257: How to Become a Friction Fixer with Huggy Rao

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Whenever you're making a one way door decision, put in good friction in the form of obstacles to slow you down. And when you're making decisions where the cost of failure is pretty low, make things very easy for people to do because you can easily change it. It's not a big deal.

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Welcome back Free Timers. I am so excited to have Huggy Rao here with us today. He's a Professor of Organizational Behavior at the Stanford Graduate School of Business and a Fellow of the center for Advanced Study in Behavioral Science. He has all kinds of experience writing for Harvard Business Review, BusinessWeek, the Wall Street Journal. He's the author of Market Rebels and co author of the best selling book Scaling Up Excellence. Today we're talking about his new book, also co authored with Robert Sutton, called the Friction How Smart Leaders make the Right Things Easier and the Wrong Things Harder. Huggy, welcome to the show.

Thank you so very much Jenny for inviting me to share some ideas. Very much looking forward to our conversation.

Well, I was telling you before we hit record, I'm a longtime reader, first time interviewer, so thank you. I really appreciated Scaling Up Excellence when I read it, even though I ultimately decided to scale down with my delightfully tiny team and media company. So much of scaling up, down or sideways is about eliminating what you call bad friction. And then I was a little surprised to learn that you say there's also some good friction sometimes. So can we start by you outlining what is the difference between bad friction and good friction?

Friction as we know Jenny, means an obstacle for Bob and I. When we think of bad friction, we think of obstacles that infuriate people. And what this bad friction does is it prevents small business Owners, their associates, and the others from choosing a more curious and generous version of themselves. Because you're just not down by all of these obstacles. At the same time, one of the things we came to realize is friction can be good. How so? Because we, as small business owners or founders or employees, we can easily choose an overconfident and myopic version of ourselves. So what we need to do is we need to slow down decision making. And that means we need to put obstacles. What kinds of obstacles? Obstacles that force people to deliberate for, think, listen, question. So for us, that's the difference. Maybe I should actually talk about the journey that led to this book. Initially, after we wrote Scaling Up Examoons, one of the things we realized was there was tremendous burnout in organizations. People would come to us and say, you know, huggy, I work in a frustration factory. And I'm thinking, my God, and what a terrible thing to say about work. And if you permit me to be a tad more colorful, one person completely stopped me when he looked at me in class at Stanford and said, professor, he said, I'm swimming in a sea of shit, but barely got my head above the water, and you are asking me to show initiative and generosity. How do we do that? And that was kind of when we launched into the study of bad friction. But as we were doing this study, we also realized all friction isn't bad. Friction in many ways is like bacteria. We got good bacteria, we got bad bacteria in our gut, we've got good cholesterol, we've got bad cholesterol. Similarly, we have bad friction, obstacles that infuriate people, that actually destroy curiosity and generosity in companies. And what good friction does is it slows you down just a little bit so that you're not myopic. You don't actually pull the trigger quickly. And instead what you do is you check your overconfidence at the door. That's kind of the whole point of the book and what the implication is. If I'm a small business owner, what should I do? I should make the right things easy for people to do. Take bad friction. But then we can also do wrong things. I've got to make sure we make the wrong things harder to do.

I love that framing. You'll share in the introduction, a story from Ed Catamo, who was the president of Pixar, in a great example of sometimes things being too efficient. So he was kind of talking about these executives, or nowadays private equity companies, they come in and they complain how much money and time the company's wasting, and they try to get everything to like, they squeeze all the creativity out for the sake of being more efficient and streamlined. And he said that if Pixar followed that executive's advice, it would kill the goose that lays the golden eggs, that the goal isn't efficiency, it's to make something good or even great. We iterate seven to nine times with friction in the process. So how does friction help with the golden goose, the creative goose in this context?

