Steve Shallenberger: Welcome to our Becoming Your Best Podcast listeners, wherever you may be in the world today. This is your host, Steve Shallenberger, and we are thrilled to have you joining us. We have a very talented guest today, he is the founder and CEO of two Inc. 500 Companies and was awarded Entrepreneur Of The Year! Welcome, Harry Clark!
Harry Clark: Well, hi there, Steve! I’m glad to be here!
Steve Shallenberger: We’re so excited to have you. He has a great deal of experience in a number of different aspects of business, he is going to share that with us in a bit. He is a highly awarded serial entrepreneur, business advisor, board member, keynote speaker on entrepreneurship, and he was formerly the CEO and co-founder of a modular design-build and development company. He grew up from a startup to $100 million and 450 employees, in five years. As you’re going to see very quickly, Harry knows both sides, every side really, of business, and this is going to be so fun for us to be able to talk about. So, Harry, first of all, tell us about your background, where were you raised and any turning points in your life, that have had a significant impact on you and especially on some of the things you’ve ended up doing.
Harry Clark: Yeah, sure. I was born in Rhode Island, but I was pretty much raised in California, in Southern California. I went to University at Cal State Long Beach, called Beach. Anyway, it’s a University right on the beach. I enjoyed being an NCAA Division 1 wrestler, heavyweight wrestler all through undergraduate in grad school, which definitely made a big impact on me. It definitely underscored competition and working really, really hard. Anyway, that was pretty exciting. Out of grad school, I got an MBA, I worked at Deloitte and Ernst&Young, on the consulting side. That was just a fantastic experience! You basically get, in one year’s experience working there, you get about four or five years of normal experience, so it was fantastic. The manager that hired me out of grad school, at Deloitte, became a partner at a Municipal Finance firm and he brought me over there, they made me a partnership offer, we couldn’t quite settle on it, so I started my own company, and that was a Municipal Finance Software and Services firm, current to be the largest in the US and in about seven years, I sold it to a Fortune 100 company, for a huge pile of cash, which kind of set us up for life, if you will, financially, and then started the Modular business that you talked about.
Steve Shallenberger: Well, that’s an awesome background, and thanks for sharing. Those are huge experiences, that have had a big impact. Now, Harry and I had the opportunity to meet, not long ago, just a few weeks ago, in Cape Town, South Africa. What a great place, isn’t it, Harry?
Harry Clark: Oh, God, just beautiful.
Steve Shallenberger: It was amazing! And I had the opportunity to be in a workshop that Harry did, and that’s really the genesis of this opportunity today. It was fun to meet him and his lovely spouse. So, Harry, share with our listeners the business experience that led up to your book, “Mistakes Millionaires Make”, and I might add for our listeners, these are just great principles for anyone. In another sense it could be, “Mistakes People Make”, but tell us about that, would you?
Harry Clark: Yes. So the Modular company that you have referred to, after five years from the startup, literally, there were five of us, we had 450 employees and $100 million in sales, we had bookings for $200 millions for the next year, and by the way, this is in 2004. And so, we’re just growing and it’s taking off like a rocket ship, so we went out to raise $20 million in private equity money. I had been funding it completely, myself. We had five different offers for $20 million in equity, for 20% equity stake in the business. We selected one that said they could get us the money in 30 days. Everybody else said 70 to 90 days, so I figured, “Okay, the sooner the better” because of how fast we were growing, and literally, the day that we were set to close, the private equity member had basically thrown me over a barrel, and the way he did that, is that the Friday before closing on Monday, he had his manager convince my CFO to blow out all of our remaining cash, so that on Monday, when they’d put in the $20 million, the payables would be caught up and lines of credit would be paid. But instead, what they did is, the owner of the private equity firm called me and said, “Harry, we’re set to close, we love your company. However, right now, you have no cash, which means you need us more than we need you. Because of that, we’re going to want an 80% equity stake, rather than the 20% that we’ve been talking about.”
Steve Shallenberger: Oh, my goodness!
Harry Clark: So, he was obviously completely unethical and actually became a billionaire by being unethical. Anyhow, so, I had said “No” to him, and it literally ended up making it so that the business went under, because I had all sorts of personal guarantees had dragged this, you know, well-funded, beautiful state that I had developed personally from the sale of my first business, I basically lost everything, so I lost $100 million in personal wealth.
Steve Shallenberger: Wow, that’s a big Wow, isn’t it?
Harry Clark: Yeah. It was a bad year, let me tell you.
Steve Shallenberger: And, upon some reflection, which you’ve obviously done, some serious lessons that you’ve been willing to share and learn about, and one of the things that Harry shared with us, were 19 risks for businesses and I think it was eight risks for individuals that you ought to avoid, completely. Do you mind talking a little bit about those, and if our listeners would like a copy of those, with Harry’s permission, you’re welcome to write to us, at email@example.com and we’ll be happy to send them to you. Or, you can write directly to Harry, either way.
Harry Clark: Yeah, and as a matter of fact, those two little slides were on a printout that I handed out at Cape Town, and I’ve since, heard from a CEO of a large family business in Cape Town, that he’s laminated that page and it’s on his wall in his office, and he and his wife, actually, review it monthly.
Steve Shallenberger: Oh, yeah, this is a cool sheet, I mean it’s [don’t understand – 08:13]
Harry Clark: Yeah. I would definitely recommend for your listeners to do that. It’s interesting because what I ended up doing, Steve, is I did recorded interviews with 30 other CEOs that had made a loss between $10 and $200 million and then I correlated the risk factors and that became the research that developed my book, “Mistakes Millionaires Make.” And that was the genesis of the 19 business risk factors. This is a compilation, basically, of 30 very successful CEOs, learning lessons, or failures, if you will. It varies from, for example, a very common issue is that a CEO will have a CFO or a controller that listens to everything they say, and does exactly what they want, when, in actuality, the CEO should be really listening to their Chief Financial Officer, or accounting people, to get warnings or red flags of things that they may be doing that are creating risk for the company. Also, things like, not having an Advisory Board, some insurance issues, where to save expense, you forego Errors and Omissions Insurance and other different types. A real big risk factor is also just overspending, and also getting into too much debt. Another risk factor, Harvard had actually done a study, that 80% of all acquisitions sale, that’s pretty profound. That means you only have about 20% chance of getting an acquisition right.
Steve Shallenberger: That is a staggering number!
Harry Clark: Another interesting result from that study is that two-thirds of the senior staff that are acquired through an acquisition, are gone within 2 years.
Steve Shallenberger: Oh my goodness!
Harry Clark: So, all of that intellectual talent and experience that you think you’re buying, is probably going to leave.
Steve Shallenberger: Well, that’s just staggering, isn’t it?
Harry Clark: It is, it is.
Steve Shallenberger: Those numbers!
Harry Clark: And imagine how many billions of dollars are basically burned up through failed acquisitions. I mean, it happens every day.
Steve Shallenberger: Wow! Talk about risk, it’s good to understand those numbers going into an acquisition or a sale, just so you know what you’re up against. A couple of others that have just stood out for me is, avoid excess debt.
Harry Clark: And by the way, Steve, it’s so easy when the debt markets are super cheap, meaning interest rates are low and there’s available capital. It’s really easy to overburden your business with that.
Steve Shallenberger: Yeah, amen! And also, you talked about guarantees. That’s a big risk, and being thoughtful about what things that you do, put on your balance sheet, so that you have some security in your life if things go south.
Harry Clark: Absolutely, yeah! Even having cash reserves. I mean, the best practice is they have up to a year’s worth of expenses that are stocked away in cash or some kind of cash equivalent.
Steve Shallenberger: Harry, what would you say are the most common risk factors for entrepreneurs?
Harry Clark: The number one, for sure, is having personal guarantees. So, that’s when, if you’re a business owner, sometimes investors, but normally business owners, they guarantee loans, leases, for example, construction companies, like in my case, bonding lines, require personal guarantees. So, it’s having those personal guarantees, which at the end of the day, you don’t have to have, it’s just that, for example, by signing a personal guarantee for a line of credit or a loan, you might save a little bit on interest, but you don’t have to have it. So, that’s really the number one risk factor.
Steve Shallenberger: Let’s just pause on that for a second. So, some of our entrepreneurs that are listening in, they may feel like they have to give a personal guarantee, so maybe there’s a couple of aspects to that, Harry, that we can just explore a little bit further. How can someone structure their situation, say they have a home, but they don’t want to put that at risk? And the banker says, “Well, we want your personal guarantee.” What are some options?
Harry Clark: This is really very practical to talk about. Well, first of all, going to your banker or whoever you have the personal guarantee with, and telling them that it’s your objective to remove all personal guarantees from your life or your liability and that you want to come up with a plan on how to do that. So, that’s step number one. Number two, if the bank or whoever the person guarantee is with is saying, “No, I’m sorry, you’re not there, you just don’t have a strong enough balance sheet in the business”, then you would want to demand that certain assets are carved out or removed from the personal guarantee. So, rather than just signing an open-ended personal guarantee, saying, “Everything is yours”, in the worst case, you carve out certain assets that are really important for you and your family, from the personal guaranteeing.
Steve Shallenberger: Okay, that’s great advice! A couple of strategies that our listeners may consider in doing that, sometimes the business will have adequate assets, but the financier, whoever it may be, still wants a personal guarantee, and one thing that you may consider, is putting your home, either into a trust, and you rent the home and pull that off of your balance sheet so it’s all above board, the bank sees what’s on your balance sheet, but your home is owned by another entity, and then you rent from it, so that’s completely legal, or could be in the name of a spouse, so there are different ways maybe to do that, right?
Harry Clark: Yes. However, just be careful or cognisant of the fact, like in my case, there were LLCs or family limited partnerships that owned almost all of my real estate assets, but my wife and I owned 100% of all of those entities.
Steve Shallenberger: Excellent!
Harry Clark: So, through bankruptcy, it literally took five minutes for the judge to roll up all of those assets into my personal bankruptcy, so if you’re going do that, which I think is great, it’s a great way to do it, you just have to do it thoughtfully and make sure that whoever is helping you, your advisor setting it up, are aware to protect you against any credit risk or bankruptcy risk.
Steve Shallenberger: Excellent, yeah, well done! Good cautions all the way through and good advice. Okay, you were continuing with other common risks for entrepreneurs.
Harry Clark: Actually, there’s one that gets back a little bit to the CFO issue, having a weak CFO, and that is, as entrepreneurs or investors even, and when I say entrepreneurs, it includes family businesses, that we are genetically overoptimistic, and researchers are showing this. And it’s that, at the end of the day, while personal guarantees are the number one immediate risk factor, it’s overoptimism that sets us up, to say, “Oh yeah, I can sign a personal guarantee, because my business will never fail.” And so, understanding that in the end, optimism is great, right? I mean, it makes us exciting at parties and makes us friendly, but at the end of the day, it puts our family, and our businesses, or employees, at risk. So, that’s why, if you know that you’re optimistic, or overly optimistic, to surround yourself with people and advisors that help balance that, so you can be more objective and make better-informed decisions.
Steve Shallenberger: Well, outstanding advice! You just took my next question. How do they temper the optimism and be as realistic, so that they have a good balance?
Harry Clark: Yeah, right. Well, you know, especially for your listeners that are CEOs or business owners, really, a lot of times we feel like there’s no one for us to be accountable to, so that’s when it gets really difficult.
Steve Shallenberger: Right. Well, I love your advice to have an Advisory Board. That’s huge, isn’t it? To be able to bounce things off people and get different perspectives?
Harry Clark: Absolutely! And the best Advisory Board is made up of members that challenge you, that they don’t just agree with you, you know, that they actually challenge you and question things and make it a little bit uncomfortable, and a little bit difficult. That’s a really good advisor on an Advisory Board.
Steve Shallenberger: What’s your best advice, Harry, for individuals, to be financially sound, to try to eliminate the risk in their own life?
Harry Clark: Yeah, well, so, this gets back to behavioral economics and research, that having cash or some kind of cash equivalence readily available, it’s very, very important. And the reason why is that if you remember, you know, when we have the financial crisis or other recessions, and the stock market plummets, studies show that it’s in human nature to pick up your phone and to ask your [don’t understand – 19:22] manager, to liquidate, to sell, and what we found, is that about 30% of investor’s wealth is lost during those times when they just pick up the phone, and say, “Sell.” So, by having cash in up to a year’s worth of cash, or, again, some kind of cash equivalent, it makes it so you don’t have to pick up that phone and say, “Sell.” And in so doing, statistically, or historically, after a year the stock market is back up to where it was. So, just having that buffer is really, really important.
Steve Shallenberger: Well, thanks for bringing that issue up, Harry, and maybe some of our listeners are at the front end of starting to develop a savings program and I think what we would suggest to you is just start setting aside a percent of everything you earn, for you. You’re paying everybody else, already, so pay yourself as well. Maybe a benchmark might be 10%, but just start, and it will have a big impact so that it helps you get, if you’re not there today, where Harry is talking about, so that you’re in that position, right?
Harry Clark: Yeah, that’s great advice! Absolutely!
Steve Shallenberger: And probably try to minimize credit card debt. I’ve seen the interest on those and, not today, I’m not paying it, but I have in the past sometimes, and it’s huge!
Harry Clark: Yeah, absolutely! Yeah! As a matter of fact, it’s interesting that one upside of this last recession that we’ve had is that it really got people to save, or to get in the habit of saving, and so, yes, I totally agree. Just setting, it doesn’t matter if it’s $100 a month or what have you, building up that muscle of learning how to save, is really important.
