Dashboards, Scorecards, and the Hidden Psychology Behind Manual Data Entry | Lazy Leverage #90

I saw typo go out to a head of talent for private equity company. I almost jumped out of my window. If you need Grammarly, let me know. But if I see another typo go out, I'm going to fly to. Friends, Romans, Countrymen, lend me your ears. Welcome back to Lazy Leverage, the number one small business operations podcast downloaded over four billion times last month. Peter, my heterosexual life mate, tell us a little about that sweater you picked today. It's obviously incredibly elegant. It's such a great night and you've chosen a great outfit. Walk us through what you chose who you're wearing tonight. This is some, it's called Jimbury and it has to do, it's actually, they don't sell men's clothing at all. They sell kid stuff. But this is part of a package of matchy, matchy, Christmas outfits for the whole family. Fantastic. And you look divine, Peter. You absolutely look divine. I can't believe I remembered the name of the brand. What are we, what are we talking about today? We're talking about numbers. You know about letters. We're going to talk about numbers. We tell numbers number other area. Okay. It's different from letters. But no, we're going to be talking about dashboards and scorecards. We're going to be talking about paired metrics. We're going to talk about KPIs. We're going to talk about what does it mean to say everyone gets a number and we've been collecting numeric topics for a few weeks now and it's time to process those and share a little bit about what we know, what we've experienced and maybe learn from each other on how we approach kind of data and numbers within a small business. So my initial reaction, and I think it's what I want to lead with before we kind of get into some of the more specific techniques, which is, I read this post years ago at this point and it blew my mind and I loved it. And I was talking about successful big M&A guys, guys who buy big companies. And it said, when you look at the guys who've made hundreds of millions of dollars, these guys can model a deal. They can peg networking capital in their sleep. Their models and charts are elegant. These guys make hundreds of millions of dollars and these guys are tightens. And if you look at the guys who make billions, they oftentimes can barely do that math. They just only do deals where they can't lose. And when I think about numbers, and it's stuck with me, I got to pull out the relevant Warren Buffet. Price is my due diligence. Yeah, exactly. Exactly. Or there's no bad businesses, just bad deals. What's the one that I like? It's like I'll buy any business, but it ain't going to be with one of those. So famously Warren Buffet evolved from thinking Charlie Munger talked him out of, he was in a cigar butt business mindset where he would buy, he would buy meat like okay businesses at great prices. Yeah. And he famously later in life. Yes. And he talks about how's the right decision. Now he buys, he buys great companies at fair prices. Yep. What I would say is my, but we're not Warren Buffet yet. Yeah. We're still looking for good deals. The reason, the reason I would say why I wanted to just lead with that, which was depending on your opportunity vehicle, which we oftentimes talk about in this podcast, there are scenarios where if you're a restaurant tour and you mess up your food cost by 3%, you might miss payroll. And there are other instances where you can lose track of how many sales you made that month. You're just not even tracking revenue, but because you've chosen a good opportunity vehicle, it just basically swallows whole. And so I will tell you that the pressure, that's property management on the pressure on numbers in a construction business with poor working capital. And if you get LIBOR plus 300 BIPs or 400 BIPs, and that's like determinative versus somebody selling a weost product that's a PDF and they run Facebook ads. So that's my first comment is like oftentimes the intensity of getting numbers right is driven by the the game you are playing. So that's my intro. Sure. Yeah. I mean, when it comes to like, is the business going to make money or not? But I think every business benefits from tracking key metrics around growth, around retention around, I mean, there's that's the thing I like about scorecards and dashboards is once you start getting in the habit of reviewing this every week, it's actually kind of fun because you have interesting games you can add. And it doesn't have to be something you can measure numerically. For example, you could have a you could have a scorecard item that is number of new pieces of content posted this week, zero, 20, 2000. And so you know, you can't measure what you kind of can with that because there's like impressions and stuff, but you get what I'm saying. Interesting thing. Well, I think the the way to dive into this, the other the other thing I'll say up front about numbers that I like, which is numbers not in and of themselves, but I really like using them to focus and define success because with the volume of bullshit that I spew on a daily basis in our company, by having something that just says, look, you are going to be rewarded by time to fill and cancellations after submission and total mean percentage hit rate in the first batch presented. That provides a level of clarity, even if the numbered, but they know what game they're playing in a very substantial way. So I also think it has a strong focusing effect in the organization. Yes, it doesn't naturally happen. That's the other thing I love about it, right? Like, this is how I know I'm in shape, this number. Now is that perfect? No, but is that better than just trying something new every week in your team's freaking running around the circles? Fastly. Fastly better. So I think yeah, where do you want to start? Because you I think you have a lot more knowledge and