Process Street Interview with Mike Michalowicz

Okay. All right, everybody. So I am so excited to have you here today. We're going to be talking about how to stop doing so much and how to design your operations to run like clockwork instead. So if you're here, you are probably run a business or you're a team leader in your company and you're working too hard but not experiencing the momentum you'd expect from it. Or a lot of your work is reactive versus proactive. You're putting in nonstop hours while also carrying your team. Or you just constantly feel obligated by too much to do, the never ending to do list and not enough time. So if that describes your experience at all, give us a hands up or a yes in the chat and you're in the right place. My name, just to orient you to who I am, I'm Ann Perry. I'll be your host today. I run the solutions consulting department at Process Street. And Process street is an online tool that provides simple but really, really powerful ways to manage your recurring workflows for your team. So any of those processes you do over and over again, that's what Process street is here for. So we support companies and professionals like you in documenting and implementing and automating your processes and workflows so that you can produce consistent results and eliminate bottlenecks and be positioned for smooth expansion without ripping your hair out. So I have the privilege of speaking with Mike today, and this is my second interview with Mike. The first time Mike, you and I talked was about Profit first and that I can't believe I haven't written you a thank you letter because that book truly 100% changed my life. Like, really? I mean, yes, anybody who hasn't read Profit first and you care about not being broke and having cash flow, you need to read that book. So Mike is one of my favorite business leaders and authors because he makes complex business strategy not only simple to understand, but more importantly, straightforward to implement and effective. So if you haven't heard his story yet, is that okay, Mike, if I just introduce your trick story? So Mike has founded. He founded and sold two multimillion dollar companies before he was 35. And with all of this success, he was like, okay, I'm going to become an angel investor. And he did that and ended up ended up losing his entire fortune, which is super tragic. But it has a happy ending because Mike had to start all over. And this time he was really driven to find better ways to grow healthy and sustainable and strong, strong companies, which he did and does. And so he's devoted his life and work to this and has since created Profit first, which again, literally every company and human on the planet needs to follow this financial method and the world will be better place. He's the creator of Clockwork, which we get to talk about today, which is how to make any business run on automatic. And he's authored several other awesome books. Fix this, Next, get different, the Pumpkin Plan, Surge Toilet Paper Entrepreneur. And now he leads two multimillion dollar ventures serving businesses around the world. Also, just one more note, he's a former small business columnist for the Wall Street Journal and business makeover specialist for msnbc. And Simon Sinek, who you all probably recognize that name, deemed Mike the top contender for the patron of saints or patron saint of entrepreneurs, which is perfect because with all his accolades, Mike really does come from the heart and a deep place of service. So I'm so happy to have you here, Mike. Thank you for taking the time today.

Yeah. Oh my gosh, I couldn't wait to join you. And thanks for sorting out all that stuff with Zoom. I love seeing the chat. There's people from throughout the globe here, so thanks for all the attendees too.

Yay. So glad. And I know that our audience, anyway, was excited to talk with you or our customers. Process street customers. So, okay, so I want to jump in. I swear this is not, I'm not asking, I'm not trying to promote your book, but everyone, you know, buy the book.

I'm not trying to promote it either, as I do the 3D effect.

Exactly. So that's the book. And I'm really curious about this though, because I've read Clockwork. But you, you re released Clockwork very recently. Like within the last couple of weeks.

Yes.

And you, you mentioned like 60% of the content is different and it's like way simplified. So I haven't had a chance to read the new version. So I'm just curious, like, what is the 60% change? Like, what's different? And why was that important?

Yeah, well, I'll start with the why was important. So we surpassed our hundred thousandth reader and we, we have a service organization behind it called Run Like Clockwork and had our thousandth student. And through that process, I found some things that, wow, I thought it was simple, but it wasn't simple enough. And there was points of confusion. One message really got me, and this was maybe four years ago, a person said, I'm enjoying Clockwork. I own a business. I love this, but I can't share with my employees because it's about me. Getting a vacation. And I was like, oh my gosh, that's the antithesis. This is to empower employees, for people to step into opportunity within your business. This book, the defining thesis, if you will, the job of an entrepreneur is not to do the job. The job of an entrepreneur is to create the jobs. There was a statistic I saw. They said that 14% of the world population ever starts a business. So if you look back to your kindergarten class, the 30 students, whatever was in there, 14% would be four, maybe five students start a business. But and this is the one that's mind blowing, only 20% do it successfully. Where the business is sustainable, healthy, financially, it's running efficiently. Well, multiply 20 by 14%, that means about 3% make it. That means one person from your kindergarten class makes it. And I want to up those odds. That's why I was inspired to reinvent Clockwork, to simplify it, make it more efficient, I think. And there's so much new stuff in this book, but the core framework's the same. My biggest edict is to get employees deploying this alongside with you, the leader or the owner of the business.

