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Episode Overview:
Confident that he had the formula to success, he became a small business angel investor… and proceeded to lose his entire fortune. Then he started all over again, driven to find better ways to grow healthy, strong companies. Mike has devoted his life to the research and delivery of innovative, impactful entrepreneurial strategies to you.
Mike is the creator of Profit First, which is used by hundreds of thousands of companies across the globe to drive profit. He is the creator of Clockwork, a powerful method to make any business run on automatic. In his 2020 release Fix This Next, Mike details the strategy businesses can use to determine what to do, in what order, to ensure healthy, fast, permanent growth (and avoid debilitating distractions). His latest book Get Different (released September 21, 2021) will give you the tools to stand out in any market.
Today, Mike leads two new multi-million-dollar ventures, as he tests his latest business research for his books. He is a former small business columnist for The Wall Street Journal and business makeover specialist on MSNBC. Mike is a popular main stage keynote speaker on innovative entrepreneurial topics; and is the author of Get Different, Fix This Next, Clockwork, Profit First, Surge, The Pumpkin Plan and The Toilet Paper Entrepreneur.
Fabled author, Simon Sinek deemed Mike Michalowicz “…the top contender for the patron saint of entrepreneurs.”
Additional Resources:
Skot Waldron:
I have a very awesome guest today, somebody, that I have been following for a number of years. I'm super honored to have him on the show, Mike Michalowicz. If you don't know, Mike is a very influential, very impactful writer, speaker, thought leader, all types of things in the entrepreneurial space and business leader space.
I have three of his books right here. The Pumpkin Plan was the first one I read. Profit First, Fix This Next. Clockwork is something that I have dabbled in. I haven't read the whole thing yet, and he just wrote a revised version of that, and that's actually expanded now. So he'll talk about that at the end of this interview. Mike is, I can't say enough, simple, he's smart, he's got ways about talking about business that put him on the same stages as people like Dave Ramsey, Simon Sinek, and Seth Godden. He has shared stages with those individuals. He's spoken all over the country, over the world. He's got hundreds of thousands of newsletter subscribers, Twitter followers, podcast listeners, all types of things. He's got a knowledge base that is, that's very valuable and I'm grateful to have him on the show. Here we go. Mike.
Mike, I had no idea if I was going to get long beard Mike or short beard Mike.
Mike Michalowicz:
What do you call this, medium beard or long beard?
Skot Waldron:
This is kind of medium beard, Mike. I like it, man. I like it.
MIKE MICHALOWICZ:
Yeah. I do have a long face though. What's so funny, Skot, about beards is it is a polarizing thing. Half the people I meet like, "Dude, love the beard," half hate the beard, and everyone has a comment about the beard. I never knew, I'm not a beard guy typically. So I never knew.
SKOT WALDRON:
Well, there you go. I commented on it. So just telling me is one of them.
MIKE MICHALOWICZ:
But it's normal. But at least you didn't say, "Dude, I hate it," "I love it." But I hear it constantly and-
SKOT WALDRON:
Really?
MIKE MICHALOWICZ:
... some people are repulsed like, "It's so disgusting. You have such a horse face already. You're so long in the face." And some people are like, "I love it."
SKOT WALDRON:
Wait, people come up to you and say, "Mike, you have a horse face"?
MIKE MICHALOWICZ:
Well, people I know. My friends.
SKOT WALDRON:
Oh, okay. I was about to say ...
MIKE MICHALOWICZ:
Could you imagine? That'd be great. "Dude, you have a horse face, Mike"
SKOT WALDRON:
Dude, you have a horse face, Mike.
MIKE MICHALOWICZ:
But some people are like, "Oh, finally ..." It's always an insult. Somebody like, "Oh, finally you have a pronounced chin." So I'm losing no matter ...
SKOT WALDRON:
Oh my gosh, man. This is traumatizing.
MIKE MICHALOWICZ:
It's all friends.
SKOT WALDRON:
You're going to have to come from beard therapy.
MIKE MICHALOWICZ:
I know. It's really humbled me. My wife likes it though. So for now, it'll stay.
SKOT WALDRON:
That's all that matters. Hey man, we're going to bust. I love talking about your beard, by the way. But I'm sure my listeners who aren't even looking at this are like, I can't even see him. This is not making any sense. Let's look at this, man.
MIKE MICHALOWICZ:
Oh, beautiful.
