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A Book with Bubble Tea (波！） - Give you a different cultural perspective in parenting, business and life
It’s clear that different cultures have distinct styles of conveying information and different perspectives on things as well. At this show, I am going to share some fantastic books from East Asia that you might not have come across in mainstream English media or on your usual bookshelves. But trust me, they're worth your time because they're fascinating and inspirational!
A Book with Bubble Tea (波！） - Give you a different cultural perspective in parenting, business and life
[Self-Growth] EP34 - Clarity in Chaos: Seeing the True Essence | 《The Underlying Logic》 by Liu, Ren [PART ONE]
During World War II, the quality of the US Air Force's parachute was 99.9%, meaning out of every 1000 jumps, one person would die due to the quality of the parachute. Despite the military's demands for improvements, manufacturers always had various reasons for why they couldn't make the parachute safer. And how did this problem was eventually solved. How would you solve the problem if you were the US military? If you want to find out how and want to have the ability to step through distractions to grasp the core of an issue, for effective problem solving this episode is for you. Join me, let's discover it together.
Show Note
Book Title in Traditional Chinese: 底層邏輯：看清這個世界的底牌
Book Title in English: The Underlying Logic - How to See the Essence of Things.
Author: 劉潤 Liu, Ren
Systems Thinking: Causal Loop Diagrams https://www.youtube.com/watch?v=LgnBSdcxPD0
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During World War II, the quality of the US Air Force's parachute was 99.9%, meaning out of every 1000 jumps, one person would die due to the quality of the parachute. Despite the military's demands for improvements, manufacturers always had various reasons for why they couldn't make the parachute safer. And how did this problem was eventually solved. How would you solve the problem if you were the US military? If you want to find out how and want to have the ability to step through distractions to grasp the core of an issue, for effective problem solving this episode is for you. Join me, let's discover it together.
Speaker 2:Welcome to A Book with Bubble Tea With your host, mira Hee. Here I share takeaways from East Asian books on parenting, startups and self growth. Seeking insights beyond the typical English shelf, want to be a better parent and achieve more in life? You are in the right place. Grab your bubble tea and let's dive in.
Speaker 1:Hi everyone, welcome to the new episode of A Book with Bubble Tea. I am Mira. Happy Lunar New Year. It's great to have you here with me. This episode has been prepared. Aim at all the craziness of New Year's preparation. I'm not even sure if I have the red envelopes ready for my kids for tomorrow, but anyhow, I have faith that everything will turn out just fine. Alright, as you've already heard and the teaser, today's book is about developing our ability to see to the core of everything and to come up with the most effective solutions.
Speaker 1:But before we dive into the book, have you thought about how to solve the problem? The US military faced in World War II with not being able to get the parachute suppliers to improve their quality? Would you implement a harsher punishment system if the suppliers failed, or would you deploy more staff for quality control? I'll give you 3 seconds to think about it. 1, 2, 3, alright, time's up. Well, let me tell you how US solved the problem. Well, in the end, they did neither. The military simply changed the inspection system. So before each delivery, they would randomly select a few parachutes and have the suppliers executive personality test them by jumping. From then on, the parachute pass rate reached 100%. Brilliant right. Who would have thought such a small change could make such a huge impact? But clearly some people did see it, they understood it and then they grasped the most essential part of any issue in any situations, because to those people, they understand how the world works and how our world is governed by underlying logics. Even if events seem different on the surface or you know phenomenon appear diverse if you look closer, the underlying logics are the same, and today's book, the underlying Logics, subtitled how to See the Essence of Things, is all about this Identifying the underlying logics that govern this world and teaching us how we can also identify these logics ourselves, to understand the essence in everything we see or the challenges we face in life.
Speaker 1:It's such an essential ability, in my opinion. Imagine the world used to be a black box or chaos, but if you develop the ability to actually see the underlying logic, you can decode the black box and have the ability to see through all the smoke, clouds and noises to find the thing that truly matters. Whether it's a problem you face in life, like why you suddenly blow up at your kids, or you know something in business, like how likely your business will be successful, you will have the ability to find the answers by yourself. Now a little bit about the author.
