(11/9/20) shorten the supply chain

Kill bureaucracy by embracing the local

Hey all,

Hope you’re all doing well. In recent emails, I’ve been exploring how bureaucracies work. Here’s a quick roundup of these posts:

It was unseasonably warm on Saturday so we went to Prospect Park to enjoy our afternoon.

Saturday also coincided with the Associated Press calling the election for Biden. So the park felt a like a high-stakes Coachella.

Every five minutes, the entire park would erupt into a spontaneous wave of cheer and applause. Traffic in Park Slope was backed up for blocks. Cars honked happy little polyrhythms, pedestrians clanged pots and they hooted and they hollered.

This reminded me of a podcast episode I listened to a few months ago. Economist Abhijit Banerjee went on Tyler Cowen’s podcast some time back to discuss his new book Good Economics for Hard Times.

Banerjee and Cowen bantered on a bunch of really interesting topics, but my ears perked up when Tyler asked the following question:

Why is the quality of vegetables so much higher in India than anywhere else?

To which Banerjee responded: “Short supply chain.”

What I’m Thinking About

Short supply chain. When the distance is short between where things are produced and where they are consumed. In a short supply chain, the two are intentionally coupled and grouped together.

Whereas in most American cities we have no idea where our food comes from, Kolkata has a rich “locally-sourced” food scene.

If you go to the Gariahat Market in Kolkata, there’s this part [where you buy from] old ladies whose sons have sent them from their village to vend the okra that they’ve picked this morning.

Freshness is such an enormous part of taste, and also not designing food for durability. In the US, tomatoes are designed for durability, and that takes away from other things.

If the okra sucks, the buyers say so. If it’s tasty, the buyers will come back next time. The old ladies share this information with their sons, and the sons figure out a better way to raise okra. Okra lovers have their favorite auntie.

This creates a tight feedback loop. What you can eat is what is grown nearby. What is grown nearby is what people wish to eat.

A similar dynamic is on display in the iconic documentary Jiro Dreams of Sushi.

Every morning at the crack of dawn, Jiro’s trusted buyer goes to the fish market. Some days he comes back with nothing. The chef appreciates this dedication to quality, as that quality comes through in the taste of the food. And oftentimes, diners are so blown away by the flavors that they ask Jiro where the fish comes from.

You’ll experience something similar if you ever make it down to Tulum, Mexico. Many of the restaurants do not have preprinted menus. They serve what they have grown and caught.

In all of these examples, where the food comes from is an integral part of the experience of actually consuming the food. Compare this deep local connection to the conveyor-belt ethic of most of the heavily processed foods we consume.

Designing for a Short Supply Chain

In the world of design, you can understand what is valued by examining its core interaction — the key differentiating experience that makes your product unlike any other.

In this core interaction, you intentionally group things that you believe need to reside together. By grouping things, you decide what is important. Everything else grows around this core.

Example: Hartwood restaurant in Tulum—

“Our menu changes daily based on the sea and the land that offer us new harvests each day.”

At Hartwood, the core diner interaction couples the sourcing of the food with the eating of the food. The supply chain is necessarily short because the producing and the consuming are grouped together.

All diners learn about where the entrees come from (caught by local fishermen, picked up by staff). All diners have a full view of the kitchen as they eat. The restaurant itself is outdoors and embedded into the surrounding jungle. You can quite literally imagine driving down the coast for a bit and meeting the fishermen yourself. The local ecosystem possesses the inspiration and raw ingredients to produce the entire experience.

McDonald’s can’t compete with Hartwood on this experience because McDonald’s has a fundamentally different core. Its core decouples the sourcing of the food from the eating of it.

McDonald’s does not believe that having locally sourced food is an essential part of dining. Quite the opposite: it believes that you can (and should) get the same McDonald’s taste and service no matter which of the hundreds of thousands of its outposts you visit.

Based on the core, where do you think the produce from the Downtown Brooklyn McDonald’s comes from? Certainly not from Brooklyn.

This fundamental difference prevents McDonald’s from being able to pull off an experience that even remotely resembles the Hartwood experience.

Shortening the Supply Chain in the Digital World

The core-first concept of design isn’t new. Architect Christopher Alexander popularized it in his masterpiece (which I have not finished reading yet) The Nature of Order. Technology researcher Sangeet Choudary applied Alexander’s ideas to the digital world in his own work.

Choudary summarizes the concept like this:

“To design a building, one shouldn’t start with thinking about the building. When architects get down to thinking on paper, they start with a center and build things around and in relation to that center.”

