warfighting relation to running a business

Small Business Operations Podcast. I'm joined here by my trombone playing, pin wearing, keynote giving heterosexual life partner, Peter S. Lohmann, fresh off the back of broker owner, broker owner, broker owner in New Orleans on his way to LeadSimple. The man just is a traveling PM spokesperson. Peter, how are you today?

I'm doing well, John. I'm back from a couple of weeks of travel. Feels good to be in the office for a week.

I feel like I would love when you're speaking at these conferences to be your hype man. You know how comedians have a warmup act?

Yeah.

I'd love to come on and be like, guys, he's going to be wearing glasses. He'll probably have a blazer on, but I promise he's worth listening to, you know? And I could just kind of like get the crowd going.

Yeah. Yeah.

Like a t-shirt cannon. And then you could talk about, you know, uh, task maps or something.

Well, we can maybe make that happen this time next year. Cause there's some rumors that Broker Owner is going to be in San Diego again.

You know, you know my travel rule.

Yeah, so is 20 minutes, uh, acceptable?

I, I can do that. Uh, good. Um, so you've, as mentioned, you've been out and about. Anything you worth highlighting? The Crane window for applications is now officially closed. I know you guys had a banger of an application window. Anything you want to talk about with that?

Yeah, I mean, welcome to all the new Crane members. For anyone listening, it was a really fun couple couple weeks there, uh, welcoming everybody into the new, into the community and spent a few days in Cancún and then was in New Orleans for a big industry conference. That was awesome. Gave the closing keynote with Jordan Waila introducing the PM Trends 2026 report, which was very well received. Distributed 650 hard copies. There weren't enough. And, uh, we're going to be doing a digital launch of that in a few weeks. So stay tuned. But yeah, I mean, it was a culmination of a lot of things here in the last 6 weeks between the application window, PM Trends report, NARPM accounting standards that we released, uh, the conference itself, the Jazz Cruise. So I'm, uh, I'm ready for a sort of week of jamming, man.

Yeah, you've been jamming, dude.

Uh, a lot of output.

You've been jamming. Yeah, it's just a lot of stuff going on. I feel like every time I talk to you, you're like, I'm going back to Mexico, because you were in Mexico like 2, 3 times over the last couple months.

I'm going back in August for for Dani's wedding.

Exactly. So Dani, the global talent that you hired via Sagan, that's awesome. Which is exactly when I tell people about hiring directly, I'm like, no, no, you should like go to their weddings.

And so there's like 6 Crane members going to her wedding, by the way. Like, that's how tight she is to the community.

Yeah, I know, but that's right. That's how it should be. You know, it's so cool. Um, at the same time, I have like 15, or I think 15, it might be more, Sagan folks all in Buenos Aires right now. We flew in a bunch of folks from the region to just go co-work for a week. We rented a co-working space and—

Like Sagan team members?

Yeah, yeah, folks who work— so like we have our head of account management sitting next to our head of recruitment for the first time. They've never met in person. So yeah, super exciting. Okay, the only thing before we get into the topic du jour today that I want to mention, and I will just briefly tease it, I've talked about it a little bit, I should be going public on my newsletter and You know, pods. I wanna do a whole episode about this, but we are totally changing the way that Sagan's doing our education offering. Um, we're taking all of the stuff that we were historically doing live, uh, we're putting it async and we are completely reformatting everything around the topic that everybody is desperate to learn about, which is AI.

Oh, I was gonna say accounting. My bad.

You were gonna say trust accounting?

Yeah.

Um, you were gonna say revenue per headcount per door. Which is, you know, as Greg Crabtree says, the most important metric, right?

DLR. Yeah, yeah, exactly. Everyone's dying to know more about that topic.

I mean, that too.

More async education around DLR, please.

I mean, we can do it, we can do it. I mean, that's a Crane thing. But what I would say is we are seeing an insatiable demand, both personally and within kind of like key lieutenants, for I just want to be in a room with Wolf, whose vibe coding his butt off right now, and other people who are in that same category talking about, okay, how you guys handling API access? Okay, how are you, you guys doing security stuff? Are you just, okay, where you hosting? You're doing it in Vercel? Okay, why'd you choose Vercel instead of Appify? Like there's just so many people that are individually on this journey and we wanna just start creating the space where those conversations can happen. So, uh, I'm excited to talk about that.

Yeah, we're launching a couple new spaces inside our Circle community specific to AI because there's so much demand around it. And we're also launching like a biweekly live call for people that want to jump on, just like you were saying. So, yep. Yeah, the pull is real and correct. Um, but I'm curious about like, why are you moving to async? Like what, what's driving this total re—

Uh, no, no, we're only moving to async on our back catalog. So we used to do things like from EA to Chief of Staff. And we would do that live. We are moving that class to async, so it'll have the same training, but it won't be a live class anymore. Our live stuff is gonna be basically all around AI. Cause it's a much more kind of dynamic subject that should be taught live. Oh, that makes sense.

It's changing frequently and people wanna have Q&A and yeah.

Correct. And they wanna come to a live event about AI, right? They wanna be in a room in a coworking space in Austin with my head of AI talking about Yeah, that makes sense. So yeah, we're just kind of matching the topic to the, to the, uh, audience, kind of what, what people are pulling out of us. I mean, we have a huge waitlist now, so it's great. Okay, so here's what we're talking about today. I have a copy.

Look how small it is.

