The Game with Alex Hormozi - The Levels of Growth for Employees & Entrepreneurs | Ep 631

Episode Date: December 27, 2023

Watch the YouTube version of this episode HERE“It's actually your strengths oftentimes, which become almost always the bottleneck in the business.” Today, Alex (@AlexHormozi) explores the key concepts every entrepreneur needs to understand for business growth. From mastering personal skills to developing comprehensive business frameworks, the journey of entrepreneurship is marked by continual growth and improvement. Highlighting the importance of groomed leadership and a talented team, Alex walks you through the process of transitioning from being an individual contributor to being a manager, and ultimately a leader.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(1:15) - Understanding the three levels of employees or talent(2:55) - Breaking down the three levels: individual contributor, manager, and leader(4:52) - The role of systematization in leadership(5:31) - Applying the framework to different departments in your business(10:42) - The challenge of transitioning from manager to leader(11:30) - The role of personal growth in entrepreneurshipFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition(This episode is a re-run. Original airdate was on June 01, 2021)

And so for us as entrepreneurs, like a lot of times we have to think, like, how can I improve my character? What are the traits of mine that are deficient so that I can hopefully inspire people that I can bring people in at this higher level and then actually be able to execute. Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with Acquisition.com. I always wished Bezos, Musk and Buffett had documented their journey. So I'm doing it for the rest of us. Please share and enjoy. Business owners, I think we can all agree that one of the most important things that happens is,

as we grow, is that we learn frameworks. And that's why when you look back at what you used to accomplish years ago, it seems like you could fix those problems so easily because you have frameworks with which you've learned to think. Right. And so it took me six years to build my first eight figure company, six and a half to build my first eight and a half figure, sorry, multiple eight figure company because that was the same company. The next company that I did that was multiple figures was it took me a year to build. And the one after that took me six months. And so we've gotten faster and faster and faster at doing this. And now I've done over 120 million in sales across different industries. And one of the key frameworks that I've

developed or helps me think through things is someone to share with you today. All right. So there's kind of three levels of employees or talent, right? And this really applies to you or your team itself, because at the beginning it's you, right? And so depending on where you're at, you may be at one of these levels or you may have to recognize it in others. And I'm going to say in three different ways, the simplest way to think about this is in the beginning, you have to learn what to do, all right? These are the skills, right? And that's because what you are in the beginning is an individual contributor, right? That means you actually have to get things done in order for them to, you know, happen, right? And so what you're doing at this point is you're doing, right? All of your

time is spent doing the things, right? Learning what to do, et cetera. Now, the reason it's really important to be able to recognize where you're at is because then you'll be able to look through this framework and immediately see what you need to do next. To the same degree, you may have gone through this but not have recognized the shifts. And you can look at an employee and say, I think they are in this bucket. I think they're in this bucket. I think they have the potential to get to this bucket, et cetera. Many times people will stick at one level because of their own beliefs that they have about themselves, which is why we, you know, Layla and I believe that identity is very fluid if you want to be successful because you have to be able to change. change what you think about yourself in order to become the thing that's going to de-bottleneck

the business. Because ultimately, it's costing every single human on earth a billion dollars a year, not knowing how to create a billion dollars a year in revenue. Right. And that's how I always think about this. It's like, it is costing me so much money. My ignorance is costing me so much money. And so hopefully with this, I'll break down some of the other things that you won't be ignorant to so you can recognize them to other people. So level one is understanding what to do, right? Which means you're an individual contributor and what your time is spent is doing. All right? The second level here is understanding how. So you started to do it, right, the what, you figure this out, but then you have to figure out the how you're actually doing it, right?

And the reason for that is because the next level, you become a manager, all right? And that's making sure that other people can do that thing and they're consistently executing at a level that works, right? And so here what you're doing is your teaching, right? You're teaching other people to do the thing, right? And so at the beginning, you're doing, right, as an individual contributor, you have to focus on what it is, right? The next level, you're doing all the doing. And you're like, you know what, I feel like I understand this better, right? I feel like I understand the sequence of how this works, right?

