Transcript
Greg Corombos: Our guest in this edition of Expert Insights is Mike Michalowicz. He is a successful entrepreneur and advisor to other aspiring and existing business owners. He is also a highly sought after speaker. He's the author of at least nine books that I'm aware of, including All In and Clockwork. In short, he is widely regarded as one of the most innovative minds in small business. Today, we're going to be discussing why Mike thinks you need to burn your organizational charts and embrace role alignment for better performance. And we'll specifically examine what that looks like in small entrepreneurial ventures. And, Mike, thanks so much for being with us,
Mike Michalowicz: Greg, thank you for having me.
Greg Corombos: Oh, it's great to have you with us. So you are well known for thinking outside of the box and embracing new approaches to business. And we'll dig into that mindset a little bit later in the conversation. But what got you thinking differently about this area specifically, about how businesses are structured and organized, and how it could be better?
Mike Michalowicz: What inspired it was feedback from readers. I really have a great privilege of hearing from readers of my other books, and I often asked, well, what's your challenge now? And this was even pre-COVID, Greg. I was hearing back from people saying, I'm struggling recruiting people and retaining them, let alone raise the bar in the organization. And then when COVID happened, my gosh, it was on steroids this problem. So I started to investigate it. And I think I started to discover [the] challenges we have. Many challenges are caused because we implement a strategy that is perfunctory, that every other business does this. You have to recruit through online advertising, and so forth. And we follow these processes, and when they don't work, we actually go harder at doing the things that aren't working. So I really tried to find stuff that they were doing that drove results. And I found it, in many cases, in different organizations and different structures and translated that into business. I tested them out with my own companies, tested out with other companies. When we saw that it was working consistently, I said, Ah, I think this is the path forward.
Greg Corombos: Now that's a great approach to studying what other people are doing, seeing what seems to work for them, and then kind of testing it in your own environment to know for sure. So on this particular subject, as with just about anything when you want to make a change, the first thing you need to do when recommending a different approach is to discuss what's wrong with the current system. And for many, that's the organizational chart. So in a blog post you wrote, We should burn the org chart. [It’s] rigid and limiting the agility needed for the adaptation that's required in business today. In other words, our responsibilities get siloed, and we're too segmented. So explain what you mean by all of that and how it plays out negatively in a business.
Mike Michalowicz: I think there's two big challenges with the traditional org chart. One is a command and control system. Command comes from the top of the org chart, usually the president. Or if it's a small business, that just says the word “me”, you know, the owner up there. It has a long line going down to the next level and the level below it. And the control, the feedback comes from the bottom back up. But at best, it's the telephone game. And it's mixed communications, misunderstanding. There's a disconnection, it doesn't flow well.
The other challenge is the traditional org chart matches people's talents to titles. I need a sales rep or I need a receptionist or a CFO. But when we look at those titles, or those positions, they're really broken down into many tasks. So what I found in my research is the companies that are the most successful and the most limber, don't match people's talents to a title, they match or talents to individual tasks. Now, what it looks like is a web-like structure. So the old receptionist title, as an example, may have had to greet people at the door, answer phones. Also, do data entry when no one's around. And the salesperson title could have been close sales, farm relationships, do data entry on your CRM. And you may find that someone actually has talent at the greeting and hospitality for clients is also your best “farmer” in your former sales vertical. So now you match that talent, someone that could have just filled in reception, actually into these two roles. You may find some of these great at data entry fills part of that sales capacity and part of that reception capacity. It starts building a web-like structure. And the communication now is much more agile. I am talking directly to the people that I'm influencing and supporting and vice versa. There's more cross communication in a very positive way. But the biggest part is we're leaning into our talents, our desires. When we do, when I do what I like to do, I do it well. And when you do it, I assume the same when you do what you like to do. By building a structure that's role alignment, which is talent to task, that's when people start to excel the most.