Steve Shallenberger: Alright. So, as we sit back now, and getting towards the end of this interview, today, what are final tips that you might offer an entrepreneur and final tips for somebody managing their personal finances.
Harry Clark: With regard to, if you manage your business, innovation is going to be, or continue to be a critical factor, and I recommend businesses go to the Adobe Kickbox program, and you can just google Adobe Kickbox, it’s a free workshop that you can download and teach your team members how to innovate and basically, make it so that all of your team members or employees are innovating, week in and week out, and this is especially important, I think, for family businesses that can get a little bit stale. So I highly recommend that, and it’s free, there is no charge for doing that. In terms of, you know, on the personal side, I think we’ve covered really the key ones, which is the personal guarantees and trying to eliminate any personal guarantees, saving and not getting into debt.
Steve Shallenberger: Yeah, perfect! Okay, well that’s great! Now, I’ve read Harry’s book, “Mistakes Millionaires Make”, that contain the interviews, lessons learned from 30 successful entrepreneurs, it’s a treasure trove of insights and advice. So, Harry, how can people find out more about what you do?
Harry Clark: The book is available on Amazon. We have it in digital, there’s a hard copy, and also an audible, so no matter how you digest books, you can read it, it’s a very good read. I also have a website, pathwaypartnersllc.com, you can learn a little bit more there.
Steve Shallenberger: Well, you’re a great resource, Harry. It’s fun to visit with you, and today I’ve just been thinking about this, is our listeners think about the 12 Principles of Highly Successful Leaders from Becoming your Best. We’ve certainly touched on, “Lead with a vision”, in other words, get out of debt, no personal guarantees, you start setting up this vision of some of the safeguards for yourself, to put you in a better position. We’ve also talked about another one of the principles, which is “Innovate with your imagination.” This is one of the key recommendations Harry just made, which is always staying ahead of the curve, both business-wise, and individually, and then, last of all, is “Apply the power of knowledge”, and that’s what we’re doing today, it’s when you have these perspectives that we’ve been talking about and has a tremendous impact on your behavior of getting to a better place. These all contribute to being highly successful ultimately, in your life, becoming your best, which is a process. So, thank you, Harry, for being part of this show today!
Harry Clark: My pleasure! And I loved reading your book, by the way.
Steve Shallenberger: Oh, well, thank you so much, and this has been a really productive visit, it’s been helpful for me, and we wish you, Harry, all the best, as you’re making a difference in the world.
Harry Clark: Alright, thank you, and keep up what you’re doing. It’s great!
Steve Shallenberger: Okay, thank you! And to all of our listeners, never forget: you too can make a difference every single day! This is Steve Shallenberger, with Becoming Your Best Global Leadership, wishing you, a great day!
Rob Shallenberger: Hey! Welcome back to our Becoming your Best Family. This is your host, Rob Shallenberger. I hope you’re having a fabulous day wherever you are in the world. This podcast is going to be a little different direction than of most of our podcasts. We’ve been asked a lot over the last two to three years, “What is Becoming your Best all about?” And there’s a lot of facets to this because you have the six-step process, you know, the six steps to planning and execution. You have the 12 Principles of Highly Successful Leaders, you have this new strategic rhythm that will help an organization really focus on strategic planning and alignment. So, we have all of these different facets, how do you explain that to someone? And so, over the last couple of weeks, we’ve really refined our messaging and focused on just three words. And this is what it’s all about. You’ll see a shift on our website, and I want to get this podcast on what this means to you, and how significant of an impact this can have in your life, your team and with your organization. And so, it really comes down to three words, and again, these are what you will see on our homepage right now. It’s People, Culture, Strategy. I’m going to say that again, People, Culture, and Strategy. Becoming your Best is all about developing a high-performing group of people to create a high-performance culture that is aligned strategically from top to bottom. That’s it, People, Culture, and Strategy. And they all mold within one of those three words.
Rob Shallenberger: So, I want to take a little deeper dive in each one of those three words. As I do this, keep in the back of your mind where you’re at with this. And this could really be applied to a team, certainly within a family, and anybody who has a leadership role of any kind, whether it’s managerial, again, in the family, wherever it might be, should be thinking this way, people, culture, strategy. And we’re going to use primarily the business as the focal point, but again, a family, the people, the culture that exists in the family and where we’re going as a family? Are we aligned, working towards the same things, or are we all going in different directions? So, just because we’re focusing on business, it doesn’t mean this doesn’t have a personal or family application. So let’s get into these.
Rob Shallenberger: Let’s start with People. There’s a restaurant that was really successful, a business that just experienced massive growth over the last four or five years, and I love what the CEO of this business said, and it’s restaurant business, remember. He said, “We don’t see ourselves as a restaurant business, we see ourselves as a training company.” Let me say that again, this is what the CEO of this massive restaurant chain, said. “We don’t see ourselves as a restaurant business, we see ourselves as a training company.” That is a brilliant leader, right there, because he gets it! If you want to 10x your growth, well, then 10x the investment into our people. I know that, in my own perspective as a CEO, that this is not necessarily easy. We’re going against a lot of programming from the world. You know, often times, from a leadership perspective, we see this as an expense. When we invest in our people, many times we don’t see it as in investment, it’s an expense. That’s how we look at on the ledger, “Oh, I don’t want to invest 10, 20, 30, whatever it’s going to be, thousand dollars, because that’s money out the door that we’ll never see again. Versus the great organizations, clearly, they see this as an investment. So, let’s see it that way because our teams will only be as good as their mindset and skill set. So, for any of us, wherever we’re at in life, right now, it’s a product of our current mindset and our current skill set, and if we want something to change in a team member, in a manager, an employee, a son or a daughter, then we need to shift one of those two equations, the mindset or the skill set. It’s all about the people.
Rob Shallenberger: Assuming that we have a viable product or service, the next greatest predictor of success or failure are the people. And that’s why, if we want to change the mindset or the skill set we have to do something as a transformational leader. A transformational leader, and that hopefully is all of us on this podcast, should be thinking about how to help their team members think like a leader. And not just think like a leader, the thoughts should turn into actions. So, how do we help our team members think and act like a leader? Because here’s what happens. When you get engagement, and this is one of the buzz words that we use right now, in our society, and engagement is right now sitting at around 30% in the United States, less in other countries. Europe in many cases, 15%. Engagement is when someone comes to work and they are innovating better ways to do their job, they’re engaged, they’re making the team better. A disengaged team member is someone who comes to work, they do what is in their job description, they don’t go outside that, they’re not innovating better ways to contribute to the team, they go home at the end of the day, and that’s it, you know, out of sight out of mind. That means that right now, in our society, two out of three team members are disengaged. And one engaged team member can do the same, productivity-wise, as three disengaged and I think we can all relate to this. You think about a go-to person on your team, you know that they are so much more capable than the people you never ask to do anything because you know it’s not going to get done. So, how do we engage our team members?
Rob Shallenberger: Let me give you an example of what this looks like. I’ll never forget this, I was driving home with my daughters, last year. Now, I’m going through a construction zone and it’s not often, as a leader, that you can engage a construction team, you have to be a great leader. And it’s very much possible, it’s just that most don’t do it. They don’t have the skill set or mindset as leaders, to do that. And they’re not thinking transformational. Again, it’s about the people first. People, culture, strategy. Here’s an example of where someone did, and you could tell. In this road construction group of people who were out there in the brutal heat of summer, almost 100 degrees, here was an engaged team, and they were having a blast, doing what most other people dreaded. So, imagine we’re out driving, there’s a construction zone like you see many times, you have the person holding the slow sign, the stop sign, you know, they flip it back and forth? What do you see most of the times when you pull up and you see that person? At best, they’re not smiling, they’re just flipping the sign back and forth, waving you through. Well, imagine in your mind, this big Polynesian, 250 pounds, six foot two, as I approach, he’s dancing. He’s got the sign, he’s flipping the sign, and he’s waving with his arm, he’s pointing right in, making eye contact with me, pointing right at me, wave me through while he’s dancing. It was even a point where I was like, “Man, that guy is awesome!” I went another mile down the road, there was another team member doing the exact same thing. These are construction workers, who typically would never do this kind of thing. As I passed the second Polynesian a mile and a half down the road, the same thing he’s going at, he’s dancing. So, I stick my head out of the window, and I start dancing, “Hey, what’s up?” and my daughter said, “Get your head back in the window!” The point is, this was an engaged team, whoever was at the helm of that team, whether it was an internal member of the team, or whether it was a leader, someone was a catalyst on that team. They changed the way that construction team approached what they did. The entire group was having a blast out there in the hot summer sun. Can you imagine what it would be like to be a part of that team, versus most other construction teams?
Rob Shallenberger: There’s a reason this restaurant business that I just alluded to, earlier, has experienced such massive growth. They’re invested in their people. So, here are two things that you can do as a leader, right now. Number one, this one’s simple, get an audiobook, get the physical copy of “The 12 Principles of Highly Successful Leaders”. These 12 principles are what the top 10% do in any industry. So, if they’re that predictive of success, why not start making the 12 principles something that your teams can focus on? You know it’s going to transform the people and help bring out their very best, help them achieve their fullest potential. So, have them start doing that. Create a book club, where they’re starting to read. The point is, do something to engage them to shift the mindset and skill set. The next part, Becoming your Best has just created an online University, so go to becomingyourbestuniversity.com. There are several free courses on there. If you have someone on your team who’s involved in sales, we just released an incredible sales course, it’s only $199. What a simple investment! I mean, for most sales that pays itself off in one sale. The point is, if you want to engage someone and change their mindset and skill set, something needs to change. So, here’s another simple way to do it. Alright well that’s the people! One in two things that you can do right now, the book, whether it’s the Kindle, the audiobook, the physical book, start engaging your team and giving them principles that you know predict success. The second is the online university, becomingyourbestuniversity.com. You can track and see what courses they’ve completed and what they haven’t completed. Again, you’re engaging them. Alright, so that’s people.
Rob Shallenberger: How about the Culture? As a leader, we will either have a culture by design or we will have a culture by default. And one of our next books is really focused on culture building, and we’re in the process, we’re probably three fourths away through this book, we’re interviewing amazing coaches, who have created championship cultures, to find out what did they do, specifically in sports. So I just interviewed Andy Reid from the Kansas City Chiefs, Lou Holtz, a couple of weeks ago, Anson Dorrance from the University of North Carolina, 22-time National Champion for Women Soccer. These are amazing coaches! One of the things that’s become a common theme, is that they focused very specifically on creating a culture by design. They didn’t just hope the things will work out for them. There’s a reason why it’s in this order, People, Culture, Strategy. If the people and the culture aren’t there, it doesn’t matter how good the strategy will be. The culture will eat the strategy for breakfast. The culture has got to be there. So let me give you two examples of what you can do as a leader, and I’m going to use these through stories.
Rob Shallenberger: We showed up at a bowl game about two years ago in San Diego. And when we arrived, we got off the airplane, climbed into the shuttle bus that took us to the rental car facility, and as you know, if you’re flying in an airplane, that’s not typically when you catch people at their very best. People are looking at their phones, they’re obviously not happy for the most part, that’s a generalization, of course. But that’s what they are and that’s what it was like that day. And because it was December, this bus was packed. So imagine this rental car bus, just shoulder to shoulder. We get on, the bus driver closes the doors. And he said, “Ladies and gentlemen, welcome to San Diego! For the next 10 minutes, I’m going to be your personal Tour Guide! I’d like everyone to put away your cell phones, and direct your attention at the right-hand window. And what you’re going to see out there, is where Don Juan Pablo, in 1837 came and established…” And he went on. And my antennas were all up for transformational. I mean, he’s got my full rapture and attention at this point. And so, sure enough, I’m looking around at what are people doing, they’re putting away their cell phones, they’re starting to engage. And 10 minutes after we left the airport, we arrived at the rental car facility. People are laughing, they’re smiling, they’re totally engaged with the person next to them, who before was a complete stranger, and remember, before, people were in this massive hurry. Well, I watched what happened here. This bus driver got off the bus and a line of probably between 15 and 20 people formed, in front of this bus driver. And I watched them walk up and shake his hand, saying, “You know what? Thanks for taking the time to make our day great!” And they handed him a $5 or $10 tip. He probably made 60-70 bucks in that short little drive, and we gave him a little tip.
Rob Shallenberger: Now, can you imagine in your mind, you know, a group of normal bus drivers would get together and share their experiences from the day, you could imagine that most would probably say, “Man, my job sucks! I’m getting paid hardly anything, the people are grumpy and angry all day long,” and this guy is sitting over there and thinking, “Man, I don’t know what you’re talking about, people lined up to shake my hand! People loved this! I mean, I’m around people that are happy all day long!” And that’s because of a culture. Now, this story gets even better! I’ve shared that when we’ve trained organizations around the world, I probably shared that story for a couple of years now. When we talk and focus on how to create a World Class customer experience, as part of Principle 5. Well, this story got even better, because two years later, so last year, I went back to San Diego. We landed, I got on the bus, it was a female bus driver, you would never guess how she started the drive. Doors closed, and she said, “Ladies and gentlemen, I’d like to welcome you in San Diego. For the next 10 minutes, I’ll be your personal Tour Guide!” I said, “I’ve heard this before.” And she went through something that was very familiar, same engagement, and I thought, “This is amazing!” Because what I just saw there was a culture. This wasn’t just a single transformational bus driver like I thought it had been for two years. If you could dig deeper into this team, I guarantee, either someone within that team has made the shift, has taken upon them the role of leader, even without the title, or you have the leader who also has the title of manager, who has created that culture within the team. That would be defined as a high-performance culture. They’re doing what 90% of bus drivers would never even think about doing. And that’s where transformational leadership comes into play. People, Culture, Strategy!
