Clockwork: Design Your Business to Run Itself

by Mike Michalowicz

  USING INSIGHTS GAINED FROM ANALYSIS

  Recall Cyndi Thomason’s story about how she was able to free up her Doing time and grow her business when she discovered her company’s QBR: providing peace of mind to her bookkeeping clients. As her team adjusted to the Clockwork approach, Cyndi realized she needed to make a few changes.

  Bree, one of her bookkeepers, was having challenges. Though she was super friendly and the clients loved her, she was not performing at a consistent level. She was great at documenting her processes and was enthusiastic about helping her team members, but she was more of a big-picture thinker; details were not her strong suit. As a result, some of the clients who loved her became frustrated when she could not deliver the services in a consistent manner.

  At this juncture, most entrepreneurs would conclude that the employee can’t do the work they are supposed to, and fire them. But Cyndi is cut from the Clockwork cloth, as it were, and instinctively knows she must match a person’s traits to the tasks that benefit most from those traits. She knew she had someone with an amazing natural talent for communication on her hands, and Bree would thrive if Cyndi had the work for her. The goal was not to make the work, only to find the work if the business could truly benefit from it.

  At the same time, Cyndi’s assistant, Sarah, was leaving to travel the world with her husband and agreed to help Cyndi find her replacement. In the process, Sarah told Cyndi about the challenges she experienced with her position. She said that having an accounting background would have made her better able to assist and take care of the load Cyndi was carrying.

  As Cyndi and I worked to balance her team, making note of the tasks each team member considered to be joyful and their natural traits, it became obvious that the duties Cyndi needed to shed were actually related to Bree’s skill set with setting up systems, creating education programs, and managing the marketing technology.

  “The results have been amazing,” Cyndi told me. “Bree is a dynamo. At first she was doing behind-the-scenes quote prep, and I talked to the client. She did so well with that, now she is screening the clients, prepping the quotes, and presenting them to the clients.”

  Moving Bree into a new position as Cyndi’s assistant solved three team issues: it removed Bree from work that didn’t suit her and into a position that she enjoyed, while also harnessing her skills and inclinations to tackle the unique challenges of the assistant’s position, which allowed Cyndi to unload more Doing. When we understand what is working for our team members and what they are naturally inclined to do, we can move the right people into the right positions.

  A few months later, right before this book went to print, Cyndi emailed me to say that for the first time ever, her company had engaged and begun to service a new client without Cyndi having any idea who the client was. Meaning Bree and the rest of the team were handling everything. Cyndi dropped a quick email to the new client and said, “I want to thank you for working with us.” And the response came back a moment later, “I love your company. This has already been a wonderful experience. Thank you for all you and your team does.” In the past, Cyndi was on the front lines of all communication with their clients. Now, a few short months after balancing her team, all she had to do was send one thank-you email to a very pleased client. That is Clockwork, my friend! Boom! Now let’s do this for your business.

  EXERCISE: CLOCKWORK TEAM TIME ANALYSIS

  For a business to stay afloat and grow, it must be actively Doing things that its clients value. The Designing work is about creating the best way to do things your clients value, and have your company do those things on automatic.

  Kyle Keegan owns a disaster (fire and flood) clean-up service, Team K Services, and he loves getting out there and helping people. He loves doing the work. He gets his hands dirty, literally, every week for at least a few hours. And he learns from the field how to make his company run better. The QBR he identified for his company is extremely fast and accurate estimates. This gives customers, who just hours ago in many cases experienced a disaster, a very quick understanding of how they can recover and what it will cost.

  But Kyle realized that his Doing was stalling company growth. So he looked at his internal team to determine people’s strongest traits and see whether anyone had the traits to serve the QBR. Once he figured that out, he could shift to more Design time and take his company to the next level. He found two ideal people for the role, and then balanced the team to ensure the QBR was protected and served, that the work was getting done, and that he had Design time to himself. To keep the business in balance he did the Team Time Analysis. You can, too.

  Here’s how you conduct your own Clockwork Team Time Analysis:

  As I shared previously, the optimal percentages of work balance for companies is 80/2/8/10. Eighty percent is Doing: getting tasks done that directly or ultimately serve the customer and bring value to them. Two percent is Deciding for others: making necessary approvals, helping employees with decision making in unusual circumstances. Eight percent is Delegating the management of resources. To reiterate, Delegating is NOT making decisions for others; it means assigning ownership to others and providing the necessary leadership to bring about a larger outcome. Ten percent is Designing strategy. This is about making the other three levels—Doing, Deciding, and Delegating—more and more effective.

  A single-employee company (just the owner) is the entire company. So their job/task breakdown should target 80/2/8/10.

  When you have multiple employees, you want to balance the team to bring the average to 80/2/8/10. For example, your individual time may be 60 percent Doing, 4 percent Deciding, 16 percent Delegating, and 20 percent Designing. Assuming you have one other employee who works the same amount as you do, they will need to be 100 percent Doing in order to bring the aggregate of Doing for your company to 80 percent, as their 100 percent and your 60 percent averages out to 80 percent. Similarly, Deciding would now be 2 percent for the company (the average of you both), 8 percent for Delegating, and 10 percent for Designing.