experience. I have some kind of like off the wall opinions, but I think you're much better on this topic than I am. Where do you want to start it? I want to start with the cadences. You should bake into your small business or let me say not should, but the cadences that I've baked into my small business as it relates to dashboards and scorecards and numbers and how they serve the business and myself. And just quickly to follow on what you just said, we're not going to make it through this episode without saying what gets measured gets managed. We'll get that we'll get that right out of the way out front here because it's true. And when I first heard that quote, I thought it was the stupidest thing I ever heard. This is back when I was an employee. And I thought it was very obnoxious, but it is real. And I've seen it be real. If you add something to a person's scorecard that you review with them weekly, you don't need to say anything. Yeah, all you have to do is have them fill in the number every week and you will be amazed at the improvement you'll see in that number without giving them any guidance or feedback or anything, just just knowing that they're going to be reporting on it. Now, I have to jump in there, though, because you said something that I maybe will punt a little bit, but they put the number in. It is not automatically done. That is a very important step. I don't know if you want to unpack that now or do it maybe later. No, it's I totally agree. And this is a fairly new realization for me, circa the last couple of years, which is, you know, when you first get into numbers and you build your first scorecard, if you're anything like John or I, the next thing that occurs after you've done this one time is, holy, that was a lot of work. I don't ever want to do that manually again. Let me figure out how to automate all this. Let me get some APIs. Let me get some apps. Let me get some Google Sheets linked into this. And what will happen is every week these numbers will populate automatically. Won't that be amazing? Don't want to be in a room for error and it'll save time, blah, blah. That's a very natural instinct. And in this case, it's wrong because what you want to have happen is, and we'll get into the dashboard scorecard, everyone, every number has a name next to it. That's the person who's accountable for it. And they should be having to manually go, pull the data and populate the scorecard. And the reason is, knowing that they will have to do that at the end of the week, for some reason, psychologically, it's different than having it happen automatically. And they feel the weight of it in a way that they wouldn't, where some machine made the number and they don't even know if they agree with the number that was put in there, right? Well, actually, that doesn't actually include, you know, like, all right, well, how about you pull the number every week? Then we can all at least know what you think the number should be and we can talk about that. It's a little bit like L10 meetings. It's a very similar thing in the EOS, which is the meeting creates the accountability and the act of reporting creates kind of a momentum of accountability that, you know, sending out an async video about what's going on in the company doesn't knowing I'm going to get called on to say on track off track, or I'm going to put this and I'm going to have to mark it yellow, because it is not on track or whatever it is. I think it's it's kind of a normative pressure, right? It's normative. It's not a formal, it's informal pressure. It's like crap. I better have an answer. So I like that a lot. So you mentioned EOS. EOS has the concept of a scorecard on the weekly L10 meetings, level 10 meetings, which we do when we have a great scorecard. And the scorecard, you know, it has anywhere from six to 12 KPIs or metrics that the way the book describes it is if you are in a desert island, what are the six to 10 numbers that you would need to see weekly to understand the health of your business? So very high level. And, you know, these are going to be things like revenue, money in the bank account, lead flow, closed deals, employee churn, customer churn, you know, there actually tend to be fairly common across industries. So, you know, building that out and every single metric you put there, importantly is going to have a name whose the person is accountable for that number, a goal, which is like what the number should be. And then in actual like for that week, and then you look at the 13 month trailing. So you eventually build you after 13 columns. And then the left, you know, the oldest one will fall off. And that way, you have nice context when you're looking at those numbers week to week. So I got a couple things to say about this having done this now for many years. One is, don't worry too much about, oh, is this exactly the right metric? Like you can get really hung up when you're starting to build this for the first time. It's okay. Just get some numbers up there. In the motion of doing this week to week, it will become obvious, which ones need adjustment, which ones are duplicate, which ones, oh no, I really want to see like how many Google reviews we got this week. Let me add that. You'll start to think of it. So it doesn't have to be perfect when you launch. In fact, it, it should be an evolving over time set of numbers. You will think of things that are no longer relevant. You'll think of things that you want to add and start to look at. You'll put numbers on there for just a quarter because you just need to like turn around this one little part of the business. And that's all totally normal. I think it's bad. It's actually bad. If that becomes too stagnant, and you feel like, man, these numbers and these goals haven't changed at all, you want to go in there and refresh it because otherwise it just gets stale and you're not really making progress. People touching it every