Rob Shallenberger: Here’s another example of what a transformational leader is doing to create excellence, a high-performance culture in their organization. Panda Express. So, they have, I don’t know, 600+ stores, branches all over the United States. Their owner, CEO, called us about a year and a half ago, and what she does every year is, have each of their store managers read a book throughout that year. So, last year, it was Becoming your Best. And what they decided to do, was focus on one principle every month, with each store manager. And if I understood it correctly, what they had each store manager do, was send in an idea of what they were going to implement within their store that month, as it relates to that principle, one of the 12. And then, they would choose the best ones and shared those with the other store managers on the monthly call. See, that’s a culture by design. And is it any wonder, they had one of their best years ever! Last year, as a company. That’s because they were focused on not only the people, the people lead to a high-performance culture, so they invest in their people, they create a culture by design, and that puts them in a very strong position, to execute on a high-performance strategy. So, that’s an example of what Panda Express did last year. See how easy that is, to really implement when you get serious about it?
Rob Shallenberger: So here are three things that you can do with your team, as it relates to a culture. Number one, just like Panda Express, except taking it down to the weekly level, we invite you to have an operations meeting with your team and focus on one of the 12 principles every week. At the end of the 12 weeks, start over. Our friends at the Dallas Cowboys credited this process with helping them have one of their best years ever! It’s because it’s transformational, it’s a way to build the people and transform a culture. A lot of people listening to this podcast right now are getting the weekly email from us. On that weekly email, it has a story, an action item, and a how-to with a principle that week. It is a powerful transformational process. This is one of those, as we’ve trained organizations all over the world, they’ll say, “You know, we’ve had great speakers in the past, great training, but within a week or two, it’s all gone.” And this is the first time they’ve had something this sustainable and it’s really transforming their culture, because every week, as part of their weekly meeting, there’s a focus on one of the principles, and what they can do to improve their team, that week. And this is part of creating that high-performance culture. The second is to set up your quarterly and annual meetings. If you don’t already have, or holding those, I invite you to set up your annual and quarterly meeting dates. This is a whole separate podcast, it’s a separate training, coaching, suffice to say that this is a very strong predictor of success and cultural alignment. The third is, to look at your current training program, the one that you have right now. What are you hoping for your desired outcomes? Are they transformational, transactional? What are your targets? If you want to create a high-performance culture, we already know the starting place, it’s with the people. So that’s where we can start, three things you can do. A principle a week with your team, set up your quarterly and annual meetings, and look at your current training program. What is its desired outcome, how will it impact your culture, and what adjustments can you make to your current training program? Because if you’re not training the people, it’s very difficult to have a high-performance culture.
Rob Shallenberger: And the last of the three is Strategy. So, People, Culture, and Strategy. Once you have the right people on the bus, once they’re in the right seats, once we’ve given them the right tools to help them have a high-performance mindset and skill set, once you’ve created a high-performance culture, now you’re in a strong position to execute the strategy. And the strategy is all about creating alignment from top to bottom. So, imagine arrows going the same direction, versus arrows going all over the place. I’m sure that you can relate to what is like to be part of a team where the arrows aren’t aligned. Same thing in a family. If we’re going to empower our children, then we need to give them the tools, the skill set, and the mindset, we have a culture within our family. And we don’t want to leave it to hope, so let’s come up with a strategy in our family. How do we align the arrows as best we can, without taking away someone’s agency? How do you engage them? Well, that’s what leadership is about. That’s what we can do. Now, remember what I said earlier, culture will eat strategy for breakfast, so the assumption is you have the first two in place. The strategy is all about getting the oars to row together. I heard that the Minnesota rowing coach, rowing meaning, imagine a kayak or a canoe. If you’re in a rowing competition, if the oars don’t hit the water within 0.03 seconds of each other, that’s the difference between first place and middle of the pack. Having the strategy is making sure not only that we’re going in the same direction, but the oars are hitting the water at the same time. And there’s a power when that happens.
Rob Shallenberger: One of the first parts of an effective strategy is the principle that you’ve heard us talk over and over about in the 12 Principles, is To Lead with a Vision. Many of you have heard us share the story of president Paul Kagame. I’ll reshare a very brief version of that here. We’re in the process of building a Becoming your Best Leadership and Entrepreneur Institute in Rwanda right now. Paul Kagame is what I would consider being a transformational leader. It doesn’t mean any of us are perfect. What I mean is, he’s done what 90% wouldn’t have done. Let me give you an example. Twenty-one or so years ago, you had this mass genocide, where 1.2 million Rwandans were killed. The Hutus and the Tutsis. Well, he came in as the new president in a war-torn country, where two tribes of people hate each other. Well, what’s his focus? People, culture strategy. He knows that he has to change the thinking, the mindset of the people. He knows he has to create a different culture, so he gets rid of the tribes. On the driver license it now says, Rwandan, it doesn’t say Hutus or Tutsis. That’s part of creating a culture. He focused on the development of the people. How do you put all of these people through the judicial system? Well, and then, they start to think strategically. He comes up with a vision for Rwanda 2020 and that is to be a middle-income country, on the global stage, by 2020. Well, that’s great, what’s the plan to make that happen? Well, part of that is one day, every month, the entire country shuts down and everyone goes out on the streets and they clean the streets, pick up trash, including him, his cabinet, everyone does this. See, imagine what happens when you get aligned like that. People, Culture Strategy. Well, it’s now the second fastest growing economy in all of Africa, it is the fifth safest country to walk around at night. I was just there three weeks ago, there’s a palpable feeling amongst the people. There’s this growth mentality that exists. And that’s because of their strategic focus. People and culture, he’s got that in place now. It doesn’t mean we leave it alone or put it on cruise control, he’s already going in the right direction there, and now the strategy is there to complement that. So, you had this country that is unlike almost any other country in the world, right now, and what they’re doing. And they love their president because it’s just been a total transformation.
Rob Shallenberger: I just finished the Strategic Planning and Alignment Workshop for a company. And afterwards, one of their comments was, “We’ve never been so aligned.” And when they started this conversation at the beginning of this workshop, one of the things that was clear, was they, as an executive team, prior to walking the doors, thought they were aligned, they thought they had a strategy. And it became abundantly clear to everyone in the room that they couldn’t even agree on the direction of where they were going as a company, a vision, their tigs, the Totally Inspirational Goals, which mean 18 months to five years out. Maximum of three tigs. They couldn’t even agree on the vision in tigs. So, where they thought they had a strategy, it became abundantly clear that they, as the executive team, were not even aligned. Well, if they’re not aligned, what happens as you go out from that center of influence? That just simply turns into a massive ripple effect throughout the rest of the company. So, what’s the chance that the next tier manager is aligned if the executive team in that room is not aligned? So, here’s a couple of things that you can do, strategy is not the primary focus of this podcast, is just to illustrate the importance of people culture, strategy. Here’s a couple of things that you can do right now as it relates to strategy.
Rob Shallenberger: Number one is, get the book, “The Transformation Challenge” This is the six steps to planning and execution, and it’s a powerful six-step process to help you to develop an action plan. This is the foundation of problem-solving, navigating change, and helping your team and managers be solution-focused. Know how to solve a problem. And most people do this the exact wrong way. So, that’s number one, is to get the book “The Transformation Challenge”, and use the six-step process in your organization. The second, we are working on a book right now, that will be released in 2020, and it’s all about strategic planning and alignment. So, we’ve developed a powerful process that can help a company develop their vision, and translate that all the way down to the daily focus and execution. So, I’ll just give you a glimpse. Imagine your mind a pyramid, and so we have an entire book we’ll use for strategic planning and alignment workshops with organizations. At the top of this pyramid is Vision, then is Core Values. The vision is the direction, the core values are what we hire and fire to. Those should define the culture. Below that, are the Tigs. A maximum of three tigs within a team or an organization. This is an 18-month to five-year time horizon, typically 18 months to two years, for most companies. The tigs are specific, measurable goals that will help you achieve the vision. Below the tigs, as we continue down the pyramid, would be the Five Key Strategies on how you’ll achieve the tigs. Articulate what does the strategy look like? Maximum of five strategies, and then below each strategy, what are the specific Initiatives between now and the next two to three years, to help you achieve that strategy? And the strategy should align with the tigs and the tigs should align with the vision. Now, there’s more to the pyramid, but you can get the point to what I’m looking at. That will be a powerful process, and if someone’s actually interested in doing a workshop, we can do that, you can write us an email and we can talk about what that would look like for your team. If you do just what I described right there, alone, Vision, Core Values, Tigs, Five Key Strategies, and the Initiatives, you are ahead of probably 80% of most organizations. I mean, of all those I’ve been out there with, I’d even venture to say close to the 90%. Very few are able to articulate those, and what they look like, let alone the people at every level of the organization.
Rob Shallenberger: So, as we wrap up this podcast, where did this begin? This is a real description of what Becoming your Best does. High-performance people, culture and strategy. Assuming that you have a viable product or service, this is what will help you create a disruptive organization, a transformational team, and company. Focus on the people first. If you do that and invest in the people, that’s already the first part of the recipe in developing a high-performance culture. And then, very much be focused on creating that culture by design, and once you have that, really get clear about the strategy, from the vision to the core values, the tigs, the five key strategies and the initiatives, and then beyond that, the annual, quarterly goals, the weekly meeting and the daily focus and execution. People, Culture, Strategy. If you can think like that as a leader, if we can all think like that, this is how we can transform our teams and organizations to be among the very best, wherever you’re at in the world, and whatever industry you’re in. And remember, this just as much applies to a family. On a drive, I was thinking about this and my role as a father. People, who are the people? It’s my wife and my children. What’s the culture that exists in our family? What I consider to a high-performance culture, where people love being a part of it, that they like being in our home. In some ways yes, in some ways no, so there are some things we can do to improve that. And what’s our strategy as a family? Are we focused, are we aligned, or are we all going on our own separate directions? And it’s when you bring all three together, that you create a great culture, strategy, and people, all around you.
Rob Shallenberger: So, that’s what we wanted to introduce on this podcast: People, Culture, Strategy. If you haven’t read the books, that’s a great starting point. Becomingyourbestuniversity.com, free courses and some paid courses that are amazing, another great starting point to build the people, the culture and the strategy. So, I hope this has been helpful to you, wish you a fabulous day wherever you’re at in the world, and remember, that one person can make a difference. We don’t need two or three, that’s better if we had two or three. This can be any one of us, stepping up to the plate, and asking, “What can I do, to impact myself, the people around me, and make my team, the community, and the world a better place?” And that’s where it starts. That’s the spirit of Becoming your Best. So we wish you a great day, and we’ll tune in next week and talk with you then.
Steve Shallenberger: Welcome to our Becoming your Best Podcast, listeners, wherever you may be in the world today! This is your host, Steve Shallenberger, and to introduce this subject, today, I would like to share a story about how one word can make a difference. Have you had this experience where you just have something inside of you, and you can’t find the word to properly express it, and as soon as you can have this idea pop into your mind, it changes everything. Well, I had one of those experiences and it’s taken, like, over a year, I had something building up inside, but I couldn’t think of the way to describe it. I had a concept in mind, and it was Compound Interest. You all know about Compound Interest, but that was not it!
Steve Shallenberger: As you know, compound interest refers to the compounding power of your investments that, with time, as you consistently and regularly put in what may appear to be a modest amount of money, ultimately grows at an exponential rate to become disproportionately large. An example of this is, if you stick $10,000 in the bank, just one time and leave it there, and you get an 8% return, well, in 30 years that $10,000 would be worth $100,000, and in 40 years, this is the compounding power, $217,000 and if you leave that original $10,000 there for 50 years, it becomes almost a half of million dollars. So, what was the missing word that I was looking for to describe this message in my heart? I knew it was a cousin to compound interest and what seemed to me to be a profound idea that applied to consistent behavior, I just couldn’t find it, but last week I was in Malta and the word flashed into my mind! And it was IMPACT! That was it! The value of COMPOUND IMPACT! There I had it! Instantly, I found a way to describe what was pent-up in my mind and heart. The Value of Compound Impact. We might refer to it as CI. A way to describe the value or power of what might seem like a tiny, but consistent, repetitive behavior. And just like there is a huge value in compound interest, there is a huge value in compound impact.
Steve Shallenberger: Albert Einstein once noted that the most powerful force in the universe was the Principle of Compounding. And in the natural world, there are some examples here. Building a reservoir, for example, is the result of the value of compound impact. Build the dam, letting the water build up and soon, the result goes from empty to overwhelmingly full. The impact of apparently small acts becomes enormously significant with time. Another example from the natural world is the relentless impact of the disease that is called, “Glaucoma.” it’s an eye disease. Essentially, this is an issue of having high pressure levels in the eye, inside the eyeball, and is the equivalent, the action, of a bead of water. just imagine a bead of water constantly and consistently hitting against the optic nerve, in the back of your eye, which, with time, starts unraveling and eventually is destroyed, resulting in the loss of your optic nerve and your sight. Well, these are great examples of this impact, if you will, compounding impact. When you think of the compound impact of something, it is so easy of thinking of doing that “thing” just one time. That seems innocent, doesn’t it? Just one time. But the fact is, things don’t end up being just one time. And when you think of doing an act, really think, and this is the mindset of compound impact, think of doing that thing one time X 365 days X 10 years, or 20, or 50 years. I invite you to consider what are the compound impacts in your life, your team, and your organization.