  Use the Team 4D Time Analysis chart to figure out the balance for your company. Put in each person. Weigh the amount of time they work for the company in relation to the total company. For example, if you work eighty hours a week (we need to fix that fast, by the way, because your working that much is not in the spirit of Clockwork) and another employee works eight hours a week, your work is weighted ten times more than the employee.

  PUTTING IT ALL TOGETHER: THE FIRST FIVE STEPS IN ACTION

  Now that you’ve learned the first five steps to clockwork your business, I’ll show you how those steps work together to not only streamline your business, but create massive growth. In this fictional scenario, we’ll talk about Outlandish Dish, a culinary tourism company specializing in European excursions for English-speaking foodies primarily from Australia, Canada, the United Kingdom, and the United States. On their three-day “quick study” trips and fourteen-day “immersion” adventures, guests experience authentic local cuisine in different countries. They meet the chefs, learn the history of the food, and meet local farmers and artisans who create specialty items.

  The owner, Roberto Nolletto, is an Italian expat who moved to Paris, where Outlandish Dish is headquartered. He oversees the company, runs its marquee trip four times a year, and develops new programs. Roberto started the business because he loved experiencing different food and cultures so much that he was doing his own trips and bringing friends. Eating a meal with Roberto and listening to the stories and history had his friends lining up to go with him, so he decided to launch Outlandish Dish and make a business out of his passion.

  A common trip starts with dining in Geneva on the fabled cheese dishes, traveling through Germany to try their wursts (which, ironically, are their bests), enjoying the most incredible breads and pastas from Italy, and finishing the trip in France to feast on wine, pastries, and world-class entrées. The final
night of each trip includes a cooking experience, where, under the guidance of a world-renowned chef, guests prepare a meal, dine, and then party the night away. These events have landed Outlandish Dish rave reviews and international press.

  The problem is, even though the United States and Canada are the company’s biggest market, they struggle to pull customers from there. They do heavy marketing in the US, yet only 20 percent of their customers are American; 80 percent of their customer base comes from Australia and the UK.

  Roberto wants Outlandish Dish to run (and scale) like clockwork, but it is stuck. They generate $3.5 million in annual revenue, but the company is only marginally profitable. They employ twenty-five people, including Roberto, fourteen additional tour guides, one website developer, one marketer, two salespeople, three tour planners, one admin, and two bookkeepers. Roberto doesn’t feel he can afford to make new hires, but at the same time his staff is maxed out. He needs more people to help market more effectively in the United States, and more tour guides. Roberto helps with the marketing, scouts new tours, and leads the marquee fourteen-day tours. He can’t work any more hours, and he is exhausted.

  As he begins the Clockwork steps, Roberto does the sticky note exercise for himself and his employees. Roberto is one of those “I can do everything” entrepreneurs, who fills a mix of roles at his company. He identifies his six crucial jobs as scouting out new tours, recruiting tour guides, connecting with his guests (and sharing stories), managing the cash, running the marquee tour, and maintaining relationships with vendors. Roberto has his team do the analysis, too, identifying the Primary Jobs for his peeps. For his tour guides, the Primary Job is the active management of a tour as it is in progress. The sales team’s Primary Job is not to “sell to anybody” but to match the right trip to what people really want, as opposed to what they think they want. Everyone has a Primary Job, including Roberto, which is his almost uncanny ability to connect with guests. When he does, those guests become lifers, with more than half the guests coming back year after year, for a decade or more. If Roberto doesn’t connect with the guests himself, the “repeat rate” of guests plummets to less than 20 percent.

  With all the sticky notes of Primary Jobs on the table in front of him, Roberto goes through the deductive process until he is left with the “one for the wallet.” It is clear what makes all the difference to the company, so Roberto declares his QBR is connecting with guests. He is such a good storyteller that people get excited about their adventure before the trip begins, stay excited while they are there, and talk excitedly about their trip after they get home.

  Next, Roberto starts the QBR protection, which means that he has to first and foremost get rid of the task that is taking him furthest from the QBR: the marquee trip. He needs more time to connect with prospects and get them excited about taking one of their trips, and with guests who have booked upcoming trips. The tour guide assigned to take over does well, and Roberto’s time is freed up in a big way. But soon after the first trip, complaints come in, and they all sound the same: “What happened to Roberto? Where are the stories?” Turns out, people loved the tour and the food, but they missed Roberto. As a result, his business is still stagnant.

  At first, Roberto thinks he needs to go back to how he used to do things and do the marquee event by himself again, but he knows that is a fool’s folly. It would just get him back to where he was before, to what wasn’t working. He knows he needs to make his business run at a new level, and that requires that he think and do differently.

