The biggest problem with AI is the difficulty in visualizing what's possible

I didn't see the thing click on. I was in the other window. Welcome back to another episode of Lazy Leverage. I'm Jon Matsner, joining you from Encinitas, California. I'm joined by my partner in crime, my window-fixing, crane-break-taking, goatee-growing heterosexual life partner, Peter S. Lohmann. How are you today, Peter?

I'm doing great, but I can't believe you just said your city on the show, Jon. That's like an OPSEC

It's on my Twitter profile.

Violation. I don't know, man. Okay.

On my Twitter profile. So I did a podcast the episode previous to this. I just did one yesterday and I'm going to, I'm going to give a little, really cool little story here that I remembered as I was doing the intro. I mean, yeah, he's on the podcast. His name's Cam. He's a Crane member and a Sagan member. 300 doors. We're running remotely from right next to me, but it's, I think it's Houston-based units.

Okay.

We had a, we had a great pod yesterday, but he's a fan of the show. And one of the things he said to me He said, I, I don't know if it was a podcast or a newsletter. I think it was podcast. We talked about it. He said, I ran a barnacle scraping contest at my company that said, who can get rid of like a dead process? And I paid a bonus for who found the best one. And I'm like, that's so cool to hear, like—

Barnacle scraping contest.

And it was, it's great. It's like, I gave a couple hundred bucks and said like, who can kill the most forms that we don't use anymore?

Sure.

Simplify the most. And I was like, I love that. Just love that. So, uh, really cool. And he's a crane guy and a, um, uh, second guy too. So

we should do something special for people who are members of both.

Oh, the double. Yeah, it was cool. And I was singing your praises, and I think I actually landed on an interesting and fun conclusion, which was I've always told you that I'm very jealous of— you've got the best—

My tractor.

I'm jealous. I don't know why, that just hit my funny bone. That was really funny. I don't know why.

My tractor's in pieces, by the way. I'm replacing the head gasket right now.

Sorry. That's just funny.

I'm on a timeline because I use it to carry my kids around for Halloween, like in our neighborhood. We have a trailer.

You're really jealous of my merit badges? But I've always been jealous of Crane's one-sentence tagline, which sells the beach, not the plane flight, which is Crane Brakes. Nobody cares about SOPs. Nobody joins a community because of Appfolio API reviews. Everybody joins a community that says, "I'm an operationally intensive business and I want to take a month off."

Yep.

So I've always been jealous of that, and what I realized is there's actually a variation on this that I could use as I make more and try to like really put the benefits up front, which is any company is a remote company if you run it right.

Hmm.

I could I could teach somebody to run a restaurant. Remotely.

Of

course I could. And I actually think the, you know, break the geographic shackles of your business is a similar value proposition to break the time shackles, so to speak.

Oh, definitely. Yeah.

You know, and it's equally, oh my God, I'd love to— I'm not going to sell my HVAC company, but to not have to go in every day and it's still running well, how would I do that? And then it's like, welcome to Sagan. Right. But I realized it's on par with your Crane Break thing.

It, it is. Yeah. It's a similar motion. And we have some Crane members who run remote property management companies. So, yeah.

Yeah. Yeah. So I just, that was those, both those things came up yesterday in the pod. So today we are talking about, uh, a fancy word that I don't really know what it means, but I think it's something that is enormously impactful to anybody listening to this right now, which is change management. Are there synonyms for change management, Peter, that might be less kind of boring and corporate?

Yeah, we're getting a new software. That's the synonym.

But it's not just software, right? It could be a new way of doing business.

Yeah,

right. It's not necessarily software, right? Correct.

Of course, I'm being pithy. But yes.

Cool. So it's— we're doing something new, and it's not the way we used to do

it. Yeah. Yeah, we, we, John, we, we didn't used to do it this way. When I started here, this was not like this.

And it—

I'll tell you, it really used to work good. And ever since we brought in that new thing, you know, I've been trying. And I told them, I told them when we started, I said, listen, okay, so Peter, is that familiar?

Yeah, we're gonna, we're gonna talk through that. And it is more important than ever. And we have some particular challenges as non-tech companies associated with this. First and foremost, in most cases, we are fighting— or not fighting, but we're guiding an in-person workforce that has been doing things a certain way. God forbid we have a bunch of debt on the business. So if Patty, the ops manager, quits because she doesn't like the new whatever, you might miss your loan payment, right? Very different than doing change management in a 23-year-old tech company with a bunch of broccoli-haired kids who can't go fast enough. Agree with kind of like some of our unique challenges as offline businesses?

Well, correct. And like my business, RL Property Management, is 13 years old. So, um, this, the business itself is not only is it not software, but it's been around a while. Um, actually today, um, Tiffany on my team celebrated 11 years with the business.

Wow.

Wow. Yeah, she's at NARPM, uh, NARPM National all week in Vegas. Uh, so shout out to everyone who's, who's out there this week. But yeah, I mean, impact, you know, driving change through an organization is always hard, but it's, it's harder when the organization, organization itself itself is older and has more momentum and more deeply carved channels. Uh, and as well as I think you're right there, you're onto something there, which is like the older your average employee, um, just changes harder as we get older. I'm experiencing that myself already.

And I mean, yeah, but you're not gonna say silly things like, I'm gonna stick with Claude forever. Like you would never say something so, so you're never gonna say I'm done. You would never say something like that.