Oh, I love that so much because I can. So for those of you who are like, what, what do you mean? This vacation thing. So a big piece of clockwork is the four week vacation as which I love so much because like, you've probably heard the, you know, like hit by the bus test. I'm like, ew, it's so negative. Like, what about the I had to move to Paris on a whim test?

Or like, you know, that's a way better test. That's a way better test.

Yes. Or I'm taking a four week vacation, which is what you get to learn about in Clockwork.

So as I was researching for this book, I studied hundreds of different businesses. I've included case studies from about 25 businesses in depth. But I touched on all these businesses and I found in every, almost every industry that businesses touch on every element of the business within four week monthly cycles. So, so we attract a client or prospect, we serve them, we maybe hire someone or have to let someone go. All of our processes are being run. We close out the month in our accounting system. So every element of the business, something is happening on a monthly basis. So my hypothesis was, wow, if we can remove the linchpin employee, the owner, for a full month and the business collapses, that proves dependency on them. But if the business is successful after four weeks, I said four months, but four weeks, then we've proven the business can likely run into perpetuity without them. So the ambition of the goal of Clockwork is to build the entrepreneur, the leader of the organization, to get to the point of being able to take a four week vacation. Doesn't happen overnight. It's not like, oh, it's tomorrow, we're heading to Paris, which would be amazing, but it's 18 months out, usually, of following this discipline. A year and a half from now, you're going on a fortification and you're doing it again and again and again. I opened up this new book from one of the people that deployed Clockwork many years ago. He owns a detailing shop in Oregon. His name is Jason Barker. He has a handful of employees. And he was the guy that when there was his high school or college reunion every year, they had it. He had this close group of friends. He was the guy who said, yes, I'm in. And then the day before it say, I have to be out because of work. He missed. I think it was like 20 or 30 years of getting invited. He was the guy like, what? We have to invite him out of obligation, but we know he's not going to show. After deploying Clockwork, he showed and I opened the book, actually, I won't flip to it, but there's a picture of him holding a sign in an airplane saying, thank you, Clockwork, for doing the system.

That's awesome.

And. Yeah. Which is amazing. But. But there's a tearjerker here. Oh, he went to the reunion. It was. He went to Oregon State. I think they went to the football game. He went with his 10 best friends. One of his friends, after four days there together, passed away unexpectedly, had a heart attack at the restaurant. And Jason shared. He said, I never thought I'd be thanking you. I thought I'd be thanking you for going to this game, giving me freedom. I'm thanking you for giving the four last days of my best friend's life with him. And I say, oh, this is the message. It's not just about us sitting on the beach drinking Mai Tai's. That's wonderful. It's about the people who are still in the business able to grow into what their aspirations and dreams are. And it's about having time to do the other things, perhaps the more important things than just business. Being with family and friends.

Yeah. Yeah. Oh, my gosh. Yeah. I mean, it's like we've all had that experience where we look back, we're like, oh, it's been five years since xyz, right? It's Like a day goes by, a week, a month, a year. I can't believe it's September, let alone that it's 2022. I'm like, I still think it's 2021. Like, it's just.

I know I still write that in checks when I write a check, which is like once a year.

Yeah. Oh, checks. I forgot about those things.

Yeah. They exist.

So that's awesome. So I know that you teach about the four Ds that are really necessary components of any company, and they are doing, deciding, delegating, and designing. Did I get that right?

That's correct.

So I'll be curious your thoughts on this because we posted a poll on LinkedIn and we asked as a leader, which of the following makes you want to bang your head against the wall the most? And 40% said having their work be more reactive than proactive. 31% said, like, working really hard but not getting the momentum. 13% said being a decision bottleneck. And then a snarky 15% said headbanging is for concerts.

The snark factor.

The snark factor. We had to give an option for the sn.

Metallica.

Metallica, exactly. So I'm just curious, what, like, what do you hear in those poll results and in relation to the four Ds?