So it's very interesting if you really take a look at Pixar. Where does the friction actually come in? Take for example, Brad Bird when he made the movies such as Ratatouille and so on. One of the things is when they would make movies, they would have lots of people in the room, including people from finance. And so what you were always kind of trying to do is, hey, do we really need to do this? Do we need to do this in a different way? How many tries should we have? And can we learn faster and get better? And that's like an example of friction. Good friction. Another quick example of good friction. Maybe I should talk about what I do at Stanford. I teach MBAs. I teach a class called Startup to scale up with a couple of venture capitalists, which is great fun. And we have a final exam. The final exam is a source of friction, as you can imagine. How do. Our MBA students are very bright and very capable. How do they view the exam? If I gave them a case study with 25 pages to read and 10 pages of exhibits and a bunch of calculations to do, their response typically is, why do I need to do all of this so that you got to give me a grade? I'm not learning that much. So you can see how bad friction is actually dampening curiosity and generosity. Instead, what do I do? Actually, for the last 17, 18 years, every year I called a student from a previous version of the class who's scaling his or her startup. I say, come to class. Talk to these students about the three biggest problems you face in your startup. Take 20 minutes to describe these three challenges. I'll allow 10 random questions. Then I tell the students, that's your job. You got to help this founder. Question one, 200 words. Question two, 300 words. Question three, 500 words. And it's amazing. The students work throughout the week and why. The first thing is I've engaged their help drive. They want to help an alum, not anybody but a GSB alumni, and they want to be like the founder. So all of these things play a role in them being very, very Thoughtful, very careful when they make these recommendations to the founder. That's a very simple example of creating good friction. I could give you more. And there's a venture capital company where they have a five person investment team. Do you know what the rule is for this VC company that I shan't name? Their rule is if all five people agree, they're never going to make the investment.

Really?

So why.

And you say, hey, if five of us agree, it means it's a great idea. That means it might have already been done, we don't know about it, or somebody else is doing it that we don't know. And their view is they're only going to invest when there is disagreement in this committee and you ask them why and they'll tell you innovation is controversial. How can you actually invest in controversial ideas if there is no controversial difference in the team making a decision? So this is another example, a simple one of introducing good friction, if you will.

Well, that reminds me, you give the example in the book of Elizabeth Holmes and then more recently Sam Bankman Fried, where they were able to pull one over on venture capitalists and their investors. And, and in a way the fact that they got so easily greenlit might be an example of where we needed to have more friction in the process of funding these types. And that's kind of a moment for venture capital companies probably to examine their own practices and say, where do we go wrong? Where do we need to introduce more friction into this decision making process? Because they missed them. Those are pretty big misses. It's not that they have to be perfect, but. But I would think that there's a systems problem there in terms of the level of friction needed to make really smart decisions.

I love that swift connection that you made to both Sam Bankman Fried and Holmes. It's kind of funny. As soon as you made the connection, I was thinking of a simple study we were doing with graduate students here at Stanford. So here's kind of what we did. We asked them, we said, hey, take a look at all the Bay Area startups, look at their mission statement, vision statement, any public document that you can get your hands on. And using large language models, quantify their emphasis on speed, like how important is speed as part of their business model or whatever. And then we said, okay, now that these students came up with a number, we said, great, now that we have the number, let's actually go and figure out how fast. What's the relationship between this linguistic emphasis on speed and the time taken to receive a unicorn valuation? In other words to get a $1 billion valuation. Predictably, the students came back and said, hey, the more you emphasize speed, the shorter the time for you to get a unicorn valuation. They said, isn't that great? And I said, hold your horses, let's do another analysis. And I said, now that you know the time taken to receive a unicorn valuation for these startups, show me the relationship between this time taken to get a unicorn valuation and the probability of lawsuits two years down the line. And guess what? The faster you become a unicorn, get a billion dollar valuation, the more likely you're going to face legal liabilities two years down the pike. And why is that the case? And this is the problem. Speed is sexy, speed is great. But sometimes what you gotta be careful of is when you talk all the time about speed, people give themselves the license to cut corners.

And that's the problem. In fact, I would submit the real challenge, I think, is time poverty makes us do bad things.

