.

And I think there's a much bigger understanding of the importance of that these days. simple. You know, it's, it's, anyone can just play with this and it feels light when, and, and I think there's a much bigger understanding of the importance of that these days. And I wonder whether, and tell me if you, you've sort of explored this. I wonder whether part of what's going on is that life in general is becoming so layered and so complex that we're, it's almost on an individual level. We're just, we're that much more desperate for simplicity wherever we can find it. And to a certain extent, we'll seek it out and pay more if we can. Yeah. Well, no, I think that's almost certainly the case. I mean, I have colleagues at MIT who are very systematic about measuring complexity in different domains. And what's interesting, part of the background of this book was just trying to get our arms around defining complexity

and measuring it. What we find is pretty much by any measure, what you're saying is exactly right, that complexity has increased pretty dramatically, two, four, six, eight-fold over the span of a couple of decades. So if you look at interdependence of the financial system, which leads to – we wouldn't have had 2008 meltdown if there weren't such interdependence and layering. You know, technological systems, you know, orders of magnitude, more parts interacting with each other and, you know, airplanes and computer systems, software and so forth. You know, organizations working in ecosystems rather try and do it all themselves, you know, complicated supply chains. And the way, you know, the way the systems dynamics folks have thought most deeply about

complexity, define it. They say it's multiple moving parts that interact with each other in unpredictable ways. And if you think about it, that pretty much describes life these days. Right, exactly. So, yeah, no, I think you're dead on. It's like you open your eyes. It's like, boom. Yeah, that's it, right.

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are later required. Charge time and actual results will vary. So, why do, um, I guess one of my curiosities, and I know you speak about it in the book, but I think it's an interesting conversation to have, is what need does complexity serve? If it's been around for so long and it seems to only be getting worse, you got to figure it serves some need. So what? Well, new combinations create new possibilities, right?

So if you think – so we've got – if you think of the explosion of the internet, we now then through eBay or other mechanisms, we can connect. We can buy something from someone we've never met in Kazakhstan with every assurance that it will get to our door. We can – through online platforms, we can borrow somebody's house for a night with Airbnb. So interdependencies, more moving parts working together, create opportunities for novel combinations. And the whole sharing economy has grown out of interdependencies that didn't exist historically. So complexity brings great boom in terms of novel opportunities through novel connections. But it also brings risks, contagion spread, financial contagion spread. Very hard for people to understand where to intervene to get the outcomes they desire.

And at the human level, it's just very, very daunting to try to manage complex systems. And like you said also, there are vast industries built around becoming the complexity managers between you. Like TaxPrepare is a perfect example. A lot of consultants. Right. And that's all about, okay, here's somebody that doesn't want to have to understand it, but they know they have to abide by it or leverage it in some way.

And here's the outcome that they want. And so you're the person in the middle who says, okay, I'm going to do all the hard work to understand it and basically – I'm going to be the translator. You know, and I'm going to translate what the thing is and then I'm going to tell you according to this, this is what we should do. And you see it in cars too. I mean mechanics. It used to be when I was a kid, you know, I drove Jeeps for years. You basically like three wrenches. You could take the entire car apart, just leave it in your driveway.

And now I read an article a couple of years ago, and it was about how BMW couldn't find enough qualified people to go to mechanic – to become mechanics for their cars because essentially it was like you need to be an engineer. And it was a very well-paying job. And they put you through their own internal university to actually do this. And because the whole generation that had come up that were great mechanics for the cars of a generation ago, we're driving on computers now. And it's a completely different level of complexity. So your average mechanic now is less – I guess I look at it as less artisan, but maybe that's not really the right thing. Maybe you're very much still an artisan, but it's just the level of complexity has gone up dramatically. And when you look at it like that, it's just where doesn't it appear in the system these days?