Yeah. So I'll give a little more context around the four Ds now. I'll tell you what I hear here. So every business must be doing every element. What I found is business should be doing, which means serving clients or doing the infrastructural work behind supporting clients. About 80% of time deciding is active decide making for employees, where the manager says, do this, do that. It's really task rabbiting. Delegation is not the assignment of tasks. Assignment outcomes. There's a subtle difference, but the. The impact is extraordinarily different. So that's why bifurcated those. And then designing is the thought time, strategic planning, if you will. Well, the analogy I like to use is chess. You know, no one watched a chess game when those people are sitting there and, you know, you see the woman, she's rubbing her temples and thinking and moving like no one sits there and says, what are you doing? You so idle. Everyone knows you're thinking the right move because you're looking at every opportunity in front of you and the consequences of those decisions. And then they move the piece. It's the amateur me who plays chess. I'm like, this will move pieces. I don't even know where they go. I just move them around. And I lose within seconds, then the tears are coming down. But doing without considerate thought is often damaging. And yet in business, we see the other way. If we're not doing, we're not producing, but we're actually damaging. We have to see our business as a chessboard. We're making strategic decisions. There was a quote from some famous CEO, I don't recall the name, who said, I am paid so highly because I make the four most critical decisions or five every single year that this business needs. And that's our role. So what I heard from people is the frustration of doing and not seeing momentum. I heard that in a survey that's so common because we're moving chess pieces and the opposition, be it life itself, be it the economy, be our competition, keeps bumping us off the table. I've heard the frustration of I just sit here and I'm unable to make effective decisions. Well, in many cases, we're either thinking about the wrong thing, we're not prioritizing what needs to be done, or micro distractions keep on presenting themselves. What I found is sometimes the fastest way out of the weeds, just to walk out of the weeds. I think there's a misperception that if we keep working hard enough, long enough in our business, that one day this magical switch is going to flip and the business will run itself. In fact, the opposite is happening. The more you're working in the business, the greater the dependency is coming on you. You're the superhero, you're Wonder Woman or Superman flying in to save the day yet again. And the dependency grows on you. So what we do in the clockwork process is we deliberately, in small pieces, remove you, see what, what problems that triggers, reinsert you, fix those on a systemic basis, remove you again, see if now they're working and we keep doing this throughout the business on these little challenges that present themselves. And slowly we start to extract you. Once you can start taking a fork vacation. And I've done this now for five consecutive years. Actually, last year was a nine week vacation. Ooh, yeah, I know, it was awesome. Now as a Napa, among other things, this year I'm doing the same thing. The more I've removed myself in the business, my fear was my colleagues are going to say, oh, Mike goes on the beach, makes all this money while we work our butts off. They're going to resent me. But the reality is that was not my intention. And the opposite happened. When I left the business. My colleagues came to me and said, you trust us, you're Giving us the keys. We're empowered, we're stepping into who we are. And it became a very empowering opportunity for them and became a big awareness opportunity for me. Last thing I want to share about this kind of hurt in the survey, to be very careful about our own egos. First time I went on vacation, the fourth vacation, the first big test, I went to Australia. It was basically 12 hours around. It's on the opposite side of the planet. It was. It was a perfect place to get away. But within three days, with no emails, no communications, I thought one of two things. The business that I had had just vanished. Unlikely, or they don't need me. And that's when that one tier came down. Like, they don't. Doesn't someone need me? And I started to reinsert myself in the business and disrupt it. So be careful of your own ego, of thinking how important you are. Don't be a superhero. Be the super visionary, that master chess player who's doing all the design work, and let your team do the doing. Deciding delegate.

I love it so much. First of all, I love all the different types of tiers you've shown us. Like the chest tears and the one slow tier.

Yeah, right, right, right. Lots of tears.

But, yeah, no, this is pretty huge because, you know, the chest is a perfect example because I don't know if anyone in the chat here listening can relate, but just that feeling of, like, if I'm not, like, doing like this, there's like a weird guilt and I don't know what that is. Like this societal sort of like, obsession with production and constant doing. So it's almost like, like you said, you're actually disrupting things. But it feels counterintuitive because we've just been sort of rewarded for the busy or busier you are, the more rewarded versus the, you know, what if it were easy? Oh, my gosh, like, what if? Right?

I rarely. There's some pretty famous names, some big pundits who say, you need to hustle and grind. How bad do you want it? Push yourself. And I bought into that workaholism. I remember once I had a call with a friend of mine I actually mentioned in the book. His name is John Bates. He called me and he's like, dude, I am so tired. I worked last night and only got so hard that I was only able to get four hours of sleep. And I laughed and said, ha, I only got three hours of sleep and I couldn't. As the words came out of my mouth, I'm like, what have I Turned into. This isn't about sacrificing life for your business. It's about running a business to support an extraordinary life. That's what it's about.

Yeah. Yeah. It's almost like the more you step out of the ego, the more, you know, like you said, the more you're empowering others. It's all very counterintuitive. It's a spiritual path you're talking about here, Mike. This is how I'm interpreting it.

There you go.

