the 2 systems every business should have

you and I as a lens by which we view growing, building, driving organizations, which is an idea that is kind of a byproduct of theory of constraints from who— someone who has now become a friend via this podcast, Justin Rothmarsh. Follow him on Twitter and LinkedIn, uh, which is talking about measurement and business predictions, stuff like that. So I have a couple ways I want to kind of enter into this. There's really kind of a flowchart that we're gonna talk through, uh, that I think is very accessible for most business owners listening to this, that is gonna create a lot of clarity within, uh, within how you're running and managing your business. So I will introduce with one topic, uh, kind of entering this category, and then I want you to build upon this or something around this as we answer that. Is that okay?

Sounds good.

Okay. So Justin has talked about this. He said this to me in person when we were at a conference, but I also have read this in Common Cog from Cedric Chin. Cedric Chin, right?

Yeah. I'm a subscriber. That guy's awesome.

P.S. Crane subscribers get access to his newsletter for free. Join Crane.

No, they don't.

Is that right?

No.

I thought you did a deal with him.

No, it was a different newsletter that we did a deal with.

Oh, okay. Shit. Okay. Sorry. You should have done it with Cedric.

You're right.

But what they define knowledge in a business as is the ability to predict future events. They both actually, I don't know if it was independent or they got this from some theory that they both are citing, but it's not— the idea of knowledge in a company is to say, if I do X, Y happens. And if you start to define it, it starts to lend itself to some of the things we're going to be talking about today, which is predictive ability on things like profitability and stuff like that. So that's— I, I think it's actually like the first principle that you just have to define, which is knowledge in a company is the ability to accurately and consistently predict future events. I'm kind of butchering it, but you get the idea. Okay.

Yeah. And that actually dovetails nicely with something you told me a while ago, John, which is, um, after speaking with somebody really successful, you came to me and said the most valuable— like, if you want to get insane valuations on your business at sale, it needs to be able to predictably generate Y dollars of revenue from X dollars spent. Like you need to have a machine into which you put money and more money comes out the other side. Once you've proven the ability to do that, then your valuation like doubles or 5x.

It was Kavon, my business partner.

I was gonna say, I thought it was Kavon. Yeah.

Because he was an investment banker. And he says, when you— and not just small amounts of capital, we're not talking about like $100 of Facebook ads to create $120. When somebody can hand you $10 million and say, yeah, give me a year, I'll give you 13— 130%, right? Once you've built an engine that can predictably do that, that unlocks an entire category because there's more money than great places to put it.

Yeah. In big amounts, which, by the way, is not true for me and my business right now, not for my property management company. If you gave me a million bucks right now, I wouldn't know where to put it. I wouldn't be able to— I don't know that I would be able to reliably generate a return on additional invested capital. And in fact, that makes sense intuitively. Most property management companies, the owner is drawing cash off of it every year above and beyond what they need to live. Yeah, because there's nowhere additional to really invest it. Like, well, you know, there's always—

you know where it is. You know where it is. You have a section at the bottom of your newsletter devoted to it.

What's that?

Inorganic growth. You acquire.

Oh, sure. Absolutely.

So the place where you wanted to increase— if you said, we have an engine that can inorganically— we grow 10% a year organically on all of our units, but we can predictably take $10 million and buy 4 property management companies, increase their— that, by the way, when you show an ability to deploy capital as an inorganic growth strategy, it massively skyrockets your valuation.

And there are a few larger groups in our space trying to do that, basically operating under that thesis, but it's not easy.

Yeah. No, not at all. But that would be a way that, again, if you committed to that, it would do serious things to your valuation, your integration, your deal sourcing engine, your all that stuff. So, okay. So knowledge and ability to predict. So we talked about a little bit of a flowchart. There's one key question you have to ask that involves with, uh, that involves the constraint. Basically, is it static or dynamic? So do you want to talk through that first question? Because I think some people will fall on one side of this question that are listening, and a lot of other people will not, and they should basically stop listening. Yeah.

