All In: Mike Michalowicz's Secrets to Building Unstoppable Teams | Ep. 063

Episode Transcript

Mike: 0:00

give people an education, intimate understanding. The more knowledge we have of something, the more we feel connected with it. There's a saying, like, if I educate my people, they're gonna leave me. but The reality is if you don't educate your people, they're gonna stay uneducated with you and

CODY: 0:26

Welcome to the Mind Hack podcast. Today we're speaking with Mike Michalowicz, a Titan in the business world. By his 35th birthday, Mike had already founded and sold two companies for multimillion dollar sums only to face a complete financial overhaul that led him on a quest for a deeper business wisdom. His journey back to the top has been marked by the publication of business books such as Profit First, Clockwork, and Fix This Next, each Offering Strategies for Financial Health and Organizational Efficiency. Our focus today, however, is on Mike's latest book, All In: How Great Leaders Build Unstoppable Teams. This book distills Mike's extensive experience and insights on how to successfully lead your team in this post Covid work environment. His book All In provides a blueprint for cultivating a culture where your team members are empowered, engaged, and fully invested in their work. Join us as we explore Mike's approach to leadership, uncover the principles behind the all in philosophy, and discuss how entrepreneurs and leaders can implement these strategies to create their own unstoppable teams. Whether you're a seasoned business owner or a budding entrepreneur, this conversation promises to be both enlightening and inspiring. Let's dive in. Mike, welcome to the

Mike: 1:48

It is a pleasure to be with. you, Cody.

CODY: 1:50

Now at the beginning of your book, you describe an experience with an employee named Elliot. He was somebody in one of your earlier businesses. His interview just went really well, and you had only met three other candidates. You decided to hire him on the spot. Could you tell us what happened next?

Mike: 2:08

Yeah. So I'll tell you, he was quote unquote really good compared to the prior three people. and I was in a point of desperation. I, think that's what many business owners do when it comes to hiring. We wait till a need is so overwhelming that we're in a panic state. So the fact he was wearing a suit blew my mind. I'm like, this is the guy. And hired him on the spot. The first day of work, he walked in and he said, okay, ready to get started. I'm like, go out the door and start billing. know, I go on to share in the book, what a. Horrible situation. Was he, he didn't perform well, but in it was only in retrospect, I realized, my God, I didn't manage at all, how, how could he perform well with my management?'cause it was the, on the job learning, which meant trial by fire and he had no support. So it was a failure for many reasons. I didn't qualify him, but I didn't give him the qualities to make him perform well. And I think that's often where both. Those are both elements that business owners and leaders fail with, and something I try to fix an all in.

CODY: 3:10

Yeah, simultaneously is having my own multiple businesses. I've been in that exact same situation and it's taken multiple businesses before. I really realize that it's not trying to focus on the process with the systems. It's really a need to focus on the people, because that's really what makes your business run. W was this. One revelation that led you to understand this. I know there, there was a part where you felt like Elliot was trying to shake you down.

Mike: 3:37

it's true. So I remember I was putting him out there and, um, just go take care of clients. Hurry, hurry, make money. And one day we were in the computer industry and he comes back and says, I. Hey, man, uh, I've been doing all this work and saying, boy, he is the technology for folks, and I know they're so dependent on me. In fact, I, I know these systems inside now and no one else does. It'd be a shame if, if I couldn't sustain at this level, I need to be paid more. He said, Mike, you know what? Someone like me makes it, it's double or triple and making now I hope we can fix this so that, that it comes out positive. I'm like, he's shaking me down. he had set up passwords and stuff like this, like he had all the account information to manage. Quote, unquote, my clients. But he had locked him in with him and now he was putting pressure on me, and I remember the feeling, it's the weirdest feeling of a poor performing employee, albeit the reason was me. But he wasn't performing well and then wanting to pay him more, hoping he'd magically turn into this superstar performer. and that never happens. he left. It was very unique circumstances, but he left and that was one of. Many lessons I had to learn about what it's like to manage employees and what I was doing wrong in setting 'em up for success.

CODY: 4:47

It reminded me of an earlier business where I was running a web hosting business, and I believe most of your earlier. Or businesses or at least this one was a technology

Mike: 4:55

tech companies. Yeah. Yeah. I also had one in computer forensics, which is computer crime investigation, and I learned stuff there too. when I wrote all in, I was able to reflect back on 25 years of owning businesses and all the mistakes I've made when it came to the people component. I've also been so fortunate I'm in contact with, to me it's countless entrepreneurs in all different sizes and industries and learned from their mistakes too. But there's this undercurrent of businesses that are doing it right and that's why I wanted to reveal. So I found these companies that were doing really outta the box unique cool things that was working so well. I. I own some businesses now and translate it into our own businesses. We deploy these techniques and once they started working, I said, okay, this is system I get, it works. It's different. Let me include it in the book

CODY: 5:43

Is one of those techniques, the All In formula, which has four parts that you call Faso for short.

