Building Command Infrastructure that Scales with Richard Walsh

Speaker A: You have a hostage situation. That's what you think.

Speaker B: Exactly.

Speaker A: And you're the hostage. If a standard is not enforced, it does not exist.

Speaker B: Today, I'm excited to welcome Richard Walsh, U.S. marine veteran, best selling author and founder of Sharpened Impact.

Speaker A: We call it tolerance accumulation. Every time you make a little more toleration, that grows, it compounds week after week, month after month, year after year. 0809 was a big inflection point where I lost everything. Business crashed, you know, everything was shutting down. Right. No one's spending money. I got six little kids under four years old, you know, dealing with, like, what do I do now? I'm losing my house, I'm losing this and everything else. That sounds like the, you know, a tragedy. It was a great thing. Looking back, of course, it always is. It was my leadership that failed. Right. I didn't go to counsel. Right. I didn't ask anyone. I had a billionaire client, like, trying to give me business advice and I literally, like, well, what do you know, the floor itself, that's, uh, where the majority of profit leakages. It's millions of dollars.

Speaker B: Welcome to Revenue Science, the show where we translate marketing and sales complexity into boardroom clarity for CEOs, founders and leaders who are building predictable growth systems. I'm Rich Smith, CMO founder, executive advisor, and lucky enough to be your host. Thank you for listening today and please join our goal of helping more leaders to successfully grow their companies by liking and subscribing to this podcast. Entrepreneurship is the engine that drives our economy, and when founders succeed, they improve the lives of their family, their employees, their community, and lastly, but most importantly, their customers. Today, I'm excited to welcome Richard Walsh. Over 35 years in business and leadership, Richard is focused on one challenge. Many organizations underestimate frontline leadership. His work centers on turning operational chaos into control, strengthening accountability, and helping organizations eliminate the hidden leaks that quietly drain profit and performance. Richard's perspective is particularly interesting because so much of what drives operational performance mirrors what we discuss on this show around revenue systems and behavioral science, leadership incentives, decision making, culture, and execution all shape outcomes. Today we'll explore what executives can learn from frontline leadership systems, why many organizations create complexity instead of clarity, and how leaders can engineer better performance from the ground up. Richard, welcome to the show.

Speaker A: Rich, great to be here. Thanks so much for having me.

Speaker B: Yeah, I'm really excited about our conversation today. Uh, you and I had a chance to speak on your podcast actually, uh, a few weeks ago and was, uh, such a good conversation that I think we both decided hey, let's keep it going. Let's, let's do a round two. I, I thought, you know, so you're new to my audience, so if you could maybe give us, uh, yeah. A 60 second version of sharpened, uh, impact who you serve, what kinds of problems you solve and your current focus.

Speaker A: Absolutely, absolutely. Yeah, it's, uh, yeah, it's relatively simple. So what I always tell people is most companies don't have a people problem first. They have an infrastructure. Infrastructure problem. Okay? Just hard to say. All right, so most of them have standards. They got dashboards, they got meetings, they got processes. KPIs, they've got all that, right? But when pressure hits, the standard still drifts, right? So the invisible, that, that's what I call the invisible layer. And that's really what I focus on. So execution doesn't break because SOPs disappeared. It breaks because the operating structure around the SOP doesn't protect it under pressure. Right. So, so my work's about helping companies install command where leadership training usually fails. Because here's just to give a definition, command's not a personality, it's the consistent enforcement of standards under pressure. Right? So that's kind of my world.

Speaker B: I love that definition. And I think, you know, it's obviously, or it sounds to be coming from, ah, you know, your military background. Um, but I think that that concept is applicable broadly to businesses and leadership. I wonder what, what do you think about that? How do you talk about that principle with your clients and the people you work with?

Speaker A: Yeah, Rich, that's a, that's a good insight because it's, yeah, I have military background. I do apply some of this, but it's not that, right? It's, it's not barking orders, it's not, you know, it's not demeaning, it's none of that kind of stuff. But the principles being holding on to the enforcement of a standard, maintaining that clarity when the pressure, when things are tight, right? When things happen. Because when you don't, okay, that's when things can turn really bad. Now you can put it in the military standpoint, people can die, okay? But you can also put in the manufacturing standpoint, that can lead to a lot of problems. Um, not just physically, but financially, right? That's where, that's where it all drifts. So if you think about being upstream, they have, you know, you got your systems, you got your processes, you got your green lights, your red lights, you know, we're upstream of that, you know, because where everything breaks is what we call the command Drift. And what we learned in the military was you hold the standard no matter what, right? So we're able to push through on that. But what I had to do from a business standpoint, well, I'm not dealing with a bunch of jarheads, okay? I'm a Marine, so I can say that I'm dealing with them. I'm dealing with people, right? But it's still the issue, right? It's. It's people holding the standard, shift to shift, transfers, leadership changes, the. The number one guy not being there, that kind of stuff. So you kind of. You kind of develop a system that can operate regardless of who's running the system. That's the challenge.

