Hey everyone, Sam Ovens here, and today I want to tell you about systems thinking and how most successful people think. Now, systems thinking is something that has fascinated me for a long time, and I've always been looking at some people who are really successful, like entrepreneurs, but even employees and people who are really good at anything, and I've been trying to think, what really separates them? Why are they different? How come they can see things that other people can't, and what goes on in their brain? How do they think differently than normal people? This thing has fascinated me for a long time, and I've really tried to study it, and it's even become a point of obsession where I've been trying to figure it out.
After a long time, after years, I figured out that most successful people, it doesn't matter what field they're in, they're systems thinkers. What that means is they view everything as a system, and how they think through things and how they visualize things in their mind is interconnected systems, not linear like chain of cause and effect. I'm going to explain this to you in this video, and I'm going to show you how a systems thinker thinks. I'm going to show you how you can become a systems thinker, and how this has an immediate and profound effect on the results that you'll get in your business and in your life.
So first of all, like what is a system, and what is systems thinking? Well, it doesn't matter where you look in the world, the world is full of systems. They're everywhere. I'll give you some examples. Like we have the solar system. All right? That's what it's called, and it's called a solar system because there's all of these different planets and they all rotate around each other, and all of them affect what happens with other things. It's all interconnected. And the solar system is basically moving. It's interactive, and it's trying to balance all the time. All right?
And then within a solar system we have Earth, and then within Earth we have an ecosystem, right? That's what nature is. The ecosystem is what we all live in. There's trees that produce oxygen, and to do that, they need water which comes from rain and clouds and also the sun, which heats the earth, and then the water evaporates, rises up, forms clouds, drops down. It's a fascinating thing to look at because one of the best systems in the world ... Well actually, this is hands down the best system ever ... is nature. If you think about it, nature, it's smarter than any one of us on earth by a mile. We cannot figure it out. We still can't predict the weather. We still can't really predict anything, but nature is ... It continues to outsmart us all the time.
What nature is doing is it's all interconnected, right? You've got the sun, and that's interconnected by heating water that's in rivers and in the oceans on Earth, and then that's evaporating. It's coming and forming clouds, and then the clouds are moving around with wind and they're spreading rain into different areas, areas which might need water, and the sun is taking that water out of other areas that have a lot of water. So nature is trying to balance itself all the time.
Even some things that we humans think of bad. A classic example is like forest fires, right? It's fascinating. A lot of humans ... Well , most humans always thought forest fires are bad. And so what they did is they decided to put an initiative in place to try and stop forest fires altogether, and then what happened is they thought they were successful because they were able to stop some forest fires for a long time, but then what happened is one big, gnarly forest fire just swept through and just annihilated everything. Then in hindsight, they realized that those small bush fires that happen all the time, that's nature's way of getting rid of the debris that's on the forest floor so that it never piles up too high, and that it burns off and it causes small fires, and small fires are actually a lot better than one big catastrophic fire. Right? So by preventing those fires, they actually caused a bigger one, and this is a classic example of why nature is a lot more intelligent than us humans and it's the ultimate system.
It goes further than that. There's if you think into society and different humans and their interconnecting, we've got social systems, we've got a legal system. The legal system is different laws and how all of those laws interconnect. Social systems those are different social norms, and we've got systems for operating. If a human wants to interact in society, it's very hard for them to just make everything up and go out there and say and do whatever the hell they want. They won't be able to communicate with other people. They won't be accepted, and they won't really be able to integrate with the social system API because they don't know the protocols to call into that thing and communicate things.
So we have to learn all of these different systems in order to operate within the system, and as you start going deeper into this thing, you realize that everything is really a system. We've got a language system, we've got a numbering system. When we're educated, we learn the number system, which is just very simple numbers, and then we learn how to ... We learn a language like English or Chinese or whatever, and the languages are just built up of words and the interconnections of those words, and numbers are just made up of numbers and the interconnection of those numbers creates the system.
So we learned these elementary building blocks that then can be used to interconnect and communicate and do all of these things. Without knowing the number system or without knowing a language system, and without knowing the legal system or the social system, then a human being cannot operate in this world the way it is right now.