Mike: 5:50

Yeah. Yeah. So that is the big kahuna. And so there's four elements. the, the F and I can go through it super quick just to set the stage. F stands for fit. And what I realize what most businesses do, and I'm guilty as charged, is that we identify the title we need to fill and then we try to get someone to match the title. But the truth is, I, I assume you and almost all humanity, we're good, really good at a few things. So the mistake is what we match people's talent to a title areas that they can excel in a few, but not all. What we need to do is match talent to task. So what companies need to do is they need to get rid of the old pyramid structure of title, title, title, and start going to this, this web-like structure. What are the domains of demand we have? What are the special tasks that need to be accomplished in these different domains? And then have people serve just the tasks they're good at. I'll give you an example. I used to hire for a receptionist. Receptionist has to greet customers, answer the phone, but also there's data entry, invoicing. Well, I hired a receptionist and she was wonderful at greeting customers and maintaining the social relationships. She wasn't detail oriented. the data entry and the accounting component was not good. I I had a salesperson who was great at data, actually was a closer because he could nail that data. He was horrible at maintaining relationships. So we took our receptionist and said, oh, you're a relationship builder. That's your talent. We matched it with all the relationship building tasks. She became our best frontline salesperson, the farmer, if you will. And then our closer was really good at data management. So he started doing those components and excelled there. So that was fit. just going through rapidly, a stands for ability. Ability is Well, there's, three types. There's what's called experiential ability, innate ability, but what I wanna explore is potential ability. Most businesses look at experiential ability. What we've done in the past will indicate the future. We look at resumes, the success rate is abysmal. I think it's about 5% of employees that we hire are top performers for a sustained period, five years or longer. and Some of us look at innate ability. That's what you know, Enneagram and Myers-Brigg and Predictive Index and StrengthsFinders. Those tools are excellent at finding kind of the natural wiring, but the reality is potential is what we need to look at, and this is the big kahuna that no one's considering. What will the person do in the future in the right role? So the question is how do you find potential? You do it through a technique called workshops. Workshops are where you give people an opportunity to learn, to be educated, to experience, to demonstrate skills, and through these workshops where people can demonstrate their potential. And you can hire based upon that. and I devoted a large section of the book to this 'cause it's very simple to do when you understand how to do it right and can have profound effects. The S stands for safety. We need to have an environment where the people feel, of course, physically safe. Some businesses still don't do that today, including mine, I didn't realize. And we fixed that. Emotional safety, relational safety. We need to feel that we can put our full selves out there without retribution, and great leaders will set up that environment to embrace the fullness of people and put themselves out there. They'll expose their works, if you will, so that others will feel comfortable doing the same. And the last is o for ownership. The most common question I hear is, how do I get my employees to act like owners? How do I get my vendors and contractors to act like owners of my own business? And you can by deploying what's called psychological ownership, psychological ownership is where people have the sensation of ownership because they have the ability to personalize what they're doing. They have, the ability to control what they're doing, give it direction, and the ability to gain a lot of knowledge around it. Those three components give people a sense of ownership, and sure enough, when you psychologically feel like an owner, you'll act like one too.

CODY: 9:28

how do you balance the ownership of allowing the employee to have that level of creativity and ownership over the work that they do, while also maintaining a certain, standard and communication between departments and whatnot to make the company function efficiently.