A little, a little, little, little manual called Warfighting, MCDP-1 it's called. Before I do my intro, and I want to talk very specifically, I want to have like maybe 3 or 4 little motifs. What do you know so far, Peter? Because you are in the place of the audience, although I bugged you about this before. Um, what is your— what has been your experience, or hearing me talk about it, or why did you let me do an episode about this? It's another way to say it.

Yeah, I mean, I've read it. Um, did you retain anything, or just kind of like, I think some of it is just you and I have talked about this stuff a lot, so much already that it's kind of like trying to watch Seinfeld now, where it's like all the jokes are just part of the culture and you almost can't even like absorb it.

Yeah. Yeah.

Um, okay. So let's just dive into it. Cause I think that's just jumping into my— yeah.

Cool. Okay. So what this book is to me is it's written for the most basic level of Marine Corps person. Uh, it is based on basically all military history going back to Sun Tzu, Clausewitz, um, you name them, they're in there, Boyd, uh, and it's distilled into like a junior high school reading level. Talking about these incredibly rich topics. So I find it to be a wonderful source of primary kind of like concepts that I can apply in business, like truisms and timeless truths and all that kind of stuff. Okay. So, so here is the first one that I want to talk about. Business growth is a chaotic nonlinear system, or business operations. Okay. Uncertainty is inherent. All actions are, generally speaking, based on incomplete, inaccurate, or contradictory information. And nonlinear. Minor incidents or actions can have a disproportionate effect. That is the nature of the system. That is war in this book. It's also business, right? It is not this— what's the phrase? Uh, I'm going to pull some, a term out of my butt. What is it? A bomb calorimeter?

Yeah, that's right.

Is that a good term? Like where you can precisely measure energy transfer, right? Is that called a bomb calorimeter? Yeah.

You, you can determine the number of calories inside a piece of food by burning it essentially and measuring the energy output. Yeah.

That is not how businesses work. It is not this precise quantity of input with a precise quantity of output.

It is a much more dynamic—

Correct.

Okay.

So that is important because some of the lessons that we take are to overcome that fact, right? To overcome this dynamic, nonlinear, uncertain environment, you have to adapt certain practices, especially in a fast-growing company.

Your intuition is like, well, if it's unpredictable, it's nonlinear, the temptation is just kind of just throw up your hands. You're like, well, Correct. I mean, what can you even really do? Right. I'll just go with my gut, but correct. I think you're about to describe the fact that exactly this has been studied and there is information in randomness. Like that's essentially the whole field of quantum mechanics is that just because something is unpredictable in the specifics doesn't mean there aren't generalities that hold true that you can use.

And even more importantly, because so much of business is a competitive affair. You just have to be able to manage chaos and uncertainty better than your competition. It's a comparative exercise, not an absolute exercise. And so, we're entering a chaotic era with AI and transformation and all this fun stuff. And we are wading into a war— into a forum of dynamic, fast-moving, changing situations. And so what this is going to talk about is a way and some ideas to, to not only survive, but to win in an environment like that. Does that make— is that still tracking?

Yeah.

So this is why—

by a bear, you don't have to be, uh, you don't have to be faster than the bear. You just have to be faster than your slowest friend.

Correct. So there is a wonderful Clausewitz quote that is in this book that I want to talk about it in business. Okay. Which basically says, everything in war is simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction. Friction is the force that resists action, saps energy. They talk about in the book 4 types of friction. The 4 frictions: physical, resource constraints, capital shortages, tech. I'm applying this to business, by the way. This isn't in the book. But they talk about the four frictions, right? I'm layering it to business. Physical, mental, indecision over courses of action, external, market volatility, aggressive competitors. And then fourth, self-induced, unclear goals, complicated plans, micromanagement, bureaucratic technology stacks, whatever. These are the four frictions that us as business owners are wrestling with as we wade into this world of chaos. We need to learn to survive and thrive in the face of friction. Questions, thoughts?

It's a useful metaphor. Um, yeah, you feel it. I mean, you feel it's very tactile, the sensation of friction in everyday business ownership and management. And it, to me, that's one of the things that's so seductive about starting a new company.

Yep.

Is that, that friction goes away. It's just you and a spreadsheet and a website or an app or whatever.

Yep.

And, uh, even with just our 30-something person team, the friction feels incredibly oppressive, really. I don't know how these Fortune 500 companies get anything done. Yeah. Yeah.

It's a slow ship, right? It's a slow moving boat. Now, you have to— I have to do 3 sentences of Marine Corps history here. They are the small, underfunded service. They never have enough money. They are like 1/5 the size of the Army. Nobody's— it's like, why do we need a Marine Corps and an Army, right? Like, they are the— so they have had to evolve how they operate. And one of the key concepts in this book is called maneuver warfare. Okay? It's attrition versus maneuver. Attrition is World War I. I just throw a massive amount of resources and wear you the eff down. I just have a million-dollar Facebook budget, and I don't even know if my ads are good. I'm just going to flood resources. And the Marine Corps says, we don't have a million-dollar budget. I have to spend $100 and still get the job done. And so this impacts the way they talk about strategic challenges. Now, I don't know anybody who listens to this podcast who is the incumbent who can wear down the market with resources.

Sure.

And so I identify, as we're talking about maneuver warfare, which is what's in the book, but transposing it to business, we are the maneuverable small ones who never has enough money, who never have enough people.

Sure.

We are not the one who's just like, I'm just gonna sponsor every conference.

Uh-huh.

