Firing The Man
THANK YOU TO OUR 25,000+ LISTENERS! We are so thankful to be one of the TOP E-Commerce Podcasts delivering high-quality authentic content to you! Serial Entrepreneur’s David Schomer and Ken Wilson share tips, advice, and insider knowledge about all things Amazon FBA, Walmart WFS, and E-Commerce. Discover how you can create multiple income streams by selling physical products online so that you can have the time and freedom to do what you love - whether that is spending more time with family or traveling the world. Ken and David have successfully created several six and seven figure online business ventures. During the journey, they have had major wins, losses, and lessons learned. This podcast will teach you about selling physical products online through platforms such as Fulfillment by Amazon, building a team, outsourcing, listing optimization, pay per click (PPC) advertising, driving traffic to your listings, and productivity tips / life hacks that will provide a path to be successful in building your online business. It’s a mix of interviews, special co-hosts and solo shows from Ken and David you’re not going to want to miss. Hit subscribe, and get ready to change your life.
Firing The Man
Seven Stages Every Founder Must Navigate with Scott Ritzheimer
What if the very success you've worked so hard to achieve is now preventing your business from reaching the next level? This fascinating conversation with Scott Ritzheimer, founder of Scale Architects, reveals the hidden barriers that stop entrepreneurs from scaling successfully.
Scott unpacks a revolutionary framework of seven distinct growth stages that every business passes through. What makes these transitions so challenging is their invisibility—no one warns you when you've moved from one stage to the next, leaving many founders implementing yesterday's solutions for today's problems. As Scott explains, "Whatever's creating success or not creating success right now is dependent on the stage you're in right now."
The conversation dives deep into leadership dynamics, with Scott challenging conventional wisdom about what makes someone an effective leader. Rather than focusing solely on visionaries with big ideas, Scott introduces three other essential leadership styles: operators who execute relentlessly, processors who create systems, and synergists who harmonize the team. Knowing which type of leader your business needs at each growth stage can mean the difference between breakthrough and burnout.
Perhaps most valuable is Scott's candid sharing of his own entrepreneurial journey, including the painful "whitewater stage" where his company's success began creating more problems than profits. By restructuring his leadership team, reimagining the organization chart, and implementing the right operating systems, Scott's company tripled their bottom line in just 13 months.
Whether you're struggling with scaling challenges now or preparing for future growth, this episode offers a clear roadmap for breaking through each ceiling you'll encounter. Listen now to discover how to stop being the bottleneck in your own business and scale with confidence.
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Welcome everyone to the Firing the man podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more, then join us. This show will help you build a business and grow your passive income streams in just a few short hours per day. And now your hosts, serial entrepreneurs David Shomer and Ken Wilson.
Speaker 2:Welcome back to the Firing the man podcast, the show for entrepreneurs who are ready to take control, fire the man and build a business that works for them. Today, we're sitting down with Scott Ritzheimer, the visionary founder of Scale Architects and host of the Secrets of High Demand Coach podcast. Scott is a true expert when it comes to helping successful entrepreneurs and founders break through growth ceilings and scale with clarity and confidence. He's worked with over 2000 entrepreneurs and has built a reputation for guiding leadership teams through critical stages of business growth, especially that tricky spot where your success starts to outgrow your systems. In this episode, scott dives deep into the hidden pitfalls that stop great businesses from scaling, how to build a leadership team that actually leads, and what it takes to grow beyond being the bottleneck in your own business. If you're serious about sustainable scaling and stepping into the CEO role of your company's needs, you do not want to miss this episode. Scott, welcome to the show.
Speaker 3:David, thanks for having me. I'm excited to be here. I always get this moment of anticipation right at the start of a podcast, because it was just another podcast of a show that I, like I, was listening to. One day that totally changed the course and trajectory of my life, and so there's this little hope and expectation that this episode will be that for someone listening today.
Speaker 2:Absolutely, Absolutely. So to start things off and I touched about on this a little bit in the intro is you talk about hitting the ceiling as a founder, and so what are some early signs entrepreneurs miss that indicate they've become the bottleneck in their own business?
Speaker 3:Yeah, I mean we have to start off. The unfortunate news is you almost certainly are at any given point in time. So and that's part of the glory and the joy and the challenge of being an entrepreneur is that a lot of the success rides on your shoulders. Now, what this looks like there's actually seven times that we hit ceilings, and that's part of what makes it such a challenge is, as we progress through this journey of being a founder, there are these invisible barriers and boundaries that we have to cross. There are, I call them, stages. There are seven distinct stages that we face, and each one of those stages has a very different set of challenges and benefits, actually. And so what happens for founders is, when you succeed in one stage, you know that very success necessarily thrusts you into the next, necessarily thrusts you into the next, but it doesn't tell you that. No one tells you that's what's happening, right, and so some signs that that you're, you're bumping into this, right. There's actually a handful of questions, and they follow each of the stages, so we won't do all of them, but like one that might matter for some of your folks, especially those that are in the pre launch phase Right, they're, they're working for the man. You know we're early, early part of their journey.
