Systems Thinking vs. Funnel Optimization (Dis-Solving Problems)

Systems Thinking

This is an email newsletter I sent on March 29, 2019.

I’m writing the “full expanded version,” which I’ll publish here in a few weeks once it’s ready. Until then, I’ve republished the original email newsletter below.

It’s probably been the single most impactful email I’ve ever written, which I have to say has been a surprise (having received over 200 responses from peeps so far).

I share these email screengrabs below not for my ego (although it is fragile and loves positive feedback), but to impress on you that reading this is worth your attention.

(Note: I’ve blurred the identities below to respect their privacy.)


EMAIL NEWSLETTER REPRINT (March 29, 2019):

I’ve just finished writing this (lengthy) draft of an essay I’ve been working on the past week and I’d love your feedback on it (just hit reply).

I feel the idea hidden behind what I’m sharing in this email (and a few others I may write later in the year) will completely REFRAME how you look at what you do as a marketer and creator and change maker.

Like a magic trick, once you see this (and understand it), you’ll never be able to see marketing again in the same way.

You’ll not be able to unsee this.

The little voice in your head won’t let you.

In the words of Morpheus, “Remember, all I’m offering is the truth; nothing more.”

One final warning…

What I’m describing below is complex and channeling and will require some real intellectual work for you to digest.

You may very likely need to read this 3-5x to (really) get it. So there’s a serious commitment required.

I want to be respectful of your attention, so I’m making this clear right upfront.

This isn’t light snack-worthy reading like you’ll find on BuzzFeed.

If deep intellectually challenging ideas aren’t your bag, that’s cool. Hit the delete button now.

Take the Blue Pill.

Nothing wrong with that. It’s what the 99% choose to do every day.

But if they’re willing to put the time in, the rewards will be DRAMATIC.

I promise.

Still with me?

Okay, let’s do this. Time to take the Red Pill:

First I need to explain the WHY before I can discuss the details.

I’ll start at the beginning.

In systems thinking, a SYSTEM is made up of two or more parts (or nodes).

The big idea is that no single part has an independent affect (note: not *effect*) on the whole. Or, said another way, cause-and-effect can’t be isolated to a single point.

Peter M. Senge, a systems scientist at MIT, calls this the “Rebound Effect.”

He says there is a mismatch and often a delay between the cause of a problem in a complex system and the result or symptom appearing obvious.

I’ll loop back to this idea later for more in-depth analysis. For now tho, I want to try simplify this first idea by tying it back to a marketing example.

IDEA #1: A shift in mindset is required away from linear to circular thinking. The fundamental principle of this shift is that EVERYTHING IS INTERCONNECTED.

(Meaning that how you expose a cohort of people to an advertising message, and what you say, will (100%) affect the “system” as a whole.)

Okay, here’s idea #2:

In any SYSTEM, when one improves (optimizes) the performance of the parts taken SEPARATELY, the performance of the WHOLE doesn’t necessarily improve, and FREQUENTLY gets WORSE.

Whaaaaaaaat?!

Yup, … I know, this flies in the face of what you hear from many of our “marketing experts.”

(It’s a lie I believed for a long time.)

They [said experts] say this because it’s a concept that’s easy to understand and easy to explain away to people who don’t know better (and who are receptive to accepting an easy solution).

Which doesn’t make it right or factual, of course.

Sadly, explain compounded conversion rates to anyone (by improving each conversion point in the funnel, your net result will be a massive compound effect), and they will nod their head in agreement (perhaps like you’re doing now, right?).

10% more clicks on your ad…

Then 10% more opt-ins with your squeeze page…

Then 10% more webinar registrations…

Then 10% increase in your show-up rate…

Then 10% more peeps take your trip-wire offer…

Then 10% more whatever else conversion with this other sexy tactic…

… and next thing you know you have a 100x return.

Easy peasy lemon squeezy.

Any monkey can understand that.

But that doesn’t work in reality. Reality, like gravity, operates under other laws and principles.