SKOT WALDRON:
I just want to tell you, Mike Michalowicz, these are the three I have. I'm not a full on Mike groupie, but I am-
MIKE MICHALOWICZ:
Partial.
SKOT WALDRON:
... pretty close.
MIKE MICHALOWICZ:
You got the big three there.
SKOT WALDRON:
I will tell you right now, my wife loves and hates this book. Profit First. I'd said, "This is what we're going to do," aka, this is what I'm going to do. And she said, "I don't understand anything you're doing." She looks at our bank account now and she's like, "I see all these accounts and I don't know what's going on with them.' And I'm like, "It's all good."
MIKE MICHALOWICZ:
Look at the bottom balance.
SKOT WALDRON:
But she goes, you know what she said? She said, "Skot, I see that after this though. You seem to have a better hold on your business finances and our personal finances, and I don't know what you're doing-"
MIKE MICHALOWICZ:
But it's working.
SKOT WALDRON:
"... but you seem to have something going here." And I just want to thank you, man, because this Profit First idea blew my mind. And it has created so much freedom for me financially. We are going on vacations. We are not strapped for all kinds of stuff because I've got a separate account for all that stuff.
MIKE MICHALOWICZ:
I love it. You know what it is, Skot? I call it behavioral intercept. And what I did is I asked myself and spoke with so many entrepreneurs, how do you manage your money right now? And most people say, "I log into my bank account to see what's there." It's like, oh, if that's what we do, that's where we need the system. We can't do it in a spreadsheet or some kind of budgeting system. Those are wonderful if we use them, but most of us don't. And it's also cool, my wife is the same way. She's like, "What is this system?" Because we do it for our private finances also, and she's adopted to it. She's never read my book, she never will, but she managed the money just as easily as I can because we all know what's available for what purpose.
SKOT WALDRON:
That's awesome. So I know I'm not here to talk about this. I just want to give a personal testimonial.
MIKE MICHALOWICZ:
Thank you.
SKOT WALDRON:
For all those out there, Profit First change my Life. Pumpkin Plan is the first one I read.
MIKE MICHALOWICZ:
Awesome.
SKOT WALDRON:
Recommended to me by somebody else, and that changed the way I positioned my company, the way I go after certain things. I'm going to go back and do that interviewee checklist thing.
MIKE MICHALOWICZ:
Yeah. Good, good.
SKOT WALDRON:
I just looked at it and I was like, "Oh, I got to revisit that." It's been like five years since I've done this, man.
MIKE MICHALOWICZ:
It's an eye-opener.
SKOT WALDRON:
I got to go and do that. So plethora of books. You are an author, a thought leader in all this entrepreneurial space. You have done what you call the must haves, you've done financials, you've done productivity, you've done growth, you've done marketing, and you're coming out with a new book, and I want to talk about that.
MIKE MICHALOWICZ:
Oh, cool. Let's do it.
SKOT WALDRON:
So all in, you're tackling leadership.
MIKE MICHALOWICZ:
Yeah. How to build unstoppable teams. I'll show you something cool. I know you can only see it, but I have my little tree back here. Right at the top, right there is all in, right-
SKOT WALDRON:
There it is.
MIKE MICHALOWICZ:
... there. Well, I got to move my finger, right there. So I do that. It's a little tradition I have. The book is written, and once a book is complete, I put it up there. It won't come out until 2024. So we're recording this way in advance. It's just the nature of publishing. It takes a long time. What I did in All In and I tried to do in all my books is I say, "Well, what are we trying to address here?" This is recruiting, retaining, raising the bar for employees. I then said, "What's the common tactics that bring unacceptable results?" And the most common tactic is the interview process.
Many people do interviews and many people are disappointed, employers, by the result. And actually, many candidates are disappointed because they don't know why they didn't get the job or someone gets the job, they don't really understand what it was. And it's a pretty flawed process. So I dug into that among other things in this book and found systems, methods I believe, that are radically simpler and far more effective. So that's what the book's about. I can share systems too, if you want.
SKOT WALDRON:
Oh, yeah. I mean, the thing here is you're a systems guy, you develop processes and the way you think is so, it's like linear, do this, then do ... The format of your books is the end of it says, each chapter was like, here's the end. You're going to do this, you're going to do this, you're going to do ... it's so easy to follow along with your books.
MIKE MICHALOWICZ:
Thanks.
SKOT WALDRON:
So I love that application piece. Talk about your formula. This A-F-S-O formula thing you got going on.