No, of course not. Always on the bleeding edge. Yeah. Instead, instead of that, because that would be stupid, what I'm going to do instead is I'm going to jump to a new tool every 3 weeks and completely lose all of my context and my memory, all my connections, all my built-in workflows, my bots, and everything. That's definitely a better way to do things.

You know what, Peter, you right now, if anybody, you know, is a longtime podcast listener, you've got a lot of bad energy coming through the pod right now. I'm gonna, I'm gonna sage you a little bit.

Okay.

I'm gonna reset, I'm gonna reset your vibes so that you can bring a new energy because you've had some real negative energy. So I just saged you.

I don't know if that's negative energy. That's just, uh,

it's just Peter energy. Um, but the— so like you say change management's hard and then you say change management in an offline business is hard. And then you say change management in an offline business that's been around for a while is hard. Then you say Or harder. Then you say change management with those things, plus a non-technical workforce is harder. And then last but not least, the absolute hardest is all of those things, plus I just bought the business, so I don't know what the F I'm talking about. Or maybe I do, maybe I don't, but everybody thinks I don't know what the F I'm talking about, and I have debt. You take all 6 of those and you put all those in a freaking cocktail, and you understand why the idea of Buying a boring business and adding AI is a lift. Agree?

A fantasy. Yeah, you shouldn't— I don't think you should buy a business and immediately start trying to change it because you don't even understand what's working in the first place. It's a Chesterton's Fence situation.

We have flirted and talked implicitly in many of our pods about change management stuff, right? So we're going to probably talk— you already mentioned one. I have Stories, and you have stories. Like one of the first times I knew I fell in love with Peter was when he when he wrote a little phrase called "This process has been deprecated." So we will we will be referencing things we've talked about before. For longtime listeners, you're going to hear them again. I'm sorry, but I think when you take those six things or five things that I listed: offline business, older workforce, you don't really know the industry because you bought it. You have some debt. Oh, P.S. The nature of the changes is dynamic as well because the changes with ChatGPT 3.5 are very different than Fable or Grokbot. And so not only— you're basically— nothing is held in constant, and you're gonna walk into that moving company and say, things are going to be different around here. And so I think what we're going to talk about is— I was a history major. It was one of my majors. And one of the best lines about history is that history doesn't repeat itself, but it rhymes.

Mm-hmm.

And if you study, I think that's Mark Twain. If you study how Peter rolled out Notion successfully or an e-sign process or how I took my old school Hispanic crew lead and got him to start loading the truck using the QR code thing, not the, essentially To some degree, it all kind of tastes like chicken, right? Meaning it's all kind— again, it's not precisely the same, but you can learn a ton by studying successes and failures of ERP implementation or digitization.

I would love— yeah, you're getting right into my area of interest here. I would love to have someone on the pod who was around for like the rollout of email. In businesses, or like the switch where it was like all of a sudden everybody had a computer on their desk where they didn't used to.

Yeah.

Or like, there's been so many of these, like the broad availability of the internet and web-based applications versus like servers, right? When I started in the workforce as an engineer, there was a server room.

Yeah.

And there was like all of these servers. It was loud. It was cold in there. And it was like, okay, we're rebooting the server. Like, your email's gonna go down, your Outlook's gonna go down till the server reboots. And, uh, now of course everything's web-based. I've never had a server in my life. I'm 20 years in the business. So there's just— and it's annoying because I do think we— I feel like every generation has to relearn this. Like, if we could go back and talk to those people, they'd be like, oh yeah, let me tell you how to run like a technological change management process. Like, Here's the first thing, here's the second thing, here's lessons learned. Because here we are all trying to implement AI in our business. It's the same story. It's just like I said, it doesn't repeat, but it rhymes.

And I think it's— I'll say, I'll give you some good news here. The first thing is, I think a little bit of it is kind of the circle of life. It's the arrogance of youth, which is totally different. And then you read something about, like, the guy who like deployed electricity instead of steam, and you're like, bro, if I just find replace steam for Grokbot.

Yes,

that's the first thing, which is I think there's a little bit of the kind of like, well, this is— John, this is, this is different than—

This is so different. None of the old rules apply.

Bro, this is exactly the same. That's the first thing. Um, the second thing is, Peter, and I am a student, as I know you are, of the game. We have this incredible thing called books. And in those books, you can read from people who rode this wave and have a tremendous amount of captured knowledge. And so a lot of the stuff I'm going to be talking about today is from a very specific book, which I think we did a whole episode on, but is from Eli Goldratt. And he published it, I think, in 2000. And most of it is about why your ERP system isn't going to make you more money.

Yeah.

And what to do instead. And it is— I'm hesitant to even talk about it because it is so good at focusing. But the fact is, is I'm not worried about people doing this because it takes discipline and heart. So my point being is, as much as it would be nice to sit down to Goldratt and harass him with questions or whatever, we have his books and his literature. And many of these folks wrote extensively about The mistakes they made and they shouldn't have given computers to everybody and all that kind of stuff. So I would say the answer you're looking for lies in history.

Well, we're gonna bring that history to life on today's show and we're going to translate and modernize—

I'm really liking your mood today. It's like angry, it's angry, it's sarcastic. It's— I

don't know, I'm just feeding off your energy, man.

I think the sage helped.

Yeah. Okay.

Well,

let's get into some practical stuff. So let's talk about what we're doing today or present day that's working as we drive change across multiple businesses. Um, you mentioned the processes deprecated thing. Let me just tell that story real quick.