So what you're listening, but yeah, not stop listening. Stop listening. What you're describing is it's kind of like a flowchart to follow of what to do next in your business. Right? That's what every entrepreneur needs to, needs to know is what is the next thing I should work on in my business. And the flowchart, this flowchart you're referring to, contains the answer. And the first question is, is your business chaotic? And that, that's actually a technical definition, which I'll explain. It doesn't just mean like, oh, is it busy? Like, or, you know, am I, am I, uh, do I feel stressed when I'm at work? That's not what it's asking. It's asking specifically, is is the constraint of your business jumping around? So is it like one week you have too many customers and your operations is bottlenecked and you can't get orders out the door, you can't service customers? And then like a few weeks go by and now suddenly, because you were so busy, you stopped ads and now all of a sudden operations has nothing to do and you're starved for leads. I need leads. Where can I get new customers? And like then the next month it's like some supplier that you really relied on is No longer available and you're scrambling supply chain or vendor issues. Like that is a chaotic business where the constraint of what's preventing you from doing more is constantly moving around.

And do, by the way, doing more, and you know, when Justin writes about a speed-based operating system, he talks about velocity and clock speed and all these things. I always annotate it with generation of free cash flow.

Yeah.

Not produce more units, not run more sales appointments. What is the biggest inhibitor to you rapidly generating more free cash? When I started thinking about it like that, I'm like, oh, it really started to click for me, which is, that's my little, it might not be precisely right, but that's like my shorthand that, that helps me understand it. So what is, if the thing that is constantly preventing you from generating more free cash flow is moving around every week or two, that is a book definition of a chaotic business.

Yeah. So maybe the following week it's, oh, I don't have enough technicians. We need to hire more technicians all of a sudden because I can't find qualified plumbers. Right. So if, if, if you answer that question, yes, my business is chaotic, then what you should do next is clear, which is subordinate everything to one constraint. Pick a constraint and make sure everything else in your business operates faster and more efficiently, more quickly than that one bottleneck, which is the constraint, and never deviate from that. Is that a good summary, John?

I think what Justin would say is you— I think you said it right, but to just emphasize it, and he really upgraded my thinking on this, which is you select your constraint, and the way you select it is you say when this resource is most fully utilized, it generates the maximum free cash flow.

You've really internalized this philosophy because I thought, well, you also spent time with the guy, but like you're, you, you like really nailed it. I always have to like, well, now wait, what, how do we define the constraint again?

I'm like refreshing a little bit, but because, because it's, it, it sits at the heart of Sagan. It sits at the heart of Sagan. Who should I hire next? What AI agents should I build? Why do I feel like my business is out of control? And this to me provides— I don't really talk about this when somebody's like, I need to hire a CSR, but in the back of my head, I'm— the methodology by which I write a prescription is this, which is, bro, you have your lawyers spending 50% of their time on intake calls. Obviously, your law firm or your service business, The lawyers need to be the selected constraint because they're $300 an hour. And I'm going to now make recommendations as to what they should hire next or what kind of agent they should build or what type of SOPs they should prioritize or what type of task map they should put at the top of the list versus how to— it sits at the base of everything we talk about every day, which is why I've been sprinting intellectually towards it.

So say it again because I interrupted you and gave you a hard time, but the way you said it was great.

You didn't give me a hard time. You complimented me. You didn't give me a hard time. I give you a hard time. That one of the things that Justin has really set into my head, which was a couple of times, it's like, you know, like attack the constraint and all this stuff. He goes, John, John, celebrate the constraint.

It's sacred.

It's a beautiful thing. It is the thing that when it's working perfectly generates the most profitability in your company. That is to be lauded. That is not something to say, I hate my constraint and I wish I didn't have to. You're like, no, this is the machine that keeps the lights on, whether that's a machine or a person or whatever, a physical something, right? So that for me really, really clicked my brain into a new gear.

He also talks a lot about how the constraint is usually the obvious thing. Like it's not some big mystery, like for airlines, It's the airplanes, you know, for restaurants, it's the seats at the restaurant, like making sure they're full. For a painting company, it's the painters. Like, so it's not some big mystery. It's not the market is the constraint. Like, we're not—

it's—

that's not what it is. So, um, just look around your business. What's the obvious thing around which your value is built? You know, seats on an airplane, seats in a restaurant, painters painting houses, whatever that is. That is almost certainly what your constraint should be.