Speaker B: And it sounds a lot to me, like, similar, uh, to the way I define culture within an organization. So one of the ways that I define culture and get people to understand, you know what I mean by culture is, and I'm particularly talking to a CEO or a founder, is culture is how people make decisions when you're not in the room.

Speaker A: That's it. That's it.

Speaker B: That sounds very similar to what you're saying. So I'm curious, how do you equate that, I mean, or do you equate, uh, that command architecture, that thinking, to creating a winning culture within an organization?

Speaker A: So any culture has to have infrastructure. It has to have a foundation to build on. I mean, a lot of people will talk culture. It's a little fufu, okay? And they're looking for these kind of temporary things. But culture to me begins with identity. There has to be an identity, you know, in that business, uh, whatever that might be, mine in particular, not just my business, but in the space I work in, manufacturing. It's command infrastructure, right? It's identity. We actually make them commanders. Right. But again, it's not based on them. They have a system they work inside of to uphold the standard, right? To enforce the standard. That's what's key. That becomes the culture, right? That's what they look for. They see the drift, they correct the drift. A lot of people see the problem. They'll do a workaround, they'll do little deviations, and that's okay to keep, again, keep the light green, keep throughput where it should be. But the accumulation of all those little deviations, those little alterations of the standard, eventually end up in collapse, you know, quality issues and everything else you can imagine. So from a cultural standpoint, that, that level of. What would be the word, I want to say exceptionalism, the level of enforcing the standard and maintaining that is what gives you the long term strategy, and people can attach to that, right? And they speak the same language, if you will. Ah, same vocabulary. So it crosses over very, very well. It's not dependent on that. The superstar, then you got the slacker, then you got the guy in the middle, you know, and there's three different shifts and three different things happen. So you kind of have three different businesses running at the same time. So from a cultural standpoint, that's kind of messed up, right?

Speaker B: Yeah, no, definitely. And I think, you know, when we talk about standards, um, you know, if standards are moving all the time, then no one really knows what to do within an organization. Right. Imagine, if you will, just to kind of make a real world example. If you have a dog and you let your dog out into the yard, and one day you let the dog go all the way to the edge of the woods, and that's no problem. And the next day you stop the dog halfway through the yard and you tell it, no, it's bad. And then the next day you stop it on the driveway and you don't let it get off the driveway. And then the next day you let it go to the woods. Okay? Does the dog know where its boundaries are? Does it have any idea? No, it does not. It's totally confused and it's total chaos. Now imagine you have 10 dogs or 100 dogs. You're running an organization, you're running a company, and everyone's looking at different standards all the time. Right there. There's no continuity, no chance at success, and tons of inefficiency. Uh, in a setup like that.

Speaker A: Yeah. I've got a very simple saying. It's becoming very popular. It's in my book, my new book. It's, if a standard is not enforced, it does not exist. It just cuts right to it. Just everything you just said, right?

Speaker B: Very, very simply, very simply. Easier than the example I gave.

Speaker A: But, uh, but your example works, Rich. Your example works. And that's what people need to understand, and that's what it is if they go into their company. We're talking to a lot of CEOs owners here, right? Go in and just ask yourself, okay, how personality driven, independent is this function? It's a real simple way to go in and just kind of walk the floor or whatever you got. Anything in your business is this dependent on a person? Only I had an office manager like that, right? She can do everything. It was amazing. Thank you. I can go out and get things done. I can do all that stuff till the time she's not there. And then nothing gets done. Okay. And I'm scrambling, you know, because I'm used to writing stuff on napkins and handing it to her. Right. Because that's not why I operate. Like there's no system, there's no process. And then if she decides not to come back, how do I train the next person to do everything that she did? Same principle.

Speaker B: Totally agree. And you know, I apply the same principle to founders themselves because you often find founders are involved in every aspect of the business. They're running hr, they're running sales, they're running marketing, they're running finance. And, and they don't realize it, but they become a bottleneck. I actually published an article this morning about, uh, what I call the founder led business trap, which is exactly that. You know, you get to this point where you get stuck and you plateau. And the reason is it's every little task is requiring some of the founder's time. And the founder is only one person and they only have so much time.