Yeah. Well, no, I think that's right, that there's clearly complexity that's grown, particularly in these mechanical systems. I just want to pick up on something you mentioned earlier, which I think is also an important point, which is there are people who benefit from complexity. So if you take financial advisors, for instance, they have a lot of incentive. And this isn't a dig at them individually, but if you just think structurally around their incentives, they have a lot of incentives to present financial decisions as hugely complex so that you, you know, are willing to hire them to help you navigate that. And, and yet, you know, there, there's some evidence that suggests that's not the case. I'll just tell you one, one story we give in the book, which I think is a very nice story. So there's a guy named

Harry Markowitz who won the Nobel prize station, really, you know, like a great, great thinker in finance. And he pioneered very complicated way of thinking about how you allocate your assets. So if you've got 10 different stocks and 10 bonds, what's the optimal allocation for a level of risk that you're willing to incur? He wins the Nobel prize for this. So there were some finance professors recently who took his model and a couple of minor variants of that model and tested it against a simple rule. Okay. And the simple rule is called the one over N rule. And the one over N rule says, if you got 10 asset classes, each of them gets one 10th. If you have of your available funds, if you have 20, each gets 120.

Okay. So the simplest rule you can possibly imagine, right? Run the test, 28 different data sets against different models. One over N rule wins 80% of the time, outperforms this Nobel Prize winning model 80% of the time. More interesting than that, it never loses money for investors. 50%, over 50% of the time, the other models lose money for investors. This is before you add in fees that are typically associated with these complex models. And kind of a funny postscript to this is Markowitz himself acknowledged later in his career that when he had to allocate resources for his own retirement fund, he used the one over N rule. And so I'm not saying we didn't learn a lot through Markowitz's model. We did.

He helped us to think very clearly about the tradeoff between risk and reward. But actually in terms of robust findings about what we know works for personal financial investment, a handful of simple rules can work really well. But there are folks who have deep incentives for you not to know that and not to believe that. That is so interesting. I remember back in the day when the Wall Street Journal was doing – they would have their dart ball. Oh, right. Yeah, that was great. You know, just like put up a page from the Wall Street Journal and they throw a dart and whatever, like that's the stock and then they would compare it to their chosen expert of the week. I don't know if this is lore or not, but what I always heard was they discontinued that because eventually the darts were just beating the experts so consistently that it was a little bit embarrassing. Yeah, well, and I heard the same thing, and it's a research that basically shows it's almost impossible for mutual fund managers, for instance, asset managers to consistently beat the market.

There are some exceptions. You know, Bill Gross at PIMCO had a terrific run. You know, Lynch at Fidelity had a terrific run. But they are – it is a tiny, tiny, tiny fraction of 1% that fall into that category. Yeah. And what's interesting too is I think there are so many – there's so much mechanism. There's so much institution built around huge systems. I mean look at the tax code, right? And look at the IRS. Yeah.

That it becomes – when you look at that because you're like, well, okay. So if it's really that clear that in the investment world, one rule beats all the other stuff, if it's kind of crystal clear that if you take the IRS code and you simplify it down to 10 rules and you're going to get largely the same outcomes, why don't we do it? And I think part of the reason obviously is there's such massive financial interest on so many different layers in not doing that know, makes you just come face to face with this kind of brutal question, which is then what, you know, what do we do with this? And how do we actually start to, you know, can we, can we use this idea to, you know, that, okay, sometimes simplicity, just really basic stuff. Okay. We know it to be true.

This is going to work equally, if not better. How do we use that knowledge to then help make a transition from large, massive, complex, incredibly wasteful and dysfunctional institutions that are providing, frankly, tens of thousands of jobs, if not millions? Because probably a big part of that, I mean, tax preparers go out of business and 97% of the IRS probably goes away. How do you deal with that? Although, I mean, just parenthetically, it frees up a lot of resources. Well, absolutely. I guess that's the other argument. Look what we can invest now.

Well, I think there are a couple of things. So first of all is – and part of what we're really passionate about in this book is just helping people to recognize that simple solutions can work. A lot of times simple is dismissed as simplistic. That is to say, oh, yeah, that's just kind of stupid. So we're on a kind of a crusade to help. There's this thing. We call it the myth of requisite complexity, this belief that complex problems need complex solutions. And sometimes that is true.

