SPI 434: How to Know What to Fix Next with Mike Michalowicz

434 How to Know What to Fix Next with Mike Michalowicz

Pat Flynn:
We've talked a lot about productivity here on the show before. In fact, we've had a number of guests come on to help us understand how to better manage our time, how to better understand what we need to be focused on, how to structure our week. For example, how to batch process our podcast episodes, our blog posts our videos so that we can get ahead on schedule. And we've even had people like Paul Jarvis come on the show to share a little bit more about why always being productive isn't actually always the best thing to do. The idea of growing just to grow because everybody's growing, or the idea that we are making more time just to do more things. Does it have to be that way? And that was a great episode too. But today I'm extremely excited to welcome on Mike Michalowicz. He's the author of a very prominent book called Profit First, which I've practiced, I've read. And I enjoy, and I recommend.

Pat:
His book, Clockwork has been instrumental for several of my own students who I've recommended it to. And his latest book, Fix This Next is something that's really, really important that we're going to talk about today. And that is the idea, the change that you need to make to understand, of all the things that seem vital and urgent in your business, how do we know what we should be focusing on right now? Because every issue seems urgent and we cannot address them all at once, but how do we focus on the right thing, so that as a result, we can continue to grow and get out of those endless circles that seem to just keep coming up? Putting out urgent fire after urgent fire, continuing to work for just work's sake and not actually making progress. So, if any ounce of you cares about working on the right things, well, then this is the show for you. Welcome in. Let's cue the music.

Announcer:
Welcome to the Smart Passive Income podcast, where it's all about working hard now. So you can sit back and reap the benefits later. And now your host, he's gone live on YouTube every single day since we've been quarantined, Pat Flynn.

Pat:
What's up everybody, Pat Flynn here and welcome to session 434 of the Smart Passive Income podcast. Again, extremely excited to welcome Mike Michalowicz to the show. I've already told you what we're going to talk about. So let's get into it. Here he is, Mike Michalowicz.

Pat:
Hey Mike, welcome to the SPA podcast. Thanks so much for joining us today.

Mike Michalowicz:
Pat, thank you for having me. It's a joy to connect with you.

Pat:
An absolute joy for me as well. And I'm just really excited to dive into your new book because everything you've talked about, everything you write about is so important. I'm a big fan of Profit First and Clockwork. A lot of my audience, a lot of my students use that. But I want to talk about your new book, because it's about fixing things. And I think entrepreneurs, we know we need to fix things, but we have this problem of either trying to fix too many things or wasting our time fixing things that actually don't matter. So when it comes to where do we even start focusing on improving our businesses, tell us about this book and why it was so important for you to write it.

Mike:
Yeah, so I came up with this concept called the survival trap. It triggered out of this. I sent an email to my readership, just asking what's the biggest challenge you're facing in this year ahead of you. And the feedback came back, but I'm not the most technically savvy guy. I must have triple clicked or something because the email went out multiple times. But the same people, Pat, some of the same people answered with different biggest annual challenges on the same day. So in the morning, the guy's like, "I got a sales problem." In the afternoon he's like, "I got a hiring issue this year I got to fix." By the evening, it was setting vision for the company. So it became very clear that the biggest challenge business owners have is knowing what their biggest challenge is. And why we get stuck, I call this the survival trap, you can do it in three steps. You can do it in your mind.

Mike:
If you draw the letter A, it's a great illustration, on a piece of paper and put a circle around it in the center of a piece of paper, what A represents is point A, where we are now, what we're struggling with or what we're experiencing. As a second step draw two or three arrows away from A, for short a distance in any direction you choose, just two or three arrows. And what those two or three arrows represent are the two or three choices you have. There's probably more than that to get out of A. And the final step is you draw a B in the bottom left corner of that paper and put a circle around that. And what B represents is the vital need that your business actually has. And chances are, I can't see your paper. I saw you drawing it. Chances are none of the arrows pointed to B, or maybe one.