month though or every week is part of the way that when I do automated dashboards, they get stale and out of whack and that's not the real number. And the part of I think what having somebody physically handle it or digitally handle it every week or every month is that it is impossible to get stale when you touch it every week. It's basically impossible. That's part of what I like about that is it's a forcing function. Totally agree. Yep. So that's how we've run it. It's we've done it that way for a long time. It's been great. I recently heard a great distinction between a dashboard and a scorecard. I actually remembered who told me it's Chris Kaplan who's kind of like our EOS coach. Great guy. I've been around, you know, our business for years now. He helps run our off sites. And he said a scorecard should have numbers that you can control on a week to week basis. Whereas a dashboard is just going to show numbers that are more lagging indicators, but give you a sense of where the business is. So like revenue would be our dashboard. Yeah. Scorecard numbers is like you can make someone in charge of it and they could take some type of a concrete action within a one week time frame to move that number. So that would be like number of reviews requested or number of interviews conducted for an important hire or anything where it's activity related rather than like lagging performance related is how you sort of distinguish what would be appropriate to put on a scorecard. Now I have to confess we haven't updated our scorecard and it still has many dashboard like items on it. But I'm excited to incorporate this kind of new knowledge and set up a scorecard that is separate from a dashboard for us. It would seem to me that a dashboard I'd be comfortable automating, but a scorecard I never would be agreed. Like hey, export this from Stripes API and give me a sense of our error. That's just reporting. But a scorecard, the act of reporting on it and talking about it on track off track, red yellow green, whatever, that's kind of like a causal mechanism in the whole. So I like that. Okay. Ryan Deese, who you're going to talk about later. I just watched a video about CEO dashboards from him, which I really liked. Yeah, me too. One of the concepts he threw in, which was new to me, what I like is don't even go so far as to have the highlighting be automatic. So for a while, we had like, you know, you'd put the number in. If it was about the target, it would turn green. If it was below, turn red. He's like, don't even automate that. You want people to manually have to code that color to be green if it's on target. If it's off track and you have a plan, it's yellow. If it's off track and you don't have a plan and you need help, you make it red. I thought that was really interesting. I learned that from a guy who ran a very large Middle Eastern countries investment thing. He used to raise money and he said, it was talking about managing sales people and he said, there's only two tools you need to be a great salesperson, a CRM, so that you can have in-depth stuff and a coverage report. And a coverage report is five columns done by hand that has a link to the CRM, a next action. And he's like, people try to hide in complexity of reporting. And it needs to be formatted perfectly. And it needs to be done by hand and needs to be done every Monday before the sales meeting. And it is the only other thing you need to be a billion dollar a year salesperson. It's a CRM for in-depth notes and one spreadsheet in a perfectly formatted way that you live and die by. And the hiding that has, oh, well, it's yellow, but it's not really yellow. And it's like, it's hiding. It's hiding in complexity. It's people making up work, right? And so I've always, that always stuck with me about this kind of dynamic of, you know, hiding and yeah, you know, so I love that. Well, there's also like evading accountability is a big part of that. Yeah. Yeah, the hiding thing. And I want to talk about this leads perfectly into this concept of everyone gets a number. So if you think about the scorecard I just described, I said, every number has a name next to it. The problem is, depending on how your company is organized, it's very easy for people who's as their name next to, and you'll hear to, to remember say this, let's actually two people. There should be two people's name next to that. And first of all, that's never allowed. I'm going to pull out one of my favorite quotes you ever gave me, John, that is repeated often in our household because it is a lived reality, which is the fastest way to starve a dog is to make two people responsible for feeding it. That's a night. That's an African quote. It's so good. It's so good, man. It's true. The other fun one is only one throw to choke. Yeah, you want to have only one throw to choke. That's your which I always like. Yeah, I've quoted that one. Yeah. So you cannot accept that as a leader that two people are accountable for a number. You have to make one person. And what you may realize when you try to do this is the way your company is set up, your role design does not support this very well. And so when people say, no, there's actually two people responsible for that. They may actually have a valid point with the way your company is currently structured. Now, that is not their fault. That is your fault as a leader. And you have to take accountability at that point and say, you know what, you're right. Let me rethink how we have things organized because we need to make sure that one person is a cat. If it's important enough to be on the scorecard for your leadership meeting, it's important enough that one person needs to be responsible for it. I saw something too, and you'll maybe be able to say this. I think the important distinction that's often missed is like I saw it somewhere, and I think I was reading about numbers or something, is I was like four categories. It's