Extraordinary Business Lessons In Three Simple Rules

Shannon Waller: Hi, Shannon Waller here and welcome to Inside Strategic Coach with Dan Sullivan. Dan, I am particularly excited about our latest book, Geometry for Staying Cool and Calm, because such interesting things came out of that conversation. And I really want to get to the second idea in the book, but what came out of it? Because it was a big aha for me and it has to do with rules. But before we get to that, why don't you just say what the three guidelines are in Geometry for Staying Cool and Calm?
 
Dan Sullivan: So geometry refers back to a particular Greek mathematician by the name of Euclid. And in about the year 300 BC, he was Greek, but he lived in Alexandria, Egypt, which was a real center of learning. They had a huge library there. So it was kind of like a library, I think probably university of its day. I don't think he invented any of this stuff, but I think what he did is he aggregated, he pulled all the documented mathematical knowledge in that part of the world, which was really the center of development in the Western world, not the Asian world, but the Western world.
 
And he put it into a series of books. But the primary one, which I really fell in love with, was the fundamental rules of geometry. And geometry is how you build things so that they stay up. The first book intoxicated me because there's 47 rules and you can't get to the second rule until you understand the first rule and you can't get to number 47 unless you've gone through the first 46.
And I just thought it was a massively good way to put together a knowledge system. So my sense is that everything in the world today that's built, I don't care what kind of building it is, it doesn't stay up or it doesn't stay up in a sound way if it doesn't follow the rules that were laid down by this Euclid, the Greek mathematician, more than 2000 years ago.
 
So I put geometry, the book is called “Geometry” in quotation marks, because I'm not relating to mathematics here, I'm relating to mindset for operating in a world in the 21st century that I think is going to be in real flux. So how do you stand tall and stand solid in a world where a lot of things are shaky and falling down? I came up with three fundamental rules, and the first rule is everything is made up, got to realize that, everything is made up.
 
But at one time somebody had an idea and they either told somebody about the idea or they wrote it down and other people read about the idea, but all the knowledge that we have comes from somebody like I just mentioned, Euclid. All that math had not been aggregated until he made up a system for understanding it. So everything is made up, so you can make up things too. You don't have to get permission to make things up.
 
Now, once you make them up, then you have to make them up and communicate them in such a way that other people find them useful. So that's another story. Now, in the world of making up new things, nobody's in charge. So there isn't any make it up authority. As a matter of fact, most of the people who think they're in charge of making up things are the worst at it.
 
Yeah, we call them bureaucrats, but entrepreneurs are the masters of making up new things. So recognize who you are that you got here by making up something new and nobody's in charge. Nobody gave you permission to be an entrepreneur and you don't have to apologize to anybody after you've made it up. You just have to sell it. Okay?
 
And the third rule is life's not fair. That one struck more of a nerve than the first two. And they said, "Well, what do you mean by that?" I said, "Well, when you make up something new, the consequence of you're making up the new thing, if other people find it useful, that some people are advantaged by that and some people are disadvantaged, so some people are better off for your new idea and somebody is probably worse off, but you don't have to think about that because nothing's fair."
 
And they said, "Well, what about fairness, and equality? And I said, "Yeah, look that up. The concept of fairness was made up about a thousand years ago, according to the Oxford English Dictionary. And as we understand fairness today, that's about a thousand years old and humans have been around, anthropologists tell us now it's about 200,000 years. They can tell that there's a different human species, might be longer, might be less, but that's the best they can do right now. So that's only a thousand years old. That means before the year 1000 in our calendar, probably the idea of fairness really wasn't an idea because nobody had any proof that anything was fair. And it's only until recently that you can have sort of fair conditions."
 
"And then what about equality?" Ah, now that's later. That's about 1600. So that's about 400 years old because most people couldn't even eat properly.
 
There was such scarcity in the world that you couldn't think about things like fairness and equality. So now we live in a world, actually it's only been about a hundred years, that well everybody can eat. So if you put the three of them together, I put them together in a triangle. Triangles are interesting because it's the strongest structure in the universe because there's two angles that support the third angle, and there's two sides that support the third side. So if you put the three rules together, that's the geometry of staying cool and calm.
 
Remember, if you want something, make up something new. If you want somebody being in charge, you have to be the one in charge. And number three, don't worry about fairness or equality, just make up new things that are useful to other people. And that's all you have to do. But the one that also triggers people after the unfairness one is nobody's in charge.
 