Greg Corombos: That's fascinating. So basically, it's “get out of your silos”, and then you're gonna get into kind of a layered and overlapping situation where people not only excel at what they were originally hired to do, but you find out they're talented in other ways. And so they also seem to understand the big picture. And so if they need to pick up the slack here, when somebody else can't be there or is out sick or whatever is happening, that there's more of a team atmosphere. Instead of, well, I got my checklist done for the day, I'm out of here.
Mike Michalowicz: That's right. There's these cross connections, and we’ve experienced [this] in our own company. So to give context, [in] my little author office here, we have eight of us. I'm one. So there are seven other colleagues I work with. Our nearest competitor of similar size has about 20 employees. Yet, I would argue we're performing at the same if not higher level than them. The reason is our team. For the most part, everyone here does what they feel most called to do, or what [they are] most excited about, so they naturally excel at it. When we put people into titles, like you heard the classic example, someone's a good salesperson, so we “elevate” them to sales manager, where they have no desire or no capability. And now they're harming the business. So the goal is to avoid this siloed structure. We have to climb the ladder. Instead, it's, plant [people] where they can grow.
The other thing too, is we're always encouraging people to explore new things, because we don't know where our potential is until we explore things. So we do cross training. Everyone has some ability in someone else's role a) to experience it to see if they have a propensity there. But also, like a web structure, should one of the links break, someone leaves for a period of time or leaves permanently? Is the rest of the web still supported by the other links?
Greg Corombos: Do you still have to define roles, even though it's kind of tailored to individual employees? What does that look like in terms of defining what each person is supposed to be doing?
Mike Michalowicz: So you'll find that you still want to give a title just for simple communication’s sake, but we avoid the normal title. So I'm not “owner”, I'm “spokesperson”. And that little shift really speaks to the capacity I must serve for the organization as opposed to the title that I carry. And those are two different things. The capacity to serve is, I have to get the word out. So I do podcast interviews, like we're doing now. I do speaking engagements. And the rest of the team also knows, align Mike with those demands or those requirements. And he's going to serve us best by doing that. But when they see me, perhaps reviewing HR, that is not my talent. And while the traditional owner may do that, that's not where I'm gifted, and it’s going to harm the company. So we have someone else that does that [who] is much more talented in that capacity. So these quasi titles still exist just for ease of communication. But it's a much more limber or dynamic expression of those “titles”.
Greg Corombos: One of the things that you believe this web also creates is kind of a bigger stake in the minds of employees and what's happening at the business. They're not just responsible for their specific tasks, they have a better idea of the big picture. They overlap, they interweave with what other people are doing. In other words, they're valued. So what does that mean for retention and the overall climate of the workplace?
Mike Michalowicz: Obviously, when people see that they are valued, they will then value the organization. That's the definition of reciprocity. What we receive we give. So it's definitely better retention. I'll tell you the hack or the technique to this. I discovered it by making a grand mistake. I used to own a company that did computer forensic investigations, crime investigations. I was running the numbers. I spent a full day in my office running this massive spreadsheet. And it came to me, my gosh, we could achieve $10 million in revenue this upcoming year, going up from six. A number I've never achieved in any company I'd own up to that point. So, my gosh, this is the big reveal. I called all 30 employees together. I got “Eye of the Tiger”, some stupid song playing in the background. And I'm like, we're gonna achieve $10 million. And it was a deflating moment. I thought people would be excited because I had a clear vision, we had a mission to accomplish. But then assistant Patty came to me and said, Mike, if we achieve ten million, you get the new house, you get the new car. Why should we care? What about our dreams?
I was like, what about our dreams? My gosh, the vision for a company is not the vision for the company. It's the vision for the owner or the leadership team in a large organization. But the vision that my colleagues may have may be to buy their first house or to learn a language or to spend more time with family. The job of a great leader is to learn everyone's individual visions, what they want for themselves, and then make it a priority. I'm not saying that we can buy a house for our colleagues. We're not here to do that. But we can say how's that going? We can block and tackle. We can say hey, why don't you take a little time off next week so you can shop around for homes. Or maybe we have someone in our network we can introduce. We can help facilitate the dream. When we help facilitate their dream, their vision, they're going to help facilitate the dream and vision of the company which is you, the leader's dream.
