What is Leverage

Give me a lever long enough and I can strip any bolt.

In life you get in what you put out. Leverage gets involved when what you put in is different from what you get out. It all boils down to the resources you give and receive in return for your efforts. Inputs are any resource you have; time, money, effort, focus, etc. and thy can all be impacted by leverage.

The better side of leverage is you put in less resources, and get more resources back. You have a longer lever, so for the same amount of force you put in your get more out. If you buy a software that lets you get a job done in half the time you put in half the effort for the same outcome. This is all leverage.

Likewise If you get less than you expect and it’s not worth the effort, that’s negative leverage. Hiring a new employee that drops your production SQL table or edits your Issued For Construction drawings by accident is a huge negative leverage.

This can move from concrete to abstract, but in the end it’s all about inputs and outputs. And this post focuses on what I’ve learned about the nature of leverage and how it can be harnessed for great undertakings.

What are leverage systems?

Tools are the easiest way to see leverage in action.

One week our laundry workflow got impacted when the washer broke down. We had to take clothes in to the laundromat and opted to do that instead of manually washing the clothes.

That alone was a huge undertaking.

We had to collect the clothes, drive them down to a laundromat, use the washer, and come back an hour later and take the wet clothes back to our dryer.

The time spent babysitting the clothes definitely impacted our ability to get anything done for an entire afternoon.

Without a dryer we’d have to go back and forth multiple times, without a vehicle it’d be even more of a pain.

A clothes washer is leverage, so is the dryer. Having ones you own in your own home beats communal ones. And so on. All of these are forms of leverage freeing up your time so you don’t have to spend all day washing your laundry.

Tools are just one kind of leverage.

Leverage is anything implemented that increases output or efficacy of activities you need to complete in regards to your input effort or resources.

Here are the main types to really narrow it down

• Capital (Pooled resources or loans/investors)
• Social (Employees, Relationships, Reputation
• Skills and Ability
• Automated processes (Repeated processes)
• Content (Distributable media to spread ideas or concepts)
• Tools (Physical tools, or software)

The list above is much easier to think about when you compare two people trying to accomplish something with or without the above advantages.

Starting a sandblasting business with a million dollar bank loan is a much easier process than doing so bootstrapped without any money. Having a team of employees is easier than doing it by yourself. Jobs are way easier if you have the skills to actually complete them.

Coherent workflows are easier to execute if the process is the same every time. Finding and converting new customers is way easier with a discoverable website. And Managing your finances is way easier with tax and accounting software.

Humans have been using tools and creating leverage since the dawn of the species, so it’s not an outlandish concept. More leverage is better than less leverage, obviously.

But actively seeking out and improving leverage as a goal in itself is not something I’ve thought about implementing in my life, until I played a video game which showed me all of leverage’s finer details and secrets.

Satisfactory and Factorio

A talk on the game, going from mining by hand to an automation.

The main games that lead to these revelations are Satisfactory and Factorio. As the name suggests you create manufacturing factories.

The stories start out similar, your character crash lands on an alien planet, and you start off mining iron ore by hand and work your way up to building advanced spacecraft parts and particle accelerators.

You create a certain amount of parts, for example copper wire or engines, and turn them in for “research” to unlock more advanced parts or various machines that can assemble on your behalf automatically.

Avoiding Working on Leverage Systems Radically Hamstrings your Growth

In these games you can create most parts by hand at a workshop. Every single step takes time as you mine the ore, craft parts, and combine parts into more complex items.

If you need something right away this quick and dirty approach does work. You need 50 iron plates, so you mine the ore, smelt it into ingots and then craft the plates.

Then you need 150 plates, maybe 500 to make modular frames in the future.

Doing it manually is the wrong way to play the game. It actually radically slows down your progress if you rely on it.

Even though it is quick and dirty and is much faster than setting up an assembly line to create the plates for you, it still puts you at a huge disadvantage compared to people who take the time to set up the leverage of a factory line.