They said, "Well, political leaders are in charge." And I said, "Nope, they're not in charge. Okay? They're fulfilling a role according to a set of rules. So if you look at anything where things work it isn't somebody is in charge, the rules are in charge. That's why we love sports because the rules are clear cut, but the umpire didn't make up baseball. The umpire isn't in charge of baseball. The umpire is just there to make sure that the rules are followed. The players made up the rules and then you had to get uniformity if everybody was going to play the same game. And you look around your life, my life, everybody's life who are looking at it from morning till night without realizing you're probably fouling hundreds of rules about how you operate with other people and how you live safely and everything else. It's all rules."
 
Shannon Waller: Well, and that's one of the things I just love that emerged from the book is that I just hadn't thought of things that way. And it goes from everything from umpires and baseball games to traffic lights and how we don't crash into each other. The one that I particularly like are company ground rules or core values, those are rules for how people show up and work together, which I also love. So there's something about making up your own really good rules is kind of what I want to dive into because I think that's kind of fascinating. And it ties into Dan a concept that you've talked about for decades now, which is the meaning of the word autonomous. So do you want to describe that? Because you've said this for, as I said, decades, and I've always found it kind of fascinating.
 
Dan Sullivan: Yeah. It's a Greek word autonomous and “auto” means self and “nomous” means law. So you have self laws. There are people who have to be controlled by other people's laws because they don't make laws for themselves, but freedom comes out of following rules. Freedom is actually maximizing being inside of a restriction. You're restricted. Peter Diamandis, who's a marvelous technological thinker, he's in Strategic Coach and we're in his program, which is called A360, which our company and Peter's company created about 10, 11 years ago.
 
And he says, "Everybody thinks creativity is thinking outside of the box." He says, "Actually creativity is thinking in a smaller box than the one you're in."
 
But there's rules for this. And one of the rules is that nothing you come up with has any value until somebody's willing to write you a check for it. So there's a rule called the mechanism of the marketplace.
 
The marketplace is actually controlled by millions of rules of what has value and what doesn't have value. And that's determined by check writers every day deciding that something's worth it or something's not worth it. Where things get bad is where an outside force like government tries to interfere in the marketplace and control prices or control how things are traded, how things are owned, and everything like that.
 
All economic breakdown usually comes from government mismanagement. The marketplace itself, and I had a great example of that, we had a blackout here in Toronto, and if I remember correctly, it was around 2003 and I was coaching the workshop. We're in one part of the town and city of Toronto, and we live in another about, what would you say? 10 miles?
 
Shannon Waller: Yep.
 
Dan Sullivan: About 10 miles between.
 
Shannon Waller: Yes, 17 kilometers.
 
Dan Sullivan: And at about three o'clock in the afternoon, all the lights went and it was because of an electric switching station in New York State.
 
I think it was in New York State. But the energy grid between Canada and the Eastern United States is a continuous energy grid. And a lot of our power actually comes from Niagara Falls, which also powers a lot of New York State. I remember the expressway was just packed, and then people were waiting for half hour to get on the expressway.
 
So we just took one of the main local streets, we took King Street, which becomes Queen Street, and so you could stay on the street and we could get home. And as long as there was no attempt by the authorities to direct traffic, it really worked because there's a rule when you come to a four corners, there's a procedure. Who goes first? Who goes first?
 
And then we hit the middle of the city and everything blacked out because they had cops at three intersections and the cops weren't coordinated with each other. And so the only problem was where the cops were trying to be in charge. As long as the drivers were in charge, following just very simple rules. You come, the person on your right, if they get there first, they go first and then it just goes around, right, right, right. And traffic moves, and it just shows you that if the drivers know the rules, they don't need the cops.
 
Shannon Waller: Right. I like that. So that's really interesting, Dan. How can people use this in their own companies, in their own lives to make things better, to prevent interference from other places? I'm finding it super useful with teamwork, with management. It's like when something just devolves down to opinion, I'm like, let's set some ground rules. And actually the Impact Filter is my favorite tool for that. But let's set up a success criteria so people know what the rules are because then they can be more self-managing. So that's one application that I've been actively applying since our conversation about the book. Where else are you seeing it?
 
Dan Sullivan: Well, it's everywhere. I mean, everything that exists, exists and survives by a set of rules on how to use this thing and where do you use it. But where I really notice this is in language. I did my first grade in 1950, but I mean I had to learn spelling, had to learn grammar, first two or three years. And the teachers could still hit you in those days on the knuckles, not...
 
Shannon Waller: With a ruler?
 
Dan Sullivan: Well, with a wooden one that had a metal edge, more like that. And people say, "Well, that's awful." And I said, "No, the lesson stuck."
 
The one thing that gets me, I know people who have, from my perspective, I'm a writer and I have a good grasp of the language.
 
Shannon Waller: You do.
 