And in the book, we talk about the conditions under which that is true. It was like medical. Yeah, there are certain domains where, you know, you complicate solutions are optimal. And we, you know, kind of tease that out in the book. But there are a lot of problems for which you don't need a complicated solution to a complicated problem. So the first thing is just helping people understand that and building legitimacy of simple approaches to complex problems.

And that is – so that's part of it. It's not all of it. But that at least is something that we as academics can do. I think the second thing people can do is provide evidence. interesting study with about 40 companies, members of the Young Presidents organization, where they adopt simple rules for a critical process, choosing customers or new product development, whatever it was, and then measure results. And what's very interesting is results are compelling. And in some of these cases, there are quite dramatic increases and improvements in their financial performance pretty quickly. People saw that. That kind of dispelled a lot of the argument, cut through a lot of the smoke, and really, you know, got people to say, yeah, wow, this does work. The third thing I would mention is you don't, there are a lot of choices,

and this is one thing back to this execution question. You know, there are a lot of things, if you're in a big organization or a big society, and you say like, oh gosh, there are all these problems that I can't solve myself individually. But there are a lot of things that people can solve, you know, decisions that they're making on a day-to-day basis with colleagues around how they allocate resources, for instance, or, you know, how they make decisions, how they choose which customers prioritize. And you can just take in, or even personal decisions, you're trying to, you know, lose weight or do better at online dating or whatever it is, where you can, you know, try, you know, lose weight or do better at online dating or whatever it is, where you can, you know, try it, you know, develop some simple rules, test how they work within your own domain.

And what, I guess what we hope is, what we very much hope is that when we legitimize simple rules, and simple rules, by the way, we have a rigorous process for how you develop them and they're based on data and experience. So it's not just, you know, gut feel. This isn't blink. We're not saying that feels good. Actually, the exact opposite is true. We often think the unexamined rules are not worth following.

You know, you need to surface your rules and test them. But, you know, we hope to both legitimize and also show people through, you know, kind of practical steps. Try it. Use it yourself. Solve a problem that you're facing and, you know, see if it works. And if it works for you, you know, then it'll, we hope, kind of propagate this approach. So it's almost like a revolution approach or a movement approach.

Like, okay, step one on the individual level, kind of put on the simple rule mindset hat. Yeah. You know, like whenever I approach something, can I, is there a way to do this that's different, that's simpler, that's, you know, like you said, simplistic and simple, different. But is there a way that's more streamlined, there's a set of simple rules that will get the same job done with a lot less waste, a lot less complexity, a lot less from this book or this, you know, the discussion that we're hoping to spur here thinking only one thought, which is I have a choice. If I see a complicated problem in my personal life, my organization, society, I have a choice between a complicated solution and a simple solution. If that's all they walk away with, we will be very happy. You know, simple rules is one approach to simplicity. There are many others.

Uh, you know, it's one that we happen to have research. We know a bit about, but the broader point is we, as people, we have a choice. When we face complexity, we have a choice between a simple solution and a complex solution. And just recognizing that, I think, that I'm shocked. I work a lot with organizations and management teams. I'm just shocked how frequently a complicated solution is default mode. Like it's just, you know, they don't even recognize that there is a possibility to handle this simply, even though they're frustrated personally with complicated solutions. So it's almost like it couldn't be good enough if it's that simple. Exactly.

They dismiss simplicity as – Yeah. I guess part of the message also is then if the only thing that you're looking at is complex, take more time. Yeah, exactly. Because there's got to be something like where is the simpler approach. And maybe you're not going to choose it, but at least own the fact that there is going to be something very likely out there. If what you're looking at is like a morass of complexity, there is something else. So find it and then make the choice rather than just defaulting to this sort of like this complex system.

And if I may, I'll just give you one example that I think is a terrific example at the personal level just to give folks a sense how to personalize it. So we're just – we're overwhelmed by – there must be five, ten new studies every week about what to eat if you want to be healthy. Tomatoes cause cancer. Tomatoes cure cancer. They're both published the same week. What do you do? And so people resort to these complicated diets and this, and I can only do this on Tuesdays and the full moon and so forth because, you know, they want to be healthy. That's something a lot of people want.