Right? That is not the— that's not me and you. Those are not the companies we're building. Those are not the opportunities that we see in front of us. So The maneuver mindset is very different than the attrition mindset. Does that make sense?

Yep.

So even understanding that, okay. So corporate giant, wear down the competitor incrementally. Maneuver, shatter the competitor cohesively, systematically, right? One bullet, not a million bullets. Resource allocation, corporate giant, broad distribution, massive ad spend. Maneuver, hyper-focused at a decisive time and place. Primary weapon, superior capital, superior size, superior tempo, superior speed, superior decision-making, right? Maneuverable, fast, chaotic all over. Big freaking slow-moving thing that by the time it finally orients, the market's a year past it.

Yep.

Last but not least, corporate giant leadership style, procedural, centralized. Maneuver, decentralized, initiative-driven, independent in order to accelerate speed. Does that all make sense? So as you identify, the reason why I love this stuff is the Marine Corps has thought so deeply about how to win when you're the small guy.

Yeah.

It's baked into their DNA.

Yeah, and I think what's confusing for a lot of people, including me, is that most of the literature and most of what we see are the big incumbents. You know, people write books about Amazon, they don't write books about Sagan. Correct. And yeah, you, you know, you're just— when you're out and about in your everyday life, you see the big companies in action. You see the Apple ad campaigns. You don't see the RL Property Management ad campaigns. And so your, your brain is not primed to think in this way. You're— it's the opposite. Your brain is primed with signals and information from large incumbents and how they, their strategies, their tactics, how they approach a fight and compete. But that's exactly the wrong instinct as a small business owner. So, finding—

Yeah. We've all read books where you're like, that's not me. Oh yeah, you know, just get an acquisition loan. You're like, I can't get an acquisition loan. What do you—

Yeah.

Right? That's big companies.

Yeah. And then we merge with this company because it would synergize. You're like, all right, great. I mean, I'm trying to make payroll tomorrow.

And then our banker realized, you're like, that's not my life.

Yeah.

Right? So, identifying as this small maneuverable special forces, highly You know, trained and maneuverable is a much more powerful identity to me than saying we're GE and we just throw capital at problems. We have access to public markets. Right. So that's again, where I think some of this comes. Okay. Now, um, there are two things to really bring to bear an organization. We're going to talk a couple of different things here. Right. And it's all pulled from warfighting. Right. And I'm trying to, again, apply it into the business world. Which is speed and focus. The speed is the consistent ability to operate quickly. Speed is a weapon that forces the market and competitors to react to you. And two, focus, which is the generation of superior power at a particular time and place. So focus demands strict economy and the acceptance of risk elsewhere. So you cannot beat— if AppFolio gets into the community business, you cannot beat them everywhere, but you can beat them at this time and place. You can roll out AI features to your members faster. You are operating faster and you're applying that ability to like a very tight axis, and on that axis, you beat them.

Yeah.

You do not beat them by trying to be in 50 different conferences. You say there's really only 2 conferences where our community members live, this one and this one, and we're gonna beat them at this time and this place.

I think the, the selection of those places where you're going to fight is obviously critical. It's difficult. Uh, so you got to pick your, pick your battles, right? That's the, that's the phrase.

Well, And what this, what the concept in this book is that I wasn't going to talk about it, but you just teed it up, which is it's called Surfaces and Gaps. Right? So surfaces are hard spots, competitor strongholds, saturated ad channels, well-defined market segments. Avoid those. Gaps are underserved niches, emerging platforms, moments in time when a competitor is overexposed. Right? So surfaces and gaps. You see, oh man, they're, they beat us here. They are entrenched here. They own Facebook. They, right? Oh, there's a gap over here, which is short-form vertical video. We're just gonna go, we're gonna go to the gaps.

My mind immediately goes to when you talk about surfaces and gaps, I mean, you going up against Somewhere, you're using the fact that Nick and Somewhere are so prominent, you're using it against them, right? If they weren't so well known, you wouldn't be able to run a years-long campaign.

Multi-year.

You know? Um, using their content and notoriety against them, right? Because no one would get the joke, but everyone's heard of Nick and Somewhere.

And so you're at least on the internet.

Yeah, play off of that in a way that's beneficial to you. So there's a real element of like, you just talked about like, well, what if they're oversaturated? Your immediate thought is like, well, shoot, I can't, I don't have their ad budget. Like, I can't outspend them. It's like, just let their, you know, let that feed you, just piggyback on it. Find a way to turn a disadvantage, which is like, wow, they're outspending us, to an advantage. Oh, the more well-known they are, the more widely my jokes will land, right?

Let me give you a specific example. I, I, we watch them very carefully, try to figure out a paid acquisition channel. Very specifically, we watch them turn on Facebook ads. We monitor ad sets. We've got a whole bunch of tools that do that, right? As we see things get resonance, guess who we add to our very well-developed cold email infra that targets anybody who interacts with their social posts? So they're out there educating the world. Great. Go boil the ocean on Facebook. Have fun. Somebody touches a post or follows the account, they're in my funnel now. So I need to win at that time and place. I'm not going to go outspend a BPO with a billion-dollar market cap on the internet I'm going to go find these opportunities where I can attack at a very small surface area and kick their butt.

Yeah.

So this is baked into everything I do because we're— I'm an insurgent, right? Like, I'm not the big player, right? And so this idea of surfaces and gaps.

Yeah, I like the surfaces and gaps.