Speaker 3:One of the signs that you're the bottleneck on even that process moving forward is are you asking yourself isn't there a better way, right, like, isn't there a better way? Because that's different. And the thing that I love I love the title of the show and I love the sentiment behind it, because when you can go out and be your own boss, like when you can, when you can make that leap, when you can jump in, be do the entrepreneurial thing, it's magical. Like I love, love, love founders and entrepreneurs. But just because you don't want the boss that you have right now doesn't mean you should be your own boss, right. And so there's a really important distinction and I love the way that, how this show is born and your goal of kind of documenting your way through the process.
Speaker 3:And I think you said before we hit record that it took you a year to make that leap, if I remember correctly. And so often, if we're not really paying attention, we'll start to like feel, hey, I want to get rid of the boss, I should start my own company, but we don't really stop and ask the right question and we certainly don't take the time to learn. What would it take to solve for that? And so it's these seven different questions. We can go through them. I'll let you kind of lead how you want to do it, but a good example of that early on is isn't like, isn't there a better way? Because that's ultimately the driving question that leads entrepreneurs.
Speaker 2:Absolutely, absolutely, and we don't necessarily need to go through all seven but and I think you gave a very telling sign of is there a better way? And so, when you talk about those seven stages, are those generally defined by revenue targets, by number of clients, customers? How do you define when you've got to the next level?
Speaker 3:Yeah, so it's different through the different stages and, unfortunately, revenue isn't a very helpful tool, because revenue numbers for a construction company look entirely different than revenue numbers for a fractional CFO firm, look entirely different than the numbers for a Wall Street investment firm, right. So it's very difficult to make revenue generalizations across industries, particularly with how does that affect you as a founder? And so each stage, the, the demarcation points are a little bit different, but a lot of them have to do with um, uh, from a, a, a milestone perspective. They actually have to do with the, the, the quantity and quality of leaders around you that's probably the best way of putting it and uh, and so there, the reason for that is because when you're an entrepreneur, only early on is what you do actually a defining part of your job, right? So if you love coffee and you decide to start a coffee shop, you'll do most of your coffee roasting, you know, or barista-ing or whatever you want to call it, in the early days, and the further you go, the further you'll get from that, and so it's more so about, well, as you get further from those things, who's going to help you lead this and how?
Speaker 3:So that's generally it, but more specifically for the audience that will be listening today, if we start in the very beginning. The first stage is pre-launch, and so the demarcation point is pretty obvious actually, from stage one to stage two, and that is that you go full time right, it's like this is the thing that I'm going to make my revenue on my income on, and so that's the demarcation point, just as an example. So specific events that's really the most specific one outside of way, at the end of the process, when you you sell or step out, and then in the middle, where things tend to be kind of the most muddy or confusing from a stage perspective, it has to do with the quantity and quality of leaders around you.
Speaker 2:Let's dive into that a little bit more, and I think this is something that I have personally gone through and I'd be interested in your input on it when you are hiring, in your input on it when you are hiring. Leadership is something that I feel is tough to gauge when you're interviewing. Like, I've had very charismatic people that I thought would be very good leaders when I interview them and then they show up and they're not great leaders, they micromanage, and so when you are screening for leadership which I think is an excellent thing to do when hiring what are some things you should be looking for? Are there any practical tests or questions that you think would be helpful in finding that group of high quality leaders around you?
Speaker 3:Yeah, that's a great question. I want to start off with the definition of leadership that I really like. It's from a mentor and friend of mine. His name's Les McKeown. He says leadership is any act that moves a group of two or more toward their shared goals or purposes. Right, so that's a pretty broad definition. Why is it leadership? Because it's moving more than just yourself. Right, it's moving a group of two or more. It's directed with an aim. Right, there's somewhere that we're going together and it actually moves us forward. And so that definition is really important.