We'll be right back just after this.

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It's interesting, you bring up time poverty and that connection. And then also I couldn't help but think of the line in the book where you were asking who has real decision making authority in a company? And somebody answered, the people who can get away with wasting our time completely. You have time poverty, you have time thieves, then you have like time dictators, you know, maybe like the fraudsters who actually are so belligerent in their need for speed and growth at all costs that they cut corners. And then both the people we're talking about were convicted of fraud on all counts, like it was unequivocal.

Indeed. And the irony of course, is, at least in the case of Elizabeth Holmes, the implicit promise to customers is we'll take friction out, we'll make things faster for you. And then we realized it was kind of vaporware, which was the difficulty. And I think, you know what I'd really love your listeners to think about insofar as they themselves are concerned is the first thing is they ought to think of themselves as trustees of other people's time. And the other person could be the customer. It could be your partner in the small business you're engaged in. It could even be a family member who's involved in the small business. Whoever is so involved in the family business is you as the founder ought to think of yourself as a trustee of other people's time, which means the organization and the company that you're building, you should actually think of that itself as a product. You may be selling a product to customers, you may be selling a service to customers, but remember, your organization is a product of the people who work in the organization or the company you're seeking to build. So think of it as a product. And often we don't actually do. And that is the sad tragedy.

I love this idea to think of yourself as a trustee of others time. It's so aligned with the ethos of free time and including your team members, like clearing obstacles for your team, for your clients. And I love what you said of don't forget your company is product as well, especially for the people working with you in it. You talk later in the book about grease people versus gunk people and this just made me laugh because of course we're thinking about the machine that is the organization. And you say organizational design is the highest form of friction fixing. But that is it true that there are two types of people? Can we be both? Or is it better that if we're one or the other a grease or a gunk person, we find people to compliment us.

Often we're asked, are they two types of people, grease people and gunk people? We may see them as two types of people, but for many of us we have the grease self, if you will, within ourselves. And we have the gunk self also within ourselves. The real question is what is it inside the organization that's activating the gunk self?

Can you define what each one means? Grease versus gunk?

Oh, wonderful. Greece people are connectors. They like to make things easier. The simple way to think of Greece people is WD40. You look in your organization or company and say, who's like WD40? Making it easier for customers, suppliers, everybody to do things. Gunk people, they're Kind of a rule bound. They're kind of a procedure bound and so forth. And we think of them, as I mentioned, as two very different kinds of people, but they're two different cells. And I think part of what we need to do is we need to kind of make sure we recruit more of the Greece self, if you will, in everybody. That will make things very, very easy. One of the examples we talk about in the book is in the state of Michigan. I mean, you look at their application for welfare. Oh, my God, it's like climbing Mount Everest. So many questions and such intrusive questions, including one that asks you to declare the time at which your child was conceived. I mean, what an absurd question to ask. How is that going to help you make a decision anyway? You can imagine what you're doing is you're just making it needlessly, needlessly difficult for people. That's an example of gunk people designing things. The problem with gunk people is when they design things, or when our gunk self rather is activated, we don't think of other people. We don't mentalize. We don't understand what's their mental state, how are they thinking. That's the theory of the mind part. We also don't empathize. We don't understand emotionally where they are. They all seem anonymous and so on and so forth. And as a result, you just don't think about them. And that's why you put in procedures like this. When our students were working with the executives at Michigan in their welfare department, one of them, much to their surprise, they realized people actually wanted to make me better. So they had a Greece self too. There was a supply of Greece people too. If I'm a small business founder, what should I do? I need to basically kind of make sure that in my sales team, in whatever I do, I'd love to have Greece people on the sales side, but maybe it's important to have a gun person or two on the accounting side just to kind of make sure you're doing the invoicing right. Procedurally it's correct, and you're keeping track of where your money is and so on. So that's like an example of what a small business founder can do. There's like one other thing that I wanted to dial down for our audience, and that is not only should you think of yourself as a trustee of other people's time, not only should you think of the organization as a product, you should also think of your role as that of an editor in chief of A movie or a newspaper. What do Editors in Chief do? They take away stuff that distracts, bores, and frustrates readers. But they make it harder for reporters to publish, too. Right? You have to have investigation, you have to have sources, and you have to have evidence. And you can't be speculative. So you really have to think of yourselves as editors. And if you think of yourself as editors, the natural thing for any founder, they must be working super hard, long hours. But one of the tragedies is we work so hard, we do all of these things, and when we go home, we are only left with scraps of curiosity and generosity. And that is tragic. Don't you think, Jenny?