Mike:
And the reason, obviously, we can't draw arrows toward B is because we don't know what a B is. We simply know the A. What this illustrates is the survival trap. Most businesses are in point A crisis and they're trying to escape, trying to escape. Occasionally, someone will draw an arrow toward B and that, how it manifests is, if you ever come back into work and it's putting out fires and putting out fires. And one day, all of a sudden things start clicking. You're like, "I got this stuff going on, man. I got it figured out." And then the next day you come back and it's a total shit storm. That is when we draw an arrow toward B by pure happenstance, without knowing where it is. So the essence of Fix This Next is what's the one thing our business needs from us now, pinpoint it and then take actions consistent with it. Know the what first.

Pat:
Why do you think it's so hard for us to select the one next thing? And I think intuitively we all know that, but yet we, as entrepreneurs, we focus on way too many things, not just even within our own business, but the next business idea. How do we begin to manage our own brains from going out there and trying to focus on too many things at once?

Mike:
Well, there's a dopamine response. Every time we tackle whatever small issue we get done, responding to that email or answering that question or saving that client. It's like, "Yeah, I nailed it. I got this." I call it the superhero syndrome. We keep on swooping in and saving the day. But the superhero disarms or disables the military from protecting themselves. So our team around us, be it clients or employees or vendors or a combination thereof, can't be empowered to do some of this stuff themselves or all the stuff themselves.

Mike:
So it is this false positive that we get this reinforcement every time we fix something. The funny thing is it puts us in this doing syndrome and I've never seen a statue dedicated to the do. I don't see this statue called The Doer where some guy with a phone, pulling his hair out and panicking. There's a statue called The Thinker, though. And The Thinker is someone who is devoted to just contemplating what's going on. I also believe, Pat, that the term entrepreneurship has become so bastardized because entrepreneurship was never meant to be hustle and grind. And I am the antithesis of that. I believe entrepreneurship is about having clarity on an outcome, choreographing the resources around us and make that vision a reality. It's not about doing it's about delegating and empowering and choreographing everyone to get that job done. But sadly, I think entrepreneurship has become, just do more, do more. And that's really not what it's intended to be.

Pat:
Yeah. And people listening can probably think of some names of people who have really helped that hustle culture. We're not going to name any names right now, but it has become something where people equate success to how hard you're working or how little sleep you're getting.

Mike:
Yeah. Danger.

Pat:
And this is why here at Smart Passive Income it's about being smart about the approach. Not necessarily working harder.

Mike:
Yes.

Pat:
I'm curious about determining what that next thing is. There's likely a person's listening to this. They probably have five or six things. Like you said, the different arrows. How do you determine, or what filter do you use to go, "Okay, let's put the blinders on and focus on this one thing." How do you know what the next domino is?

Mike:
Great question. So that's what I dedicated the book to. And in there is this thing called the business hierarchy of needs translated from Maslow's Hierarchy of Needs with one essential difference. So quick primer Maslow's is studying human behavior, identifies that physiological needs are the base needs for all humanity. You and I have got to breathe air, drink water, eat food. Once that's adequately satisfied, then we elevate up to needs of safety, ultimately self-actualization. What Maslow argued, if at any time a base level need is not being satisfied, we automatically biologically respond to reverting to it.

Mike:
So if I start choking on some water or something, I can't help but start coughing. Well, in the business hierarchy of needs, there's five foundational needs that all businesses have also at a hierarchal level. The one fundamental and critical difference is we are not biologically or neurologically wired into our business. Therefore, gut and instinct does not serve us in a business nearly as much as matching that to empirical data. Pat, if you and I were walking back from an event or something, we're walking down an alley and we're both like, "No something doesn't feel right." We better turn around because we're going to experience some harm. That's our instincts that's being generated through senses. Sight, smell, hear is triggering a sensation. But in business we're not neurologically wired in. So we have to back it with empirical data.

Mike:
Just the real quick filter is this: every business foundationally needs sales. It's the equivalent of oxygen or breathing. No sales, you're suffocating. But immediately, once sales are satisfied and it needs to only be adequate to support the next level, is we focus on profit. Profit is the creation of stability. And sadly, as we go through this COVID crisis, we see so many businesses that were focused on sales without the consideration of its impact on the next level of profit. And they're gone. Once profit is being serviced, it's simply adequate to achieve what's called order. Order is organizational efficiency where there's no dependency on the owner themselves, was as we were discussing, perhaps the true definition of entrepreneurship.