Speaker A: Yeah. My first book is called Escape the Owner Prison. Because you're in a pre. It's you, you're the bottleneck. You're it. You're having to do everything. You have to turn that key each day, open the door. So business happens. Really bad place to be. I love. And we've all been there. You know, I always tell people, you work hard, you wear all the hats for the first two years, getting this thing off the launch pad and everything else. But then next thing you know, 10 years goes by, you've repeated the first two years five times. And that's why you're not growing. That's why you're not even able to reach a point to scale or anything like that. So, um, oftentimes, and we all have to admit this, as founders and CEOs, we're the problem. Okay. We can't let go of certain things. Um, but once you can see that and do it and you do it with companies all the time, like, you can take them away from that. And it's unbelievable what can happen when you understand that and you start letting go and going, okay, what do I have to do? Even if you got to do it in little increments and, you know, so you don't have the separation anxiety. Right. I'll be able to do everything but talking, uh, to a company, actually a large company we're looking to acquire and great company, Family Run, I mean, deep in the film, like, they're amazing, but they're in every detail. Okay. And as we Want to accumulate and acquire other companies and roll up and it's like, okay, this is going to be a challenge. They get it. But you can say you get it, but when it comes time to do it, you know, it's gonna. There's gonna be some eggshell walking a little bit here and there, you know, as we try to wean them off of that. That control that they have.

Speaker B: Yeah, yeah. So I want to change gears a little bit, um, and get a little further into the, you know, some of your concepts around leadership. Was there an inflection point or an event in your life that changed your view of what leadership is, is and means and what it should be?

Speaker A: Yeah, I think there was. Yeah. I'd say 090809 was a big inflection point where I lost everything. It made me think, Hm. So I literally, like, business crashed, you know, everything was shutting down. Right. No one was spending money, especially on the luxury items that I provided. They could wait. So the issue was that I got six little kids under four years old, you know, dealing with, like, what do I do now? I'm losing my house, I'm losing this and everything else. And now that sounds like the, you know, know, a tragedy. It was a great thing. Looking back, of course, it always is. But it was my leadership that failed. Okay. It's what my. My decisions as the leader, you know, that bottleneck, that guy had to do everything, you know, other than my one great office manager. Right. And I look back on that, and that's when I really said, wow, I did so many things wrong. Yeah, my crew was great. You know, I was great with the guys. I could get them to. I trained them. Uh, we did a lot of good things and we built incredible things, world class stuff. But the decisions I was making rich was really. They were wrong. Right. I didn't go to counsel. Right. I didn't ask anyone. And I had people volunteering. I had a billionaire client, like, trying to give me business advice, and I literally, like, well, what do you know? You know, you're just. You just own manufacturing plants and professional sports teams. I'm like, I'm a. I build water features and do still sculpture. How can you help me? You know, because I was just that level of thick, right. Where I'm going to do all this. So that's the first thing is really opening that up to council, you know, to coaching, whatever you want to call it, Coaching, mentoring, whatever you want to put in there. Um, and really looking for better ways to lead. You know, it has to be a continuous learning process. I think that was my big flip there. I mean, it took losing everything, but like I said, I'm a little thick, but I got it now.

Speaker B: Yeah. It's funny how, um, events like that, um, can be a wake up call. And as you're going through them, they're horrendous. But then you look back and you think about how much change and growth that you had during that timeframe. Uh, I was the chief marketing officer of AIG bank in 0809. So I was like right at the epicenter of the financial crisis. So I get what you're saying. Those were definitely trying times. And I think we all learned a lot, uh, during that time period. That's a story for another day. Um, I want to get into how, you know, thinking about the businesses that you've built and run, um, do you feel like your growth came more from systems or culture or leadership, Discipline?

Speaker A: Wow. It's. Those are tough to do individually because they kind of tie together. Um, my first big thing was systemization. That was the first thing, like, why do they need me all the time? You know, I literally broke it down to the simplest thing. This is going to seem incredibly rudimentary, but. But my next business after losing the first one, I had one requirement. Okay, now we had six kids. My wife's at home, we're going to homeschool the kids. I said, okay. My goal is that if she needs me, I want to be able to be there in 15 minutes. That was my goal. That's all I had. I said, so I'm going to build this next business around that. So what do I have to do to do that right now? She never really needed me, just for the record, but that goes okay. Now I have to have this system. I have to this. I have to have other people doing the work, you know, even a little bit. In the beginning, I do it like, how do I get. Because I open a gym, boot camp style training, we're doing that kind of stuff. So I started to really learn how to build a system, build a lane, and then drop someone in it so they can function without me. Right? Because a lot of times we get where we just think they're going to figure it out and they don't. So the systemization aspect was really, really important. That's kind of your, it's kind of your foundational thought process. So that's where it began. And then you got to start. You still got to lead, right? And you have to do the other work.