Steve Shallenberger: So, let’s have a little fun considering the impact of some of these Compound Impacts. I’m going to alternate between positive and negative impact items. Let’s start with Money. I’ve already referred to that, about compound interest. Creating a base fund, and consistently adding a small amount, will build into a significant amount. Recently, one of our key employees, Mary we’ll call her, commented to me, and she said, “I am so grateful that you persuaded me to start participating in the company 401K, five years ago.” She has actually worked for our company 13 years and had not yet taken the leap to participate in the 401K, even though our company will match the employee’s investment, if you will, with a 50% matching. Well, Mary proudly proclaimed that just after a few years, she now has a sizable pot of money already and it continues to build. She has now over $15,000 in her savings account. And she commented, “I don’t even miss the money taken from my paycheck.” So, a great practice here in the value of Compound Impact, in this case, also aligning with compound interest, is simply set aside. Not so easy, sometimes, but it is a mindset to have it. 10% of what you earn for savings and watch it grow. I did a previous podcast on the Richest Man in Babylon. It is hands down one of our most popular podcast that we’ve done and worth referring to not only your children or family members, friends, but also to your employees. And it literally underscores what we’ve just talked about, and how putting aside a small amount of money has a big impact.
Steve Shallenberger: All right, well, let’s shift to the bad side of the ledger here, a second. I have to laugh because the one that I’m going to use is definitely one of my weak spots. If I’d say I’m addicted to anything, it’s gotta be sugar. So let’s take Dessert as an example. And all of us fight this, right? I presume I’m not alone here. We’re all interested in health and vitality. Dessert seems to play a big part of that, and don’t get me wrong, I’m not against enjoying a great dessert, but it also can represent a real threat. Statistics show this clearly, that sugar can have such huge negative impacts in our lives. So, remember it’s not just one dessert, it’s not just one cookie. It is 1 X 365 X 10, 20, or 50 years. You most likely have a stronger will power than I do, and please do not put a yummy chocolate chip cookie in front of me. But I guarantee it is not just one for me. If I see chocolate chip cookies, I’d love to have more than one. So, think of the opposite of the value of Compound Impact of not having the sweets 1 X 365 days. I’ll just repeat, that doesn’t mean you can’t have a “bonus” day to indulge, but the Compound Impact will produce a real long-time healthy set of results when aligned the right way. For example, on the negative side of things, let’s say that a cookie weighs 3 ounces X 365 days. That would be 1,095 ounces in a year. Divided by 16 ounces, which is 1 pound and 16 ounces, that would be the equivalent of eating 68 pounds of cookies and sugar, over a year period of time. Can you imagine that 68 pounds of cookies? That’s called, “Compound Impact.” And over a 10 year period, that’s 680 pounds! What COMPOUND IMPACT does that have on your body?
Steve Shallenberger: Okay, well, back to the positive side of the ledger. Imagine the Compound Impact of simple exercise. Dr. Fotuhi, a world renowned expert in Neurology, including his focus on longevity and health, has done intensive, deep research on this whole area. And his research has shown that walking one mile, three times a week, will grow your hippocampus, this little feature at the bottom of your brain there, it is the gateway to brain and body health and longevity. If you would walk one mile three times a week, will increase the size of your hippocampus by 23%. If that is the case, think of the impact of one mile, in this case, say you did it 250 times a year X 10, or 20, or 30 years. Over 10 years, that is 2,500 miles walked. The value of the compound impact here, will result is better weight, extended life, improved health, and vitality and energy.
Steve Shallenberger: Okay, back to the bad side of things. How about the compound impact of negative thoughts, comments or a frame of reference? Remember, this is not just one day, this is a way of living. It is 1 X 365, or perhaps multiple times per day because the thoughts or the words, simple words would take a fraction of a second, X 10 years, that’s 3,650 days over that period of time, or of negative thinking, holding bad feelings, or a grudge, or not forgiving. That compound impact is devastating and robbing you of years of happiness, prosperity, and health. Think of all of those. Just in that short period of time, if you have, say, three negative thoughts in a day, over that period of time, it’s 10,000 dark feelings and life is too short. So, why does having a positive frame of reference, on the flip side, have such a big impact in your life? Research shows that a positive attitude affects your success in business, work, and life, in a dramatic way. Why does that matter? Well, the top 25%, research shows, of optimistic people, had 39% less risk of heart disease or a stroke and 52% less risk of dying from an infection. Let me tell you a little bit more about this, because the study analyzed data from 2004 to 2012, from 70,000 women enrolled in the Nurses’ Health Study, a long-running study tracking women’s health via surveys, every two years. They looked at participants’ levels of optimism and other factors that might play a role in how optimism may affect mortality risk, such as race, high blood pressure, diet, and physical activity. The most optimistic women, the top quartile, had a nearly 30% lower risk of dying from any of the diseases analyzed in the study, compared with the least optimistic, the bottom quartile. And that’s what the study found, the most optimistic women had 16% lower risk of dying from cancer, 38% lower risk of dying from heart disease, 39% lower risk of dying from stroke. This is where these results came from, 38% lower risk of dying from respiratory disease, and 52% lower risk of dying from infection. So, this is what we’re talking about, the value of compound impact. Research has also shown in other studies, optimistic sales reps sell 56% more than their pessimistic peers. And in a study, “Chronic Complainers”, have found that the hippocampus shrinks and there are significantly higher cortisol levels which lead, of course, to increased risk of heart disease and diabetes.
Steve Shallenberger: So, if the compound impact of negative thinking, mean comments, cutting other people down is devastating, imagine the impact of the opposite of making kind, thoughtful and upbeat comments, multiple times every day. One time X 365 days X years. Imagine what a sweet bonding power that would be on your relationships. Imagine the positive light that you are wherever you go. The greatest value of the compound impact of positive thoughts is your own sense of peace, happiness, and joy, and of course, talk about having an impact on being a highly successful leader, this does it. We work on this at Becoming your Best, I assure you. We are working on NO NEGATIVE comments, or words of any type. This is not thinking them in our mind in the first place, but thinking all the way on the positive side of the ledger. An example of this, I was in the office, not long ago, and was reading a news article about someone who had made, what appeared to me anyhow, an incredibly bad choice, by embezzling money from their company. I said out loud, in the office, “What a dummy!” Rob quickly responded, “No negative comments, dad!”. I laughed. He was right. How did that negative comment I make, help me or anyone else around me? And frankly, time is too precious to waste on the negative, especially multiple times, 365 days a year. So, what is the value of the compound impact of saying three negative words a day? It is 1,000 negatives a year! And so, just imagine replacing those negatives with positives, with three positive words a day. That is 1,000 positive words per year. And what is the compound, the CI, of that? The fact is, it is huge!
Steve Shallenberger: What is the compound impact of living the Becoming your Best 12 Principles of Highly Successful Leaders? They are designed to be lived 1 X 365 X 10, 20 or 50 years. The value of the predictable impact is that you would be better in every area of your life at an increasing rate, this exponential rate. In other words, one day you wake up and you’re just better at a lot of things. In an ever-changing world, the need to continue to improve, to change your skills and your mindset with CI, have never been greater. The alternative is like a friend of mine said, “If you are not moving ahead, you will get run over, and left in the dust”. By the way, one of the most powerful of the 12 Principles, because it brings to bear the other 11, is Pre-week Planning. It is such a simple, yet enormously powerful process.
Steve Shallenberger: So, What can you do, as we wrap up, and give some thought to this discussion today, to develop the habit of using the value of compound impact in your life? There are some things you can do today to set yourself up to win! Here are just four. Number one is instituting into your life a principle a week and a motivational daily thought, and this literally is the definition of the process of the Value of the Compound Impact, just doing that simple thing. To help you develop these power-packed Becoming your Best Principles into your life, Becoming your Best has developed for you a personal “compound impact” system to reflect and work on one principle a week, and then move on to the next one, the next week and through all 12 Principles. On the thirteenth week, reflect on your progress. How have you done with each of the principles? And with inspirational stories attached to each one and a call to action, you can do this four times a year, 4 X 13=52 and you can work on these throughout the rest of your life. In addition, you are provided a one or two-line daily motivational quote to just give you that little punch. That’s what we’re talking about, that impact that with time, exponential impact. Together, the weekly message and the daily quotes are a tailor-made COMPOUND IMPACT program that will serve you faithfully throughout your life. This is a service that we provide on a complimentary basis to the entire world. This simple and invaluable process helps YOU to set up a fun, inspirational, on-going program to master the 12 Principles of Highly Successful Leaders and especially Pre-week Planning.
Steve Shallenberger: Many of you, who are listening today, may be receiving those emails now. I have now been receiving them for the last five years, and I can tell you, I look forward to them. If you are not currently receiving them and would like to receive them, simply write to us at firstname.lastname@example.org and Murphy will send those out to you, right away. He’ll set them up, for you, your spouse or partner, family or team. There’s no cost to it, it’s free to you. And this is one of the most important actions you can take in life. So, talk about the value of compound impact, and this is a perfect example of it. If this is something you would like to set up for you, just email us at email@example.com and request the weekly/daily messages. I know that you will enjoy them. And if they don’t work out how you thought they would, you can always unsubscribe to them. That’s one thing that you can do. That’s an action that you can take today. I’ve got three more, they’re very simple.
Steve Shallenberger: Another that you can do is, be sure that you are working on a healthy diet and regular exercise. And do things that you love! This will help make your program sustainable. A third thing is, in terms of the spirit of CI, is just be determined that every single day, you’ll treat people with respect and consideration. Be nice, patient and kind. And the last one, that I’ll suggest today, is keep learning, reading, listening to podcasts, like you are doing today right now, TED talks, etc. This will stoke up your mind, they’ll fire your intellect up. As you work on investing in your life, with some of these few key actions, I just suggested four, right? Be sure that you have set up the regimen of a weekly leadership thought, one of the 12 Principles of Highly Successful Leaders and an inspirational, motivational, daily thought. Number two, work on a healthy diet and exercise. Three, treat people with respect and consideration, and four, keep learning. Now, as you work on investing in your life, with these things, they will work magic in your life. And it is NEVER too late to start. Why? Because it is about Becoming your Best. You can start fresh today, regardless of wherever you were yesterday. That is why failing is such a big, positive, sometimes painful, part of life. Failure is a pathway to improvement and growth. So, it’s never too late to start fresh today! To put yourself on a more positive track.
Steve Shallenberger: Remember, “Thoughts produce actions! Repetitive actions produce habits! Habits, especially good, productive healthy habits, produce a good, healthy, productive character and destiny in life!” The positive value of Compound Impact will catapult you into a transformational person and a highly successful leader. You are an inspiration. I realize YOU are working on your CI right now! Way to go! Because of your relentless effort, you are receiving the value of compound interest now! It is impacting your own life with greater happiness, joy, and prosperity, and whether you realize it or not, you are a positive light to all of those around you, especially as you just keep working on it!
Steve Shallenberger: I hope that you’ve pulled an idea or two out of today’s podcast. We wish you all the best and remember, you make a difference every single day of your life! This is Steve Shallenberger, wishing you a great day!
Steve Shallenberger: Welcome to our Becoming your Best Podcast listeners, wherever you might be in the world today. This is Steve Shallenberger, your host, and I’m excited to talk about one of the 12 Principles of Highly Successful Leaders, today. Happens to be Principle Number 10: Apply the Power of Knowledge, and this, specifically, in five key factors in running a successful business and thriving personally. And imagine the confidence that comes from having a clear pathway on things that you can do to run a successful business. I mean, just think about the mortality rate of new businesses, start-ups. 50% are no longer in existence within five years. One, out of two, will fail. And that’s 75% within 10 years. So the question is, how can we be one of those, the 25%, that are still thriving after 10 years? And it’s not easy in the world’s economy, but I’m gonna talk about five things today, that you can do, in running a successful business.
Steve Shallenberger: Now, I’d like to give a little credit to my business partner, Dave Clark. We’ve worked closely together for 40 years. He is one of the best business people I’ve ever met. He is considerate, he is thoughtful of others and has developed outstanding business acumen and standards of how to run a successful business. These five basic factors, we have used over, and over, and over, again to keep us on track, and the results are consistent about standing high performance. This is the endgame. This is what we all want to achieve, right? We want to prosper, we want to be successful. So, what are those five factors that contribute to that type of an outcome? And you may tweak these, depending on your industry, but they are as dependable as night and day, and they apply to large firms, multi-billion dollar firms, small firms, 500,000 whatever it might be. They apply just the same. Let’s just get right into them. Here are the five, first I’ll give you a quick overview and then let’s just talk briefly about each one. The first one is Having a Strong Economic Engine. The second is High Quality, third is Safety, fourth is Customer Service, high customer service, and the last one is Control your Cost.