like one person is responsible for the number. One person is accountable, which is usually the boss. One person needs to be informed or something. It was like, you know what I'm saying? It was like four roles. It's a race, I think. Is that what it is? Responsible, accountable, communicated with, and something else? RACI. Responsible, accountable, consulted, and informed. Yeah. So, so that dagger has come about annual growth rates. So, nerd alert. So, the key thing though is I think oftentimes when people were like, well, more than one person has that number, it's one of those four roles. Yeah. It's not, it's like, no, no, they have a relationship with the number, but which one of these four is that relationship? And so, I think oftentimes it's like, you need to disambiguate. Oh, by the way, I got a compliment on Twitter for saying the word "dross" on our last podcast, so I'm just joking off of this. So disambiguate. That'll be my $5 word for today's episode. But I think you have to disambiguate people's relationship with the number. It's not just, if you're you're responsible, you have no relationship with the number. It's like, not exactly. Yeah. The other thing that people get twisted here is you'll try and put their name next to a number and they say, well, I don't actually do that. That's Susie who works for me. You're like, okay, but you're you're still accountable for it. Like, if Susie's sick or not doing her job, you as a manager are accountable for this number. It doesn't mean you have to be the one actually doing the thing. Yeah. But the buck stops with you. That's part of being a manager. That's why you get paid more. Can I go mildly off-pieced for a second here? Okay. Here's something that I struggle with that I want to hear your answer because I get pulled constantly in both directions. So you watch Nick Saban, probably best college football coach of all time, maybe the best. And he basically says, "Outcomes and the scores of distraction." To distraction. You show up, you do your job, you know your role in the system and the score takes care of itself. You're a footballer. That's literally I think the name of the memoir. It's a square chance answer, right? And it's all about, look, you show up, you do the sprints and you run the plays and whatever and we're going to play the best weekend. You control the controls. Very stomach, right? That's one piece of me. The other piece of me is, I don't give a shit if you have magic fairy elves. If you made seven hires last week as one of my recruiters, you're my best recruiter. I don't give a shit if you put tea leaves and a Ouija board. Did you produce the output? Labor has no intrinsic value. I don't care if you worked one hour or 24 hours, right? But it's a little, a little anti-mark. But like, and I'm pulled because I'm like, just output baby and then a series of suggestions and a series of best practices. But ultimately, I hold you accountable to the output. I don't care. Or conversely, I don't give a shit about the output. Did you run the process? Did you control the controls? Did you Nick Sabanon? And I'm constantly ripped in half in my brain as I think about, well, which one is it? And I still only the answer to that. It drives me crazy. Well, let's try and tease that apart a little bit. So what Nick Sabanon is referring to is definitely scorecard metrics. Things are controllable. Did you run the passing drills? Did you work out? Did you eat healthy? Did you show up every day? Yep. Where you lay to practice. Yeah. Now, let's be clear here. Let's be clear here, though. The dashboard is what actually matters, right? The dashboard is money in the bank. That's what matters. But the scorecard is like what you can infer. Yeah, the scorecard matters more to the degree that you're off track from your, to the degree that your dashboard is like red. Like, if your company is growing 20% of month, I'm not going to be super concerned to look at what is influencing that growth because whatever you're doing is clearly working. But would Nick Saban say that? He'd say what he'd say is they want a blowout game, which is all the matter. Well, I don't know if he'd define that that's. But they won 50 to five. And he walks to the football coaches do this all the time. I used to do it. They walk it after winning 50 to five. And they say, guys, this is the most embarrassing performance I've ever seen in Alabama football. And I know we won 50 to five. I shouldn't say five. That's a terrible football score. 50 to three. But I was embarrassed. And when they lose, they could say, guys, there was a lot of stuff there that I thought we did, right? And the scorebar, like, so I'm just like, I'm on this like mind-f about, do you like, let's say they get a good outcome, but they didn't fall the process. Let's say that we're growing and RIRR is growing. And they, but they showed terrible behaviors. Do you correct? So this, what's going on here is Outcoming. Yeah. I know you read that book thinking in bets. Yep. Oh, I think what I love. I was thinking about that this morning. Yeah. What happens in a football game is that it's so tight. Like, for all intents and purposes, any two NFL teams are within 5% performance of each other. And so even if one team is demonstrably better than the other one, there's so many other variables and factors that if you were to run 100 games in a simulation, like 60 to 40 or something. Exactly. It'd be like 55 or 60 to 40 or whatever. And so in that scenario, you can't rely on the scorecard as a reliable indicator of performance. Yeah. I think that's what's happening right there. And it's probably also building on what you just said when you think about Eddie Duke and it's why poker is so much better to study than chess for business owners. It probably has to do with kind of like bound and unbound games. Like football is a bound game with a known rule set and a known competitor. Whereas business is