Yeah, surfaces, gaps. Like in your example, as you have a competitor stand up, right, where are they going to be strong and where are they going to be weak? How do you attack them in their weaknesses, not their strengths? Duh. You say that, but this is the bedrock of clear strategic thinking.

Mm-hmm.

Right? You have a market competitor in your local market as a property manager. What are their surfaces and what are their gaps? How do you position against those gaps rather than go into the teeth of their— hey, man, he's a former real estate agent. I'm not going to go try to beat him on real estate referrals. I'm going to lose. That's a surface. What am I doing? I'm going to go over here. He's not even playing over here. I can beat him. So I think that, that theoretical underpinning is a really important part of like competitive positioning, strategic development, stuff like that. So I love this stuff, right?

So I think like when you explain that, it's like, oh yeah, of course, right? That's clearly, that's clearly the move. I think it's all— it is actually intuitive to a lot of people that like, well, let's not compete with a big guy in the area where they're already good. I think the challenge though, and I want to get your take on how to do this, is like The actual strategy is hard to come up with. Like, you're clearly a natural, you're very good at it. I bounce a lot of ideas off you, but I think for most business owners, this idea of thinking strategically about market positioning isn't something that comes up naturally. It's not something you learn about in school, it's not something that you talk— even talk about with other business owners really much at all. Um, so what would be your suggestion or recommendation, like, if If I wanted to get better at this skill, um, how could I do that?

So I'll give two suggestions. Number one, I'm not a natural at this either. I'm, I'm competitive naturally, but I'm not business positioning naturally, right? Those are learned skills. I was given a book, it's on my shelf, um, Competitive Strategy by Michael Porter.

Yep.

It's a book from the early '80s. Um, is a foundational business book that provides framework for analyzing industries and competitors, introducing concepts like the Five Forces—rivalry, new entrants, substitutes, buying power, supplier power—and generic strategies—cost leadership, differentiation, cost focus, differentiation focus—to help firms achieve sustainable competitive advantage and profitability. So that's the classic, if you like this stuff. That's from the early '80s. Generally speaking, quality Quality, price, or specificity are the three, like, timeless. We serve left-handed realtors in Canton. You can play and win there. Right? I don't like that nearly as much as I like Blue Ocean Strategy. Sagan is a byproduct of Blue Ocean Strategy. Did you ever read Blue Ocean Strategy? Mm-hmm. Yeah. And there's some really great exercises. I bet you, you could use AI to actually walk you through it pretty powerfully. What are some things that haven't historically been done by PMs that we should overdeliver on? What are some things that have historically been done by PMs that we don't want to deliver on? Right? Like, I think you could do some really, really good work with AI around redefining a value proposition to grow your market or solidify your competitive positioning in conjunction with AI. That's, that would be my—

I think you're right. I remember reading Evolution Strategy. Yeah, I remember reading it and like there's a whole exercise that walks you through. I think it's right here actually. Is that it right there? It, there's a whole process that walks you through. Yep. I think mine's right there.

See that? I just like making sure that people know that I'm not full of shit. You know what I mean? Like I'm holding the book up now if anybody's listening. Um, and it's a, it has dog-eared copy.

It has you walk through a pretty complex flow to help, like an exercise to help you identify your niche essentially, or your strategy. Yeah. And I'm sure you're right. That would be, and you could hire them to consult with you and everything. Yeah. But I think, yeah, totally drop that, drop that into Claude and just say, I need you to walk me through the Blue Ocean Strategy process to help me figure out how to compete in my new wine.

And, and not just compete, uh, define a value proposition to grow my primary market. Yeah, that's, that's the whole thing, which is you don't have to go down the same paths, right? So like the, the exercise I like, I don't know if you ever— I've done it, I did it for Sagan, which was the one where it has overdeliver. Yeah, meet expectations, slightly don't meet expectations, and then like don't do it all.

So it's like, it's the picking what fires to let burn. I mean, that comes right out of that same line of thinking, which is you can't be good at everything.

The classic, the classic one in the book is Cirque du Soleil, which is, well, you're running a circus, you have to have animals. And they're like, nope, we are negative 10 on animals, but we're positive 10 on atmosphere.

Yeah. It's like Walmart versus Nordstrom's, right? I mean, there's a million classics.

Yeah. So this, I would say if somebody is looking to form some of this, you know, surfaces and gaps, I would insert right there, read Blue Ocean Strategy or go You know, go play around with the materials, go grab a YouTube channel that talks about it, import it all into NotebookLM and start talking to it.

That's a fair recommendation. Yeah. Okay. It's making me want to run, run through this with Crane right now, actually.

Yeah. And stick your vivid vision in there, right? Stick your vivid vision in there. Say, what's the long-term way to kind of map this out, right? What are the gaps? Here's how this competitor's positioning or potential competitors, right? Okay. Now I'm going to talk about 3 specific things and we'll go in different directions here about how to build a business that is kind of built on this maneuver concept. And these are not, um, independent, but what you're trying to do in the middle, it's like a Venn diagram. I'm looking at my screen here and it says harmonious initiative. Okay. That's our goal here. How do we create harmonious initiative? And the goal of harmonious initiative is the company moves with the speed of a small company, but hits with the aligned force of an incumbent. Yeah. Whack. Right. It is clear and it is powerful. It is not diffuse. It is not slow. So what we're trying to do here is, oh my God, they brought so much power to such a small surface area.