Steve Shallenberger: So let’s go back and hit the first one. Let’s hit the business side first, and then we’ll just make a reference to the personal side because it applies on both ends of the spectrum. What we’re really talking about, when we think of economic engine is that you have a product or service that can produce a reliable income stream for you. And it’s understanding, from beginning to end, how to deliver that widget, and that you can do it successfully. So, for example, if you’re running an organization, you know it takes 10 contacts to produce one sale, and the average is $10,000, and that you know how to consistently do this. You know what contributes to every part of that. Now, you can start scaling that idea. That would be a proven economic business, economic engine. In other words, we push the button here and the results come out here. And it’s predictable. And once you have a successful model, you expand the model. So, I’d like to invite each one of you that’s listening today, if you’re running a business, or a Division Manager, or a Department Manager, what is your economic engine? The mindset, here, is to maintain real growth from year to year. So, I invite each one of you, when we think of economic engine, not just now, not just this week, this month, this year, but also think out into the expanded future. And how does our economic engine look in two years from now, five years from now? And we want to build with this mindset, in the back of our mind. We call it, maintaining real growth, having an economic engine that we tweak, we build, we produce additional engines and different channels, that gives us this type of result that we hope to have, an ongoing successful organization.
Steve Shallenberger: Let me give an example of this. One of my early companies was a publishing company. Our products were educational products, were sold to the home, and we recruited college students who would sell during the summer, and that this was a proven model. We knew that the average rep, could do X in volume, sales volume. Let’s say it’s $50,000 per rep. That’s a good number. From that, we knew that we could produce the product. If we had so many reps, here is how the production look, and that we would have Z left over. It was the operating income. So we understood, from beginning to end, every aspect of the delivery of that product. As a result, what we were able to do, over a six-year period of time, is we scaled from having 30 reps, to the next year to 60 reps, to 120 reps, to 175, to 300 and ultimately, to 500 reps. And this is how we built the economic engine. And this is what we saw. Now, with time, we also wanted to think in terms of diversification. So, when you think of your economic engine, how do you diversify, so that you strengthen your capacity to maintain real growth over time? And this is diversification related to markets or products. And we’re trying to spread the risk if a particular market channel becomes attacked through disruption or competition, or Government regulation, or whatever it might be, that we have other legs to stand on, and we can diversify by industry products, services, location.
Steve Shallenberger: One of the standards that we set up for ourselves, is that no division would be greater than 35% of our revenues. This is part of our diversity program so that we can have an economic, combined economic engine that was healthy, and strong. And as you think of the spirit of maintaining real growth and innovation, and bringing on new products, whether it’s taking what you’re good at, and applying it to another area, or adding a new product or service, to an existing core set of business, what you want to do is really allow 12 to 18 months to develop a new product line where possible, or service, before phasing out the old lines that you had, or the existing markets. And this creates much more of a predictable process so there’s less disruptive to your business. So, that’s what I’ll say, that’s number 1: Economic Engine. You wanna build strong economic engines and if you look at your organization or your business, just say, “Wow, I’m not sure I can really say, if I push this button, I’m gonna get this result.” Well, the advice is to really work to understand every facet of your business, even if there’s small business channels, to say, “Do I have anything that gives me a dependable result?” Well, that would be an economic engine. From there, how do we expand that, and how do we build multiple channels that protects our business over time. And, just keep pushing, until you find that dependability that you’re looking for in an economic engine, so that you’re not disrupted.
Steve Shallenberger: Okay, well good enough. And as you think about this aspect, let’s just switch to the other end of the spectrum, which is personally. Remember, you are the product and the service, as far as it comes to an economic engine. Your ability, your self, your energy, your attitude, the skill base that you have, all gives you the capacity to make a difference. What makes you unique. Whether you’re in sales, or leadership and management, you could be in IT, a technician, administrator side of the team, so what you want to ask yourself is, how can I be the very best at what I do? If I’m an HVAC technician, how do I become one of the very best HVAC technicians in the United States, or in the world? That’s the idea. That’s the mindset, but now build the skills set, so you’re always learning, reading. Let’s say that you’re in sales. This is one of the things that you can do, you can say, “Okay, one of my goals for this year, my vision is to be one of the best sales reps in my organization.” So, the goal, whatever year you’re in, but your annual goal would be, “I am going to read 12 books on sales. I’m gonna take to lunch the top salespeople.” So, this is a way, then, to build this economic engine, your capacity to make a difference. “I’ll listen to podcasts, rethread my skills.” I was just talking with a friend the other day, and we also discussed this on a recent podcast, that if you have an IT student, that’s in technology, that’s a freshman at college, by the time he becomes a senior, many of the things that he/she learned, as a freshman, are already outdated. So, if things are changing very quickly, we need to stay ahead of the curve and be determined that that is exactly what you will do. Okay, that’s the number one factor, is having a reliable, strong, predictable economic engine that we’re always cultivating.
Steve Shallenberger: Second, is have High Quality. Do it right the first time. And whether it’s a product or a service, provide a high-quality product or service, that you stand behind. Peter Drucker, such an inspiration, he became one of the very Chief Consultants to Japan, during reconstruction. And, there was a time that I remember, when, if it said, “Built in Japan”, people would laugh, because of the poor quality. Well, that is no longer the case. Peter Drucker helped inspire the entire reconstructed industry of services and markets to build in the product or the service that you had, processes of high quality, right from the get going. The high quality is built right into the whole system, so that’s the result of it. And the result is, Japan completely transformed the end result that they got, in terms of their economic apparatus. It became a high-quality apparatus. That was the norm. And if you think about Japanese products today, where there’s technology, automotive, financial, etc., these are all very well thought of with high quality. This is what we want to do, building high-quality services, right from the beginning. On the personal side, imagine what you would like to have your employees do in terms of delivering high quality. What’s the mindset and the skill set? What do they do? Both think and do.
Steve Shallenberger: I think I can illustrate this with the determination of being a finisher and developing a high-quality result, of doing the job 100%. Leaving things better than when you found them. I’m gonna use an example of our fifth son, Daniel, who is really an extraordinary individual. After graduating from college, he worked for Becoming Your Best for about five years. And it was close to have, he and wife and children lived fairly close and so they helped on a number of projects. I remember one time, that Dan went up on a roof with a ladder. When he was done, I came out at the end of the day, and the ladder was left out. So I thanked him later for helping with the job, but I asked him why he wasn’t a 100% finisher? In other words, why didn’t he finish the job and put the ladder away? And he has become outstanding, at high quality, and being a 100% finisher. We really laugh about that. Right now, he’s getting his International MBA at Thunderbird, in Phoenix, Arizona, and what a resource he is. He’s amazing! But in all of your work, this is what we ask ourselves: how can you be a 100% finisher and leave things better than when you found them? And this takes SA. SA is Situational Awareness. And asking the question in the first place. Have I left anything out? How do I wrap this job up, so I’m leaving it better than when I found it? So that there is personal pride in the work that you deliver, and that someone doesn’t have to follow you around to be sure you’re delivering the right kind of results. Seek feedback, and have a becoming your best type of attitude. So, how can I always improve?
Steve Shallenberger: Okay, that’s the second one. We, as highly successful leaders, the five factors we focus on to run a successful business, number one is Have our Economic Engine in place, a vital healthy one. Number two, we deliver High Quality. Number three is Safety. Safety is a huge factor in successfully running a business enterprise, and the most successful organizations have a safety plan in place. And remember, unless you have safe behaviors, safety is luck. And so, what you really wanna look at, is safe results come from safe behaviors, and how can we be sure that we are teaching and reinforcing safe behaviors so that we can have a more dependable outcome? So, a few examples are safe driving habits. A safe speed, the three-second rule of so much distance between you and the car in front of you, changing lanes always looking over your shoulder when you change a lane, not holding and talking on your cell phone, or texting, while you’re driving. How catastrophic that can be. Or if you are at the stop light, or stop sign, even though your light turns green before you enter the intersection, you look both ways to see if somebody is coming. How many of you have actually had an experience where you’ve done that, and looked and saw somebody coming at high speed and ran the red light right in front of you. And if you would’ve entered that intersection, there could’ve been a terrible accident and crash. That’s just an example of safe behaviors.
Steve Shallenberger: There are so many wonderful courses, by the way, on the Internet of safety plans that you could put up. One of the things that we do in our organization, is we work on daily stretching. The statistics show that if you’ll stretch every day, and there can be a regimen of, like, eight different types of stretches that you do, that you can reduce injuries by 60%, by just daily stretching. These are things that you can do. It’s a mindset. Our mindset is that safety is not a program, it is a way of life. And our vision for our organizations, is that our employees can come to work, wherever they might be, whether it’s in sales and then out with the public, they’re technicians, visiting people’s homes, doing work or administrated, that they can come to work and go home at the end of the day, safe, to be with their loved ones. And this is an important vision. It impacts so much of a successful operation.
Steve Shallenberger: Number four is Customer Service. Many of you are quite familiar with something called, “The Net Promoter Score”. Net promoter score is a way to be able to asses or measure the level of customer satisfaction that you have. One of our companies, we have an entire office, and one of the primary things they do, is they help us with customer data, customer feedback, they call 25% of all of our customers. We work on measuring our level of customer service and we wanna know it before anybody else does. As a matter of fact, we measure it, not only as a company but by every single individual technician that we have. How do the customers see their interaction with them? In this way, we can provide feedback, we can reinforce and recognize those that are stellar, and if there’s some that have problems, then we can take action on that, and go to work on it and try to fix the problem.
Steve Shallenberger: And then, how about your customer service policy? At least, in our business, in energy efficiency in one of our companies, we call in thousands of homes every month. If there’s an issue, customer service issue, we have an ironclad policy, we just fix it. And we fix it as fast as we can. We have wonderful partners that we work with, in this industry, utility partners, who are fabulous, amazing organizations, also municipal power companies at local communities, same thing. These are people, a delight to work with, and the program managers for example, if there’s an issue, their reputation depends upon us. And so, we have decided that it’s not about the cost, we’re gonna make it right. As a matter of fact, is our opportunity and rarely do customers take advantage of this policy. To the contrary, they’re grateful and relieved for a company that has their best interest at heart. Our company vision is this: We treat people right, whether it’s customers, employees, and this is a great gold standard if you will. There’s a lot of research on this, and companies that prioritize their customer service show that they consistently have higher profits than those companies that don’t. Well, we see this all the time.
Steve Shallenberger: I had an experience, this is just an example of this. A client of ours, his name is Michael, we’ll say. Some years ago it contracted with a training and consulting firm out of Europe. They had agreed to a number of in-house trainings, coaching with their key employees and this was a longer-term contract. And Michael was going to have a critical meeting one night, having to do strategic issues, and this consultant happened to be in town, and so Michael asked if he might go to dinner with him and this other party with whom they are going to work on a significant strategic issue. It’s very interesting, because afterward, when the meeting was over, the consultant said, “Well, Michael, how shall we arrange for payment for me coming to this dinner, to provide you the services?” Well, Michael, in his mind, said… We’re thinking about customer service and at Becoming Your Best, anyhow, our vision is to over deliver, with outstanding customer service. How do we over deliver? Well, in Michael’s mind that night, without knowing us, or anything else, he said to himself, “We are done! Are you kidding me? After all we’ve done, you’re gonna sit here and try to dime me to death? I just wanted your advice and counsel here as a friend.” That’s a fair request, nothing wrong with that. So, anyway, when we came along, he was excited to have a fresh, alternative, that he thought was a better fit, in this case. Over deliver, with outstanding customer service. This is the spirit of it!
Steve Shallenberger: So, let’s just review the first four. First one is to have a strong economic and dependable, diversed, economic engine. There’s a lot of disruption out there, and so be very aware of having an ongoing program of maintaining real growth. Number two is build high quality into our processes. Number three, safety. Safety is every part of what we do in our business and in our personal lives. Number four, High level of customer satisfaction. A high net promoter score. And last of all is to Control Your Cost.
Steve Shallenberger: Now, there’s a lot of ways, quite a few dimensions on this particular item, but it’s a big deal. And one of those is that, in terms of financial aspects, you should have accurate and timely financials. By the 10 or 15 of each month, following the previous month, so that you can benchmark where your costs are going, and especially the large costs. You’re always thinking about our fuel, our energy, our rent. What are ways that we can be more responsible in operating our business? So, for example, if you are a long term tenant, you can look at your rent versus buy option. And as a result, we’ve ended up buying all of our offices that we’re in, really. Because long term, and now we have an asset at the end of a couple of decades. It’s pretty amazing, it adds up. And this, by the way, can have a huge impact from many different dimensions, and because it’s your own building, then you can say, “Okay, this is a long term investment, and how about solar versus ongoing electric cost? And can I do better with solar?” So we have installed solar on most of our buildings. These are ideas that you’re always thinking about. How can we run our business more efficiently? Sales service. You look at the big costs we just talked about and then benchmark them. How can we do better? Also, really work and have a solid cash position. About 10 days ago, I was at a Global Leadership Conference, in South Africa, in Cape Town. One of the speakers, Harry Clark did a great job, fun to be together with him, and he talked about mistakes that millionaires make. And he had built a company, had the opportunity to sell it, with time things went south, then he said, “I just couldn’t even give my company away.” So, he developed a list of 19 things that are risk for our business and 8 personal things that are risk for us, financial. And if any of you would like those, just write to firstname.lastname@example.org. We’ll be happy to send those along, to you.