Speaker 1:The author of this book is Liu Ren. He's definitely the most well-known business consultant from China. He's even recognized by many Taiwanese people. He was the former director of strategic partnerships at Microsoft China and after he left Microsoft, he founded his consultancy and his clients include many household corporates like Tencent, baidu, herbal, live, etc. He is a bestselling author, a KOL on WeChat, and more than 460,000 people have purchased his audio course online.
Speaker 1:The author shares a lot of the underlying logics he's identified in this book, from judgment of right or wrong, how to problem solve, how we can improve ourselves and work with others, etc. I found a lot of them really, really enlightening, but I don't think I can cover all of them in one episode, so I'm going to actually break it down into two episodes to share with you about this book in slight more detail, because this is such a great book, you know, I want to have a more thorough discussion with you and in today's episode, I'll focus on the how to part, like how we can also develop the ability to identify the underlying logic. It's, like you know, the underlying logic of finding the underlying logic, because you know, surely, when we are talking about underlying logic, we shouldn't be satisfied just being fed with the underlying logic that other people have identified. Right, we want to have the ability so we can identify the underlying logic whenever we face any situations, right? I think that is the most important thing. So I'm going to actually talk about it in this episode, and in the next episode I will share a few underlying logics that particularly enlightened me and authors takes on. You know how to have good logic. So the next week's episode will be on sharing with you some underlying logics that the author has identified, and I think it's either very interesting to know or it's really helpful to know. All right, so definitely stay tuned for both of the episodes. Okay, let's move on. So now we are going to talk about the underlying logic of thinking about any problems.
Speaker 1:The most critical ability to solve any problem, in the author's opinion, is the ability to see through the facade and to see the core, the essence of any issue, despite all the smoke or noise surrounding it. So what exactly is this ability to see the essence of issues? While working there, he observed that one supplier was tasked with providing both lunch and dinner to the staff. Lunch generally provide a better profit margin for the supplier, as more staff ate lunch at the office compared to dinner. However, the quality of the food was bad. So what to do about this? Was the supplier cutting corners? Should Microsoft have someone observing their operations? Or, you know, was it lack of creativity and manual planning? Should Microsoft actually demand manual changes, where even a regular chef change?
Speaker 1:But the author believed none of these measures would work. After all, making improvements cost money, right, which contradicts the supplier's goal of maximizing profits. Thus, you know, while suppliers might seem compliant on the service, fully controlling them behind the scene is just impossible. The key is to align their interests, the supplier's interest, with the goal of Microsoft more fundamentally. So, like the earlier story about the parachutes, right, because the responsible person at the suppliers and doesn't want to risk their lives, they'll do whatever it takes to ensure the quality. And in Microsoft's case, they introduced a new system appointing an additional supplier for meals, one for lunch and another for dinner. Microsoft then made it clear that every three months they would survey the staff to see know which one provides a better meal, like lunch or dinner. If dinner received higher rating, then the dinner supplier would take over lunch service and the lesser liked lunch supplier would switch to dinner. Moreover, if one supplier consistently outperformed the other over six months, microsoft would replace the underperforming supplier.
Speaker 1:According to the author, this policy completely transformed the suppliers' attitudes. You know, gone were the days of complaining like we've already done our best, we're changing the manual increase cost. This is just not possible. After the policy's implementation, the suppliers focused on improving their quality to win the competition, instead of complaining and saying it's impossible to be done. Soon after, staff satisfaction with the quality of food improved dramatically.
Speaker 1:It takes someone the capability of seeing the essence of the issue to understand that the supplier wasn't the problem. They should actually lay in how Microsoft defined the rules of the game. By introducing a simple policy change that hinged on the underlying logic of business avoid losing business and a competitive environment Microsoft and its staff got what they wanted. This is the essence of seeing the core of a situation and devising the best solution. So now it's time for us to look into how we can develop disability. The author applies the method of system dynamics to teach us how we can also develop disability.