That's exactly how I think about our application windows. We only market twice a year, but we concentrate all of our money and all of our effort and all of our marketing materials, and we whip the hell out of our email lists for those 14 days only every 6 months. And man, does it make an impact. And then we're silent. We're basically silent for 5 months after that because we can't run ads all year round. We don't have enough money for that. Yep.

Yep. So that's a great example of bringing full force to a very limited surface area to win. Hey, we're gonna be the best at this 2-inch by 2-inch square. Yeah. Right? Whether that's a marketing channel or a part of your value proposition or whatever. Okay. So there's 3 ways that as you grow to keep this harmonious initiative in place, there are 3 key parts and each is talked about extensively. Okay. The first is the main effort and defining the main effort, which is the focus. And we could talk endlessly about the main effort, but what it does is the rules of the main effort are it receives priority for budget, support, and talent resources. All other units in the company know they must support that unit's goal. And it serves as a harmonizing force faced with the decision, everyone on your team should ask, how can I best support the main effort? So it is the way that ties get broken. It is the way that if you have $100, you give it over here. Hey, I've designated the main effort. It's like the mission creates a— yeah, mission statement. It's— well, but it is to the detriment of other things, meaning everything else is a supporting effort. So it's like, guys, 1,000 members in Crane. It is not 50% gross margins on new applicants. It is when I'm looking at a decision, should I juice margins or try to get to 1,000? By Peter saying our main effort is 1,000 members as quickly as possible, it lets your subordinates— we're gonna talk about this— make decisions without having to check in with Peter. Yeah.

So what our actual one is, is member value. So everything is subordinate to member value. If it's a decision that we have to make and it's Coming down to the decision, it's like, does this add value to being a member of Crane? If no, then we don't do it.

Good. So the first part of the triad for creating that harmonious initiative is defining the main effort, which is a focusing exercise. Okay. The second one is commander's intent, which is what it's called in the military. But the answer is the why. What this does is it establishes the visions, the boundaries, and the ultimate purpose. So you say, what'd you call it, member value? Mm-hmm. Okay. Member value, right? Why? Because we know that property managers are cheap SOBs, but if they look at their monthly costs and they say, these guys are the most valuable subscription I have, they will be members for life. Mm-hmm. Right. And so having that why And that intent defined lets your team maneuver the nuance of it.

Yeah. It's the reasons behind it. How did you come to that conclusion? Context. So that when, because a few words sounds great and it's a great way to jog your memory, but you do need to know the full picture if you're gonna make decisions using that framework.

Well now, but imagine you go to Danny, right? And I know you guys are hosting events. You go to Danny, your community organizer, and you say, okay, the task is to host a great event. Whatever. But now you give a why, which is to— the why is to get a bunch of new signups, right? And she's doing something and she has a decision to make and she doesn't know to go left or right. And she's gonna go back and say, wait, what was the why? It was new signups. I'm gonna go to the print shop and get a rush job to make sure that there's things here. Because the whole purpose of this— she doesn't have to come ask you permission to go to the print shop to print out some new flyers. Just wait, the whole purpose was to get new signups. And if We don't have flyers. I'm not going to get new signups. So I know Peter will be okay if I go spend a couple hundred dollars extra. So the idea is by giving that why, it empowers your team to move very quickly and coherently to attack the surface area very, very hard and quickly without Peter having to say, yes, you can approve that for $9.

Is this the source doc for Commander's Intent? Is— sorry. Like, is this the source material for Commander's Intent? Because I've heard you talk about Commander's Intent a lot, and like, I've seen memos from you that are in that format and things like that. Yeah, correct.

Commander's Intent. This is the Seinfeld problem.

It's like, I already heard about that, the joke, you know, it's in the downstream. Yeah, it's like, oh, this is actually— no, this is where it actually came from.

Correct. And, and that's why, and that's why I wanted to just talk about the specific text, because it is the— so you, you wonder like, oh, I don't— how do you guys launch things so quickly? It's because I went back to the bedrock and built the way I write memos off the back of this style.

I had a mentor tell me one time, he said 3 words: read original sources. And it's— it sounds stupid or like irrelevant, but I can't tell you how many times those 3 words have helped me get a leg up over my competition, personal growth, strategy, deepening friendships. Like, when people understand that you've read the original material It changes the way they relate to you completely.

I always do the reading. That's what I've learned. I always do the reading. Okay. Last one. And then we can wind up or do questions or talk about something else. Okay. Last one. And this is going to be one where your Seinfeld problem—

is this going to be OODA loop? Cause I was, I was waiting for us to get to OODA loop. It's, it's, I'm not going to like throwing that out that, you know, OODA loop is how you measure maneuverability, but thank you for saying that.

I appreciate it. Saying that. It's like me saying, you know, like, you know, like, uh, revenue per door. Exactly. You know, like, it's like, okay, you— we've had this conversation in various forms. Okay, the last thing I was gonna say, this is literally in the onboarding of everyone at Sagan. I will say that again, taken straight from this. Every new member of our team hears this, and it's called Mission Tactics. Which is the contract of decentralized execution. We call it the leadership promise. Okay. The leadership process. Promise. Promise. Promise. Promise. Sorry. Sorry. For the slip. Okay. Here you as a boss, here's what you are obligated to provide. Define the end state. What are we trying to do and why? I provide the support, context, and resources, and I intervene by exception. Mm-hmm. But if you ever need clarity on what we're trying to do here, what the context is, resources, prioritization, you come to me. That's my promise to you, Peter, when you come work for me. Now here's your promise to me. You act with initiative, aligning with my intent, intent, you have an understanding of how what you do fits into the larger goal of the organization, and you inform me, but you do not wait for permission. That's my promise, which is I'm not going to micromanage you. I'm going to say, Peter, your goal is to grow our LinkedIn and get more downloads of our lead magnet. Uh, let me know if you need any help. The reason we're doing this is we're seeing socials are a great avenue. Uh, we're crushing it on Twitter and we want to be on LinkedIn. The specific mechanics of that, That's your job, not mine. Let me know if you need resources and let me know if anything else competes for your time. Best of luck. Go fast. Yeah, that is literally baked into our onboarding. Everybody at Sagan hears that.