MIKE MICHALOWICZ:
Yeah. Or FASO. It's F-A-S-O. I may realign it.
SKOT WALDRON:
Oh, okay. Yeah, that's what ...
MIKE MICHALOWICZ:
Yeah, I may realign it. So it's fit, it's ability, safety and ownership. So I found these are the three elements, or I'm sorry, the four elements that drive the grace engagement. So the first part is fit, and it's similar to that concept of the right people on the right seat, on the right bus. So what does the business need and who's the person that can satisfy it?
Now here's the notion I challenge in this. I was looking at research out there about A players, we all want A players for our business. So I said, "Well, what percentage of population are A players?" And comments are all over the place, but it's usually 10 to 5%. Five to 10% of people are A players, so most people aren't. So you have to go through this kind of exhaustive process to find the A players.
And I said, "Well, what if everyone's an A player? We're just not finding the right fit?" And so I believe everyone has A potential, meaning everyone has a potential to being A player if put in the right role. So what we need to do as employers is first is identify what does the organization really need? And it's not the job title. I don't need a receptionist, for example. I need certain tasks done. And my job is to match talent to task, not talent to title. That's where most businesses go wrong. We need the receptionist to do these 10 things, but really, we need individuals that can accomplish 10 different tasks. Maybe it's multiple individuals. So there's this kind of web matchup type of strategy. That's the fit.
The ability, we've all heard of experience, and you can find on a resume, and it's nice bringing someone with experience, but maybe the wrong experience, maybe they have to unlearn. Now there's been focuses on innate ability. So these different tests like DISC and Predictive Index and StrengthsFinder and Enneagram, there's so many tools out there, and we're starting to focus on what's the innate talent, but there's this actually massive component that's the most important, that very few or almost no one's looking at, which is potential ability.
So innate ability is what you walk in with internally. Experiential ability is what you've gained over time and can already prove. But potential ability is what do you have the potential to do? What can you take on? So how do we find that? And what I teach in the book is a way of doing not interviews to find potential ability, but doing workshops.
So one example is Home Depot, you may not know this, has a recruiting platform that is a mind changer. They run these little workshops every weekend in the summertime, at least in our area, where you can build like a birdhouse. And so you go there and you build a birdhouse with whatever, maybe your children or whoever you bring with you. And there's other parents there. Yes, they're trying to ingratiate you with Home Depot. They want you to be a customer. But they have employees of Home Depot observing who are the greatest participants, who shows the most potential to be a great Home Depot employee because they know what they're doing or they're asking or supporting other people? They're engaged with the group around them.
At the end of that, they approach and say, Hey, you are really good at this. Did you ever consider working at Home Depot? And they recruit employees this way, through workshops. We can all do this, don't interview, actually run a workshop where any potential candidate could come to your business to learn the skills to improve themselves. So everyone whose process improves, and then you and I get to cherry pick, who are the few people that we see have the most potential to be successful with us?
And this isn't something new, by the way. It's like, oh my God, no business does this. Home Depot does it. Almost every college university does this in their sports recruiting program. I played sports in college, and when I was in high school, I went to Hobart to play lacrosse, Hobart Camp to play lacrosse. It's a popular school for lacrosse. And there was hundreds of athletes there from all the different high schools. And they were teaching all of us to get better at the sport. And they cherry-picked, not me, but they cherry-picked certain athletes there and said, "Hey, you would be a great player at Hobart." And they were recruiting. So everyone's elevated and the right fits are engaged. That's how we identify or find potential ability.
The next thing is safety. We need safety in the environment we work in. That's actually generally the biggest compromise of our performance is we don't feel physically safe or relationally safe or safe or emotionally safe. If I say the truth of how I'm feeling about something, is there going to be consequences and so forth. So we need to set an environment where people feel that they can be their full expressive selves.
And how do you do that? You give opportunities for people to express themselves, to talk about themselves. So people are coming to work, not just to work, but for the social aspect of self-expression. And we as a leader need to deliver that. The last part's ownership, one of my favorite sayings is, or questions I hear is, I wish I knew a way for my employees to act like owners. I want my employees to act like owners. So I said, "Well, how do we get employees teams to act like owners?" And I found there was research done in the 70s that subsequently was kind of abandoned, called psychological ownership. There's certain techniques that we can deploy where someone will feel like they own something even if they don't legally own something.