ultimately an unbound game, a bunch like poker. And so I'm just, yeah, I struggle because if I truly, if I'm truly the decentralized leader that I believe I am, I give him the end state and the output. And I say, let me know if you need resources prioritization or context. You guys figure out the best way to get there. Not did you make a hundred cold calls today? I think there's something about the difference between being the owner of a football team and being the head coach. Like the owner doesn't care about just when the passing drills. And they're just like, you need to win games. Whatever you need to do. I'm not going to, I'm not going to put together a scorecard for you. Yeah. But if you're the head coach, you're like, okay, I got to get all these guys. You're, you're kind of like more of a middle manager where you're interested in all these direct reports. And you have to. Interesting. Interesting. That that's a very interesting one because that is the same with us when I look at my like CEO scorecard. I'm like, these are the three eye track, but track, but Sophia, I expect you have 30. I just don't give a shit. There's nothing in here about sourcing. I care about how often are you closing the role within two weeks? I assume you're going to need to crack the whip in sourcing in order to hit this. I don't care though, right? Like I have a very, so yeah, it's probably like a level of the organization and stuff like that. But I just, I'm constantly ripped in half by that. That is interesting. I don't know my answer. I still don't know my answer. Like, yeah, I also think too that like in business, the outcomes are so much less certain, like Nick Saven, presumably from decades of experience is like, I know for sure if we do these activities sustained when we are going to win games. I don't know that the things are that clear in business. Like the rules are changing all the time. The market is shifting. Competitors are doing different things. That would suggest more outcome based because you need the maneuverability to do the creativity and you don't really want your team member to be like, well, I made a hundred calls like you said, like, sorry, there was no sales, you're like, well, Nick's football practices look similar to what they were 15 years ago. Whereas a business looks completely different from 15 years ago, so you can't maybe pattern. But yeah, it's just, it's just such a rich concept to me because it collides with my leadership philosophy. It's like, am I really going to mandate they make a hundred cold calls a day, where I'm going to say, dude, five points a week and you got a job here. Go. And I'm much more your style. I like to a fault. I'm just like, yeah, I've got feedback from my team that they need more feedback from me. So building on that though, just because I know it's a little bit off to the side, but I think it's related, which is what I have determined, at least what I'm doing right now is I give the output or the end state. But then what my job is is to equip them with a ton of voluntary tools and feedback that they are free to use or not use. But they know that we have an AI surfacing tool for our 500,000 candidate database, but share resources. Yeah, step two of deleting. Correct. Here's, I see I wrote, I wrote smear, I can see my, I love this is a printout of notion, by the way, for those of you that don't recognize what that is, that is a notion page. That 100%. It's fun in my own way. But it's like, it's like, I'm trying to create the conditions for them to hit the output without being dictatorial is I think what I'm, that's what I'm kind of like landed these days. Yeah, and like the degree to which you should be prescriptive has to do with how they're doing. Yeah, like if they're, if they're hitting numbers like my, you know, VP of Ob's Brennan, who's kind of taking over more and more of the business, if he's growing the company 20% every year and profit margins stay about 15%, I am going to be an extremely hands-off owner. Yeah, let me know for you anything. Yeah, you know, but to the degree that those numbers go down is the degree to which I'm going to start insisting. Yeah, that he reads the books. I send them comments on the articles. That's the first one you said. Gives me updates on a weekly basis on our lead flow. Yeah. You know, I'm going to send him some new video from Tato and be like, I need you to implement this new owner fee so that we can drive up our profit margin. Let me know when it's done, your deadline is this quarter, right? I think you're right, though. I think that there's two variables that are that are inverse, which is performance level and prescriptive. Yeah. High performance level, low prescriptive, low performance level, high prescriptive, and they're inverse and they're lines that criss-cross. And so it's like, you're doing well. I'm not going to ask you many questions other than what you need. And if you're not doing good, it's going to be a proctology exam. It's your old seven layers of management thing, right? You've got the, you've got this relationship between prescription and mandating activities versus giving an end state. I think it also sits on these axes, which is I'm going to be managing inputs like a mother if they're not successfully generating a pin. But if they're generating appointments, I'm going to be like, I don't even know what inputs you have, dude. Just keep doing whatever the hell you decided. So I think that that's right. So that might be the answer is it's driven by performance. There's no one size fits all answer. Hey, it's Peter. I'll keep this super quick. Some of you may know that I take a month off every year where I fully disconnect from my property management company, I travel, spend time with my family, et cetera. I've done this every June for the last four years. Well, I get a lot of questions about how I'm able to do that. So I've started writing a weekly newsletter. It