So you start to get my point, and then it goes even deeper. Like here's all of the ... This isn't even all of the systems within your body. You've got your immune system, your cardiovascular system, your respiratory system, your digestive system, and then you've got your reproductive system, and then your muscular system, your sensory system, your nervous system. Right? It goes on and on, and there's systems within systems, and when you really start to look you, you realize that all life really is is all of these different systems at all different levels and all of them interconnect.
Now why am I talking about all of this and how does this actually help you in business? Well, business is a system again. We've got an accounting system to try and figure out if we're making a profit or a loss. We have all sorts of online systems, right? There's Google, there's Facebook, there's ... And if you're going to use a software, like if you're going to use a landing page software like Click Funnels, that's a system. You've got to learn that system and what its components are and how those components interconnect. And what I've found is that the people who do really well as entrepreneurs, and really well in life as well, and our best hires, the people that are just exceptional, they're all systems thinkers.
Why that's important is these days I see a lot of people who are not systems thinkers. And what's the opposite of a systems thinker? Well, it's really like a component thinker. Right? And what that means is that instead of viewing the whole and how the whole has all of these moving parts and how all of these moving parts interconnect, they just see a piece and they just see this piece frozen in time like it's static, and all they know is this piece, but they don't know how this piece fits into a larger whole and changes and affects other things within the whole.
In business, the piece is never important. What is important is the whole and the wellbeing of the whole, and the whole is the business, right? So a classic example of this might be an accountant, and this is true. This is like ... Accountants are notorious for this. A lot of accountants, they're so closed-minded and narrow-minded that all they can see and think about is just like the P&L and balance sheet. That's all they see and they're just confined to thinking about things as accounting. So they might look at our expenses for Facebook ads and be like, "Oh, my God. This is stupid. Why are you spending this much money on Facebook ads? Why are you spending millions of dollars on it? This is a waste. This is an expense."
What that accountant can't see is that when we spend money on ads, we actually ... That's the action, right? Which is an expense. But then the reaction of that action is that we make a profit. Now, that's not always true. That doesn't mean that if anyone's spends money on ads, they're going to make a profit, but we do it in a way that does that. And so you know, you have to take your time to explain it to these people and they still really can't get it. And I'm like, "Man, what the hell is wrong with this person?" If I put $1 into a machine and $3 comes out, why would I limit my putting of dollars into the machine? That's what an accountant thinks you should do. Well, that's what a bad one thinks you should do because they can't see the bigger picture. They can't see how all of these things interconnect. So they just see expenses as bad, and they can't see how an expense can actually create income. They're component thinkers. They can only see their little thing.
Another example of this is basically a lot of employees who are just narrow-minded in their little area. So you might have someone in customer support who is answering support tickets in a particular way and doing things in a particular way, not thinking about how that's going to affect the larger whole. And you know they might think, "Oh, if I do this, then it might come back and affect finance, or it might come back and affect our live chat website team, or it might affect another team," right? They don't think about how all of these things interconnect. They just think things operate in isolation.
A lot of people think like this. They think that everything operates in a vacuum. And I see this, a classic example in marketing is people who just focus on their landing page conversion rate. They look at their landing page and they see a conversion rate and they see a cost per lead, which is a cost per email address. And let's say that number is 15% opt-in rate, and they might think, "Oh, that's bad." So then what they do is they start making changes to that landing page and they get it from 15% to 30% or 40% and they're like, "Oh, that's good. I improved that conversion rate there," but that's a component thinkers view. All right?
What a systems thinker would do is they would look at the whole, they would look at the health of the whole not the part. And so instead of thinking about a landing page, they would think about the entire machine, and where does that machine end? What's the ultimate measurement within this machine? Well, it's getting a customer and cost per acquisition and ROI, return on investment.
And so when a systems thinker makes changes to their landing page, they're not so worried about the landing page conversion rate. They're worried about the change to the cost per acquisition and the ROI, and this is how I do things. Like when I'm optimizing my landing page, I've taken it from like 18% to 40% and I've actually hurt sales at the end. A lot of people don't understand that you can do this. You can get an improvement here and kill everything here, where it matters. So where it doesn't matter, you can make an improvement, where it really matters, you can hurt it. It is more than possible, and I see this all the time where these things actually go opposite ways at different stages in the machine, and only really a systems thinker can do this.