And then you can teach other people how to replicate that skill. And at the very end, I'll show you how to apply this to departments in a second. All right. So stay tuned for that. But this is level one, right, as you're looking at yourself or an employee, right? Level two is, oh, I think this person could teach other people. I think they could manage them. And as a quick caveat here, like, not every, like, managers don't necessarily need to know

how to do something better than an individual contributor. There's always going to be niche expertise, et cetera, but they should understand how it works, right? And so this is just an important, like, just nuance to note there, right? The third level is what I look at is the who, right? And I know this may sound odd. It's like what and then how, then who. But that is kind of what it evolves to over time. All right?

The title is a leader, all right? And these are very different than managers, which is something that I had to realize as I was scaling the business. And usually at this level, this is where you're at your, you know, three-ish million dollar a year level. And this is what allows you to crack open to the million plus per month level. So 10 million plus is you have to have leaders that are engaged, right? And the thing that you're doing is your systematizing. All right. And so what I'm going to, I'll say this a different way too because I think it's worth noting is building the machine that.

that builds the machine. All right? And the reason that's important is because first you're doing it, then you're teaching it, and then you need something that can teach it for you. That's kind of how this works, right? So it's always, it's not delegating it, it's systematizing. So it's really, I was trying to be thoughtful about what order I was going to use there because it's like, is it delegating? Is it handing it off? It's systematizing it. And there's a lot of different ways you can build a machine that builds the machine. But if you think through this in terms of your own frameworks, the reason that I like, this is that you can actually grade yourself in terms of where you're at. You can grade yourself in terms of where a team member is at. And you can even grade departments, right, within your

business, which depending on what your size is, your departments might just be, might be things that you are doing, right? If you're a solopreneur, for example, then like you wear all the hats. Your finance, your HR, your legal, your IT, your marketing, your sales, your product, your fulfillment, you're all of those things, right? But as you grow, you know, in the beginning, you'll have your first core team of probably five people and they'll fulfill each one of those functions. of somebody who helps you with, you know, delivery. You'll have somebody who helps you with, you know, finance who does the bookkeeping. Maybe somebody helps you with marketing.

Maybe that's you. Somebody helps you with sales, et cetera, right? And so what you can do is you can look at an apartment and say, what level am I involved here, right? Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words so we can out more entrepreneurs, make more money, feed their families, make better

products, and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you do is you can just leave a review. If it takes 10 seconds or one type of the thumb, it would mean the absolute world to me. And more importantly, it may change the world with someone else. And eventually the goal is that you can move, right? Move above, right? Me equals, you know, CEO.

And so you have a team of leaders who are building the machine that builds the machine for you so that the actual whole thing works without your, without you being there besides providing the vision and strategic insight for making decisions, right? And so for me, I define this within a business where I'm no longer on the Slack channel. So in our portfolio companies, if I am no longer on the Slack for that company, meaning no one can reach me besides the one person who's in charge for that company, that is what I believe is a truly delegated business that acts as a portfolio where you are actually an owner, right? I can't tell you the amount of times I talk to entrepreneurs. And they're like, oh, yeah, yeah, I could totally

take this new project on, like, my business is totally systematized. And I'm like, dude, like, no, it's not. Like, your phone's blowing up twice since we've been on, like, since we've been sitting here and talking. Like, yeah, I mean, just because you don't have to respond to something in the moment doesn't mean that you don't have to eventually respond to it or make a decision or, et cetera, right? Like, those are things that are still levels of involvement that require your existence and presence. And so for me, it's, if I'm not in the Slack channel, I have one meeting a week with one of our portfolio companies, the manager, the center of a portfolio company. And between that time and the next time, the company can continue to

grow without my direct involvement. That is what I would say is checking all the boxes for me. And if something's not checking all the boxes, you can check all the boxes at a business level, but you can also just look at this as a department level. And the reason I think it's so important is that it can give you a grade that you can look at to improve. So you might have marketing and you might have sales, and then you might have product, and then you might have shared services, be like IT, legal, HR, all that kind of stuff, right? And you can look at yourself and think, okay, do I have in sales, for example, do I have people who can, like, am I the one doing the sales? Okay, well, maybe I'm not doing the sales. Well, I'm the one who's teaching people how to sell.

