Why Interdependence Beats Going It Alone

In this episode, Paul Spencer unpacks the tension between specialization, interdependence, and resilience in business using lessons from Deming, economic theory, and even the story of a simple pencil. Through relatable anecdotes and thoughtful analysis, Paul highlights how strong supplier relationships, systemic awareness, and high-quality standards are crucial for success in an unpredictable world. You'll hear surprising insights about risk, the true value of simplicity, and how deeply connected we all are—both in business and life. Tune in for practical wisdom that will challenge your assumptions and help you navigate complexity with greater clarity.

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Chapters
(00:01) Debating Deming’s Single Supplier Principle
(02:29) Navigating Supply Chain Risks and Dichotomies
(04:37) Value Beyond Price in Business Relationships
(06:30) Specialization and Interdependence in Economics
(10:44) Simplicity, Quality, and Customer Expectations
(16:59) Interdependence, Cascading Effects, and Risk
(21:28) Personal and Social Dimensions of Interdependence

Creators and Guests

Host

Paul Spencer

Family Business Advisor

What is Resilience Talk?

From Paul Spencer of Second Nature Solutions, a conversation about the complexities and nuances of building resilient family enterprises, especially in the face of economic and political uncertainties that loom on the horizon. See more at secondnature.solutions.

Welcome to Resilience Talk hosted by
Paul Spencer of Second Nature Solutions.

Let's dive in.

I got a lot of comments recently around
the topic of Deming and his concept

of, um, reducing to one supplier and
building a deep relationship and have

that long-term trust and loyalty.

And that kinda sparked
something in a few of you.

So it's a lot of fun.

Uh, you know.

I've also learned that, uh, when,
when there, uh, it's not necessarily

a controversy, but when you guys wanna
kind of banter on some of the topics,

you do it to me personally, right?

So it's not on social media, it's not on
LinkedIn, it's not on any of the posts.

Um, you send me a note,
which is I love that.

I think it's perfect.

And I, and I reflect on that a
little bit and I always wonder

about the, the folks who.

That we know, right?

Let's, let's use Trump and Elon.

Uh, when they, they had a falling out
over Twitter or X, sorry, I should say X.

Um, and it's very interesting to me to
to think about would I ever have those

types of words or that type of say,
argument or discussion with somebody.

On a public forum so everybody can
watch and then have it, have it

just go down into name calling.

And this is very interesting.

So anyway, I'm not saying that you
guys, or I am, we're devolving into

our conversations in the name calling.

Um, but it is fun to hear from you.

So keep sending me notes, keep,
uh, giving me, um, some insights

into how you're thinking.

Um.

I think all of your points are valid.

So, uh, a lot of you are, well, some
of you are confirming, uh, some of

you are, have a little bit of yeah.

Buts.

And then there was one or two of you that
were very adamant that tend to disagree

with the concept of a single supplier.

And, and you had lots of examples.

Um, and we've had, we have
recent examples, right, with uh.

With the COVID, um, supply chain
issues, uh, the recent, uh, turmoil

that we have now, um, is an output,
an outcome of a lot of that happened

in 2020 with, uh, the supply chain
issues that we had, mostly with China.

Um, and what does that mean to Reshore?

How do we reshore?

How do we get more supply chain locally?

How do we get more fault tolerance?

So I agree with all of that, and I
think it's a fun point discussion to

say that everything that we talk about,
there is a dichotomy to everything.

So our world is full of a dichotomy.

We could say at one hand,
our principle is this.

But on the other hand,
it's also this, right?

The yin and the yang.

And those two things could
be true at the same time.

And uh, and going back to what we were
talking about the last couple times

is just provocative thoughts, thinking
contr, uh, contrarian thoughts, right?

All of those things are part of us.

Um.

Not just being robots in what
we're taught, not taking our MBA,

not taking, uh, the status quo,
the established ways of doing

things and just doing it that way.

Right?

This, what I'm after is for us to think a
little differently for, we may come to a

similar or the same conclusion as what we
would say the established traditional way.

Um, but the way we get there is different.

Our thinking is different.

That's, that's the whole point.

Um, so, uh, is Deming correct in
saying that, uh, we should end

the practice of wording business
on the basis of the price tag?

Well, you tell me.

You tell me.

You are in business, you have customers.

And if your customers say,
Hmm, too expensive for me.