Another classic example is a lot of entrepreneurs I see who just have really shitty customer support. They think that customer support is not worth anything to a customer. They think that that part of the business they should just farm out to some people overseas for like $500 a month for them to just do and figure it out, and it's an afterthought, right? Because all their money they think should be invested into marketing and other things because support doesn't influence income. That's how a component thinker would think, but a systems thinker would think, "Hey, if a customer buys from us and then they have a question, and if we answer that question poorly or late, or if it's not done professionally and well, if it doesn't wow the customer, then how is that customer going to feel? Probably pretty bad. And then if we sell something else, which we are highly likely to do, then they're less likely to buy something else from us in the future. So actually we're harming ourselves by offering shitty support. We're actually going to make less money by doing that."
That's what a systems thinker would think, and so that's why with my team, we've got well paid, well trained, full time, U.S. based people doing our customer support, and I obsess over it. I try ... I look at all of the numbers. I look at our happiness score, which is how happy people are and that is ... I looked at the standards across the board, and like Google and a lot of companies that are really good at this, they've got their satisfaction score at 92 happiness. All right? And we've been able to get to about 87, and that's pretty damn good. My mission is to get it better than Google's, and we're doing that. We're making it better every day, and that's actually had an effect on our sales. We make more money because our support's better, because when a customer has an amazing experience, and when they've dealt with other businesses like ours they've had a horrible one, then who are they more likely to buy from next time around? It's a no brainer, but only when you think like a systems thinker.
Also we obsess over the response time, how fast from when someone submits a ticket to when we reply. Right now we're at like two hours or two and a half hours, and I want to get that down. My mission's to get that to like six minutes, because I want it not to just be good enough. I want it to be exceptional to the point that our support becomes a marketing and sales tool in and of itself. That's systems thinking. Everything can be used to do anything because it all interconnects. All right?
Now, I want to show you how a system basically works first and foremost, because it's pretty simple. Everything in the world works like this. So you've got inputs over here, and inputs are what you put into a system, and then you've got processes in the middle of the triangle, and the processes are like what happens with those inputs. It's how you're manipulating and combining and changing those inputs to produce something. And then you've got on the other side the outputs, and that's all really a system has: inputs, processes, and outputs. But then there's something that influences a system, and that's the environment, that's the sun up here. Because like I said, nothing works in a vacuum. Like when you're building out ... When you're doing anything, it's not like it's not affected by something else. Everything is always running in a vacuum.
A classic example of this is like you're ... Imagine you as a human, and you've got your ... You're a system. A human is basically a system, right? You got all of these different components within you, and then you've got all of the interconnections between all of them. Now if you want an output out of yourself, which is good, like if you want to be happy and if you want to perform well and do good work and be focused and all of that, then if that's the output that you want, then the inputs matter. You know, if you don't sleep properly, then your output isn't going to be very good because sleep is a really important input. If your food isn't good, then your output isn't going to be very good.
Just to show you how inputs actually affect outputs, just try having like 20 beers as an input, right? Just try to drink 20 of those and then see how sharp you are. You won't be. So that's just, right there that shows you that what goes in affects what comes out. And there's this saying with systems, garbage in, garbage out. What we put in is often what we get out.
And then we've got the environment which affects us too. Humans are really influenced by our environment. One of the largest influences of our happiness and things is the weather. If it's sunny, we're statistically more likely to be happy, just if it's sunny. If you don't believe me on this one, then look at the most depressed countries in the world, and it will be those ones over like Greenland, Iceland, where they don't have any daylight for basically all ... like most of the year. Then if you look at some of the happiest places, then you'll notice that it's places with really good weather.
There's even a trader called Paul Tudor Jones who even has developed a stock trading algorithm that basically looks at weather patterns and humans' reactions to weather patterns, and it trades stocks based on that because humans are more likely to feel good and make optimistic bets when it's sunny. We think we're logical, but we're affected by the sun. That changes this our decisions. All right?
So we've got inputs, outputs, processes, we've got our environment, and then we have feedback. What feedback is, is outputs actually affect inputs, right? So all of this stuff is interconnected. A classic example of this is if you have ... Just think about a crowd forming. So if there's like some sort of dance party or music event or something like that, and let's say that no one is dancing and it's just an empty field, then one person goes in and starts dancing. That one person is going to be by himself for a while, but then as another person comes in, then people slowly start coming in faster and faster because a crowd's now forming. Then as soon as a lot of people start running in, a lot more people start running in, and then a lot more people start running in, and it grows exponentially. This is a classic example about how outputs come back and provide feedback to inputs.
