3 Principles: Competence, Collaboration, and Prudence
How to pursue a good life if there's no consensus or proof of what "good" means?
How do we ensure we're working towards our collective goals, be they at our company, family, or community, if they are unclear or when we're far removed from them?
I propose one way is to embrace the 3 Principles: Competence, Collaboration, and Prudence.
Mailroom clerk's goals
Imagine a massive company, similar in size to the DoD or Walmart, each employing around 2 to 3 million people — or maybe even larger. Now, picture the mailroom clerk, working alone in the basement, moving mail around.
What should the goal of the basement mailroom clerk be in such a huge company? And how should this goal change when the company’s goals change?
And can anybody really tell? I mean, do we even have enough technology to model and predict how changing the mailroom goals moves the company's needles?
I think that's the predicament we're at in life. We have no consensus or proof of what we are here on Earth for, and yet, all 8 billion of us are supposed to live in such a way as to achieve it.
Or at least make progress – whatever that means.
So what do we do? Unless you think the past 2,500 years were a wash and a definitive answer to the meaning of life is right around the corner, we must find other ways to guide us.
And to explore what to do, I'd like to go back to our company employee metaphor and explore what employees do in similar situations.
The blessing of clear company top-level goals
Unlike life, companies typically have clear top-level goals.
What's great about clear company top-level goals is that you can usually see the predicament and the constraint optimization problem that your strategy is supposed to solve.
Perhaps you're trying to acquire X more customers, launch Y new product features, and ensure you have Z months of runway by end of year. You add these to your model and realize:
- Hiring in Sales increases X but decreases Y and Z
- Hiring in Engineering increases Y but decreases X and Z
- Not hiring increases Z but decreases X and Y
Then you have an optimization problem: What should the right values of X, Y, and Z be? And what's your strategy to maximize their values?
It turns out that how you spend (or don't) in X, Y, and Z makes a big difference in what you achieve. How you pursue X, Y, and Z defines both how big those numbers can be and how successful you'll be at achieving them.
Increasing the acquisition of customers X by hiring in Sales is different from by hiring in Marketing, and they're both different from investing in paid advertising or going to conferences. How you pursue X matters.
And maybe the bottleneck of customer acquisition X isn't even on Sales or Marketing, but in having a new Product feature Y that your current Revenue team can market and sell – and maybe that's cheaper too, and it helps you increase your runway Z.
This optimization of X, Y, and Z is what a strategy will do for you. It will look into bottlenecks and synergies across all of your pursuits so they can be aligned and maximize company results.
So there we have it: a strategy is an essential tool to ensure a company is maximizing its potential to achieve its goals and that employees are all aligned and pushing in a single direction instead of each tugging their own way.
But what are the core components of a successful strategy?
And if you didn't have goals, and didn't have a strategy, what would you want to make sure you had?
Competence: Who problems, not What problems
Who is your number-one problem. Not what.
Smart, Geoff; Street, Randy. Who . Random House Publishing Group. Kindle Edition.
In what is possibly the best opening quote in a business book, Geoff Smart and Randy Street's Who – The A Method of Hiring tells it like it is.
It's not that you don't have "What" problems – you do. Many problems, including potentially a lack of goals and a lack of strategy.
It's just that the number-one problem is a "Who" problem: solve it, and the other problems will start being solved by the right people.
Different people are different. I've overseen the hiring of over 100 software engineers, and worked with at least another 100. The level of software engineering competence between the top person and bottom person in this list is staggering. It is really different.
This variation in competence is true in many other disciplines where you need skills to achieve valuable real-world results: Sales, Marketing, Product Management, People Management, Recruiting, Leadership.. you name it.
No, not everybody can do the same thing to the same level of effectiveness. People learn new skills, but they have different styles, different proclivities, different ceilings, and some people will learn and grow while others won't, and at different speeds.
Why is that important? Because the right people will make or break your ability to execute your strategy given their different levels of competence.
Problem #1: Winners and losers have the same goals.
Clear, James. Atomic Habits (p. 24). Penguin Publishing Group. Kindle Edition.
In another memorable quote, James Clear reminds us that achieving is more than setting out what to achieve: you need to actually succeed. Competence is, by definition, the skills applied to the real world that allow you to succeed in what you intend to do.
In short, a necessary but not sufficient condition to succeeding in your strategy is competence, the ability to actually achieve valuable real-world results.
And if the strategy is unclear, and goals are unclear, then you need even more competence to ensure you can execute on whatever comes up and adapt as things change.
But a part of competence that's worth breaking down on its own principle is that which will allow us to solve problems together.
Because nobody can solve the really hard problems, or achieve anything meaningful, on their own.
Collaboration: Hard problems require many people
I have a rule. You can call me Schnitzel, you can call me Termie, you can call me Arnie, you can call me Schwarzie, but don’t ever call me a self-made man.
Schwarzenegger, Arnold. Be Useful (p. 229). Penguin Publishing Group. Kindle Edition.
As far as openings to business books go, Arnold Schwarzenegger's is pretty good too.
There are only two types of people: those who achieve success with the help of others and those who don’t achieve any success. That’s what we call a conjunctive proposition – there are no other kinds of people.
There’s a whole set of disciplines to solving problems when more than one person is involved: persuasion, documentation, written communication, verbal communication, management, negotiation, leadership, conflict resolution, empathy, active listening, project management, delegation, feedback, decision-making, facilitation, coaching, mentoring, stakeholder management, diplomacy, emotional intelligence, consensus building, accountability, relationship management, ...
