12:56am, 8 August 2013
In the 3rd chapter of How Will You Measure Your Life, Clayton Christensen tells the story of SonoSite:
More than a decade ago, Seattle-based SonoSite was founded to make handheld ultrasound equipment—little machines that had the potential to truly change health care. Prior to these machines, the only thing that most family doctors and nurses could do when performing an exam was to listen and feel for problems beneath the skin. As a result, many problems would elude detection until they were more advanced. For twenty years or so, although technology had existed that enabled specialists to look into a patient’s body through cart-based ultrasound, CT scan, or MRI machines, this equipment was big and expensive. SonoSite’s handheld ultrasound machines, however, made it affordable and easy for primary care doctors and nurse practitioners to see inside their patients’ bodies.
SonoSite had two families of handheld products. Its principal product, dubbed the Titan, was about as big as a laptop computer. The other, branded the iLook, was less than half the size of the Titan—and one-third the price. Both machines had enormous potential.
The iLook was not as sophisticated as the Titan, nor as profitable, but it was much more portable. The company’s president and CEO, Kevin Goodwin, knew there was a promising market for it—the iLook had managed to generate a thousand sales leads in the first six weeks after its introduction. It became clear that if SonoSite didn’t sell it, someone else was likely to develop the same compact, inexpensive technology and disrupt the sales of the more expensive machines—and SonoSite itself. ￼￼
Eager to see firsthand how customers were responding to the new, smaller product, Goodwin asked to attend a sales call with one of the company’s top salespeople.
What happened taught Goodwin a critical lesson.
The salesman sat down with the customer and proceeded to sell the Titan—the laptop ultrasound. He didn’t even pull the iLook handheld out of his bag. After fifteen minutes, Goodwin decided to intervene.
“Tell them about the iLook,” Goodwin prompted the salesman. But he was completely ignored. The salesman continued to extol the virtues of the Titan. Goodwin waited a few minutes, then leaned over again. “Take the handheld ultrasound machine out of your bag!” he insisted. Again, the salesman completely ignored him. Goodwin asked one of his best salespeople three times to sell the iLook—in front of the customer. Each time, he was completely dismissed.
What was going on? The CEO of the company couldn’t persuade his employee to do as he asked?
The salesman wasn’t deliberately trying to defy Goodwin. In fact, he was doing exactly what the company wanted him to do—sell the product that provided the highest return.
Goodwin knew that the handheld innovation had enormous long-term potential for the company—perhaps even more than the successful laptop-size model. The problem was, the salespeople were all on commission, and success for them was defined by the total value of their sales and gross margin dollars. It was much easier for Goodwin’s best salesman to sell one of the laptop-size ultrasound machines than it was to sell five of the little products. In other words, Goodwin thought that he was giving clear instructions into the salesman’s ear. But the compensation system was shouting the opposite instructions into his other ear.
Christensen frames this case study in terms of resource allocation: occasionally, when individual actors operate in their self-interest, they don’t act in the long term interests of the company. If the incentive structure and the company’s goals don’t align, you very often get companies that act in ways that aren’t consistent with their goals.
Christensen then quotes Andy Grove:
“To understand a company’s strategy, look at what they actually do rather than what they say they will do.”
This is a non-obvious insight when you’re running a company. But if you scale this back and apply the principle to individuals, you end up at a very obvious, commonly repeated piece of advice:
“Actions speak louder than words”.
When I was a child, one of the things my dad would most often tell me was: “Are you sure that’s your goal? Remember that your actions speak louder than your words.”
He would repeat this refrain disgustingly often, to the point where it faded into the cacophony of ‘things my dad says’. (In fact, when I hear this phrase today, an image of my father appears unbidden in my head. Most of the time this image is frowning disapprovingly at me.)
But I’m now beginning to realize the wisdom of his refrain. As with most such sayings, it’s the implications that are profound, especially when followed to logical extremes:
“I want to do an internship in the US!”. But if you’re not practicing interview questions and studying algorithms, then you don’t really want to score an internship.
“I want to lose weight!”. But if you’re not exercising more, or eating differently, then you don’t really want to lose weight.
“I want to stop failing math in school.” But if most of your time is spent doing other things, and not practicing math, then you don’t really want to stop failing.
“I want to start a tech startup!” But if all you’re doing is attending entrepreneurship events, or emailing people asking them to be your technical co-founder, then you obviously don’t want it enough.
“I want to have a happy family, with kids.” But if you’re not making time for dates, or you’re spending all your time on your company, then obviously you don’t really want a happy, healthy family.
The key insight here is that you can only derive your true goals from your actions, and not the other way around.
Applying ‘actions speak louder than words’ is closely tied to being honest with yourself. I was surprised, a few years ago, at how hard it was to start being honest with myself - and I think this is true for the majority of people. You may tell yourself that this is the last time you’re going to fail a subject in school, or that you’re definitely going to start losing weight next month. But if your actions don’t match your intentions, then you don’t truly want to achieve those goals. (I’m speaking from sad experience here).
You’re simply lying to yourself: that is, you’re telling stories about the future to make yourself feel a tiny bit better. I’ve fallen prey to this more times than I’m willing to admit - and it hurts every time I pause to take stock of my life.
The principles here may also be applied to interactions with other people. I have a friend who wants to eventually work in the US. Her plan involves interning at a large tech company in the summer before graduation. This is all well and good, but she spends most of her time doing dance, and getting involved in school activities. There’s nothing wrong with school activities or dance. But if she’s not willing to make compromises in service of her goal, then her goal isn’t a true priority. She doesn’t want it hard enough.
Looking yourself in the mirror and deriving your true priorities from your actions is a highly uncomfortable process. I have to force myself into it every time I try. And I always end up feeling emotionally exhausted and unhappy afterwards.
But the pain is worth it: increasingly, the older I get, the more I realize how necessary it is to tally my intentions to my actions. The older I get, the more I realize how important it is to be honest with myself.
My dad was right all along. I’d like to say that I wish I had listened to him earlier, but I know that this is impossible: you can only use wisdom when you’ve been burned enough times in life to have it count. The implications of wise sayings are never obvious without the scaffolding of experience.
Youth is truly wasted on the young.
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Impressions from a cowboy town.
Asian universities and the pursuit of truth.
Are there good reasons to be starting a startup in Asia, instead of the valley? Yes, as it turns out.