Complex systems operate very differently to the idea of compounded interest in accountancy and finance.

The models are completely different.

When a SYSTEM is taken apart, it LOSES its essential properties.

The SYSTEM is not the sum of the behavior of the individual parts. It’s the PRODUCT of their INTERACTIONS.

Perhaps read that last part again, and when you do, think about the human body.

In systems thinking, the (individual) PART is NEVER modified (optimized/improved) UNLESS it makes the WHOLE better.

This is a core principle in systems thinking.

Reductionist (or linear) thinking is that something is nothing but a sum of its parts.

1 + 1 = 2

But complex systems don’t function in a linear flow, where each part behaves nicely with the next (simple linear cause-and-effect).

IDEA #2: Messing around with the parts of your “funnel” won’t necessarily improve the system as a whole (and may make them worse).

Before I continue, lemme define a complex system.

There are three main categories:

  1. Ecological (the environment systems: Mother Nature),
  2. Products (industrial systems),
  3. People (social systems).

… and within each of these systems are millions of smaller systems (and subsystems).

As marketers, our “funnels” are a system (a whole):

From using ads or articles or referrals to get attention…

To the “hacks, tricks, and tactics” used on websites to capture leads and get them through the “selling machine” pipeline as fast as possible:

  • Email (nurturing, promotions),
  • Webinars (evergreen, live),
  • Surveys, (engaging in questions to match promo offers),
  • Live chat (that leads to a sales offer),
  • Messaging (chat bots, SMS),
  • Deadlines (engineering scarcity and urgency),
  • Lead magnets (incentives),

… blah blah f#$in& blah.

Each of these is a node in the “funnel system,” for lack of a better term.

The visitor path may seem as tho it’s a linear flow — that starts with an ad and ends with a sale — but the system in which the flow happens behaves differently.

It’s anything but linear.

The system is the “collection of parts” which INTERACT (this is key btw!) with each other to FUNCTION as a whole.

And in systems thinking this unique interaction of parts is referred to as EMERGENCE.

Emergence occurs when an entity is observed to have properties its parts DO NOT HAVE ON THEIR OWN. These properties or behaviors emerge only when the parts interact within the system AS A WHOLE.

To help explain this concept, I’ve visualized what I mean (I know, a drawing artist I will never be):

ANALYSIS is what happens when (I’ll stick with the marking theme) marketers use reductionism to focus in on one part or component of the system.

For analysis, this is what needs to be done, but the mistake marketers make is that they then optimize it (in isolation; not understanding the impact it will have on the system as a whole).

Think of each dot (part of the system) as a component of the marketing funnel; an ad, framing of a message, lead magnet, lead capture, webinar pitch, email sequence, etc, etc.

SYNTHESIS is when the focus shifts to the RELATIONSHIP between the parts.

In a dynamic system (which a “funnel” is), understanding the NON-LINEAR flow of how things interact with each other is kind of important (yet rarely done).

Question: How will this “thing” impact other parts of the system (remember: in a non-linear way)?

EMERGENCE is the outcome of the synergies of the parts (things interacting together to sometimes create “magic”):

In marketing: the thinking is that by focusing on the individual parts, you (at some point) end up with an optimized system that kicks-ass like Bruce Lee (or Chuck Norris, Steven Seagal or Duke Nukem).

But this thinking and behavior is fundamentally flawed.

Everything is reliant upon something else for “survival.”

The difficult leap of faith we need to make is to embrace a dynamic, chaotic, interconnected array of relationships and feedback loops that make up a system (funnel in this context).

I get it; we like to think in a simple, linear, structured worldview. But this lens will not serve you.

The process of reaching people, earning their attention, interacting with them (delivering value), and then capturing value, is a complexed and highly NUANCED one that is fundamentally “chaotic” in nature.

Moving your opt-in rate from 20% to 50% will (in *every* case!) have a profound effect on the system as a whole.

… and a negative effect (almost certainly), even when the next hop in the flow seems to have improved.