Definitely. Well, I appreciated how in the book you say you're smitten with the book subtract, which is the science of doing less. And so you read my mind. Because it's not just optimizing for good friction and removing the bad, it's also sometimes doing less. Like maybe the meta. Removal of friction is simply eliminating something altogether when need be, which a good editor in chief would be doing as well. They're cutting paragraphs from the columns, they're cutting whatever doesn't fit. They have to be really discerning.

That's exactly right. People listening to our conversation, they can actually think of subtraction as mowing the law, because that's what subtraction is. The problem is, for a lot of people, subtraction is one and done. Oh, I got rid of that cumbersome procedure. Well, that's not done. I mean, how often do we mow the loan? I would assume pretty regular. So if you don't mow the lawn, what's the problem? Weeds are going to overrun the place, and you can never plant fruits and flowers and vegetables and all of these things in your garden. So founders have to think of themselves as people who are mowing the lawn and doing that every day. And a simple way to start is maybe the rule of halves. Hey, what if you only had 50% resources, how would you organize yourself? What if you only had 25% resources, how would you organize? Again, you can see that these questions, they slow decision making down and make you think of moving.

Yeah, I wanted to ask you about the rule of halves. So you just gave a few examples. I had one fascinating conversation earlier on this podcast. I'll put the link in the show notes. My friend, and he's an author, Steven Shapiro, he wrote a book called Invisible Solutions. But he challenged himself for over a year to only work two hours each day and Sometimes one hour. In a way, that was a rule of tense. Yes, but it really helped him focus. So how could somebody listening, let's say as they go into the next week or month or quarter of work, what would it look like to apply the rule of haves here?

The first thing is you should really begin doing a calendar audit. I mean, that's like a simple place to start. What do you spend your time doing? And the question is, if you're spending your time fighting lots of fires, maybe that's not the most useful thing for you to do. And part of what you also have to do is once you look at what you're doing and most important thing is for everybody to realize we don't want our time to be spread thinly like peanut butter on a slice of toast. If it's so thinly spread, you're never going to actually have impact. Or rather, it's very unlikely that you're going to have impact. You're going to have impact when you actually concentrate your efforts. And the thing that you have to concentrate your efforts are on things that are actually closely tied for our audience to winning. You got to win clients, you got to beat competitors. That's kind of what growing a small business is all about, isn't it? And you gotta always ask yourself, how much time am I spending on activities that directly are connected to wheat as opposed to plumbing, et cetera, et cetera.

Yeah, so many good metaphors.

We'll be right back just after this.

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In free time. I share a process for moving from friction to flow. And in the book it's align design. Assign those are the three stages. So it's kind of challenging us to realign the work, just like you said, with what we consider winning and then designing process and ideally delegating and doing more of that. Specifically, a lot of business owners and a lot of leaders seem to get stuck on the delegation piece of. There's a lot of friction sometimes in trying to get things out of your head and into someone else. I mean, that is the work of leadership and management. So what do you think creates so much friction when it comes to delegating the work? And what do you think is a way to grease those wheels a little bit better?

