0:00:00.3 Kurt Baker: Looking for ways to enhance leadership and team dynamics in your business? Meet Rich McLaughlin, an expert in transforming small business teams with over 20 years of experience. Tune in as Rich reveals practical strategies for driving growth and fostering a collaborative workplace. All right, Rich, thanks for coming on. I know you’re an expert in this space, so help us out with I guess how you got involved and what you see going on out there. And ’cause you deal mainly with small to mid-sized businesses, right? My understanding?
0:00:33.8 Rich McLaughlin: Correct, correct. Thank you Kurt. And yeah, as I was thinking about this, really my first two most formative experiences that led me to this work happened in college, believe it or not, when I was a floor supervisor for a couple of years, and I had to get 56 guys to play nicely together. And [laughter] learned very quickly.
0:00:58.1 Kurt Baker: In college? That’s awesome. [laughter]
0:01:00.2 Rich McLaughlin: Yes. Yes. And I learned very quickly that I needed to be able to have conversations with people around what’s okay and what’s not okay. And I also learned the difference between trying to drive compliance versus commitment. And of course, I wanted to get to commitment and not get them just to comply. And that required me to use all different kinds of ways to engage them rather than resort to using my authority, which I knew was not the right answer.
0:01:32.9 Kurt Baker: Right.
0:01:33.0 Rich McLaughlin: So that got me started on this path of paying attention to how do you really engage folks in the most effective way and ultimately teams that you’re on or trying to lead. The other one that was interesting that happened in that same time period was my senior year I got to… I was a manager at our student union, so it was another leadership experience leading peers. And we were hosting a regional conference at our student center, and I happened to submit a proposal for a workshop on motivation. And lo and behold, it gets accepted, and I’m like, “Oh my gosh, I gotta go put this together now.” So I knew going in that, well, look, I’m 22 years old, a senior in college, and all the people that are gonna be in my breakout session are all gonna be older, full-time working folks. And I’m sitting there thinking, how they’re gonna react to this 22-year-old talking to them about motivation? And I knew that trying to come across as an expert was not gonna be the right way to go. So I came up with a design with…
0:02:35.4 Rich McLaughlin: In essence, I just threw questions out to them at the tables, asked them to discuss, and then facilitated conversation around, “What did you guys discuss? Where’d you land?” And got a great response to that, and they really enjoyed that. I think I honored the wisdom in the room, and so they appreciated that. And suddenly the light bulb went off where I realized, I don’t have to be the smartest guy in the room to facilitate a conversation; I just need to know how to facilitate. So that really jumpstarted me into this work and gave me a lot of courage around walking in any room and knowing that I don’t need to be the smartest person in the room. In fact, that’s probably gonna work against me if I try to be. So I’ve tried to take that lesson to every team I’ve worked with over the years and the leaders of those teams to get ’em to understand that if you wanna get the most out of your team, you want to bring some humility to the conversation and let them show you how smart they are.
0:03:34.1 Kurt Baker: I would agree 100%. I think it’s incredible that you figured that out at 22 years old, frankly.
[chuckle]
0:03:41.2 Kurt Baker: ‘Cause I think the old styles, I don’t wanna date ourselves too badly, but the old style was really top-down “Manage it,” right? You set out the rules and regs and almost like the military, “This is the way it’s done and it’s worked for a couple of 100 years so listen to me and do it this way.”
0:03:57.0 Rich McLaughlin: Right.
0:03:57.0 Kurt Baker: Whereas the newer style is more about, “I’m gonna assign you with a task or a project, and you can work on the details as long as we end up meeting the goals, and I’ll coach you along if that becomes necessary at some point. But as much as I can rely on your experience, the better.” And I agree, it sounds like you created essentially a mastermind group by facilitating the expertise in the room of people that were much older than you and more experienced, and respected that expertise, which I know now being on the other side of that fence, having a 22-year-old come in the room I’d be like, “Hmm, I don’t know. Let me think.” [laughter]
0:04:33.1 Rich McLaughlin: Yeah. Exactly.
0:04:34.2 Kurt Baker: “I’m not so sure.” [laughter] I’m not sure how much they’re gonna add to the conversation, but if they got us to talk together, I could definitely see how I would be like, “Oh, that’s pretty cool,” right?
0:04:44.0 Rich McLaughlin: Yes.
0:04:45.8 Kurt Baker: So did anything… I’m just interested in what maybe… That’s a pretty insightful thing to know at 22 years old, is the only thing I’m thinking, so maybe it’s pretty like, “Hey… “
[overlapping conversation]
0:04:55.1 Rich McLaughlin: Well, I don’t know if I was that conscious of it, honestly. I just kind of knew it wasn’t gonna work.
[overlapping conversation]
0:05:00.0 Kurt Baker: Okay. That’s great.
