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As many of the regular readers know, I’ve told this story of my wife coming into the finance meeting and making a few suggestions to drastically change Grundy County. I’ve told the story a couple of times, but it’s been awhile. I need to tell it again to set the stage for this episode as I’m going to interview my wife for the third time this week. As we know, Kerri is an elected official. Some of you know from the last podcast that I am so excited to be her guest because Kerri got invited to the White House and she gets to do a plus one and I asked if I could be the plus one. I bought new pants, new shirt, and new shoes and Kerri got a new dress. To say we’re excited is an understatement.
There’s a cool short story that leads to why Kerri got invited to the White House. Kerri’s on a number of boards as an elected official in one of the finance committee. There’s a story and I’m not going to say it perfectly, it doesn’t matter. The point is they wanted Kerri’s opinion because she runs a fairly large and growing company. The story goes, they were roughly $700,000 or $800,000 in the red. Kerri came in and said, “Let me take a look at the books.” She spotted something that was in place when the books were balanced in a surplus. She said, “Why don’t we go back to that budget since everything is identical now?” They did and all of a sudden, it was magically better.
I want to talk about some left brain stuff, some high-end very important business stuff. The title of this episode is How to Reboot a Company? How to Reinvent a Company? We’ve rebooted or reinvented at least three times in the last ten years. Without mentioning any names, 100% of our management is different than years ago. Why is that important for us?
The philosophy that went along with it, one of them is still with us, but that’s a different animal. The reason is because when you’re growing a company, you’re in a different situation as you’re growing, depending on how fast you’re growing. In the beginning, you just need help. It’s like all hands-on deck help, kids help, mom help, dad help, brother help, neighbor help, everybody who you know that can fill this void. Not necessarily the most qualified, but people who know what they’re doing or can help and put their fingers in the holes to get things done.
As you get larger, you start to realize key people need to be in these positions, “I need this person who has this special knowledge. This person has special knowledge.” As you get bigger and the numbers get bigger, you realize, “Not only do I need a key person, I need a key person of knowledge take us to the next level. We’re missing something or would have been there faster or we need to morph off into this direction.” Say this product is a bicycle and now we need the bicycle pump and we realized that our team can’t do it. We’re going to find someone whose specialty is creating and selling bicycle pumps.
You’re thinking, “You’re hiring is more strategic the faster, as well as the larger your company is.” The people who were with us in the beginning, although they were incredibly amazing people, I will not say anything negative because they are absolutely awesome. They were key to help us get to where we needed to be at that time. As we grew, we needed more knowledge.
As you get bigger, the numbers get bigger. Click To Tweet
We needed people with more expertise, people with more accountability. Accountability is key because in the beginning, it was a family thought, “We’re a good family. I’m going to hire this person because it’s my family.” Don’t get me wrong, my family works for us, but it becomes to the point where, “So and so wasn’t feeling good, they’re not going to be here or so and so is going to go on a family vacation.” We still have key things that have to get done and we need these people here. When you’re in a family, how do you get mad at someone? Needless to say, over time, we’ve morphed in from a family field to a business field to more of a corporate field with accountabilities, as well as measurements that each person has to reach.
We’re going to talk a little bit about me. One of the key management changes is you came in pretty much full-time. Please tell everybody exactly why. Be honest, you can’t hurt my feelings. We know 20% of the people reading this are wired like me. Why was it critical that you and I fight to get a nanny full-time, so you could come in as close to full-time as possible? For the people wired like me, why is it critical that a person like Kerri come in?
Ken and I have been very blessed. In 2015, someone came in and videotaped a biography of Ken and I together. One of the pieces in our biography was Ken’s brother, Billy, who works with us. He is absolutely amazing and I love him dearly. He goes, “I don’t know how they do it, but Ken and Kerri have always worked together. It works for them. It’s perfect.” You have to watch how he says it because it’s hilarious. It’s up on our website. Ken and I are built completely different, but yet the same. We’re like the rings of the Olympics where they’re separate, but yet they overlap in the middle. I have a huge awe factor for my husband. He is, to me, absolutely amazing and there are things that I go, “Can you please?”