Mike:
Above that is impact. Impact is the creation of transformation. So where you're serving clients in a way that impacts them beyond the transaction. Legacy, which is the most interesting level to me, is where a company creates permanence. And what's so interesting, as I was interviewing business owners that have achieved legacy, they all said the same phrase. They said, "I realized I was never a business owner. I've been a business steward. That my responsibility was bring life to this organization. And that my involvement in it is simply secondary to the organization continuing on its purpose."

Pat:
Really love that. I loved your example about the alleyway too, because I think we can all relate to being in a place and just without necessarily being conscious of what's happening, we have this subconscious thought of just, okay, something's going on here. And like you said, we have a natural reaction to turn around. I think that's based on several years of just experience of being in situations similarly and going, "Okay, well, this feels like it was before. Let me turn around because there might be a tiger there." I don't know what the example would be.

Mike:
That's a great example. Actually Malcolm Gladwell's book is dedicated to that research called Blink. And what he argued is that when we have repeated exposure to something, it will consolidate down to an instinctual feeling. So in our business, if we do 500 sales call, the 501, you start getting a sense this isn't working because your mind is automatically subconsciously processing that data. The challenge with entrepreneurship is there's so much new and when we rely on our gut for the new, it often fails us. So that empirical data is the ultimate compass.

Pat:
Yeah. I don't know why I'm reminded of this right now, but my son, I have a son. He's 10. We play a lot of Fortnite. My son and I, we want to get really good at it. And there's these things that you can use, programs to train in terms of aiming; they're their aim trainers. And it's funny, because somebody mentioned when you're playing a game of Fortnite, two percent of the game is actually going around and actually aiming at other things because there's so many other things to do. So you actually don't get that training to get better.

Mike:
Interesting.

Pat:
Hence you have to get the program that all you do is aim, which is how you either win or lose the game. And it just makes me wonder, with entrepreneurship, when it comes to sales or whatever it is we're trying to do, we actually don't do that part very often. There's a lot of the setup. There's a lot of the other things and social media and a lot of things pulling our mind away from what is actually worth training ourselves on. And I don't know why I thought of that.

Mike:
No. That's a great analogy because the distraction is so prevalent. So how do we carve through it and what we focus on? That's another argument why so many business owners get stuck in the, I would argue, the ultimate game of entrepreneurship. There's so many things that you can do. There's so many things you can target and shoot at, but what's the one thing that matters most? The vast majority of businesses, and Pat, you know this, the vast majority of businesses will never grow past one or two employees because the owner's trying to control everything. The vast majority of businesses will never pass $250,000 in revenue when they have such potential. If they simply do the one thing that will move the business forward, they can break through those glass ceilings.

Pat:
What was an example in one of your businesses where you essentially caught yourself really focusing on something and going, "Oh, well maybe that's not the thing I should be focusing on. I should focus here instead." Do you have an example?

Mike:
Oh yeah. Well, sadly way too many examples. The first one that comes to mind, it was actually written about in Inc. Magazine. So I've been an entrepreneur my entire adult life. My second business was in computer crime investigation. That's where I really made a "name" for myself. And I realized that hiring really driven salespeople could be a game changer. At least that was my feeling. By the way, I now feel that no one can sell ever as effectively as the business owner, because the business owner is so intimate with the business itself and so emotionally attached. And I'd even argue, Jeff Bezos is probably one of the biggest salespeople at Amazon. No, he's not clicking, saying ship this box when you make an order. But sure enough, when he's negotiating cities that they're going to move Amazon into when he's doing the big sales, he's absolutely there.

Mike:
So the big sales are ours. Well, I said, "I'm going to hire salespeople." And I had this epiphany. This is when Survivor Island was super happy or Survivor. So I'm like, "I'm going to run a Survivor at three o'clock in the morning." Because the best salespeople really want it. They'll show up any time. Sales is a 24 by seven thing. So I ran this interview, Survivor style 3:00 a.m. in the morning for people to show up. And it was just a calamity. I was so focused on this. No one showed, by the way. I take it back. Two guys. One guy was drunk. Another guy who was getting off his UPS shift and said, "I would just check this out." And I was just so entrenched and believed in it so much that I channeled my resources. I had my assistant there. I had my existing sales team there, everyone there for this big dud.

