Mike Michalowicz: Run It Like Clockwork | E52

Podcast Summary

• Entrepreneurship: Understanding Profit and Discipline: Mike Michalowicz emphasizes the importance of profit understanding, physical discipline, and simplifying entrepreneurship through his 7-step program, 'Clockwork,' and 'Profit First' framework.

  That entrepreneurship is a challenging journey filled with financial struggles and the importance of understanding profit and efficiency. Mike Michalowicz, a bestselling author and successful entrepreneur, shared his experiences of building multiple businesses and the lessons he learned along the way. He emphasized the importance of establishing a clear understanding of profit and implementing physical discipline in running a business. Mike also introduced his 7-step program, "Clockwork," which includes the importance of designating a "Queen B Role" to protect the lifeblood of a business and his "Profit First" framework for optimizing profitability. Through his experiences and insights, Mike encourages entrepreneurs to simplify the complexities of entrepreneurship and learn from the struggles to create a more successful business journey.

• Productivity vs Profitability: Focus on optimizing time and profit through systems and structures, not just working faster.

  Productivity, as commonly understood, can be a trap for entrepreneurs. The speaker, an experienced businessperson and author, shared his encounter with a productivity expert who had a change of heart and realized that productivity techniques, while making you work faster, don't necessarily lead to more efficiency or profit. Instead, the expert suggested focusing on optimizing time and profit through systems and structures, which is what the speaker's books, "Clockwork" and "Profit First," advocate for. The speaker's personal experience of testing and implementing these concepts in his own businesses supports their effectiveness.

• Transitioning from doing to designing: Entrepreneurs should focus on being designers, setting clear outcomes, and delegating decision making to employees for increased productivity and business growth.

  Entrepreneurs often find themselves with more time due to increased productivity, but instead of taking a break or delegating tasks, they take on even more work. This cycle leads to a lack of productivity and a need for new tools and ways to work more efficiently. However, it's important for business owners to transition from being the "doer" to being the "designer." A designer focuses on the clear outcomes they want for their business, both short and long term, and leverages their resources, including people and software, to achieve those outcomes. The entrepreneur's journey involves climbing the ladder from doing to deciding, but getting stuck in the deciding phase, where the owner retains all decision making, can hinder growth. Instead, building a system around decision making and allowing employees to learn and make decisions can lead to greater productivity and success for the business.

• Delegating desired outcomes: Effective delegation empowers employees by assigning outcomes, allowing decision-making freedom, and approving choices, leading to growth and alignment of individual and organizational goals.

  Effective delegation involves assigning desired outcomes rather than specific tasks, giving employees the freedom to make decisions, and approving their decisions, even the bad ones. This approach empowers employees, fosters growth, and ultimately leads to the highest level of leadership: designing, where the vision for the organization and individual goals are aligned. During a recent business retreat, I experienced this firsthand as we worked on defining our personal and professional visions, demonstrating the importance of delegation in achieving both individual and organizational success.

• Recognize the bottleneck and let go of control for business growth: Focus on hiring for passion and developing raw talent to overcome the bottleneck and unlock unexpected growth for your business.

  For business owners to move their companies forward towards a shared vision, they need to focus on vision alignment and delegating tasks to their team. However, letting go of control can be challenging, especially when dealing with less experienced employees. It's essential to recognize that the bottleneck in most businesses is often the owner, and an ego check is necessary to admit that not everything needs to be done by us. When hiring, focus on passion, interest, and cultural fit, as these qualities cannot be taught. Developing raw talent into a skill requires training and patience. In the case of Jenna, who started with no writing experience, the team identified her passion for writing and provided her with opportunities to grow. Through voice management training, persuasion techniques, and involvement in launches, Jenna's innate ability was developed into a valuable skill for the business. In conclusion, recognizing the bottleneck in the business and letting go of control can be challenging, but it's crucial for growth. Hiring for passion and developing raw talent can lead to unexpected but valuable contributions to the team.

• The importance of passion and efficiency in learning and business: Passion for learning new things and effective time management are crucial for success. Analyze how time is spent, prioritize designing, and focus on production for business efficiency using the 7-step framework.

  Having a passion or interest for something is more important than having existing skills when it comes to learning new things and being successful. The speaker shares his experience of hiring people with various skill sets and how trying to unlearn their ingrained processes caused conflicts. He also emphasizes the importance of investing and managing investments effectively, which he achieved by using Yahoo Finance to link up all his accounts in one place. Another key takeaway from the discussion is the 7-step framework outlined in the speaker's book to help businesses run efficiently. The first step is analyzing how time is spent and prioritizing designing over just doing. The second step is the concept of the Queen Bee Role (QBR), which is based on observing the efficiency of bee colonies and focusing on the most important function in an organization, which is production. The speaker found that the most efficient businesses follow a simple rule set, similar to how a queen bee lays eggs and every bee is programmed to produce eggs. This concept can help businesses prioritize their functions and become more efficient.

• The Queen Bee Role: Protecting and Enhancing a Business's Promise: Focus on the Queen Bee Role (QBR) - the critical function that ensures business promise is delivered. Prioritize it, protect it, and optimize it. Capture processes effectively through videos or recordings for knowledge transfer. Balance the team by utilizing strengths and supporting weaknesses.

