We are all learning how to play the big game of life and business. Not everything we try works the same.
My eldest son learned some of the lessons very early. When he was little he loved playing the board game Monopoly*. The game’s objective is to bankrupt the players through a process of accumulation and domination. The players are relatively poor at the beginning and earn cash by looping the board, which exposes them to numerous expenses and risks along the way. If a player does not invest their cash stores in income-producing assets, simple entropy will erode their cash base and at some point the player’s resources will deplete completely and they will exit the game bankrupt.
Upon starting the game and rolling the dice, players generally race down and around the first edge of the board in a mad dash to purchase one of the prestigious properties like Boardwalk or Park Place. If they can snag a green property, a yellow one or a red one–or even a railroad–all the better.
Kyle is not particuarly flashy or impulsive and came to the conclusion that it was better to nonchalantly purchase the first trio of shitty cheap blue properties. They were not quite slum-level but they were relatively inexpensive. And because a player can purchase a property that another lands on and does not buy, it was relatively easy for him to get a monopoly with Oriental, Vermont and Connecticut. He could buy all three for $320 compared to$500 for Board Walk. This required only a small amount of his cash resources.
An operating lever is a strategic intiative that has an outsized impact on something important.
Kyle's nascent monopoly was right after the other players passed go with a $200 cash infusion. There was a decent probability they would land on one of his properties right away and have to pay rent. He figured out that houses on those properties were relatively cheap to buy. He carefully used his cash and rental income to build up his asset base without being overstretched while everyone else was overextending themselves trying to complete monopolies on the much sexier and much more expensive status properties. He thus managed to get hotels on his properties before anyone else even noticed or completed their own monopoly, and then milked the other players as they passed go, using the proceeds to block the other players. It did not take him long to drain the rest of the swamp.
Kyle discovered and learned to use a lever: he got in early when cash was tighter and took advantage of an inobvious timing asymmetry built into the game. His only mistake was revealing his strategy to me as the key to its execution was stealth. Alas, sometimes a kid needs his dad's approval!
Innovation begins with a shift in mindset toward the unconventional and the counterintuitive.
Before we pull a lever and generate the result built into its design, we have to see it. Operating levers are easier to see in retrospect than in prospect. This is not initially a cognitive problem of mechanical design but one of perception. Mindset at an individual level, and culture at the collective, impact the probability of seeing an obfuscated concept. This conditions perception and cognition and allows the inventor of the lever to bootstrap its creation. In the monopoly example, the “conventional” mindset is to race around and be the first person to land on Boardwalk. The design of the game primes for this strategy but there is no leverage in this approach as everyone is usually following the same program. The prestige-minded players miss the opportunities on the slum side of the board. They don’t even see it. Asymmetries in timing are very counterintuitive to a mind unconciously biased for simple Newtonian cause and effect relationships.
In business, this linearity bias expresses itself as the traditional and often-oversimplistic strategic planning approach to "set a goal and figure out how to achieve it". That might work for lower order technical problems but opportunities for leverage escape many strategists dealing with higher order problems involving many layers of messy people. Complex systems make the linear design process at best ineffective and at worst impossible, due to the recursive nature of the system itself and the asynchronous and unpredictable nature of the feedback available to the designer. The great levers are non-linear strategies that require the kind of thinking that is hard and energy-intensive: exponential progressions, compounding and network effects, probabilites and statistical reasoning, differentials and integrals, identification of asymmetries in timing and geography and the modelling of mysterious multi-factoral inputs to a system. It's far from simple.
An operating lever is paradoxically elegant and sophisticated.
The mechanical design work of developing and executing a lever is time-intensive; a shift in perspective takes but a moment. It requires personal work in order to develop complexity skills and metacognitive capacity and it takes even more work to undo the blinding effects of wisdom and experience. This is why the younger players in their "first rodeo", who don't know enough not to try something, are the ones who often stumble into disrupting the game. The older incumbents have to unlearn their conventions and shortcuts and reframe a situation in order to identify and interrupt a nonconscious pattern.
Levers are the products of design thinking.
Principle 1: The lever is the one initiative of all the possible strategies available that generates the greatest impact on an immediate, specific and measurable key metric that leads in a direct way toward the achievement of a longer-term primary objective. (In Monoply the objective is to bankrupt the other players; the metric is cashflow velocity.)
Principle 2: The lever is not the only thing but it is the first domino: the other necessary strategies and tactics cascade from its launch and multiply the original move to generate a cumulative adantage. The cascade features an exponential rise in some quantity, slowly at first and then rapidly as the new effects compound on the previous effects. This is a timing asymmetry that takes advantage of getting into a geometric progression early in the game while the curve is still flat, based on a keen understanding of the nature of how it will accelerate through time. The task of pulling a lever is like activating a massively connected node in a network structure that triggers an array of other tasks that are all required to achieve a result but are slaves to the original impulse. (In Monoply the cascade begins by being the first to purchase a set of properties which allow the cumulative advantage of adding rental houses and hotels.)
Principle 3: The lever is hiding in plain site. It might be basic and “unsexy”, but there is nothing unsexy about the crescendo of activity that builds through time towards something spectacular. Levers live in areas of a workflow that are constricted. The chokepoint creates a reduction in the flow of cash, of time, of ideas, of deals–of energy. Clearing the block increases the flow until it gets to the next chokepoint in the network. Every clearance supports an increase in scale and impact. (In Monoply the unsexy strategy is to purchase cheap properties at the beginning where limited cash positions choke the build-up assets.)
Principle 4: The lever forces the expansion of the skills and strengths of the leader pulling it. The design of a lever requires the strength to recognize an unconscious pattern. The execution of a lever requires the skill to disrupt the pattern. A shift in mindset and culture are always required before people have the capacity to see opportunity and the willingness to do something about it. (In Monoply the strength of humility precedes the skill of stealthy, under-the-radar execution.)
Levers are the mechanisms of innovation and impact at scale.
*Like many fathers, I can be gushingly proud of my children when they discover things and learn to do cool shit. But I generally like to celebrate genius when and where I see it regardless of whether they are my spawn.
Pass go! Share this with people on your team...
...start a constructive conversation about levers.