Well, it turns out Michael Pollan, who, you know, is a real, you know, really influential and very thoughtful person on diet, he has these three simple rules, which are basically eat food, i.e. not processed. Your great grandparents would recognize it as food, mostly plants and not too much, you know, and it turns out and people could, you know, back to this point about dismissing, they say, oh, that's way too simplistic. Well, no, actually, there was a professor at Yale who heads their diet and nutrition center. So very credible scholar did a review. He's actually written the book on diet and nutrition, you know, a textbook.

Reviewed thousands and thousands of studies for what findings were robust. So tomatoes kill you, tomatoes cure you. Okay, let's kind of cancel each other out. They're not robust findings. But what do we really know? It turns out he wrote a really nice academic article, but really nice. He basically said pollen's right. It's like eat minimally processed foods, mostly plants, not too much.

That's what we know. You know, so you can – there's this whole industry out there selling you the latest diet and the latest fad. But both, you know, from the pollen kind of studying in an almost anthropological way and then also this much more large big data-driven analysis kind of converges on actually you follow those rules, you'd be in pretty good shape and and it gets to the fact that for somehow we've convinced ourselves that um the simple answer can't be it can't be as valid as the complex answer so i think i mean that's a huge awakening it's just a kind of like know that you know what maybe more times than not it is yeah um so look at it and give it an equal credence and test it. First, if you can, because it's probably going to be a lot easier to test. I had a friend of mine that actually started, she wanted to just make some behavior changes,

but she didn't want to do all the different diet stuff like that. So she's like, all right, I'm going to commit to one green smoothie a day. I can do that. It's my only rule, one green smoothie. And literally it became Charles Duhigg's keystone habit. It triggered a whole bunch of series of other things just unintentionally. And she ended up becoming so much healthier and losing weight. And so like one single thing. That was the simple rule for her, one green smoothie a day.

And it rippled out into this profound change. And it was because it was doable. Yeah, exactly. It's like she said, I can do one thing a day. Yeah. The Apple Watch Series 10 is here. It has the biggest display ever. It's also the thinnest Apple Watch ever, making it even more comfortable on your wrist, whether you're running, swimming, or sleeping. And it's the fastest charging Apple Watch, getting you 8 hours of charge in just 15 minutes. The Apple Watch Series 10.

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Tell me how to fly this thing. Mark Wahlberg. You know what the difference between me and you is? You're going to die. Don't shoot him. We need him. Y'all need a pilot. Flight Risk.

Well, let me give you, I mean, one of the things that I think we're most pleased about with the book is that we've kind of come up with a process. And it's not just we came up with this. Like, we, you know, we're academics, like we've got 30 pages of footnotes, you know, like it's all based on research. But one of the things that I think- It's like, don't you get fired if you don't have sort of a minimum of footnotes. Yeah, exactly. Exactly. There aren't enough footnotes there. Sorry, we have 21 pages of footnotes. Exactly. Just make them up. It doesn't matter. But yeah, so it's – but it's based on research. And it's basically a three-step process.

And what I like about this is – because simple rules are meant to be a practical tool. So if we had some theoretical discussion without any practical tips, it would not be helpful to people and that wouldn't be what we're trying to achieve. So – and I'll give you my personal example just because it's a good example of personal. So I bought a bunch of shirts and – at the same size I used to wear and they didn't fit. And I was really ticked off because I spent a lot of money and I'm a real cheapskate. So I'm like, oh, this is killing me. And I bought like 20 of them because I thought I'll buy them in mass. They're cheaper.

So these shirts didn't fit. So I decided, okay, I got to – this isn't quite working for me. So I want to come up with some simple rules. I go through a process. I just use this to illustrate the process. So the first thing is what we say is called understand what will move the needles for you. So to step one, understand what will move the needles for you. And it turns out psychologists have a lovely notion that there are basically things that make our life more fulfilled.

And that's kind of the top needle. And you want to push that up to give our lives meaning. There are also things that cause us stress or anxiety. And you want to push that down. And by the way, they're not the same needle because, for instance, you know, as an author, writing, it stresses you out, but the fulfillment should outweigh the stress. So you net out with a gain in the, you know, the delta between those two needles. So first of all, understand what will move the needles for you and clearly articulate that. So for me at first, it was like fitness, you know, feeling younger.