Mike:
What I realized is, I can get on the high horse about this great idea and see it way too far past. So I myself now use this system to take pause to really consider is this really what my business needs from me? Admittedly, every book I've written is facing a challenge I have my own businesses.

Pat:
Yeah. And you're a wonderful writer. I love how you start the books. They are really just to hook us in.

Mike:
Thanks, brother.

Pat:
Clockwork, the story about a woman who you had experience with who was going through some tough times in her life.

Mike:
Oh my God, yeah. I never got hold that woman again. It was so sad and so scary. But, that was an extreme example of how brutal entrepreneurship can be. It can emotionally destroy us.

Pat:
It is brutal. How do you stay positive through all the challenges and a lot of the negative that happens?

Mike:
Ever hear of the book called The Five Love Languages?

Pat:
I have.

Mike:
Okay. So I believe that's the essence and actually our little office here, if you just walk around, we're tiny, there's 12 of us, but in all the different spots, we have pictures of our childhood on the front of your door or cubicle. And below it says my operating manual. So it's how you operate. Well, we found that the five love languages is the way people want to communicate. Mine's words of affirmation. Jenna's is quality time, meetings and so forth. Well, what I do is I set up affirmation loops because mine is words of affirmation to stay positive. I ask readers in all my books, "Hey, just reach out to me and tell me how you're progressing." So I get a regular stream of my fuel so I can be very positive. So when I'm down on myself and things aren't going well, I just check email. And within an hour, there's going to be a couple more emails in there to get me jacked up again. That's my little hack.

Pat:
That's cool. I'm words of affirmation as well.

Mike:
Nice.

Pat:
My wife is acts of service. We're definitely deep into that. And I also too have mechanisms for when I get down or there's a troll out there and I feel terrible. I go into my email or I have a board up here in my office with thank you letters and stuff. And that just reminds me of the purpose of why we do what we do.

Mike:
Yeah. And someone told me once the trolls, just laugh at that because I have them too. And he just told me, "If you don't have people hating you, you don't have people loving you." What's interesting is when you empower a tribe or a community that if they don't have an enemy, they can't be elevated. It's like, "Oh, what are we going to do here?" But once they have that other side, so the trolls actually start to serve us is if we activate our community and say, "Hey, look what other people are saying." So I appreciate having them. It sucks when you get that burn. But I do appreciate having that community out there. I need them.

Pat:
It's true. It's almost like a sports team with no competition, right?

Mike:
Yeah. I was watching, what's that show? Joe Exotic the tiger guy.

Pat:
Yeah.

Mike:
Those two, the woman on the bike, whatever, and weirdo Joe, they thrived because of each other. If she didn't exist, he would've fumbled. And if he didn't exist, she would have no cause. It was amazing way how enemies are actually the best allies.

Pat:
Yeah. It's true. And one of the enemies of entrepreneurship, to segue, is burning out and working too hard, being overwhelmed. Obviously this book Fix This Next. Definitely check it out on Amazon or any other places where you want people to go. I don't know if you-

Mike:
Amazon's the hotbed.

Pat:
Amazon's the hotbed.

Mike:
[inaudible 00:17:12] Book Shop is a nice company now. They're trying to compete with Amazon and prioritize books because they procure their books from local bookstores and ship them out that way. So bookshop.com.

Pat:
That's cool. Thank you for that. What are some high level things that you can tell us who are working so hard with the little time that we have and aren't getting any results? How do we know, not necessarily even what to fix next, but even what to focus on to begin next.

Mike:
Yeah. So, the simple starting point I call the working/not working list and whatever's working, you do more of and whatever's not working, you do less of. So it's literally just a piece of paper. You put a line right down the center and on the top you put is working on one column, the other one not working. And then on the rows you put the key elements of business, which is marketing, service, product, operations. And then just for each category, just spend the time saying what's working, what's not working.

Mike:
In book sales alone, you have some books out there and I have some books out there, and to sell books, it's changing constantly. So I simply wrote down for my own book launch now saying, what is working? What's not working? Well, the traditional approach used to be, get all your influencers that you know and you're friends with and ask them to support you, which I've been tracking, is actually less and less effective because there's such and overwhelm with email.