He’s like the person sitting in the passenger seat saying, “Too fast, slow down. Speed up. You take a right, go left.” The passenger who is in the driver’s seat says, “Forget it and take over.” Ken and I, we know our differences. Ken is my idea person. He’s a big picture person and he has great ideas that need to be implemented. Once he does it, he says, “I need this done,” then he walks away and I look at him I go, “Did they follow through?” “What do you mean do they follow through? I know I told them to do it.” It’s like a kid, “Clean your room.” Unless you go in there and check to see if they’ve cleaned the room, they may never clean their room. Ken is more creative. I’m a little creative but I’m more sanguine-choleric.
I’m a choleric-sanguine when you’re a sanguine-choleric. A choleric, by definition, is the driven, dominant, wills things to happen type of person. A sanguine is the life of the party people-pleaser. A melancholy is the analytical deep thinking, accountant, engineer type. The phlegmatic is defined as peace at all cost. My wife, beautiful Kerri, is the driven, dominant, wills thing to happen. That’s 80% with 20% sanguine people pleaser, lover of people. I’m the opposite. I’m 75% people pleaser, lover of people. I don’t ever want to hurt anybody’s feelings. Feelings are way more important to me than anything else. 25% I’m still going to run you over and will things that happen. We are yin and yang all day.
Kerri’s trying to be nice. I have 0% follow-through skills. I don’t want to gain follow through skills, follow-up skills. I don’t want to remind somebody what I asked them to do a week ago. It’s not how I’m wired and to try to become that person would be a waste of time. My wife on the other hand, not only can she see around the corner and know what has to be done, she understands that if you do not inspect what you expect, it will never happen. She understands things that are managed, get done, things that aren’t managed, meaning checked up on, they don’t get done. It’s like the kid’s room. If you don’t go in there and check, nothing is going to get done. That’s pretty good.
What signs would you tell people to look for that signal it’s time to reboot their company? I love taking the example of a one-person company, a ten-person company, a 100-person company. If you know, we’ve rebooted three times. Maybe you can explain why we rebooted our company. New management, even a slight new product line. We’re not doing the events we did. We put them on pause. Why don’t you talk about that? You’ve covered it a little bit. Why did we drop Digital Footprint for a year specifically? Give a little bit of that and then we’ll go to a one and ten-person company. What were the signs that told us that it’s time to reboot?
Things were growing larger than they needed to be, that’s why the management changed. We asked questions and they didn’t have definitive answers. What happened was we decided to do more in the company to go to the office since we are pretty much a virtual company. It’s website-based. We were able to work from home most of the time, then when we started to go to the office. We realized and asked questions, one team was using one software and other team was using another software. We started to look into who the responsibilities were of and asked who was accountable. Although they had their way of doing things, we needed to be more streamlined because it wasn’t duplicatable. Unless new things are duplicatable, it used to be that each car’s handmade and then he decided, “We could do much faster if we streamline it.”
That’s the same with the website. Not entirely, but very similar. We had to change the model from onesies to streamlining it, plus having a separate division that helps to create and to grow faster. It’s looking into your company and doing a clean slate. Another thing I like to do is a zero-base balance. The bottom line is every few years, I like to look at our budgets and go from zero. Like what everybody would love to do with every other corporation or even our government, just go from zero. Do you need this? We discovered that we were paying for a service that we hadn’t used in two years.
We were spending $24,000 a month in a software we hadn’t used in six months. 20% of that we hadn’t used in two years. We hadn’t even logged in and we were still paying monthly for that software.
The important part is when you go for a zero and you start going from ground up, “Do we need?” let’s be honest, your car changes, the service person you use for your car might change. The websites you view change in two years. The same thing, software increases, the quality increases and people want to change and sometimes things are on auto renew. You think that you’re done using the service of this software company A without realizing that you’re paying for A because it is on auto renew. Now you chose to go with B thinking that A was gone. Another thing that we’ve instituted, which is every three years we go to a zero base, just tell me that you’re using it, tell me that you need it, tell me why. The big thing is why.
