So, I want to talk about this whole idea of shaping up your business and one of the fastest
ways for you to shape up your own business is to reset what's the core thing we're doing
or another way to look at this is necessary endings. So, when we're looking at a business,
we know that clarity drives simplicity and then simplicity drives speed. This is one
of the most powerful things that GE became very good at doing is that to become simple,
you have to be confident. You have to have a tremendous amount of self-confidence because
self-confidence, it takes, as we've said many times, that when you're in complexity, you're
still the student. When you're in simplicity, you've become the master. And so, it takes
a certain amount of confidence to say, we're going to be this simple because simplicity
drives speed. And you know, one of the hardest things to do as a leader is to simplify because
it's genuinely, it's not about the right plan. So many leaders think it's about the right
plan. It's not about the right plan. It's about the team being able to follow a simple
plan. And we're going through this ourselves in our own business that you build up and
somehow by itself, it just gets really complex. And the next minute, you're in all this complexity.
And the problem with complexity is there's three major problems. One, your team can't
follow you, which means two, they can't generate creative backend systems and support and infrastructure.
And three, they can't promote something that's complex. So, it hurts sales. It hurts fulfillment,
the ability to execute and support. All of that suddenly gets bogged down and you find
yourself slowing down. So, if you find yourself in that spot, usually, it's because you're
not simple. So, we're going to get into a practical simplicity exercise here in one
minute. So, you know, a lot of people say, well, you know, I just hope the team will
make something. No, it's the leader's job to constantly push for simplicity. That's
your job as a leader. And it doesn't matter where you are in leadership in the organization,
whether you're the CEO, as we've talked and said, the concept here is that we're a team
of leaders, not just a team with a leader. We don't just look to the leader and say,
it's your job to create simplicity. It is primarily theirs to make sure simplicity is
constantly on the agenda. But it is every leader in the organization's role to get rid
of complexity. Because the best thing to do is simplify. You know, and we'll get into
this in later trainings, where some things you just need to delete them. Because a lot
of times what we do is we spend time optimizing something that shouldn't even exist. And here's
the thing, in the same way that your brain cannot multitask, team people can't focus
and follow you. I remember listening to one particular leader and this leader would get
up and once a month would have some new vision. It was like vision of the month, you know.
And you had no idea. It was like, okay, now that's the vision, then this is the vision.
Now with three or four visions in, what happened to the first vision? Oh, well, we're still
kind of keeping that going. Oh, what about the second? Well, it's not as important. The
third? Oh, no, no, that's still important. So where's this fourth one fit? So what happens
is people get lost. And this is so easy to do, no matter how skilled you are as a leader,
no matter how many years of experience you have, this is a constant fight. Because simplicity
is a way to protect your core offering to the market. And the fastest, when the minute
that gets diluted, and the bigger the organization gets, the more challenging this becomes. And
so great leaders are very good at inhibiting things. In other words, this is the main thing,
I'm inhibiting everything else. I'm saying no to all this other stuff, but these are
great ideas. So we don't want to do the next big thing, the next shiny thing as the leader.
That's the worst thing we can do as leaders. And from time to time, we all get caught up.
Maybe just because at this time in history, we're having AI introduced, it's hard not
to wonder, where does that fit in? And so that is for us one of the big drivers as great
leaders.
So let's go through an exercise together, and let's talk about three pruning techniques,
three ways to bring that level of simplicity. And the most, speaking of simplicity, a simple
analogy to explain simplicity would be a rose bush. Did you know that a rose bush produces
more roses than it can sustain? Does that sound like your business? Producing more rose
buds than it can actually sustain?
And that's for me.
Most of us, we produce more ideas and more products
than we can actually sustain
because we kind of fall in love with them
or we always had that one
or that's really important to us and so forth.
So the fastest way to get to this
is firstly acknowledging that we all do this.
We all produce more roses than the bush can sustain.
We all do this, right?
So in that case, the people who learn the opposite,
those who learn that and are aware of this
know that 80% of the life of the business
is in 20% of the business.
That is a big thing to say.