0:05:01.1 Rich McLaughlin: I just knew that… It was almost the circumstance drove it from the standpoint of I was like, “Well, I can’t go in there as an expert. It’s just, it would be laughable.” So I almost resorted to, “Let me go with something that I think might work,” and then it did and I got a positive response, and I’m almost suddenly going, “Oh, okay. You don’t have to be the most knowledgeable person to be upfront leading the conversation.” And that was the light bulb.
0:05:26.4 Kurt Baker: No, I agree 100%. So now that you learned your genius there, you figured that out, which is awesome, where did you go from there to try to help business owners and people really produce a better product and be more efficient in the way they do things?
0:05:41.8 Rich McLaughlin: Yeah. So for a while I was doing it more on the larger corporate side where I was doing a lot of leadership-development-type of work, and working with teams and folks in leadership positions, just trying to get them to work together as efficiently and effectively as possible. More recently, I just pivoted to focusing on small businesses and partly just driven by the fact that A, most people, if you look at the data work for small businesses, they don’t work for large corporations. And B, I just like the idea of seeing small businesses succeed. So I think as you can imagine, a lot of these small business owners and entrepreneurs, they know maybe their business, they know their service, but they’re not necessarily schooled in “How do I lead and manage other people?” And so that’s a lot of our work from what we call our EOS practice, where we’re just helping those folks in those leadership positions learn how to develop the people underneath them so they can grow and actually have some time to enjoy running the business, not feel like they have to do it all.
0:06:50.0 Kurt Baker: And I would agree again, I think one of the things, small business owners, and I’ll throw myself into that ring, we’re pretty good at what we do, but as you try to expand and bring in more employees, you feel like “How do I let go of this stuff?” Because honestly, many times you are doing things better than the people you’re handing it off to.
0:07:10.8 Rich McLaughlin: Sure. Yeah.
0:07:11.9 Kurt Baker: But it’s literally impossible to grow unless you inspire others to take on those tasks that really aren’t the best use of your time to begin with, and just trust the process to let them grow into it. And at some point they’ll exceed your abilities too. Long term, if you do it right, you’re gonna end up with people that are much better at different tasks than you are when they first come into the process. So how do you talk to a small business owner such as myself and say, “Hey, I think we’ve got a process here where you can let go of some of these things?” Because this is their baby. They grew this thing from nothing…
0:07:48.3 Rich McLaughlin: Yes.
0:07:48.8 Kurt Baker: And when you start asking them to hand off things, that’s a little painful for some people. I know, me included. So how do you get ’em to buy into that psychology and then to work the process itself?
[laughter]
0:08:02.0 Rich McLaughlin: Well… You know…
[overlapping conversation]
0:08:02.2 Kurt Baker: How’s that?
0:08:03.9 Rich McLaughlin: If there was an easy answer to that, I’d be making a lot of money at this point.
0:08:07.0 Kurt Baker: Yeah. Well, that’s the challenge. At least I’m just being honest with you. [laughter]
0:08:11.2 Rich McLaughlin: No, you are absolutely right. That is the fundamental…
0:08:13.2 Kurt Baker: You can do different examples. I know we’re all different. We’re not all the same, obviously.
0:08:17.1 Rich McLaughlin: Right.
0:08:17.3 Kurt Baker: But just… You can give me some examples of people that you’ve worked with, and some of the things you ran into and how you worked them through that process themselves.
[overlapping conversation]
0:08:24.0 Rich McLaughlin: Yeah, yeah. So one of the things is just, is a lot of holding up the mirror, right? Where you’re asking them, “Tell me about how you’re doing it today?” and then, “How much of that of your time is being eaten up doing all of these things?” And then asking questions like, “All right, so how long is that sustainable for you?” and, “Are you enjoying working 80 hours a week feeling like you gotta do everything?” And, “How’s that working for you?” So just asking some basic questions to get them to slow down for a minute and really evaluate, “Yeah, is this gonna get us where I want us to get to?” And you’re right; there’s an element of letting go that they all struggle with, I think, to a degree because they know that, “Well, if I do it, I know it’s gonna get done, and then it’ll get done the way I like it,” all of those things.
0:09:21.2 Rich McLaughlin: And rarely are they able to just switch it on and off, and go immediately to, “Yeah, I’m gonna completely let go.” And so there’s a weaning off process. And we use some tools with them to help them start to identify. One of ’em it’s called our “delegate and elevate tool,” where we just basically ask them to look at, “What are you really good at and you have a lot of passion for?” and then, “What are you really good at but don’t have a lot of passion for?” And there’s some criteria we run by them just to get them to start to sort out some of those things and make it easy for them to start saying, “Yeah, I probably should let this go even though I like doing it, because it keeps me in the weeds and I gotta get out of the weeds.”
0:10:06.9 Rich McLaughlin: And so part of what we’re trying to show them in the big picture is, you gotta work on the business. You can’t just be 100% running the business, ’cause you’ll never get any traction and get any movement if you’re constantly running the business every week. So a big part of the EOS process is just getting them to realize that, about 20% of my time on any given day or week, I gotta be working on the business with my team, and let the folks we’ve hired run the business. And otherwise, we’re just gonna spin our wheels and stay in the holding pattern we’re in.