So if you're in that chaotic business, all of the other things too, I will add, you know, you select it and you say, look, sitting down when we're, when we're done here in my roofing company, what is the resource max? And you say it's skilled roofers. It's not apprentice roofers. It's not salespeople. It's not owner's time. It's not back office. It's I keep my skilled roofers frickin busy because those guys are the only ones that can finish a roof or whatever, whatever that is, right?

No, because if skilled roofers are fully utilized, it will generate maximum profit.

Sorry, that is a more precise way to say it. Yes, thank you. Yes, that is absolutely more precise, which is when they're maximally utilized, I make the most money.

Yeah.

Not when my salespeople are maximally utilized, because then I have a backlog. Not when my back— not when my executive assistant has a full schedule. That doesn't drive maximum profitability. Ability, right? Okay. When you're around that, and you and I know this, you and I talk about this a lot, a lot of the ways that you're able to clarify that and clear it is all the systemization stuff that you and I have been talking about for 3 years, right? That's things like workflow diagrams and system design and SOPs and output thinking and John's hierarchy of leverage. It's, that's all in the family of trying to build no non-chaotic, uh, non-chaotic kind of value creation process.

The, the way I think of it is all those things that you just referenced that we've been talking about for are they— if you get them in place and sort of build an organization around and with those tools, it ensures that the non-constraint never becomes the constraint.

Well, and that's why we're going to talk about the second number. Yeah, that's why we're going to talk about the second number, which I think is brilliant when Justin talks about that. So, okay, so the first thing is, do you have a chaotic business? And we are very specifically defining that as your constraint is selected and known. You, you fair with, with basically saying that it doesn't—

selected, known, and doesn't, doesn't move around?

Yeah, it doesn't move. Yeah, selected. Well, I guess selected and known are kind of the same here, but like it's known and it doesn't move. Cool with that?

Yeah. So we— so, okay, so let's say yes to the answer to the question and let's go to the next question.

By the way, I will, I will mention as an aside here, the— there's always— you talk about me internalizing it. There's so many secondary implications of it. For example, if you're going to join a franchise network, you should be thinking, how are they going to help me with my constraint? It's a great question. On my maximum profit-generating resource. And so that's why some of these home service things, it's like this can— right? So I think there's the implications of this way to look at businesses and analyze value creation has all of these little— it ties into AI.

Because of the implications.

Because the implication, it's like when in Rome, it's like, I don't think you use that. Right. Uh, okay. So step one, is it chaotic? We already defined that. Okay. Now, Peter, talk about the two systems that Justin, uh, has an acronym for, but we can just speak to them very plainly. And by the way, this, this contradicts some of the stuff we've talked about historically, and my, my mind is still open, but let's, let's give his kind of definition of the two key systems and some of what we think are the implications of it.

Yeah, so I'll just, I'll quote him here. He says you should design your business with two very loosely coupled groups or subsystems and model it accordingly. First one is the business as usual or BAU group that generates revenue. So a lot of people call that operations. The second is growth. So basically sales and marketing that generates growth in revenue. You should not collapse them into one system in reality or in your model of reality. So that means two systems, each with its own goal and its own constraint.

Uh, so, so I think I will tie this in. He, you know, he put a title to it, business as usual and growth system, right? But any experienced entrepreneur has learned this, meaning do you go to your COO who's answering the mail every day and has 7 tickets on their board for maintenance requests or overdue hiring and say, "I've got a new idea for a marketing campaign." Right. Hey, just, I saw this thing on Twitter. I think we should do this. It's this AI go-to-market thing. Every good entrepreneur is informally thinking about protecting the people delivering the work. Again, I say good entrepreneurs. I don't think all entrepreneurs do this, but I think good leaders are thinking, "No, that guy's got a day job." and his day job is business as usual, versus the kind of fast, quick, loose growth experiment, try stuff, money, that's very different than, did I get the keys delivered on time to the owner investor? So I think we all informally do this. Oftentimes, with the types of businesses that you and I are talking about, I can tell you Sagan, for the last couple of years, and now it's being fixed, But all of the business as usual was done by the team. And all of the growth was done by me and Kayvon, my co-founder. That was how we did it. Because, and now we're really building our growth team, but it's only because it's matured.