So the classic example is you can have a rental car or you can own a car. And the way we behave is differently. No one takes a rental car to a car wash, but your own car, you probably do, but your own car, you may not even legally own. The bank may own it. There's something that happens once we feel we have possession, we treat things with much more engagement, we treat it much better. So how do you deploy that ownership?
Well, first of all is you give people control over it, meaning they can keep the car in their own driveway and so forth. So some form of control. Secondly, and most importantly, I think personalization. I can make it my own. I can hang the dice balls from my car. A rental car is usually very generically plain, a personal car probably has some personal effects in it. And there we had a sense of ownership. And then the last component is intimate knowledge.
I used to have vinyl records. I grew up in the 70s, vinyl records. And when the record spin, I knew exactly at what song, what beat I would hear the scratch in the record. That was my record. And I was actually surprised when I heard on the radio that it didn't have the scratch in it. But when we have personal intimate knowledge of something, we become more possessive of that thing.
So when we assign work to our colleagues, what can we give them to give them intimate knowledge? What can we do to give them the opportunity to personalize it and have control over it?
Now the last thing I want to share is there's a little bit of a dark side here. If you give too much, people can build fiefdoms and they start protecting and defending their area, which could actually harm the company. So we want to give ownership to multiple people. And then it becomes what's called collective ownership. So many people have insights, but they all feel they own that object, which is in part, your business.
SKOT WALDRON:
This is so good.
MIKE MICHALOWICZ:
A big down low.
SKOT WALDRON:
This is good. So what's the biggest mistake though, that people are making when they're trying to build teams, when they're trying to build successful teams? You obviously came up with this four-part framework to help solve ... What is the core issue that entrepreneurs, leaders are having when developing these teams?
MIKE MICHALOWICZ:
We think that our teams care about the corporate goal. So we come out and say, "This is the time, our company's doing 10 million dollars," or, "Our division's going to launch a new product." No one cares about the corporate goals except for the people who set them, because they have ownership over them, because they set them. So the owner of the business cares. I get the new car, the bigger house. I get to brag that my business has grown, but my colleagues, my employees may not care.
But everyone cares about their own path. Everyone cares about their own vision for themselves. So what a business leader should do is to engage every colleague, every team member and say, "What's your own personal vision? What are you looking to achieve through this career in your life?" And then align the paths for our individual team members to achieve their own goals while we march toward the corporate goal, which is the leader's goal. And if everyone's achieving their own goals and you're marking off along the way, the momentum becomes unstoppable.
Just to give context, we test everything out in my own businesses. At this office right here, we have 10 employees. So we're an itty bitty company, and we meet once a quarter. We actually just happened to do it off the calendar quarter. We just actually did it last week. And we sit down, I'll show you, I'll pull it up real quick. We have, this is mine, individual goal tracking. These are all personal visions and dreams I have, what we do for every employee.
We then have a big tracker right outside my office here on the wall of people achieving their dreams. And so now what people feel and I feel is, wow, the company cares more than just Mike's corporate goal. We care about our individual accomplishments. We're recognizing it, we're celebrating it, and therefore people are more engaged. It's reciprocity. The more I care about you, the more you're likely to care about me, as long as it's true and authentic. So that's what we need to do.
SKOT WALDRON:
That's cool because it aligns with something I do. I talk about a purpose tree. I call this thing a purpose tree. And when I'm developing a wider purpose for a company, you've got the corporate purpose. What's our why? Then I've got branches that come off of that, which are divisional or departmental whys. And then you've got nested whys that are individual people whys, and they all need to be combined and connected. And if we work on your personal why, you should be able to draw a circle around it and then point it back in some way to the corporate, because that's how you're going to get buy in. So it sounds a little bit like what you're talking about.
MIKE MICHALOWICZ:
So much so. Ironically, we use an actual tree. We have a Barron tree outside this office, and we attach, we tape leaves to it. So every time someone accomplishes their own personal goals, it's a new leaf on the tree. And this tree now has bloomed magnificently. So much so that we're talking about setting up another tree because so many individual dreams have been accomplished.
SKOT WALDRON:
That is so cool. It almost sounds a little bit like artsy craftsy. I think you're running in elementary school over there. It's like, but it's so cool. Visually, that's got to be so impactful when you walk by that and just see what's going on.
MIKE MICHALOWICZ:
Yeah. And we're big believers of that. I wish I could take you for a little mini tour here of the office. We have a lot-
SKOT WALDRON:
I'm on my way, I'll be there soon.