0:10:43.0 Kurt Baker: Absolutely, I agree 100%. We’re gonna take a quick break now. You’re listening to Master Your Finances. We will be right back.
0:10:53.0 Kurt Baker: Okay. You’re listening to Master Your Finances. I’m here with Rich McLaughlin, and we’re gonna continue on with our conversation as this EOS system, which is pretty well established in the business world, right? Entrepreneurial Operating System. And part of the problem is, we as entrepreneurs are very good typically at creating businesses and finding and meeting a need of a client base of some kind. However, when it comes time to grow that business beyond a certain amount, and we’re all a little bit different, we hit a pain point where we simply cannot work any more hours based on the structure we have in place that we’ve grown by. And now this is where coaching and processes and things like that truly benefit us if we’ll listen and we’ll actually implement [chuckle] them, because it’ll free up our time to really focus on what we do best, which is usually, meeting the needs of our client base and truly helping ’em in a way that no one else can, because we saw the original need ourselves, frankly.
0:11:54.9 Kurt Baker: So a lot of these pieces we can put in place. I know I’ve done things like try to get rid of my inbox, try to get rid of accounting, try to get rid of a lot of these things that I can do. But they take up a lot of time. If you start adding it up, it’s hours and hours a week that could be better on me serving my client base. And so that’s what I would prefer to do and what I enjoy the most. So, Rich, what kind of things do you see happen with different entrepreneurs, and how do you walk them through this simple but difficult process? [chuckle] Which is what I would call it. [laughter]
[overlapping conversation]
0:12:25.1 Rich McLaughlin: Great question. Yes. Great question. So one of the things I like about the EOS model and the tools is that they’re not hard to understand. They are pretty simple. And we start with this model where we say, we’re gonna look at six areas that every business owner needs to look at. And they’re not gonna surprise anybody. First one being the Vision one, are we all on the same page around where we’re trying to go, how we’re gonna get there? And if I pulled aside anybody working in the business at any given moment and I asked them, “What are you working on? And how does that connect to where we’re trying to go?” that they would be able to explain that to me and make that very clear. If I could do that, you are doing really well on the vision end. Now, I would say in most cases that’s probably… They’re not quite there. Maybe the leadership team’s all on the same page if that, even sometimes we find that even the leadership team’s not on the same page. So we start there, let’s get the leadership team on the same page around where we’re trying to go. And then we ultimately gotta communicate that to everyone so that they all understand when they show up each day, what’s this thing we’re trying to move forward.
0:13:34.3 Rich McLaughlin: So Vision is one. The second one is where you see a lot of the issues come up, and that is the People category. And then the people category, we look at two things. We look at first, do we have the right people inside here from a culture fit? We wanna attract people that fit our value system in terms of how we wanna work together and how we want to see this business grow and the way we interact together. So that’s the first question, Do we got the right people from a culture fit? And the second one is a little trickier, and that is, Do we get the right people in the right seats? So it’s a kind of a Jim Collins, if you’re familiar with the Good to Great stuff, talking about… This is a classic thing that happens in a family-run business. Uncle Joe is in the marketing role because he was a warm body that we knew at that time, right? But when we step back and look at that, we realize, “I’m not sure Uncle Joe’s the right fit for that role,” when we think about what we really need in that role. So part of our job is to hold the mirror up and say, “You’re telling me this is what you need in this role, and right now you’re saying Uncle Joe’s not quite the right fit for that. So maybe we can find something else that plays to Uncle Joe’s strengths, and then let’s start working on getting somebody that fits that role a little bit better.”
0:14:50.0 Rich McLaughlin: So a lot of the stuff comes up in the people one. So we go from Vision to People. Then we go to the Data side, and that’s nothing more than making sure we’re managing by fact rather than emotion of the moment. And are we looking at the right five to 15 maybe key metrics that we need to keep on top of to know the health of the business? And so first and foremost, it’s just figuring that out. And it takes… Sometimes we find in working with clients, it might take up to a year working with them to get their scorecard right. Meaning, we finally fine-tuned it to the point that, yes, these are the things that if we keep on top of these, it gives us a leading indicator of where we’re going and how we’re doing. But that takes some time. So we tell them, “We’re not gonna get that the first time we sit down together. We’re gonna work that over time.” And then ultimately everybody in the organization should have some metric that they know that this is what helps me drive my part of the business here that I gotta pay attention to and own.