Speaker 3:Because if we use what most of us think of in terms of leaders as people who have ideas and tell others what to do right, of leaders as people who have ideas and tell others what to do Right, and you know varying degrees of niceness, that's, that's really only you know, 20 to 40 percent of the population, something like that. It is not a big pool and it's not the only way to lead by any stretch of the imagination, like if and here's the here's the litmus test for this I'll walk into organizations that have all people of that type. They're all leaders. It's a company of seven people and they all lead their own division inside the company. Right, there are seven divisions in a seven-person company and you have too many cooks in the kitchen. You have too many people with ideas but no one actually executing on those ideas. So is it really leadership to have ideas if none of those ideas actually get across the finish line? No, not really. So we have to broaden the definition of leadership to include there are four styles that we work with. What those are isn't as important We'll get into a couple of them a little bit later but you have to broaden the definition of leadership. And then it's looking at it and saying what kind of leadership do I need right now?
Speaker 3:And so for folks that are in this process of, you know, starting their own company, going from solopreneur to having a few people around them, there's actually a very specific kind of leadership that we're looking for, and it's not ideas. It's folks who lead by doing right, who have a bias to action, who get stuff done. They generally aren't the most strategic people in the world. They're generally not the most idea oriented people in the world. They oftentimes aren't the most charismatic people in the world, but these are folks who get stuff done. They get an enormous amount of stuff done. They lead by example, they lead by doing.
Speaker 3:We call them operators and again, they're just ruthless finishers in the best, most positive sense of that phrase. And the reason why we need operators is because most folks who start their own business they've got and I mean, tell me if you've had a different experience, but they have way more than enough ideas to go around. They're not at a shortage of ideas, they're at a shortage of execution. I need someone to actually get these things into the real world. I've sold a bunch of clients. I need someone to actually service them and so in the interview process, especially early on, and then this is true for every stage but making sure that you're looking for the folks who will lead in the way that you need right now.
Speaker 2:I like it. I like it and I'm glad that you gave the definition of that person being a doer, somebody that can complete the tasks, because if I look at my own organization, or organizations that I've been a part of, there are a lot of idea people that struggle on the execution side of things, and so two areas I like to hire when finding a leader. I'm curious if you have any pro tips here I really like for operators people that have been in the military and people that have been on sports teams.
Speaker 2:And if they've been on collegiate sports teams, that's even better, and so not that I exclusively look at those, but I definitely, like you know, that resume floats to the top of the pile, if I know that about them. And so what are some like other characteristics, or do you have any similar things like that?
Speaker 3:That's so spot on. I want to unpack why a little bit, because the reason is a little different. So, when you're looking for operators, military experience for sure, but interestingly enough, when they test right, when they like, they take our assessment, they don't test as operators all that often. So what's happened is they have the learned skill and behavior of an operator, which is great, right. So what the military tends to do for folks is add the ability to operate is the best way of putting it. Now you'll get, you know, wired like folks who are wired as operators, who are attracted to the military. But the bigger thing from the military is that it puts those skills in you Super, super helpful, especially when you need a blend of different styles. Now, sports, on the other hand, is much more a reflection of wiring right Folks that are attracted to sports, and I would say individual sports more than team sports, although not exclusively, but there's a slight edge there, because a lot of folks, if they don't get D1 or higher, then a lot of it might be social right. They do it to be part of a team and that's a different type of person. So individual sports very, very much. So I was telling I was teaching this to a group and I said I don't know of a single operator executive, right. So these are operators who have risen to the level inside of bigger enterprises where there are executives in it. I don't know a single one who doesn't have a Peloton and and the operator on the team he just like hangs his head. He's like I have one. So, yes, those are the biggest tells and they're they're very, very helpful in in finding operators.
Speaker 3:The other thing that I would say is you tend to find them in jobs that require them to work with their hands more, to be more kinetic and move around.
Speaker 3:So oftentimes if you have a role that requires operators, a great place to go, look for them. If you're in a small business and don't feel like you can compete in some ways, a step out of the warehouse and into the office is a huge step up for a lot of people. And into the office is a huge step up for a lot of people, right, and you'll find folks that are in a warehouse that are really smart, really clever and for whatever reason, they're working a warehouse job, but they would be able to roll right into your organization and it would be a huge step up for them. So that's another place that you can look. If you have an office type job, a lot of folks see that as a step forward in their career, even if it's somewhat lateral. From a pay perspective, that would be the biggest one. I would add to it is some type of job where they're more kinetic.
Speaker 2:I'm adding that one to my bag of tricks because that's a really good one and a perspective that I haven't thought about. But I do personally have a warehouse and I have people that work over there and they're very capable and they're working with their hands all day and if I were to put them in an office role, they would like it and I think they do a tremendous job, and so I'm glad that you mentioned that. Zoom out and talk about your journey a little bit in building and scaling your business. What have been some roadblocks that you've run into and what are some mindset shifts that you've had to take on as you've been growing your business?