Mike:
I found the new thing is that was working was I was doing these live webinars with people that actually live there and just asking them on the live webinar, "Hey, would you be willing to buy the book right now?" And that had the biggest result. So what I did is I just track what's not working, what is working and then I start concentrating more on what is working and amplify it. And what is not working, you have to repackage and find a new way. That's a great way to go through all this stuff that you're overwhelmed with right now. Amplify what's working, diminish what's not. And that'll usually start moving you forward pretty quickly.

Pat:
What if what's on that list of what is working is just not fun?

Mike:
That's funny because most of the stuff we do, isn't fun but necessary. Yeah. Some of it too is, you do have to see yourself through it. If not you, who? So you do see yourself through some stuff. It's repetition of not-fun stuff that becomes a real problem. So the not fun stuff, me personally, I do the Brian Tracy, eat the frog, just do it first thing in the morning. Get it done. I have a work session. 6:00 a.m. to 7:00 a.m. every single morning. And on that work session, I do the one thing that I don't want to do. And I do it with other people. I do it in what's called a Sprint. So we collectively come on, we all go on Zoom. It's like let's get it done. So that's a simple hack I found for myself.

Mike:
But I also noticed-

Pat:
Is that within your team or is that with other-

Mike:
Other people. Other experts. If you're ever interested, tell me. So then what I found is if I'm doing it repeatedly and not liking it, that's something I got to outsource and delegate because I'll never be efficient at it. Which is most things by the way.

Pat:
Because I think it's important to know that not everything's going to be fun, number one. And I go through these launches for different products and launches for my books. And a lot of times there's a lot of grinding moments in there, but they're not an all-the-time thing. But there are things that happen all the time that I have learned to outsource. And in fact, there are some things that I was good at and even enjoyed, that I eventually had to learn how to outsource. What might you recommend in terms of that? Because I think part of the struggle is I do this thing all the time. I don't like it. Let me hand it off. That's obvious. But what about the things that you know that you are good at?

Mike:
That's super smart.

Pat:
Yeah. How do you begin understand where should my time actually be focusing?

Mike:
Yeah. So that becomes a major limiter of a business's progress is when we are doing the things we like to do and don't want to give it to anyone else. I think we have a choice there. We can say, have we achieved a lifestyle that we want? And this is what we want to sustain. That's an okay choice. The second choice is, do we want to see through it to something differently? So I've done with speaking. I've seen you speak live. I do a lot of speaking. And I realized that for me, once you get to about 50 gigs a year, at least for me, I'm very capped out. You know, you're spending a couple of weeks on the road straight banging out some. You get back home for a week and you're back on the road. But how do I amplify speaking?

Mike:
So, one of my books, Profit First has just become so popular that it's an endless stream of requests, which is wonderful. How do you satisfy them? And I love speaking. Well, what I did was I empowered licensees to learn my speaking method or the speech and give them the right to do it and then start empowering them to do it. And then start cherry picking the big ones I really want to do. So I'm speaking at Dave Ramsey's event, coming up, Entre Leadership. And that one I want. That's going to be awesome.

Pat:
I'll see you there.

Mike:
Oh, you're going to be there?

Pat:
Yeah.

Mike:
Oh, dude.

Pat:
Although I don't know, this year is weird. Things are changing all the time.

Mike:
Very bizarre. We should definitely try to meet up though in some safe capacity. But my other ones, I love doing them. They were preventing me from doing the bigger stage stuff. Those are the ones I started licensing out. And so I think that's the approach. If you love doing something, I wouldn't personally take myself fully out of it because then I'll start getting disappointed. Instead, I started catering to the bigger, better ones, if you will, while still satisfying the other ones through licensees in my case.

Pat:
Awesome. I love that idea. Before we finish up here, we're very close and I know you're busy. So I want to respect your time. Thank you again for coming in today. Definitely check out the book, Fix This Next. Cannot wait to have my audience dive into that and thank you for writing it.

Mike:
Thanks.