Speaker B: Yeah. And you know, it is a little bit of a loaded question, right? Because all three of those things are very much interrelated. And I think you described it very well. You know, systems build culture, leadership, discipline creates systems. It's a right, it's a circular, um, process for sure. I want, I do want to double click on something you said though, about, uh, you know, replacing yourself. In essence, I'm, um, I'm using my words, maybe not exactly the words that you used, but you talked about the importance of creating systems that allow people to replace tasks and functions that you may have been doing or someone else in the organization may have been doing at, at the time. And what that does is allows you or you know, whoever within to level up. And if you're not leveling up, your company is not scaling up. You've got to scale yourself, right, in order to scale your company. And, and that's just a really, really important concept that I want to make sure, you know, our audience, uh, internalizes is think about where are you doing things that somebody else could do them cheaper than you could do it. Right. And how do you build systems to, to make them successful in that role? Do you. I'll let you react to that.

Speaker A: Yeah. And there's the big takeaway. And the last thing you said there, you have to build these, I, uh, call them lanes, right? The system, whatever it is, where you're going to drop someone. Let's use sales as an example. You get this great, a player, salesperson. Well, if you just bring them to your company and say, go sell, all right, that guy ain't staying. Because there's no system. What does winning look like? And I always tell people this, what you have to design inside this lane. Not only the how to's, you know, here's the job function, here's how to do it, here's the training, how to do it. But really what the success look like on the day, the week, the month, the quarter and the year. If they need to know how to win on the daily, okay, no one wants to come in and figure out your business. No one wants to come around, come in and figure out your sales system that has to be built. You don't. If you want C players, if you want a players to come and really move the needle, they want to get dropped in and do what they do, okay, they know how to sell. You're not teaching them how to sell. They just need to see your system, acclimate to it and run to the goal post. How do they hit that every day. So I think that's where a lot of founders and owners really drop the ball is they don't build, build these lanes out for each position. That's why they can't release it. Because if you build it that way they can jump in it and go and they're winning. Why would I stop them?

Speaker B: Yeah. And thinking specifically of sales, because you used that example and I think it's a really good one. Uh, the corollary to that is also true or the reverse of it is also true. I think a lot of times, uh, CEOs will think, well, you know, I've got these one or two rock star salespeople and everything depends on them. And if any, either of them leave, we're in a lot of trouble. And if you find yourself saying that or thinking that you have a lack of systems in your have a hostage

Speaker A: situation, that's what you do.

Speaker B: Exactly.

Speaker A: And you're the hostage.

Speaker B: Because great salespeople will sell and almost any a really good salesperson, you can plop them in pretty much any environment and they'll figure it out. But if you're asking, but they'll figure it out their way and it's not necessarily systematic and repeatable for the rest of the organization. And you know, how many rockstar salespeople are there? Are you going to build an entire team? Uh, probably not. So that element of having them work within a system, uh, is just so important to really being able to scale in a predictable way.

Speaker A: Yeah. And don't forget in that system you have to install your values, your ethics. I mean they'll go sell. All right. Okay. But you know, there's a lot of ways to sell. Okay. And there may not be something that, that you know, that aligns with your value system because you didn't lay it out, you didn't interview for that, you didn't find out what they're. Are we in alignment with that kind of stuff? So there's little things like that too that can make a big, big difference on the ability to scale or maintain your reputation alone. It's important.

Speaker B: Yeah, yeah, I agree. You know, many CEOs obsess over tactical tactics and tactic design, um, while overlooking what comes before and after, which is strategy and frontline execution. Why does that happen?

Speaker A: I think because most owners depending on again depending on the business and maybe they started from ground up. Things like that, they're hands on people. Tactical is super rewarding. It is a sense of accomplishment on the daily. That's why you see these businesses who are just Firefighting all the time. And you think, why are you doing this? They learn to love it because they're the hero. They become the hero who puts the fire out all the time. They got everyone coming to their door and knocking on it and they get addicted to that or it becomes the operational standard because they've permitted it. I've dealt with companies like that. I'm like every, I'd always say give them different lead times. I'd have to lie because if I wanted it in two weeks, I have to tell them I want it in a week. You know, if I need it in a month, I have to tell them I need it in two weeks. Because they're never on time. They're always reacting, putting out fires. So the problem is they really get stuck in that kind of realm. And that's why they can't do it. Right. They can't let go because they want to do that. They don't understand the freedom of that. You know, true delegation and what that means. I always say I want the owner, the, the top, the top of the chain here to be working on what I call their 5%. It's the 5% of the business only they can do. Right. The growth. Now we talk tactical compared to strategic. Strategic is you're looking at the whole map. Okay, let's put in a, in a battlefield, you know, um, situate scenario here, right? You got to see everything. You can't just look at one battle. You can't look at one platoon or one company. You have to see the entire map. What's the actual objective? How do you win the war? Like that's why they get caught in the tactical, because it just feels good and they're accomplishing, but they really don't take any ground. They're really in the defense. Tactical is a defensive position. Often in business situation, you know, you're kind of maintaining, you're kind of pushing. But the bat is World War I, trench warfare. Nothing moves.