Platform Scale, Sangeet Paul Choudary

The center of a design is the spark. It creates a clear perspective on how to view everything else.

In many popular digital products, you’ll notice a core focused on uniformity and standardization.

Many incumbents have been forced to improve their quality to compete with upstarts eating their lunch with stronger tech and design. But as uniformity and standardization has raised the quality bar in many instances, it has created a monoculture where everything looks and behaves the same way.

I believe there is a huge opportunity to reshape the core of a lot of products to shorten the supply and embrace the local + idiosyncratic.

Example: Hailing a ride on Uber vs Lyft—

The core interaction in Uber is hailing a ride quickly. As you enter your details, you see a live-updating map showing you how far the car is from you and at what time you will arrive at your destination.

The “Where Am I Going” and “How Will I Get There” are very tightly coupled. This grouping ended up being a huge innovation over traditional taxi services.

Taxis could only inform you about the “Where”. The “How” you had to figure out yourself. Stand on the street? Call the taxi company? Stick your thumb out and hope for the best?

But notice how Uber’s core interaction focuses on you and the car. You select the class of car you want to pick you up. You see the car on the map while you wait for it to arrive. You read the car make, model, and license plate info so you can easily find it.

The actual human being driver is not that important to the Uber experience. Uber does not believe drivers are instrumental to their service, apart from having a clean car and safety record.

If cars could drive themselves, Uber would gladly take that option. And the proof is right there in the core interaction they’ve designed — one that values customer waiting time over everything else.

No matter where you are in the world, Uber promises to provide a homogenous, standardized experience and service.

Compare this core to Lyft’s:

On the surface, Uber and Lyft appear to be knockoffs of each other. But looking at their core interaction, a different story emerges.

Uber will one day consist of a fleet of self-driving cars that arrive at your door within one minute of you ordering the ride. You’ll have complete control over the music, the air conditioning, and any of the other minutiae of sitting in a car. These self-driving cars will be stored at suburban hubs and deployed programmatically based on rider demand. All of this at the expense of connection with human and place.

Lyft will one day consist of drivers intimately familiar with local roads and experiences. You’ll have a great conversation and a few great recommendations of things to do in the area. These drivers will train for the job as a hospitality gig rather than a transportation gig. You’ll have the option of hailing a ride from a driver you previously had. All of this at the expense of car availability and speed of pickup.

While Uber is competing on efficiency, Lyft has an opportunity to compete on local empowerment. Shortening the supply chain.

When you get in an Uber, no words will be uttered and you’ll expect to get to your destination as quickly and smoothly as possible. When you get in a Lyft, you might have to wait a little longer, but you’ll probably leave with a new lunch spot to try or weekend trip to plan.

(In the course of writing this post, I’ve realized it is time for me to delete my Uber app and put my money where my mind is. Goodbye, sweet Uber rating, thanks for the memories.)

Viva La Localism

Whether it’s in digital products or in the real world, shortening the supply chain changes how participants in a system operate. The local comes to life.

We develop deeper relationships with our environment. If I really enjoy using a product, I’ll do whatever I can to help keep it alive and improve it. If I really enjoy working with someone, I’ll do whatever I can to work with them again and bring them more business.

We invest in local capabilities. If I work to empower those around me, I now have a group of people willing to help me out when I’m in need. Our collective local knowledge will allow us to create compelling experiences for ourselves and others.

We cultivate the resilience to endure hard times. If we understand and trust our relationships and capabilities, we can work together to adapt to any unexpected changes in the world. Everything we need is available right around us, within reach.

What emerges is a latticework of direct relationships and interactions, the tightness of which creates a web of strength. We can create a culture that operates at scale and gives a damn.

Relevant References

The Third Plate - Dan Barber: The chef and owner of the famous Blue Hill at Stone Barns restaurant details a farm-to-table philosophy that actually respects local ecosystems. Thanks to Nikhil K for the rec!

Platform Scale - Sangeet Paul Choudary: Industrial Age businesses treated their services like pipes. Extract value from one place and move it to another. The big businesses of the future will be platforms. Not extracting value, but cultivating it like a garden.

Good Economics for Hard Times - Abhijit Banerjee and Esther Duflo: I studied papers by these two in college. They were among the few that were actually testing their theories of economics in small and numerous trials the real world. This book is a synthesis of many of their findings.

I’ll be taking a step back to let some things marinate for the next few weeks. Be on the lookout for some notes from things I’ve been reading + some more recommended reads. See you out there!