WEBVTT

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So, I want to talk about this whole idea of shaping up your business and one of the fastest

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ways for you to shape up your own business is to reset what's the core thing we're doing

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or another way to look at this is necessary endings. So, when we're looking at a business,

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we know that clarity drives simplicity and then simplicity drives speed. This is one

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of the most powerful things that GE became very good at doing is that to become simple,

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you have to be confident. You have to have a tremendous amount of self-confidence because

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self-confidence, it takes, as we've said many times, that when you're in complexity, you're

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still the student. When you're in simplicity, you've become the master. And so, it takes

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a certain amount of confidence to say, we're going to be this simple because simplicity

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drives speed. And you know, one of the hardest things to do as a leader is to simplify because

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it's genuinely, it's not about the right plan. So many leaders think it's about the right

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plan. It's not about the right plan. It's about the team being able to follow a simple

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plan. And we're going through this ourselves in our own business that you build up and

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somehow by itself, it just gets really complex. And the next minute, you're in all this complexity.

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And the problem with complexity is there's three major problems. One, your team can't

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follow you, which means two, they can't generate creative backend systems and support and infrastructure.

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And three, they can't promote something that's complex. So, it hurts sales. It hurts fulfillment,

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the ability to execute and support. All of that suddenly gets bogged down and you find

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yourself slowing down. So, if you find yourself in that spot, usually, it's because you're

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not simple. So, we're going to get into a practical simplicity exercise here in one

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minute. So, you know, a lot of people say, well, you know, I just hope the team will

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make something. No, it's the leader's job to constantly push for simplicity. That's

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your job as a leader. And it doesn't matter where you are in leadership in the organization,

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whether you're the CEO, as we've talked and said, the concept here is that we're a team

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of leaders, not just a team with a leader. We don't just look to the leader and say,

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it's your job to create simplicity. It is primarily theirs to make sure simplicity is

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constantly on the agenda. But it is every leader in the organization's role to get rid

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of complexity. Because the best thing to do is simplify. You know, and we'll get into

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this in later trainings, where some things you just need to delete them. Because a lot

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of times what we do is we spend time optimizing something that shouldn't even exist. And here's

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the thing, in the same way that your brain cannot multitask, team people can't focus

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and follow you. I remember listening to one particular leader and this leader would get

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up and once a month would have some new vision. It was like vision of the month, you know.

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And you had no idea. It was like, okay, now that's the vision, then this is the vision.

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Now with three or four visions in, what happened to the first vision? Oh, well, we're still

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kind of keeping that going. Oh, what about the second? Well, it's not as important. The

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third? Oh, no, no, that's still important. So where's this fourth one fit? So what happens

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is people get lost. And this is so easy to do, no matter how skilled you are as a leader,

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no matter how many years of experience you have, this is a constant fight. Because simplicity

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is a way to protect your core offering to the market. And the fastest, when the minute

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that gets diluted, and the bigger the organization gets, the more challenging this becomes. And

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so great leaders are very good at inhibiting things. In other words, this is the main thing,

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I'm inhibiting everything else. I'm saying no to all this other stuff, but these are

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great ideas. So we don't want to do the next big thing, the next shiny thing as the leader.

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That's the worst thing we can do as leaders. And from time to time, we all get caught up.

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Maybe just because at this time in history, we're having AI introduced, it's hard not

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to wonder, where does that fit in? And so that is for us one of the big drivers as great

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leaders.

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So let's go through an exercise together, and let's talk about three pruning techniques,

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three ways to bring that level of simplicity. And the most, speaking of simplicity, a simple

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analogy to explain simplicity would be a rose bush. Did you know that a rose bush produces

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more roses than it can sustain? Does that sound like your business? Producing more rose

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buds than it can actually sustain?

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And that's for me.

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Most of us, we produce more ideas and more products

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than we can actually sustain

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because we kind of fall in love with them

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or we always had that one

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or that's really important to us and so forth.

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So the fastest way to get to this

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is firstly acknowledging that we all do this.

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We all produce more roses than the bush can sustain.

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We all do this, right?

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So in that case, the people who learn the opposite,

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those who learn that and are aware of this

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know that 80% of the life of the business

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is in 20% of the business.

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That is a big thing to say.

