The Road Less Stupid: Thinking Better and Smarter To Grow Your Business with Keith Cunningham - Genius Network Episode #164

The gap between where you are and what you want is what you typically describe as the problem. When in reality this gap is not the problem. This gap is the symptom.

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We've all done stupid things. It's part of growing up and it's part of life now. Of course, the goal is when we do stupid things to at least learn from our mistakes so we don't keep repeating them. However, that's not always possible. Sometimes we just don't know the right things to do and therefore we keep making stupid mistakes. For the last 45 years, Keith has been a businessman, an investor, a teacher, a coach, a mentor, and a thought leader in the business arena. This is the best business book that I've read in probably a decade. It's amazing. The Road Less Stupid, which is going to be the topic of our discussion for today. One thing like years ago, Robert Kiyosaki was telling me I was out to lunch with Robert. I said, who's rich dad? And he's like, there's two rich dads. One was like a booze runner in Hawaii that did all kinds of crazy things. He did a bunch of illegal stuff. And he's like, the other one is Keith Cunningham. That's who I learned. Rich dad. So what is the road less stupid?

How would you describe it if I gave you the opportunity to unwind any three financial decisions you've ever made in your whole life? How much money would you have? It turns out that the key to making more money is to doing fewer stupid things. I happen to catch a big wave, and I have mistook catching a big wave with being a good swimmer. And it's what Warren Buffett is very famous for saying. Most of you have heard it. You never know who's swimming naked until the tag goes out. What it takes to make money is very different than what it takes to keep it. And most people are so obsessed with making it that as they become more successful, they do stupid things, which winds up sabotaging their overall success. So I went from plus 100 million to minus 50 million in a matter of 24 months. And when you do that, it takes your breath away. I mean, that's a major, major event, not only because of the size of the money, but also because the loss is so devastating. And I have my Self worth entwined with my net worth, which is a deadly combination. Look at your losses. It's not necessarily pleasant to think back on, but everybody's had some kind of loss that they've sustained as a result of a bad decision or excessive optimism. Unexamined assumptions, faulty expectations, excessive optimism are killers. Arrogance is killer. The truth is, to me, sustainability of wealth is the holy grail. It's never what you do, it's how you do it. A business owner has mastered two things, structure and leverage. And without structure and leverage, there is not a way to create a sustainably successful business. I must say the structure part a different way. Before I talk about leverage, opportunity without structure is chaos. The Achilles tendon of most entrepreneurs is structure. They hate it. That's why they started their own business, is because they hate the idea of having structure. And yet structure is critical for scaling. The problem that most people have, in my experience I know I have this problem, is that I'm not particularly honest with myself about the reality of my situation. As long as I'm lying to myself or not telling the truth, I have no opportunity to make a change. So it's why addicts don't stop using is because they say, well, I don't really have a problem. I can stop anytime I want. Yeah, I know it's a little bit. But, you know, the reality is it's I'm functioning right. It's why alcoholics. Or pick a topic. People don't tend to tell themselves the truth. This is point A. We also have point B. Point B is ought. This is the way I'd like for it to look. This is point B. And it turns out that most of us are experts on point B. We have massive clarity on the way we would like for it to look because we've done all this visualization, we've done all this goal setting. The gap between where you are and what you want is what you typically describe as the problem. When in reality, this gap is not the problem. This gap is the symptom. The hardest part of thinking time is getting clarity on the problem. That is, if you don't have clarity on the problem, that is, you'll be tactical instead of strategic. As long as I'm dealing with the symptom, I'm going to be dealing in tactical. And once I say it's not a tactical issue, I need to be strategic. If I don't have clarity on the problem, that is, I'll build a machine for the problem that isn't. If you tell me your sales aren't high enough, I'm going to say that's a symptom, not a problem. If you tell me you don't have enough profits, if you tell me you have a crummy culture, if you tell me you have weak employees, if you tell me your balance sheet is screwed up, I'm going to look at you and say all those are symptoms. What's the problem? So business to me is an intellectual sport. It's chess. Money and business does not respond well to emotions. Warren Buffet said it. Optimism is the enemy of the rational investor. So business is an intellectual sport. And the people that win the game sustainably have got skills and tools, which is why I wrote the Road Less stupid.