Could you cut that by 20%?

Could you cut it by 30%?

What are you going to say?

What are you going to say?

I think you'll say, geez, let's not
just look at it at the price point.

Let's look at these other
factors that we provide.

Let's look at the value we bring.

Right?

So Deming is correct in that.

And then the follow on
to that is instead of.

On basis of price tag.

On price, let's maximize total
cost, which is moving toward a

single supplier for any one item.

Right?

Build that relationship.

Build long term loyalty and trust.

So does that mean that
we could have some risk?

Yeah, we talked about that last time.

We could, we could incur,
incur some risk by doing that.

Um.

When we talk about the unknown
unknowns and the unknowables and

the data with all of that, um, that
still applies to all of this, right?

So anyway, I think
that's very interesting.

The dichotomy's good.

Um, somebody mentioned to me the,
uh, the, um, uh, a set of books.

Now, Brandon, who normally
does the, the tag team with me,

you guys all know who he is.

He suggested to me and
I, I have these books.

It's basically the, um, uh, the
great mental models by Shane Parrish.

And, um, so there's four books in there.

And so somebody even mentioned
that, um, Shane Parrish mentions,

um, what did he call it?

They call it interdependence
in one of the books.

Um, and so I thought I went through it.

And you know what?

I've had these books forever
and I've never read 'em.

I'm a little bit like my dad.

I just buy a bunch of things
and then I keep 'em in a box

and then I never read 'em.

No, that's a shout out to dad.

So anyway, this one's called, this
one's, uh, the fourth Volume, and

it's around the economics section.

And so there's a part in here about
interdependence, which somebody

mentioned that said, Hey, some
of the things that you're talking

about are some of the things that
Shane Perish was talking about.

So open it up and was taking a look at it.

Um, very interesting because, um,
it's probably that chapter, it's very

concise writing, very, very cool.

If you haven't picked it up, um, it's a
good, it's a good little, um, set of books

instead of principles that are fun to
read, especially for, um, maybe for some

of us might be, these might be like, duh.

We've read these and we know these, but
there's some cool things in here around,

um, um, physics and chemistry, biology.

Um, it is just, it's just fun.

Anyway, uh, the interdependence
is probably five, six pages.

It's not very long, but when
you read through it, when I read

through it, um, it states everything
that Deming's talking about.

So, um, not gonna name names, but the
person that sent me that I think was.

Using it as a counter to Deming and I'll,
I'll need to follow up with you and,

and make sure that I'm right in that.

Um, but, and there are, there is, he does
state the dichotomy in there for sure.

Um, but by the time you get
to the end, it's the same.

He's saying the same thing as Deming.

Um, so I want to talk
through that a little bit.

Um, and then there's an also
cool, there's another cool thing

in here called I Pencil, which is
an essay that was written in 58.

Uh.

Which I'd never heard of before,
and it's a, it's really cool.

So anyway, I wanted to read some of
the things that are in here, um, and.

Really what, what he's getting at.

And he's just summarizing
known principles.

He's not reinventing anything.

It's not an invention of things.

It's a great, it's got great,
uh, references, bibliography.

Um, so anyway, he's, this
is just the introduction.

It says specialization leads
to interdependence, which is

exactly what we just talked about.

Um, a supplier for each
item for one item, right?

That's specialization.

And if we get a deep.

Um, specialization.

Um, then in order to, um, survive, you
have to have multiple businesses, multiple

specializations within your ecosystem,
right, because you can't do it all.

Um, and, uh, so I'm gonna read this,
the more specialized an individual

company, company, nation, or
other, or any other group, is the

more reliant it must be on other
specialists in order to meet its needs.

Right?

We can't do everything on our own.

Yeah, exactly.

And I think that it speaks
exactly into Deming's.

Uh, SOPK, which is the awareness
of the system, is that we're all

intertwined, interconnected, which
is what this whole chapter is

called, it's called interdependence.

So because we're specialized,
we are therefore interdependent.

And so, um, again, just
kinda repeat myself.

When we have, when we have an awareness
of the system and we understand

the interdependence between us and
our competitors and our suppliers

and the world economy, the world
supply chain, the government, right?

All those things that are around
us, um, we have better insight

into how to make decisions and why.

Things are happening and how to
make different processes to be

able to handle those different,
what we would call imposed inputs.

Those are things we can't control, right?