MIKE MICHALOWICZ:
Yeah. So we have the tree, we have other things. Another thing that our president, Kelsey, did here, which is genius, including the book is outside of everyone's cubicle or office, is a picture of them when they were a child. So you come into my office, you see a picture of me when I was six or seven years old. And what the argument is is we're all still the same human being and the way we have rapport with each other is differently. It's you're talking at this very adult professional level, realize there's an inner child to each person. It's a much more intimate connection in the way we communicate.
SKOT WALDRON:
Man, I love that. Because we are, we're human. And sometimes we put on these facades of titles or we have all this other stuff going on, and it's like, no, dude, Mike, you've written 28,000 books, but you're the kid that skinned his knee riding his bike down the street.
MIKE MICHALOWICZ:
I'm long face, horse face, Mike.
SKOT WALDRON:
Horse face, Mike. I mean, dude.
MIKE MICHALOWICZ:
Horse face Mike with the beard.
SKOT WALDRON:
Yeah. He's harmless. He's harmless.
MIKE MICHALOWICZ:
Yes. And to your point, it's harmless. And that's what the power is. I think with titles, there is this provocation, this aloofness, and I can't approach someone because they're the big deal. But when we see we're all coming from the same playing field, there's this openness that comes about.
SKOT WALDRON:
Mike, you're a rockstar man.
MIKE MICHALOWICZ:
You're a rockstar.
SKOT WALDRON:
I've been looking forward to this interview for so long. Not only because I'm a half 50% Mike Michalowicz groupie, but just because I knew you would have something to add. This is so cool. We are recording this way ahead of time. This will come out over time, this episode, but all in, it's in 2024. But what are you doing right now? How do people get in touch with you? What do you want people to do right now?
MIKE MICHALOWICZ:
So I just finished Clockwork revised and expanded. I rewrote the entire book. It's about business efficiency. So I think if you're looking to improve the way your business or division operates, Clockwork may be the source to check out. The place to go is mikemotorbike.com, as in the motorcycle. You can go to Mike Michalowicz, no can spell it. So go to mikemotorbike.com. Every book I have there, you can get free chapter downloads. I just write for the Wall Street Journal. You can get that content there. And I have a podcast up there too.
SKOT WALDRON:
Brilliant. Mike, you are awesome. I really appreciate you.
MIKE MICHALOWICZ:
You're awesome.
SKOT WALDRON:
And I appreciate the value you're adding to the world with your knowledge.
MIKE MICHALOWICZ:
That means the world to me.
SKOT WALDRON:
It's super smart and I just, it's simple and smart, and I think that's what makes it so valuable and easy to implement. So everybody, jump out there, grab Mike's stuff. It's good.
I think something that's really interesting to think about is this whole fit thing that he mentioned right at the beginning, because we tend to look at people and just go, "Nah, they're useless. They cannot perform that job. They are not a good employee." And we just bunch them all up and we chuck them out because they couldn't do that thing.
But what if it just wasn't ... they're perfectly capable, they're talented, they're competent, and other things just not that thing. What if we moved them to something else where they could thrive? I've heard so many stories of that happening over the years of people that just weren't thriving, and then we moved them and then bam, gold.
And that's where we need to land with thinking about fit, thinking about ability, that potential ability. Are we looking at people's potential or are we just looking at their straight-up ability right now? What is the potential for this individual going down the line?
Safety. Are we creating psychological safety? Project Aristotle, which was a study done by Google, analyzed 150 teams inside of Google and said, "What is the top thing that indicates a high performing team?" Number one, psychological safety. Do people feel safe? Do they feel heard? Do they feel like they can say things without being dominated or ridiculed or whatever? That's really, really important.
And then ownership. How do we get people to hang the dice, to make it their own, to where they can feel ownership even though they don't technically own it? I thought that car analogy was really, really good.
Again, this book All In is coming out in 2024, so if you're listening to this before then, just get Clockwork. Get one of his other books. All of them are good. I'm just going to say, all of them are good. If you're getting this after 2024, go back and get All In and check that out. I'm really, again, grateful for his knowledge.
If y'all want to find out more about me, you can go to skotwaldron.com and like, subscribe, comment on this YouTube channel. Or if you're listening to this anywhere else, please do the same there. I will be very, very grateful. All right, everybody, till next time, I'll see you on another episode of Unlocked.
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