Steve Shallenberger: And I might add, that we’re thrilled to announce that we have recently launched, based upon a lot of our customers and clients asking, the Becoming Your Best Online University. This is an awesome university, that has a host of free programs, and resources available for you. There are also some resources that you can invest in, to go much deeper, to help individuals within your company, family members, to be able to take advantage of these resources, which really puts you on the cutting edge of making a difference. If you would like to have information about that, simply go to our website, becomingyourbest.com and you’ll get there and see that it’s a great resource. Very exciting!
Steve Shallenberger: Well, let’s get back to finishing up on controlling your cost. One of the things that we wanna look at, is our account receivables, account payables, and inventory. Being sure that we’re collecting the money as fast as we can, we have a good account payable’s policy, not stocking up too much inventory of the wrong things, so managing this aspect well. Another is that when we think of controlling our cost that we manage, our workman’s comps issues, efficiently and quickly. So, if somebody has an issue, let’s say, on the job, it could be a first-day issue, but that very day, the very same day, we connect them with the medical resources and help them get back on their feet. But these responsible type of management ideas, also, really drive down your workman’s cost, and workman’s cost expenses, over a long period of time, and your moderates of all of these, have a big impact. Something else that helps us control our cost is really abide by the three-bid rule. Get in three bids for things that we need to do. And don’t forget that a great resource is buying used equipment. Especially in today’s world, it’s so easy to find used equipment, that’s much more accessible, that can work just as fine, depending on your needs and your wants. But we can keep working on these.
Steve Shallenberger: Well, these are the type of things that we can do, to run successful businesses. Number one, Have a Strong Economic Engine. We continue to work on, all of the time. We always monitor it, just like any other engine, daily, weekly, monthly, quarterly, thinking throughout the future. Number two, we build High Quality into all of our processes and products from the get-go. Number three, we have a Safety program. Safety is a way of life, it’s not a program, okay? But we do have a program! It’s a plan out there, and here are the things we do, and here’s how we teach it, every single week in our meetings, we talk about safety. And we stretch. Number four, a High Customer Service. And we prioritize this, within our organizations, and last of all, we work on ways to Control our Cost in over a long period of time. These are the things that help you run a successful business. And as you apply them in your own personal life, think about this, “I am the economic engine, so what do I do to keep myself current and make a difference? How do I deliver, be a 100% finisher? And deliver high quality. It’s what I do, right?” It’s a mindset. And these are great questions to discuss with your employees and imagine the impact when you discuss them. Are you a 100% finisher? Do you leave things better than when you found them? How do you renew your skills? How do you become the best at what you do? Safety, customer service, and last of all, controlling the cost. We do each of these. How do we control and manage our finances well? How do we get out of debt, how do we pay off our credit card debt and quit using the credit card, unless it’s we pay them off every thirty days?
Steve Shallenberger: So these are wonderful, powerful principles. As you do them, you make a difference. That’s the way it comes down. And this is what leadership is all about. It’s the leader that really sets the tone for everything else, in your families, in your relationships, and these are sound powerful processes. Today, we’ve talked about one principle out of the 12 Principles of Highly Successful Leaders. It is Apply the Power of Knowledge. And these five simple steps, are ones that you can use to apply, to make a big difference as a leader and a manager. We wish each one of you the best, as you are making the difference. What an honor and a privilege it is, to have you listening to this podcast, to be associated with you! We are so grateful for you, and I wish you, a good day!
Rob Shallenberger: Alright friends, welcome back to the Becoming your Best Podcast. This is Rob Shallenberger, wishing you a fabulous day, wherever you are in the world. And I know there are listeners in the Philippines, Africa, Europe, Central South America, and so we welcome you wherever you’re at and hope you’re having a fabulous day! Just a couple of things before we get going. Number one, many of you may be aware, yet I know some aren’t aware, that we just launched The Becoming Your Best University. This is an online resource that you can use and access tools from all over the world. If you go to becomingyourbestuniversity.com you’ll have access to a lot of different courses. Some of them are free. For those who are serious about their success, there’s some paid courses, where you can invest in yourself, that has all the templates, the tools and this is something you can watch on your own free time, so we’re excited about this. People have been asking about it for months, and so finally, it’s here, and we will continue to release online courses, through the upcoming months, and certainly, years. So for example, the Breakthrough Leadership Conference is currently on there, and we’re gonna re-record this upcoming April Conference and put that on there. Our Entrepreneur Conference is available, a Sales course. So anyone in sales should watch this Sales Course and we’ll talk more about that. It will be released here in the next week or so. These are powerful courses. So, becomingyourbestuniversity.com, great place for you to access tools from anywhere in the world.
Rob Shallenberger: Now in this podcast, this may not take a long time, yet I hope it resonates with you on a deep, personal level. There’s a couple of things that have had a big impact. I’m gonna share what I would consider the bigger of the two, for the latter part of this podcast, in just a few minutes.
Rob Shallenberger: The first one though, something that has been really interesting though, over the last few days, is your personal health progress fitness and performance. Something that I’ve learned personally about that. And this question is, how do you measure your personal health progress and performance? Some things are fairly easy to measure. Others, not so easy, and a little bit more difficult. The foundation of this is to have your vision, your roles and goals, and combine that with pre-week planning. If you don’t know what I mean when I say those three things, go to the Becoming Your Best Univerity and get some of those free courses on how to do that. A lot of people listening to this podcast will understand what I mean by that. So that is the foundation: roles, goals, pre-week planning. The target is critical. Michael Phelps, the Olympic swimmer said his secret to success is that he has his goals next to his bed and when he wakes up in the morning, the first thing he does, is he looks at his goals. So I wanna lay that as the foundation. We need to know where we’re going, what the targets are and what matters most this week.
Rob Shallenberger: Assuming that that’s the foundation, there’s another layer that can take even a step further or a little bit deeper if you wanna look at it that way. And that is, to get some sort of watch that allows you to track your progress. Now, I recently invested in a Garmin watch and I returned from Africa, it was there waiting for me, I was all excited to get this, and so far this week, I’ve done certain things as it relates to health and exercise that I haven’t done for months. And there’s a power in this principle. In business, we say, “Don’t get mad, get the data.” Well, how about in our personal lives? If we’re wanting to have better health, and there’s certain things we want to improve, let’s not get mad. We assume that the goal is there, we know the target, now let’s get the data. And having the data can add another level of accountability, that’s very powerful for us. So, for example, my Garmin watch tracks steps, sleep and even tracks deep sleep. There’s a little app on it that has a seven-minute workout with the watch. And ironically, I may be breathing a little fast right now. I just finished a workout with Murphy. I walked downstairs in the office, asked who wanted to work out, and Murphy, enthusiastically raised his hand and so we did a seven-minute workout together. That was because of my watch and I knew I needed more intensity minutes than I got yesterday. It has your average heart rate and so on. The point is, whether it’s a Fitbit or a Garmin watch, whatever the brand is, having the data here motivates you to do certain things that otherwise we may not be motivated to do. I mean, just last night, I go home, spend time with the kids, had a great afternoon, evening, and then realize, looking at my new watch, that I was still a couple of thousand steps short of the target for that day. So at 7:00 PM, I grabbed my wife and we walked out and went on a maybe 15-20 minutes walk, together, simply to get those remaining 2000 steps. Now, would I have done that, had I’d not been tracking on the watch? It’s a good question. I’m still in line with my goals, without having gone on that walk. Yet, having that data was an extra motivator. So, the reason I’m bringing this up is, if you want to improve your health, if there’s something that you want to do better that relates to your physical body development, lose weight, lower your heart rate, whatever it might be, then get a watch or a Fitbit or something that allows you to track that data. For me, even in four days of having this, has been monumental in helping me shift the way I think towards accomplishing my goals.
Rob Shallenberger: And then, there’s another layer to this. This could be a blessing and a curse because you also can get texts, and phone calls on this smartwatch and that can be a huge distractor. That can clutter up your life even more if you’re already living a high stressed life. So on that note, yes, I’m highly recommending one of these watches, or devices that can help you track this data; at the same time, if you already feel like you have a pretty high-stress level, then you may wanna deactivate that function that allows you to receive texts and calls on your device. That’s really up to you. But if you’re already feeling moderate to high stress, there’s no need to add another layer of stress. It’s important to disconnect at different times. So that one’s up to you. I’m just gonna throw that out there because I’ve seen a lot of people say, “Yes, I got this awesome watch, it’s doing all these amazing things, but I can never disconnect.” Well, set it up from the beginning, so that there are times when you can disconnect. So that’s number one. This has been for me awesome last four days, as I mentioned. If it’s something that you feel like would be valuable to you, then consider going out and getting that. See what impact it has. See if it works for you. You know, what’s the worse that could happen? It doesn’t do anything.
Rob Shallenberger: Number two, and what I consider to be the more important part of this podcast, is this reminder for all of us, of the power of the 12 principles. And sometimes, after we’re around them for a while, we’re listening to these podcasts, we get the weekly email; in our case, we’re speaking and doing seminars all over the world about them, it may potentially be easy to get a little bit numb. In other words, it might not be too difficult to get complacent about these principles. We think about them, we talk about them, and they might just become sort of an after-thought, whereas, at one point, they had a fire that came with them. Well, we’ve gotta guard against that, because these are powerful principles, and we never arrive, so to speak. These are something that should be a part of our lives throughout the rest of our lives. For example, let’s just take our personal vision. You’ve heard us talk about that over and over, so many different times. Well, I’ve had a personal vision written for years and for any of our Becoming your Best listeners, you know we invite you to develop a personal vision by role. Parent, spouse, whatever your title is, at work. What does your very best version of you, look like? And using empowering words, such as “I am”, rather than “to be”, “hope”, “someday”, things like that. Well, with the vision, you know, I’ve had it for years, it could potentially be easy to start to get a little complacent about it. Well, let me share with you some things that I’ve done to bring the power of the principle back alive, so to speak.
Rob Shallenberger: I started treating my vision a little bit differently, recently. So, for example, rather than just having it written and reviewing it once a week, even though I have it memorized, I’ve started treating my vision like an affirmation. And so you’ve heard on different podcasts, when we’ve mentioned the Becoming Your Best morning, for example. What goes into a powerful morning routine and how to start the day off right? One of them is, when we open our eyes, to simply stay in bed for three to five minutes, and start to verbalize different affirmations. If someone’s sitting next to us, sleeping, well, then maybe we can do it in our mind. But the idea is to say them out loud and let them become a part of who we are. That we align our thinking with our reality and vice-versa. That’s the beginning part of it. Well, as soon as I started treating my vision like an affirmation, it became very powerful. It brought a whole new life back to the principle.
Rob Shallenberger: So let me give you an example of what my vision is as a father, and as a husband, or as a spouse. So, as a husband, this is my vision in that role, and this is what I got up reciting this morning, and it already started the day off with that power. Is like planting the seed for the day. So here goes, “I’m a kind and caring husband, who always helps Tanya feel like a 10. I’m totally faithful in thought and action, and I constantly strive to compliment her, serve her and be the husband of her dreams.” As soon as I recited that two or three times, I looked over and there she is. How am I going to treat her, after using that as an affirmation? Immediately I’m already asking that question. What can I do to make her feel like a 10? See how the vision becomes a guide, and it brings the power to it? Well, how about in the role of father? “I am an example in thought and deed, of what a true gentleman looks like. I am the type of person I want my daughters to marry. I’m present with my children and we constantly develop great memories together. I help them see their potential, and how they can make a difference in the world and I am vulnerable and I empathize with them.” So as we wake up in the morning, the question is, what does an incredible father look like? What type of person would I want my daughters to marry? How am I gonna treat them, this morning? And so, when you start to look at your vision as an affirmation, it takes on a new power to it. And it becomes the guide for the day. And that’s exactly what the vision should do. Now, just to bring this back to the whole point of this, we don’t want let the principle become stale in our lives, because these are the most predicted principles of success, that we’ve been able to identify in years and decades of research of high performers.
Rob Shallenberger: So let’s just stay on this principle of the vision, for a few minutes. We just returned from this amazing leadership tour in Africa. We were in Cape Town, Durban, we had a two-day Breakthrough Leadership Conference in Johannesburg, flew up to Nairobi and then over to Kigali in Rwanda. Just an absolutely incredible experience to me with so many amazing people. Well, one of them has become a good friend. I’m gonna call his name, John. For me, in this entire Africa trip, there was a single moment that was probably the most powerful moment of the trip. And it was after the two-day conference was finished in Johannesburg, people were giving us hugs, we were saying goodbye, it was just a great two days with the people. And as everyone’s filtering out, I noticed that John was still there. And John has become a good friend. We were in Durban with him, for a couple of days, we went out on a safari at his preserve that he has, and it was an incredible experience. So we started to become really good friends with John. He’s been through some challenging times, a couple of divorces in his life. And at this point, fairly heavy smoker. Probably around two packs a day or so. And this is a big deal, and he’s mentioned several times while we were on the safari that he wanted to stop, that this wasn’t a part of who he was. Well, at the end of the conference, he walks up, and I’m standing next to a chair, and I see an arm reach across me, and on the chair, I see this arm put a pack of cigarettes on the chair. And then I see a lighter get put on top of the pack of cigarettes. And I look over, there’s John standing next to me. And he said, “Rob, thinking about my personal vision, this no longer aligns with my personal vision. And that right there is the last pack of cigarettes I will ever touch, for the rest of my life.” He gave me a hug and walked out of the room. And I’ll tell you what, Thomas, the other BYB presenter, and I, we just kind of stood there, almost in tears, not even really able to talk for almost a minute. It was such a powerful experience to see that. For him, he was starting to plant the seed of a vision. He felt the power of that principle in his life, and it was life-changing for him in that moment. Now, he still has the road ahead of him. It’s not gonna be easy to do that.