The imposed inputs, they're,
they're forced on us.

Um, and we have to deal with
them, but we build our processes

around those constraints.

Like just like when we talk about
with the theory of constraints,

which is also awesome theory.

So, um, then he mentions the eye pencil,
which I had never heard of, um, essay.

Um, and then.

Uh, I'm gonna read this too.

So, even such a simple device
involves numerous specialists.

So, um, there's loggers to harvest the
wood workers in a sawmill to cut it.

Designers of machines used to
work on the wood, so on and

so on, and so on and so on.

Um, and it's a very, uh, very fun topic.

I think it's a fun topic.

Uh, so I pulled up, um.

The essay and you can just search for it.

It's called I comma pencil,
meaning my name is pencil.

And it just, it's, it reads as,
he writes it as my family tree.

Right.

Uh, kind of a play on words and
everything, but, and it's his genealogy

of how he exists and everything.

And I highlighted this as, um, 'cause
we've talked about this before, is

I have a profound lesson to teach
because I am seemingly so simple.

And then it says, simple, simple.

Yet not a single person on the face
of this earth knows how to make me.

This sounds fantastic, doesn't it?

Especially when it is realized that there
are about one and one and a half billion

of my kind produced in the US every year.

And this was written in in 1958, right?

So, um, this is another
thing that we have.

Uh, around simplicity and things that
we were just talking about before,

which is the quality that we have when
something is, is, and I'll go into the

software world when we build something,
um, from a software perspective.

Of course there's the code, um,
there's the tech debt, there's the

data, there's all the thing, there's
the architecture underneath all of

those things, those are all hidden.

You don't know what those are.

You don't understand the quality
of that, but you understand

the quality of the interaction.

And so when you interact with a
piece of software, um, you have

an understanding of its quality.

Right.

Um, and at this point in time in, in our
world of software development and product

development is we don't tolerate errors.

So maybe 20 years ago, or maybe even
15 years ago, if something failed,

meaning you got an error or it didn't
quite load right, or, um, maybe

it did something you didn't quite
expect, and you're a little confused.

Uh, we tended to tolerate those
things a little, a little more.

'cause that's just what, what the
environment was Today, we're in a

much more mature and commoditized
software environment that if

anything failed in that way, it,
it, nobody's going to tolerate that.

And, uh, and you'll lose customers.

Right.

So that whole interaction design is
super important in today's world.

If you're building software products,
um, because the customer has low

tolerance, it's a, it's a commodity.

They expect it to work.

If you grabbed a pencil,
right, I still use pencils.

Look at that.

Um, if, if I grabbed this pencil
and it broke in my hand or wouldn't

sharpen, or, uh, it wouldn't write, um.

And, uh, and it was not
useful to me immediately.

Like as soon as I went to ride,
use it, uh, I would throw it away.

I have no tolerance for it, right?

Because I expect this to work.

It's a commodity.

And 30 years ago, 50 years ago,
it was still a commodity, right?

We expected it to work.

Um, so anyway, with when we have the
interaction design, um, we're, we're.

We have such a high threshold of
Toler, a low threshold of tolerance

that, uh, quality is expected, right?

So anyway, it's something interesting
to be thinking about and uh, when

we talk about the simple solution.

'cause in the eye pencil, right?

He's talking about it's being simple.

I am simple, but seemingly I'm not.

That is when you have high quality.

That's, that's kind of the litmus test.

So going back to the software piece
is, uh, when we use Google, and

you've heard me use this example many
times, but when you go into Google.

Now we don't really go to Google anymore.

We just type into the browser and
type what we're looking for, right?

Our search.

But at one point, Google had,
you went to the google.com,

right?

And there was one input box, and then
you would type in there, whatever you're

looking for, and then you hit enter.

That is simple, right?

Seemingly simple what's underneath there.

And uh, kind of from the pencil's
perspective, all the things it took.

To be able for you to just type, uh,
what were the, what was the Bengal

score from last weekend for it to go
find all that information, pull all

that data, do all the algorithms,
put it all up, and then bring you,

uh, five pages of HTML, um, documents
that you could go look it up, right?

Websites that you could go
look at that information.

Super, super complex, super complex.

But it's simple.

And that means high quality.

That is high quality.

So when we're building.

Anything physical, manufacturing,
uh, hardware or, uh, fasteners,

screws, anything like that.