covers all my best practices and lessons learned, plus everything that doesn't work because I still mess up a lot. It's written for the property management industry. But if you run a small business of any kind, I think you'll find a lot of value here. So check it out and subscribe at peterloman.com. And of course, we'll put a link in the show notes. So what about, what about this concept of some numbers? You, you give them an acceptable range, and some numbers you are to maximize, or perhaps only one number, you are to maximize or minimize that, you know, there is no, you can't ever get good enough, right? To go back to our pit stop analogy, the pit stop can never be fast enough. There is no acceptable range. That is the thing you optimize for. That is like asking you, you know, what do you feel about LandSimple? I am so, I am so into theory of constraints right now. I'm thinking about night. And so you talk, you quoting something from theory of constraints right now is not cool. Because, you know, I'm trying not to make this entire podcast about that, but I'm seeing it everywhere now. We held off for 30 minutes somehow. I did the, did you see by the way? I did the year on review on Riverside. I sent it to you in our number one most popular world, this AI. And it was like, and they did a super cut of us. We were like, AI, AI, AI, AI. But then somebody in the comments wrote, you sure it's not hormosy. Nice. Okay. I see that comment. That guy listens. Was that on Twitter? Yeah, yeah. It's great. Just a plus comment. I don't know who wrote that. The thing about what you ask about him. He was referencing Alex Hermosy. Yes, he was author of $100 million dollar money. Yes. Thank you for clarifying that. About there are some numbers, particularly the construction, there's actually really one number that you want to maximize like a free cash flow. I mean, you can never have too much free cash flow. Right? I'll let you know if we get there. Yeah. Yeah. I'll let you know if I could sick of it. Whereas something like, we talked about this a couple episodes ago, speed of time it takes for the food to come out in a restaurant. The correct answer is not 30 seconds. You are not constantly trying to improve that number. You're trying to keep it within 10 minutes to 30 minutes based on what time of day it is. Yeah. That's a range versus free cash flow, which is maximum. And so I think is a leader understanding which in which is really important because, and this again, if you had this on your bingo card, if you can tell what John's been reading lately, a lot of people oftentimes are running after local maxima, which actually hurt the company. So the guy, the cook, is trying to maximize how quickly food gets out. So he over orders food because he never wants to run out of everything, run out of anything because it lets him get a faster food out the door when what he should be doing is thinking about the global maxima, which is free cash flow or whatever it is. But that takes discipline and leadership to not let his local maxima lead the entire that that number become an organizing principle rather than a supporting one. The Marine Corps, we call this a supporting effort and a main effort. And everything needs to be subordinated to the main effort. Main effort is this supporting effort can be pursued only as long as it supports the main effort. So I think we're going to do 50,000 episodes about local maxima and numbers. But in this case, I think it's sufficient to say some numbers are not to be maximized. They're to be managed within a range. Yeah. So your score card, as you're reviewing that with your team, you know, there's a temptation. The team says, you know, the team says, well, what what should these numbers be? And you're just like, just make them all better. Like, correct, correct. Well, what should I do this week? Just work on your numbers, make them better. Yeah. You know, who's at a boss like that? But actually, know that that would be not only would that be a waste of resources and effort, but it would be actively destructive to the most important one or two or three numbers at your business. Are you at the part yet in the book that I sent you where he talks about it's actually rational behavior to pursue a local maximum number in the absence of more information. Yeah. He says, no, that's rational behavior. And it is actually a better outcome than just randomly making decisions, which is if you have a choice, maximize every variable, but there's a third option, which is orienting against the constraint, which is better than even maximizing a local variable. So it's like giving people, it's okay, like in absence of another system, you made the right decision, like order more inventory to get the food out faster. That is better than randomly ordering an inventory. Yeah. There's actually an even better one, which is, you know, theory of constraints. So in property management, one example here would be like, turn time. So how long does it take from the moment we get keys to a unit from a tenant moving out until it is, um, move in ready for the next tenant? Uh, you might be tempted to say in your team's kind of like, well, how what should it be? And you're like, you're ahead of possible. You're ahead of turns. That's the whiskey one. It's not the owner. It's the person Beth who you said you're in charge of our turns. And she goes, okay, I took it over. It's at 10 days. I'm going to try to get it to one day. So I can say I improved our turn speed by 90% right. She's thinking about putting that on a resume. Local max roll. Yeah. And so as the leader, it's your job to understand where turn time fits in the context of the entire organization. Um, the theory of constraints guy Eli would say, uh, he kind of envisions this as like a snake. And like you don't want to, you don't want to, I'm going to mess up this now. No, keep it up. Wait, I want to see you get your back