  Because Roberto does not go back to running the big trip that took up so much of his time, he has time to think about his QBR. One night, while talking with his new in-house booker, Mariette, she says, “Our company QBR is storytelling. You serve the QBR. Running an entire trip is not the QBR, but your story times are. Why don’t we have you drop in on a trip near the beginning, and then again on the final night? Instead of running a trip for two weeks, you can serve the guests on the trip for a day or two. And, since almost all of our tours pass through Paris, our home base, many of these story times will have you out of the office for just four or five hours.”

  Roberto likes the idea but is skeptical. He knows storytelling is the QBR, but he struggles to believe that showing up only at the beginning and end of a trip will have a big impact.

  Roberto is right. That small tweak to the approach doesn’t have a big impact. It has a massive impact.

  When he shows up for the mingling and dining parts of the trips, he is on fire. He isn’t drained from travel, so he’s able to be present in a big way. He regales the guests with stories, and they hang on every word. And, because Roberto isn’t tied up for two weeks running the marquee adventures, he can now visit with every tour group, including those on the three-day trips.

  Raves pour in. People who experience the three-day trip now start booking the fourteen-day trip. People want more adventures. They want more stories with their meals. And now, instead of 50 percent of just the marquee trip guests repeating trips, every trip is getting a 50 percent rebooking rate. Within a year, sales increase to $4.5 million. Outlandish Dish is no longer one of many culinary tourism companies; it is the culinary tourism company. It increases prices, and margins. Roberto captures systems for some of the other tasks on his six sticky notes so that his team can take over more of the Doing and give him more time for Designing.

  Two problems remain: The first is that the team is still only twenty-five people, but with everyone focused on protecting the QBR, the demand has taxed the tour guide team and they need to make a new hire. The other is that sales from the US market continue to be a dribble.

  Roberto does the Team Time Analysis to first address the challenge of his overloaded team. He evaluates the Team Time Analysis and discovers that this company is heavy in the Deciding, Delegating, and Designing phases, almost 40 percent. He is shocked, because his tour guides are constantly saying how busy they are (Doing).

  Looking into it further, the percentages start to make sense. Roberto realizes his three tour planners are contributing to the skewed 4D Mix. Tour planners carry out many administrative tasks, and their jobs are heavy on Deciding (making decisions for tour guides), Delegating (assigning resources and responsibility to tour guides), and Designing (formulating a variety of new tours). As a result, these tour planners are also overloaded and stressed. Since most of the tours are already established, having three tour planners seems to be too many, as there’s no need to create so many new itineraries. Instead of creating new tours, he decides to do more of what was working. He decides to keep the most successful existing tour and freshen it up every year with new restaurants and new chefs, but the rest can stay the same: same cities, same sites, same hotels, same transportation. This change frees up his tour planners and reduces all of the associated Deciding, Delegating, and Designing.

  With the goal of supporting the tour guides who also need relief, Roberto does the Job Traits Analysis for his team. The key job trait for a tour guide is customer care. Roberto loves the tag line: “No one cares about how much you know, until they know how much you care.” Knowledge of the area is important, addressing the problems that spring up as things move along is important, but nothing is as important as caring for the customer.

  Evaluating the results of the Job Traits Analysis, Roberto notices that Janet, one of his three tour planners, is extraordinary at customer care. An American expat who moved to Paris to care for her grandmother in her final days, Janet fell in love with the city and all of Europe. In her work as a planner, her care for people shines. For example, she is known for sending gifts to the chefs and vendors she meets while scouting for tours, and staying in touch with them even if they don’t become part of a trip. While she’s never run a tour, she has the key trait that positions her for great success.

  Roberto schedules a tour for Janet, and as tempted as he is to ride shotgun with her in this process, he knows the company must be des
igned to run itself. So he sends her to shadow an existing guide on one of the three-day tours. She learns from the guide, and on the third day she runs the trip. The other guides give Janet high praise. Then Roberto schedules Janet’s first solo trip, and has the other guides pop in throughout the trip to give her support, which she rarely needs. On her second solo trip, Janet is completely on her own. Within a few months, she becomes one of their highest-rated guides.

  Outlandish Dish still has a twenty-five-person team, and with a focus on improving successful tours rather than creating new ones, Roberto realizes that two scouts is too many. He looks at their traits. One of the scouts, Sankara, is a videographer and editor. Every time he gets a chance to make a video, he does. Roberto remembers a suggestion Mariette made at one point. She thought videos would be helpful to break into the US market, but Roberto couldn’t fathom assigning that task to someone when most of his team was working overtime to meet demand. He asks Janet about this idea, and she tells him that Americans watch more video on Facebook and YouTube than they watch television.

  Roberto matches the new job of tour videographer to Sankara’s talent. Within two days, Sankara films the first video with Roberto and Janet. Targeted for the US market, the video features Janet talking about the life-changing experiences Outlandish Dish provides. Then she introduces Roberto, who shares an amazing story of how Christopher Columbus crossed the ocean to discover the riches of America, and now he is personally inviting Americans to come to Europe to discover the rich foods. He shares stories of laughter and tears with his past American guests and invites the new guests to visit so that he can personally pour their wine on arrival.