WEBVTT 1 00:00:00.000 --> 00:00:05.080 Today, I want to start with a simple story. 2 00:00:05.080 --> 00:00:11.040 There were 50 CEOs that were doing a world wide tour to visit the best run companies 3 00:00:11.040 --> 00:00:12.440 in the world. 4 00:00:12.440 --> 00:00:17.000 And one of their stops was in Malaysia to a pewter plant who had figured out how to 5 00:00:17.000 --> 00:00:21.400 extract lead out of the pewter and they made various pewter products. 6 00:00:21.400 --> 00:00:24.000 The company had over 3,000 employees. 7 00:00:24.200 --> 00:00:30.440 Well, when it came time to the presentation, you can imagine how surprised these 50 VIPs 8 00:00:30.440 --> 00:00:35.360 were when 5 people in their blue overalls walked out. 9 00:00:35.360 --> 00:00:41.200 Not the senior management team or the CEO of the company or the owners, 5 of the workers 10 00:00:41.200 --> 00:00:42.560 walked out. 11 00:00:42.560 --> 00:00:47.200 And they proceeded to explain the products they made, the technology they used, their 12 00:00:47.200 --> 00:00:53.240 positioning in the industry, their marketing strategy, their economics, their finance. 13 00:00:53.240 --> 00:00:55.200 It was astounding. 14 00:00:55.200 --> 00:00:58.960 These 5 workers understood the business. 15 00:00:58.960 --> 00:01:03.240 So at the end of the presentation, one of the CEOs raised their hand and said, OK, how 16 00:01:03.240 --> 00:01:07.360 long did it take for you to be trained to say all this? 17 00:01:07.360 --> 00:01:13.560 Well, the workers were a bit confused and they said, well, so we heard that 50 VIPs 18 00:01:13.560 --> 00:01:18.360 were coming, so they put up on the bulletin board who would like to make the presentation 19 00:01:18.360 --> 00:01:22.560 and all 3,000 people put their names down. 20 00:01:22.560 --> 00:01:27.560 That is an impressive story, because what that tells us and what we can learn from that 21 00:01:27.560 --> 00:01:34.800 is that when people understand how they're contributing to the bottom line, then everybody 22 00:01:34.800 --> 00:01:37.160 works together seamlessly. 23 00:01:37.160 --> 00:01:41.400 So here, people weren't just being trained in their one little area, they had a good 24 00:01:41.400 --> 00:01:43.680 sense of the business itself. 25 00:01:43.680 --> 00:01:49.840 It's important that everyone in the team has a good sense of the overall economics of the 26 00:01:49.840 --> 00:01:50.840 business. 27 00:01:50.840 --> 00:01:55.760 So we don't have to share salaries and so on, but in our business, we believe that everybody 28 00:01:55.760 --> 00:01:57.720 knows everything except salaries. 29 00:01:57.720 --> 00:02:04.320 And the reason for that is we want everybody in the team to understand the business. 30 00:02:04.320 --> 00:02:10.160 Now we also want everyone to understand how they contribute, what they do, and how that 31 00:02:10.160 --> 00:02:12.080 adds and contributes to the bottom line. 32 00:02:12.080 --> 00:02:17.680 Which reminds me of a second story of a consultant who went to a company in Chicago, he was brought 33 00:02:17.680 --> 00:02:20.680 in to help improve their operations. 34 00:02:20.800 --> 00:02:25.440 To get his own sense of it before he went through the front door, he did something unconventional. 35 00:02:25.440 --> 00:02:29.360 He went to the loading bay at the back of the factory and he met somebody there and 36 00:02:29.360 --> 00:02:30.360 he said, hey, what are you doing? 37 00:02:30.360 --> 00:02:35.560 He said, well, I'm packing all the telecom equipment for one of our big customers, Walmart, 38 00:02:35.560 --> 00:02:41.160 and the installers are going to take the truck and go and install this new equipment. 