Justin talks a lot about how if you don't deliberately model these two systems separately, and allocate resources separately, he talks a lot about how the business as usual team will rob resources from the growth team, and the growth team will kind of play second fiddle to the business as usual because the business as usual will just start screaming about how busy they are. And I need our— I need to grab, you know, some of these salespeople to do customer support because they sold the deal. I need them to get on the phone with this guy and straighten it out. And so suddenly, before you know it, your growth and marketing engine is slowed to a crawl because you haven't like separately conceived of and resourced these two independent systems.

Fascinating.

Mm-hmm.

I love it. It's awesome. So if we talk about a business as business as usual and the Growth System, which is how we're gonna talk about it, each has its own goal, each has its own, uh, constraint, and each will have these two numbers that we're gonna talk about that Justin says are the keys to, with the philosophy of being, creating predictable predictable free cash flow or predictable velocity through the system, each of these will have these two numbers. So he says most people have way too many dials. He has a good speech. He's probably done it on a podcast or a video. I assume he's done it. He said it to me, and then I think I've read it somewhere, but he has this really interesting series of Socratic questions, which are, in effect, What's the purpose of your KPIs? And why? And it's kind of like, you kind of like, well, to keep an eye on. So why do you need to keep an eye on what's going on? And it kind of like cuts through a couple layers of like bullshit for why you need 20 things. He's like, so basically they're all just like proxies for how much money you're generating. It was like a really good like series. You go to look at his articles, or I'm sure he's done a YouTube about it. Like Yeah, but like, why? So that you can intervene and have targeted interventions to fix that before— okay. So you need to be looking out ahead. It's not like— he has a really good series that kind of like cuts through a lot of the kind of like complexity of, well, I need to like turn time and I need to have onboarding speed. And it's just like, yeah, like, yeah, sure. All that. Like, But you're the CEO. Like, what are you really trying to do here? And it's like, yeah, more free cash flow.

Do you have a dashboard, John? Do you have a dashboard that you look at every day? I don't either.

No, I don't.

What's the, what's the closest thing that you look at with any regularity?

I look at, um, right now because of my nature, I look at all growth stuff. So I looked at, look at opt-ins to lead magnets. I look at, um, sales appointments. I look at kind of coverage reports. From individual sales or growth folks. I look at some of our go-to-market things, you know, webinar attendees. I'm not spending it— I get basically once or once, depending on the section, once or twice a week, I might get a brief from our head of recruitment. Hey, we closed 87 roles in the last 30 days. We're really struggling with this type of role. I need some money for better sourcing in Lithuania.

But largely speaking, a fancy BI dashboard, or how do you actually Where does it actually—

where do you get the data? I get on a Zoom. Our team might have them, but I get on a Zoom and I get on a Zoom and they walk me through it. It's a brief. I read a book On Managing by Harold Janine. Did you ever— it's an old-school book. He was like, whatever. ITT was his big multi-industry roll-up. And basically what he said is, I run all these different industries in all these different countries. And basically where I spend my time is control, which is accounting, which is I very tightly control budgets. So like every new hire goes through me or Kayvon. It's, I, I control the organization through resource allocation and starve and feed certain initiatives, but I'm not in there saying how many leads did you like? No, no, I can.

Yeah. Hermosi's got a great book. Hermosi's got a great YouTube short. About, uh, about, um, a mentor who told him one time, um, profit is unnatural. Uh, basically every business by default will consume and absorb all of its excess cash.

Fascinating.

And find places to spend it and use it. And that you have to be unbelievably diligent and basically neurotic, or hire someone who is, for a CFO, to prevent a business from spending all of the cash that it creates.