And I was basically like, no, it's just fitting these shirts. Like I really, you know, this is driving me nuts. So, you know, clarity on that was helpful. Then the second step is what we say, identify a bottleneck that is a specific activity or decision that will influence your ability to either do more of what is meaningful to you or in this case, decrease what is causing you anxiety or stress. And so at first I was thinking like, oh, maybe I'll exercise more. I just looked at my calendar. I, oh, maybe I'll exercise more. I just looked at my calendar. I don't have any time to exercise more.

And, you know, at my age, my knees won't tolerate any more exercise. So, you know, I talked to some people. I said, well, you know, it looks like diet actually matters more in terms of losing weight. So, okay. So focus on diet initially. And one thing about the bottleneck, the narrower you can make it, the better. So I actually, I got one of these little fitness apps and tracked my exercise and food for a week. And what I thought was really interesting is basically the real problem – it was fine.

Breakfast, lunch, dinner were all okay. Post-dinner snacks, all hell broke loose. I was like, it was a bottle of Cabernet. It's a Ben and Jerry's. Exactly. I'm getting all day, but there's like that witching hour. I'm like, sweet mother of God. Am I not like – I'm a better day. Exactly. I'm getting all day, but there's like that witching hour. Like, sweet mother of God, am I not like – I'm a better man than this. Give me more potato chips.

Exactly. And the thing is, it turns out we did a little research on this. And it's basically the punchline is willpower is a reservoir, not a stream. That is to say you deplete it through the day. By the end of the day, you're just tired and you don't have much willpower. So I realized I was eating the equivalent of a lunch or two every night after dinner. So I said, okay, my bottleneck is going to be not all eating, but snacking after dinner. So very narrow bottleneck. And that makes it helpful to develop the rules. And it was only then that I went and kind of developed the rules. And I read a little bit, I talked to some friends, didn't invest a

ton of time, but, you know, came up with some rules like no snacks on weekend. That was actually hearing Michelle Obama make that suggestion. I thought, that's a great idea. Another one is eat out of a bowl, not out of the bag. So it turns out there's some terrific research about how portions really influence how size of container influence portion, portion influence caloric consumption. And then don't stockpile snacks. So I'd go to the store and I'm like, I'm going to take 20 of those.

And, you know, if they're 20 in the cupboard, you can eat, you know, 15 of them or whatever it is. And those simple rules, you know, for me, I lost 15 pounds in, you know, under two months, which was perfect. But the point that, and we give, we have two whole chapters devoted to this in the book, but we talk about this process of clarify what will move the needles for you, whether it's a business or personally. Identify that critical activity or decision, and then develop and test the rules. And that, I think, is really helpful for people who want to kind of put this into action, try it.

Yeah, no, I love that. I love the fact that you use just a very real-world individual thing like that as well. And I'm just thinking, okay, tonight when I go shopping, leave the bags on the shelf. Um, and I think so many people have that, that similar, uh, challenge too. Um, how do you know when you've got the right rules? It's a, so it's a great point. It's a great question. It's, um, uh, you know, one of the points we constantly make is this is a data driven exercise this is not an excuse to just trust your gut because your gut is often wrong

you know notwithstanding this research on trust your intuition there are some domains where intuition works reasonably well but there are a lot of domains when it doesn't so you know use tests so one just in that little silly diet example, in that case, it was pretty easy. I knew that, you know, do I fit my shirt or not? Intermediate variable to test that is what's my weight? You know, as it came down, I knew it was making progress. And initially, by the way, what I had was – so that's one way of measuring it, you know, data. The other thing is whether you're actually following the rules. And you can just kind of keep track of that.

And, you know, initially I had this rule, no desserts ever. Well, you know, that Pol Pot school of weight management didn't work for me. It's like, you know, I need a little wine come the weekend. So I kind of think, okay, weekend's okay, but the rest of the day's not. And that's what we see, you know, when we've done experiments with companies, for instance, organizations. I mean, that's one of the things we insist on is before you implement the rules, figure out how you're going to measure success and commit to gathering that data. Because it not only lets you, I mean, it has a lot of benefits. One, you always have to make mid-course corrections to your rules.