39 00:02:41.160 --> 00:02:44.280 And he said, well, how is this contributing to the bottom line? 40 00:02:44.280 --> 00:02:45.280 How is this helping? 41 00:02:45.280 --> 00:02:50.040 He says, well, last month, I reduced the install cost by 30%. 42 00:02:50.040 --> 00:02:51.680 He said, well, tell me more. 43 00:02:51.680 --> 00:02:57.320 So I go out with the installers regularly to make sure that the way I pack the equipment 44 00:02:57.320 --> 00:03:03.040 makes it the most efficient for them in terms of how they install the system. 45 00:03:03.040 --> 00:03:07.280 They don't want to have to unpack everything and then search for all the parts they need. 46 00:03:07.280 --> 00:03:10.120 I pack them in exactly the right sequence. 47 00:03:10.120 --> 00:03:14.760 So every time they improve the installation process, I go out with them and I figure out 48 00:03:14.760 --> 00:03:18.480 how to pack it so we can reduce our installation costs. 49 00:03:18.480 --> 00:03:21.400 And last month, I reduced it by 30%. 50 00:03:21.400 --> 00:03:22.400 I love that. 51 00:03:22.400 --> 00:03:27.720 I love that story because that gives people a real sense of their contribution and what 52 00:03:27.720 --> 00:03:31.200 they do and why it matters. 53 00:03:31.200 --> 00:03:36.320 So what's the one big dial that would change it for you? 54 00:03:36.320 --> 00:03:41.920 Every company has one big dial that when you turn that, it moves the needle more than anything 55 00:03:41.920 --> 00:03:42.920 else. 56 00:03:42.920 --> 00:03:46.440 And I'm not talking about trivial answers like, well, we need more revenue and less 57 00:03:46.440 --> 00:03:47.760 costs and so forth. 58 00:03:48.040 --> 00:03:52.680 I'm talking about there's one thing that if you turn that one thing, everything in the 59 00:03:52.680 --> 00:03:53.760 company moves up. 60 00:03:53.760 --> 00:03:56.600 The company thrives at a whole different level. 61 00:03:56.600 --> 00:03:58.880 Let me give you a few examples. 62 00:03:58.880 --> 00:04:01.240 Let's say that you run a restaurant. 63 00:04:01.240 --> 00:04:05.440 One might say, well, what's the one big dial? 64 00:04:05.440 --> 00:04:10.760 Well in a restaurant, it's not just the number of customers or, you know, labor costs and 65 00:04:10.760 --> 00:04:11.760 so forth. 66 00:04:11.760 --> 00:04:14.800 It's revenue per customer. 67 00:04:14.800 --> 00:04:17.480 What's the revenue per customer? 68 00:04:18.200 --> 00:04:19.200 We have a lot of fixed costs. 69 00:04:19.200 --> 00:04:23.000 There's rent, there's labor, food costs, etc. 70 00:04:23.000 --> 00:04:29.800 But if we can change the menu, if we can learn how to upsell, if we can train our service 71 00:04:29.800 --> 00:04:35.440 better, if we can all understand how we're going to raise the revenue per customer, and 72 00:04:35.440 --> 00:04:41.480 if we calculate that revenue per customer on a daily basis or even a weekly basis, and 73 00:04:41.480 --> 00:04:47.200 the whole team gets to hear the number is going up, everything changes. 74 00:04:47.800 --> 00:04:54.360 That reminds me of a story of Maria, who is a family-owned restaurant in a suburban strip 75 00:04:54.360 --> 00:04:55.360 mall. 76 00:04:55.360 --> 00:05:00.080 Now, in her case, she started with 200 customers. 77 00:05:00.000 --> 00:05:04.680 customers a day, averaging $38 average ticket. 78 00:05:04.680 --> 00:05:08.960 So that meant that they were really, really struggling 79 00:05:08.960 --> 00:05:12.720 because $38, they had rising food costs, 80 00:05:12.720 --> 00:05:16.240 the rent was busy going up, and she wasn't even sure 81 00:05:16.240 --> 00:05:18.300 that she could even keep the business going. 