Speaker B: Yeah. And I think that's a really great way to look at it. And I wonder when it comes to the development of strategy, right. Seeing the big picture, seeing the entire field, the entire uh, battle, I sometimes wonder whether CEOs avoid that because they don't want the answers to the questions that they would be asking of themselves. Do you ever run into that?

Speaker A: Yeah, it's a, it's, yeah, it's kind of a double edged sword. Like you think they don't, but like, but then if you take like, I love vision stuff, I'm um, all about where can we go with this? What does this look like? What do we have to do? You know, I love to go out to the end and reverse engineer. Let's start at the exit. Where are we going with this thing? 10 years, 15, whatever that is, and then work our way backwards. But I think you've got a point. I think they get stuck in the operation and they're maintaining. Let's just pick a revenue number. Well, we average 20 million a year in our revenue, and they want to maintain that because you can slip from. You know, that can fluctuate, right, Depending on the economy, income, prospects, the whole thing. But they get focused on that. They get a little too laser focused on that, and they end up holding that defensive position. And defensive positions are only meant to be temporary. Okay. You want to, you know, as it said, advancing constantly. Right. Uh, you want to be moving and taking ground, but if you don't know where that ground is, it's hard to go. So you have to understand what is a. If you want to use revenue as a marker, what is the revenue number right now? I'm a big fan of profit over revenue. Big fan of that. Okay. Revenue feeds the ego and profit feeds the family. I'd like to feed my family and focus on that. But that's another. That's another discussion. But. So I think that's kind of what you're saying where they can get that hesitation, that inability to really look at the long view. Because it could be overwhelming.

Speaker B: Yeah. And, you know, I think because of that. So what are some of the, you know, those hidden leaks that are costing companies millions all the time.

Speaker A: So I'll give you my example from the manufacturing floors, okay? So the floor itself, that's where the majority of profit leakages. Okay? And we talked about in the very beginning, it's deviations. It's not enforcing standards, it's workarounds. Okay? The floor learns what's acceptable. You can have all. You have the most perfect manual, every sop, you've crossed every T dotted, every I. This will be amazing if you follow this. Well, that's not the reality. That's just a manual. What they're really doing is they're trying to still get the throughput. They're trying to keep the light green, but they have to do all this other side. I got to hit the machine twice with the hammer on the left side, you know, so all these little adjustments that are saying, hey, escalate this to the engineer, bring them in, correct us, get this thing working properly, they don't want to stop production to fix things. So it's very short term thinking. And I think the problem with all that is, you know, every time you're doing that, you're losing money. So when we do a diagnostic of the floor Rich, we're able to diagnose all of this, right? Very simply. Just simple interviews with shifts and leaders and things like that and show them the disparities on these gaps. Right. And if they just close them in by 10%, we show the ROI to it. It's millions of dollars. And here's the beauty, it's just leaking. You don't have to get more headcount, you don't have to buy new machines. Okay. You have to plug the holes. Okay. And it's not that difficult, but you have to for us is putting in the command infrastructure and it's millions and millions of dollars for these operations.

Speaker B: Yeah, I think that's a great example and I want to try to extend it a little bit and just get what your thoughts are on that. You know, I work with a lot of, um, B2B service businesses. They don't make a product, they don't have a manufacturing floor per se. But I talk about same similar kinds of concepts. And one of the concepts that I discuss a lot with the companies I work with is removing friction from the buyer journey. Right. If you think about a B2B service business, its factory, if you will, is the buyer journey and the customer experience after they've bought. That's your factory. Right. And I think that the analogy works between, you know, what you just talked about on operations floor and then what you, what you might look at in a service business. Um, and you know, obviously manufacturing businesses have to sell too and they have a sales pipeline and they have buyer's journeys. Right, but did you, does that, is that pretty equivalent? I mean, is that how business should think about it?