Mike: 9:44

you wanna achieve what's called collective ownership. It's the most powerful form. So the reveal of this is when you hear someone say, oh, this is, this is the job, or this is that job. They're disassociated with it. When you hear people say, this is my job. Then they feel personal ownership when they say, this is our job, our company, they're showing collective ownership. So collective ownership happens through collective creation. So what I would do as a manager say, Hey, we have certain things we need to get done here. I'd like to discuss that and tell me what your thoughts around what we're doing. Do you agree, disagree? What's your thoughts around the output? Then we say. We have some best practices to get here. I wanna share those with you, but I need your insights to redefine our best practices.'cause the best practice is for you to be able to use your full capability to express yourself naturally. So what works for you and what doesn't? And let's dynamically adjust. What are your thoughts and ideas? When people create their own thoughts or ideas, we have much more ownership over it. How can you personalize it? How can you make this your own? What's your own flare you wanna put into it? We had one person here who is a seamstress, she decorated our office and the smile on her face when she comes, we all love the office, but when she comes in, she knows, she's partly a creator of that. There's a sense of ownership, so people can create stuff figuratively or literally like, you know, physically, but you have to give people the ability to personalize things. And the other thing is give people an education, intimate understanding. The more knowledge we have of something, the more we feel connected with it. There's a saying, like, if I educate my people, they're gonna leave me. but The reality is if you don't educate your people, they're gonna stay uneducated with you and you don't want that. So if you educate your people and give 'em the ability to advance, yeah, maybe they'll see other opportunities, but you'll have top performers working for you. And if you're serving them, you're supporting them. If you're caring for them, chances are not gonna wanna leave anyway.

CODY: 11:31

Yeah, I, just recently interviewed Dan Martell for one of his latest upcoming books, and he basically said the exact same thing is that you should focus on the leadership and e even between. Dan and I, and, probably you we're several hundred books in, in terms our knowledge recollection. And so it's our responsibility as leaders to then teach our employees what they need to know in order to grow and foster as individuals. Because you, your theme in your book is really, if we can foster the individual, then that will come back to foster the company.

Mike: 12:03

I love that I came out of my office, this is when I had my forensics business. I remember Cody, I was, I was sitting there for a full day calculating numbers and I'm like, okay, if we do this, that and the other thing, we can achieve$10 million in revenue this year. And for me, like I never had to that point a 10 million company. I'm like, this is huge. I went outside, I wrote on the wall in big bubble letters, like a whiteboard, 10 million. I put like a post note in front of it and I called it, and it was a brick and mortar at the time, and I called it my. 30 or so colleagues, everyone gathers together. I queued up some cheesy music and I said, okay, this is the year I did this whole like fanfare thing. This is the year we're achieving $10 million in revenue with the big reveal. I ripped off the post-it note to great fanfare and then there was silence, and I'm like, hold on. The music's everything's right. Why is everyone all pumped up? Why aren't we cheering? And then they kind of slumped back to her office. My assistant Patty came up to me, she said, Mike, if we achieve 10 million, you get the bigger house, you get the new car. What about our vision for ourselves? And that became the aha to, to your point, the great leaders take great interest in serving their colleagues. And part of that is knowing what their individual visions and dreams are and when we care for that. It's natural human reciprocity to care for the dream of the organization. The corporate mission is not the corporate mission. It's the dream of the leader, the owner of the business. Everyone else has their own personal mission. So one person here, wants to buy their first house. Another person wants to learn Spanish. Another person is fighting cancer. They've defeated it, but they wanna stay off they cancer track, and they're going for a year number five now. And so what we do is, as a leaders organization, my job is to know what every person's personal mission and vision is, what all their dreams are, and to recognize that and support it and celebrate it. So at our company, every first day, first Monday of the month, we come together and we say, what goals did you accomplish? We actually document our goals for the year individually, and we have this big tree outside my office. It used to be barren, but on these leaves we write down, you another year Cancer Free. Bought that first house, learning to speak Spanish, and this tree is blossomed. It's massive. It's with all of these leaves on it of individual celebrations. My colleagues say, my gosh, you care so much Mike about my dreams. And I do. They say, we also care about your dream. We're gonna help you get that 10 million or, and now it's a different dream, but that was back then. But we're gonna help you achieve your dream.'cause I'm all in on theirs. They're all in on the corporate mission, honestly, is my dream.

CODY: 14:37

I love that, that was your, eye of the tiger

Mike: 14:39

Yeah, it's the cheesiest. I couldn't pick a cheesier song, but I did. I picked either a tiger and I also did like that, that cheesy guru thing. I'm like, we're gonna achieve 10 million revenue. I did the hand clap with a humble head bow, you know, all the cheese factor, and it didn't get anyone excited.

CODY: 14:57

so it's very difficult as, a starting entrepreneur to be able to transition your focus from caring so much about your business and your dream to trying to care about what your employee's dreams are. Is there a transition point at which you should move your focus to caring about your employees or should you care about your very first employee from day one in terms of its of the impact that they would have on your business?