Quality is based on the simplicity.

The customer just assumes it works.

The customer just assumes that,
oh yeah, that's easy to make.

Like how hard could it be
to make a screw, right?

And all of those things.

That's, that's what we're looking for.

That is, uh, that's what the
whole pencil thing is all about.

So anyway, I would
encourage you to go read it.

Very interesting.

Um, and really in the end, the whole,
the whole, um, premise, the whole,

um, moral to the story is just about,
um, how free markets work, right?

Open markets and the need to have
specialized interdependence in a

market in order to build and innovate
and seemingly create simple things.

So lots of fun.

Um, there's a couple of
things else I wanted to.

Talk about is there's a quote
inside, um, uh, Shane's book here.

And so I wrote these down.

Uh, when everything works,
interdependence works well.

When things don't go as planned, however,
interdependence starts to shut everything

down, which is, we saw that, right?

Um, and he wrote these books in 24, so
he already had the experience of the

2020 stuff, but it's very common, right?

I mean, it, it makes logical sense.

So, um, does that mean that
we can't be interdependent

and we shouldn't specialize?

Well, there's risk.

There's risk with everything.

Um, and that's the dichotomy.

That's the dichotomy.

Um, one other thing that, uh, that I
thought was interesting, and I'm gonna

read this too 'cause this kind of
lays out the unknown unknowables that

we had talked about, um, previously.

Um.

Actually, there's one other thing
too in here I'm gonna read too.

Uh, so he's talking about how oil
prices went down in the thirties because

there was a, there was a gluttony of
oil wells and uh, the oil was gushing.

And then, so this kind of shows the
interdependency of all the things

that we were just talking about and.

When we read it out
loud, we, it's a big duh.

Of course.

Yeah, yeah.

That happens.

Um, but when we're in our businesses
and we're trying to consider what's

going on and why are we getting weird
results and, uh, how do we, how do

we move here or how do we innovate or
how do we get more efficient and those

kinds of things, you really do have to
start to look out and look at the big

picture and see how things are connected.

And that will give you more
foresight, more insight, more

foresight, more insight, right?

You get to iterate on all of
that, and then you come to,

hopefully to a better solution.

Um, which again is just a theory,
and then you get to take those

theories and see what you can do.

So anyway, so first, oil
prices went down all over.

And because none of us collected
and refine our own oil, there was

widespread reaction to the windfall.

That our dependency created homes
started to heat with oil instead of coal.

Great.

Because it's cheaper, right?

But then employment and coal
mines fell and the price of steel.

Went up as because, because coal
became more expensive, right?

'cause coal was going down.

We drove our cars more railway
usage declined highways grew.

Towns caught in the wrong location.

Or dependent on the wrong resources,
stagnated or died out while other

towns boomed new oil product, new
oil produced effects that cascaded

far outside the oil industry.

This is exactly what Demming was
talking about when, um, when we were

talking about the the seven deadly sins.

And when manages management focuses
only on visible figures, he says

it in a slightly different way.

He says, uh, he says, management, uh,
by use only of visible figures alone.

Something like that.

He kind of turns all
the words around, right?

And then he goes on to say, with
little or no consideration of the

figures, meaning the numbers, the data
that is known, unknown or unknowable.

Is exactly, this is a great
example of that, right?

Is uh, we look at the oil, we
look at oil production, but the

cascading effects around that.

And we're not, we're not worried about
the economics of things in our business.

Those things will go on our own, but
there are consequences of having more

production in outside our own business
to do this and what effects that's

going to have either for our own
suppliers or for our own businesses.

Um.

Uh, yeah, so anyway, that, that's,
that's what I wanted to talk about.

There's one last part in here, um,
that is also very interesting here.

Um, so interdependence isn't just a
macro concept, it's deeply personal.

We're all independent with our
families, our friends, our communities.

We rely on one another for
support, for love, for meaning.

And interdependence is the
fabric of our social lives.

Um, he also says, interdependence can
be both a vulnerability and a strength.

So the dichotomy of the world for
us to be thinking and to be aware

of these things, we understand
that there's lots of variables.

How do we reduce our variables?

How do we create theories?

How do we go and learn and be
aware that there are unknowables.

Unknown data, unknowables
things we'll never know, right?

That are very hard to, to understand
the cascading effects, um, rather

than just relying as Deming
says, on visible figures alone.