0:16:00.1 Rich McLaughlin: So that’s Vision, People, Data. Then we go over to what we call the Issues box. And that is, once we start looking at Vision, People, and Data, we start to notice issues pop up. Every company has issues they’re trying to stay on top of, and we are just trying to show them a discipline around, “How do we keep track of them?” and then, “How do we address them in a diligent way?” And we talk them through a process that we use around that. We just call it IDS for short, meaning, we Identify what the issue is, what the real issue is, then we Discuss it briefly, and then we Solve it. Somebody has to own it or a couple of people have to own it, and they have to tend to it between this meeting and next meeting, and so that we don’t just talk about it. The last thing we wanna do is get together and just talk about our issues. We wanna resolve them. So that’s a discipline thing. Nothing magic about that other than being disciplined about how we run those, what we call “level 10 meetings.” Level 10, meaning, every time we get together, we wanna feel like we are focused, we’re working stuff through, we’re discussing and using our time effectively, and we come out of that meeting feeling like that was a 10 in terms of quality of the meeting.
0:17:15.3 Rich McLaughlin: So we may not get there every time, but we wanna shoot for 10 as our response to, “Was that a good use of our hour or 90 minutes?” whatever it might be. After Issues, we go over Process. And it’s nothing more than saying, Do we have our processes documented at some level so that we can bring people on and train them and scale not a 100-page SOP type of thing, but maybe a couple of pages for each of our core processes so that we can train and coach people accordingly, so that we are following the process that we tend to follow 80% of the time? It’s not worrying about the 20% of the variations that come up. It’s really, “What do we do 80% of the time? Let’s make sure we got that documented.” And then similar to the vision that everyone’s following that process so that we all know, this is how we do our work.
0:18:08.4 Rich McLaughlin: Last one is what we call Traction. Traction is nothing more than quarterly figuring out, What are our rocks or our goals that we need to tend to as we work on the business? Meaning, every quarter the leadership team as well as people throughout the organization has certain things that they’re tasked to do that improve the business so that we’re working on the business while we run the business. So 80% of the time we’ll be running the business, but we wanna spend some of our time each week working on the business. So everybody has rocks that they’re working on. And when we come to our meetings, we’re updating each other about where we are on our rocks. And that’s where a lot of the accountability comes in. So that everybody knows each quarter, I got a rock or two that I’m working on and I’m accountable to the team to deliver on that rock, so that we can move this business forward. That’s the six areas.
0:19:05.0 Kurt Baker: That’s awesome. That’s really awesome. Yeah. So the first thing I heard in the first one was really getting on the same page, I think with the mission of the company. I know a lot of companies have a clear, concise statement of their actual mission, like who do they serve? What gets us up in the morning? Because you hear this over and over again where companies lose sight of what their true mission is.
0:19:31.8 Rich McLaughlin: Yes.
0:19:33.2 Kurt Baker: Right? So are you… And, I don’t know; what was… I’m trying to think of some examples now. So, I don’t know, like Blockbuster thought they were in the CD delivery business, but they were actually in the movie content delivery business. So when Netflix came along and found a better way to do their business, they wiped them out.
0:19:50.1 Rich McLaughlin: Right.
0:19:50.7 Kurt Baker: So sometimes you lose sight of, How are you actually really serving the client? And as times adjust and change, are you truly doing it in the best way for the client experience, right?
0:20:04.1 Rich McLaughlin: Right.
0:20:04.7 Kurt Baker: And I know you’ve got a lot of financial services going through that, right? There’s a lot more involved in the advanced planning side of it than just investment management, right? It’s an evolving business. And every business has an evolution they’re going through. And if you’re not evolving, that means you’re probably being disrupted and don’t realize it. [chuckle]
0:20:23.2 Rich McLaughlin: Yes, yes. Right.
0:20:25.0 Kurt Baker: So you have to be careful. So do you have any examples of where companies have really noticed something and said, “Hey, we’re not really in this business, maybe we were in this business instead?” Right? So I know I’ve seen that time and time again where people lose a little bit of track of what they think they do, but that’s not really what they do. [chuckle]
0:20:48.0 Rich McLaughlin: Right. Right.
0:20:50.4 Kurt Baker: I know you can be honest about that. I think…
[overlapping conversation]
0:20:50.8 Rich McLaughlin: Wow, that’s a great question. In that Vision piece, we spent some time talking about, “What’s our core focus?” and, “What are we really good at?”, “How are we distinct from others if we are?” those kinds of questions. As I was listening to you, the thing that popped into my head that I think a lot of people are trying to figure out right now is, What’s AI gonna do to our market? Right?
0:21:15.3 Kurt Baker: Sure. Yeah.
0:21:16.8 Rich McLaughlin: So with ChatGPTs and the other AI platforms out there, where what is now what you would think of as kind of brain work of sorts. If it can be routinized, that’s a prime target for AI disruption where the one that I was told about a few years ago was radiologists. You can put scans, there was a script scans into a AI app, and with 98 point such and such percent accuracy, they’re gonna be able to tell you what if anything’s going on in that scan. And so that means, well…
[overlapping conversation]
0:22:02.8 Kurt Baker: We’re gonna have to do something with it no matter how good AI gets. At some point, I believe… And a human being needs to get involved, so we’re gonna evolve.
