The Game with Alex Hormozi - This Management Hack Took Me Years To Learn | Ep 364

Episode Date: January 20, 2022

Keep doing this mistake, and you’ll never reach your goal! Today, Alex (@AlexHormozi) talks about how this simple management hack he realized over the years has greatly helped him reach his goals, improve his management skills, and get his team to perform excellently. This piece of advice will definitely help you manage your team to do exactly what needs to be done!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:(1:09) - Lack of motivation, knowledge, and clarity hinders desired actions.(5:10) - Prioritize primary actions for goal achievement, not goal setting.(7:58) - Outcome-based goals may not align with effective actions.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Best management hack that took me years to learn. Welcome to the game where we 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 we have learned along the way. I hope you enjoy and subscribe. In this video, I'm going to give you the single best management hack that took me years to learn. I hope that it does not take you years to learn. So by the way, my name is Alex Sermosey. I own acquisition.com.

We do about $85 million a year. I make this video for entrepreneurs, the people are in the game who are out there slaying every single day. who have their teams or executing on their behalf. And so I want to give you one of the most tactical piece of advice that I can give you for managing those people so you can have the outcomes that you want. All right. So I'll give you a quick recap on one of my little triangles. So a little mental model for yourself in terms of how to have the hard conversations about people who are not performing the way you want them to. There's only three reasons that they're doing that.

Number one is that they are not motivated to do what you want them to do, which is they do not know why. The solve for that is telling them the vision of what you want in your company. The second one is that they do not know how to do what you want them to do, which means they lack training and process that you have not taught them. So that is the solution to that one. And the third is that they do not know what you want them to do, which is a breakdown in communication, which is either you have miscommunicated or you have poorly communicated

or you have not communicated via the medium or channel that they best understand to get them to understand what it is that you want them to do. So either the person doesn't know what you want them to do, They don't know how to do it or they know both of those things and they're just not motivated to do it because they don't know why, all right? or they have weird character traits and you can let them go. Whatever. So that is the triangle of the reasons that people do not do the things that you want them to do. Right.

But here's an interesting one. And this is the one that if you can shift all of your management tactics from what most people do, which is managed towards outcomes, to this special little widgetee, Wichita, then you will be successful. All right. So here's the thing. And I'll give you an example of it before I reveal it to you. All right.

So if you have any kind of service-based business or rather, any kind of recurring based business, people, which all businesses are recurring to one degree or another, but if you'd like to have a more recurring based business, then one of the things that you're going to track is churn, which is the percentage of customers that leave month over month every month, right? Right. Okay. So, one of the problems with tracking churn or trying to manage towards decreasing churn is let's say you have your meeting and you say, guys, we need to decrease turn, right? And they say, we sure do. And we say, okay, guys, we're going to set the goal of reducing turn by 20% this month, all right, or by the end of the court. And they say, sounds good, Alex,

that's a great idea because if we reduce our turn, we're going to make our customers worth more and we'll not have to acquire as money. Or if we acquire the same amount, we'll be a bigger business than we were last year just if we do the same thing. And I think, wow, guys, that is a great idea. What is the problem with this thinking? Can anyone guess? We set out the goal to decrease our turn by 20%. Fair goal. It's smart, right? It's specific, it's measurable. It's, it's It's realistic. It's actionable. It's timely.

We say by next quarter. It's got all those things. Right? Wrong. The problem is that it is a lagging indicator. All right? And so I'll tell you a quick story about this. And hopefully it'll drive it home.

So I had, and this is what's fucking crazy. I still do this stuff and my own business and I still mess this up. So I'm leaving this to you because I can tell you when we accomplish our goals, it's because we are focused on leading indicators rather than ladding indicators. I'll tell you a quick story about this. So for two quarters, the goal was to increase the number of outbound sales that we had in one of our companies. So there's a cold call team. They're trying to increase the number of outbound sales.

