Welcome. Wow, week 4. I don't know about you, but it's gone fast for me. It's been a great time. Let's just take a moment to review a couple of things, all right? Let's review a couple of things. Trying to give you concepts, okay? A way of thinking. Something to sit back and for you to use as sort of a model, okay. Can I give you the silver bullet? No, because you've already learned. There's lots of things that you've got to balance and take into account when you are building and growing a business and you've already learned that the solutions at one size level don't necessarily work as you get even bigger. You've got to constantly, constantly sit back, think, scan what's going on, people, processes, controls, pace, work on culture. And prioritize, what am I going to spend my time on today? Well before getting to today's session, lets just go through a quick, a quick sort of mental replay. Remember that? Mental rehearsal before you go in everyday, mental replay every evening? What have we done? Week one. Well, have you figured out yet? Are you theory x or you're theory y? Okay? I know Kyle behind the camera has figured it out because he's talked about it. Two other filmings okay? Theory x, theory y. The six transitions an entrepreneur makes as a business grows. Delegations, not a natural act. A good entrepreneur is a good teacher. Then that led us a discuss and think about wow, If I gotta be a good teacher, should I be hiring good students? And what I mean by that, should I hire people that are comfortable with change, people that want to improve. Should I hire people who like learning and then we talked about, well, how do we figure out who those people are? And how do people learn? They read, they explore, they try new things. They're, they're curious. They ask why. They don't let obstacles get in their way. And we talked about the Barbara Lynch case. A fascinating entrepreneur. Week two, we looked at the secrets. The secret sauce of the research of high performance organizations. And the fascinating finding that every research project Is found, the same characteristics, so we know what the secret sauce is. And as we discussed, the problem is in execution, inconsistent execution and doing it excellently. That's a hard word to say, try that, excellently. Try that sitting there at your desk or in front of your computer, excellently. Hard for me to say it at least. Alright. We then talked about the relationship of high employee engagement, to high performance organizations. We talked a lot about what do employees want. And were you surprised, they want the same thing you want. Okay? We all want the same thing. And remember I read 2 weeks in a row, the passage. Okay. From the book of the former CEO of AT&T and General Motors. We talked about meaning. Yeah, meaning. What's the purpose of your business? Why should it exist? And meaning for employees. And looked at the Trilogy Health Services case, as to how Randy Buford created meaning for his employees, okay, who had a most difficult job. And we talked about this drawing. Okay. High employee engagement leads to customer satisfaction, loyalty and all that leads to money,money, growth. And I told you, that's just not Ed talking. Research at Harvard, Case Western, Michigan, Stanford. All support that, alright? All support that. That, okay, is something too many companies forget. This smiley face here doesn't happen if you treat somebody like a fungible commodity to be used and disposed of at will. We went to week 3, and I know you were surprised, because I said you are an artist. You're going to paint your own picture. Remember the slide were we said business comes in many different flavors and we had the 3 ice cream cones? Thank you Catherine, my IRA, for being creative and putting that in there. Cool, really cool, cause it makes the picture. It makes the point, you, as the entrepreneur, are an artist. I'm giving you general rules and principles which apply, but your facts, your context, your personality is going to basically give you the ability to paint your own picture. And we studied in room, free room and board where John Gaybor painted his own picture, a company which violated lots of common ways of doing business in his industry. And he created a high engagement, employee base and a high performance organization. We talked about system and alignment. And how really growth results from the right behaviors. And you gotta get culture, leadership behaviors, HR policies, measurements and rewards, all aligned. Remember the little ducks? Remember the geese in a pattern? We talked about other companies. I shared with you stories of Starbucks, Leevee Restaurants, Outback Steakhouse, Ritz Carlton, Southwest Airlines, the Container Store. Remember the story I told you of my friend Mr. Bill. Well, today we move to the final class and the challenge of building a senior management team. That means you've gotten big enough that you need senior managers, okay? That means you have reached a plateau which very few companies reach, but it's a plateau in which you can still implode at, alright? Just because you got there, doesn't mean you will stay