Interesting. Yeah. Yeah. So, so this is a long way of getting to the fact that Justin says, as a senior executive, not down at the working level, whatever, but as a business owner, you should be tracking two numbers and trying to drive and improve two numbers, which is the, uh, overarching theme of your company. That then will break down into sub-goals, but only in as much as they support the top-level goal. So sure, everybody can have rocks, but you need to tie it to these two things, which we're gonna talk through right now. So that's, that's essentially what he says. What he says is, number one, is you should be focused like a laser on increasing the productivity of your constraint. Which you could also say is the contribution margin of your constraint.

Okay.

I will then say the second, the second number he says you should track is on-time task completion of non-constraints.

Hmm.

He says those are the two numbers that you should be— why? Because when you've named your constraint as the thing that generates maximum profitability, the more contribution, the basically the more efficacy of that resource, the more profit you make. The more, right, that's— we've defined, we've, we've defined it tight enough that there's no wiggle room there. And then on all the other things, we're saying, look, you're not the maximum driver of profitability. You are a driver of profitability only inasmuch as you don't slow down my stinking machine.

That's right. And so when it's like, oh man, so productivity of constraint, which That number could take a lot of different forms. It could take utilization rate or billing. There's a lot of ways you could define that depending on what your constraint is. Percent of seats filled on an airline, hours filled.

I think it's contribution margin. I think it's contribution margin because I don't— I think it's contribution margin. And contribution margin is essentially to— I actually pulled it up because I want to make sure I said define it at an elementary school, high school, and entrepreneur level. Elementary school level, contribution margin is the money left over from a sale after paying for ingredients. If you sell a cup of lemonade for $2 and the lemon and the sugar cost you 50 cents, your contribution margin is $1.50. I thought that's gross margin. $1.50. Here, type in what's the difference between gross margin. I think gross margin is represented as a percentage.

Yeah, that's right.

And this is represented as a dollar amount, which is hugely important because your overhead and your fixed costs are dollars, not percentages. Which is why I think contribution margin is so— Bezos talks about this. He's like, don't worry about profitability, worry about dollars of profitability. Oh, I have 200% margins on 15 cents. So he actually— contribution margin is better. High school level is the money a product generates to cover fixed overhead and create profit. Unit contribution margin equals price minus variable costs. An experienced entrepreneur definition is the ultimate metric for validating unit economics, operating leverage, and scalability. Contribution margin ratio equals revenue minus variable costs over revenue.

Revenue minus variable costs, not fixed costs. That's the difference.

Correct. Because this is what contributes to basically say, all right, I got to get rid of all these fixed costs before I start distributing free cash flow.

Yeah.

And so I think when you talk about the productivity of a constraint, I don't think it's like the machine is on all the time. I think it's how many dollars do they push upwards out of their cadence, out of their workflows or workstreams, how many dollars physically do they push upwards and say, you can pay the rent with this, you can pay salaries, and you can take a fat distribution. And trying to make your constraint generate more of those is one of the levers that you should be obsessed with. And frankly, your entire organization should be pushing towards from a simplifying management structure.

Yep. So first constraint, and the second number is on-time task completion of non-constrained resources.

Basically everything else.

Everything else.

Basically everything else.

And so if we take the first concept and the second concept together, every business actually would have 4 numbers because you have 2 independent systems. You have business as usual, BAU. You're going to have productivity, the constraint, and on-time task completion for non-constrained tasks. And then you'll have your growth engine. Similarly, you'll have your productivity of the constraint, which could be something like, uh, number of your best salesperson. Yeah.

Salesperson. Uh, the more John talks to people, the more money we make. So how do we get him talking to qualified leads?

Yep. And then on-time task completion would be something like, you know, John's assistant, you know, would need to have 100% on-time task completion for sending out contracts and doing follow-ups and researching and uploading 100 cold leads every day. Exactly.

8:00 AM for the SDRs to call. What percentage of the time do you hit that 8:00 AM deadline? 100%. Awesome. You're not gonna slow down the constraint then.

You're getting into some drum buffer rope stuff right there, I think.

But that's, but that's, but that is right. What I, what I like about this and it, and Goldratt talks about it in his book, which is everybody thinks elegant systems are complex. And what I like about this is it's an enormously simple rule that explains and solidifies and cuts through, oh, I have 74 KPIs and dashboards and live feeds to API. And you're like, what are you doing? What are you doing? Right. And I think that really speaks to me. That's why I've really like identified with it.