So we have inbound and outbound. So the outbound team says their goal. They say, we want to do this. And we say, and I said, no, guys, we need to make this a leading indicator. So what are we going to do to do this? And so the manager said, we need to hire five more outbound reps. And I was like, that is a wonderful leading indicator. Because if we hire five more outbound reps, then we're going to make more dials,

which is going to make more calls, which is going to blah, blah, blah, blah, blah. Right? Right. Guess what happened? Didn't happen. Right? But why? Because that is a leading indicator, right?

I mean, if we want to get more outbound sales and we say, in order to do that, we're going to need more calls. in order to get more calls, we're going to need more BDRs, right? And so we need to hire five more BDRs. Done, right? Anyone guess? 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. When you pick the leading indicator, it can't just be the thing that happens before. It has to be the thing that happens first. I'm going to say it again. When you're picking your leading indicator, when you're managing your team, when you're trying to accomplish goals,

and this works whether you're managing just yourself or you're managing an entire organization. You can pick the worst thing to do is pick the outcome because nothing you're going to do is going to go towards the outcome. Either your hit or your donor has nothing to do with any, any, any, any, everyday living. right? So then you go one step earlier and you say, I'm going to do a leading indicator. So I'm going to make, we must make a hundred calls a day in order to hit this goal. Sure. But what was the true leading indicator? This is what the actual leading indicator was. Was the number of outbound requests and the number of ads we were going to run to attract the BDRs? And how many interviews needed?

to be had in order to create the job positions that would then make the calls. And for two quarters, we set the goal of doubling that team and it did not happen. We set the same fucking goal. Both quarters drove me nuts. And only on the third quarter, because I whiffed twice as the CEO here, right? Whiffed twice. I'd not really see you, but owner, right? I whiffed two times. And the third time, when I heard the same freaking goal again, I was like, we're not making this mistake again. All right? So lagging versus leading. Lagging is what most people do is when they put the objective metric, and that's silly.

Because no one can accomplish a metric. They can accomplish tasks. They can accomplish actions. And then the question is, which actions are the primary action that lead to the remainder of the actions? So it's like saying, I want the sixth domino of the 20 dominoes to be the thing that we need. to focus on when in reality it must be the first, which is what is the thing that must first occur in order for the remainder of these things to then happen, right? And so this might be one of the most important things that happens in a company is figuring out and determining

what is the true first action, primary action that is required to accomplish what we would ultimately like, which is an increase in X, right? If we want to decrease churn, it's not necessarily let's have more conversations. It might be we have to run more ads to get more coaches to have those conversations, right? And so the thing is, is we have to continue to pull the thread until you identify what the actual weak link is in the chain of dominoes. And here's the crazy outcome to this story. All right? This is the nuts part. So for two quarters, we had the same goal and nothing happened. Zero. Zilch. Team was the same. size. And we were still hiring people, right? We had normal amount of employee churn, but the amount

of churn versus the amount of people that are getting interviewed evened out when the team stayed the same exact size. But you know what actually happened next? When we actually identified what the primary action was, with the true leading indicator of success for this metric was, we had the entire team staffed and trained up in 21 days. It was a quarter-long goal. It took us three weeks. week-ish to make the hires two weeks to train them up. How nuts is that? But it was because we were focused on the wrong thing. We were focused on lagging indicators or not the primary indicator.

They were leading, but not the first thing that must occur that then creates the subsequent actions. And so right now, if you've had a goal, and this is the reason I'm making this video, if you have had a goal and he've written it quarter over quarter month over month you've written the same number and you have not accomplished it and you are not making progress towards it then it is likely because the goal that you are setting is one outcome based and two the actions that you believe are required to accomplish that goal are not the primary action but simply preceding actions that are still not the source of the creation of the outcome And as soon as you can identify that, and that is the job of the owner, that is the job of the CEO, is to have the discernment to say, no, no, no, that's not the thing. This is the thing. And this is what we're going to focus on. And if we do that, then all of the rest of these dominoes are going to get knocked over.

And so that, my friends, Mosey Nation, there's a lot of people that are broke. I don't want you to be one of them. That's why I make this channel. Keep being awesome, lots of love, and I'll see you guys in the next video. Bye!