Whaaaaaaaat?!

In the human body, for example, saturate the system with an essential nutrient or mineral (say vitamin A) and eventually you get toxicity (cause-and-effect kicking in at some point in the form of liver failure).

The default thinking and behavior for marketers is to optimize the parts.

(I’m starting to sound like a broken record, I know.)

However…

Downstream, in most cases, marketers are left scratching their head wondering why something they optimized so well for upstream, hasn’t caused the desired effect (crap, I wonder what caused the liver failure!?).

I see this all the time.

IDEA #3: Stacking “hacks” and “best practices” together doesn’t work. There is a fundamental system dynamic at play BETWEEN the non-linear parts of any funnel.

In systems thinking, the system as a whole CAN’T be divided into INDEPENDENT parts (it breaks).

Remember: The system is the PRODUCT of the INTERACTIONS of its parts (not the sum taken separately).

A car dissembled into its parts is not a car anymore. It’s just a lot of pieces.

It can’t get you from A to B.

Deconstruct a Toyota, a Tesla, and a Ferrari.

In each case, the parts that make up the whole will be completely different (not interchangeable in any way, shape, or form).

Cutting a cow in half doesn’t get you two smaller cows (don’t try this at home folks). You get a dead cow and hamburgers.

In marketing, this thinking is commonplace.

No one even second guesses the status quo. The goo-roos.

Maybe no one wants to look silly, the weirdo asking the dumb questions.

I don’t think there’s an excuse for being ignorant. You should be second guessing everything that matters to you.

Always be curious.

And yes, including what I’m telling you here. You won’t hurt my feelings (promise). Do your own research.

I stopped attending the typical internet marketing seminars, conferences, and masterminds years ago.

I always felt like the weird one, the black swan.

I used to get invited to some events, but not anymore. Perhaps it’s because I don’t tow the party line and stay in my lane.

In every case, the conversations are about optimizing (through some new method or hack and tool) parts of the marketing flow (greater throughput).

In the 16 odd years I’ve been doing this full-time, I don’t remember a single time where the conversation was about looking at marketing as a whole system.

It’s always been around the idea that “doing THIS, will INCREASE that.”

Example:

Slap Ask quizzes to the front-end (to frame the sale around the corner)…

That lead to trip-wire offers (to create a customer ASAP!)…

Then bot PLF to that (to use social pressure and urgency to sell)…

Then The Perfect Webinar is shoehorned into the mix (because webinars are perfect for closing quick sales, right?)…

“Best in class” pieces are added like ingredients in cake mix…

It’s so dumb.

(To be clear, I don’t specifically have anything against any tool or method, per se. The problem isn’t the hammer, after all. The problem is how the hammer is used. It’s the lack of seller transparency and buyer insight.)

The result?

Well, it’s not a badass system, that’s for damn sure. Otherwise, we would all be multi-million-billion-aires, right?

I heard Seth Godin joke on a call a while back (I’m paraphrasing), that the problem with relentless optimizing is that eventually, you have a porn site.

Haha, I love that.

The reality is … well, most marketing systems don’t FUNCTION well at all (I’ll come back to what “function” is in a bit).

The evidence is all around us in our little marketing ecosystem.

And beyond our ecosystem, the landscape, sadly, is no different.

Most businesses fail.

Most startups don’t go anywhere.

And those businesses that do scale and become unicorns, like Facebook, aren’t much better when their measurement of success is not value, but revenue.

Look under the Facebook hood at their “system,” and you’ll see an ugly beast with parts that are being “self-optimized” to the detriment of the whole.

Time will tell.

But this isn’t about FB.

It’s about how you look at the work you do.

It’s about caring about the people you seek to serve.

Putting their needs first.

QUALITY should contain the notion of VALUE, not merely efficiency (blind optimization).

Instead of applying the reductionist, linear thinking of the status quo, consider how the parts of your marketing system INTERACT with each other.