You know, Jordan Waila has had in his email signature, for a decade or more, this quote from Leonardo da Vinci. It says, "Simplicity is the ultimate sophistication." Correct.

Reminds me of the hard part is getting it to that simple theory, that simple, look, if you make these two numbers improve, your business is doing fantastic. And if you don't, it's not right.

Which, you know, it's simple, but that may not be easy.

Oh, of course. I mean, that's like saying, you know, uh, uh, you know, uh, eat less than you burn off and, uh, Work out an hour. It's like, yeah, of course, but that's really hard.

Yeah.

You know, it's like, yeah, just go 15% a year. It's like, so yeah, it's, I think that's the nature though of, I think as an executive leader, I think as an executive leader, the simplicity of tying everything to those two clean numbers provides a real elegance to what you spend your time on as a manager. And you know, when we did our first couple of months, 6 months ago, and our minds were blown by Theory of Constraints, this to me to me now is taking all that excitement we feel, which is what should I work on today? What should I not work on? What fire should I let burn? Why aren't I growing faster? All this different stuff. And now brings it right down into the reality of, uh, of, of influenceable levers that you can drive as an executive.

Mm-hmm.

And your whole team can consolidate around and always make good decisions. Did I make this number go up? No. So what are we doing here? Are you— oh, was it at 70% on-time task completion and you got it to 90? Oh yeah. Good job. Yeah. Great.

Yeah.

So that's, that's why I think I've, I've integrated so much is because I've just been like chewing on it constantly as a model by which I view manage effective management intervention.

I mean, I haven't done it yet, embarrassingly, but it makes me really want to take my 3 businesses I'm involved with and, you know, really map out these 4 numbers for each of them, right? What is the constraint in the property management business, you know, in, in business as usual and in growth? Likewise for media, likewise for Crane.

And, uh, generates maximum profit— profitability. So I just, I just like things that are simplifiers. And this to me, especially in the age of AI where you have access to more primary source data than ever and you could build a dashboard in Claude code in 3 minutes and you're just, you're just diddling yourself, you know? And so, um, so I really like how this cuts through and it really gives, it gives some sort of, uh, legitimacy to a lot of my intuitions.

Correct. I mean, Over the years, I've always like— and I think a lot of entrepreneurs have felt this— you sit down at your desk in the morning and there's a lot of different things you could work on. The obvious one is just start on your emails. Um, they're right there, people are asking questions, and you feel like, I gotta process this, it's just like what I'm supposed to be doing. But there was always an intuition of mine that was like, this isn't great, this is not a great— it's not You know, I, yes, it has to get done, but it's not, it's not ideal. And, um, now we know why. It's because that's neither a constraint nor is it, you know, on-time task completion of non-constrained resources. It's just, it's correspondence. So, ding, you know, but I think we both had intuitions around, correct.

You know, or even the two systems things, business as usual and growth. Like I've informally done, the reason why I took the growth stuff and Kayvon took it was because Bincy's like, bro, I have 100 open hiring requests. Leave me the fuck alone. I'm not going to help you set up your go-to-market.

Right, right.

Like, we, we've been good. I think you, you naturally come by this, but like with most good theories, it can backfit the data, but it also allows us opportunities to intervene, intervene on a go-forward basis, which is what I'm most excited about, which is, am I really like— we're doing some redesigns within our, in our business as usual group. And we're coming up with commission plans and all these different things. And the first thing we did, which was, okay, in this workflow, what is the resource that when maximally utilized, uh, makes us the most money? It was the first thing we did before we started doing anything, because I was like, who do we want to be freaking crushing it? And who do we not care has excess or protective capacity? It was the first thing we did. And I'm like, and it's just clarifying.

What's also interesting is, you know, most business software is not— doesn't report these two numbers anywhere. So it's a bit of a— it's a bit of an effort to pull together on-time task completions or utilization of your constraint. Productivity of your constrained resource requires a little bit of thinking to figure out how you could measure those things, and then putting a system in place so that you can get— so that you could get those two numbers. Um, that are the most important.