If we think of we're all building a business, It's a machine, it's an intellectual sport, It's a chess game. How should everyone here think about this machine that is their business?

There are two types of business models. There's the Michael Jordan model and the Michael Dell model. Michael Jordan, Tiger woods have a personal services model. It's all on them. There's very little leverage because Michael can't delegate the jump shot to win the game. Tiger can't delegate the two foot putt on 18. Tiger has to make the putt. You can make a lot of money in that kind of model, but there's not as much leverage as there is the Michael Dell model. The Michael Dell model is Michael hadn't put together a computer in 38 years. He put together a couple of them and then realized very quickly, unless he had some people on his team that he could leverage, that he wasn't going to get to the success that he was capable of or that was available to him. Depending upon which model you're talking about, the machine could look one of a couple ways. The Michael Dell model, where it's not a personal services type of model. Michael Dell model relies on three things. It relies on a strategy, a plan, not an idea. One of the fundamental mistakes we make as business owners is we wind up executing on ideas instead of plans. We have an idea of what we want, but there's no yellow brick road. This is oz. We're in love with Oz. I've heard so many business owners tell me over the years, this is my dream, this is my vision. I go, I'm good. You're telling me about Oz. Build me the yellow brick road. Show me how to get from where you are to Oz, and then I'm on board. But just because you become very adept at describing Oz, doesn't give me the clarity that I need to be an investor or to support you if I don't have clarity on the plan. So the plan, the strategy, is number one. Number two, you got to have people, A, players. You take a great strategy and you have B, players, C, players. Anybody in here have an employee? Anybody in here ever been disappointed with the performance of an employee? I might give you a hint. You get what you tolerate. Nothing can change until the unspoken is said. Here's the truth. For us as leaders, the greatest failure of leadership is a lack of courage. A lack of courage to say what needs to be said. I tell my employees we own businesses and I tell my employees all the time, I refuse to lower my standards in order to accommodate your need for mediocrity. Every one of our employees wakes up the morning and they want to be successful. My job as the leader is to support my team. And being successful, that's my number one job. And so I'm going to coach. I'm going to build a yellow brick road. I'm going to have performance standards, but I got to have a people. What's the definition of an A player? There's three or four things. Number one, they have a high internal emotional need to succeed. High internal emotional need to succeed. I'll say this a different way. Pros don't have to be motivated, amateurs do. People ask me all the time, how do you motivate your employees? I say I hire them. I'm giving you an opportunity, and I've built you a yellow brick road that if you stay on the yellow brick road and hit my standards, you and I are going to do well. If you can't hit my standards, I understand this is not a good fit. You're not going to be able to stay here and be successful, which I know you don't want to. You don't want to come to work for the next five years and be unsuccessful. So let me help you go find someplace else where you can be successful, because it's not here. Because here, this is what we produce. Number three, I got to have the structure and part of the structure. Probably the most important part of the structure is going to be the culture. Culture is not perks. Those are two different things. Perks are how many jelly beans are in the kitchen and whether you do or don't get to bring your dog to work. Those are perks. I look at culture as, how do we treat each other? How do we talk to each other? Culture is accountability. The Navy Seals has got one hell of a culture because they're accountable. They get stuff done. They do what they say they're gonna do. They're on time. That's a cultural issue. And so I would ask you, as you're thinking about a machine, what's your plan? What's your leverage? There's a culture, there's a way we do things. The whole idea of the machine is that I pour gasoline in and it runs, which is not the kind of business that most of us have. Most of us have a business where we're crankers, we're hand cranking. And then I hear people talk about, I want to scale my business. And if you scale a crank business, you wind up with more crankers because there is no machine. It turns out scaling a crank is a bad idea. But we're addicted to this idea of growth and getting big and scaling as if big was the same as rich. Big is not the same as rich. Those are two different words. And when I look into the cockpit of most businesses, there's one lever that the pilot has at his or her disposal. Who's running the business? The pilot. And that lever is the accelerator. Anything that goes wrong, okay, first thing let's do, let's mash down, let's get big, let's amp, let's scale, let's add more. This, let's do this. Let's get a social media web. And pretty soon I got all these tactics storming at me, and I'm going, what is the real problem here? Sometimes gains are a result of losses avoided.

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