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Take a minute and think about the implications of that

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to you in your business.

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80% of the life of the business is in 20% of what you do,

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right?

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So in our business, we know what that is.

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And I have to constantly refocus our business on the 20%

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because I'm usually the culprit opening it up

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and making it broader than it needs to be.

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So this reminds me of a guy

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who bought a $25 million business

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and it had four, sorry, five major divisions.

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Now here's the strange thing about each division.

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Each division was profitable.

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So $25 million revenue business

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and each division of the five divisions are all profitable.

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What would you do in that situation?

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I wonder if you would do what he did.

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I wonder if you would sell off four of them.

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Close them, sell them, get rid of four of them.

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Because he knew that 80% of the life of the business

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was in 20%.

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So he identified the one core business

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that he thought they were in

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and where the life of the business was in.

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It was the thing that customers most responded to,

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most loved, and it was clearly their contribution.

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But because they were also able to do other things,

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that's where the delusion comes from.

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Because we can doesn't mean we should.

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Hey, we could serve that market.

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We could serve this market.

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And especially when you start becoming profitable

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and the company goes into that fast growth pace,

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as you think of the bell curve

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of the life cycle of a business,

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as it hits that early growth curve,

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we call that the go-go phase.

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When it hits that go-go phase,

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the number one threat to the business

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is expanding into too many areas.

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Again, this is very normal.

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What's not normal is to let that

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become a pathological problem

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that threatens the very existence of your business.

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Your people get burnt out, they can't multitask,

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and they can't follow you in complexity.

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So neuroscience teaches us

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that when a leader masters the art

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of making things so simple everyone can follow,

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and honestly, there are leaders

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who deal with unbelievable complexity.

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I mean, take SpaceX.

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Launching rockets must be one of the hardest things.

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Satellites, rockets, and a vision to take us to Mars

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might be one of the most complex human endeavors,

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which in most cases, most of us would think,

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well, that's the purview of governments.

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That's not the purview of a private company.

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But if you walked into SpaceX's lobby,

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there'd be two massive pictures on the wall.

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One is of Mars today, the barren red planet,

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and the other is a full-functioning city,

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obviously an artist's rendering

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of a city with a million people.

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That's it.

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How simple is that?

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So can you make your business that simple?

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Can you make it so simple that everybody can follow that?

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So I'm gonna tell you up front,

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this takes huge leadership courage,

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because what we're about to do

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is go through a three-step process that is not easy to do.

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You're gonna have pushback,

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and the biggest pushback you're gonna get is from yourself,

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because I like that program.

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I like, you know, whatever it is,

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because think of how a rosebush works.

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If any of you are gardeners

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or have any sense of how this works,

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when you prune the rosebush,

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you make all the resources go to the best roses.

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So there are three types of roses on your rosebush,

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in our analogy here.

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There are those that are thriving.

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They are your best roses.

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There are those that are doing fine.

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And then those are just,

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those who are sick or busy dying, or have already died.

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So those three categories.

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Great roses, you know, the best roses,

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good, but not the best,

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and then poor to dead.

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And every business has three different sets of roses

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going on in their business.

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So at the moment,

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we're talking about your products and service offerings.

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We're not so much talking about your people.

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We're talking about your products here for a minute, right?

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So here's the first question you might wanna ask.

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ask yourself. Question number one. What in our organization right now is sick and not

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going to get well? There's a point as a leader that a product strategy or maybe something

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you're attached to is not going to change, well not easily or not without huge capital

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or without sucking more resources from the company. All those nutrients, those resources

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in the company cannot be pushed up to the level to make the sick thing well. And maybe

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it's as simple as the season has passed. Recently we've just had to move our logistics and infrastructure

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group across to Amazon. So we had to move from Pennsylvania to Amazon. And as we're looking

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through all the products and inventory, I noticed we still sell CDs. And I said, why?

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Why do we still sell CDs? We have streaming products, we have all this other stuff. So

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what happened is that time has passed. So I joked and said, you know, we could really

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ramp that up and offer VHS tapes to explain how to use the CDs. So I mean, you know, at

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some point you have to blow up your own products before the market does. And it's difficult,

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especially if the person involved is maybe someone who started that division or it was

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their brainchild or there's some personal reason. Warren Buffett refers to this as the

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institutional imperative. And what that means and what Buffett is speaking about here is

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that typically like a CEO wants to acquire a company. So they send out all their people

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and then everybody comes back for the most part and tells them why this is a good idea

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and how it's going to work. Nobody wants to tell the CEO this is a really dumb idea. Right.