Linear thinking is ad copy affects clicks, which then determines how many people see your squeeze page (or tripwire offer)…

… and your lead magnet affects how many people are attracted onto your email list, etc.

That’s linear thinking.

Non-linear thinking understands that complex nuanced system dynamics are at play…

And that your ads at the very begging of your system flow WILL (like 100%) affect the type of customer (or lack of any customers) waaaaay down the line.

The START of the thought process should be what the FUNCTION of a system is.

(NOTE: A system exists to achieve a PRIMARY FUNCTION.)

For Facebook, make no mistake, that’s revenue above all else. Oh crap, I pulled FB back into the discussion. Their fault.

Anyhoo…

Here’s something for you to consider:

Instead of starting your journey by looking at your marketing system as a bunch of linear connected parts, that each feeds the next piece in the funnel (a form of duct tape marketing I guess)…

START by defining the FUNCTION of your system.

And no, unless you’re Facebook with billionaire investors and short-sighted shareholders, the function should NEVER be revenue.

(FB makes an easy punching bag.)

Revenue should be the RESULT of doing something else well (for a job well done in serving your peeps).

Example:

There’s a restaurant in Chicago called, The Aviary. It’s co-owned by Grant Achatz (the chef) and Nick Kokonas (who runs the business end).

https://www.theaviary.com/

(Grant Achatz is an artist. See Netflix documentary, “Chef’s Table” for a glimpse at what that looks like.)

Chef Grant does what he does not because the PRIMARY FUNCTION of The Aviary is to generate as much revenue as possible.

The revenue is the byproduct of the system they’ve thoughtfully and purposefully engineered.

The EMERGENCE from “mixing” the parts of their system in a unique, non-linear, and interconnected way.

Chef Grant’s business partner, Nick Kokonas, a genius (imho), who no doubt understands the dynamics of a complex system.

If you listen to the Tim Ferriss interview with him (damn brilliant interview btw! which I’ve listed to three times already), he optimized parts of their system in a way that boggles the mind (their table booking subsystem).

I had a strong spidey sense that he sees the system as a whole — in the interview, “systems thinking” was never spoken about specifically — so their optimizations don’t negatively affect the system.

They enhance it.

Okay, back to the marketing discussion.

Where was I? … ah, that’s right … start by defining the FUNCTION of your system.

Which leads me nicely to:

IDEA #4: The system exists to achieve a primary function. As marketers, as creators, as change makers: I propose that our primary “function” is to create happy customers.

Let’s say the function is to create HAPPY CUSTOMERS.

(The “happy” part is critical btw: because any zero-value spammer or scammer — or low-cost airline for that matter; just throwing that out there in case the CEO of Ryanair or EasyJet are reading this email — can generate unhappy customers.)

So let’s unpack this idea of creating happy customers as the primary function of your marketing funnel system:

Question to ask yourself:

What events need to happen to attract and earn the trust and attention of a happy customer?

Firstly, I can tell you it probably ain’t some B.S. clickbait ad to get more clicks…

And I can probably guess that some curiosity-based shallow-content squeeze page with some big promise lead magnet incentive shenanigans won’t help, either.

Yes, I’m being facetious on purpose.

You may find that the ad you *need* to write will garner FEWER clicks because you choose to prequalify so heavily…

You may find that the copy (story) on your website matters more than you think…

You may find that the best way to present your message is counterintuitive…

You may find that perhaps decoupling your lead magnet as an incentive carrot in exchange for an email address, would serve you better…

You may find that leading with empathy and front-loading with value before asking for anything in return, works best (enhances the system as a whole)…

You may find that instead of exposing offers to prospects at every possible opportunity, the shift in behavior creates a happier dynamic and a pull in your direction…

Of course, none of these parts function in isolation, but rather they form the function of the complete whole.

Where you create the perfect environment for EMERGENCE to show up and for magic to happen (and blossom).

IDEA #5: Everything changes when you optimize for happy customers.

Something to think about.