Speaker 3:Yeah, so I got into the whole entrepreneurial thing by accident and it's a really long story, but I was hired by someone who knew someone who knew someone kind of a thing, and I was just looking for a part-time job early in my career and about two months after I started there, the company was sold on an owner finance deal and then just systematically but unintentionally destroyed over about 18 months. It was really really painful. I stayed on with a new employer. I was one of the three people by the end of all of it that was still on. It was just awful, and I watched this company that I'd come to love just be torn to pieces. And in the midst of like this really excruciating experience for everyone involved like there were no villains right, there were no like victors, Like it just it wasn't pretty. Everyone was hurt because of it I fell in love with what business could be. It's this really weird dichotomy, but long story short, I ended up relaunching that company with the original founders. So we we you know shut everything down, built it back up in September 2008, which was not a great time to be starting a company and I had no idea what I was doing. I was 21, 22, something like that.
Speaker 3:Whenever we first started and I was right out of the gate because we were relaunching the company, we had to hire in a number of folks right away. So I had a team almost instantly out of the gate. Because we were, like, relaunching the company, we had to hire in a number of folks right away. So I had a team almost instantly out of the gate and I had no idea what to do with them and there was so much imposter syndrome. Most of them were significantly older than me. It was just a real challenge and I had always had success by what I could do right.
Speaker 3:That was, you know, for sports, for school, for early in my career is basically just like how do I handle myself really well? And the thing I struggled with the most and had to get and had to move into very, very quickly was how do I create success through a small team? Because we weren't big enough for everyone to have their own role. We weren't big enough for me to go hire a bunch of specialists. I just had a bunch of folks who were operators, who would get anything done, and it took me quite a while to really learn how to leverage that well. And, you know, give them the clarity they need to stay out of their way.
Speaker 3:Not micromanage which was a huge tendency of mine, especially early in my career was a huge tendency of mine especially early in my career.
Speaker 3:But that shift from individual kind of star player to captain on the field, where I have my own job but I also have to orchestrate everyone else's job at the same time, that was that was a pretty big challenge for me early in my career. And I see that happen for a lot of solopreneurs, a lot of folks that are that are early stage. They're like super talented, super gifted, no one can do anything as good as I can, and to some extent like that's true early on, and and so they end up in a little bit similar to what I did, in a little bit of a prison of their own making, of like I can't delegate any on anything because no one can do what I do, and that's a miserable place to be Like when you create a company that just consumes every last bit of your energy and you've got no one else that you can trust and turn to, you've got a huge, huge problem. So early in my career that was one of the biggest challenges I faced.
Speaker 2:So and this is coming from a I would consider myself a recovering micromanager and also a perfectionist, and I have what you're talking about. I have been through, and so, when you noticed that this was happening, what were some things that you did to break out of that cycle?
Speaker 3:Yeah, it wasn't like this. I wish it was like this overnight revelation. You know, like I get to help folks with that now, because it's just a normal stage that everyone goes through, and how you do that is actually very straightforward, right, one of the huge frustrations like why don't these people solve problems the way that I do? Why don't they think like I do, right, why don't they take ownership like I do? And so, instead of owning the responsibility for solving that, I found myself just getting frustrated by them all the time. Right, and a lot of folks you know folks listening will resonate with this.
Speaker 3:There were so many times I woke up on Monday after, like, working all weekend to, to, and not getting to my job Cause I was cleaning up stuff that other people had done. You know, either wrong or not to my liking. I wake up Monday morning exhausted, the whole week is ahead of me and I'm like what's wrong with these people? Like and. And one of the things I learned in that season was, if there's something wrong with everyone, then there's really just something wrong with one person and that's you, and I had to come to that conclusion. And there are lots of little stories and anecdotes, but I remember one time I was trying to actually take a smaller element of our team and say, hey, I need you to be leaders in the team, like I want to invite you to this, and I so had no idea what I was doing and I was so confusing in my presentation that like I actually ended up making most of them angry, like they thought that I had like demoted them or something. It was just terrible, terrible communication, I mean just utterly embarrassing.
Speaker 3:And like that same week I had gone to a conference where Dan Cathy spoke and I just remember like contrasting the two you know communications and the styles and everything about it. I was like I have to learn how to communicate differently. If I'm going to create success through others, I have to talk more like that than like this. To create success through others, I have to talk more like that than like this, and so that led to a number of things. But it was really this idea that my success was now dependent on my ability to clearly communicate my expectations and follow through on accountability with the team. And in a kind of strange way, my like woeful, pathetic attempt at that, contrasted so sharply with Dan Cathy's presentation on the same topic really highlighted that for me and, you know, kicked my ass into gear for lack of a better term.