Well, the, the other thing I would say that I— and I haven't said this out loud yet, it's been one of those things you think about in the middle of the night— um, is I also think, because I've been thinking a lot about, you know, global talent and agents, which is our— you just resources you use to apply against these to make these numbers move. And what I realized was I said something a little irresponsible a few months ago, which is you can absolutely hire and use resources, whether it's agents or talent, to increase on-time task completion. You can spend time on a non-constraint if it's driving on-time task completion. And spend time or resources or cycles could be, we gotta figure out our accounts receivable because we're not getting the money in the bank. And I know that— no, but it needs to be on-time task. Like, I need to build an agent that helps me collect money faster. That is not a wasted agent. As long as you understand that really what you're trying to do is ultimately increase on-time task completion. It is not a waste of effort. Because I think I'd said kind of like, if you're not hiring against the constraint or, you know, building agents and using technology exclusively against the constraint, it's reckless. But there's a second category, which is on-time task completion of non-constrained resources.

And the reason that matters is if you are sufficiently If you're sufficiently poor at on-time task completion of non-constrained activities, they will become the constraint.

Correct.

And now you're back to a chaotic business, right? Correct. Because if you're— in your accounts receivable example, if you didn't get the money that you should at the right time, now you're going to run out of money. And now all of a sudden money is your constraint, cash is your constraint, and now you're back to a chaotic business.

And, and the reason why this triggered with me is when you talk about software, right? There is absolutely a role for software, but you have to say, does it help answer one of these two questions? It's not just the constraint question, which is actually a good start, which is, does this new technology apply against the constraint? But I can also see, hey, it's taking us 48 hours to get back on tenant questions. And even though that's not my constraint, I, you know, on-time task completion to keep our turn team employed is I need to get these tickets closed within an hour. Yeah, man, let's layer some SaaS against that, or an agent, or whatever.

Well, no, my point is like, I don't know my on-time task completion rate. That's not being reported to me by software that we're using. And so not across the whole company— certain, certain softwares report on-time task completion within that software, but In order to operate your business by these two numbers, you need to know what they are at any given moment. And so I think the first step is standing up a process in your organization to report on these two numbers on some type of regular cadence so that you can understand if you're trending in the right direction.

And I would also argue mapping what are the tasks that need to be completed on time to keep your constraint fed. That's like, oh yeah, because not every one of the things, you know, refilling the fridge does not feed your constraint. But getting the keys made feeds your constraint. So I think also you need to map the kind of value stream of things that must be done on time to keep your constraint maximally productive. Right. So, okay, cool, man. Well, I think this is super dense episode, but I really wanted to do this. We'll do something stupid about, you know, next episode that's like lighter, but this is just such a, as you can tell by the way I talk about it, it's, it's polluted my mind in a very productive way. And it's immediately changing the way that I'm doing stuff.

Well, I'm excited for you to spend some more time with Justin.

And we're gonna hire him, you know, he's got a, he's got a consulting offer, and we're gonna hire him. And the only reason I haven't signed yet is I need to make sure that, like, my executive team has the capacity, because they're going to be the ones mostly working with him, not me.

Yeah.

So really excited to kind of work with them and get to know his team and just harass him with more questions. So, um, cool, man. Okay. Final thoughts I've got. I wanna, I wanna read one thing to end, uh, end the day or end the, the pod. But, um, anything you got, pitches or exciting ideas or anything?

So yeah, I'll tease, I'll tease a little something. Um, I'm addicted to my phone. Mm-hmm. It's the last thing I look at before I go to bed. It's the first thing I look at when I wake up. I pick it up. A billion times throughout the day, even though I have most notifications turned off, even though I deleted TikTok, even though I'm on a news blackout, there's still so much going on with my phone. I mean, I went to meet a friend for lunch the other day and I accidentally forgot my phone in the office and I felt so incredibly uncomfortable not having my phone. Yeah. And that made me uncomfortable. Like the fact that I was that uncomfortable not having my phone. And it really woke me up to how addicted I've become to this rectangle of glass and, you know, silicon wafers and stuff. So I'm just beginning the process to think about what would it mean? What changes would have to happen in my life such that I could not go to bed with my phone next to me? And not in the same room, and not have it with me or near me for at least half of the day. So it's like, but you don't realize you use your phone for like everything. Yeah, calendar, my car key, the time, your car, you know, who— being able to reach an emergency, navigating. Like, it's, it's a kind of a disaster. So I don't know, I'm just, I'm just starting to think.

