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28 Jul

Systems, not habits.

Productivity, if not understood well, can be something quite mechanical and dehumanizing. We are not machines, after all. But if you do, and focus on building systems versus building mindless habits, you can be effortlessly productive.

In this essay, I will help you understand how to build a productive system for yourself via just three basic but core principles.

1. Transaction Costs

In Economics, Transaction Costs are the total costs of making a transaction — including the cost of searching, planning, changing plans, resolving disputes, etc. And if not minimized, transaction costs can be the major source of friction in any trade. If high enough, they can make or break a trade.

An easy way to understand them is to think about why aggregator platforms work or why app designers always keep talking about minimizing the no. of clicks on a sign up/onboarding flow.

Essentially, wherever there’s a trade of some kind, there are transaction costs. And you can think of productivity as trading our energy and attention for getting tasks done.

Someone asks you to start working out every day. Your first thought is joining a gym. Bad idea.


It simply involves too many steps and is too high a transaction cost to pay for working out. You will most likely not stick to it.

The solution: buy home equipment. A pull-up bar and some dumbbells are all you need for a start. Actually, you can even start with plain bodyweight exercises.

Another good idea is if you’re working from home, get a standing desk. The point is to reduce friction between you and the task.

Can’t read more books if they aren’t lying on both your bed and table within arm's distance. Can’t drink more water if that water bottle is always empty. Can’t invest regularly if it isn’t automated via SIP.

You get the drill.

You can also increase transaction costs in your favour.

For example, if you’re on a healthy diet, simply don’t have any junk snacks in your pantry at all. Or if you have trouble waking up to your alarm in the morning, keep your alarm a long walk away from your bed. That way, you will have to get up to turn it off, waking up in the process.

Reduce transaction costs for productive behaviour. Increase transaction costs for counter-productive behaviour. Simple.

They tell you to not take the path of least resistance. That’s wrong. I believe that you should design your life in a way that the path of least resistance becomes the path of maximum productivity. Transaction costs allow you to exploit your laziness and make it work for you.

2. The Principle of Frequency

“Frequency platforms unlock trust and distribution and suck all infrequent use cases like a black hole.”

“Leading indicator for the death of a B2C app is declining usage frequency of high-quality users.”

“Apps and friends with the lowest frequency get deleted first.”

Kunal Shah (Founder – CRED, Freecharge) has written a lot about high-frequency products creating winner-take-all markets. While this was said in a product-usage context, we can easily apply the same analogy to how we design our workspaces to maximize productivity effortlessly.

The principle:

The ease of performing a task should be proportional to its frequency.

The principle of frequency helps you answer the question of which transaction costs to minimize first.

The answer is, “Minimize it first for tasks with the highest frequency.”

The reason is that if you do something 10 times a day, you face overhead costs 10 times versus something you do once a week. So, it makes sense to eliminate overheads you pay for the most.

If there's something you have to do a lot, try to make it easy for you to do.

It’s a universal design principle followed not only in apps but also in the design of sophisticated control systems like the cockpits of aeroplanes — where the most commonly used controls are kept nearest to the pilot.

Similarly, in a Michelin Star restaurant kitchen, the most frequently used cooking implements and ingredients are within arms reach of the chef, and not hidden in drawers.

To maximize your productivity, design your workspace in a way that reduces operational overhead. And the best way to do it is to focus on making the highest frequency tasks as easy as possible.

Additionally, the principle of frequency doesn’t just apply to workspaces, but also to people and behaviour. That’s the reason why they tell you to surround yourself with people who inspire you and you wish to emulate.

Frequency works on a subconscious level. Hence, the effect your environment has on you is huge, as it is, in some sense, the highest frequency product you use; you’re in it 24x7.

And finally, remember that productivity is not a voluntary act, it’s a side-effect of the system you inhabit. The more aligned your system and environment is with your goals, the more your productivity will be.

Naturally. Effortlessly.

3. The Principle of Momentum


Conventional advice says,

“Schedule everything on your calendar.”
“If it’s not on your calendar, it will never happen.”
“Use your calendar to be more productive every day!”

Well, I do not totally disagree with these exhortations. They have some value for sure. But what we often do is miss the forest for the trees. We confuse our calendar for our reality.

So much so that founders nowadays block large chunks of empty, unscheduled time in their calendar outside of external commitments and THAT is what allows them to be more productive!

And it’s got to do with a very simple reason:

Your body and mind have their own rhythm. And they most definitely don’t go by a calendar. Well, on some days they might, and some people may naturally do better with their schedule than others. But most of us will fail every now and then at keeping a schedule; more often than what we'd like. And if we force ourselves to follow it, it may result in burnout, exhaustion, and complete loss of interest in the activity at hand.

My suggestion:

Focus on momentum.

I’m sure it’s not just me who gets into the “zone” or the “flow state” on most days, only to be INTERRUPTED by my calendar. My calendar gets in the way of my momentum.

Momentum is precious. Once you get really engaged in any activity, that’s when you’ll start being your most creative. That’s when all the great ideas will spill out.

And this is even more important for knowledge workers who often have to engage in deep, focused work to generate great output.

So if you find another self-scheduled task getting in the way, you are better off ignoring it for the time and focusing on making the most out of the zone. You can always reschedule it later.

That’s also a reason why they say, “Meetings kill productivity.”

Because they are external commitments. There’s no way out of them without feeling a sense of guilt. And if you have scheduled tonnes of meetings on your calendar, they will often break your momentum.

You can also time your work in a way that is most in line with your body’s natural rhythm. For many, that would mean focusing on all the deep work during early mornings or late nights, when there are no distractions. And then scheduling the external commitments during the dull hours of the day, when you will anyway need some external motivation to keep your energy up.

If you design your workflow around these three principles, you will find yourself turning more productive naturally. That's the beauty of building systems versus building habits — after a threshold of investment, your systems start taking care of you instead of you having to take care of your systems.

For more tips, you can read the whole #21DaysofProductivity series. And do follow me and Raj on LinkedIn for additional insights, musings, and hot-takes around businesses and careers.

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