Yeah. And I also just want to clarify real quick, because I know we're talking about entrepreneurs and leading a business and running a business. How does this relate to somebody who's maybe a team lead or somebody who works in a really large company but, you know, still has kind of master of their domain?

Yeah. So just to give context, we're a small business here. Collectively, between my two companies, we have 22, 23 employees. So we're tiny. But what we discovered was that we have to start this clockwork momentum somewhere. It can start with the owner or the, the CEO or can start with a leader of a team. It can start at any level and it can work in departments. We've had actually now Fortune 500 that's using some of these techniques we just met with. But I'll tell you a story about our own business. When I left on my first work vacation to Australia and I returned four weeks later, I asked the team, how badly do you want me back? And the response was, we want you back because we like you, but we don't need you. And Kelsey, who's our president, came to me and said, I've also noticed a new problem. As you take fortifications, it's spreading out redundancy among our team to back you up, but we don't have redundancy for each other. She constituted a fork vacation for every employee. Now, this is the extreme case. I'm not saying you should do this, but it's been an extraordinary change for us. Every employee in our company goes on a four week intentional vacation because it's that trip to Paris. Someone's one day and say, I'm going to Paris. And now you have that. That person leave with all their knowledge going out the door, or at least all their experience. So what happens is every time someone takes a fortification every year here, they have two backups in place for them. So now if anyone goes to Paris or gets hit by a bus, we have the backups. It's actually strengthened our organization. I believe leaders can do this throughout. The second thing is I think there becomes for some people, territorialism, that once I have something, if I cling on to it, that now I'm going to elevate myself because I'm the expert. But the reality in all my research and experience is the more people have these territories they're protecting, it keeps them reduced, it prevents them from scaling up within the business. So with Clockwork, what we do is we have methods for them to capture their knowledge, present it, empower others to do it and step forward. So I think Clockwork for every level of employee throughout an organization is a way for them to amplify their importance to the organization. Not by protecting, but actually by engaging and supporting the team and the organization.

Yeah. And that's another one of those counterintuitive or like old conventional wisdom things, which is don't be replaceable. Right.

Right. Yeah. Right. Be irreplaceable. Be the one and only. Yeah. So here's an interesting thing too. This is happening. Our company and many companies have deployed this as. We run a very thin organization. And when I say thin, it's our employee to revenue ratio. It's very high, which drives high levels of profitability. We can disproportionately pay our colleagues more. The more they teach and spread their knowledge, the more everyone's income, including. Including their own, increases. There was a. An article, I think it was in Popular Mechanics, like a long time ago, but it was fascinating. A supercomputer was challenged to deconstruct a column like one of the Roman marble columns that holds all that weight. To use the same material, marble, but to use less of it, but support the exact same amount of weight. And the computer came back with this like, web like structure where it kind of pulled out marble, but it left it in there. And it was just as strong, just as rigid, but used, I think half the material. That's what we're looking to do in our organization. We're not looking to let people go, but we're looking to get more out of the organization as a whole by complementing each other. Almost like in a web like structure. And then everyone rises as that tide rises.

I love that. And it. And it sounds like that doesn't mean more work for everybody. Everybody carries more load. It just. It's about like being doing things in a smarter way.

Yeah. More efficiently leaning into your love. It's funny, we hired a colleague here, her name is Corday. And the first, during the interview process, our president who interview said, what would you love to do if you could do anything? What Would you love to do? And there was a silence, and Cordae said, I've never been asked what I want to do and I love to do. And the response is, if we can align your love with a need, we have. My gosh, you're going to be a rock star. I don't enjoy accounting, so don't make me the accountant here. But we have another person who loves number crunching. My gosh, she is a rock star.

Yes. If everybody were doing what they love, like, the result would be excellence. Like. Yeah, yeah. Okay. So I have to. I'm curious about this because I'm coming from the perspective of Process street. And as I shared, so it's a software that basically helps you to document and implement recurring, repeatable processes. And we kind of have this philosophy that a lot of people think of their work as projects. And it's like, if it's. If you're doing it more than once, it's not a project, it's a process.

Yes.

And so it's something that needs to be, you know, documented in a way that can be done over and over again. What is the clockwork approach for capturing that knowledge and capturing the process?