Dan Sullivan: But one thing that just jars me is the people who use “me” as the subject of a sentence. “Well, me and Shannon are…” Everything else is perfect about how they talk it and all of a sudden I hear the me and I said, "Oh, they don't know this. What else don’t they know?" And it's like somebody in a tuxedo, but they're wearing white socks and tennis shoes. And I know there's fashion, grace, and everything else, but I myself could never do that.
 
Shannon Waller: I love that, Dan. I was raised by someone who was expert in language.
 
Dan Sullivan: No, I had it easy.
 
Shannon Waller: My dad would stick up his finger because teenage girls were like, "Like, like, like." And every time we did it, he'd hold up his finger during dinner. He pretty much never put his hand down.
 
Dan Sullivan: You were valley girls.
 
Shannon Waller: Yeah, apparently. But the one that drives me crazy is less and fewer. Oh, I just want to correct people. Or infer and implied. When you know the rules, you're like, oh. And to your point, Dan, you're not sure what else they don't know. And you've said something before, which I think is relevant to all rules. It's like those people don't know what opportunities will be closed to them because they didn't learn the rules, which I think is really interesting.
 
Dan Sullivan: Well, the interesting thing about it is that people probably wouldn't correct you, but there's doors that just closed because of the use of language. There's opportunities that you're never going to have. And the worst thing about it is you're never going to know, because someone said if they don't know basic English and they don't know basic grammar, what else don't they know?
 
I had the opportunity to have as my tailor, one of the greatest men's clothiers in the world, Harry Rosen here in Toronto, and he is considered one of the greatest clothiers. He had 17 stores here in Canada, but about 40% of the upper income men's markets, a Harry Rosen suit was a big thing. And he said, "Men have it easier than women because men, it's all about style. Women, it's very, very subject to fashion." And he says, "If you establish a style as a man in your twenties, and it's a good style, you can stay with that style for the rest of your life."
 
And he had a thing called style of confidence. And I said, "What's style of confidence?" And he said, "You're dressed in such a way that you're at a social function and you're the only person in the room not thinking about how you're dressed."
 
So what rules do is they allow you to have your attention on the main thing rather than on the small things. But if you're in a situation like what's happening in the big cities in the world now, they're lawless, you could be robbed.
 
Some cities in the United States, the big retailers are moving their stores out of the city because they're losing so much money on shoplifting. People just walk in and they just walk things out. And there's sort of rules. You can't stop them, you can't pursue them and everything else because the retailers are no longer protected by the rules. So they take their business someplace else where their business can be protected by the rules.
 
Shannon Waller: And I think that's key. And that's where the enforcement of rules, I think is critical. I know, so in Ontario we have something called the Liquor Control Board of Ontario. And literally the security people and the staff have been told, "If someone goes and steals, don't stop them."
 
Which for personal safety, I totally understand, but I'm like, why isn't someone calling the cops? And I've met some of the cops policing the store and they're incredible. I love them. They're so, to use the term, badass, they're just great. But it bothers me. It's like, no, if we're not enforcing the rules, the rules don't matter. And I think that's true individually. I think that's true in stores. I think that's true in companies. It's really being conscious and conscientious about your rules. I only like rules where I've been part of creating them. I tend to be the rule breaker otherwise. But if they're really good, then they need to be upheld. What's your take on that?
 
Dan Sullivan: Yeah, there was a great column in the New York Times 25 years ago, writer by the name of Tom Wicker, very famous New York Times columnist. And he was talking about a weekend that he spent in Toronto, and Toronto was just starting to emerge as a major city, turn of the century. He said that he had heard about Toronto, so he flew there, stayed downtown, and he was just catching the hotel bus to the airport. And he was trying to think, what's the difference here? And he went into the store in the hotel and he bought himself a candy bar, and he ate the candy bar and he had the wrapper and he put the wrapper in his pocket and then went to the airport, flew back to New York, and the next morning when he was out on the street in New York, he took the thing out of his pocket and threw it on the street. He said, "That is the difference between Toronto and New York."
 
Shannon Waller: That is so true. No littering.
 
Dan Sullivan: No littering. And on the escalator, make sure you're on the right. Get those two rules down, you can pretty well do well in Toronto.
 
Shannon Waller: Walk left, stand right. I love it.
 
Dan Sullivan: I find Canada is a bit more rule abiding, compliant than lots of places in the United States. I'm not saying everywhere in the United States, but there's kind of a lawful mindset here in Toronto.
 
Shannon Waller: I agree. So Dan, to me, this idea of it's all made up...
 
Dan Sullivan: Remember in any situation you're in, it's not people who are in charge. They can be in control, but they're not in charge. What's in charge are the rules.
 