Okay, time to recap the big ideas and meta takeaways:

IDEA #1: A shift in mindset is required away from linear to circular thinking. The fundamental principle of this shift is that EVERYTHING IS INTERCONNECTED.

IDEA #2: Messing around with the parts of your “funnel” (system!) won’t necessarily improve your results (and may make them worse).

IDEA #3: Stacking “hacks” and “best practices” together doesn’t work. There is a fundamental system dynamic at play BETWEEN the non-linear parts of any funnel.

IDEA #4: The system exists to achieve a primary function. As marketers, as creators, as change makers: I propose that our primary function is to create happy customers.

IDEA #5: Everything changes when you optimize for happy customers.

IDEA #6: Choose a system mindset (how will this decision benefit the whole?) vs. an outcome mindset (how can I increase this isolated metric?).

IDEA #7: In many cases the most significant opportunity or leverage point in the system, is in the counterintuitive takes on something that everyone does or believes is true (zag where others zig).

META IDEA (context: marketing funnel): Everything (everything!) within a marketing funnel will affect the system as a whole in some non-linear interconnected way.

Optimizing the parts of the funnel by blindly increasing throughput, will frequently (more times than not) make the system as a whole worse (if the function is to create “happy customers”).

MENTAL MODEL: I don’t have an official mental model for systems thinking, other than to liken it to your body (your own complex biological system). Inputs matter. Cause and effect aren’t linear and rarely obvious.

(Eating one McDonald’s burger won’t kill you, but over a prolonged period it will. Why? Cause and effect across hundreds of interconnected subsystems that keep you alive, fit and healthy.)

I’m going to end this email essay now. As I write this, my Ulysses has alarm bells flashing that I’ve exceeded 3,500 words.

In a few weeks I’ll publish a fuller version of this rough draft on our website, with prettier images 🙂

Once I’ve done that I’ll let you know.

That said, this email may be accepted like a radioactive ice lolly. In that case, maybe it’ll die right here.

Oh yeah, almost forgot…

I have an amazeballs! video of Dr. Russell Ackoff giving a speech on systems thinking.

This video will help you wrap your head around this concept of systems theory.

It’s an old video, but don’t let that put you off.

Sadly Dr. Russell Ackoff is no longer with us. He is considered to be one of the godfather’s of systems thinking:

Watch the whole thing. It’s pure (pure) gold.

Enjoy!

André “DIS-Solving Problems” Chaperon

P.S.

I also completely forgot to tie in the idea behind DIS-solving problems.

I’ll tie this idea into the full version in more detail.

The quick version is this:

Instead of trying to SOLVE a problem you have, in many cases, you can eliminate the problem by changing other parts of the system.

Hence the “dissolving” of a problem so it doesn’t exist.

SOLUTIONS are often just “band-aids” which mask the underlying problem by treating the symptom.

Something to think about, eh?

SETH GODIN (source):

The best solution to a persistent, apparently non-solvable problem is to make the problem itself obsolete.

Go around it.

Cease to need it to be solved.

Redefine your process or goal so that the problem is no longer permitted to slow you down.

An unsolvable roadblock might be better called “reality.”

P.P.S.

In the video I’ve shared above, Dr. Russ Ackoff uses education to frame some of the discussion around system theory.

The one idea is that the best way to learn is to teach. But being taught, counterintuitively, is not very useful.

Selfishly I much admit, because I’m aware that there is no better way to learn something than by teaching it, is one of the reasons I choose to teach.

It’s why I write weird long emails like this.

As much to help you as to help me.

To be a learner is to be a teacher: a classic chicken and egg scenario.

The fix, or hack (because “hacks” are sexier), is that you can learn (yourself) by teaching (yourself).


[ASK]

If you know anybody else who needs to read this email, it would mean the world if you forwarded this to them.

What REALLY helps me is when people forward these emails to their friends. Forwarding these emails (or re-posting them on the socials) really helps us grow our readership and that helps keep us going strong.

It also helps give a boost to my fragile ego 🙂