Speaker 1:The most critical part of this is understanding that the phenomenon we observe are merely the symptoms, not the cause. What does he mean by this? Because the phenomenon we observe are not the cause in itself. They are simply the product of a dynamic system and in the system you have components, the elements and the relationships between these elements that link them together. These relationships must be causal. It has to be a clear cause and effect relationship. It cannot be a correlation relationship. It has to be causal relationships. This is very important. So a system, if we put it simply, is a structure composed of elements and the relationships between these elements, the causal relationships between these elements.
Speaker 1:You can think of it like a mechanical watch where the dial, crown, hands and hundreds of parts and gears behind the case back are the elements of the system and the way these parts and gears connect and match is their connection relationship. It's the elements of the watch and their relationships that form this watch system. Therefore, you know whether we see the watch running too fast, too slow, perfectly on time, we're not running at all. These are just their service phenomenon. Perhaps the parts and their connections that affect the dials become stronger or weaker, but no matter what performance we see, it does not change the watch system itself, nor does it change the fact that it's the watch system driving different performances, what you might think.
Speaker 1:Okay, I've got the analogy of the mechanical watch, but how does this work in the real world? What could these systems potentially be, or how could this help us in understanding about the world? Don't worry, I got you covered. I will use a very simple system dynamic model of population growth to illustrate the point and will teach you how we can think in a system dynamic way and, according to the author, there are five important steps if you want to adopt this thinking. And in this example, we will only deal with three variables. So very simple the population, the births and the deaths. Okay, and now let's talk about these five steps.
Speaker 1:The first step is to identify your stock. Remember, in the watch analogy we just talked about, and how the parts of the watch link together in the relationship. In system dynamics, these parts are referred to as variables. They are the foundational blocks used to build up the system, and a stock is also a variable, but it's a particular kind of variable that you would like to quantify and measure its performance over time. A stock is always connected with an inflow pipe and an outflow pipe controlling the rate at which things enter or leaving the stock. Consider your bank account. Your bank account is a stock and you get the inflow, which is your deposit rate, and then the outflow is your withdrawal rate. Or the stock could be your boss's satisfaction with your work performance, and the inflow is things that may can become more and more satisfied with your performance, and the outflow is things that actually deplete his satisfaction. And if we turn to the case of population again, then the stock in this instance would be the population itself, with the inflow being the birth rate and the outflow being the mortality rate. You should always identify the most critical stock variable that you would like to closely monitor its effect over time before you start doing your system dynamic analysis or construct your causal diagram. The second step is to identify critical causalities between variables. So, after identifying the key stock, you can now outline the variables that will affect the stock's performance and connect these variables with the correct causal relationships.
Speaker 1:No-transcript. Birth and populations have clear causal relationship, right, if both variables move in the same direction, like when the birth rate increases and the population also goes up, we can call this relationship a positive causal relationship. And we know if there is a positive causal relationship, then there must be a negative causal relationship too. This simply means that the two cause and effect variables move in opposite directions. For instance, consider death and population. Assuming all other factors remain constant, an increase in death leads to a decrease in population. I think it's very easy to understand that this is a negative causal relationship. But one important thing to remember here is that the causal relationships between variables never change. Whether we see it, experience it or not, it's always there. This is very important. You know, even when the population, say, undergoes exponential growth, the causal relationship between death and population remains constant. Right, it doesn't matter whether the population goes through exponential growth or decline. The relationship between death and population is always there. Whether we see it, experience it or not, it's always there. This is very important. Even when the population undergoes exponential growth, the causal relationship between death and population remains constant. It won't change, and this is very, very critical.
Speaker 1:The third step is to identify reinforcing loops in the system. Ok, so now that we understand variables, stocks and causal relationships, what about a loop? A loop occurs when variables connect in a circle. This is the driving force of the system and the relationship between loops, such as which loop dominates the system and which loops are weak, explains why we see different results emerging from the same system. The dynamics of the loops are responsible for the dynamic result, and what problem solvers or policymakers should aim to change. The effectiveness of your solution depends on how well you can alter the power dynamics among the loops.