Shannon Waller: I love that. Yeah. And so to make sure that, at least if you're the one creating or co-creating the rules, that they're really good ones. I think that's one piece. And then it's also often just the way to get along and to make things happen the most easily is to know what the rules are, know the rules of the game.
 
Dan Sullivan: Yeah. In the scheme of things... This is probably for another whole book maybe, but it's very interesting because I'm both American and Canadian. So I've lived in Toronto for 52 years and I'm almost 80, and I've actually lived two thirds of my entire life outside of the United States. And from a certain perspective, the United States is the most law-abiding country in the history of the world in a sense that the country was created out of a set of rules. And it's called the Constitution.
 
And what's interesting is that the 13 colonies who came together and were the first 13 states each had a constitution. And the great genius of this was James Madison, who was about 26, 27 when he took all the constitutions. Plus he was one of the world's greatest constitution experts. I think he had access to about 2000 different constitutions going back thousands of years.
 
And if you took the Constitution, which was 1787, it was agreed on, and you typed it out single space, it would be 23 pages in 1787. And today, if you typed it out, it would be 27 pages. They've added four pages. And the entire country, and it's gone from 3 million people to 340 million people, it goes from the Atlantic to the Pacific, and then you have Alaska and Hawaii. And everything that happens day to day is controlled by the rules.
 
So they have the debt crisis. Right now it's called the debt crisis because our government has...
 
Shannon Waller: The debt stealing crisis? Yeah.
 
Dan Sullivan: The debt stealing crisis because this current administration is just spending and spending and spending. But there's a limit. There's a debt ceiling. So the president says, "Well, we can use the 14th Amendment." That's one of the rules in the Constitution that says that it's legal for us to have a debt.
 
It is under that. But in the United States, the national debt is 80% owned by Americans. It's not owned by foreign countries. I mean, everybody says, "Well, China owns our..."
 
China is maybe 1% of the total outside debt. And it's Americans who own the debt. And what the 14th Amendment says, the government has to pay the citizens who own the debt before they can do any more spending. So he doesn't even understand the rules or he is acting as if he doesn't understand the rules. And there's only one body of the government that can change the debt ceiling. And it's the only one who allows there to be any spending and that's the Congress. It's not the president.
 
And everywhere, the President of the United States, it looks like he has an enormous amount of power, but he's stopped at almost every... Oh, nope. The Supreme Court can block him. The state governments in certain cases can stop him. And all this has been known for 250 years, and it takes about seven years to change the Constitution, even if everybody wants to.
 
Shannon Waller: That's amazing.
 
Dan Sullivan: So there's not only the rules, but there's rules on how you can change the rules and you can't just change the rules.
 
Shannon Waller: I love that. So Dan, I just really appreciate this perspective because it's certainly this conversation and what emerged out of the book gave me a whole new insight into rules, more liberty to make it up, which I really love and to be very conscious and as I said, conscientious about the rules that I am living by. So I just thought this was an absolutely fascinating take on things. And I as always really appreciate your insight.
 
Dan Sullivan: I've never put this in book form. We haven't put it in book form because there's no books unless we're doing it together. But I'd like to revisit the, we called them the referability rules in the old day, but I think they're the credibility rules. And there's four of them, which I want to add a fifth one. And the four rules are show up on time. Whatever you're doing, show up on time, show up a little earlier, and you feel a little bit more confident. Do what you say or go back and say, "I can't do what I say, I've got to do something different."
 
And number three is finish what you start. And number four is say please and thank you. But number five is be appropriate. So wherever you are, be appropriate to the situation.
 
Shannon Waller: I love these.
 
Dan Sullivan: Those are self rules and I strive mightily to follow the rules and it avoids about 90% of the problems that an individual can get in because they don't show up on time and they get into trouble. They don't do what they say, and they get into trouble. They don't finish what they start, so they get into trouble. But not only that, doors are closed to them, the word goes around, not a dependable person. They don't say, please and thank you, and they're not appropriate for the situation they're in. They're not talking appropriately, they're not dressed... Their hygiene isn't up to standards. They're just not paying attention to their surroundings.
 
Shannon Waller: I love that. Dan, thank you for ending with that because I think though we've called them referability, habits, credibility habits, rules, another great context, but they're so practical because you can start them immediately after listening to this conversation.
 
And it's true, it's just like language, if you're not following these, people won't correct you, but you will not know what doors are closed to you. And that's huge. I mean, these are great rules, habits to raise your children with, right? It's like these are so key. So thank you for ending with this and I think it'd be a spectacular book. Let's do it.