Book Review: “Reset” by Dan Heath
In his latest literary work, Heath touches on many topics relevant to small businesses and how they can work to make positive changes in their own operations.
In perhaps the most un-shocking news of the week, I read a lot of psychology and business books. I know, I know, anyone that knows me probably just fell off their chair. While I’ll try just about any non-fiction book, there are a select few authors that I really cherish, whose books I will preorder without even knowing what they are about, because I’m certain it will be entertaining and enlightening.
That was the case a few months back when best-selling author and behavioral economist Dan Heath announced his newest book, “Reset: How to Change What’s Not Working.” Having previously sold millions of books, Reset is his fifth major publication, following four previous books, two of which won awards for top nonfiction book of the year. I’ve been familiar with Heath for many years, having read all of his previous books. I was also recently a guest on his podcast, “What It’s Like To Be”, where he interviews people in various industries to educate his listeners on what their job is like.
The summary from Heath’s website says, “In Reset, Dan Heath offers a roadmap for leaders and teams to diagnose and fix the systems that hold them back. Using real-world stories and actionable insights, Reset empowers you to create lasting change in your organization.”
And from the publisher: “What if we could unlock forward movement—achieving progress on what matters most—without the need for more resources? The same people, the same assets…but dramatically better results. Yesterday, we were stuck. Today, we reset.”
The book focuses heavily on organizational systems and operations, especially how to rebuild them if they are not working. Just like Heath’s other books, he pulled examples from small businesses, large corporations, non-profits, and everything in between to make the topic relatable to anyone. I recently finished reading it and wanted to share few tidbits that I found very interesting and helpful for me as a small business owner:
“Every system is designed to get the results it gets”
While this idea isn’t necessarily groundbreaking to you as a business owner, it is a phrase that may be prudent to always keep in the back of your mind. Any time you’re looking at a process in your company and trying to figure out why it isn’t working, this sentence can potentially help you. While we often want to find an easy fix for a problem, occasionally it’s the system itself. If you find yourself constantly looking for different fixes for the same issue, perhaps it’s the entire system itself that is causing the issue, not just one kink.
“Glaring problems are sometimes the legacy of past solutions”
This was one of the most enlightening sentences I read in the entire book. We have a running joke in our companies that we do something a certain way “because we’ve always done it that way.” It’s an actual joke now only because we no longer operate that way. Years ago, in my early days working full-time in the family business, I would be given that reply when asking about a specific operation, and it frustrated me. If there was actually a reason to do something a certain way, that’s fantastic. But this answer suggested to me that no one was actually trying to improve. Some member of management put it into place decades earlier and no one ever questioned it.
Taking this closer to Heath’s words, in any company, but especially one that is decades or even centuries old, there will be something you are doing that is likely inefficient or outdated. But it takes an awful lot of soul-searching to find those processes. Oftentimes a solution will require undoing something that was previously a fix for something else just a few years earlier. At face value it will seem like you’re admitting the last fix was a failure. But in reality, perhaps the technology has evolved since then, or maybe the working environment has changed. Perhaps you also have to just acknowledge that a previous solution didn’t necessarily work as you had hoped. Understanding why things are done a specific way is the only method to being able to constantly improve. By knowing why past solutions were put in place, you will be able to easily figure out when that solution has suddenly become the problem.
Target the constraint
When you walk through a process to look for ways to improve, you will inevitably come across constraints, or parts of the system that hold everything up. As you improve one constraint in a process, the constraint inevitably shifts elsewhere. Heath uses Chick-Fil-A’s efficient drive-thru as a great example: when the incredibly long line seems to stop moving, management has to figure out what specifically is holding everything up. Is it the order taking? The payment process? The drink station? The food station? Only one part can be the biggest constraint at any time. If fries aren’t being made fast enough to keep up, putting in an additional cash register isn’t going to hasten the process. But once you realize you need another fryer, the constraint will move elsewhere. Now the food station isn’t backed up, but perhaps the order takers are falling behind. Maybe now you need a faster order-taking system, or more order takers, or something else you haven’t yet thought of.
This is incredibly relevant in any of our businesses, no matter what we do. Let’s say you have a retail store and you’re plagued by long lines and wait times for checkout. Is the issue that you don’t have enough cashiers? Is it that you don’t have enough registers? Is it that the point-of-sale system you have doesn’t work fast enough? Are the items someone is buying not tagged properly? Once you find your constraint, then fix it, you will improve the problem, but it is never 100 percent fixed. The constraint will move elsewhere, and you have to keep jumping to where the new constraint is to remain efficient. It’s a constant improvement process that will always require your attention.
“We tend to over coddle the smallest customers and under coddle the largest customers”
This is likely something all of us have done before. Oftentimes we get so spoiled with some of our best customers that we subconsciously assume they will always be there and that they don’t need our service. But a shiny, new customer, one who is only doing a small amount of business with us, why they’re just ripe for the best service we can give in the hopes we can grow them into a larger customer. Sooner or later, you find that you’re spending all of your customer service capital on the smallest customers in trying to grow them, while not putting enough attention on retaining (or even growing) the large customers you already have.
Don’t get me wrong – there’s plenty of room to do both. The answer to this issue isn’t to stop servicing the newer, smaller customers; it’s to remember to continuously service your largest customers and to never take them for granted.
Type 1 and Type 2 decisions
This section of Heath’s book references a management technique that Amazon’s Jeff Bezos used during his time at the helm of the e-commerce giant. Bezos considered Type 1 decisions irreversible and Type 2 decisions reversible. For example, a Type 1 decision might be choosing to build a 50,000-square-foot extension to your building. If it doesn’t work, you can’t undo the construction and cancel the bank loan. A Type 2 decision might be adding a new category of products to your offerings. If that doesn’t work, you can dump them at a clearance sale and try something else – it only costs you a little bit of money.
Bezos’s management technique was to ensure that Type 2 decisions were not overly-deliberated. They should be made on gut instinct, knowing that if it doesn’t work out, you’re not that much worse off. Type 1 decisions should be made only after delving into the data, the pros and cons, the risk-reward calculation, lengthy discussions, etc. These are decisions that could make or break a company. The issue becomes when someone uses the wrong decision-making process for the issue at hand. If you turn a new product idea into a multi-month-long discussion, refusing to make a decision until you’re 100 percent confident, you’ve most likely already lost out on the potential benefit. Likewise, if you choose to completely overhaul your pricing model in an effort to increase sales, without even looking at a bit of financial data, you’re probably going to end up bankrupt. Heath rightfully asks if you are using the correct process for each decision type in your day-to-day operations.
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While I wouldn’t call “Reset” as groundbreaking as Heath’s other books, it is certainly an excellent read and worth the time if you run a business or have any management say in an organization. There were many times that I had to stop and think about something I was doing in my own business, which to me is the most helpful thing a business book can do. No colleague, author, or consultant ever has all the answers. But if something they say or write makes you think a bit deeper about something you never previously considered, to me that’s a small win I’ll take any day.