Speaker 2:I like it. I like it. So when was Scale Architects born? What's in? What's the backstory there?
Speaker 3:Yeah, so fast forward a lot. So basically, that business was all about starting organizations the one that I helped co-found in 2008 and worked there for for about 13 years something in that ballpark and as we were going through it seven, eight years into the journey it got it was like awesome. And then it got really, really hard. I mean it got really, really hard. Like there were days when, even though we're bringing in millions of dollars a year, I didn't know if we would be there the next year. Right, there were days when the conflict between me and the other founder was so painful that I didn't know if I even wanted to be a part of it anymore. There were days where it's like it wasn't days, it was weeks, where it was just like people problem, people problem, people problem. It's just this mess. And the biggest problem I had in all of that was David. I felt so alone in it, like we had gone out and tried to hire a couple of coaches and consultants in various different ways and I didn't realize this at the time. But there's a lot of. I'm not gonna say that they're bad coaches and consultants, but there are a lot of people who do bad coaching and consulting work and I lost in the course of three different people. Over a span of about four years, we lost about a million dollars following their advice well-intentioned but ill-meaning advice and so when we couldn't figure it out and then we hired the people who promised us that they could help us figure it out and they couldn't figure it out I felt totally isolated. I felt like this is, I guess this is it. I guess this is as good as it gets. I guess this is as big as we get. I guess this is as much as we can dream. I guess this is it. And it was actually at that time, going to what I opened up with that.
Speaker 3:I heard that podcast. It was also by Les McKeown and in it he's talking about one of the most boring things that you could talk about business life cycle stages, but I think it was the Irish accent that kept me interested at least long enough to listen. And he starts describing these different stages and it's like I remember that. I remember that. And then he gets to the stage called whitewater and it's where complexity inside the business starts causing you problems profit drops, problems go up, infighting in the leadership team, lack of alignment, revenue still moving, but you're not keeping any more of it. You know all of those different things that we were experiencing. Like all of them, he starts listing off and it's just a natural stage in the process. Natural stage in the process.
Speaker 3:And that hit me like a ton of bricks because it was the very first time that I ever felt like me and my business were on a map that already existed. Right Every day before that it felt like we were walking off into the wild, unknown, you know, and that's really fun for a couple of years. It's really exhausting after a while because you started stepping in potholes and stuff and it's just not a pleasant experience. It gets old and. But I didn't have any other way until I heard Les speak.
Speaker 3:So I got a copy of his book and as I'm looking through all that he has to say on whitewater and how to get out of it, I realized two things at that stage. One was like this is it, this is the path to get out. You know, I'm really confident that this is going to work and it did. We tripled our bottom line in 13 months. It was amazing.
Speaker 3:But the other thought that hit me totally out of the blue, and this is a very long answer to your very short question was if I could help other people recognize this stage and get out of it, and if that's what I could do for a living, I would die a happy man. And that was back 2016 or 2015, something like that. And it took a few years for that to really brew. But once I got us out of that whitewater stage, we had this massive transformation as a company. We were bringing new leaders in and putting them in place. I realized that's really what I wanted to do. I wanted to help other founders whose dreams were being squashed just by virtue of the fact that the complexity in their business was overcoming their ability to execute. They were in that whitewater stage and they needed help getting out, and so Scale Architects was fundamentally created to help founders recognize those different stages and excel and succeed through them.
Speaker 2:Very nice, very nice. What were two to three chess moves that you made when you recognized that you were in the whitewater phase and wanting to get out? You had mentioned bringing in better leaders. Were there any other areas that you really doubled down on or focused?
Speaker 3:Yeah, it's interesting because these are like some of the most boring things in the world, but I've watched them transform my company and I found, now that I do this every day, my, our results were pretty normal. They weren't actually very exceptional, which I thought we were awesome at the time, you know but it's it's a pretty normal process. So it starts with, with the org chart, just the design of who does what inside the organization. And we had one. It just reflected where we were coming from, not where we were going, and so what was happening was because folks weren't clear on what they needed to do for us to succeed. We had a bunch of people running in a bunch of different directions and none of it was really working together.