Greg Corombos: So retention is obviously one of the major benefits of this system. But what happens when you do need to replace it? Does it make it a little more complicated when in the web, John leaves over here and he's really good at this, this, and this. But it might be hard to find someone who's good at the same stuff. So do you have to adjust the web to fit whoever you think is the best hire?
Mike Michalowicz: There was a really interesting study about actual webs. And this applies to what's called biomimicry, meaning there's applications from nature into a business application in this case. When you pluck a strand from the web, the web does not collapse. In fact, it actually strengthens the other elements. The way webs are “designed”, they will take on that slack plus some. Now what happens if someone leaves the organization, the people that are cross trained to some degree, then are expected to step up. And in a short term, often those people step up in a bigger capacity, because they've been supported. They want to serve the business. And you have the redundancy in place. That gives you, the leader, freedom of time to find the new replacement.
But it isn't a one for one replacement. That's the other key. The mistake that many business leaders make and I've made so many times over, and I've corrected this, is if one person leaves, that's not a one person replacement. What I do is I deconstruct all the tasks they had. Remember, match talent to task. And that one person left had these ten tasks that they were doing. I then say, what are the capabilities I need for someone to do these tasks? And it could be ten different people, maybe all part time, maybe contractors, or it could be three people. But don't think it's a one to one translation. It's hard to find clones of ourselves, let alone anybody else. So often you fractionalize all the stuff that person was doing and then find multiple people to fill it in. I'm a huge fan of part timers, contractors, virtual assistants, and stuff like that.
Greg Corombos: Is it complicated to implement? How do you get started making the shift from whether it's an organizational chart or something else to role alignment approach?
Mike Michalowicz: Yeah, it’s truly time consuming. And so that can translate to complexity. But it actually is a simple process repeated over and over again. Start with yourself and say, what are all the things I do as a leader? What are the tasks? I do? And then can you start to fractionalize that. Are there certain tasks you do that are truly your passion, and your desire? Let's retain those for the moment. And there's other things that are not your passion and interest and not your talent. Can we find someone else that already exists in your organization? So now we're just starting to shift stuff around with your existing organization. Then over time, we may have to hire or recruit people to fill roles that are not being fulfilled by your organization. Start with you, then do it for the rest of your team. So this is something you don't deploy overnight, it rolls out over time. But when you start with yourself, you'll start seeing the success you have. And the momentum kicks in.
Greg Corombos: Our audience is largely made up of small entrepreneurs, often just a handful of employees, sometimes even fewer than that. Given the smaller number of people involved in the web, is it harder or easier to implement what we're trying to put together here?
Mike Michalowicz: I guess there are pros and cons for both sides. So if you're a super small company, you have one or two other people. To start delegating some of your work to other people may overwhelm them. But I encourage a small business to look into remote help, virtual help, and so forth. Actually, one of the things I do with small business, and a way to get started is, I’ll query an audience and say, who here has a personal assistant? The majority of people don't. And I say, if you don't have a personal assistant, you are the personal assistant. This is the first thing we need to learn to create this role alignment web. Let's bring on someone. Even if it's five hours a month. You can find someone remotely. They're, of course, working for other people, too. But for those five hours a month, you can start learning how to sign stuff out. In this case, I invite people to sign out easy stuff. Not stuff that you necessarily like, but stuff that's easy to transfer over. Because when you give something easy, you can usually transfer it quickly. Secondly, it also builds this discipline of not being a crutch for the company. One of the challenges small businesses have is the owner says, I can do this because I'm a free resource, and they overwhelm themselves with stuff. When you sign out something easy, easy stuff is normally stuff we revert to when we want busy work. It's filler work, or we feel we're getting some results. It's not hard work. So by getting rid of easy work, you learn the discipline of delegating work, as opposed to reverting and doing it yourself. Then over time will revert more and more of the stuff that's not your talent. And that's how you get started.