If we look at the research, the reason why people are unwilling to let go is they overvalue the the importance of their monitoring. They think, hey, if I've monitored something, if I've overseen something, the outcome is better. It's simply, it's your ego that's kind of involved. So what are simple ways to kind of delegate? Let me start with the simplest and perhaps most amusing way. I was talking to one small business founder and I said, hey, when do you go to work? He said, 11:30. I said, 11:30 sounds awfully late to go to work, don't you think? And he smiled and he said, huggy, if I go there at 9, all of my subordinates are going to come and quickly give me the problems they're dealing with and ask me for their advice. They're never going to make decisions on their own. And my way of forcing them to make decisions is not to show up. And then this is also my way of making sure I'm not over monitoring them. So he's kind of putting, if you will, a time cordon around himself is one simple way to kind of think about it. Another thing is what you sort of want to do is it's not monitoring that's the important thing. In other words, it's not supervision that's the important thing. It's help that's the important thing. See, when you got people working for you, what's your job? If you think my job is, hey, I'm going to tell them what my goals are. I'm going to give them incentives. Bob and I sort of think of this as the air war move. It's not going to do anything because winning is a ground war. What's an air war? You're very remote, high up in the air, dipping in and out. You don't really understand what's going on. By contrast, a ground war is messy, lots of people involved, also casualties. And the Most important thing in a ground war is not incentives, but tools. I think what this means for our founders is and owners of small businesses is all the time you've got to ask yourself, hey, if I'm a trustee of other people's time, I got to help them with tools.

And the tools can be the simplest of things. They could be more complicated. But the most important thing is making sure you actually give them help. Let me give you an example, perhaps for our viewers. My colleague Jin Wong wrote a beautiful case study about a company called Tamagoya. Our listeners may not be aware of this company, but what Tamagoya does is. Tamagoya sells lunch to businesses in Shinjuku in Tokyo. Typically, the lunch is in a bento box. It's around $4 or so. You got some sushi, you got some vegetables, and you got some tempura and a few other things. Now, the amazing thing about Tamagoya is their customers are in Shinjuku, and the place where they assemble these bento boxes is four hours away. But yet they open for business every day at 9. The last order should be telephoned to them by 10, but they gotta deliver everything by noon, which is astonishing. I mean, if you're so far away, how are you gonna do that? What is the wonderful way in which they do it? We asked the founder, how do you do this? Do you have some kind of artificial intelligence, or do you have a complicated forecasting system? He said, no, I've just got my drivers who go on different routes. So we said, who are these drivers? He said, well, they're not just drivers. I like to call them CEOs of their own route. I said, what do they do? Well, he says, first, they have the right to choose customers. If you as a business want to come and tell the CEO of a route, I want to buy food from you for my people, then say, we'd love to help, but we got to take a complicated U turn at this intersection. It's going to delay things for a lot of people. I'm sorry, we got to take a pass. So the interesting thing is they deliver the food in bento boxes, which are wooden. They deliver them at noon. They come back and collect them in the afternoon at 3. When they do that, they quickly see what is uneaten, what is left over. They understand the feedback from the customer. They talk to the customer, and the customer says, you know what? Tomorrow we're having a big meeting. We might need 30 of these lunchboxes that evening itself. All this information is actually relayed back. So what that means is when the factory where they assemble the food, it opens at 5, they already know 60 to 70% of the demand. They've already begun to ship everything to people. The remaining 30%, they've got like trucks that move around and they can be diverted anywhere where there is an emergency request or a supply need. The amazing thing, Jenny, is every day they deliver 70,000 lunches every day. Do you know how many lunches are left over? They're not thrown away because gas stations instantly buy them up. Every day around 47 lunches are unused. Can you imagine doing that? 70,000 lunches at 47, all with people.

That's incredible.

No computer system, just phones, conversation and listening.

That's incredible.

He came here to Stanford. We said, wow, you're doing so great. And to your point, we asked him, why aren't you expanding to other cities? Why don't you serve more than 70,000 customers? And he looks at us and says, well, If I serve 70,000 customers, more than 70,000 customers says, I can't keep the price, I can't keep the quality. And the students asked him, but you're going to Dubai, aren't you, after this talk? And why are you going to Dubai? Are you thinking of that as a place to start this? He smiled and he said, I'm going to Dubai because I've never been there.