I have a thought for— I have a thought for you because it reminds me, I don't know why this This weird analogy popped in my head. It had to do with, um, certain eating habits and, uh, about like omega-3s and all this stuff. And it basically was like, look, you shouldn't eat these directly, but what you should do is you should eat a chicken that's eaten them, and you're basically sacrificing the chicken's liver so that you can get like healthy omega-3 levels or something, right? So it's like, what it needs to be is Monica. Monica is your unlock, which is you basically sacrifice Monica's ability to be tethered to a phone. So if anybody needs you, they have that availability, but it filters through Monica and Monica has your landline number and the one way to get in contact with you via your watch. So you have like this sacrificial heat shield that is a person that is still ubiquitously accessible, but will push people to the next day or whatever. And, and so you basically, you have a sacrificial lamb. I actually think is, uh, that's an interesting idea.

I wonder if I could have like a desk, like an old school desk phone installed here in my office and like a beeper so Jim can reach me in an emergency.

Apple Watch. Use an Apple Watch. That's what I do. That's really helped me because I know that my family can get me on my Apple Watch at any time, 24/7, but I can put my phone away. That's, that's been the one thing I've done that's, that's helped. Not like sleep mode in my phone. Cause I just turned sleep mode off. It's like, I want to check Twitter.

It's like, so, so how does that work? You have the cell version of the Apple Watch. And, but couldn't, aren't you just getting like texts and stuff on there?

I don't do business via text, so that's not really an issue for me. I don't do business via text. So everything, all my business stuff is via email or Slack. I, one of the reasons why I hate doing business over text is cuz I can't clean break. Whereas email or Slack I can, but I know that my sister can get me if she, or my Becca can get me if she's locked out. Or something.

See, I— a lot of business buddies, like, all the time though. So you got to get a different—

then what you got to do is you got to get a different number. You got to get a different number that you only give to a few people, including Monica. And you have your work number and then your non-work number, and she knows. And the 3 people that are allowed to call you when you're with your kids are your reachable number.

I like that, because then I can just put my phone in a drawer when I get to work, but— and, and not worry about missing calls, because the people who need to reach me can reach me through Monica or, or through my Apple So this is like my private—

save both of these. If the one doesn't work and you really need me, have this one.

Yeah.

So, okay, I'm going to read this. We'll end with this because it really— it's literally written. I wrote it by hand because I read it every morning to motivate me. And it's from Andrew Carnegie, who I think is like one of the richest people of all time, right?

Mm-hmm.

He said, what I do is get good men as employees and I never give them orders. My directions seldom go beyond suggestions. Here in the morning, I get reports from all of them. Within an hour, I've disposed of everything, sent out all my suggestions. The day's work is done, and I'm ready to go out and enjoy myself.

That's so great.

And I, I have this written on my freaking desk because I think it, it, it represents an aspiration for the quality and the quantity and the team and So if you came in, let's say if you came in and worked for an hour every day, I mean, that would kind of be an increase. Yeah, no, relative to what you're doing now, you read this and you think this is a goal in terms of how little to work, and for me it's actually how much to work. I'm really trying to fill the hour. Really?

Yeah, stretch it out, you know. Yeah, get a cup of coffee, you know.

This— but the idea of never giving orders and giving suggestions the right kinds of people, I am getting reports. I just— there's, there's a lot of wisdom baked in that flow. He's not, not doing anything. He's also— they're giving him reports. Like, there's a lot of little wisdom that I find to be very motivating at this stage of my life. So I'm not doing this, PS, but I aspire to. Not yet. Cool, man. All right, good podcast.