Greg Corombos: What other headaches should people be prepared for?
Mike Michalowicz: Well, be prepared for people not buying into this vision concept I shared earlier from the beginning. If you haven't done it before you and sit down with an employee and say, hey, what's [your] dreams? What are the things you want to accomplish in your life? They’d be like, I like to go home and have a beer after work. There's gonna be resistance. So here's the strategy. If you get that kind of resistance, a) recognize that's normal. People don't usually get asked about their personal future. They're usually expected to comply with job requirements. So instead say, hey, three years from today, if your vision came true for your life, start designing for me, what would it look like? Where would you be? Tell me all those things. And that's actually a better way to reveal their dreams and what they're working toward. Oh, I think in three years, maybe I'll be living on the beach. In three years, maybe I’ll be starting my own business. And they may not reveal those things right away. But you can support those. And the funny thing is, a lot of business owners say, my God, if I'm supporting someone starting their own business, they're gonna leave me. I want people who are going to stay.
Well, sometimes the best people are people who have that vision of growing into being or doing what you're doing. So what I do in that case, I invite them. I say, listen. I bet you spend the next three or five years with me, I will train you on how to run your own business. And then the day you launch it, I'm going to be an investor in your business. I'd like to have X percent, and I'm going to send you lead flow and clients and opportunities. Do we have a deal? And now you're in alignment with their vision, and you're actually expanding your business opportunities, too.
Greg Corombos: Yeah, absolutely. Whether they're a vendor or some other relationship, you can benefit each other in those situations. So what kind of results have you seen, Mike, in your own businesses? We talked about that a little bit. But also ones you've consulted with.
Mike Michalowicz: It's a leaner and friendlier — so not leaner, meaner — it's a leaner and friendlier environment. There is this connection. It’s funny. Today, Jenna, one of my colleagues here, came back and she has another job. It is a dream of hers. And so we actually have supported her in this transition. It's a way she can be of service to people in a way she can't [be] here. And she came back and she's like, I just love being here. She's like, it is so connected, we're so on such a mission. That other job is the job I want, but not the community I want. And the crazy thing is what she was sharing was, there's a job opportunity in the world out there that she could have, that would be amazing. But they don't have an environment that is cultivating that for her, that's supporting her in that, and she's already feeling reticent about it. And that's a shame. What I find is when small businesses implement this structure, you're showing support for your colleagues, because they're being moved toward their talents, to their desires. And when they feel supported, they support the company. So these companies inevitably have higher performers, happier people, all the good stuff.
Greg Corombos: How do you consistently adapt the web? Everything's always changing in the business world. You know, if you're not moving, you're getting lapped. So to stay where you want to be at peak performance and peak atmosphere in the office, like you were just talking about teamwork and so forth, how do you tweak the web?
Mike Michalowicz: Yeah, so two ways. And this is gonna sound very demanding, but it's actually the reverse. We have a weekly meeting with every employee, a one on one. Now, I don't lead this because that's not my talent. It's Kelsey, here. She is the most human human you've ever met. And she can read between the lines, and she'll love upon you, and you can't help but love upon Kelsey. Well, she'll have a one-on-one meeting. And the conversation is, what's on your mind, how's your personal vision going? and it'll naturally transition to discussions around the job. By doing these weekly one on ones. And sometimes they’re five minutes, Greg. Sometimes they're 15 or 20 minutes. And sometimes it can go a couple of hours if something gets serious. But we've never had to have one of those corrective meetings. We never had to sit down someone and say you’ve got 30 days to fix this. By having these meetings, the micro tweaks and enhancements happen.
