Are Your Employees Holding You Hostage?

May 11, 2023

I saw this quote a month or two ago, and I’ve been thinking about it non-stop.

“We get brilliant results from average people managing brilliant processes - while our competitors get average or worse results from brilliant people managing broken processes.”

This is from Fujio Cho the Chairman of Toyota.

This is one of those things that you read early in your career, and only appreciate many many companies later.

I hope you’ll study its implications as much as I have.

OK, so enough fan girling for an elderly Japanese man from me, on to the topic at hand!

I was speaking with a successful and sharp business owner this week.

He has a nice online business selling a consumer product, with a 5 person team, and 10MN in annual sales.

Pretty cool business, right?

Not so fast.

This owner is still very much involved in the day to day of his business.

He’d reached out to talk about using global talent, but (as always) our conversation became “systems and processes to enable successful global talent” not just “global talent”.

(Side Note: If talent is all you are after, close this email and go on upwork…you can hire globally in about 30 seconds. Finding someone is about 15% of the challenge, in my experience).

Why, with all this success and sales, was he still involved in the day to day of his business?

I won’t pretend like I can fully diagnose the challenge in a 45 minute call, but if I had to guess, I’d say the root cause is - “focusing on brilliant employees not brilliant systems”.

I’ll illustrate my philosophy (and Fujio’s) below.

Which company would you rather own or buy?

Company 1 - High Brain Damage

“Bob does our bookkeeping - he is kind of peculiar, and an asshole sometimes, but he keeps the company running.

He casually harasses most of the people in the office, but what can I do?

He is all I can get within 35 minutes of our office.

I don’t know what we would do without him, or if he ever decides to take a vacation”.

OR

Company 2 - Low Brain Damage

“We have a great bookkeeping system.

Right now our bookkeeper is a guy named Bob, but with the system we have in place, we have to sometimes find things for him to do.

He started helping out with our CRM actually”

Company 1 - High Brain Damage

Bob comes in and acts like a jerk AND asks for a huge and unjustified salary increase.

I can’t fire him without a lot of brain damage & business risk - something I already have enough of.

OR

Company 2 - Low Brain Damage

Bob comes in and acts like a jerk.

I fire him that day.

One of our remote back office staff follow the checklist for reconciling payments/invoicing/whatever - and cover in the short term.

I post a job ad (remote, of course - and hopefully global), and 7 days later you have someone rocking and rolling.

In company 1, you’re hosed.

You might be the boss on paper, but YOU WORK FOR BOB (and every other employee or contractor with similar dynamics).

The employees & contractors & owners should be OPERATORS of the business system.

The employees & contractors & owners should not BE the business system.

See the difference?

The entire team (including the owner) are operators of “the system”.

Bringing this all together.

If you have had Gordon Ramsey cooking your french fries (making $4,000,000 a year), you can say:

“We have the best french fries in the world”

and you’d probably be right.

You might even say to yourself

“if I just had 10 more Gordon Ramseys I could build an empire!”

I have no clue if that business is profitable, but you’d have damn good french fries.

Then, due to your staffing challenges, you send me an email and say “JON I JUST NEED MORE GORDON RAMSEY’s BUT CHEAPER from overseas”.

I say:

“The magic of McDonald's is the SYSTEM which lets a stoned 16 year old create great fries on his second day of work for minimum wage. Anyone can make good french fries with Ramsey at 4MN a year”

Using low cost global talent, while maintaining quality is a BYPRODUCT of brilliant systems.

You need systems to enable the usage of lower skilled personnel!

Now, swap out accountant, lawyer, estimator, or underwriter for Gordon Ramsey - and you’ll understand why “MORE GORDON RAMSEYS BUT CHEAPER” isn’t the answer you think it is.

I hope this inspired you to go build some brilliant systems. Now go write down a process and put it somewhere people can find it!

The journey of a million miles begins with a single step.

Yours in Outsourcing and Building Great Companies,

Jon

And now, the poem of the week, because it’s my newsletter and I can do what I want.