Mike: 15:21

Day one. Day one. you know, because it starts the new standard for how your organization operates, and it's not time consuming. It's the irony. These are quick discussions. Sometimes it's 10, 15 minutes. once a year we sit down for a full day. We talk about our individual dreams, so we do choose to vote time to, but it's not necessary that significant. But what's interesting is you'll find your colleagues, they don't experience this with editing other employer. They probably don't even experience it at home. You know, we're losing that. the history of employment's been, go do your job, your lifestyle is separate, but we're in a new environment now. it's blended and the leaders who are embracing the humanity win. So do it from day one. I am investing in startups and like this is one of the first things we implement is programs that care for our colleagues. The interesting thing too is as it grows, we have quite a few folks here now, and I don't manage it myself now. the teams can manage themselves. They can have little pods of five or six and they have their dream meetings or their vision meetings. There's a great book that supplements this, it's called The Dream Manager by a guy named Matthew Kelly. Talked about how a large, janitorial company did this and how they have these little pods getting together, and I subsequently interviewed that company and it's amazing. And what happens is it's, again, it's natural reciprocity. The more we care as an organization for our team members and they care for each other, the more they're gonna care for the collective organization. It's just natural.

CODY: 16:45

and it seems, say back in the fifties we had the corporate. Man, where you were dedicated to your corporate job, and I know that's still the case over in Asia, but it seems that with a new millennial and the new generations that it, there's been less emphasis on the employees. I mean, we've had the live flat movement in China, and now that's started to see its way over into other countries is this the new norm where employees just realize that they just want to go to. A company to make money and then leave that and do as little as possible it, this is kind of the antidote to that in a

Mike: 17:20

It totally is. I think when the human experience is not available, then it is all about money. There's a saying that I have that when we're forced to comply, we will seek to defy. So I'll give an example with a rental car. Next time you rent a car, Cody, maybe you'll have experience like I do. You have to go through all these ridiculous requirements of signing out and so forth. And they tell you the measurements. You're expected to return this car in such and such date or time, or there'll be a penalty. It better be a full tank, of gas or we'll charge you $10 a gallon to refill it ourselves. It better be a scratch and dent needs to be clean. Okay? So there's always compliance requirements. So what do I do the second I get outside the DMZ checkout at a rental center? I'm doing donuts in the parking lot. I'm skidding into the traffic lights and I'm flooring it the second it turns green. I abuse the vehicle because they force me to comply, so I will seek to defy. Traditional employers are still filing this model. They say, here's what you need to do. Here's your performance metrics. If you don't meet it, you're not gonna have a job here any longer. And if you're lucky enough to nail all these metrics, we may give you a 5% raise. There's compliance orientation. So it's human nature to defy, and now we're seeing greater and greater expressions of that, the life flats and so forth. So what I'm saying is we are losing the human experience. So leaders as an organization have to lead with humanness, with embrace our colleagues. And I think that will prevent turnover. People aren't leaving 'cause they're not making enough money. People are leaving because I'm not cared for anyway. I might as well make more money. I think we can bring back that human component. I think we have to.

CODY: 18:55

And then sometimes as a business owner, we try to implement policies that we hope and think will have a positive effect on our employees. One example of that is the punctuality bonus, that you encountered with a former Mars employee. Can you tell us about that?

Mike: 19:11

Yeah, so I, I can't reveal the source. Mars is a major company. I still think it's private though, but it's massive. And they make all the. Candy bars you can think of. And, they invoked a strategy. This is back, I think 15, 20 years ago, called the punk. Bonus punk stands for punctuality. And what they were doing was they said, we want our team, our employees, to comply with attendance policy. So if the starting time was eight o'clock, everyone's gotta be there eight or prior, and they thought they would incent it by having a bonus that if you arrive before eight o'clock on a particular work workday and checked in with the punch clock. You would get a 5% bonus for the debt. So what they noticed is, interestingly or not, so that people started to team up and say, Hey, I'm not gonna be on time today, Cody, could you check my, you know, punch in for me and I'll punch in for you next time? So I go, people are trying to circumvent the system. We're gonna hire a security guard that monitors each person, so now becomes this more aggressive compliance. They're watching everyone. People now start getting in arguments and fights. everyone's rushing in at 7 59 and I can't punch in quick enough 'cause I have to wait in line behind you. I'm pushing through the line'cause I'm gonna lose out my bonus. These are what's called unintended consequences. We have something that we think will be a benefit, but there's always negative consequences. It got so bad, that they actually abandoned the system, which then became the worst thing because the people that were attending on time. Said, my bonus is gone now. You were rewarding me. I always show up on time and now you're punishing me. So it became this really damaging experience. The lesson is this. If we want to encourage or incent people, we have to play out all of the scenarios on a program, incenting process because there can be unintended consequences that actually make it feel punitive or actually be punitive. So be very careful about programs and systemic, reward for certain accomplishments that can sometimes actually backfire in a bad way.