This happens the same way on the way back down. If a lot of people start leaving a dance circle or whatever the hell you call those things, then a lot more people start leaving, and it decreases just as fast as it increases. That's basically how it works.
Now, one thing, this operates everywhere. This is what we call a feedback loop, when the output of something directly affects the input of something. A classic example of this is the stock market and stocks. So the biggest influence on a price of a stock is the price of a stock. So if a stock price is going up quite fast, then that's going to influence more people to think, "Oh, this is good," and then the people who put their money in, they're going to be like, "Oh, this was the right decision." So they might put more in and tell more people, and then you get your bubble, you get your bit coin sort of event because of the feedback.
So that's basically how systems work. So you don't have to be like an Einstein or a NASA space scientist to really become a systems thinker. All you do is you just think about inputs, outputs, processes, feedback, environment. So you want to think in yourself. Like if you ... What outputs do you want out of yourself? Do you want to do really good work? Do you want to be healthy and fit? Well then you need to have good inputs. You need to be good, you need to eat good food, you need to sleep, and more than the physical things, you need to put good information into your brain. If you don't ever read anything or watch anything or consume any form of information, it is impossible for you to know anything. All right? We're not just born knowing stuff. We don't know anything when we're born, other than some survival instincts which are programmed into us from our evolution, but that's really it. If we want to learn something, we have to have inputs.
So smart people will often read books. That's how they learn, and then they'll often watch good sources of information. They won't be watching the news and they won't be reading the newspaper and they won't be watching like Game of Thrones and binge watching Netflix because that doesn't really teach you anything, right? But instead they'll be reading books and they will be doing experiments and learning, and that will be the input into their brain, and then obviously the output is knowledge, right?
So it doesn't matter where you look, everything is this simple. If you want to be healthy, eat well, sleep well, drink water, exercise. Those are the inputs. The outputs are health. If you want to be knowledgeable or smart at something, read good books, practice, learn. Put those inputs in, intelligence is the output. If you want to grow a business, well then you've got to think, what are the inputs, processes, and outputs?
This is basically what I broke my business down to. I realized inputs are basically ... is web traffic, so people becoming aware of what we're doing. Those are the inputs, traffic, number of human eyeballs coming through on the Internet. That's the input. What is the process? Well that would be like right now it's my automated webinar, so a webinar that shows people a presentation, explains what it's all about, and sees if they're interested. What is the output? Well, it's like a customer. Someone signs up or not. Then what's the environment? Well, the environment there's changing PPC prices, like the ... Oh, sorry, the CPC prices. So those move up and down, and there's also a competition. If someone comes in and they're doing something better, then that massively changes the environment, right?
So this doesn't just run in isolation in a vacuum. It is affected by a lot of other things. And so a good systems thinker will first and foremost create a basic elementary system where you've got inputs, processes, and outputs, and they will test it at a small scale to make sure that it delivers the desirable outputs. What is that? Well, it's customers at a profit. So if I spend a grand, do I make more than one grand? Do I want to make at least two grand? So if I put a thousand in and I get a bunch of clicks coming through, do I make more on the output? If that is true at a small scale, then it should be true at a large scale, and then we just keep scaling it up until we get to more than 120 thousand a day. All right? It's as simple as that.
We don't do some weird magic to just scale it up. It has to be inputs. It has to be an increase in inputs to move that thing up. There is no magic. Magic is only things that people cannot understand, and this is what it is.
There's also feedback that comes from that. If someone comes through our program and gets good results, then they will tell people about their results, and then more people are likely to buy my program because it's been getting people good results. Then when they tell more people and more people join, then that's more people who are likely to have good results. And so when they have better results, they tell more people, and you see what happens here. We have a crowd forming sort of a phenomenon.
But the environment is also playing a part. We have to watch what's going on with the Internet and with CPC prices, different channels, different competitors, different strategies, all of these things that are influencing it. That's basically how I view my business and in every different part within the business, and it's how I view myself. It's how I view everything. I've been doing it for basically my whole life, but I didn't really know what it was and I couldn't put a name and a word to it, and it's systems thinking.