The second thing is we have a quarterly meet up. And one day, a quarter, we all leave the office, and we just get together and say what's working, what's not working. And one of those quarters once a year, we spend three days together. We'll rent a house or something with eight bedrooms, and everyone gets their own room. But we're spending the days together. And we're saying what's working, what's not working. We're measuring the data, we see where the demand is and where it isn't. And it's the discipline of saying, here's what's not working and cutting it off. And here's what is working, and amplifying it then helps us redefine the web.
Greg Corombos: Absolutely fascinating. And again, go to mikemichalowicz.com to read his blog post and learn so much more about how he approaches the world of business. And in our last couple of minutes here, Mike, I want to go back to where I started in the first question. And that is, your mindset and your ability to see where change can benefit businesses and a lot of different areas. So explain how you evaluate your own business and other businesses? Obviously, the conversations you have on a regular basis that you just explained are a huge part of this. But what mindset do you need to be able to see what may be working pretty well even, but could obviously be better? How do you find those best new practices?
Mike Michalowicz: “How do I find it” is a really simple process. I asked myself in any scenario, what is the standard protocol for addressing the situation? So for recruiting employees, what's the standard protocol? And what it is, is run an ad online, and then do interviews. That's the standard protocol. Then I say, what [does] the data say is the results? I don't want subjective information. I don't want people's opinion. I want to know the raw data. and when it's bad… For interviewing, the rate of high level employee engagement of finding the right people is under 20%. That's pretty freaking bad. I then say, well, is there any existence of an alternative out there. proven alternative, that works? And when it came to this [issue], I usually look in nature. There's something that's called biomimicry. You take something from nature and translate…you know, like a web. But in this case I found another business application for when it came for hiring and recruiting. And I found it with the sports industry. They run camps, and camps have proven to bring on the most elite athletes consistently. And every athlete that goes through camp actually gets better in the process. I was like, oh my gosh, business can be running camps. So I translated it. So look at the formula that exists, the popular one. What's the real results? And if they stink, is there another real world example, alternative, that drives the better results? Test that out. And if that starts working, that's the idea I go with.
Greg Corombos: Let's close with a look at those very small business owners that we mentioned. They're just a handful of employees. And like you said, sometimes they don't ask for extra help. So they're, in functionality, they're their own personal assistant. And so they're slammed with everything from marketing to paying the bills, making sure…everything. So how do they find the time? And how do they train themselves to look for these other opportunities to do things better and more efficiently?
Mike Michalowicz: You gotta start slow and let it grow. So the first thing is, I wouldn't look for a single new thing. I would simply try to get one thing off of my plate with consistency. And that's why I'd suggest everyone who does not have a personal assistant, my gosh, by the end of this podcast, you better hire a part-time or remote personal assistant. Just one hour a month is fine, but just something. Because then you start learning the discipline of delegation. The next step is to start measuring return. I would encourage folks to set aside ten minutes a week or a few hours a month, or a day a quarter, and sit down and say, what are all the things I do and what is the return on this? Maybe there's a financial return or not, maybe there's a client engagement return or not. But measure what's working, what's not working. The discipline and growth is less about taking on new things as much as it is saying “no” about things that aren't working. So you must identify those, and then have the discipline of scratching them off and not doing that stuff anymore,
Greg Corombos: Mike, a fascinating conversation and a lot of fun to see how you approach efforts to constantly improve businesses. And it's got to be super gratifying when those new approaches pay off big time. So thanks so much for your time today and introducing us to the web of role alignment.
Mike Michalowicz: Greg, it's been a joy. Thanks for having me.
Greg Corombos: Thank you, sir. Mike Michalowicz is a successful entrepreneur and advisor to other aspiring and existing business owners. He's also a highly sought after speaker and the author of at least nine books including All In and Clockwork, and you can find more about him at mikemichalowicz.com. I'm Greg Corombos reporting for Expert Insights. For more information on this subject, please visit bizfilings.com.
