The Game with Alex Hormozi - The Sweet Spot | Ep 217

Episode Date: June 30, 2020

Balance is not found, it’s created. Today, Alex (@AlexHormozi) talks about finding the right balance between the performance and role when it comes to managing your employee’s workflow. He also shares the metrics that are needed to find the balance.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:(0:45) - Manage roles through balanced metrics, balancing performance and role.(2:17) - Define metrics to push individuals for better performance.(4:06) - Find the sweet spot between positive and negative aspects.(5:53) - Train employees with two metrics to maintain high-level performance.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Welcome to the Jim Secrets podcast where you talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe. Hey, what's going on everybody? Happy Wednesday. I'll make this a short one for you. I just got off a ball with a company that I have a best interest in. And so we were talking about how to set up the management metrics in place for the business as we're trying to scale it. And so one of the things I picked up from Andy Grove in, shoot, what is called? High output management, I think, is paired metrics. And it was just a great epiphany for me. And so I'm going to share it with you. So the way that Andy Grove, who's the founder of Intel, very smart dude, manages each of the roles within the company, is that he tries to put paired metrics in place.

So it's not just number of sales or just closing percentage or just insert one thing here, Most times, and this is just myself included, I would usually should be like, this is the one key metric that I want to look at, right? This is the one thing that matters for this position. But if you think a little bit more about it, it tends to be two that are in parallel. All right. And so what it does is helps you manage the balance or the dichotomy between the performance and a role. And typically, it'll be between speed or output in terms of total volume and quality. All right.

And so the way that you balance this within any position would be, for example, if you're talking to a salesperson, it would be total number of sales against refunds backouts. If you're looking at a customer service position, it might be speed of ticket resolution or total number of tickets handled and customer satisfaction or NPS or so like a promoter score, right? So that would be a balance between two different metrics that you're looking at. And then that way, because at the end of the day, you never really want to, because a lot of times in business, it's not about either extreme. It's about managing a dichotomy of being, am I being micromanaging or am I delegating too much, right? Like, is either of them wrong? No, you want to follow kind of right in that middle path. And in different times, you might lean towards one area or the other area more.

But when you're looking at each component of the business, you can look at balanced metrics. And so I'll break down more examples because I think it might be useful for you. you're looking at a marketing position, it's going to be total number of applications against qualified applications, right? So it's like, okay, this is the total volume I got, but how many were qualified, right? The next would be the sales guy, which I just went over, like total sales volume or a closing percentage against backouts, all right? The service position, total number of responses and or tickets handled or customer complaints resolved or speed of resolution against the quality score, right?

On the back end, let's see, I'm trying to think of other positions that you can have for this. I mean, like, right now I'm obviously thinking of them live. But if you think about every piece of your business right now, all of the people that report to you, there's typically a metric that you're trying to push, but something you're trying to also conversely not have happened. And so if you can define both of those things for the person, then you can push as hard as you can on the top, the top side, right, the speed or the volume metric and balance it. So another example is if you're in a physical products business, it would be inventory

against shortages, right? You don't want to have tons and tons of inventory because that's not good. You have lots of cash that's sitting there. It's not good for the business. It's dangerous for the business. But if you just say, hey, I want you to just keep our inventories as low as possible, right? Then you're going to start having shortages, right? And so you want to balance inventory against shortages.

and then that's the metric that you're reporting on for that position, right? So for me, that would be my finest department who's managing that component of our business in the supplement side, right? Taxes versus audits, right? Or any kind of issue that you have with the IRS. And so with each of these things that have, you have the positive thing which you're going for against the negative thing that you're trying to avoid. And so I want to call this the sweet spot, which clearly I didn't, and I'll name it later.

But that's the managing the dichotomy in management using parallel metrics will get you so much closer to the sweet spot of optimal performance for each of these roles. And also going through the mental exercise for yourself will help you to find those things for each of the roles in your business. And ultimately, the only thing that's going to allow you to scale the business if you're in the service space, which many of the people are listening is are, is initially it's going to be your ability to train people and onboard people. So it's going to be your culture and your training. your training gets them up and going, culture keeps them going, right? Mosy Nation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to $50, $100 million plus, we would love to talk to you. And if you like that, we would like to hear more about it, go to acquisition.com.

You can apply anywhere on the page and talk to one of our team and see if we can help you get there. And then the keeping them going is making sure that you're monitoring the right things for them so that you can get the outcome that you really want, right? And so I just had this call with the founder of that business that I'm now invested in. And we were talking about how we're setting that business up to scale so that each of the roles that we have get balanced out. And so for there we have image editors. So we can see the total number of images that are edited. It's a photography-based business against the number of callbacks or corrections that need to happen.

And so you can see this in virtually every position that exists within your business. But if you simply look at that, name them and explain it. to the person, then they'll understand everything that you want, and then you'll ultimately make more money, and then they will feel like they have more clarity. And if they don't understand how to do those things, then you train, right? And that's the entire, that's the whole game. Is you train them, you give them the two metrics, you walk the middle, and then that is how you maintain high level performance over an organization. So shout out to Andy Grove for being smarter than me. Hopefully that was useful for you. For me, that was a huge takeaway when I was going through his book. And so use it.

make more money have higher profits have a happy your team have a happy Wednesday lots of love hit you soon bye