Now you're probably thinking, "All right, I kind of get this," but now I want to make it really clear to you just the main tools and the main points of difference between a normal person and a systems thinker. So here we've got tools. So the first thing is disconnection and interconnectedness. Top left. And a normal person thinks with disconnection, so they're thinking that everything is different and it's not interconnected. So my customer support team has no effect on my sales, and my marketing has no effect on my customer support, and customer support and my marketing have no effect on my finances. All right? It's pretty messed up. That's honestly how they think. That's like doctors who treat a specific symptom without understanding how that's going to affect other systems within your body.
Then we have, the next one across is ... So good systems thinkers always see that everything is interconnected. There is no such thing that isn't connected to something else. It is through multiple different dimensions. Everything is connected, all right? And then linear versus circular. So normal people, they think that everything happens linearly, and what I mean by that is that an event happens now, that affects an event that happens there, and then that affects an event that happens there. But what they don't understand is that's not what really happens. Otherwise, how does a crowd form exponentially? How do stock prices grow exponentially? How do we get any form of exponential behavior when things happen in linear cause and effect chains, right? It's impossible.
The only reason why a crowd forms faster and faster and faster is because the more people that are joining influences the more people that are joining, and like I said, one of the biggest influences of the price of a stock is the price of a stock, and if it's going up, it's more likely to keep going up, and if it's going down, it's more likely to keep going down. All right? So that happens because there's a feedback loop and the things happen in a circular sort of way, not in a straight line, not in a linear sort of way. So that's important to understand.
Then the next tool is silos versus emergence. So normal people think that everything happens in a silo, and they like to really trap everything down and bolt everything down and force things to happen the way that they wanted them to and only that way. Now, let me give you an idea of this. This is a tougher one to understand, but when you really understand it, it will help you in a big, big way. So emergence is basically letting ... Well, emergence basically is complex behavior that arises from simple rules. So if we look at like the formation of birds when they're flying, it looks very, very complex and like a form of art, right? And we'd probably think there's something very sophisticated going on there, but really it could just be a very simple rule that the birds have, which is don't collide. Based on that simple rule, we get this amazing pattern and behavior in the formation of a bird and in the formation of a flock of birds.
The same happens in business all the time. Like you don't need to control everything. You can just set some simple rules and then let emergence happen. A perfect example of this in my business is we don't tell people what niche to pick. We did this before, back when I didn't understand things so well. I used to tell people these are the top 12 niches in the world. I don't know who I think I was to be able to make a claim like that, that I actually know that, which nobody can know. Anyone who claims that they know the top niches in the world is ... They don't understand how life in the world works, and the reason why is because ... I'll give you an example of this, and this is fascinating.
When I was at school, a lot of the social norms and what society had kind of tended to believe is that trades and being a plumber or a carpenter or a builder or an electrician, they started to believe that doing these things is not considered successful. They were like, these things became frowned upon, and if you really wanted to be successful, oh, you got to be a doctor or an accountant or a lawyer. These people are good, worthy people. These people are not good. All right? Which is kind of messed up.
So a lot of parents would say that to their kids, and a lot ... So then what happens, right? And they probably thought that at that time. This is how people don't understand systems thinking. At that time, doctors and lawyers and accountants probably made more money than tradespeople. So they were like, "Oh, okay. Well then we should tell everybody to do these things because they obviously make more money, and if they do these things, then they will be more successful than these." Nothing works that simple, right? So then they tell everyone to do these things, people stop going in and starting these sorts of trades. Then what happens with time is that we end up in a market where there's too many lawyers and accountants and not enough tradespeople.
So back home in New Zealand, this is happening right now. I know this well because I've got friends that are accountants and lawyers, and I also have friends that are tradespeople, and my dad was a builder so he knows this well too. Right now in New Zealand, carpenters and builders and plumbers and electricians make more money than accountants and lawyers. This is the way it is. And not just a little bit, but a lot more. So right now if you work for the top law firm and you've got first class honors in law and all of this stuff, and then you go and get a job at a law firm, right? Then you're going to make less money than if you're just a carpenter or a plumber or an electrician. So the tables have turned, and this is because people didn't know how to think.