Rob Shallenberger: It’s having that vision and planting the seed and when it becomes powerful enough, we can start to make those kinds of changes in our lives. And so, the whole point in this is to not let these principles become mundane or become complacent about them. These are powerful! These are what the top 10% of any industry do to get there. Be true to character. That’s the foundational principle that we are honest in all the things that we say, that we do and that our actions align with our words. Vision – be an effective communicator. Well, we never stop working on that. To become a better listener. From Africa, someone wrote Thomas a note, because of this principle – be an effective communicator – when they worked on the five steps to become a master listener, that was so deeply touching and powerful to him, he knew it was gonna change his business and life and his marriage. He wrote a special note talking about how that really did change his life. It was that principle that did it for him.
Rob Shallenberger: Be accountable in taking responsibility for our actions. Each of these, combined together, are life-changing. So I would hope that after this podcast, that we will take a renewed, fresh look at these principles. This is why we invite teams and people to focus on one principle a week so that it doesn’t become mundane so that we can look at a different angle than we had before. I mean, just like my vision. This is my entire life, I’m around this all the time. And yet, still, now the vision takes on a whole new spirit as I’ve started treating that as an affirmation in the morning. That’s new, that’s exciting, it brings a new focus and power. Well, we can do the same thing with all of the different principles, as we stay focused on them. And they will create success in every area of our lives.
Rob Shallenberger: So, we’re gonna wrap up this podcast, two invitations: assuming that you have a vision, your roles an goals and that you’re doing pre-week planning, consider getting a Fitbit, a Garmin watch or something like that to track your progress and help you physically, maybe even take it up to the next level, from where you’re at today. And number two, re-focus on the power of the principles. One principle per week, and make them a central part of your life, to help with that. Again, I’m gonna come back to where I started this podcast, becomingyourbestuniversity.com. There are some free powerful courses that you can use, right there. You can share those with your friends, co-workers. If you’re a manager or leader in an organization, share those free ones with your team. Some of them may be important enough where they invest in the whole course. Great! They’re just gonna exponentially get better, as a result of that. So we’re grateful for your association, your friendship, your influence in the world. You need to know, the vision for Becoming Your Best is to reach a billion people. That’s not a small vision, and everyone who’s listening to this podcast is a part of that vision. This is not ours, it’s not yours, this is something that we do together, to transform and influence the world. And it’s happening! People are scheduling events in Russia, Jamaica, Central South America, there’s things happening in Asia, China, and so this is something that every one of us can be a part of and the truth is, it starts in our own lives, with living a life by design, rather than living a life by default. And then it spreads out its influence from there to our family, to our friends and then the people who are around on a day-to-day basis, wherever we’re working.
Rob Shallenberger: So we appreciate you, we’re grateful for you, this is a powerful movement, and we wish you a fabulous week, wherever you’re at in the world.
Steve Shallenberger: Welcome to all of our Becoming your Best Podcast listeners, wherever you might be in the world today. This is your host Steve Shallenberger, and we have an amazing guest today. He’s brilliant, he’s the founder and CEO of Tasktop and he drives the strategic direction of the company and promotes a culture of customer-centric innovation. Welcome, Dr. Mik Kersten.
Dr. Mik Kersten: Thank you, Steven. Great to be here.
Steve Shallenberger: Oh, this is gonna be a fun interview today. And before we get started, I’d like to tell you a little bit more about Mik. First of all, my brother in law’s named Mik, Mik.
Dr. Mik Kersten: Oh, really? Wow.
Steve Shallenberger: Yeah, there’s not a lot of Miks around, are there?
Dr. Mik Kersten: No.
Steve Shallenberger: He’s a great, great guy. Alright, now, before Tasktop, Dr. Kersten launched a series of open source projects that changed how software developers collaborate and as a research scientist at Xerox PARC, he created the first aspect-oriented development environment. He received a PhD in Computer Science from the University of British Columbia. What a beautiful area, Mik!
Dr. Mik Kersten: It is!
Steve Shallenberger: And his research interests focus on Value Stream Architecture. Dr. Kersten has been named a JavaOne Rock Star speaker and one of the top 10 Java writers of the decade by IBM developerWorks, and in 2012 he was awarded the Business in Vancouver of the decade. Well, of Top 40 under 40, right? Did I get that right?
Dr. Mik Kersten: That’s right, yeah, the Top 40 under 40.
Steve Shallenberger: And has been a World Technology Awards finalist in the IT Software category. And Dr. Kersten is the editor of the new IEEE software department on DevOps. You wanna tell us what that is?
Dr. Mik Kersten: Oh, sure. So, I’ve been studying this space for a while and working in this space for a while, in terms of how we deliver technology and support of our companies, our businesses, and, in the end, our society, and there’s been this DevOps movement, that’s a big part of that, so I started writing in for the IEEE software and all of those writings have actually culminated in a book I recently published, in “Project to Product”, so it’s just been an interesting journey.
Steve Shallenberger: Oh, great. Project to Product, is that right?
Dr. Mik Kersten: That’s right.
Steve Shallenberger: And what is IEEE? You have to, you know, slow it down a little for me. I got most of this, but not every little bit.
Dr. Mik Kersten: Oh, no problem. And I know there’s way too much technical jargon, perhaps, in this bio, but it’s one of the professional bodies that governs technology. So, it’s a professional body where different electrical engineers and computer scientists and so on, publish some of their work, so it’s really an academic body. We’re sort of publishing these interesting changes in how we architect software, because of what I realized is that we’ve been spending too much time looking at technology for technology’s sake and not quite enough at technology for people’s sake and for management sake as well, so…
Steve Shallenberger: Okay, good. I’m just thinking that one or two of our listeners are probably wondering, “What are we gonna talk about today and how does that impact me?” So that’s a good question, but I think you’re going to discover to our wonderful listeners that this is quite relevant to every single one of us. So let’s start out, Mik, first of all, telling us about your background and including any turning points in your life, that’s had a significant impact on you.
Dr. Mik Kersten: Absolutely. So, I guess I could start this story with… You know, when I first went to Univerisity, I was really very interested around the humanities, around people and I actually started studying at first a bit of philosophy and other things, but then anthropology. I became very excited around anthropology and this was back in ’94, so we were just starting to do things like send emails to each other back then and just do things like web-based chats on computers. My father was working in Hong Kong at the time, I remember, and we were actually chatting back and forth on the very earliest chat program that there was. And I will never forget this moment, where I started realizing that there was something interesting happening between technology, which had been around for a while, I had actually learned how to program when I was 10 years old. I learned how to program before I learned how to speak English, in fact; but I realized that it was changing. It wasn’t that computers were just there to crunch numbers on spreadsheets anymore. They were changing how society was starting to work and I will actually never forget this moment where I picked up a Wired magazine and just kept reading it. I have read it a few times before, but I thought there’s something so fundamental going on here, in terms of how communication and technology are affecting our society already, ’cause we were seeing glimmers of it back then, that I realized this was more interesting in terms of anthropology and studying people than anything I was doing in anthropology. So I actually went into Computer Science. And that was a defining moment, and even more defining was just how hard Computer Science was for me; I was way behind the math you had to study and some of that more engineering mindset, so I struggled, but I kinda came out on top and got more and more interested in the field. So that was an interesting and roundabout journey, compared to other people who just studied math and programming early on.
Steve Shallenberger: Yes. I was just talking with a fellow who serves on the board of trustees of a major University. I mean, this is a high-tech University. He said, “What’s interesting is, our students that come in are freshmen; whatever they’re thought is already outdated by the time they’re a senior.”
Dr. Mik Kersten: Oh, yeah, it’s actually incredible, is… And this is where this pace of change that we’ve seen in technology, especially over the last 50 years is so interesting and, in some ways so problematic, and in fact, the way that the Project to Product book starts is to talk about these five different technological revolutions that we’ve had, because I started to ask myself, “Has this pace of change, always been the same? Is it going to continue forever?” Is it going be exactly as you just said, Steven, where you start University and four years later, the programming language that you learned is obsolete, which, more or less, happened to me. There’s something interesting going on here, and I became very curious whether this is something we’re going to see permanently, whether this will continue, or will it slow down, or something change?
Steve Shallenberger: Well, great. I can’t wait to hear more about the book that you’re writing and some of the observations that you’ve made. Let’s start with, what is Digital Disruption?
Dr. Mik Kersten: So, we’ve been through these different kinds of disruptions and I think digital disruption is simply the latest one. So, if we look at… There’s just been this brilliant book in my mind, a very, very dense book I should say, written by Dr. Carlota Perez, and it’s called, “Technological Revolutions and Financial Capital.” And some of her theories are actually the anchor for key parts of my book. So, she takes us through – in her book, which by the way, was published in 2002 – five different technological revolutions. And these are what we think of, as sort of the long economic waves that we see through history, right? It all started with the Industrial Age and following the Industrial Age… by the way, these things happen approximately, these kick off approximately every 50 years, so that started 1770 – 1771. Then we had the Age of Steam and Railways. And then we had the Age of Steel and Heavy Engineering. And then, we had the Age of Oil and Mass Production, and now, around the ’70s, at the time that the microprocessor started, we’ve had the Age of Software and Digital. So, the really interesting thing about Dr. Perez’s theories, is that each of these waves, has actually broken up into two different parts: the first part is called The Installation period, where some new means of production, say like electricity, or mass production, the ability to build cars, like Ford learned at the turn of the last century, some means of production becomes much, much cheaper. And with that, we have this big installation period where lots of different companies, lots of financial capital, so people wanna get reach off these new means of production, a lot of that just starts firing up and creates this frenzy. And it’s a frenzy of creative disruption, where you’ve got so many different startups and companies trying to leverage this new means of production. And that’s what we’ve had, since the ’70s with software. We’ve had this period of creative disruption, we’ve had this frenzy, we’ve had all this venture capital pursuing this new means of production, which is all around software. And that’s really what digital disruption is. It’s going after those entrenched businesses and creating and providing a digital experience, and in the process, that creative disruption, displacing some of those businesses.
Dr. Mik Kersten: Then, in Dr. Perez’s model, you get through a Turning Point and after the Turning Point, there’s something called, The Deployment Period. So the Deployment Period is when the rest of the economy, the rest of the world’s organizations start to master that new means of production. And, at that point, it’s actually no longer financial capital at the helm of the technological revolution, it becomes production capital. And that means the capital that’s in the hands of the companies. So just to give you an example, earlier in the Digital Age, you had companies, and I’ll just use the example of consumer electronics, consumer devices because we all know those pretty well. We had companies like Jawbone creating cool Bluetooth headsets and really innovating that space and creating speakers. They actually raised almost a billion dollar of venture capital, but because we’re getting through this turning point and we’re starting to see the end of the turning point, it’s no longer possible for financial capital to compete with production capital that same way, which means for Jawbone to compete with a Samsung or an Apple, becomes impossible because consumer hardware has already been mastered and that means of production has been diffused, which means that company went out of business, right? It didn’t even get to a fire sale. Jawbone’s gone. So, that’s really this world that we’re in. We’re in the middle of the turning point, where digital disruption means that traditional businesses, even some newer businesses, like the Jawbones of the world, not just the blockbusters, not just the brick & mortar retailers, they’re being disrupted by companies who have mastered the new means of production and the new means of production is all about software delivery.
Steve Shallenberger: Okay, so, how does that affect brick & mortar companies, service companies, let’s say HVAC contractor, you know, those that might provide services to a home. How about, let’s just hit some different industries. We already see what’s happening, for example, with Tesla. They’ve closed most of their, if not all their shops, right? Their service centers. People order online at Tesla. Would that be part of what you’re discussing, part of what you’re talking about?
Dr. Mik Kersten: Yes. So let me actually answer… I think you had a few interesting points there, Steven, and we’re gonna take those one at a time. This digital disruption, this turning point that we’re in, in the Age of Software, is going to affect the entire economy. Now, it’ll affect different parts of the economy in different ways. So, we will have businesses whose business model simply go away, because a digital experience is going to supersede it, right? If consumers actually elect that they do not want to go to stores, to get their daily goods, they want those delivered to their door, it’s possible that Amazon actually completely displaces the Walmarts of the world and all those other stores. So, we’re seeing that kind of disruption, we’re seeing it more in retail, actually, and this is something we’re familiar with, with companies like Sears, so brands that have been around for ages, going out of business, going bankrupt in some cases. In fact, if we look at the stock price change of retailers, between 2006 and 2016, Amazon has grown almost 2000%. Almost all of the others have dropped, right? That’s how serious digital disruption has been in retail. And it’s going to happen across all parts of the economy that are affected by digital experience. So, basically, whenever we have a relationship with some service, some product, that can be changed through a digital experience and that’s something that consumers will elect to do, they prefer that; it somehow gives them better value. We’re going to see this. So we’re basically going to see across all parts of the economy. And not just the consumer parts of the economy, you can even look at the primary sector and the way that resources are extracted right now is very heavily dependant on software. It’s become very… Much more software intensive to figure out where to look for oil, where to look for gas and all of those things. So, we’re seeing software as the driving factor for helping businesses compete and the businesses that are slow to become digital and to have their operations based on software, are the ones being disrupted.