Yeah, it's one of my faves. Yeah.

So like 6 years ago, 5, 6 years ago, I discovered Notion. And as soon as I played with the product, I realized, oh, this is the right answer for a property management business, or probably most small businesses. It's a combination company wiki, employee handbook, list of policies, like all of these things that were scattered all over my office and across Google Drive and across Dropbox, various emails, printed binders, onboarding checklists, all this stuff. It can all be in one nice digital version. that's easy for anybody to update and can be like a central single source of truth. So I started moving stuff into Notion because before AI, I had to do it all by hand like an animal. I was like copy pasting Word documents. The formatting would be all messed up. I'd be like backspace, backspace to like remove all the extra spaces and stuff. And eventually got that thing really well organized. And throughout the process of doing this, I was already thinking in the back of my head, How am I going to get everybody to use this? So of course I did the thing that everybody does, which is I wrote this big long email. We're now using Notion. Here's the link. I created a login for everybody. Please log in. Make sure you, you know, all information is in Notion now. And of course, instantly nothing happened and everybody just kept using the old documents, which, uh, were quickly becoming out of date because in the process of moving all my documents into Notion, I would give them a little one-pass. And I would update and correct and make any fix, remove old processes. And like I was kind of like tuning things up as I moved them into Notion. And so very quickly I realized what I need to do is make sure people aren't using the old documents. And so I literally would at the top of the document in like size 72 red font, I would write, this process has been deprecated, see Notion, and I would drop a link to the current version, which was in Notion, like a direct link to the Notion page. I would save the document and then I would rename it. I would, I think I put like an exclamation point at the beginning of it to like signify that that one had been migrated over. So whenever someone would open that document out of habit, they would see, oh shoot, let me go to Notion. And the link would be right there. It would be really convenient. So that's the story, at least as I remember it, that enthralled you and kicked off our

Friendship. And I— yeah, well, actually, Notion was what first kicked off our friendship because I was also a Notion obsessive 6 years ago.

Yep.

And I saw your Notion stuff and I was like, okay, I should be friends with this guy. But the— the— you actually started— we started with the end, which is when you finally get to the point where you say no more. But I think we should start at the beginning. Right. I think we should start at the beginning, which is, which is there's a couple framing atmospherics comments that I think are important. Number one, you have to recognize that your organization has a finite change budget.

Yes.

It has a finite change budget. And in your mind, you might be like, oh, it's cool. Here, just try Grokbot. If it doesn't work, it's no big deal. It's like, Bro, your bank balance

in the bank, the bank balance is the analogy I like the best here, which is every day that goes by in your business that you change nothing, your balance goes up a little bit. It's like earning interest. You're getting a little deposit in terms of your goodwill with your team. And when you push through a big change, whether that's a new software, a new leader in the business, a reorg, a new physical office, Whatever, you've now making a withdrawal from your balance, your goodwill balance with your team. And you can only make those withdrawals every so often, or you're gonna go into the negative and then you're gonna have like a revolt basically. Yeah. And you're gonna lose the authority to make future changes. They're just gonna start to ignore you cuz they're gonna say, this is too much. And correct.

They're gonna fuzz out. They're just gonna fuzz out. They're gonna say, you cannot send me another half-built Replit tool, bro. I have a job. Right. Now, there's one other really important part about that bank balance that I think I've now crossed this at Sagan, but I was balancing between those 2 things. The best way to build that balance is to give them something that dramatically makes their day-to-day life better. Totally. So you add a dollar every day and every change you do takes away a dollar. But if you say, Guys, you know how we used to have to reconcile by hand the trust account that used to be in four different places and it took you seven days? It's a click now, and you just added fifty dollars. Like, like because now they're like, oh my God! I have confidence that Peter, even if I can't see where we're going, has he's proven to me that sometimes I have to kind of like press the I believe button and walk down this path, even if I'm a little skeptical about this thing called Notion or this thing called so the. The best way to build that bank balance is deploy technology that makes their life better. And I would argue, I want to play around with this a little bit, but I would argue that it's, and I was specific, it's not something that makes the company more money. It's something that makes their life better. Because you're doing it to make more money, but it needs to make their life better or remove a butt pain. Right? Like you have to, they have to be, they have to get a significant benefit. From the technology.

Yeah, I think a really important skill as a leader is it's like theory of mind stuff. You need to be able to put yourself in the mind of somebody who works for you.

Yeah.

What do they actually care about? What is their day-to-day life like? Who did they speak with today? You know, your customers or your vendors? How long is their commute? You know, what's going on with their family? Like, think about— and it doesn't feel like a specific team member— when you, when you're addressing your team, You need to speak with a different frame than you would speaking on a show like this or speaking to investors or speaking to your business partner. And I see that missed too much. If you want to like quickly alienate your team, just tell them a bunch of things that don't impact their life at all. Like,

just— When we, when we talk about these 4 steps, the key thing here, and you start at the end, which was the like, okay, this is all proven, it all works. I'm deprecating the old system, which is actually a very important step, which we're going to talk about. But that's the last step. You don't just start shutting off their core workflow because you just signed up for Notion and a day later and it's half— Sure, that's true. What I mean is you started at the end, which is actually a very important step that many people don't do. But at the beginning, you're just like, guys, I've been using Notion. We're kind of prototyping it right now over in the customer service team. It's just a great way to not have to look for things in different places. If any of you really want to use it, I'll give you a seat, but heads up, guys, in the coming days and weeks as we get our hands around this, you can expect to see more Notion at RL Prod. Like, that's the first thing you say. That's

right. I agree completely. And has the added benefit of being true of you're testing it out. Like, don't switch everything over in one day, but like, you should pilot it. You should deploy it to a department, get feedback from the team, explore, okay, how should this actually be organized? what actually belongs in here, what doesn't. Before we move on from the bank balance thing, though, I want to give like one or two tips on how to add to that bank account balance too.