Speaker 1:All loops can be categorized into two types the reinforcing loops and the balancing loops. Reinforcing loops means that the loops amplify changes. You will either get more and more of something or less and less of something. Take the case of population, for instance. When you have more births, the population increases. But conversely, when the population increases, it will also lead to more birth. So you see, birth and population actually form a loop right, and the loop they are in is reinforcing. So more birth leads to more population and more population will also give more birth. Reinforcing loops are your best friend for growth, but if it fears towards an undesirable direction, you will also need to put in a lot of effort to counterbalance it.
Speaker 1:The fourth step identify balancing loops in the system. But we all know that nothing in the world can grow forever right. Therefore, if there is a reinforcing loop, then there must be a balancing loop to upset it. Balancing loops aim to counteract change and stabilize the system. Take the case of population, for example. Assuming all other variables remain constant, an increase in death leads to a decrease in population. So death goes up and population goes down, and a decrease in population will actually lead to fewer death. So you see, when population actually decreases, the death also decreased too. We start with an increase in death, but after going through the entire loop, we circle back to death again, but this time it's with the effect of having fewer deaths. This is the nature of a balancing loop. It prevents the loop from moving in one direction indefinitely. It's always trying to correct itself and stabilize it.
Speaker 1:Obviously, this is an oversimplified version of how population changes occur. In the real world. The system is more complex, right? Nonetheless, the principle actually remains the same. The system doesn't change, but depending on which loop dominates, you will see different outcomes. If the system is dominated by the balancing loop, assuming everything else remains constant, the system will reach an equilibrium. But if it's dominated by the reinforcing loop, then it will either continue to grow or continue to decline.
Speaker 1:The step number five. The last thing to consider is the delay factor, or called the lagged effect. The last element that needs mentioning is the lagged effect, which we commonly know as the delay. This is because most effects won't show immediately. It takes time. For example, an increase in population leads to more births right and more deaths, but these changes don't happen instantly. It takes time for newborns to grow up before they can have children of their own, and it certainly takes time for a person to die. The time it takes before the effect shows is the delay. Well, you might think, why does it matter? But in fact, delay complicates things so much.
Speaker 1:My system dynamics teacher always, always, reminded us delay breeds danger, because when you don't see the immediate effects, you can end up overdoing it, underdoing it or abandoning it altogether because you mistakenly thought it wasn't working. Be mindful of delays and what you do to it. Like you know, I learned about the system dynamics thing ten years ago. Until this day, the saying of delay breeds danger. It stuck in my mind and every time when I see a delay, I tell myself delay breeds danger.
Speaker 1:Okay, so here are the five critical steps to develop system thinking in order to methodically uncover and complicated issues, layer by layer. So let's recap them here, okay, they are step one identify your key stock variable to measure overtime. Step two identify critical causality between variables. Step three identify reinforcing loops in the system. Step four identify the balancing loops in the system. Step five consider the lacked effect, ie the delay. I hope by now you have an idea, at least a basic idea, of how the system can be constructed and how it works. Now, with this knowledge, we can try to understand much more about what's happening around us.
Speaker 1:For instance, why did the US Federal Reserve drastically increase the interest rate from March 2022's 0.25% to February 2024's 5.25%? If you take the time to draw a causal diagram, you will notice a strong reinforcing loop that dominates the system, consisting of inflation, wage increases and money supply in the market. The Federal Reserve attempts to counterbalance this by introducing a balancing loop aimed at decreasing the money supply through higher interest rate, and this move is designed so that the reduction in money supply will lead to a decline in inflation. So they want to have less money in the market, because people will put the money in the bank right, and with less money in the market, then it will decrease the inflation rate. This move is designed so that a reduction in money supply will lead to a decline in inflation. However, the Fed is also contending three unprecedentedly strong variables fueling the inflationary reinforcing loop. They are the high oil prices that drive the inflation higher and the US government's COVID-19 relief efforts so a lot of cash got injected into the market. And third, a decrease in the working population due to COVID-19's death and the retirement of baby boomers. This last factor boosts workers' demands for higher wages, further intensifying the inflationary loop. And again, this is like a very simplified version of it, but I just want to give you the basic idea of how the system dynamic thinking can also be applied in a day-to-day understanding of the world. So, given these challenges, it's actually no surprise that the Fed has significantly raised interest rate. Considering the Fed's lack of control over these three variables that amplify the inflation loop, its hesitation to lower interest rate is actually very understandable.