Speaker A: I'm a big fan of service businesses. I love them. Some people hate them. I think it's awesome. But it's totally applicable because again, even if we just go back to standards, how are you delivering your service? How consistent are you in your standards in deliverance of this service, whatever it is? It could be because we have, you know, we'll have maintenance service for, you know, um, a robotics company. You know, they're building assembly lines or we have, you know, whatever it is, you got to go in and serve these other businesses. You know, you may supply them with a product, but now we want to serve them also. Right. So we got it. So you Build those. It's the same principle. If you don't, they get to do whatever they want as long as they finish the job. Well, the customer experience. And this is even bigger, obviously, in service, that's what really matters. And you only get that through standards and consistent enforcement of those standards. So when people say, these guys are amazing, and the next person says, yeah, these guys are amazing, and the fifth, uh, person says, these guys are amazing. They did this. And everyone's telling you the same story, okay? You go to Chick Fil A, okay? It's a service business, okay? Does everyone talk about this? Yes, they do. It's the same experience wherever you go. And that's where the highest, most profitable chain ever, okay? So you look at things like that, because they had the system, they have standards, they enforce the standard. They have duplicatable, you know, performance in that service area. So that it. Service is way more challenging, okay? Because you're dealing with more people, different environments all the time, right? So it's. That's a challenging thing.

Speaker B: And people adapt. And, you know, when you're. When you're serving people, right, uh, they change. They adapt. Uh, it's not a static environment that you're working in whatsoever. And your competition changes and adapts as well, too. So, uh, you know, it's always, uh, it's always shifting sand. Uh, you know, do you see any parallels between Frontline, um, leadership failures and revenue failures?

Speaker A: Yes, that's where it all happens. That's where it happens. It's. And that's my focus, right? I mean, really, we're recovering millions and millions of dollars from Frontline execution, you know, and again, it's not. It's not that people don't know what to do. Again, they haven't been. It hasn't been dialed in. Again, we're not enforcing the standard, okay? They haven't built what, uh, to use to say escalate, right? That means you don't have the authority to fix this machine, even though you can fix it, right? Like, I get it. Like, there's things on a car like you might be able to fix, but if you got a Ferrari, I wouldn't do that, okay? Because you got a double warranty, right? You're not authorized to work on the car. You have to take it in to maintain the warranty. Same principle in business, that's not your job. So you need to get that up quickly. When there's a problem, you can perceive the problem. You get it? But you have to escalate that, right? And that should Go through service businesses as well. The problem is you have to be, uh, willing to create that escalation. What is that path? When does it happen? What are the time frames? Things like that. Same thing in the. From the service end. Do you even listen to your people? Because they're going to. Again, like you say, it's a very adaptive field. You're getting different things. So you might have that guy or girl who, like, figures out a better way to do it, but you have to, and they need to. They need to be allowed to bring it to you. And maybe you're going to change the system because they actually figure something out because they're out there all the time and they see it repeated again and again and again. That's a great adaption, right? So you have to have that flexibility. But I think from the floor and execution, that's where everything leaks. I always use the shift to shift. So we usually deal with 2, 2 to 3 shift, you know, manufacturing plants and things like that. And every time they hand off and you can. Because I interview them, I talk to them. Everyone's got a different standard. Everyone does this or that. There's the top guy and there's this guy, and that's where everything gets diluted. So you have total dilution of what you think is going in one end and coming out the other. Right? It's all the in between. That's the problem.

Speaker B: And what do leaders most often misunderstand about how people actually behave versus how they think they behave?

Speaker A: Yeah, behavior. This is what it's all about, okay? Behavior is where it's at. Just like accountability, okay? You say, well, why aren't they held accountable? What's the behavior? What's tolerated? We call it tolerance accumulation, right? What are you tolerating? Every time you make a little more toleration that grows, it compounds week after week, month after month, year after year, right? So here's the issue. That's when you're talking about that, like, what is it? What are you setting as the standard? And then how do you enforce it? Right? So inside there, you're going to get this variance all the time. Uh, we call it command drift. And drift always happens, right? So we track all the drift. So we install command, right? So you have commanders, but they upload what's going on every week. It's little, little stuff, you know, when did you detect drift? You know, you want to get it early. If they ever upload, no drift detected, they get an email that calls bs, okay? Because there's always drift. You Ain't paying attention. We know there is. And the fact is once you know that, you understand that it's that uh, early correction. Right. But it has to be able to be identified, you know.

Speaker B: Yeah. And I think another thing that uh, a lot of leaders believe and rely on are incentives creating incentives, uh, merit based pay or other kinds of uh, equity, uh, bonuses, etc, other kinds of incentives. How do incentives unintentionally create the wrong outcomes?