The first set of rules you develop is a hypothesis. You know, it's typically two-thirds, 80% right. Almost always needs refinement. Two, you want the users involved in making the rules because they're best situated to see if they're working or not. And it's really that commitment to the measurement then gives you also evidence if it's working. You know, so it helps you to get things on track so they do work. It also then shows, look, you know, this is a simple approach, but look at the benefits. You know, we've, we've had examples, especially working with these companies, you know, dramatic increases in profitability in a very short period of time through what initially people were skeptical

of because they thought, oh, that's too simple. We couldn't possibly, you know, increase our sales by 50% using simple rules. Wow. There's the data. We did, you know, at which point the, you know, the theoretical discussion goes away. Yeah, no, I love that. And I still agree that it's, some people really resist the idea of measuring, but I think you got to figure out what's the right metric and you've just got to be on it. You know, and if psychologically you have trouble with like, you know, because they're going to be sort of like your rebels or like, yeah, I can't be measured. I can't be boxed like that. But if you're actually trying to do something substantially, you have to with like, you know, because they're, they're going to be sort of like your rebels were like, uh, yeah, I can't be measured. I can't be boxed like that.

But if you're actually trying to do something substantial, you have to figure out the metric and you have to be able to, to measure it. Um, last question for you. So the name of this is a good life project. So if I actually offer that out to you, the phrase to live a good life, what does that actually mean to you? Uh, to me personally, it's about making the right commitments and honoring them. So it's, you know, I'm really interested in philosophy.

And, you know, my kind of brutally reductionist history of philosophy is, you know, we started out as deists where meaning in life. So, you know, meaning matters a lot, right? You know, that you feel like you're leading a meaningful life. And historically, we've gotten meaning by attaching ourselves to something that was inherently meaningful, God or democracy or something. And then along comes Friedrich Nietzsche and says, you know, God is dead. Anything that seems inherently meaningful is a construct that we've made. That leaves us in kind of a cul-de-sac, you know, like how do you have meaning if there's nothing out there that's inherently meaningful? And there's a terrific philosopher who died recently named Nozick who wrote a book called Philosophical Explorations. Terrific, terrific book. And one of the points he makes in this book, one of the many brilliant insights he has is that actually meaning doesn't result from committing yourself to something inherently meaningful. It results from the act of commitment itself. Even if that thing, you know, your children or your family or your career or, you know, some question or startup is not inherently meaningful.

And that, I think, is a terrific, terrific insight. And so for me, that's the heart of the good life is committing to something that's matters to you and really, you know, living through that, you know, honoring that commitment as, as things get hard. Love it. Thank you so much. Terrific thing. Hey, I really enjoyed that conversation. If you found it valuable as well, um, would so appreciate if you would just head on over to iTunes, take a couple of seconds, and let us know. Share a review or rating. Always honest. And if you found this episode, the conversation, valuable and you think other people, maybe friends or family would enjoy it and benefit from it, go ahead and share it with them as well.

And as always, if you want to know what's going on with us at Good Life Project, then head over to goodlifeproject.com. And that's it for this week. I'm Jonathan Fields, signing off for Good Life Project. We'll see you next time. Whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power.

Peloton. Visit Peloton at onepeloton.ca. Mayday, mayday. We've been compromised. The pilot's a hitman. I knew you were going to be fun. On January 24th. Tell me how to fly this thing.

Mark Wahlberg. You know what the difference between me and you is? You're going to die. Don't shoot him! We need him! Y'all need a pilot. Flight Risk. The Apple Watch Series 10 is here. It has the biggest display ever.

It's also the thinnest Apple Watch ever, making it even more comfortable on your wrist, whether you're running, swimming, or sleeping. And it's the fastest-charging Apple Watch, getting you eight hours of charge in just 15 minutes. The Apple Watch Series X. Available for the first time in glossy jet black aluminum. Compared to previous generations, iPhone Xs are later required.

Charge time and actual results will vary.