Yeah. So, you know, a common thing I hear from people is I have no systems. And then there's this fear that's gonna be overwhelmin to create it. So Process three is such a powerful tool in this regard. But my point is, everyone has systems we haven't extracted yet. The systems are just in our mind. So if you do it once, you've created a system at one time, so you have a system. And if you're doing repeatedly well now. Right. It's a process. One technique is to capture with video just to get that initial capture. Some people say to me, oh, I don't have time to capture this process or record it, because I have to get it done right now. Well, if you want to do both at once, kill two birds with one stone video, or record with some tools, store it over, you know, speak over what you're doing. And now you have an explanation what you're doing. This isn't true just for computer stuff, which is a lot of stuff for many people. But you can be in a meeting, you can use your iPhone to record the conversation going on. You could be moving boxes in the inventory room. You can videotape it with that smartphone, too. The key is capturing. But I will tell you another tip. Once you've recorded it in Process street and you transfer it now to another person, meaning they're now responsible for it. Have them teach the system too. Have them record process. There's an old saying. The best student in the classroom is always a teacher. If someone can demonstrate teach the process, not just read it, but teach it, that means they've mastered it and can do it now.

I love that. That's really good. Yeah. Kind of just like getting it done once and then having the next person teach it. It just gets cemented each time and gets, you know, improved along the way.

Correct. And a second version of it, too. They may improve upon it and that person may leave. The personality that's been given responsibility may leave, but their knowledge isn't leaving. It's staying with you.

Yeah, exactly. Exactly. I love that. That's so great. So what have I not thought to ask? I know we just got a couple minutes here, but what if you could leave one wisdom nugget with the folks tuning in today? What would that be?

It's a word. I'll give you one word, and it's a game changer. It works particularly for entrepreneurs, but at any level, business. I want to change your word from your title. So let me work with entrepreneurs here. If you're calling yourself an entrepreneur, that is often equated to hustle, grind. I love the word entrepreneur. Business bastardized. I'll give you a new word. Shareholder. When people ask me, what do you do for work? I'm like, oh, I'm a shareholder of a couple businesses, and it causes confusion. And that's my intention. They say, what does that mean? Well, I'm also a shareholder in Ford. I own some shares in Ford. When. When Ford sends their distribution check for 13 bucks, I don't say, oh, my gosh, I. I don't deserve this. I don't return to them. I don't race down to the factory and say, what do I need to do to earn this money? What I say is, I've taken a risk by investing in this company. So this is a reward. I share in the profit, but also I have rights as a shareholder. I vote we put together the board of directors. We give strategic direction when they're building new plants and so forth. Nothing is more powerful in this universe for humans than to comply with how we identify. We comply with our identity. If I call myself an entrepreneur, I will naturally want to hustle and grind, because that's the definition. Therefore, I use the word shareholder over and over and over publicly, internally, and it's awkward at first, and it's taken me a good year or two to use it consistently, but sure enough, every time I say it, I've transformed my identity from doing the work to designing the outcomes for my business. And one thing I did as a shareholder is I voted myself back into my little business here. I said, well, if I could do anything, what's my dream stuff to do? It's to write books and hence plug time. To write books and to be a spokesperson. What we're doing now, these are my two favorite things. It gives me joy. So those are the ways I did vote myself back in to do some work.

I love that. That's awesome. I love it so much. Hey, everybody. Thank you so much for joining in the chat too. We didn't get a chance to, like, look closely what you said, but I will have that chat transcription after. So we're going to look through that and, you know, we'll get back to you if there's anything in there. And we'll, you know, if there's like some common themes, we'll, we'll create some content around for you. But I want to make sure that we give everybody next steps here before we sign off. So go to mikemikalowitz.com and you can see the spelling of that here. Can I call you Mike? Mike?

Yeah, you can call me. That's what my friends did. Or you can call me Mike Motorbike. And I do have mikemotorbike.com because McAllen is a nightmare.

Oh, that's brilliant, Mike. Motorbike.

Yeah. So go to mikemotorbike.com it's a faster, easier way.

I love it. And is there any other, like, specific Clockwork website we should send folks to?

Oh, yeah, if you want to go to Clockwork Life. And the reason I chose Life, because I believe this is a lifestyle transformation. So Clockwork Life.

Love it. And if you haven't used Process street yet, you can get a free trial at Process St. And if you do use processtree, or if you don't yet, but you want some support in building out your process, that's what my team does. And you can just shoot me an email personally. It's Ann A N N E Ann with an Erocess St. And we'll get you some more information on that. So, Mike, I have to say thank you again. You are a gentleman and a scholar. And I want to tell you too, that you remind me of a quote that is one of my favorites that I actually have on my LinkedIn profile, which is be humble, for you are made of earth. Be noble, for you are made of stars. Oh, yeah, you remind me of that a lot because I just really appreciate your humility and your heart. And you're making such a difference in the world. You've changed my life, and I know so many others. So thank you for what you do and thank you. Awesome. Thanks, everybody, and we'll talk to you soon. Take care.