Accountability is key. Click To Tweet
Here’s another reason why it’s important to look at things that you’re using in your company. You look in your own closet. I have a closet and things are on the floor because there’s nowhere to hang them. I’ve ran out of space. The point is you look at what you use in your closet, you’re going to use probably four sweaters, three jeans and that’s it. The rest are one offs. If that’s a software, if that’s a membership due, if that’s an employee, that’s extra money that you could be using in your company to grow your company or start a different division. That’s why for us, it was important to go back to basics every three years.
I’m going to hit the three points Kerri hit, which come up in our meetings quite often. First is, she started by saying, “When we went to the office more often, we found we were getting answers very slowly or not at all.” The first knee-jerk answer of what signs should someone look for if it’s time to reboot, we would go to the office sometimes and we’d ask a question and seven people would look at each other, “I don’t have that answer, but we could find somebody that could get you that answer.” That began to scare us because if we asked a question with the top seven people in the room, somebody should have an immediate answer, at least something that said, “Give me two seconds. I’ll call that up on my computer.”
We were not getting that and we could tell immediately there was a problem with communication and information. The second thing Kerri went off on was the zero balance and she finished it perfectly. If you’re spending $24,000 a month on software you haven’t used in six months, that’s $150,000 that could have been put into a proactive event, a radio commercial, Facebook ads, some gross budget to grow your gross sales. That’s criminal. You’re robbing from yourself. Finally, when you zero balance, one of the reasons there’s a management shift in two years is, like Kerri asks the question, “Could we start at zero and do this every year or every two years?” Without knowing it, we ask ourselves about our people every January, “Would we hire this person again?”
We’re doing a zero balance and I can’t take any claim for this. Kerri’s the queen of it. We take stock of who’s with us and we ask the tough questions, “If we started over now, would we hire that person again?” I’m going to go into another little nugget here. We’ve had some critical managerial changes during this reboot. Can you share with the audience when we met a gentleman named Patrick Thean from Rhythm Software? We hired him on a one-year contract. Can you tell everybody what his software does and why we signed up with him for a year to help consult us like the two other billion-dollar privately held companies called Unicorns that he consults for?
Patrick is patient and amazing. Patrick’s cool thing is to help people grow their business, but while you’re growing your business, it’s an accountability. He has a book called Rhythm and he has software. I don’t remember which came first to me. It’s irrelevant. They both go side-by-side because the book is edification for him, as well as the knowledge to help you understand the software. The software, what it does is it, it lists out your responsibilities and then your measurements. I have to say, one of my responsibilities is to go through everybody’s SOPs and there’s a by date. If I don’t get it, I have a red light, which means I didn’t do a very good job because I didn’t get it done.
If I got three and I set it, so I’ll set it. Out of the seven KPIs, let’s say I reviewed five of them and I made changes, I get a yellow light. If I get all of them done by the fifteenth, I get a green light. If I get all of them done by the tenth, that’s even better, I get a super green. The bottom line is it is accountability. We all need to be accountable. We all need due dates. It’s like school. Everybody’s got their stuff done by school. You either passed or you didn’t pass. You get an A or you didn’t get an A. You get into medical school or you didn’t get into medical school. Everybody needs due dates and that’s what Patrick brought to the table. It was a software that allowed all of us to not only have clear defined responsibilities, clear defined due dates and then did it get done or did it not get done. It’s not only for us to see, all of our team gets to see it. If I don’t do my job, my management staff, my C-Suite level, they see that the owner didn’t even get her stuff done.
When no one’s accountable, the productivity goes low. Click To Tweet
What does that mean? That means they can laugh at me, “I can’t believe she didn’t get it done,” which is probably what they would do. These are great guys, but unfortunately in a different situation, they could go, “She’s not doing it. I’m not doing it. She’s not accountable. Why would I be accountable? That was dumb,” which then goes all the way down to the newest person in the company. That is now their thought process for this company, no one’s accountable. Therefore, the productivity goes low. What Patrick brought was we are all being accountable. We all have to be accountable. We all know what each other’s responsibilities are. We all will know who is doing the task. No one can hide from being responsible from their position. It sets the stage and the tone for the company of accountability. Now we’re all accountable. What do our clients feel? They feel that we’re an accountable company.