So this is like end state, defining the end state. End state. What we—

the specific thing we say is we say you get 3 things from me. It's like 3.5. You get end state and context, you get resources, and you get prioritization. If you ever don't know those 3 things, you are not expected to know them. You do not know the context, what's happening above you and You don't know that. You can always come to me. Hey, why are we switching our CRM? Right? You won't know that. You can come to your boss. But in exchange, I will not micromanage you. Yeah. If you promise to act with that in mind, I will not be in your pants. I'll treat you like an adult. I do not manage tasks. Your job is to close maintenance tickets as quickly as possible with a target of 50% gross margin, except by a rare exception. Go. You know the end state here. Why? Because maintenance is a key driver of profitability within RPM. I'm not in QuickBooks looking at why he approved a more expensive vendor, because he knows my end state and he goes, hey man, that was one of those really angry owner investors, so I approved the guy. It hurts our gross margin, but I promise we'll get back to normal next week.

Great decision. This has echoes of Values drive policies, policies drive processes. It's like the right—

so this is a— this is really the value, which is decentralized leadership with the people who are closest to the problems, as long as it's aligned with your intent, with your goal, with your vivid vision, with your context, with your prioritization. So that to me is when people say like, how are you guys launching this stuff? How are you able to— because our team is crystal clear on what the end state are, is, but if they decide, you know, this isn't anything real— or sorry, this is something real— they decide who— if we think we messed up and we want to return somebody's credit, I don't decide that. They understand, hey, I don't like doing this, but if you think we really messed up, go ahead and take care of it. I don't need to know about it. Yeah, you guys got it. You guys are closer to the problem. Ah, Peter's internet is acting up, so he's going to restart right now. So in summary, what I would say, uh, as he rejoins, is the goal of these three things is harmonious initiative, right? To be able to move very quickly but with very focused kind of corporate and business power. The 3 ways we do that are the why, which is why are we doing this? This establishes the vision so that even in chaotic scenarios, people know what to do. You back? I'm back. Cool. I was just, uh, talking a little bit about the, the 3 things, right? The why, the focus, and the how. And the how is a promise that says, I will tell you the destination. You are free to accomplish it within the bounds of the why and the goal we're achieving. But if you need to do something to get there, you do not need to ask me, please execute quickly. Go fast. Yeah.

We've, we've kind of run on a version of this for many years. I sort of intuited the good ideas behind this in a lot of ways, and I'm also kind of lazy, so I don't like to micromanage. My experience has been that for team members, it can be very disorienting at first, and it's probably especially cuz I didn't explain everything that you just explained to them.

I just like, we put it in onboarding for that reason. Yeah.

Yeah. I just like started. And didn't explain like what you just explained. And so my experience is that team members can be very disoriented by the lack of micromanagement, by the lack of check-ins and clock-ins and clock-outs, because a lot of folks in small business come from retail, come from hospitality, come from labor, like, so they're used to having a direct supervisor right there telling them exactly what to do, chastising them, asking why they're sitting down on their phone when they should be, blah, blah, blah. And when you give them a whole bunch of autonomy and a direction and say, go, let me know if you have an issue, they're sort of like, wait, what? Like, you're not gonna come over and sit with me and look at my computer? And so it does, there is like a, um, adjustment period for new team members to this style, but for the people who adjust to it and get it, they, my experience has been, they are incredibly loyal. Because they so appreciate the trust that you place in them. They appreciate the autonomy. They appreciate the results-oriented management style instead of the micromanagement style. And they can stick around and work for you for years and years and years because they're just so thrilled to have a place and a person that values their ability to solve problems and figure stuff out without coming to you for everything.

I'll put one caveat here, and we've talked about this. This is one of the themes of Lazy Leverage. But what I would say is this is mostly shown with how you handle mistakes. Yeah, in that everybody says this, yeah, I just want a team that just, you know, kind of just does all this stuff, but you know, they make mistakes, so now they have to CC me on every email for a move-in because, right? And so We had, we had a $50,000 mistake in the last week. We just forgot to bill something huge, right? The correct answer is we're doing a lot. Keep it up. Do what you can. What systematic issue made the fact that we didn't catch this beforehand? Are we understaffed in our FP&A? What is it? Do we not have— great. But it's not, okay, now all I want to report every 3 days in a dashboard that shows what our AR versus AP like. So I think you, you prove this by how you react to mistakes.