Speaker 3:The other one was getting our leadership structure in place. We, again, we had leaders, but what I realized during that process was that we needed to move from having a leadership team to an executive team. We didn't need just leaders who ran around getting stuff done anymore although we needed some of that but we had to balance it out with, like executive quality caliber folks that brought a different skillset. So the other styles, just real quickly visionaries, which makes a ton of sense. Operators, which we've talked about so far processors, folks who think in terms of system and process don't need them early on, desperately need them in whitewater. And then the fourth style is a synergist style which kind of melds the other three together. But we needed to balance out that team. I had to re-engineer my leadership team almost top to bottom and some people stayed on. They all had different roles because of it. But getting that leadership structure right. And then also right underneath them we had another layer of leadership that was forming in our management group and we had to get those two working together, which was trickier than I had expected coming in. So those are two big first ones. There's other things like alignment and how we do empowerment and delegation, and then cross-functionality is the fifth one. So there's some building blocks in there.
Speaker 3:But ultimately having an org chart doesn't do anything for your bottom line. Changing right Like having good leaders doesn't in and of itself, just because you have them doesn't mean that it's changing anything. But what it did was it led us to just this unreasonable amount of clarity on where our strategy wasn't working properly. When folks were finally clear on what they were responsible for, they're like there's no way that that can happen or we're only doing half of what can happen, right. So that clarity, particularly within the org chart and the leadership team, and alignment where we were trying to get in the long term helped us to recognize there were significant parts of the business that we actually had to shut down. Term helped us to recognize there were significant parts of the business that we actually had to shut down and there were other parts that we had to double down on. And so the structures that we put in place you know, rote and mundane as they are were the very thing that created the environment for us to see the actual problems we were facing and solve for them.
Speaker 2:I like it. I like it. And one common thread I'm hearing you talk about is the personnel, the people, the team, and I know it's been my experience when I first started my business. Of course, on day one I'm doing everything and then I hire a VA, and then you slowly build the team.
Speaker 2:And I had a guest on the podcast the other day and he said something that has I've honestly lost sleep over it and I'm curious what your opinion is on it. So he had said hourly compensation and salary compensation is a lazy way of compensating people and if you can align compensation in a way to where people are rowing the boat in the same direction, where you have perfect alignment, you will get much better results. And the reason I've lost sleep over that is I agree with them. There are hourly employees that work very smart, work very efficiently and they bill less and in turn they get compensated less. There's really not a ton of incentive for being more efficient Salary it kind of seems like whether we outperform by 50% or we underperform by 50%, like this is my cut. And so I'm curious, as you were making those chess moves that related to personnel, was there anything that you did with compensation that you found to help get people rowing the boat in the same direction. Yeah.
Speaker 3:You're hitting a big item because I'm philosophically very torn on this issue right now. Item uh, because I'm I'm philosophically very torn on this issue right now. Uh, no, thanks to, uh, daniel Pink. So, um, I don't know if you've read the book drive by Daniel Pink, um, but the whole motivation 1.0, 2.0, um, there's a lot of evidence there's way more evidence than there was at the time that I was making these decisions that motivation 1.0, um, you know, get eat what you, you, you kill, kind of a thing, has some really significant limitations. And it doesn't matter what the compensation model is, it's really really limited. And then motivation 2.0 doesn't have any answers. It just it just shows that that's wrong. So there's not a whole lot of models out there that are there and there's definitely not a one size fits all.
Speaker 3:But I will say one of the things that gave us a tremendous amount of success in the kind of middle that they completed we use that very heavily somewhere between 70 and as little as like 25% of most people's compensation was tied to what they do.
Speaker 3:It's hard to make that one size fits all because a lot of folks don't fit into that, and increasingly so as you scale.
Speaker 3:And one of the things that you'll find is, in the earlier stages, what you kill, what you eat is pretty much the most effective strategy. It's a very, very effective strategy, but as you go further, it has some serious constraints when it comes to scalability. It has some serious constraints when it comes to teamwork and motivation sustainable motivation and motivation, sustainable motivation. And it also has some serious constraints in that it does not value stability, which, as you get bigger, you find you need a stable position to be strong from. So, yes, as much as you can, especially early on, especially when you have operators, you want to, you really want to go. They want to be paid that way, right, like they want to be paid by what they produce. So here's the, here's the, the, the principle that, I think, kind of supersedes all of this compensation strategy. Compensation strategy that inspires the highest degree of ownership and self-accountability in the type of people that are needed at that stage.
Speaker 2:I like that I like that.
Speaker 3:So in the stage that uh that you know you're in coming out of I'm not real sure where you are today, but uh, and for those who you know have have fired the man and are progressing through where, to the extent that you're dependent on operators, then, yes, that's very true, operators want to be, they want to have some control over what I want, and they're very results oriented. So it's it's very helpful, but, like processors and synergists, it's not anywhere near as effective. In fact, it can trigger fear responses in them that are debilitating. So the biggest principle is that compensation, or the type of compensation, is largely irrelevant. What the goal is is a an exceptional degree of ownership and self accountability. So if you pay people in a way that causes them to take more ownership, that's the right answer, no matter how you've paid them.