0:22:10.1 Rich McLaughlin: Absolutely. Absolutely.
[overlapping conversation]
0:22:11.0 Kurt Baker: But, yeah, we’re gonna take another quick break. You’re listening to Master Your Finances. We’ll be right back.
0:22:20.8 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m with Rich McLaughlin, and we’re talking about how AI might be affecting us. That’s where we left off. And I think that’s a fascinating topic right now. So tell us a little bit about your thoughts, and I’ll follow with my thoughts about it. So how do you think AI is going to affect the small businesses that you’re currently working with, and how are you talking to them and what are they doing about it in general? If you wanna tell me.
0:22:45.2 Rich McLaughlin: Yeah. Yeah. So, great question. And I think AI is gonna impact us in ways we can’t even imagine right now. And anything that could be routinized, even brain work that can be routinized is up for impact from AI. Now, you’re gonna see it, I think, much more in larger organizations where they have a lot of employees doing what I would call routinized work: Claims processing, or whatever the case may be, where they’re doing thousands and thousands of things where there may be some patterns in existence that the AI can pick it up a lot faster than the average human. So I was thinking of one more recently in my learning and development work where I’m putting on workshops for clients, where I put into ChatGPT and I said, “Hey, what should be in an XYZ workshop?” And sure enough, within minutes, it spat out an outline for me. And I was like, “Wow, that was great.”
0:23:47.0 Rich McLaughlin: Now, of course, it didn’t get me all the way there. I would say it got me about 80% there, ’cause we were chatting earlier that it’s never gonna fully replace the human element where we need to add some of our judgment as to… It can only give us straight generic content pulling from existing sources. It’s not gonna be able to provide nuance. And that’s where the human eyes come into play. So I had to look at this outline and say, “Okay, yeah, it’s about 80% there, but now I got to tweak it a little bit to polish the rough edges.” So I think you have to look at it as a tool. It’s gonna help us do our jobs a little faster, a little easier. And why not allow that to happen, and just know that you’re still gonna need to be there to bring the human element back into it.
0:24:40.4 Kurt Baker: Yeah, and I would agree with that. And I think people are… First of all, you have to incorporate AI into your business. There’s no question about it. If you don’t, you’re gonna get disrupted out of whatever business you’re in. It doesn’t even matter. It could be anything. It can be all nuanced for a living. At some point, if you don’t throw AI in there, you’re gonna get disrupted by somebody who is. But the other side of it, I think, Rich, you talked about very well is that, we are human beings and we like to communicate with each other on a human level. So even if you… People are creating like full-blown content, educational programs and so forth, right?
0:25:14.9 Rich McLaughlin: Mm-hmm.
0:25:15.2 Kurt Baker: But if you think of it, if you went to a college or any high school, whatever school you went to, you could have the greatest book in the world in front of you, but somebody has to deliver and connect that information to you in a way that’s on a personal basis that triggers your brain and helps you to learn the way that you learn. And we’re a long way from AI being able to do something like that. And frankly, I think no matter how good it gets, we still wanna communicate with each other. It’s just, this is gonna do a lot of the grunt work. It’s gonna help us do that, triggering our memory of… Okay, we wanna make sure we don’t forget, whatever. You just gave six points that you have to go through the EOS process. If I didn’t know any of those, and I just said, “Hey, what are some things I should do to improve my business?” Well, I can get… Okay, now I’ve got the six points, but now I have to implement them.
0:26:02.5 Kurt Baker: And every business is different. And I have to come up with a very specific design based on my client base and based on who I am as a business owner and my employees. And everybody has to be working together to really focus in on that little fractile of a client that we’re really trying to go after and assist. So I just think it’s gonna become a way for us to deliver services better, faster, and more effectively than in the past. And we’re gonna get to do the fun parts, the best parts, the things that we as human beings do really, really well, which is to communicate with each other and help each other improve and do better. So, that’s my personal blah. My personal blah about all that, So… [laughter]
0:26:45.2 Rich McLaughlin: No, I agree with you, Kurt. I was talking to somebody earlier today about… That in my mind, content is free anymore, right? ‘Cause you can get content anywhere and everywhere. And of course the ChatGPTs and the other AI platforms can give you all the content you need. You still need to A, connect with the people in the room and get them to… And read the group and get them to a place where they will be open to being influenced by the content. And that’s not something I think you can outsource to an AI application.
0:27:17.8 Kurt Baker: Definitely not. So that gets us to People. And that was your point two, which honestly I found the most intriguing and probably the area that I find to be, just this is personally again, the most difficult one to solve for.
0:27:36.4 Rich McLaughlin: Yes.