Speaker A: Yeah, good point. So yeah, it's anything at all costs get my incentive at all costs. That's how it undermines it. Okay, so there's, there's, you know, you know nine different ways to get that incentive. Actually I can work around this. I can do this again. We talked about earlier keeping the light green. The throughput came out. But what's it doing to the equipment? What's it doing to the quality of the product and everything else? I'm still hitting my numbers. But how is that happening? Right? That's that drift, that's that over time. All of a sudden one day you have this major collapse. If you will breakdown. Oh, what happened? Something. Well this started six months ago, this started the year ago and now it's just showing, it's showing the results. Remember a system, a program, it's only tracking results, right? So it's, I call system. Systems are dumb. They're just dumb. They just do their thing. Okay. It's not, they're not adapting and doing all this kind of. They're showing what's going in and what's coming out. You know, they're not tracking in between and when things start to drift and things. So I think that's where the incentive thing can be. You have to put the incentive differently. Right? How do you maintain the standard? That's where it has to be, not just the output, you know, and that's hard for a lot of owners. Or they're really, they're revenue based, they're driven. Right. So they want to see that. But they understand the profitability aspect as being eroded because of that drift and everything else. Does that make sense?

Speaker B: Um, yeah, that makes total sense. You know, and things. There are always unintended consequences when you introduce uh, incentives. And I think in many ways they're overused because I firmly believe in hire good people, pay them well and set standards for their job. And yeah, there might be profit sharing or bonuses or equity, uh, that go along with that. But if you're relying on outcome based incentives or what I would call activity based incentives, I think a lot of founders Want to jump straight to outcome based incentives which make it even harder, I think, to manage and build repeatable systems. Um, just thinking about, uh, m people and performers, what kind of behavioral patterns do you see that consistently separate high performers from the rest of the group?

Speaker A: I guess you could put in one word, ownership. They own what they do. That's the difference that a top performer owns what he does or she does, right? I mean they take full responsibility for what goes in and what comes out. Right? That's the difference. They're not pointing fingers, not doing that. They're getting stuff done. You know, that's where it's at. And the dovetail this back into the incentive thing. Got a company and it's like they have this efficiency bonus, right? Uh, they're producing, but they have 35, 35 people on the floor and they all have to produce at this level. Okay? Uh, so they make it basically impossible for a lot of reasons I'm not going to get into, but it's like, wow, now, now you've got to depend on 34 other people to get your little bonus. Okay? How does that make you feel? You're killing it. And John over there doesn't, doesn't give a hoot, okay? He's just getting by for the day. He's doing the minimum, which is a whole nother discussion how low the bar is set, you know what I mean? But, but you know what I mean? So it like your top performers, they got ownership. If they say, I need 40 sheets a day minimum. And they said, but you can do as many. Okay, well I'm knocking out 75 because I can, I got it figured out, I do it, I own this. But, but now that is stopped because the next guys aren't producing their levels, right? So a lot of these systems are built, they're kind of self sabotaging. So your performance guys, your top performers usually leave. Okay? If you don't have a top performing culture, meaning that you're enabling your people, you're giving them the tool set, you've built the systems properly where they can excel and perform at a top level. Those people will never leave. If they can do that, they're really happy. Like I said earlier, who doesn't want to be a winner? Every day I won't see any hands go up. It says I don't want to win every day. Right? So if you're able to enable that, that's when you get that top performing high culture plant or whatever the business is, these people are doing it. But oftentimes they just don't have that business built in to their entire system.

Speaker B: Yeah, and I think, you know, we were talking about incentives a minute ago, and a poorly designed incentive plan, um, when applied across, you know, top performers, middle performers, low performers, uh, evenly, it actually can manufacture, uh, employee dissatisfaction and where it wouldn't otherwise exist. And that's. That's the tragedy of it.

Speaker A: I see it. I see the animosity and that don't care. And, um, they just rolling in at 30 seconds to the hour before they punch in. You know what I mean? They just. It just. It's. It's a haze over the floor. You can smell it, man. You can feel it. When you go, you're like this place. I mean, I don't have to be any psychology expert. I walk in and, like, you got problems here. You can just tell by the way people move, the way they look, how they communicate. I mean, I don't. Again, I don't need a doctorate to figure this out. This stuff is broken, okay? There's something going on here, and that is a process. But a lot of owners don't want to deal with the human element. This is the point. They want to know their system because the system will save them. You know, they'll drop 400 grand on that in a heartbeat, okay? But they won't train their people. They won't spend time to build out systems and levels and everything else. So it's. You get that a lot, you know, and I don't. Hey, who doesn't want a system that'll do everything? Okay, but just. It's not reality, right? You know, you might not have 100 people now, but you got 73. Okay, but you got to. The human capital aspect of business can never be tossed to the side. You know, we talk about leadership. That's. That. That's going to test your leadership, especially if you're at the top. It always starts at the top, you know, Rich. It does, right? Everything rolls down. Just show me the owner. I'll tell you everything else about the company.

Speaker B: Yeah, yeah, 100%. And, um, just in your experience, what leadership belief that is commonly held by a lot of the CEOs you work with that you think is just simply wrong?