Speaker 2:I like that, that the more ownership equals better. And my next question relates to operating systems and I will share with you and to anybody who's listened to this show for a while knows I'm a huge fan of the entrepreneurial operating system from the book Traction. I think I'm in my eighth implementation of it this year and it has been remarkable in terms of setting long-term goals and then breaking those down into actionable steps, and I think that kind of goes along with what you're talking about is giving ownership to team members or more ownership, and so are there any? And I would call that kind of an out-of-the-box operating system. Of course I'm in my eighth year of implementation. I would say we do it 90% by the book, but are there any operating systems that you've used or you've consulted on that you find to be incredibly helpful in getting out of that grind stage and more into a legitimate operating business? Yeah.
Speaker 3:So the operating systems I like to call them operator systems because that's really what they do they're the least restrictive set of mechanisms that allow operators to do their best work when they're used properly, right, and so the operator systems are most helpful in what I call stage three, that reluctant manager stage we talked about earlier. What's wrong with these people? Those people aren't the same as you. They're not visionaries like you, and so what EOS does very well is it takes what the visionary knows, wants and needs and interprets that in a way and then protects the operators in their ability to execute on. That Does it very, very well, right, top to bottom. That's really what it does, which creates more freedom for the visionary, and it's just, it's magical. So EOS is a good one. Very, very closely related to EOS is something called System and Soul, which has a little bit more of a cultural edge to it that I really like and found my clients appreciate. It's a little bit easier to do an implementation and not be skewered by the community for not being like drinking the Kool-Aid and going 100%. So a very similar framework, but has a much deeper cultural edge to it, and that's what I tend to implement with my clients, a lot of similarities between them and when you look at it fundamentally like, eos is just bits and pieces pulled from a bunch of other operating systems. They all share the same thing. So what do you need? You can use EOS, that's great. What you need is this you need to have a healthy number one, number two relationship. If you don't, it's just a way bigger lift for you as an individual. But to the extent that you can get a healthy person in charge right hand man or woman and you can get that relationship working well, which they do through the visionary integrator and the same page meeting that's a way of solving that problem. Having two people leading from the very center is very, very effective.
Speaker 3:You've got to have a set of leaders who at least can execute on the things that you want them to do right. There are various degrees of how much input you need from them throughout the stage, but you've got to have some semblance of a leadership structure. You have to have really clear expectations, right? Everyone has in numbers the example of this. Here's how we measure your success and we actually measure it right. So there's accountability that comes with that, and then you have to have a way of linking where you want to go, your long-term vision, to what you're doing now, right, and they do that through the vision traction organizer with you know the longer term goals I forget what they're named all the way down to the quarterly rocks. And then, last but not least, you have to have a regular meeting rhythm. It's not every week for every company, some it's a little less, some it's actually a little bit more frequent, but that's what makes EOS work for folks, and they've done a great job at putting all those pieces together. But if you look at any operating system, they're all going to include those same elements and so long as you have those in place, that's going to do 90% of what an operating system can do during that time.
Speaker 3:Now, just quickly, it's important to note what an operating system doesn't do. It doesn't tell you that your vision, mission, values are right, like. It doesn't tell you that you're going after the right thing. It doesn't tell you that what you do is valuable to your customers, right, that you've got a high quality offering, and so one of the things we have to be cautious of and I see this more in the EOS community than most others is an operating system is nothing apart from those things. Right, it assumes that you have the right answers to some of those questions, and so we have to be a little conscientious and make sure we're actually plugging the right inputs into the operating system. Otherwise, you can do a whole lot of work and be exactly where you are today.
Speaker 2:I think that is a tremendous, tremendous opinion on operating systems, and that they can guide you in the wrong direction, and KPIs and measurable outcomes are really important, and so I really liked that.
Speaker 2:I have been a disciple of the traction program for a long time. However, I've I've had bad years in business when I've been running it and I've made poor decisions while I've been running it, and so I do think that that's a helpful thing to point out is what it doesn't achieve. And so now, scott, I think we could probably talk for two or three hours, but I do want to be respectful of your time and I want to save some time for our fire round. But at the beginning of this podcast, you had mentioned that you had an experience where you heard something that was very high impact to you on a podcast and it changed your life, and so you know, talking to the Firing the man Nation, this is a group of people that are e-commerce entrepreneurs, people that want to fire the man. What would be something that you'd like to share with them that you think will be pivotal in their overall journey?