Leverage, and continuous implementation of new leverages.

One of the first tools you get access to is an automated mining machine. You place it on the ore vein and it pumps out ore. Now you’re free you don’t need to spend time getting it out of the ground. You had to make some plates manually, but now you can use them to build these machines.

At the start you still need to manually retrieve the ore. Eventually you can create conveyor belts that do it on your behalf. And a smelter to turn the ore to iron ingots. Once you manually craft those plates. You can take 10 of those iron plates and create a machine that builds them for you at a rate of 5 a minute. It’s slower than you can create them yourself but it does it automatically.

Incrementally you built out a factory that does everything so you don’t have to anymore. In theory.

Setting Up Leverage Looks Deceptively Hard.

It looks bite sized and easy when I put it that way. And it’s 1000x easier than finding and implementing leverage in real life. But eventually things in the game make doing things manually look more attractive than implementing the systems.

Factories eventually become massive undertakings of hundreds of machines. Transporting parts around becomes a huge logistics nighmares of design. Eventually you’re building oil refineries, railways and setting up self driving trucks. (The game is quite addictive)

One thing I noted was it often felt like it would not be worth it to put in the effort. The time taken would feel like a lot of work. Sure I could create a factory that creates 5 computers a minute, but I can also just go get the parts from the storage bins I set up and build them when needed.

But putting in that effort to undertake the project and create the leverage system was often less effortful than just ignoring it for a long time and working around output constraints (caused by not having the leverage).

Leverage systems don’t even need to be good

What actually ended up happening is taking the time to create or improve leverage was always a better option than finding work arounds or making due with the current set-up.

Even small leverages created huge benefits.

Lets go back to the computer factory. Lets say it took 20 minutes of effort on my part to create a small one that only created 1 computer a minute.

Even that small commitment beat manually making computers on demand. Because the system had leverage and was automated. I could play the game for an hour not even thinking about computers and have 60 of them.

That computer factory output could be sent to automatically create the next item on the list (lets say supercomputers).

Crappy systems I created, still increased output and compounded. Even lame duck ones still combined with other leverage systems to create a compounding effect.

Earlier in this article I talked about all the types of leverage, and one could easily see how a business would be able to run when each of them combined to create something bigger than it’s parts.

As you collect leverages in your life or work, you can radically improve your output and achievements. Even if they are small and seem inconspicuous. Even something like a clothes dryer can save you an 2 hours a week of work.

The sinister side of leverage.

The last little tip I found out about leverage while playing the game was how incapacitating it can be.

Leverage lets you do less work for the same output.

On paper this lets you set up more leverage systems with your free time to get insane outputs in your life. While one factory hummed I could set up another.

But..

Often times human psychology takes over and the path of least resistance breeds complacency.

I often found myself creating leverage. then doing nothing with that advantage other than taking a nap or time off.

If it takes me an hour to write an article, or 10 seconds to do it with AI, in the end I just have one article. What I choose to do with that gained 59 minutes and 50 seconds makes or breaks the compounding nature of leverage.

If I create enough leverage to turn an 8 hour day into a 1 hour day but just lounge around and waste the next 7 hours then I haven’t progressed. If I do 8x the work in a work day I reap the true benefits of the leveraged systems I’ve created (including creating even more leverage).

Leverage in Action

If you’ve read this, my leverage has worked, I put in time to manually write this article and now 0 to 1 billion people could read this concept and gain from it.

Maybe the reader can gain more skills for themselves and improve their life and create more impact in the world than they could previously.

Anyone who comes in contact with it can learn a bit about how I think and implement solutions, adding to my reputation in ways a resume never would.

All you need to do is find ways to create leverage, and take the time to implement them incrementally into your processes, while maintaining the amount of effort you put in daily despite the gains in efficiency. You can leverage loans and capital, tools and software, inspire others to work for you, create content, and acquire skills.

Thanks for reading.