Speaker 1:And let's see whether we can apply this system dynamic thinking to another event that happened lately, which is the social media CEOs, many of them. They got called to go to the Senate Judiciary Committee to testify in response to increased concerns about exploitation of kids and use on social media. It seems social media platforms have really gone through a lot of trouble these days, you know, with issues like hate comments, hate speeches, child abuse, fake news and even security concerns. But why wasn't it like this about 15 years ago, when more things seem positive about social media platforms than negative? Well, because in the initial stage of the development of any social media platform, the dominating reinforcing loop was more content, more users, and more users create more content. However, as user grow in sizes, there is another loop that gets strengthened, and this loop is more content and more undesirable content and causes more discontent towards the platform, which depletes user. So you see, this balancing loop is being strengthened here. The way social media platforms try to weaken this balancing loop is by introducing mechanisms to identify, censor, blog and delete those undesirable posts. But it will be interesting to consider whether there will be another way to weaken this balancing loop.
Speaker 1:Obviously, this is just a very brief introduction of how system shapes our world and I have used some real-world examples to illustrate the point, which are not covered in the book. But I just thought it will be more interesting perhaps, or more relevant to you guys to know about how system dynamics can also be applied in our daily life and how we see the world. But I would suggest you to definitely go and check out system dynamics. I guarantee you, just even by knowing the basic, basic basic about it, it would totally change the way you see the world. It will give you an exponential clarity in how the world works. So I will include a link of a YouTube video which will give a slight more illustration on what we talk about the population example. So hopefully you can learn something from there. Okay, now we are at my thoughts. So this book is definitely fascinating and in today's episode I can only cover what I consider to be the underlying logic of the underlying logic, which is the ability to see anything at its essence despite all noises, and I think this is something that has always, always intrigued me.
Speaker 1:In fact, that's the reason why I took the class of system dynamics about 10 years ago, because I just wanted to find the truth, I wanted to know what's going on with the world. But I didn't realize, actually, a lot of the things or a lot of arguments that we heard, including academic theories where academic researchers analysis a lot of them actually has a false logic, either confused correlation with causalities, where, when you really think about it, what they say doesn't make a lot of sense. But I didn't know this until I took the class of system dynamics and be more careful at discerning what is causality, what is merely correlation. So this has really really widened up my perspective. So in this episode I could only cover this, but in the next episode we'll definitely dive into more of the underlying logics that the author has identified.
Speaker 1:I'm still trying to think what are the good cases I will share with you guys about the underlying logics that the author identified. But there are some fun things, like why the underlying logic of building your network and connection is not about what you can get from others but what you can offer them, and why effectively working extremely hard is the most efficient way to acquire any ability, or why any phrase is starting with why plus a statement is something to be wary of. But we will talk about it more in the next episode to see why you need to pay attention to it. I am really kind of worried that today's topic is a bit hardcore, but I really think this is very important and I really think having the idea of how system work will truly benefit you. So I hope you enjoy it and I hope you have learned from it.
Speaker 1:And lastly, for today's episode I would like to give a big shout out to my producer and my friend, lillian, for making this episode happen Even during the Lunar New Year holiday in Taiwan. Today is the fifth day of the new year, I believe, so thank you. So, so so much, and I wish everyone listening a happy, prosperous year ahead, and in this new year let's continue to grow and learn together and enjoy our bubble tea. In the new year we get to be the best version of ourselves, and don't forget to subscribe to our show. You can find us on Apple Podcast, spotify and YouTube. Now Also, type a book with bubble tea with Mira. Please give us a like or some comments. It will be a great motivation for us to continue.
Speaker 2:Alright, that's it. Let's continue learning and enjoy our bubble tea together. See you next time. Bye.