Sure.

I think it's really important. One way you can do this is by circling back to previous decisions that you made that subtracted from the bank balance and like follow up on them. So like at a company meeting at an all-hands, Once in a while I like to say, now some of you were here and you may remember 4 years ago we moved from Process Street to LeadSimple. You guys remember that? Raise your hand if you remember. Oh, I remember that. Yeah. And remember how like it was really hard and like took this long time to figure out this new system and like there was all these issues in the beginning. You guys remember that? Oh yeah. Remember we had that thing? Oh yeah. Yeah. And then you say, well, let me bring you to the present day.

Remember how Bob was really skeptical and now Bob's obsessed with that? Right. Yeah.

You know, today we're running 25 different processes in LeadSimple. We ran 20,000 instances through, through the system in the last year. Um, 90% of our team is using it every day. Like, and you kind of like, and then everyone's kind of thinking, oh yeah, I do remember that. Yeah, I guess that did go pretty good. Like, yeah, I didn't even realize, but now it's like all we use for that now. And you're sort of re— you're resetting. Like, you gotta remind them, like, sometimes I'm gonna come through with these decisions, but they normally do work out. Right. And it's not a, It's not a problem to remind people of that. Now maybe leave out the ones that didn't go so good because we've all made some mistakes along those lines. Okay, now the second tip I have for adding to this bank balance is you you want to like tell a story and set context around these things, and the further back you can go, the better. Ideally, every new change you make at the business is going to start with something like now when Adam and I started this business in 2013, and it was Jesse and I. We were able to use pen and paper to manage our turns. Yeah. And then some of you may remember around 2019, we started using, you know, an Excel document for that. Who remembers that? Oh yeah, I remember that was crazy. And you have like a screenshot of it. It's the best. I love doing this. And then, but the problem, if you remember there, was we couldn't have multiple people editing and you'd end up with these conflicted copies in Dropbox. That was a big problem. Who had a problem with that? Oh yeah, I had a problem with that. And then do you remember in 2022 we moved to Google Sheets. Yes. And Google Sheets was great. And you have a screenshot of like your first version of Google Sheets and you're like, okay. And Google Sheets was awesome because it solved this problem, this problem, this problem. And it really let the team supercharge our turns and our turn time actually went down after we migrated to Google Sheets. Okay. So everyone's like getting really invested in the story. And then, and then you go, okay. And I want to bring you to the present day. We're still running on Google Sheets. However, and then you list the problems that you're having with Google Sheets. And then you say, so what I haven't told you all, but what I've been doing is for the last 6 months, I've been testing 5 different pieces of software to manage our turns to replace Google Sheets. And first I thought LeadSimple was gonna be the right answer. So we did a process in LeadSimple and you tell a whole story, right? About how you tried all these different softwares. And then you say, but I have great news. I found the perfect solution. And then you tell a story about the perfect solution, how it solves the problems that you have. And so what we're gonna be doing now is ba ba ba ba ba. And then you say what's going to happen. So the point is you tell a story and you provide context. When you do that, you demonstrate authority and you, you get buy-in cuz people are like, they're invested. They're like, okay, yeah, that all kind of fits together and makes sense. How different is that from just coming in and saying, starting tomorrow, you're all gonna have a login to new software company. They're like, what? Why? I don't, it works fine. I don't, what, what are you even talking about? Right? So

the other, the other buy-in thing that I'm very guilty of that I've gotten better about, which is I think that the more, the more junior the employee, the later they should know about it, the more formed it should be. So when I'm in the, I'm like, guys, I think we should use this new agent for scheduling interviews. I would never say that to like a frontline recruiter who's just like elbow deep in, because they're gonna be like, okay, so does that mean I should do that today? Like what? Like it can But I go to Soph, our head of recruitment, or Anya, and I'm like, this process pisses me off. I think we need some tech here. What do you guys think? And I'm uninformed with them, and I'm like, because they know that, oh, that's just John like working through, hey, I'm thinking about when I'm thinking about switching everybody to Notion. So would that freak everyone? And she's like, one thing, don't do that. And so the more junior I get, basically the deeper into the process I need to be. But I'm slowly, I'm like, I'm soft pitching my senior leaders because it's like, John, you don't realize that we use Google Sheets for this. You can't lock everybody out of Google Sheets. I'm like, really glad. Thank you, Soph. Thanks for the heads up. And then I kind of like work my way deeper with more authority. Sure. So that's definitely like a bank account thing, which is getting buy-in or early kind of Sent, uh, like sensitivity check with senior leaders can help get them on your side that when you need to be like, hey man, we gotta get everybody outta Google Sheets, right? By the way, as you're listening to this, guys, just swap AI for every single proper noun being used here, right? Like, so if you're wondering,

like, we trust our audience is smart enough to make the—

Yeah, just do find replace on the transcript and write AI agent or AI workflow.

Yeah,

because it's exactly the same.