If you skew the evolution of something like that, it's going to change, and that's what happened. My point with this is, a lot of people don't understand when they're teaching a course and telling people what to do, if they tell people to all do one thing, then as soon as everyone is doing that one thing, then it stops working because the only reason why it was working in the first place was probably because there wasn't a lot of people doing it, so now that a lot of people are, it loses its edge. Now it doesn't work as well, and now the whole business blows up and the tactic and strategy is no longer useful.
Same thing with niches. If I find at a point in time that the best thing to do is helping dentists with Facebook ads, then that might be true right now at a moment in time. But if now I teach 10 thousand people to do Facebook ads for dentists, it's not the same anymore. It's the same phenomenon we saw with the doctors, lawyers, accountants and the tradespeople. Right? So as soon as I started to learn this, which was years ago, I stopped telling people what niche to pick because I didn't know anyway, and I know that the best form ... or the best niche to pick is something that is unique to you individually.
As soon as I started doing this, people came up with the most amazing niche ideas, which I've never seen before in my entire life. People started doing porn addiction consulting, like Hunter Otis. When he did this, he was way more successful. We have got people who do consulting on irritable bowel syndrome. We've got people who consult on family crisis intervention. We've got people who consult on losing weight and in all of these different unique things that I would have never thought of that actually have turned out to be extremely profitable for all of these different people. It's because they're unique and it's because there is emergence happening.
What happens is when you stop siloing things ... Siloing is telling everyone that they should all do Facebook ads for dentists. Siloing is telling everyone that they should do law or accounting. Emergence is letting things evolve for themselves and creating diversity and really letting things flower, and that's a huge strategy and tactic that I've executed in my company that's helped us get to where we are today by removing the siloing, letting emergence happen.
Another one is parts and wholes. So like I told you, it's like the typical business owner who thinks customer support doesn't affect the whole, it's just something that should be farmed out to somewhere for cheap. It doesn't. Every part affects the whole. And quite often, the whole is only as good as its worst part, so it doesn't matter how good all these other things are. If one part's rotten, the whole is rotten. It's all about having the whole operating the best it can.
Then we have analysis and synthesis. So analysts that just view one core component without viewing the entire interconnectedness of all of the components, they're not very good analysts. A perfect example of that is the person who looks at their landing page and thinks that by improving their landing page conversion rate that they are improving their whole business. Not true. I've seen that the opposite is true a lot of the time. So that's an example. I can view the whole and the synthesis instead of just individual component analysis.
And then isolation and relationships. So a lot of people think that things just happen in a vacuum, but a systems thinker will understand that everything is interconnected and everything has relationships with other things. For example, my mood is affected by the weather. So if it's sunny, I'm going to be happier. That's like a fact. And then if I'm happy, I'm going to do better work. And then if I do better work, then we're going to make more money and help more people. So if we trace that back, the weather is actually quite important. So is my food. So is my diet. So is my exercise. If these inputs are off, my mood isn't very good. If my mood isn't very good, I don't do very good work. If I don't do very good work, I don't help my customers. If I don't help my customers, I don't make much money. So all of this is interconnected. You can start to see what I'm saying here, all right?
So some action steps for you to take. How do you become a systems thinker? Well, you want to start thinking of things like this. I recommend that you take a screenshot of this thing. Actually, I'll include a PDF of this beneath this video for download. So just go beneath this video, find this link, grab the PDF, print it out, put it on your wall, learn to see everything as a system and learn to see what are the input ... If you're analyzing anything or trying to troubleshoot or diagnose anything or fix it, make it better, just ask yourself, what are the inputs, what's the processes, and then what are the outputs? Is there feedback present? If so, what is it? Is it positive, is it negative? What's the amplification of this feedback? And then the environment, what things or forces are influencing this and in what sort of way?
Understand this, and then it makes everything so damn easy. I mean, I guess it doesn't make things really easy, but compared to doing it without this, I mean, yeah, it's like putting on glasses after being blind and then learning to see. You know? If you do this, it'll make you learn to see.
So if you enjoyed this video, what I want you to do is just click that like button. Also, let me know what you thought of this video in the comments section below. I'm going to be checking these comments myself personally, and if you've got any questions about systems thinking or how you can be a systems thinker, let me know in those comments. Also, subscribe to my YouTube channel. If you liked this video, I release one of these every single week, as well as customer interviews and other things that will help you on your journey of becoming an entrepreneur, or if you're already one, becoming a better one. So thanks for watching this video, and I look forward to seeing you in the next one soon.