Take a minute and think about the implications of that
to you in your business.
80% of the life of the business is in 20% of what you do,
right?
So in our business, we know what that is.
And I have to constantly refocus our business on the 20%
because I'm usually the culprit opening it up
and making it broader than it needs to be.
So this reminds me of a guy
who bought a $25 million business
and it had four, sorry, five major divisions.
Now here's the strange thing about each division.
Each division was profitable.
So $25 million revenue business
and each division of the five divisions are all profitable.
What would you do in that situation?
I wonder if you would do what he did.
I wonder if you would sell off four of them.
Close them, sell them, get rid of four of them.
Because he knew that 80% of the life of the business
was in 20%.
So he identified the one core business
that he thought they were in
and where the life of the business was in.
It was the thing that customers most responded to,
most loved, and it was clearly their contribution.
But because they were also able to do other things,
that's where the delusion comes from.
Because we can doesn't mean we should.
Hey, we could serve that market.
We could serve this market.
And especially when you start becoming profitable
and the company goes into that fast growth pace,
as you think of the bell curve
of the life cycle of a business,
as it hits that early growth curve,
we call that the go-go phase.
When it hits that go-go phase,
the number one threat to the business
is expanding into too many areas.
Again, this is very normal.
What's not normal is to let that
become a pathological problem
that threatens the very existence of your business.
Your people get burnt out, they can't multitask,
and they can't follow you in complexity.
So neuroscience teaches us
that when a leader masters the art
of making things so simple everyone can follow,
and honestly, there are leaders
who deal with unbelievable complexity.
I mean, take SpaceX.
Launching rockets must be one of the hardest things.
Satellites, rockets, and a vision to take us to Mars
might be one of the most complex human endeavors,
which in most cases, most of us would think,
well, that's the purview of governments.
That's not the purview of a private company.
But if you walked into SpaceX's lobby,
there'd be two massive pictures on the wall.
One is of Mars today, the barren red planet,
and the other is a full-functioning city,
obviously an artist's rendering
of a city with a million people.
That's it.
How simple is that?
So can you make your business that simple?
Can you make it so simple that everybody can follow that?
So I'm gonna tell you up front,
this takes huge leadership courage,
because what we're about to do
is go through a three-step process that is not easy to do.
You're gonna have pushback,
and the biggest pushback you're gonna get is from yourself,
because I like that program.
I like, you know, whatever it is,
because think of how a rosebush works.
If any of you are gardeners
or have any sense of how this works,
when you prune the rosebush,
you make all the resources go to the best roses.
So there are three types of roses on your rosebush,
in our analogy here.
There are those that are thriving.
They are your best roses.
There are those that are doing fine.
And then those are just,
those who are sick or busy dying, or have already died.
So those three categories.
Great roses, you know, the best roses,
good, but not the best,
and then poor to dead.
And every business has three different sets of roses
going on in their business.
So at the moment,
we're talking about your products and service offerings.
We're not so much talking about your people.
We're talking about your products here for a minute, right?
So here's the first question you might wanna ask.
ask yourself. Question number one. What in our organization right now is sick and not
going to get well? There's a point as a leader that a product strategy or maybe something
you're attached to is not going to change, well not easily or not without huge capital
or without sucking more resources from the company. All those nutrients, those resources
in the company cannot be pushed up to the level to make the sick thing well. And maybe
it's as simple as the season has passed. Recently we've just had to move our logistics and infrastructure
group across to Amazon. So we had to move from Pennsylvania to Amazon. And as we're looking
through all the products and inventory, I noticed we still sell CDs. And I said, why?
Why do we still sell CDs? We have streaming products, we have all this other stuff. So
what happened is that time has passed. So I joked and said, you know, we could really
ramp that up and offer VHS tapes to explain how to use the CDs. So I mean, you know, at
some point you have to blow up your own products before the market does. And it's difficult,
especially if the person involved is maybe someone who started that division or it was
their brainchild or there's some personal reason. Warren Buffett refers to this as the
institutional imperative. And what that means and what Buffett is speaking about here is
that typically like a CEO wants to acquire a company. So they send out all their people
and then everybody comes back for the most part and tells them why this is a good idea
and how it's going to work. Nobody wants to tell the CEO this is a really dumb idea. Right.