I love it. That's so good. And just such a great example of keeping his values and debunking the myth that we always need to grow just because we can. That's certainly something we talk about a lot here. Last question before we officially wrap up with our permission slip. You talk about being a friction fixer at any level of the organization. Now, in spite of my best, let's say, my biggest desire to be a friction fixer in the world, sometimes I'll be working with a very bureaucratic client. So I laughed when you were talking about the Stanford process of approving a professor's promotion or hiring decision. And I will get stuck in another company's procurement labyrinth or the check that they owe me is delayed by five months. And they're a huge conglomerate. And it feels in those moments torturous, like there is nothing I can do without being a jerk to move things along when I have these huge corporate clients that, you know, on the one hand, I feel very lucky to have when they come in. And then sometimes, though, the bureaucracy is just soul crushing, as you described.

So.

Well, what do we do when we are faced with a friction mountain such as These, that does feel so hard, so intractable. Because even, let's say the point of contact that I might be working with in the company, even they feel that their hands are tied to do anything about it.

My simple sort of response is for starters, see if you can recruit grease people in your client organization to help you out. The more Greece people you know, maybe the more you can do. That's certainly one thing that you can do. The other thing you sort of want to do is you really want to ask yourself, what's the cost of serving a client and is it really worth it? And that's like a question that you should think about. Oftentimes what happens is people love to serve large corporations as clients. But the problem with large corporations is they drive the price down and they make it really hard for you to get your money back, right? And so that's kind of the problem. You gotta ask yourself, are they the right people for me to serve? And one of the things and I'd like your founders to walk away with are two lessons. First thing is don't be customer compelled. A great company says yes to a bunch of customers and no to others. So you gotta ask yourself, you don't need to chase every customer. Those would be my responses given the specific scenario. But the other thing is a friction fixer is you have to do a simple test of what we call friction forensics. A very simple place to start is ask ourselves, hey, is this a one way door decision I'm making? That means it's a very costly to reverse decision. Hiring a senior person, buying another company, launching a product, all of these are like difficult to reverse decisions. On the other hand, there are a bunch of decisions where the cost of failure is very low. You know, you can easily reverse a decision and all that. And our recommendation is whenever you're making a one way door decision, put in good friction in the form of obstacles to slow you down. And when you're making decisions where the cost of failure is pretty low, make things very easy for people to do because you can easily change it. It's not a big deal. But the most important thing I think in the end is when you do all of these things, what you're doing is you're actually unlocking the potential of your people instead of stacking them like Firewood company.

Very well said. So with that huggy, if you could give leaders, business owners permission to do something differently or drop something altogether, what would it be?

I recommend that they start with something super simple. And Bob and I like to call it G Get Rid of Stupid Stuff what I would urge all of your founders and small business owners is how are you going to get rid of stupid stuff every day and can you only have one rule for yourself and for everybody and that rule should be simple enough to be understood by a 10 year old. I think that's a great place to start. Getting rid of stupid stuff is a good place to get on the journey to load the loan for me.

And when you say come up with a rule that a 10 year old can understand, meaning each person for themselves or their company, do this.

Yes, absolutely. Because if a 10 year old cannot understand, probably you're not clear about it either.

Well, so many helpful pointers in this conversation. Thank you so much Huggy listeners. Be sure to check out the Friction Project, how smart leaders make the right things easier and the wrong things harder And Huggy. Is there anywhere else you'd like to send people to learn more or keep.

In to check in on Bob's website, Bob Sutton.com and HuggyRao.com where we actually will be adding tools and ideas and so forth so they can actually take advantage of them.

Amazing. Thank you so much Huggy. It's really a treat to get to chat with you today.

Thank you so very much Jenny for wonderful questions and for being curious and generous. Thank you.

Oh my goodness. Well, a book after my own frictionless loving heart. At least in the right ways. I was so excited to see the Friction Project come through and to get to chat with you. And big thanks to all free timers who are here with us listening.

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