The leadership team is— you're right. And most changes, by the time you get to the point where you have a leadership team in your business, most changes should run through that team. And you should kind of workshop it and get their input. And like, it should sort of be a team decision. However, there is a time and a place for you to what I call pull out the sword as the founder CEO and say, go to

the— go to the—

this is happening. Because once in a while, there is a team that—

there is—

Now that you make a huge withdrawal on the bank balance when you do that. And but I think it's okay to do that like once a year, because there is going to be times where like, you as the leader or founder, you, you can see further in the future than anybody else. And you have the global context of your business more than anybody, any other one person on your team. And so there is going to be times where you're at like a disagreement with your leadership team, or they're just not getting it. And you just need to be like, to take that sword out of the, the scabbard and say, this is happening now. But if you try and do that every month, you're gonna completely lose.

Yeah. And, and, and I think, and I think, and this is a whole nother topic, but part of the, part of the challenge with that, depending on the pace of your organization, you have to, as you said, have theory of mind. Some of that I have said, I said, Soph, when we first started Sagan 3 years ago, who was our best recruiter? And she gave a name. And I said, because they were really good at Boolean searching our ATS. She was really good at handcrafting Boolean searching. And now I'm like, how dare you do that? An agent can do— and so, you know, I think that's a big part of it. When the pace of change is that rapid, which in some categories it needs to be, in others it doesn't, to some degree I say, Soph, I can't— you have a full-time job and you upgrading your context enough to see where we're going is— I wake up in the middle of the night and I think about agents and you think about it 30 minutes once a week. I need you to put a little bit of trust in my hands and I'm going to get your input. But if I told you the differences between N8N in the cloud and Fable versus a cursor agent, you'd go cross-eyed. But that's actually determinative on how we end up sequencing this. So I just need you to let me know, like— So like, there's also when it's that rapid, like there's a little bit of I'm in charge because I know where we're

going.

Totally. Right. You have to, you have to balance it. You have to be self-aware of that. Yeah.

And I see, I see entrepreneurs, they go to the extremes on the wrong way on either way. They either never pull the sword out and they just kind of like, well, the team said we can't do it. And

correct.

And they never exert that authority or they're trying to like whip everybody every week. We're doing this, we're doing this, we're doing this, we're doing this. You got to moderate it.

Yeah, I love— and this is exactly what I wanted this conversation to be, which is it's just kind of like a freeform in the trenches about pushing change in a small business, which you and I have been doing. So I love that. Okay. Um, go ahead.

Well, I, I think what I've really noticed that since my company has crossed, call it 30 employees, which happened several years back, it's become much more daunting. The, when I was still 40 hours a week in RL Property Management and we were 20 to 25 people, I was at every meeting. I ran everything. I, you know, I would execute change all the time. Not all the time, but like pretty frequently. I was very comfortable with it. I wasn't afraid to make a change or try, you know, try something new. Since I've stepped back from the business and since it has crossed that 30-employee threshold, I will admit I've become a lot more fearful about it, and I think I've lost a little bit of my edge, lost a little bit of my skillset when it comes to change management lately. When I think about trying to drive change through this organization, RL Property Management, 9 times outta 10, I end up just thinking, nah, let's just leave it alone.

Yeah.

Uh, and I actually don't think that's great. I think I'm, I think I've swung too far. In the like stop changing things side. Uh, and I believe if it, if it went on for too long, it could, there could be problems there. Now I've put some things in place. You know, Brandon is now elevated to president at the company. He's empowered to make change and he is effective at driving change. He is in every meeting.

Yeah.

Um, he does have buy-in of the leadership team, but there's a real sense, like when you stacked up all the problems of like company's been around for a while, long-tenured employees, offline business. There's a certain point where you're like, I think it'd be easier to just start over. Like just start a new company. Uh, it's like a guilty pleasure to think about like, well, what if we just started another management company? And then that one we'd start with agents and like, I don't know.

I mean, I have some private comments about that that I won't share because it's, we've definitely learned some best practices on specifically that, but what we figured out on that, we can talk about offline. Um, I do want to talk— okay, so anything more as this kind of like framing or that kind of thing? Okay. So I'm looking this up. I had the sheet up and then I lost it. Okay. The first thing that I think is really important is technology is not a strategy.

Technology is not a game. Technology is downstream of process, which is downstream of product.

Yeah, or that's another way to say it. But technology is not I've been— I'm trying to like be more— so I'm doing this because we've been cutting up the podcast into short forms. I'm gonna do a short-form clip right now. You ready, Peter?

Yeah, let's do it.

All right. You want to hear it? All right. We're gonna do it live. So long-form listeners are gonna hear John's short-form verse. Your company is so broken that if I gave you artificial general intelligence, you still could not make one more dollar. Here's why. Was that good short? Yeah. Perfect. Okay. But what I mean is more technology is like putting more gas into a car that doesn't have a map. So I think sometimes people think they see on the internet and they're just like, if I just add technology, I'm going to— and not even talking about individual productivity, I'm talking about company productivity, which is a totally— that's a multivariable equation. We're talking about throughput. So even just giving individual increased productivity is tricky. And the fact is, is that that's a local optima. And even getting company RL property management increasing its throughput has almost nothing to do with technology. Sorry. Technology is, well, that's the name of the Goldratt book, which I'm talking about, which is Necessary, Not Sufficient, which is you must use technology to innovate, but it is not sufficient. And then he talks about how to fix that. But that's literally the name of his book, which is Technology Is Necessary, but It Is Not Sufficient to Harvest Productivity Gains from Innovation. That's what the book's about.