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So anyway, they take the hard decision. They're going to do it. And then, of course, it doesn't

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go well. So what does the CEO have to do? Pour more money. We call this pushing more

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good money after bad. But because we're now so far into it, does any of this sound familiar?

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We better just keep going. How many of you know exactly what I'm talking about? Right.

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Yeah. So sometimes you have to do the hard thing and end the pain, put it out of its

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misery. And if it's sick and not going to get well, it's time to call it a day. It's

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time to have a necessary ending. And this is what separates, you know, mediocre, even

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good leaders from great leaders. Great leaders are not afraid to create a necessary ending

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and call it a day. And it's just time to call it. Then there's stuff in your organization

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that's even worse. It's dead and it simply needs to go. It's like it's dead. It's just

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looking for a place to lie down. Any of you got that going on in your business? Let's

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just be honest. Let's just have a nice burial. Do the reality check. It was great while it

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lasted. Yesterday is gone. Today's a new day. Stop that already. Let's just stop. Let's

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stop the pain. Let's just let that thing die then already. And in our particular case,

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as we're moving to a different logistics company, I literally gave instructions to burn and

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to destroy all the inventory we don't want to sell anymore. It's literally dead. And

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for some reason, and when I looked at the actual economics, it was so tiny, but nobody

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paid attention until we had to move. And then it was clear. So as we're going through that,

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and then the last category is the category of what are our best roses. Eighty percent

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of the life of the business is in 20 percent of what you do. By the way, that parade of

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principle holds even after you've trimmed out the stuff, because with time, more stuff

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will get added. So doing the repruning is probably a good exercise to do this once a

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year. Some of you have heard this training before, and here is a great opportunity for

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you to hear it every single year. This should be an annual exercise in which you go through

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and say, where is the life of our company? And then let's put all the nutrients, all

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the resources behind that, and let's kill off the 80 percent we don't need. If you had

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to get rid of 80 percent of your products, and I said to you, there's a 10 million dollar

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bonus for you if you get rid of them in 24 hours. Would that be enough incentive for

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you to get really clear about what the 80 percent that needs to go is? 10 million dollars

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or nothing? Okay, 24 hours, go, start. So come back to me in 23 hours time and tell

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me which things we're selling, getting rid of, closing. So what's dead and just simply

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needs to go? What's sick and not getting well?

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And what is the 20% of the business, where the life of the business is?

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So, do we sell the players too?

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Yes.

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So, the question was, do we sell the CD players?

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I think we should and get VHS machines.

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I mean, let's just go all in, you know.

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So, I think that'll be great.

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So, I want to say to you this one thing.

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As you're thinking about this as an annual exercise for your business,

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great leaders make these hard decisions.

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And when you make these hard decisions, it is very difficult.

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When I first came to Brilliant, we used to be two businesses.

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We had a publishing house and we had our resource training facility capability.

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And when I shut down the publishing house, outsourced it, made it all one business,

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it was tough because the publishing house was where the business started.

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It's where the initial resources were built and those resources what led to the second business.

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And so, many of you are in a situation where you have a starter business,

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but what it's led to is where the actual life of the business is.

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Let me give you another example.

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Many of you use Slack as a product, right?

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Anybody use Slack?

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If those of you that are using Slack will know that that came from a gaming company

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who are trying to improve their communications and they needed something to take up the Slack.

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So, when they did that to take up the Slack,

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they put themselves in an unusual situation that they inadvertently created a powerful product,

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which became, I think, within a few years became a $10 billion business by itself.

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So, what wasn't the initial product became the main business.

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So, if you keep doing this review,

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where's the life of the business, the 20% that carries 80%?

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You say, well, if you've corrected that, surely, yeah, but within a year, trust me,

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stuff will get added.

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And if you're a big company, within a month.

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So, it's just what it is, right?

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So, this is just the human nature.

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It's the nature of systems to become complex,

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and it's the nature of great leaders to make them simple.

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So, I hope you enjoyed that.