Well, there's two things going on. One is the business owner's mindset around this. Like, that's a great example, $50,000 mistake. So many business owners, and I don't fault them for this, really struggle with how to react to that mistake. And you said it, it's like, okay, well, from now on, I'm getting CC'd on every invoice. And I'm going to set up a filter in my email and I'm going to set up an automation that if it's something like— and they have all this process around it, right? Yeah. Because they believe that that's what a leader does is make sure that everything's perfect and founder mode, no mistakes happen. Yeah. Yeah. Um, and they also believe that a mistake made by the business is a direct reflection of them as a human being. And if the business made a mistake, that means you as the founder made a mistake. And if you made a mistake, that means you're a bad person. And that is very uncomfortable for a lot of people. So the first is the mindset shift, which is mistakes happen. In fact, they're normal. They're part of the learning and growing process. If we're not making mistakes, we're not growing, blah, blah, blah. First is coming to terms with that just as a founder. Yeah. Then, and that could even just be, that could be a solopreneur thing. No employee is necessary to get caught up in the wrong mindset here, right? Like you can create a whole process just for yourself. To avoid the one-off mistake. The second issue is with team members, and when a team member makes a mistake, you're exactly right, how you handle that— you— I can't even— I can't even overemphasize the importance of how you handle that and how it's going to reflect and refract throughout that organization and down through time. Yeah, because What do employees talk about? They talk about what the hell's going on and what their bosses did and how they handled this. And yeah, oh my God, did you hear what so-and-so did? And Jim lost his shit, he threw a chair, blah blah blah. Adam, my business partner Adam, and I still talk about this guy at River Consulting who 18 years ago threw a chair around the office because he was so mad about a mistake, right? That is how these things cascade through time. So when you catch a mistake, you really got to check yourself and understand that the way you handle yourself in that instance is going to have a massive impact on your own quality of life. Your ability to take a month-long crane break is going to be directly impacted by how you handle an employee's mistake. If you lose your shit, you lose your shit. They're not going to feel empowered to make decisions and they're going to keep coming to you with every little thing. And you're never gonna learn.

By the way, there is a time to lose your shit. It's just not this time. Like for example, I lose my shit with a lack of initiative. I mean, I say, you waited 3 days? That I will dial. I said, you waited 3 days to ask what color pencil to put on the poster? You're the head of marketing. If you make another mistake like that, you're gone. I'm not gonna ask. Because a lack of initiative is the sin, not the making mistake. That to me is much more of a failing. I mean, I don't lose— I would throw chairs, but you know, like the things that you react to as a leader drive culture and normative expectations and stuff like that. You know how I'm reacting though, as you're talking, I want to connect this to something we've talked about, which is, you know, we talk about death zones in businesses. Mm-hmm. I think there's a great post that you could write about, in effect, We think of death zones as, oh, well, I need an in-house maintenance department, but I'm not big enough to justify it, so my gross margins go down for these couple hundred doors, or I need a full-time head of this and I can't afford, right? I actually think that there are leadership death zones where your limit, you have to break through your leadership death zone, and it is almost harder to break through than your, you know, your truck death zone where you don't have enough trucks and you have to do overtime and you're grossing— it's actually, it's like a leadership software upgrade that you're like, yeah, you can QC every move-in request at this amount of revenue. And then you need to reformat your software because if you keep running that operating system at this many doors, you're going to break it. You're never going to— and I think decentralized leadership and relationship with mistakes is something that is a huge inhibitor on the journey to the types of companies that I think are worth owning forever.

Totally. I mean, whatever company size you have right now, it's a direct reflection of your leadership capabilities. Yeah, how could it not be? Yeah. So however big your company is and however you measure that, whether it's growth, revenue, profit, whatever's important to you, whatever your company is right now, that's your limit. You've reached your— you're always at your ceiling, basically. And I went through two of— I've identified, and I think there's at least two of these. One is the transition from doing the work yourself to managing. That's the first one. That's the first. That's the E-Myth, right? Okay. And then the second one is going from managing workers to managing managers. Yeah. Everything else is kind of a subset of that.

If you figure out— there's some even above, there's some even above that too. Sure. Like, like I'm, I'm not even managing managers anymore. I'd say at 100, at 100 headcount, I'm resource allocating, doing high-level recruitment, high-level growth. Like, you know what I mean? Like there's, it keeps going, I think too, depending on headcount. And there's levels above me, right? Like, oh, I deal with the investors or public markets. Right. Um, but I think like the reason why I think this is so important is I think that if you look at say a CraneBrake, right, I think there are people who go, well, I just need to like document the SOPs and I need to, uh, you know, task map. And that's what's preventing me from, and it's like, You know, there's a blog post that says mistakes and a crane brick. We need to— I want to look you in the eyes and say they're not gonna do the work as good as if you were sitting next to them.

You got to get comfortable with 80%.

And you have to, like— but there's like a software upgrade that goes with a crane brick, which is mindset and your story about training and mistakes and empowerment and one-way doors and two-way doors. That is equally important to saying like, here's where we keep the spare key in case the fire department calls. There's also that. So I think I, I, I'm getting energy around this because I, I see a lot of people who need to rewrite their scripts around like leadership and mistakes. And that's actually the biggest inhibitor to the next level. And this is a very specific way to do it. We just talked about a specific way to do it.

So it's a journey for sure. And Crane helps facilitate this with a community of other people, I think. These are the kind of soft topics that are hard to articulate and like read in a book. And you're just like, okay, great. Got that software upgrade in my brain. It's like, well, you kind of need to bump elbows with other people who have been through what you've been through and hear them talk. Like there's something about, I have such specific memories of being around entrepreneurs who are further down, further ahead than me. Yeah. And something about hearing the nonchalance with which they discussed mistakes. Problems, team members made a real impact on me. It was like, oh yeah, no, I got back, he totally messed that up, but you know, whatever, like we got to figure it out. Yeah, reload. Yeah, yeah. And I was just like, wait, what? Why? How are you not like completely losing your mind about this? Because that's how I related to mistakes and problems. And so it's just something about like being around other people and seeing how they relate to things. It's just like, oh wow, oh, I guess I don't— like my identity doesn't need to be tied up in perfect work product.