your way out of this. Keep going. So basically, you walked, you walked away. You don't want the, you don't want the snake to swallow a squirrel, right? You want snakes to have small digestible meals. And if you, if you don't provide the context to your turn manager of here's a range of turn speeds. We need to, we need to be from five days to 15 days. Yeah. If you reach five days, stop trying to optimize it. If you're longer than 15 days, make it your, you know, important focus for you. That is something that only you as a leader can provide that context, the turn manager is not going to understand enough about what else is happening in the business to decide whether it should be five days or three days or 20 days or whatever, because they're not talking to customers. They don't know anything about custom rights and other worlds. They don't anything about resourcing or budgets or anything else. They have every incentive to improve that number as much as possible in the absence of you setting the acceptable range. And while I'm going to make one small thing on that, then I want to talk about snakes because I think it ties into a numbers point. The other thing as a manager, an inexperienced manager, I would say, or, you know, in some instances, you go to every department head and you say, okay, give me current state numbers and you sit down with every single one individual and say, how do we improve this? And that is the wrongs think and answer. Hey, you're a 10. Awesome. Come back to me with a plan to get to four. And it takes a lot of experience or wisdom, I think, to not do the easy answer, which is to meet department by department and say, well, if we all just improved a rising tide lifts all boats, when in fact, you can create enormous inefficiencies and create all sorts of perverse incentives and raise new constraints on that stuff. Anything on this before I make a snake jump? No, I think there's a classic story about numbers and it's one of the reasons why oftentimes I'm very slow on numbers and a lot of different parts of our organization is the government of India was trying to give it a snakes and they said, awesome, we'll pay you one cent for every snake killed that you bring in to, you know, a police station and people started breeding snakes to kill them to make money. And so I think you always as a leader have to be really careful with what incentives you create, especially if you start doing things like time compensation to it. You know, you might find out they're not, you inset your person who does turns, you find out that she's slow rolling the lease move out date and telling the tenant to just back date it so that she can get a head start so that she can game a number because that's what her comps tied to and that's the only metric that she's reporting out of that group and so she's playing games with not bringing the keys back which slows because it doesn't count until the keys get right. Right. Right. Right. Right. Yep. And so the answer to that, the simplest answer to me always is paired metrics. Yeah. Which is, you know, it's for us, for example at Sagan, the paired metrics are total turn a total fill time to the roll turn total turn speed total fill time, but it's paired with we call it batting average, which is what percentage of the time does one of the first three candidates you present get invited to an interview. And those are very well paired metrics because if they improve one, they start slow rolling to get a better batting average, it's going to kill the other metric. But if they, you know, slow roll this one, this one's going to get messed up. So paired metrics tensed or fractions or percentages tends to be the ways you can kind of reduce that. So yeah, just wanted to talk snakes and paired metrics. Yeah, paired metrics is a really great concept and there's a lot of ways. There's many scenarios in which you assign a number to a manager and the way to optimize that number is to make the experience of the customer worse. Like so for a lot of these metrics, you end up hearing it with some sort of a customer satisfaction score or an NPS score. So for example, you may have an ops manager and you may give them a metric of like, so in property management, we would use DLER, directly where efficiency ratio. By the way, we need to do that. Crab tree maybe. Crab tree, he's a god, you know, if we had a mount rush board this podcast, I think it would probably be honor. Yes, we can get him on the show, I'm sure. Yeah, well, he was a guest on one of my early episodes of my show. You recommended to just book to me. You can't read that book without, don't read it before you go on vacation because you have a hundred ideas. That's not on the recommendation. So if you assign your ops manager, the DLER metric and say, you know what, you need to maximize DLER because the better our DLER is the more profitable we are. DLER is basically a way of saying like revenue per employee. Yep. And it's slightly more sophisticated way. Well, what's the best way to drive more revenue per employee? It's just to have less employees doing the same amount of work. It's our firing people. We have one picker. So, you know, first of all, that's going to need employee burnout. But even if it doesn't, the way the employees get more done with the same number with the less people is they just starting ignoring customers. So pretty soon your customers are like, hey, where the hell is everybody in your NPS? So that's why you pair it with your Google score, NPS, something like that. So that's like, well, we do want you to optimize, you know, DLER, but it can't come with the expense of customer experience. We need to get creative. We need to figure out what's the constraint that, you know, within your department and we're going to work on that. Love it. Yeah. I love that conversation. I love, you know, thinking about what perverse incentives this may or may not create. I love that