The two things that wove into that answer were clarity and accountability. When you put in the KPI for yourself and for your team, you’re showing extreme clarity. It’s numeric. There’s a number and there’s a color code. If it hits this number, it’s green. If it’s this number, it’s yellow. If it hits this number, it’s red. It’s completely clear. The key is everybody then is simply accountable to their own little marching orders to get everything to turn green. What’s beautiful is that people themselves help set the color codes and the numbers. The difference is 90% of companies and 90% of people reading this do not set any clear accountable numbers for themselves. They assume they’re ten-foot-tall and bulletproof, like, “I’m guilty of this on a weekly basis.”
They don’t set them for themselves. If you don’t set them for yourselves and it’s not a habit, you’re certainly probably not setting them for your direct reports. Quite frankly in a business for growth, that’s criminal. I want to go to two points here. We had a thing called The Campfire. That’s where people can ask us any question of any kind about business or even personal. I remember it was in our basement here. We had a mastermind group. Somebody said something like, “My sales have been flat for a couple of years and worse off, the attitude in my company is beginning to get bitter.”
What I want Kerri to speak to is, would that be a signal that it’s possibly time to reboot? Is it do you reboot the company, do you reboot the product line, the management or maybe even the owner themselves? If you hear that, let’s say there’s somewhere in a three-to 30-person size company, they’re not massive but they’re not tiny. If the office is getting bitter and sales have been flat or a slight decline, what do you think is the signal for rebooting there? That’s the signal. What do you think is the probably the symptom and the remedy?
This is when you asked about the yin and yang. My first thing that I would walk in as I would let everybody go, you don’t want to be here, you don’t have to be here. Being employed is an opportunity, it’s not a right and you either have lots of other places to go to work. If you’re happier somewhere else, which is obviously the case in this is hypothetical. They’re not happy, so then find somewhere you would be happy and make everybody happy. It’s okay to let someone go. You’ve got to let them go. It’s like paging a bird. If the bird is not happy, they’re flying, flapping around. Let the bird go and that’s how employees are. Often, they’re afraid to take that leap because change is scary. Give them the opportunity. That’s the first thing I would do.
We all need to be accountable. We all need due dates. Click To Tweet
Once that department is no longer with you, simultaneously though I would find alternative remedy of either outsourcing, if it’s possible to find if that department can be outsourced. It’s easier to let another company go than it is to continue to let employees go. I would check out the management because often, it’s the management’s tone. The management sets the tone and, in our company, we have a new management. One of the reasons is because their people had a bad attitude. The manager was absolutely wonderful, what a great guy, but he wasn’t a leader. He was good at what he did. He wasn’t a leader. Often, some people in management aren’t necessarily leaders. They’re great, amazing, capable doers who got there by chance and the inmates ran the asylum.
That might be the situation here, too, where you need to change your management and change everything. Those are the three things I would do. I would definitely look for outsourcing. If you’re not able to outsource, I would definitely, as you are getting ready to let those people go and let the management change, you simultaneously have to have management coming up or looking to see for new employees to replace them while you’re getting ready to let them go. If it’s a key position or key department in your company, you don’t want to be left hanging. You need to have a replacement ready and you don’t want to be irresponsible to yourself, your company or your clients. That all doesn’t have to happen at the same time but take the band-aid off and get it done. The rot will go into the next department and the next department and you could lose your company.
You couldn’t have made this up. I could not have set the stage. I certainly couldn’t have primed Kerri to answer in that way. If you go to the Today’s Growth Classics, a different episode, find the one where I’m explaining exactly how the transition in the MCI WorldCom Office went about. I was brought in and they had eight people. I did a weed and feed. I fired six of eight. I brought in six people that had no telecom experience at all. I also brought in new management. Everything Kerri described, your first knee-jerk reaction, “What do you mean you’d let everybody go?” I let pretty much everybody go. The only two people I kept were two people that had very little telecom experience and they were brand new to MCI WorldCom. 91 days later, that office went from last place, in 33rd place out of 33, to first place.