there. And, what we're going to do today is focus on the difficulty of hiring a senior management team, getting the senior, a senior management team choosing the right people, what I called, play well in the sandbox together. Okay, instead of go in and fight over the toys and want to take them to one side of the sandbox or to their own sandbox. And we're going to talk about the necessity of upscaling in your business and what a research findings. The research finds that, as your business grows, the people and processes and controls that work it say 1 million probably won't work it say 5 million. If they it 5 million they probably won't work it 10 million and we're going to talk about the difficult issue of having to upscale people. Who had been good loyal employees, but who can't function at a higher level. And we're going to use the secure work story. And isn't that a fascinating story? And I've exposed you to a different type a leader here in Mike Cody. Okay? Think about it. You've seen very different people Barbara Lynch, Randy Buford, John Gabert, and today Mike Cody. And you can learn from each of them. Okay? Because you can't model anyone. You're going to put it together your own way. You've got to be true to yourself. And that'll be the true test, as to whether you can build a business. Okay. Some good quotes to start out. You have to dump stars who are not nice. You're going to hire really super, super employees or managers. Okay? But if they're not nice, you got to dump them, according to one CEO. It's very similar, if you will, to Andy Lansing's comment from Levee Restaurants, don't hire jerks. 80% of people who started with me are no longer here, because they could not grow with the business. That's the thing about up-scaling that we're going to talk about. One negative person can impact 5, 10, 15 people in a small company. Yes. That's why we're back to hire slowly, fire quickly. The container stores, go read their foundation principle and read the paragraph that says, one great person equals three good people. My biggest mistake for hiring too quickly and firing too slowly. I didn't make that up, the research taught me that. I have yet to be successful in putting somebody on a different seat on the bus and their ego being able to handle it. Yeah, you got to get the right in right seats and then you got to deal with issues when the people don't want to change seats. You should have also learned in this course. Growth is change, as basically growth is evolutionary, you've got to adapt and learn and if you're not comfortable with change, because change is constant improvement, okay? Change is innovation, things are just not going to be the same everyday. Things are just don't work that way and basically the chaos of a small business. Growth eventually requires you to build a management team. And this is the sad truth and in that a sad face. In most cases, the team that can manage a small business is not the best team to manage a growing bigger business. People either have to grow quickly or new people have to be hired. And that's where leadership comes in. Leadership in how you deal with the people that can't go to the next level and leadership in finding the right people to come in that can take you to the next level. And then that raises the question of what you can afford. Do I hire people that can take me to the next two levels, who are more expensive than people that can just take me to the next level? All things to think about. How much can I afford? Where do I find people who can take me to the next level? What kind of experience? Should they come out of big companies? Should they come out of entrepreneurial companies that have scaled, that have grown from 1 million to 5 million to 10 million, who have been through what I'm going to go through. That's the type of questions and thought process I want to leave with you today. Three big research findings, which quite frankly surprised me. I didn't expect this at all, alright. Well, I knew hiring senior management is not easy. But I didn't really expect, when I started the project, to learn how hard it is, how really hard and a surprisingly large number of CEO's in my study and I had 54 different companies, made a lot of bad management hires. Okay. And many of them works very experienced. Some of them had failed in their first venture and had learned in their second venture, okay. And some had failed, had, excuse me, had succeeded in many entrepreneurial ventures, were a serial entrepreneur. Many CEO's in my study, it took them 3 to 5 hires to hire the right person in certain technical jobs. A CFO, an HR person, chief of technology, a head of sales. It all depended on what their background was the CEO, the entrepreneur. And hiring outside his or her background, experience, comfort level, was very, very hard. I wonder why, what do you think? Remember, you got your paper with you, you got your pen, let's take a break. Pull out that piece of paper. Why do you think hiring experienced management people is so hard? Write down two or three things. Just take a minute or two. I'm not leaving, don't expect you to. I'll be right back to you.