Pat:
And just everything that you put in these books. I wanted to finish off talking about this crisis and the pandemic that's happening right now, and businesses that are affected by it. Obviously, it would behoove me not to ask you about profiting in this situation and how a business can approach the environment that we have now. Should things change? What should we focus on? There are obvious things like trimming down expenses that aren't required, but what else should businesses that are alive today do so that we can stay alive?

Mike:
Yeah. So I call what we're experiencing the big, hairy shift. Make sure you throw an F in there. The big hairy shift because it's a new entre petri dish, if you will. Things have changed so significantly. So for businesses that aren't getting business in this new environment, it's not because you're not capable. It's because the needs have shifted and we have to change. Sticking with what worked in the past may not work going forward. So that's one element. The second element is a responsibility for profitability. I see some businesses just trying to be of such service to our community. And they've compromised themselves. There's a couple of businesses right down the road from here, they've gone out of business. They gave everything they got for about three weeks. They ran out of cash and they're gone.

Mike:
So we have an obligation to sell. And my final thought is this, is that there is sadly some unscrupulous businesses moving into the market in all markets right now because buyers are panicked and they're very desperate and doing crazy things. And I see noble good businesses backing down because we don't want to sell. I'd actually argue we have to sell to block out those unscrupulous providers. Ultimately at the end of the day, a buyer is going to buy when they need to buy. The question is, who they're going to buy from. And if they can't see you, if you're invisible, you're done. So we have to market into this market more than ever, actually. We have to stand up and start selling appropriately and fairly to our customers, but also fairly to ourselves.

Pat:
Any words of wisdom related to messaging in and around COVID? I think a lot of people are afraid to mention it, but you have to, but you don't want to seem that you're playing on that fear.

Mike:
Yeah. Don't freaking do the "We're all in this together" line. I got a message from Chevy. I own a Chevy and Chevy says, opening line is, "We're all in this together." Which, me as the consumer, says what are you going to try and sell me now? And Chevy's like, "Hey, ready for oil change?" I'm like, "What? So I can drive from an infected city to another?" I'm not driving more. "We'll sell you a new car."

Mike:
I think the appropriate response is to simply say, "I'm sure you're affected by COVID, but I can't imagine how badly. Please just accept my well wishes." That's genuine because we don't understand. And then instead of saying, "Are you ready to buy from us?" Saying, "We're here if you need us, and if you don't need us, now we understand. And if you need us in new way, please tell me." I think that communication inspires a good relationship.

Pat:
I love that. Mike, thank you so much for coming in today.

Mike:
Thanks, brother.

Pat:
Where else can people find out more from you and what you have going on?

Mike:
Well, if you want to check out Fix This Next, go to fixthisnext.com . I've got a free eval there. If you want to learn more about me, it's mikemichalowicz.com. No one can spell it, so you can go to mikemotorbike.com. My nickname in high school was Mike Motorbike. Tons of free resources and all that stuff. Mikemotorbike.com.

Pat:
Mike, it's been a pleasure. Thank you so much for your time today.

Mike:
Thanks brother.

Pat:
All right. I hope you enjoyed that interview with Mike Michalowicz. Again, you can find his book at fixthisnext.com along with a free evaluation there, and also his personal site, mikemotorbike.com. Love that. It just redirects to his name, which I agree is very difficult to spell. So mikemotorbike.com. Mike, thank you so much for coming on the show. Everybody check out the book. I am going to read it because it just came out and I'm so stoked to have you learn and take action and get results, which is exactly what this show has been built for, for you to take action on, to have confidence that what it is that you're going to be putting time into is worth the time and effort and to help you get results too. If you've gotten any sort of results from listening to the show at any point in time, please do me a favor, if you can, and leave a quick review on Apple podcasts. It would be a huge, huge, thank you coming from me to you if you do that, because it really helps other people who find the show understand that there is actually value here.

Pat:
There's a lot more podcasts coming out now, and that would be extremely helpful. You can also check out the show notes at smartpassiveincome.com/session four, three, four. If you enjoy this episode, let me know on social media, wherever you're at Instagram, Twitter, what have you, @PatFlynn.

Pat:
Stoked to know you listened and that you found value out of this. Thank you so much. I appreciate you. And as always, hit subscribe, if you haven't already and #TeamFlynn for the win. Peace out.

Announcer:
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