82 00:05:18.300 --> 00:05:20.520 It really was that serious 83 00:05:20.520 --> 00:05:22.960 because they were just breaking even. 84 00:05:22.960 --> 00:05:25.620 Well, when she went through this exercise, 85 00:05:25.620 --> 00:05:30.620 they identified the big dial as the revenue per customer. 86 00:05:30.820 --> 00:05:32.180 So what did they do? 87 00:05:32.180 --> 00:05:36.260 They went back and analyzed the top 20 receipts 88 00:05:36.260 --> 00:05:37.900 to see if there were any patterns, 89 00:05:37.900 --> 00:05:39.780 and they found out that big families 90 00:05:39.780 --> 00:05:42.180 were often attracted to their restaurant. 91 00:05:42.180 --> 00:05:47.180 So they created a family feast option for 46 people. 92 00:05:47.340 --> 00:05:50.820 They trained their servers on wine pairings 93 00:05:50.820 --> 00:05:52.260 and making suggestions. 94 00:05:52.260 --> 00:05:55.460 They even added premium desserts displayed 95 00:05:55.460 --> 00:05:57.860 near the register where people were paying. 96 00:05:57.860 --> 00:05:58.740 Guess what happened? 97 00:05:58.740 --> 00:06:03.100 The average ticket increased from $38 to $58 98 00:06:03.100 --> 00:06:04.980 within eight months. 99 00:06:04.980 --> 00:06:09.660 Same customer account, but 53% increase in revenue. 100 00:06:09.660 --> 00:06:14.320 So the business went from break even to an 18% net profit. 101 00:06:14.320 --> 00:06:16.620 I love that story. 102 00:06:17.700 --> 00:06:19.660 Another thing could be, for instance, 103 00:06:19.660 --> 00:06:23.100 if you run a SaaS or a software as a service company 104 00:06:23.100 --> 00:06:25.660 where people are paying a monthly subscription, 105 00:06:25.660 --> 00:06:27.860 but you have high churn rate. 106 00:06:27.860 --> 00:06:31.840 So the big dial is the monthly churn rate. 107 00:06:31.840 --> 00:06:35.740 Reducing the churn really compounds growth. 108 00:06:35.740 --> 00:06:38.440 It has a profound effect on the business. 109 00:06:38.440 --> 00:06:41.140 Keeping existing customers is a whole lot cheaper 110 00:06:41.140 --> 00:06:43.420 than getting new ones, right? 111 00:06:43.420 --> 00:06:48.420 So that meant improving onboarding, feature adoption, 112 00:06:49.180 --> 00:06:52.420 customer success programs, and so on. 113 00:06:52.420 --> 00:06:56.180 And that is exactly what happened 114 00:06:56.180 --> 00:06:58.260 with one specific company. 115 00:06:58.260 --> 00:07:00.180 And in that particular company, 116 00:07:02.940 --> 00:07:06.980 the owner, Alex, ran a project management software 117 00:07:06.980 --> 00:07:11.240 for construction companies, but the churn rate was high. 118 00:07:11.240 --> 00:07:14.940 So they were doing about 8% monthly churn, 119 00:07:14.940 --> 00:07:16.340 and it was just killing their growth. 120 00:07:16.340 --> 00:07:19.380 They worked so hard, they knew their acquisition costs, 121 00:07:19.380 --> 00:07:22.180 they knew what each customer represented, 122 00:07:22.180 --> 00:07:25.220 about $2,400 a year to them. 123 00:07:25.220 --> 00:07:28.420 And when they lost one, it was huge loss in revenue. 124 00:07:28.420 --> 00:07:31.700 So they redesigned onboarding to ensure 125 00:07:31.700 --> 00:07:34.620 that there was much larger feature adoption 126 00:07:34.620 --> 00:07:36.300 within the first 30 days. 127 00:07:36.300 --> 00:07:39.540 They set themselves a goal that certain number of features 128 00:07:39.540 --> 00:07:42.180 had to be used within 30 days. 129 00:07:42.180 --> 00:07:43.500 Great plan. 130 00:07:43.500 --> 00:07:46.860 Then they created a construction-specific templates 131 00:07:46.860 --> 00:07:49.260 and workflows that construction people 132 00:07:49.260 --> 00:07:52.420 with the way they think and the way they work. 133 00:07:52.420 --> 00:07:56.220 And they also added a customer success manager, 134 00:07:56.220 --> 00:08:00.340 not just customer service, but customer success, 135 00:08:00.340 --> 00:08:03.200 because now we're managing to customer success. 