0:27:37.3 Kurt Baker: Because we’re all… People are people, and you have to find ways to connect people with the things they love to do and they do best. And also to manage those people in a way that they run as independently as possible, and get the projects done so I’m not working 80 hours a week overseeing this whole thing and I can expand it. So can you walk us through a little bit of that? Because that’s an area… I remember Merv Griffin years ago, and I’m probably dating myself. He says, the number one attribute to his success was his ability to hire right.
0:28:09.8 Rich McLaughlin: Yeah, good for him.
0:28:11.1 Kurt Baker: And you hear that, you hear that over and over with different people in different ways. And in fact, that’s tech, right? Tech is known for hiring people and letting them run, you know? [laughter] And letting them be creative and really solve problems very quickly. And that’s why you see some of these companies go from nothing to multi-billion dollar companies in literally a couple of years sometimes. Because they’ve learned the power of allowing people to really produce in a way that if you tried to top down management, it would not occur. It just simply can’t happen.
0:28:43.8 Rich McLaughlin: Yeah.
0:28:44.8 Kurt Baker: So anyway, what are your thoughts about the People aspect? And how do you find those right people, or how do you reallocate the people you might already have? And then how do you bring in the new ones as you’re trying to expand and you have to hire additional people to help out?
0:29:00.0 Rich McLaughlin: Yeah. Well, there’s a lot there to unpack. So how do you get the right people in? So I go back to my college experiences again, and I’ve learned so many cool things going through that. So as part of the recruiting process to become a floor supervisor, I distinctly remember they… Of course, you went through your normal individual interviews with people and, you know? You know how those go. They went, “Tell me what your strengths and weaknesses,” and, you know? They have a formula that… And there’s a fiber. What was interesting that they did is they put a number of the candidates in a room and sat in a circle and gave them a task to do together. And then others on the ground on the outside were watching. And what they were looking for was not that who’s the smartest person in the group, and who could dominate the conversation and sway the group. They wanted to see, how well did we work together? And I thought that was so interesting when I came away and realized and asked them why they did it that way. And I thought, and so many companies to even to this day still don’t do that, I think.
0:30:07.3 Kurt Baker: Really?
0:30:08.0 Rich McLaughlin: ‘Cause I think in a one-on-one… Yeah, in a one-on-one situation, you can always say the right things. “Yeah, teamwork. I love it. I breathe it every day.” But put them in a scenario where they actually have to work together with some teammates, you may see a different story.
0:30:21.0 Kurt Baker: Right.
0:30:21.1 Rich McLaughlin: So I think we need to rethink about how we observe and evaluate people in both one-on-one scenarios as well as within a team scenario, because you could probably think about, I might in a one-on-one scenario come across one way, but in a team scenario, come across a very different way. So that’s one way to think about, how do I make sure I’m bringing the right people into the company that fit the value system that we’re looking for. From the leadership standpoint, I find that just… I keep coming back to this notion that the really effective leaders always remember that my job is to focus on the What and the Why, and stay out of the How. And if I can do that, you’re gonna do two things. You’re gonna both give folks the necessary structure and sense of the lanes they need to stay in, ’cause we need that, and they need that. And you’re also giving them the freedom that they desire in terms of how they go about doing their work, because everybody likes to express themselves in a way they do their work.
0:31:21.1 Rich McLaughlin: And so as a good leader, I don’t wanna inhibit that. I wanna give them that freedom, but I also need to give them some structure and some lanes so that we’re not all doing our own thing. So I think most leaders kind of realize, yes, that’s this line I have to straddle. I have to give some structure and some lanes, but I also wanna give maximum freedom as much as possible. And know that not everybody loves that. There are some people that might wanna come work for you that will sit there and tell you, “No, I want you to tell me exactly how to do it.” And then I’d say, “Well, they’re probably not a good fit here,” because I don’t want somebody coming in here with the attitude, “I don’t wanna think, I just wanna do what you tell me.”
0:32:02.3 Kurt Baker: Yeah. No, and I agree with that. And I believe you said that the… When they have a clear indication of what are they doing… And I think the biggie was the Why. Because a lot of times you’ll give people a project, here’s what we’re gonna do. If they don’t understand why this is important to the service or product or whatever you’re doing as a business, they’ll lose sight of… When they come across a challenge, they don’t really… “Why do we need to do this? It doesn’t make any sense to me.” But if management explains, “This is why this is important to our overall company,” because you’re segregated off maybe in this little task that you’re doing, and you may not really see the big picture like leadership does. And they really need to share as transparently as possible, why are we doing all the things that we’re doing? And allow them that flexibility to really solve… Because they’re right there on the front line, and they’re gonna see things faster than you will, as far as… “Well, maybe you thought that was the right way to do it, but this is what I’m seeing. Maybe this other way might be a little bit more.” And they can test it and try it. And they can come back and say, “Look, I tried this other way, it’s actually working better. So that’s why I’m doing it.” So I think it’s a really… A key way to push the decision-making process as far to the front line as you can. It’s still managing control at some level, right?