Or even my job is not to create a mistake-free environment. I think it's also a job definition. Yes. Right. My job, I would say now, is to create an environment where we learn from our mistakes. That's honestly what I would say is a much more important goal at my size organization. It's not— we're always going to mess up. Are you kidding me? We're a service business. Of course, we're going to drop the ball on stuff. Like it's to have a learning mechanism and a reflection process and an integration process not— we're at zero, you know, we're not flying planes here.

I used to think that if we did create an error-free solution or service, that would solve everything. We would become profitable, we would grow, like customer service problems would go away. Like I had in my mind this idea that, oh, if we can just stop making mistakes, that's going to fix everything. And that's not true. But it was very hung up on that as an engineer, right?

It's funny. It's funny you say that because I have told many different people in our organization that if I don't see you making mistakes with some regularity, I'm not pushing you hard enough. And that always freaks them out because I'm like, again, we're not engineers designing bridges here, right? This is a service-based business. I want to be pushing you hard and fast enough that you're just getting it out into the world at 80% and we'll clean it up as we go. Not, I took 4 days to have a coordination meeting with her. What do you think she'd say if you got on a meeting with her? She'd say that, great, just send it. Yeah, just send it. It's okay. Great. So, um, awesome, man. All right. Any final thoughts on this? So I think I gave a couple, um, very specific examples of how this stuff is, and you actually were able to pull it into things you've heard me say a thousand different times. I did not talk about OODA loop here, but I will review again. What we're aiming for here is harmonious initiative. Which is you move with the speed of a small company, but with the power of a big one. And the ways you do that are end state, the why, context, establish the vision, the boundaries, the ultimate purpose, the vivid vision, the 3-year, 5-year, what's it, wait, what's it called? The, what's the thing called in EOS? Oh shit, I'm forgetting.

The VTO. VTO.

That's right. That's right. Boom. VTO. Nailed that one. Thanks. Somebody, you know, okay.

VTO. Must've been that great EOS consultant you hired a few years ago.

Yeah, exactly. The why. The second is the focus, which is the main effort, which is how do we point this towards the key, you know, center of gravity? And then the third, of course, is mission tactics, which is that kind of, I give you the permission to operate as long as you're pointing towards our ultimate goal. I don't tell you, you know, where, how to name your columns in Excel, even if I might have a little, I'll guide you, I'll shape it, but I'm not going to get in there and start naming columns with you and picking colored pencils. So those are the ways that you can very quickly nail, nail speed and focus is with those three, three kinds of tactics. So cool. Any final thoughts on this?

Uh, no, it's good. Good recap. Good, uh, book report.

Okay. Um, I wanted to, uh, I wanted to end with one quote from this that I think is, um, uh, I think very salient because I think it applies to a lot of the stuff we're dealing with right now. I just deleted my— okay, here it is, which again, I oftentimes find myself revisiting this, which is, "We must have the moral courage to make tough decisions in the face of uncertainty and to accept full responsibility for these decisions when the natural inclination would be to postpone the decision pending more complete information." A good plan today aggressively executed is better than a great plan next week in so many different scenarios. And so people oftentimes look at the things we do and the speed with which we move, and that kind of quote and this kind of stuff is a bedrock of velocity, focused velocity. So final thoughts, Mr.

Lohmann? Making decisions, I should say acting decisively with incomplete information is a hallmark of a leader. Yeah, and a lot of people struggle with that because they want— they want to get the perfect solution, they want to have all the information, but you, you're, you're behind. Like, you can't effectively lead. And like, so the making the decisions with incomplete information part is important, but what's also equally important is the acting decisively part. Like, once you've committed, you go full force and you show no You show no weakness, uh, or no indecisiveness to your team, especially, especially. I've worked with leaders before where it's like they make decisions and they make good decisions, but they're not convicted about those decisions, and the team perceives it as weakness and indecisiveness and then does not execute with, with the speed and with the decisiveness, which is required to have even a chance of success, uh, with the idea. So, um, once you've made up your mind, go. That you're the entrepreneur, you're the leader, you're the guy who's supposed to have all the answers. And even if you don't, you need to act like you do. It's lonely at the top, right? Yep. That's just— that's part of the life.

Yep. If you're not enthusiastic, pretending to be enthusiastic oftentimes feels and looks exactly the same. So that's, that's what I— it's true. Uh, okay, good. So So in closing, great book. You can get it for free online in a PDF. If you like this kind of stuff and you want to learn about it, I would say it's probably one of the top 5 most foundational— this is not a book that you're going to read and say, I know how to buy more clicks on Facebook tomorrow. This is the kind of book that in 100 years should be revisited by young leaders. So if you're looking to insert yourself into some of the primary text that has so much downstream. You can Google it, you can find it online for free, you can buy for $5 on Amazon. I find myself— there's a reason why there's a hard copy within arm's reach.

Yeah, the PDF sucks, by the way. Don't, don't waste your time with the PDF. Just buy the hard copy on Amazon. What you should do, like, a post on like your 5 foundational texts. I would love to see that.

It'll be a fun list to kind of swap, like if you only had 5 to give to people. Good idea. So cool.