You know, my intuition is that our audience gets that. They get that they can't just indiscriminately throw technology into a business.

How many of our audience have Vibe-built tools and are sending them to their team? And if I went and talked to their ops manager, they go, every time I see Slack ping with a Claude link from Peter or a Replit link or a forward from Twitter saying we should do this, I want to jump off a bridge. My team certainly felt like that. I stopped. You— I think most of them still do that.

Well, it— I— most of them maybe still do it, but I think what they would love to hear from us is what should we do instead?

Okay, cool. So we've talked about this before, but now we've given a ton of context and there's all sorts of fun secondary things here that we're going to spin off into. The first thing There's four steps, or there's really I'm gonna say two steps. Just whatever. There's really two steps. When I really boiled this that whole book down, and we could get very complicated about this. I think that there's really two steps or three steps. Number one, and we're gonna skip this one. You have to. I know I'm going back and forth. You have to make sure you're applying it to the right part of your business.

Mm-hmm.

It like hey, we lost an owner investor because we didn't have one source of truth for the status of his home. Therefore, Notion will help our. churn number. Awesome use of technology, Peter. Churn number is one of your Q2 rocks. Not, wouldn't it be so great if we could publish a blog post using Claude code every day? It's like, wrong part of your business. So that's the first thing you have to say when you think about innovation is, are you doing it on the right part of the business? Should you even do it at all? Especially given that you have a finite change budget.

Yep.

Comments?

I agree with all that. Now, The hard part is, you know, what's the right part of your business? I think we've covered a lot of that in prior episodes. Theory of constraint.

Yep.

Um, understanding what fires to let burn.

Yep. Fix what bugs you. Yeah. All that kind of stuff. Okay. So that's the first thing. Okay. Second thing, you have to say, given that this part of my business was broken or was the slowest part or was the constraint or whatever it is, What was it? What were the old rules? Rules—I'm using a word here—written or non-written that we adopted to accommodate that limitation? So we used to schedule closings in person on Fridays and only on Fridays because we had we had them come into the office. Because and Tammy was the one who did our.

She only worked on Wednesdays.

Correct.

Yep.

Correct.

Yeah.

Whatever. We just bought DocuSign, and the old rule was we only did lease signings on Fridays because of all this old stuff that used to exist. So you have to very deliberately say, "Well, we used to have to have a meeting with our owner investors to tell them this, and now that we have Notion, we just make the page public and text it to." Well, actually, that's the new way. But we used to have meetings with owners in order to— or we used to be organized as departmental, not pod, because departmental, we could keep up to date with the information. There's all these, these shadow decisions and rules that are made because of a particular constraint or a particular limitation.

Yeah, I find this to be Such a nuanced, uh, concept, both to try to explain it as well as to try to apply it. Um, it's very, very difficult to come into a business that's been operating for a while, look at a process, figure out all the inputs, all the outputs, all the assumptions, all the limitations, and then like bring in new technology and improve it. It's very, very hard to do that. Because there's so many interlocking things and unforeseen consequences. And, um, it's easier when it's like a physical factory floor and you're like, okay, the machine moves over here and why is it curving down over there? Oh, because there used to be a big machine blocking this hallway. That machine is no longer there, so we can actually turn here and save 20% on the conveyor belt. Or like, for some reason, like physically picturing the flow of work through a factory. I feel like would— is so much easier. But when it's all knowledge work, man, it's, it's really hard to like tease out the assumptions that are baked into these flows and figure out which of them are based on old ways of doing that are no longer relevant versus which of them are accommodating a thing that happens 5% of the time. But when it does happen, it's catastrophic. And so no, we actually don't effing wanna change the way this thing is happening.

And it's real work, right? It's the old line where it's like, things should be as simple as possible, but no simpler. It's like, I'm sorry. I know you wish that I told you you could just install Grokbot and make more money, but you you need to put in the work. If you have an hour to solve a problem, spend fifty minutes defining it. And so it's like you're you're right. I wish you didn't have to do this. I I wish that you could just hire somebody or build an agent or install a Claude code plugin, and it was done for you. But I live in the real world, and history. And all of these different things, right, are hard. And that's, you know, that's why it's called work. So you're right, you're completely right. But, but smoking out those assumptions and those rules is the job.

You're right.

That's the job, not vibe coding stuff in Claude on the weekends.

That's a great point. And it's, it's why we, quote, make the big bucks, right, is Correct. You know, it's why if we ever sell our business, we have a big exit or we, you know, we can, sky's the limit in terms of income as a business owner. But these are the hard things. These, these are the things that you, in many cases as the business owner, are gonna be the only person in your business who has the knowledge, the background, the context, the history to come in and say, we don't actually need to schedule a lease signing. That was a carryover from when we used to do them in person. Instead, you just send the document for signature as soon as it's ready. Like, you don't need to schedule it.

And, and that's where it gets— so we're naturally going to the next step, right? Uh, oh, sorry, one thing I was gonna say about that. Uh, oftentimes one of the big unblocks for me, and I know you've done this, I've done this historically a ton, is visualizing digital workflows. So when you talk about why this is in a manufacturing facility, you go, look, I need some pretty shapes here. A square is a decision, a diamond. That's right. Because what does it do? It lets you look at it and be like, why do we go back to the little diamond after they do? Why is there 4 days?