So anyway, they take the hard decision. They're going to do it. And then, of course, it doesn't
go well. So what does the CEO have to do? Pour more money. We call this pushing more
good money after bad. But because we're now so far into it, does any of this sound familiar?
We better just keep going. How many of you know exactly what I'm talking about? Right.
Yeah. So sometimes you have to do the hard thing and end the pain, put it out of its
misery. And if it's sick and not going to get well, it's time to call it a day. It's
time to have a necessary ending. And this is what separates, you know, mediocre, even
good leaders from great leaders. Great leaders are not afraid to create a necessary ending
and call it a day. And it's just time to call it. Then there's stuff in your organization
that's even worse. It's dead and it simply needs to go. It's like it's dead. It's just
looking for a place to lie down. Any of you got that going on in your business? Let's
just be honest. Let's just have a nice burial. Do the reality check. It was great while it
lasted. Yesterday is gone. Today's a new day. Stop that already. Let's just stop. Let's
stop the pain. Let's just let that thing die then already. And in our particular case,
as we're moving to a different logistics company, I literally gave instructions to burn and
to destroy all the inventory we don't want to sell anymore. It's literally dead. And
for some reason, and when I looked at the actual economics, it was so tiny, but nobody
paid attention until we had to move. And then it was clear. So as we're going through that,
and then the last category is the category of what are our best roses. Eighty percent
of the life of the business is in 20 percent of what you do. By the way, that parade of
principle holds even after you've trimmed out the stuff, because with time, more stuff
will get added. So doing the repruning is probably a good exercise to do this once a
year. Some of you have heard this training before, and here is a great opportunity for
you to hear it every single year. This should be an annual exercise in which you go through
and say, where is the life of our company? And then let's put all the nutrients, all
the resources behind that, and let's kill off the 80 percent we don't need. If you had
to get rid of 80 percent of your products, and I said to you, there's a 10 million dollar
bonus for you if you get rid of them in 24 hours. Would that be enough incentive for
you to get really clear about what the 80 percent that needs to go is? 10 million dollars
or nothing? Okay, 24 hours, go, start. So come back to me in 23 hours time and tell
me which things we're selling, getting rid of, closing. So what's dead and just simply
needs to go? What's sick and not getting well?
And what is the 20% of the business, where the life of the business is?
So, do we sell the players too?
Yes.
So, the question was, do we sell the CD players?
I think we should and get VHS machines.
I mean, let's just go all in, you know.
So, I think that'll be great.
So, I want to say to you this one thing.
As you're thinking about this as an annual exercise for your business,
great leaders make these hard decisions.
And when you make these hard decisions, it is very difficult.
When I first came to Brilliant, we used to be two businesses.
We had a publishing house and we had our resource training facility capability.
And when I shut down the publishing house, outsourced it, made it all one business,
it was tough because the publishing house was where the business started.
It's where the initial resources were built and those resources what led to the second business.
And so, many of you are in a situation where you have a starter business,
but what it's led to is where the actual life of the business is.
Let me give you another example.
Many of you use Slack as a product, right?
Anybody use Slack?
If those of you that are using Slack will know that that came from a gaming company
who are trying to improve their communications and they needed something to take up the Slack.
So, when they did that to take up the Slack,
they put themselves in an unusual situation that they inadvertently created a powerful product,
which became, I think, within a few years became a $10 billion business by itself.
So, what wasn't the initial product became the main business.
So, if you keep doing this review,
where's the life of the business, the 20% that carries 80%?
You say, well, if you've corrected that, surely, yeah, but within a year, trust me,
stuff will get added.
And if you're a big company, within a month.
So, it's just what it is, right?
So, this is just the human nature.
It's the nature of systems to become complex,
and it's the nature of great leaders to make them simple.
So, I hope you enjoyed that.