0:33:24.0 Rich McLaughlin: Yeah. And…
[overlapping conversation]
0:33:25.3 Kurt Baker: All right. Let’s cut. We’re at another break here. Another break. We’re gonna come right back. You’re listening to Master Your Finances.
0:33:33.2 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I am here with Rich McLaughlin. The people I think is always the biggest challenge, but once you get that figured out, you talked about managing the data, which of course is really, really important. And all of us should be tracking and managing our data. And then as the issues pop up, you need to address those issues. But the one in this last segment, I’d really like to delve into a little bit is that process long-term. Because just from what I’ve noticed is that until you get your business into a systematic process that can be easily explained to somebody else, either internally or externally, you really don’t have a business that’s easy to manage. And when you go to sell it or bring in investors, you need to be able to easily explain, “This is how we actually are… Why we’re successful, and how we’re doing it.” So what are your thoughts about that? How to get that business really to that point where it’s a systemized process that works, right?
0:34:35.0 Rich McLaughlin: Yeah. Great question, Kurt. And it made me… It makes me think about, when did I suddenly develop my process mindset, I’d like to say. And so for me, it happened back during one of my internal jobs when I was working for a big manufacturer, and I was going around a bunch of their plants, and I was part of the total quality management education effort at that time. And there was a big emphasis on understanding your system, right? And so inevitably the people at the plant would want to take me on a plant tour. And so we’d often start wherever they found me and, “Well, I’ll start here.” And so, I might be in the admin building and, “Yeah, this is the finance group.” And I would always stop them after maybe the first couple. And I say, “No, no, no, no, no. Take me to receiving, start me there as if I’m raw material coming in, and then take me through the plant the way raw material goes through the plant and ends up at shipping, so I can really very quickly understand what you guys do here.”
0:35:39.4 Rich McLaughlin: And so to me, that was way more enlightening to get me up to speed very quickly about what goes on there, how they run their overall process, and where the pain points might be. And so ever since I’ve had this, just, I guess what I would call a “process mindset” and try to get people to understand that a lot of times it’s not that people come to work planning on screwing up, that process gets in the way. And so when mistakes happen, my caution to leaders is don’t look for people to blame, look at the process. Because usually it’s the process that’s getting in the way and just making it difficult for them to do their job. Sometimes it might be the people, but it’s usually not. It’s usually a process issue going on. So part of what we do is work with these leadership teams to, first, again, document at a high level, this is how we do it. Because sometimes I think, as you can probably imagine, they don’t even know. They just show up and do it every day, and they don’t necessarily take the time out to say, “Let’s document what we do,” because otherwise, how do we scale? How do we bring people in? How do we show them what we do other than trying to just do it by memory?
0:36:51.3 Rich McLaughlin: So that’s the first part. And then by having it written down, then they can start to make decisions about, Is this the smartest way? Can we simplify it? Is it too complicated? Until it’s down, it’s hard to know whether… We don’t see the unnecessary rework loops. I was just with a group in DC last week, and they had a number of reviews that went on as they were asked to release these grants. And as we started to map it out, they started to realize that you’ve got a lot of rework loops that don’t need to be there. And so once you see it, once you put it up on paper and you can see it up on the wall, so to speak, suddenly the light bulbs go off and they can just see that, “Wow, this doesn’t make sense.” So that’s why we ask them to document it, put it down on paper. And just doing that helps them to start to realize that we got processes here that are more complicated than they need to be. Maybe they made sense at the time, but they may no longer make sense based on the way the business has evolved. So it’s not, again, it’s nothing rocket science, but it’s something about getting them to put it down. I find that when I get people in a room and we put it up on the wall and have them direct their attention to the process, they stop blaming each other and start looking at the process.
0:38:10.1 Kurt Baker: Wow, that’s amazing. So once you get that process nailed down… And what I heard you say is that, and I think this is critical, you actually document what you’re doing. And I think when any of us does this, you just sit down and document what you do during the day, whether you’re a business owner or you’re a line person working in a factory, if you literally will write down like what I’m doing, and then you figure out, well, why are you doing it this way? You kind of step, take a little bit of a step back, and you never know. You might come up with some ideas that might make things more efficiently. I remember years ago I was reading how Toyota was trying to out-manufacture Ford back in the days of the line thing. And Toyota came up with the idea of the U-shaped line, right? Because he found that they could move around back and forth a lot quicker. And just that simple change allowed him to make a Toyota cheaper with more stuff than we were able to do here in the United States. And all he did was just change the line from a straight line to a U. [chuckle]
0:39:16.1 Rich McLaughlin: Right. Yep.
0:39:17.1 Kurt Baker: But he did that by having conversations with people on the line and figuring out, “This is a little bit better way, so let’s give it a shot,” right?
0:39:25.0 Rich McLaughlin: Yep.
0:39:26.0 Kurt Baker: And I think every business can do that. Just because you’ve been doing it for a long time and it’s worked, doesn’t necessarily mean it’s the best way.