100%.

The whole process is 11 days and 4 days is waiting for a Friday. So, so making some of these white-collar workflows visual, I think, is tremendously valuable as I'm looking at process redesign.

And very fun.

You like it?

I love it.

I mean, dude, you're a fucking systems engineer, so fuck off.

Yeah, yeah. So business process design, visualizing business processes. There's a whole visual language here with like,

yeah,

pill shapes and circles and diamonds and squares.

That's the only one I know is a diamond.

Yeah, that's right. And it's, you know, it's very fun. You have these swim lanes where it's like Harry, Susie, Jeff, Tom, and like it bounces from one and you're like, so wait, this one process has 4 different people that have to touch it? Like, can we get that down to 2? And

Dude, that would be— that's a good pod, is like, I would love— and it's going to take a little bit of work, but like, or you could probably have your Claude do the research and then you just present it. I would love if you did like 5 concepts from system engineering that every business owner needs to know.

Oh, that's a great YouTube. Oh my God, my YouTube guy's going to love that title. But

it's true because like, I want to learn like 5 tricks from system engineering that are going to save you money as a business owner. Like, Because it's true, because you're like, with your background, like, I want to hear, like, there's this thing called an orchestrator. An orchestrator is simply a choice-based model that chooses where you have spare capacity and dynamically routes. I'm like, oh my God.

I know you're into that stuff.

Dude, I love that stuff. You know that.

Early in the days with LeadSimple, before I was even like an investor or anything, I emailed their, the co-founder at one point and I was like, I was like, I really think that your process system could actually take some learnings from like systems engineering where we have like a closed loop. And because that will make sure that would never accidentally get into a state where it couldn't get out of. And like, I had this whole email.

You're teasing me right now. I know. Yeah.

I'll find the email.

You're teasing me right now. This isn't fair.

Yeah.

This is state machine.

The title of the email was State Machine. I was like, I think we could design— I think we could redesign like the— we could turn this into a state machine. So it would automatically advance, but it would never get into a state where it got stuck. Like there's a whole theory of state machines.

Dude, this is just, this is just like, this is just heaven. I want to pour myself a cocktail and listen. So, okay. So by the way, yeah, good YouTube video. And I think good pod too. Okay. So yeah, visualizing a system, making it visual, I think is a great step as you, especially when you start doing real redesign. Which is the next step, which is okay. Now that I've applied innovation to this constraint, what's the rule change? That's the rule. What's the rule change? And then I'm going to add a little bonus step. But the rule change is we now send e-signature documents within fifteen minutes of sign of the call. Like that's a rule change. We don't wait for Fridays. We do it in fifteen minutes.

Mm-hmm.

That's it. The rule change could be, we used to take— it's oftentimes changing the time or changing the quality. So the last step is, okay, you have to say, you have to make sure you're applying it to the right part of the business. You have to say, how did we used to operate this bad or unoptimized part of the business? And then what's the new way we're going to operate this new, better synergized, optimized part of the business? I mean, that's really stripping everything down. I mean, that's, you know, go ahead.

Just do that and

I'll send my invoice. Yeah. The last thing, do you want to comment on that, which is kind of like resetting the bar?

No.

Okay. The last piece that I'll say that is not in Goldratt, Goldratt was a physicist. I don't believe he talks about this, but it's hugely important. It was my favorite part of your system, which most people never get to, which is you need to become a dick about the new rule. You need to basically raise the bar and say, guys, I gave you 60 days, we integrated your feedback. Everything is here in one click in Notion, everything's alphabetized. Betty, I love you. But if you keep doing stuff in a spreadsheet, I'm going to give you a warning. And then you do not have a home at RL because you doing it the old way creates work for five other people, and we are now all in Notion. And I love you, and I'm happy to sit down with you and train you again. But if you don't get with the new program, hasta la vista, baby.

So I've got a couple thoughts on this. This is again a situation where I feel like business owners go too far in one direction or the other. They either go too far in the sense of. They just mandate the new system. They ignore all feedback. They ignore all complaints. They plow ahead. Or they listen to every single possible person who has an issue with it. They keep pushing and postponing the date of implementation. They keep accommodating and allowing folks to use the old system. There's— it's the middle ground again. And when you have somebody who's resisting a new system or a new process or a change, I do think it's really important that you listen, you actively listen, and there's 15 billion podcasts on the topic of active listening. So I'm not gonna reiterate that here, but you need to listen to them and you need to hear what they're actually saying. And you need to do it with a curious mind. You need to ask follow-up questions and questions that actually push back on the assumptions inherent on what they're saying. So a lot of times, for example, when I'm talking to someone about implementing LeadSimple, They'll say, well, my team, we tried LeadSimple. However, my team said it's just a whole bunch of extra clicking around for stuff they're already doing. Okay. And maybe this is similar to other rollouts people have tried to do. So what you have to do though, is you have to figure out what is really underneath that. Are they using another similar system? Are they running everything from memory? Are they checking stuff off in a Google Sheet you didn't know about? What do you mean it's extra clicking? And the second part of that you need to understand is if this, if the new tool or new system is great, it should save them time. This is back to stuff you were saying at the beginning of the show. It should be easier for them. It should not introduce extra clicking. Now, if they've been doing it for 3 years and they've got the whole system memorized, I'm sorry. Yes, there may actually be a little bit of extra clicking, but ideally it would be offset with things that are now automated. So for example, instead of drafting an email and sending it, All you have to do is check off a box in LeadSimple and it fires automatically. So yes, there's some extra clicking on some other things, but the trade-off is 50% of the tasks you're doing manually are now automated. So you as the owner of the system, of the change or of the system, you have to both listen to the people who have complaints while at the same time knowing enough about the system that you can gently push back and incorporate, incorporate what they're saying to make it better. While at the same time, once you've done all of that, you now say, we've implemented everything you addressed has been— everything you brought to us has been addressed. And we are now moving forward with this system. And it's like this delicate balance you got to get right. But again, you can't go too far on one side or the other.