Dr. Mik Kersten: So I’ll just get into your Tesla case right now. Geoffrey Moore has this great book called, “Zone to Win”, which describes a different kind of disruption. So, you can have an infrastructure model disruption, which is really how you’re delivering your good to your consumer; an infrastructure model disruption, something that Tesla’s doing, just as an example, they’re changing the experience that’s the car, right? The car is now driving more autonomously, it’s an electric car, it’s a different product and it’s very digital. It’s got a very large screen. So it’s a very different model. And people think of Tesla’s disruptive in that way, but with Tesla, Steven, is actually a much more profound disruption, which is the fact that Tesla’s changing the operating model of the customers relationship with the car, by taking dealerships, which they’d already done, and now, even their own storefronts out of the equation, and having the cargo directly to the consumer, through the web experience, that’s a pretty significant disruption, when you think of all the businesses that are founded on the old distribution model, that Tesla’s changing. And then, Geoffrey Moore speaks of one more kind of disruption, this is called the Business Model Disruption, where the consumer’s relationship with the offering changes completely. And so this is what Uber’s doing, and this is what, even the Teslas of the world need to be worried about, because, if all of the sudden, the ownership model changes, and it’s more about mobility and just getting driven around in an autonomous car that an Uber picked you up in, well that could even disrupt all sorts of other vendors.
Dr. Mik Kersten: So I think what we’re seeing, in terms of all of these services and products, the software will power the changes, the companies that will be better at building that software will be the ones who thrive. We’ll see a lot of businesses fall through in the process, The nature of the services that we provide, so back to your HVAC example, I think there’ll be less disruption in parts of the economy, right? The services sector might be considered less disrupted than other parts of the economy. But, the way that the service is delivered it and what they’re delivered for, will change as well, with, let’s say, Tesla now bringing a repair man to your door, as well. So I think the change is… We’re just really starting to see the scope of the change because we’ve been through this installation period, it’s going to go very broad, very quickly right now. And really change the way we all work.
Steve Shallenberger: Well, Mik, you bring up a great point too. Let’s take the HVAC company or others that are services related, even though, and we’ll see how this all plays out, and certainly, will play some role, software, internal software, can give that company a competitive advantage. So, yeah, even the delivery may still have to be in person, but as I’m reading from what you’re saying, this has both an internal and external impact.
Dr. Mik Kersten: It does, it does. And it’s kinda like, there’s the companies whose services are software, are explicitly software, such as Netflix, and social networks and so on, but then, there are the companies, whose operations depend on software, and increasingly, that’s going to be everybody, other than you know, maybe some small businesses and agencies and so on. So, it affects everybody and I think that’s a really key point, as the bank who’s become better at creating their internal software, will outcompete the bank who hasn’t and who’s potentially outsourcing all their software. So, software and digital is becoming core to running pretty much every business. And then there’s… I do wanna distinguish two kinds, cause for those of you listening, who are running small businesses, this is really just about gaining, as leaders, as employees and as team members, competency in using these digital technologies in the workplace. But, as the businesses get bigger, it turns out they actually have to build their own software to maintain their relevance. So, it’s being able to build software, being able to manage developers for any company that’s at scale, even any Government institution, that’s at scale, becomes a really, really critical thing.
Steve Shallenberger: So, this is one of the things that can differentiate a company, is their capacity to produce a software that best serves their customer, and so that’s a unique approach that makes them different and perhaps allows them to serve their customers better. Is that what you’re saying?
Dr. Mik Kersten: That’s exactly what I’m saying. And that’s actually the whole point and the whole motivation for the book, which is, what I realized is that we’ve got some companies in this age of software, that have become very, very good at building software and at managing software and having a leadership, an organizational structure that supports that. And those are the FANGs, the Facebook, Amazon, Netflix, Google, you can add Microsoft in there, you can add some of the ones from China, like Alibaba and Tencent and ft.com. If you take those eight companies, the wealth that they’ve accumulated, through creating these digital offerings, actually puts them as the third largest economy in the world. So, at the size of Japan. That’s how much wealth has been created by these companies, who have become the masters of software delivery, right? Think of Visa as the new robber barons in the Age of Steam and Railways, that’s how much wealth have accumulated. And the problem with that is the world where there’s that much wealth concentration and the new means of production is controlled by so few, is that it’s not a great world for everybody. And so, what Carlota Perez actually predicted, very interestingly, back in 2002, is that we would see the same thing that we saw in other technological revolutions, towards the end of this turning point, which is that we would start to see regulation, talk of regulating these companies, right? And that’s one approach. I’m just not holding my breath at how long that will be, because signs of effective regulations are just barely beginning. It’s unclear to me when that would happen. So what I realized is that the best hope we’ve got right now is to teach the rest of the world’s organizations how to master, how to thrive in this Age of Software and Digital.
Steve Shallenberger: Yeah, okay that’s terrific. So amazing, so stimulating and thought-provoking. So, I know that you thought about this and probably have included this in your book and I’m excited to study this more. What are your predictions for the next decade of software delivery? Where is this going?
Dr. Mik Kersten: Yeah, so that’s an interesting one. It really is looking at what happens when we get through the turning point and into this deployment period where my hope is, and my whole goal is, that the rest of the world’s organizations are getting better and better at mastering software. So, first of all, there’s a very broad range of organizations. We’ve got healthcare companies, we’ve got companies running the software in their hospitals, we’ve got companies that are citizen services, well, we’ve got citizen services in the Government and so on. And so, I think what’s going to happen, and this goes back to your point about the University students, the things they learned are obsolete by the time they’ve graduated, I think we’re gonna go away from this age of frenzy and invention, where everything is moving constantly and now we have mobile and then we have internet and things and then we have Cloud and so on; I think on the technological front things will stabilize. Some, right? It will actually… This is what happens towards the backend of a technological revolution, which is the pace of invention actually slows and, you know, look at your phone. The pace of the invention is absolutely slowed on your phone. It’s almost… If we’re just standing four feet away we can’t even distinguish which kind of phone someone’s holding. Things are starting to stabilize, and so this age of invention starts to pivot into this age of adoption, where all these companies are getting better and better at adopting software and digital technologies, and adopting it for their business models, for their customers, and for their domains. So, we go away from just a small number of companies who are the tech giants and if we know how to manage software to scale, the software becomes critical to every niche; to how we provide healthcare services, how we provide mobility service and so on… And citizen services. So, I think we’re gonna see that that pace of innovation slow, I think things like artificial intelligence will become actually a part of that, so there’s still interesting things that will happen, but I think what we’ll notice is we won’t have self-driving cars tomorrow. We’re seeing less of a pace of invention, but the benefits of software in technology and digital can now be applied to more and more organizations.
Steve Shallenberger: And this will have a huge impact, no doubt. You just mentioned artificial intelligence, and robots and self-driving cars and drones, so I like what you’re saying, is figuring out how to really apply it and become the best at what we do in delivery with were at before another revolution begins.
Dr. Mik Kersten: Yeah. And then, by the way, these revolutions, as Carlota Perez talks about them, I’ve talked to her about this several times now, as well, over Skype, is when we’re in one revolution, we cannot fathom what the next one is. So just, in our minds, we should consider that this one’s gonna last a while and because we can talk about artificial intelligence, it’s probably more part of this one, at least the way that we envision artificial intelligence today. So, this pace will slow, but the complexity of software it’s just going to grow, like crazy, right? We’re already dealing with the fact that companies cannot keep up with the complexity of the software. We’ve seen these breaches these companies have, like the Equifaxes and Targets of the world. And that is because they’re trying to innovate, they’re trying to deliver faster, they’re trying to create these digital offerings. Now just this week we saw what happened with Boeing 737 Max 8. The design of that particular feature actually has an effect on how a plane handles and whether it stays in the sky. So these are all things based on software. And until these companies, the world’s companies get better and better, at mastering that software, making it secure, at keeping our data secure, if that’s their business model, then we’re going to see more and more problems because the complexity of the software is growing to almost unmanageable proportions.
Steve Shallenberger: Let’s just deviate, just a little bit, and then maybe we can come back and wrap up with some of this discussion where we’re at now. Why does project management cost center, budgeting and organizational charts, as a way to manage teams actually drag organizations down?
Dr. Mik Kersten: Right. So, remember when we just talked about, at the start of this discussion, these five technological revolutions.
Steve Shallenberger: Yeah.
Dr. Mik Kersten: An interesting thing that’s happened with each revolution is that a new managerial principle formed. So, back in the Industrial revolutions, that the innovation on the management side was factory systems and then, in the Age of Steam and Railways we got subcontracting. That was a pretty significant innovation. Then, in the Age of Steel and Heavy Engineering there was something called scientific management, or Taylorism, that formed, and this was really the ability for organizations to divide and subdivide work and dish that out among workers and really treat their workers, more or less, even though this may have not been the intention, as cogs in a big machine. Then, in the next age, of mass production, Henry Ford realized that, well, this may not be the best way for us to treat our workers, he decided to pay workers twice as much as his competition and to invest in his workers, and invest in their knowledge and training and that actually became Fordism. So mass production companies that have been successful have adopted Fordism. If you treat your workers like cogs in the machine and dehumanize them to that point, chances are you’re not gonna thrive as a car company. And the problem that I’ve noticed is that a lot of traditional businesses, so large organizations, the banks, healthcare companies, insurance companies and so on, they have grown up in this age of Taylorism and so the way they think – that’s where their businesses where started back in that age, a good number of them – and project management as a discipline, is actually all about treating people like replaceable, fundable resources. You just allocate work to people, they get it done and you’ve got your dam or your building, right. That’s one of the big innovations during project management was the ability to create something as complex as the Hoover Dam. But if you’ve got a creative discipline and software is creative, it’s about design and experience and listening and understanding to your customers, your users and so on, this notion of project management of trying to run everything through costs and budgets and basically take everything creative out of the loop, it just doesn’t work. So companies, and this I’ve realized is one of the big bottlenecks for traditional businesses, trying to do digital transformations, is it trying to do it with project management as the manager of discipline and it’s a complete failure, in terms of being able to provide the kind of leadership, the kind of environment, the kind of culture that you need to be a software innovator. So, hence, the title for the book. I think Project Management is a complete dead end if you’re trying to transition to this world of software and digital and you have to take this customer and product and offering centric focus in order to transition and to really understand how to innovate.
Steve Shallenberger: Yeah, it actually has the opposite effect, that they had hoped it would have.
Dr. Mik Kersten: Well, yes, exactly, because I think that’s what happened is that a lot of organizations learned how to master complexity through project management, through decomposing these things. But that only works if you’ve got a simple problem domain; a building is a relatively simple thing. You can break it down to all these processes and it’s a well-understood problem. Building software that’s never been built before, and never run at the scale of the internet before, you have to learn as you go, and the good companies have created those feedback loops. That’s actually what this term of DevOps is all about. It’s about flow and feedback. So, if you’re trying to pretend that you know upfront what you’re software will look like, the way you might at building you’re wrong, you’ll fail, and that’s why these digital transformations fail more often than not and you fail because you’ve used the wrong approach to try to conquer that complexity.
Steve Shallenberger: Yeah, exactly. You’re trying to unleash the creativity in people. You know, I am always blown away how fast these podcast interviews and shows go. I mean, we’re at the end of our time.
Dr. Mik Kersten: Oh, wow, that did go by fast. Those were some interesting and fun points, Steven, thank you.
Steve Shallenberger: Oh, great. Any final tips you’d like to leave with our listeners today, Dr. Kersten?
Dr. Mik Kersten: I think the main thing is that if you feel like you’re in one of these organizations that’s being disrupted, that’s going to get disrupted or working with a large or mid-size organizations, that are going through these digital transformations, I think, do take this bigger perspective, in terms of where these things are headed, how your career or your path within these organizations needs to be modernized, because a lot of things will be changing over the coming years. And I think having this perspective of this massive shift into a new way of leading and managing and producing value through knowledge, through software, is really important to wrap your head around, because the things that worked in past ages, we’re seeing those things fail at an accelerated rate now. And I think there’s, again, the great thing that Carlota Perez talked about is, after the turning point, you’ve actually got a Golden Age. You’ve got a period of wealth generation and I think everyone owes it to themselves to become a part of that and for, basically, all the wealth that’s been created and concentrated tech giants, to be more broadly distributed in this age that’s coming.
Steve Shallenberger: Well, what a delight. What a delight to have you on this show today, to hear your insights, your thoughts, so stimulating and so relevant. Its very much appreciated and how can people find out about what you’re doing, Mik?
Dr. Mik Kersten: mik_kersten on twitter, so check it out there or go to projecttoproduct.org to learn more about the book and the mission and the vision there. I would love to hear from you.
Steve Shallenberger: Well great. Thank you, Mik for being part of this show today! What a really exciting and stimulating and inspirational visit this has been.
Dr. Mik Kersten: Thank you so much, Steven.
Steve Shallenberger: All of the above, and we wish you all the best to your making a difference in the world. We have an exciting world that we live in, and to all of our listeners, this allows us, this kind of thinking, literally, to use our efforts and influence to make a difference, to stay ahead of the curve. And also, remember the human side, this whole issue of becoming your best, this is right in the heart of it and it’s this technological side, but also the relations that we can bring together and this is what creates, really, the difference. Thanks again, Mik, been great.
Dr. Mik Kersten: Absolutely, thank you so much, Steven.
Steve Shallenberger: Wishing all of our listeners the best, this is Steve Shallenberger with Becoming Your Best Global Leadership, wishing you a great day!
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