  Every business, like a beehive, relies on a critical function that ensures its promise is delivered. This function is the "Queen Bee Role" (QBR), and it's the most important activity that supports the business's reputation. In a beehive, it's egg production. In a business, it could be anything from writing excellent books for an author to delivering high-quality products or services. The second level is protecting and serving the QBR. Every employee, including the business owner, must ensure that the QBR is prioritized and functioning optimally. If other tasks need to be compromised, the QBR should remain the focus. The third level is capturing systems. Instead of creating standard operating procedures (SOPs), it's more effective to capture the process as it's being done through videos or recordings. This way, the knowledge is passed on effectively, and it doesn't leave the organization when an employee departs. The final level is balancing the team. It's essential to maintain a harmonious work environment where each team member's strengths are utilized effectively, and their weaknesses are supported. By understanding and valuing each other's contributions, a team can work together more efficiently and effectively.

• Match talents to tasks for efficient teams: Identify and cater to your ideal customer base for business success and alignment with interests and values

  Balancing a team involves matching people's talents to their tasks rather than fitting them into predefined roles based on titles. This approach leads to a more efficient and productive team. Another key point is committing to serving specific clients that resonate with your business and that you enjoy working with. By doing so, you can build a business that aligns with your interests and values, and that can thrive even in your absence. Additionally, it's important to remember that pivoting your business to serve a different client base may not always lead to long-term success if you don't truly enjoy the new direction. Instead, focus on identifying and catering to your ideal customer base.

• Focus on profitable clients and offerings: Analyze and prioritize clients and offerings for profitability to optimize resources and improve revenue and profitability.

  Focusing on identifying and nurturing the most profitable clients and offerings, as per the Pareto principle, can significantly enhance a business's revenue and profitability. By analyzing and prioritizing clients based on their profitability and the profitability of the offerings they engage with, businesses can optimize their resources and improve overall mental and financial well-being. This can lead to the removal of unprofitable clients, transitioning clients to more profitable offerings, and focusing on the best clients and offerings that bring the most joy and success to the business.

• Make profitability a habit for sustainable growth: Consider profit first by taking a percentage of sales and allocating it to profit before expenses to manage resources effectively and encourage long-term focus on profitability

  Focusing on profitability as a habit rather than an end-of-year event can significantly improve business performance. By considering profit first, businesses can prioritize it and make decisions accordingly. Traditional accounting methods, which focus on sales minus expenses equals profit, can be misleading and result in a never-ending cycle of selling more yet profiting less. Instead, businesses should adopt the profit first mentality, which involves taking a predetermined percentage of sales and allocating it to profit before spending on expenses. This approach not only helps businesses manage their resources more effectively but also encourages a long-term focus on profitability. As Aristotle once said, "We are what we repeatedly do. Excellence then is not an act, but a habit." By making profitability a habit, businesses can build a foundation for sustainable growth.

• Savoring present moments and prioritizing health are crucial components of profitability in life.: Making a profit isn't only about earning more money, it's also about practicing mindfulness and prioritizing health for a fulfilling life.

  Profit is not just about making more money, but also about savoring present moments and prioritizing health. Mike Michalowicz, an entrepreneur and author, suggests taking out profit first in business to encourage "forced frugality" and innovation. This concept, based on Parkinson's Theory, suggests that when resources are limited, we consume less and become more resourceful. Michalowicz applies this concept to money by allocating it to different purposes before spending it. However, profitability extends beyond just financial gains. Savoring present moments and prioritizing health are crucial components of profitability in life. By practicing mindfulness and prioritizing health, we can fully live out our potential and experience the joy and happiness that surrounds us. To learn more about Michalowicz and his work, visit his website at mike motorbike.com, where he offers free chapters from his books and hosts the podcast "Entrepreneurship Elevated."

• The power of continuous learning and engagement: Stay open to new ideas, build meaningful relationships, and embrace resilience for personal and professional growth.

  The importance of continuous learning and engagement in personal and professional growth. Hala Taha, the guest on the Young and Profiting Podcast, shared her experiences and insights on various topics, including the power of networking, the value of mentors, and the importance of staying curious. She emphasized the importance of being open to new ideas and experiences, and the benefits of being active in communities where you can learn and grow. Hala also shared her experiences with building a personal brand and the importance of authenticity and consistency in online presence. She encouraged listeners to engage with their audience and build meaningful relationships, whether through social media or in-person events. Another key takeaway from the conversation was the importance of resilience and adaptability in the face of challenges. Hala shared her experiences with setbacks and failures, and how she learned to bounce back and use those experiences as opportunities for growth. Overall, this conversation was a reminder that personal and professional growth is an ongoing process, and that there are always opportunities to learn and grow, no matter where you are in life. So, keep learning, keep engaging, and keep pushing yourself to be the best version of yourself. And don't forget to connect with Hala and the Young and Profiting community on Yap Society on Slack, and follow them on Instagram and LinkedIn for more insights and inspiration.