I’m not being flip: this list is extensive, but the number of competencies required to be a stellar collaborator is even greater.
Like it or not, pretty much every problem worth solving in the world requires collaboration with others. Collaboration is, therefore, a requirement for success.
In a dynamic system where different people are each acting and effecting change in the world, collaboration is the API tying our work together. Whether we collectively succeed or not is highly dependent on how well this collaboration goes.
So if you're unsure about what skills to build, or how to achieve success, or what success is, this is great guidance: work on your collaboration skills and find other people to help and be helped by.
Pretty much anything that you'll build that really matters will require other people's contributions, so instead of starting, then trying to pull people in, pull people in and use collaboration with them to start.
In the end, if you have a group of highly competent people who are stellar collaborators, you have almost everything you need to succeed, no matter what the definition of success is.
There's only one more thing to be cautious about: even if you are achieving excellent results with competence and collaboration, you must be careful about what types of results you're optimizing for.
To ensure you're moving in the right direction, it's important to think your consequences through and over the long term.
Prudence: long-term games with long-term people
Play long-term games with long-term people
Compound interest is a very powerful concept. Compound interest applies to more than just compounding capital. Compounding capital is just the beginning.
Compounding in business relationships is very important. Look at some of the top roles in society, like why someone is a CEO of a public company or managing billions of dollars. It’s because people trust them. They are trusted because the relationships they’ve built and the work they’ve done has compounded. They’ve stuck with the business and shown themselves (in a visible and accountable way) to be high-integrity people.
Compound interest also happens in your reputation. If you have a sterling reputation and you keep building it for decades upon decades, people will notice. Your reputation will literally end up being thousands or tens of thousands of times more valuable than somebody else who was very talented but is not keeping the compound interest in reputation going.
This is also true when you’re working with individual people. If you’ve worked with somebody for five or ten years and you still enjoy working with them, obviously you trust them, and the little foibles are gone. All the normal negotiations in business relationships can work very simply because you trust each other—you know it will work out.
Jorgenson, Eric. The Almanack of Naval Ravikant: A Guide to Wealth and Happiness (p. 47). Magrathea Publishing. Kindle Edition.
Naval Ravikant is trying to get to the core of an important principle of real-life results: they take time and a focus on building for the long term.
What you once considered "long term" is now today. Prudence means understanding that the future soon becomes the present, and to maximize this present, you must think long-term.
For anything in life you're not going to throw away, such as a company, your family, your community, and yourself, there's no such thing as short-term and long-term optimization – there's only risk optimization.
If your company was at $5M ARR today and you were choosing revenue strategies among the following options:
- $10M ARR in year one and $15M ARR in year two (100%, 50%)
- $8M ARR in year one and $20M ARR in year two (60%, 250%)
If they were not guaranteed, the answer may be "it depends." But if they were both guaranteed outcomes, 10 times out of 10 you would choose strategy #2. It's $3M higher, first of all, and it has a larger potential for growth.
In fact, if you could guarantee the future this way, you might ask instead, "Well, what do each of those look like in 5 years? How about later?"
Of course we can't guarantee the future, so we optimize for the long term while mitigating the risk of failure. That's prudence.
A bird in the hand is still worth two in the bush. But two birds in the hand is worth double that.
By the way, two things that highly increase your odds of predicting future success are competence and collaboration, so the more of those you and your collaborators have, the better able you are to manage long-term risk and focus on long-term success.
Mailroom clerk revisited
Maybe it's too hard to understand how the mailroom clerk impacts the company goals. But if the mailroom work is necessary for the company to work, there are a few proposals I make:
- Competence: Expertly moving the company’s communication increases its overall effectiveness compared to doing it poorly.
- Collaboration: The clerk can’t work in a vacuum with so many people depending on his work; his ability to help and be helped by others boosts the company’s effectiveness compared to isolating himself.
- Prudence: Any optimizations the clerk makes for long-term performance enhance the company’s effectiveness, whereas short-term improvements that harm long-term outcomes do the opposite.
This is the overall idea of these 3 Principles: even if the goals and strategies are unclear, following them will tend to, on average, lead to better outcomes than violating them.
Just as employees can contribute to a company’s success by following these principles, even when the overarching goals and strategy are unclear, we can apply them to navigate life when our purpose is uncertain.
Tying it all back to how to live
These 3 principles can help us pursue good results when there is uncertainty about outcomes, be they at work or in life.
Competence ensures you are effective at shaping the world and that you have the expertise to make good decisions about what to do, how to do it, and why.
A large part of unforeseen consequences and folly comes from ineptitude or a lack of expertise.
Collaboration ensures you are effective at tackling and solving hard problems because every hard problem requires several people working together to solve it.
Nobody can solve hard problems on their own, and a large part of failure and folly comes from not asking for or offering help.
Prudence ensures you're thinking about the long-term consequences of your actions and that you're optimizing for the best future you can.
Today is, after all, the past's long-term and a large part of bad decision-making and folly comes from our immediacy bias and dismissing the long-term for short-term results.
By embracing the principles of Competence, Collaboration, and Prudence, we can continue making meaningful progress, solving challenges, and driving positive outcomes, even when the ultimate destination remains unclear.