Speaker 3:Yeah, the number one lesson that came from all of those lessons and from helping. I've had the opportunity to help around 20,000 different entrepreneurs at this point, and when you do something that many times, you start to see a pattern and there's no one thing that's going to grow your business every time right? There's a lot of this like, if you just do this, your business is gonna explode. No-transcript major on in each stage, but they're different in every stage. So the biggest thing I'd hope folks recognize, and that I wish I knew early on, is that whatever's creating success or not creating success right now is dependent on the stage you're in right now. And so that means two things.
Speaker 3:One, you better know what stage you're in so that you can just do the things that are helpful and not have to worry about the 30 things that aren't. And number two, when you succeed, it's going to push you into the next stage. Don't be surprised that it does. Just recognize that this stage has changed and take on and embrace the new set of skills that are needed at that stage. So if you do that, your propensity to get stuck is almost zero because, like the path, it's the same for everyone. The stages are zero mystery. Once you know what they are, it's just like walking down a road with road signs, but you just need to know where to look, and so my biggest thing would be that it's not about what you do. It's about what you do right now.
Speaker 2:That's huge. That's huge and you could probably do a mic drop and we could end the episode with that one, but that is really really good advice. And, yeah, that's really good advice. Now, scott, we have a section of the show called the fire round. It's four questions. We ask everybody at the end of the show Are you ready? I'm ready, let's do it. What is your favorite book?
Speaker 3:Favorite book. I have to give a shout out to Les and his book Predictable Success. Again, it's a huge part of my story and if someone is listening and hasn't read it, you are absolutely missing out. I joke, les is kind of the Morpheus of the business world. Once you see the world through the lens of these different stages, you will not be able to unsee it. So sorry, not sorry, but it'll change the way you look at your business and just about every business you work with.
Speaker 2:I love it. I love it. I'm adding that to my reading list Number two. What are your hobbies?
Speaker 3:reading list Number two what are your hobbies? What are my hobbies? I still love to play soccer to this day. So Saturday mornings for me, I run out and, like an old man, play dad soccer, which is tremendous, but it's a blast. I get to bring the kids out every once in a while too, so we have fun Outstanding.
Speaker 2:What is one thing that you do not miss about working for the man? What is?
Speaker 3:one thing that you do not miss about working for the man oh gosh, the thing that I don't miss is having my wings clipped when you like. For me it's a little unfair because to some extent I was the man, but I did it with a partner, and I don't have a partner in this endeavor, and the degree of freedom that you get flying solo versus having to stay in sync with a partner is pretty magical.
Speaker 2:So I don't miss you know having to ask someone else's opinion before I move forward. Very nice, very nice. And number four what do you think sets apart successful entrepreneurs from those who give up, fail or never get started?
Speaker 3:I think it is principally that they either intuitively or intentionally understand what stage they're in and deploy the right strategies for that stage. So just to expand on that real quickly a lot of folks you'll see and I saw this a ton early in my career we had all these folks that are starting out. It was awesome, it was really cool. And then, like three, four or five years later, some of the best ones I would have banked on early and you know when we started, we're coming back and saying, hey, it didn't work. Well, what the heck is that? How does that happen? And so the best entrepreneurs are not good at a thing, they are good at adapting to the thing. Going back to my answer right before our round here so when you can adapt to the thing, your ability to succeed goes through the roof.
Speaker 2:Outstanding, outstanding. Now, scott, who is your ideal client at scale architects? What type of companies do you work with?
Speaker 3:Yeah, so I do a ton of work, um, with folks that are uh, in in the, the language of the book, which we'll make sure folks can get a copy of it, there's stages three, four, five. They're managers, leaders and chief executives, but founder-led businesses usually have 15 or more employees and are looking to grow rapidly. We help folks that are trying to scale all the time and that window from, you know, 10 to 15 to 150, something like that is where we do most of our most transformational work.
Speaker 2:Outstanding, and if people are interested in getting in touch with you, what's the best way?
Speaker 3:Yeah, so I would recommend kind of a two for one. Here is head to scalearchitectscom forward slash founders, and there you can actually get a free copy of the full book, the Founders Evolution that goes through all the stages and everything you need to know about them. You can get a digital copy for free there's no payment at all and when you do that you'll get an opportunity to schedule some time with me so you can do that as well.
Speaker 2:Outstanding and to all of our listeners, check out Secrets of the High Demand Coach. This is a podcast. This is where I discovered Scott, and I discovered Scott and you do an outstanding job there and really enjoy tuning in. So I will post links to all of that in the show notes. Scott, I want to thank you for your time today and looking forward to staying in touch.
Speaker 3:David, thanks for having me on.