CODY: 21:08

So what are some other things that a business owner can do to foster this psychological growth? is it just having regular meetings with them? Maybe a one-on-one every two weeks and learning what their goals are and having everybody have a growth tree? And then how do you, as a leader. Foster so many individual goals, and also, what if you have a company with a hundred employees? what's the structure? How do you manage their goals to create that level of ownership across your company? Because that can be a problem as you scale.

Mike: 21:37

Yeah. So we do one-on-one meetings with every employee. And we do it every week, which already sounds tough. We, have, 20 people here and, that's even with 20 people. That's more than one person can manage. Now here's the thing. These calls average about 10 minutes. It's just a check in. How are you doing? Here's what it's resolved by checking in what's going on, how are you doing? we don't have annual reviews where I said in the last six months, you weren't doing so well. We're constantly on top of the small things, and the adjustments are micro adjustments as opposed to these chiropractic changes we need to make. Down the road. The second thing is. Get people managing this for you. So be a manager of managers. I check in with my management team, which just a couple people. Kelsey, the president of our company, being the most senior person. I check in with her, how are you doing? What's on your mind? So that's how you do it. And, you can have someone manage, I think 10, 15 people, on their one-on-one check-ins without a problem. But beyond that becomes a little bit much. So just manage a few people and then have it cascade, throughout your organization that way. The second thing is, I would say 80% of the time is spent talking about personal. How are your hobbies going? What are you doing in your personal life, which often reveals interests. One of our colleagues here, her name is Jenna, she was doing email management stuff for us, and one day she said, oh, I'm, finally tapped into that novel. I've been wanting to write like, what? So yeah, I'm working on novels, fiction, and just gives me so much joy. I love writing. Like, my God, we have someone who loves writing and we don't have her writing for us beyond email management. Like do or would you be interested in handling our blogs and stuff? She's like, that's a dream come true. And so we matched up talent people aren't able to express their talent within their organization and that will happen, they'll often try to find ways to express it in a personal life. So as much as as appropriate, learn and discuss personal lives and the fact that we're showing interest in their personal lives. Have people more interested in the company. And the last thing we do to invoke psychological ownership, it's a form of safety actually. As we have open books, we share everything. We don't share individual salary salaries. There's a collective pot if you really want to figure it out, I'm sure you could, but we share the health of the organization. What's interesting is people invokes a sense of safety 'cause they know what's going on. Many employees will know roughly what the top line revenue is and they'll think, oh. A company's doing $5 million. That means the owner's taking home$5 million, which is rarely the case. Almost as in never the case. You know, I know $5 million business is where the owner is going bankrupt as they're funding the business. We have open books so people can see the health and change to the business. We had an unexpected big financial challenge happen last year and 'cause we were open about it, our colleagues could see what was going on and they had asurity that we had reserves and preparation for an emergency and it present itself, but also how we were navigating it going forward. And they had confidence in that and it was super cool if we didn't have. Of open books, it would just be the state of flux. Like I, we know something bad's going on or something challenging is going on, but we don't know how we're navigating it. So that's a powerful tool Also.

CODY: 24:38

your overall story reminds me of that Jim Rohn quote, which is put the right people on the bus, but then you have to put them in the right seats. And I think you throw something else on top of that because it reminded me when I, took the bus, when I was a kid, it was always the bus drivers that, that got to know the kids and that was cool. One-on-one. that Tend to have, the fewest amount of issues. So I think there's a component of making sure you're also like the right bus driver on that

Mike: 25:03

That's exactly right. And I'll tell you sometimes the leader, the owner is not necessarily the best to lead or drive the bus. So pick someone else in your team that is,

CODY: 25:12

And I know that we're at the end of our time, so where should people go if they want to check out your book or your website?

Mike: 25:17

Thanks Cody. anyone who's interested, you can go to mike motorbike.com. It's a nickname from Grade School. the thing is no one gets spell Mike Michalowicz. It's, so that's my shortcut. Go to Mike Motorbike as in the motorcycle.com. you can find all my books there, free chapters I used to write for the Wall Street Journal so you can get those articles for free. I even have a podcast, mike motorbike.com.

CODY: 25:36

Cool. Well, thank you very much. I appreciate you being on my podcast.

Mike: 25:40

Cody, thank you.