Okay. Well, have I built a machine that teaches people how to sell so that I don't have to do the teaching of selling? So I can actually just bring people in on a consistent basis and get them up to speed, right? That's where you start looking at like hiring one, two, three salespeople a month, right? And you put them through the machine that builds salespeople. right? And so you can look at these levels within each of the departments. So maybe that's where your sales is at, right? You've got a machine that builds the machine. Awesome. But is your marketing there? Right. Do you have a machine that builds the machine there? Or are you still doing or are you still teaching people? Right. Here's one of the things that I think for me it took a long time to realize is

that it's actually your strengths oftentimes, which become almost always the bottleneck in the business because the things that you don't know, you're far more comfortable giving away to people so that they can build these things, right? because they have better expertise because they know how to do, teach, et cetera. And that's where you as a CEO or entrepreneur is you actually have to walk them through these things. So it's like, okay, great. You know how to do some, whatever it is, the delivery of your product. You toss them when I do that. It's like, great, now I need you to teach someone else how to do that so we can build a team of people who are doing that so we can scale.

Right. And then finally, at a certain point, it's like, man, I'm spending all my time teaching. It's like, okay, well, we need to build the machine that does the teaching for you. And so I think if you can think through this framework for each of the departments that you have in your company, you'll figure out where your bottlenecks are, and it will at least give you a grade. And so every quarter, you can look at your business on a little sheet like them think, okay, do people know what to do? Do we have the base skill? Okay, do we have this sequence, the how to do it, right? Teaching people step by step, how to do this process, right,

and hold them accountable. And then finally, can I find somebody who can help systematize and build the machine that builds the machine that recreates the skill over and over and over again and other people, right? And so that's kind of the process. And which is interesting, If you listen to Reid Hoffman, the founder of LinkedIn, he talks about the difficulty for most employees, most people, to jump these levels. It's very difficult for most people, which is why, especially like rapid growth companies, they'll often have to, you know, change out, I'll say leadership with quotes here, just anyone who's in charge, because in the beginning there's probably more managers. And over time, there need to be leaders. And a lot of times the managers, despite their tenure, aren't actually leaders, right? And so when I'm looking at talent within our own business, I'm thinking, okay, who's a good individual contributor? And sometimes amazing leaders are terrible individual contributors. And sometimes

a lot, oftentimes, good individual contributors are terrible leaders. Right. And so it takes a very unique person, which is why being an offer so hard is that you have to really master all of these levels so that you can recognize it and teach it in other people. Because ultimately what we're doing is we have to walk the path that every person who is behind us must walk, which is why entrepreneurship is such a growth-oriented occupation. Like you have to grow yourself in order. to attract people who are at a certain level, right? Like, imagine if you were to start working for somebody and you feel like way more than them and that they just have no idea what they're doing, right, then it's unlikely that you're going to be very influenced by that person. That person's not going to

inspire you to do anything. On the flip side, if you were to start working for somebody and you aspire to be like them, you like their character traits, you love the way they operate in their personal life and how they do business, et cetera, then that is somebody that you were being led by, right? And so for us as entrepreneurs, like a lot of times we have to think, like, how can I improve my character, What are the traits of mine that are deficient so that I can hopefully inspire people that I can bring people in at this higher level and then actually be able to execute? Because I can't tell you the amount of times I can't even like most entrepreneurs I talk to I said 95% of them like, oh my team's amazing.

I love my team. They're awesome. And at the same time they have all these horror stories about teammates. And I can say like a amount of times I've talked to somebody they said their team was awesome. Then I talked to him nine months later like, oh, no, no, that team wasn't awesome. This team's awesome. Right.

And I'm like, dude, the perspective in which you make judgments is flawed. and I don't believe anything you say because every time you've said this, it has been wrong. So why would I believe differently now? And so these are the levels that I think of for myself, my employees, departments, and then ultimately the business. This is just a different way of thinking through it. Hopefully it was valuable for you. If you have these frameworks, you can look at your own businesses, apply things faster,

and break through the bottlenecks that you have so you can get to where you want to go.