136 00:08:03.200 --> 00:08:04.220 Guess what happened here? 137 00:08:04.220 --> 00:08:09.060 They reduced their churn rate from 8% to 2.3% monthly. 138 00:08:09.060 --> 00:08:12.360 The company went again from just above break-even 139 00:08:12.360 --> 00:08:15.400 to 40% annual revenue growth 140 00:08:15.400 --> 00:08:17.900 with the same acquisition costs. 141 00:08:17.900 --> 00:08:19.740 I could go through so many stories 142 00:08:19.740 --> 00:08:22.020 like this story after story. 143 00:08:22.020 --> 00:08:26.320 Big question is, do you know what the one big dial is 144 00:08:26.320 --> 00:08:27.380 that if you turned it, 145 00:08:27.380 --> 00:08:30.040 if everyone in the business works towards it? 146 00:08:30.040 --> 00:08:32.840 Because the one big dial isn't just one thing. 147 00:08:32.840 --> 00:08:35.419 There are many aspects that make it up. 148 00:08:35.419 --> 00:08:38.159 In each of the examples I just gave, 149 00:08:38.159 --> 00:08:39.440 there was a lot more to it. 150 00:08:39.440 --> 00:08:41.799 It was a general everybody getting around 151 00:08:42.240 --> 00:08:43.980 and in their area of responsibility, 152 00:08:43.980 --> 00:08:45.520 in their contribution, 153 00:08:45.520 --> 00:08:50.520 knowing that they helped contribute to the one big dial. 154 00:08:50.680 --> 00:08:52.200 And here's what happens. 155 00:08:52.200 --> 00:08:55.140 When you successfully identify and focus 156 00:08:55.140 --> 00:08:58.200 on your one big dial, a couple of things happen. 157 00:08:58.200 --> 00:09:00.880 Number one, clarity emerges. 158 00:09:00.880 --> 00:09:04.760 And we know that clarity drives speed. 159 00:09:04.760 --> 00:09:07.560 Every business decision becomes obvious 160 00:09:07.560 --> 00:09:10.800 because it's filtered through that one primary metric. 161 00:09:10.800 --> 00:09:13.840 Number two, growth accelerates. 162 00:09:13.840 --> 00:09:17.920 There's a focused effort produces exponential results. 163 00:09:17.920 --> 00:09:20.160 Three, team performance improves 164 00:09:20.160 --> 00:09:22.920 because everybody's pulling in the same direction 165 00:09:22.920 --> 00:09:24.620 and we understand the priority. 166 00:09:24.620 --> 00:09:26.280 And it's like watching a ball game. 167 00:09:26.280 --> 00:09:29.280 There's a scoreboard and we can all see what the score is. 168 00:09:29.280 --> 00:09:31.920 That's really useful. 169 00:09:31.920 --> 00:09:34.680 Then the value, business value increases, of course, 170 00:09:34.680 --> 00:09:37.560 because now we've made the company more valuable. 171 00:09:37.560 --> 00:09:40.600 And in the process of doing that, strangely enough, 172 00:09:41.280 --> 00:09:42.120 stress decreases. 173 00:09:42.120 --> 00:09:44.560 No one's worrying about if the business is gonna make it 174 00:09:44.560 --> 00:09:46.800 because we can all see the score. 175 00:09:46.800 --> 00:09:48.680 We know what the one big dial is 176 00:09:48.680 --> 00:09:51.280 and we can see the numbers improving. 177 00:09:51.280 --> 00:09:53.800 So that's your exercise for today, 178 00:09:53.800 --> 00:09:58.800 to successfully identify and then focus on your one big dial. 179 00:09:59.840 --> 00:10:00.680 Okay. 180 00:10:00.000 --> 00:10:01.000 Hope you enjoyed that.