Speaker A: I. I think it's. I think they think it's, you know, leadership is about what people. I don't know, like, they. They think. They think leadership is about charisma and it's about accountability and all these things, right? It's all these things inside someone, and again, they're. It's important, right? But it's not the number one thing I'm. And I'm gonna, you're gonna. This obviously a theme. Go back to standards, back to the enforcement of standards, okay? If that's not the company byline, if you will, right? All that charisma, all that, all, everything else you've got as a leader isn't going to be effective. You're not going to send someone to a three day leadership camp, okay? They're going to be great on Monday and Tuesday and Wednesday. Thursdays are back to the old thing, right? Because you haven't, you haven't installed an identity. Identity is what sticks, right? So from a leadership standpoint, you have to build an identity. Now I can jump over to the Marine Corps, right? I was in, my son's in. I got another son talking about going in. But this is an identity, right? Because you say, well, you're a Marine, you don't get to say you're an army, okay? There's an identity. Being a Marine that is just, that's part of their system, right? It's identity. And we get to keep that our whole life, right? So I know that I'm not going to the extremes here, but like, you come back, if you don't have identity on your floor, in your business, what is the identity? Why do they care to get up and go to work? You know, is it who they are? Right? This is the big. They spent a lot of their life in your place. Like, there has to be a connection there and leadership needs to build that. All right, yes. There's lots of other things to leadership. I, uh, get it. But like, if you don't start there from a foundational standpoint, you know, you're not going to get the buy in. People aren't going to listen. You know, you're just, you're screaming in the woods, you know, and the trees don't care.

Speaker B: Yeah, I totally agree, uh, with that. That's a great way to put it. Um, hey, this has been a great conversation, Richard and I, I know you and I think a lot alike and we could keep, keep going for a long time and maybe there'll be a round three or round four, uh, at some point. Um, but just to kind of bring the conversation to a close, if, if One of our CEOs listening today wanted, uh, one practical step tomorrow morning to diagnose some of these problems or begin to begin, uh, to solve them. What should they do?

Speaker A: I'll tell you. I want them to walk out to wherever their business Is. Okay, there's just three questions you have to ask, okay? So get your pencils out. Very, very simple. All right, Here, here's. I'm trying to keep this super, super simple. Um, uh, where I want to go with this, okay? First of all, what depends on personality, right? We talked about that earlier. That's the first thing, right? Where are you losing things and all that, right? That's the big one, right? So you want to talk about, well, what's, what's really killing my predictable growth, you know, what are we tolerating on the floor, right? That's one of the big things that they want to do, right? Um, from there, next thing you're going to say, well, how we go, we go back to standard enforcement, okay? That's the theme, right? Just go and look at that. Let's keep it super simple. Break down just that, right? What's the standard? Okay? What protects it under pressure and what happens when it drifts? There's three things, right? So we understand. Do we have, uh, we all have standards, guaranteed. I can ask every company. They all have standards, okay, but what protects it under pressure, right? And then what happens when it isn't working, when it drifts? So there's three things you can do very, very simply in your business. Just put those together and go, okay, that's my mission. And once you see that a lot of doors are going to open. You're going to see things very, very differently, uh, because of that. Does that make sense?

Speaker B: Yeah, it makes complete sense. And thanks for giving that, giving, uh, that advice to the audience. Um, last question is, if people want to engage with you, learn more about you and your work, uh, where should they go? How do they connect with you?

Speaker A: You can go to grittttolead.com really simple. That's great stuff on the website there. You can contact me through there. You can see all kinds of. I got a simulator on there. You can plug in some questions that you do with your business. It'll pop out some great answers and what things look like, what's leaking on your floor, stuff like that. You can engage me further from there, but grit2lead.com is the place.

Speaker B: Well, uh, that. That's great. We'll put that in the show notes for everyone so you don't have to remember it. If you're driving, you can just look it up later. Um, hey, thank you so much for being, uh, on revenue science today. I really, really enjoyed our conversation. I really appreciate the time that you've given us. And I also want to take a moment just to thank you for, uh, your service as a retired Marine and thank you for your son's service as well. Uh, that's fantastic. I really appreciate that M. He's a

Speaker A: far better Marine than I was. He did really well.

Speaker B: Well, that's what we all hope for as parents, right? They turn out better than we did, so. Exactly.

Speaker A: He's doing it, so it's good to see. But Rich, thanks for having me on. This has been so much fun. I just, I love talking this. I love sharing this stuff with people. So I appreciate the opportunity.

Speaker B: Great. And we'll, we'll talk soon, I'm sure. Thank you for your time and attention on revenue science today. I hope you have gained valuable insights to put into practice in your own life and work. Please join our goal of helping more leaders to successfully grow their companies by liking and subscribing to this podcast.