Lots of secondary things here. The that are all non-technology that I've experienced. One of the best ways that I've seen this happen because it's not always true that they're going to have less clicks. It might be you need to do more, but it now lets us skip a process. It lets me consolidate a different department because you spend more time up front doing. more input so that we don't have to correct it in 2 months, which, like, so it's not always like, sometimes it'll make their job easier, but not always.

Sure.

And so one of the best ways, and I learned this from my dad, I'm sure you have people in your company, you've met my dad, and then my grandpa who worked for my dad, like my dad worked for me, and my dad used to tell a story about my grandpa, which I think My grandpa was like me, so he was the nuts one, which was he had like a business partner or associate who was always skeptical of everything. They'd be like, that'll never work. You can't sell an ad for $500 over the phone. You got to see him in person. So what he would do before he proposed anything is he would just go sell one. And then when he proposed the idea, they'd be like, that won't work. He's like, I already did it.

Because

he's just like, he knew what the guy was gonna say. And similarly, if you have a clear objective of increased velocity or increased quality, I say, I can say something to the degree, and now I'm saying this kind of tongue in cheek, but it's something like, Betty, Mrs. Skeptic, Bob, Mr. Skeptic, as long as the way you're doing it now can, uh, can retrieve accurate customer information in 30 seconds and is searchable, You can do whatever you'd like. Well, I can't do that in 30 seconds. It's like, let me introduce this thing called Notion.

Yeah.

It's right here. So it's almost like I want to like say, look, look, I don't— maybe your system's better, but I can produce a lease signature, you know, whatever it is. And it's like the new standard at RL Property Management is not new Notion. It's that we send e-signatures out within 30 minutes and they're signed within a day. And to some— because what that does intrinsically is put the benefit forward of the innovation, which is, bro, this takes you 5 days and you have to have 3 meetings if you don't use Notion.

Yeah.

So it kind of like— I've done that several times. Just sure, maybe the old system's better. Maybe I missed something. You can query our entire candidate database. From Slack and get me ready to present candidates. And okay, show me. We'll race, right? Like we'll do the Pepsi challenge. Who has the better presentations? It's like, okay, that's what I thought. Come on in. The water's warm. And then I invite them to come into the new way of doing business.

Yeah.

So that's great. You know, like that's and that's like a very soft thing. But it's like you and I both. There's a great line, and I've mentioned it before on the podcast from Saul Alinsky in Rules for Radicals. which is— he basically was like a labor organizer, like communist type in the '20s and '30s in the US. And the first line of the book, I'll butcher it a little bit, but effectively says, as organizers, we must start with the way the world is, not as it should be.

Yeah.

And it's like, as guys running non-tech companies, making payroll, dealing with human beings who are not, you know, huffing Grokbot, we must start with the way our organizations are, not as they should be. You're right. You should be able to just write a memo and everybody switch to Grokbot. And then— but Bro, I start with the way the world is, not as it should be. And the way the world is, is you have to do these things like bank account and change management and deprecating old systems and changing rule sets and making public successes. And the first time somebody uses the new thing successfully, make a huge deal out of it and give them a bonus and say, we just saved a churn because of Notion. All of those soft things are us dealing with the way our businesses are, not as they should be. And we are constantly in a state of trying to meet the way a business is versus the way it should be dealing with the realities of an ever-changing series of complexities.

Yeah. I gotta wrap, but I wanna mention that change management is sales. Everything is sales and change management is sales. You're selling your team on a different way of doing things and all of the same psychological tools or psychological knowledge of human nature applies. Right? What's in it for me? How can I make this fast and easy? What's the risk? What does this mean for me and my career? You know, all of those things apply. So you need to address those concerns or those, um, what do they call it in the sales?

Objections.

You need to address those in your

relationship with sales.

Yeah.

Yeah. We just take quarters off where we don't do sales anymore. What's that thing called? An objection?

You know, Crane does twice a year, so it's been— I'm

a bit rusty on this thing called— so what do you do at the end? You ask them for money? Oh, you don't just— oh, they don't just sign? Oh, that's interesting. You know, but I will, I will, I will close on your point by, by continuing it, which is I very often will say to my team, I am trying to sell you on why we should be using this new thing. And I will literally say, I recognize that you don't want to do it, but can you let me try to sell you on why Notion is going to make your life easier, Miss Head of Recruitment? And I will literally say, I'm going to sell you. And, you know, and it's true. I'm trying to sell her to say, like, I need you enthusiastic on this because if you're not enthusiastic, I'm not gonna be able to loop in the recruiters. So I got to convince you first that this is going to make our lives easier and let us get better outcomes for Totally.

All right, man.

Crane window's closed?

It's closed. See you in the spring.

So sorry. All right, well, uh, thanks everybody. Uh, remember to like, subscribe, and