How did it happen? Kerri said, “If you have cancer in that office, stinking thinking and the inmates are running the asylum, they’ve got to go. Then you’ve got to bring in new management because it might’ve come from the top down and it did.” They had to go and so we brought in new systems. We got rid of stinking thinking and they kicked butt. Sometimes in business you’ve got to do the big boy stuff and it’s painful. Let’s do a summary question. Knowing the buggy whip business is no longer around, meaning hundreds of years ago people would go from New York to California on a horse and buggy. You’d need a buggy whip. There isn’t much of a buggy whip business any longer. I’m sure there’s a few.
The point is, the odds of everybody’s product line, the odds of that product line being around 30 years from now, it’s pretty slim. I might even say 10% to 20%. There is an 80% chance that that product line is not going to be around. It’s not if people have to reboot or reinvent their company, it’s when. What are some things that you can mention Kerri as advice that people could do to proactively reboot their company before they need to reboot their company?
Often, people are afraid to take the leap because change is scary. Click To Tweet
That’s the key thing is always doing it before you need to. You always have to be thinking, “What’s the next vertical?” Don’t take your eyes off of what you’re doing, which is your main product line or main service. For example, a dentist did drilling, dentists did cavity checkups, and then dentists moved to teeth whitening. Some of them moved to either having an orthodontist being next to or part of their company, becoming two companies at one time. You’re growing the company, but if you’re just doing a teeth cleaning and doing drilling, you’re limited. With your company, if you’re staying in the same vertical or staying in the same service, you’re limited and there’s going to be a new business that comes next door. You’ll always have to increase your product whether it went from the silver to that to the white filling.
No matter what, you have to be looking to see what the next product line or next availability is in your service in order to continue to have a client base because people get tired. Let’s be honest, our attention spans are pretty low. It’s the same with your product. Your product is amazing. It’s great, but you need something else to add to it. It should be something that is parallel to what you’re doing already, if it’s possible because you already have the knowledge if you’re in service space or you have the ability to make that product based on the stuff that you have in stock that’s already creating your original product. For us, we have websites. For us, we have different verticals that we’re putting together in each of our departments.
Even us, we have to have different verticals and they will be coming out shortly. We tried one vertical and it didn’t work, so we got rid of it. We did that with the subscription thing. Sometimes your secondary vertical might be great and amazing and sometimes it might not be. That’s fine, but like your main business, you don’t stop what you’re doing because that’s second vertical didn’t work. You find the next one, but to have all of your eggs in one basket and if you trip and fall over, those eggs are going to crack. Then what are you going to do? Life changes, life morphs, products change, and products morphs.
We don’t have the same Model T now. One day, I look to hopefully have my Bentley. I know the ride in the Bentley is going to be amazing and it’s surely isn’t the same as that of a Model T would have had. Even that product had to continually morph over and over again to be something absolutely amazing, what we would need and require now. It’s the same with your business. You cannot stay in the same four walls. Life changes, people’s expectations change, and we’ll see if there’s anything that you can do in your business that would be online. I don’t know if it’s product, you can add a product online or a different service. Maybe it’s a service over online service. Who knows? Figure it out, find something that you can do, and no matter what, a secondary source of income is always a great thing to have and it will help you expand your primary business.
That’s the story of Income Store. That’s the story of Today’s Growth Consultant is how do we add a second source of revenue on top of the one we currently have? For those of you that are new readers, Kerri and I urge you to check out episode one in the Today’s Growth Classic Section. It’s a different podcast. Those are our most downloaded, most listened to worldwide podcast. The number one, which is titled S-Curves is by far the most downloaded. It’s exactly what Kerri finished with. She said the phrase, “What is the second source of revenue you could go after?” and that is critical because everybody’s first and major source of revenue will stop at some point. It’s not possible to keep a main source of revenue forever.