0:39:34.0 Rich McLaughlin: Right.
0:39:34.9 Kurt Baker: Especially we add all these new things that are coming at us right now that might be able to be implemented in your business. And you don’t even realize how much more efficiency you can get out of it and more productivity, right?
0:39:47.0 Rich McLaughlin: Yeah. Yeah, and you said it, the people closest to the process usually know what’s not working well. [laughter] Because they’re living with it every day. And they usually know what might be the right fix if we give them the time and space to even have that conversation. ‘Cause again, they’re usually so busy just running the business that they don’t stop to look at their process and say, “There’s gotta be a better way.” Or it’s a conversation they have by themselves in a frustrating way because nobody’s listening to them. So. [chuckle]
0:40:22.1 Kurt Baker: That’s I think is a key thing. ‘Cause I’ve been on that end of it too where I’ve been like an engineer working on a ship and things like that. And you’re going, “Well, that’s fine, but there’s other ways we can do this and get it done a lot quicker and easier and cheaper.” And frankly, we just did it. But it was like… Because we’re on a ship. But if I was in a factory, that wouldn’t necessarily be okay because too many other people are involved. And when you have 20 or 30 people on a ship, it’s not a big deal. Where you’ve got hundreds, if not thousands of people all involved, you can’t just switch without management’s approval. And that would get very frustrating over time if you’re seeing that you’re doing something in a way that it’s just so evident to you that you could improve it. And they’ll feel better about themselves if you listen to them and allow them at least to try it. They may be wrong, but at least let them try. Let’s find out whether or not on a test basis, ’cause they may have a very valid point. And most times they’re probably gonna be right because they’re living it, right?
0:41:26.7 Rich McLaughlin: Yes. And yes, to your point, you want to encourage that kind of experimentation because now you’re tapping into their creativity and you’re letting them share their wisdom that they’ve called running this process for months or years. So, yeah.
0:41:45.6 Kurt Baker: And I like the concept of self-disrupting. Because if you don’t self-disrupt, somebody else is gonna disrupt you for you. And that’s not a good experience. [chuckle]
0:41:57.0 Rich McLaughlin: Nah, [laughter] no. [laughter] No. Yeah, yeah.
[overlapping conversation]
0:41:58.0 Kurt Baker: That’s far worse than you help disrupt. Somebody comes in at a left field and just takes you out. You’re like, “Oh, wow, I never saw that coming.”
0:42:07.9 Rich McLaughlin: Right.
0:42:08.8 Kurt Baker: But if you create a culture of self-disrupting experimentation and allow your employees to take a little bit of risk, I think long-term they’re gonna be happier because they feel more involved in the job and more involved in what’s occurring. Because job satisfaction, people think it’s salaries is why people leave, but it’s usually about how they’re being treated…
0:42:34.2 Rich McLaughlin: Yes.
0:42:35.0 Kurt Baker: And whether or not they feel part of the business, the community that they’re in, and are they making a difference.
0:42:42.0 Rich McLaughlin: Yep.
0:42:42.5 Kurt Baker: And if they don’t feel like they’re making a difference, they’re gonna get very frustrated and say, “I want to go somewhere where somebody appreciates me.”
0:42:48.8 Rich McLaughlin: Yep.
0:42:49.3 Kurt Baker: And I’ve seen people take pay cuts, significant pay cuts to go to a business that they feel like is gonna appreciate them and actually listen to them and allow them to contribute.
0:43:00.0 Rich McLaughlin: Yeah.
0:43:00.8 Kurt Baker: So why wouldn’t you want that as an owner? You just need to tune yourself into these things.
0:43:04.0 Rich McLaughlin: Yeah. Yeah, and that brings us around back to the People thing, which seems to always come back to that.
[laughter]
0:43:10.8 Rich McLaughlin: And this is why we work with the entrepreneurs and small business owners, and talk about, you do not want to discount the culture work because at the end of the day, that’s what keeps people around to your point.
0:43:23.9 Kurt Baker: Right.
0:43:25.0 Rich McLaughlin: Yeah.
0:43:26.0 Kurt Baker: Yeah. So what are your final words for us here today as we wrap up? It sounds like it’s the people, but any final thoughts? Because this has been an awesome journey.
0:43:34.2 Rich McLaughlin: Yeah. Wow. Jeez. I probably would always come back to, if I run a leadership position is just to remind myself that my first responsibility is to make sure folks understand the What and the Why, and then try to stay out of the How. And I think if you do that, if you remember that kind of mantra, you’re gonna be in a good space for the most part. So focus on the What and Why, stay out of the How.
0:44:00.2 Kurt Baker: All right. Well, thanks, Rich. I appreciate everybody for listening. You can follow us at masteryourfinances.us, and I appreciate everybody listening. Take care.
0:44:09.1 Rich McLaughlin: All right, Kurt. Thank you.