whole, that whole thing. Yeah. So other best practices, I think you mentioned it, but I like, you know, I both like Ryan D.C.'O dashboard. I like what it is, you meet monthly, you meet monthly to establish the target, but it's reported on weekly by hand. It's putting just a simple Google sheet. You can download his template anywhere. And you have one name assigned to it. And then it's color coded with green means it's on track, yellow means it's off track, but I have a plan and red means it's off track and I don't have a plan. I think those are the big ones that, you know, those are like the best practices. I always like, you mentioned it already, but the other one to me is always, you know, if I just got like a post, you know, a post card in the mail, how would I know a second was healthy? Yeah. Net new member editions. Literally, that's, that's the only, at say, and it's one net new members. That's companies would call this logo growth. Let's just call that. New member editions. Yeah. Subtract charm plus how many customers were required? There you go. How we doing? Is that up into the right? Seconds doing good. So everything else is essentially below that. Yeah. The other, the only other thing that, did you, do we miss anything big that you wanted to add? I just thought of one thing, which is when on your scorecard, yeah, that you're looking at weekly, if a number is consistently below the target, like coded red or whatever, you can't allow a culture of accepting that to, to take foot. And I actually have been bad at this in my company, where there's a couple metrics. It's like every week they're red and every week I'm like, yeah, but yeah, we're working on it. It's the solid. She's got some good ideas. Yeah. And you simply can't allow that because that's, that's going to be very corrosive. So you either need to actually just went through and exercise with this in Crane in our L 10 this morning, you need to change the goal, change the metric or delete the metric, or if you decide, no, this is the right metric and this is the right goal, then you need to be way more aggressive about holding the person accountable, whose name is next to it and say, hey, when you come to this meeting next week, we need a fully built out plan of how this is going to get turned around within four weeks. And if it doesn't happen, you're not going to be in the same role that you're in right now. Yeah, it reminds me of something when we talk about coaching. It's like the five questions or whatever. I'm combining different books, but it's like the first conversation is about the lack of performance and what the goal is. The second conversation is about the lack of performance and what the goal is. And the third conversation is why are you making promises you can't keep? Like after the third time, it's now meta, which is why do we keep setting goals that make us red? It's now not the number anymore. It's our conversation about the number. Dude, that is so good. Dude, it's from a book. What's that from? Well, it's from a shelf. If I'm low, it's on the way to give feedback. It's the same book where it's like ask for permission, name the facts, talk about the impact, talk about the plan going forward. That's it's that book. I don't know if it's blue and yellow. That's not the wait, wait, dude, dude, wait, the effective manager. How fucking good is my, how fucking good is my memory? I knew the fucking color is. Okay, the coaching have it. Yes, I have that book. Yeah. And it was verbatim, which is after like the second or third time, I'm pretty sure it's this book. After the second or third time, it's about, oh wait, you might not be this one. Yeah, I don't remember that from that book because I read that book like last year. That's a good book, though. Great book. Not the right one. It wasn't the effective manager, wasn't it? It could have been. Yeah, it totally could have been. Could have been this one the effective manager. Yeah, no, no, that's it. That's it. Yeah, it's in there. I believe it's in there. And it basically says what happens if after you give the feedback, they don't improve. And it says after like the third time, it's a conversation about why are they making promises they can't keep, which is like the pep stage. Yeah, describe the impact. Oh, yeah, yeah, that's the right book. Yeah, yeah, from that incurred defective future behavior. Yeah, this book. Oh, it's so good. Manly, you reread this book. We do this what we teach in our emerging leaders. We teach that book. We teach this one. We teach. So the last thing I was going to say, which is, you know, this book, there's this book by Saul Alinsky, called Rules for Radicals. And he was like this communist agitator in the 1920s and 1930s. And it was a President Obama's favorite book for a little while, very controversial, because this guy was like this labor organizer who was basically like communist, whatever, but a fascinating book about human behavior. And it's a, it's the old people who I was just telling about like the sign of intelligence as the ability to like understand the context of something. Oh, I love this idea that people were mad that he was like quoting that book. It's like, no, it doesn't mean he's a communist. It's just a good book. Yeah, exactly. The ability to take something from one domain and bring it into another domain. Like you realize that's not like an application essay. Yeah. Um, it's the book where the first one is, uh, organized as a human behavior, we must start with the way people are not the way they should be. That's the old line. It's an incredible line. But there's a concept in that book that reminds me of numbers, which is he says, when you start turning up the pressure on a political figure because you've been agitating and whatever, the first thing that they're going to try to do is make it seem like they're not wholly responsible. And your job is to keep the spotlight directly on the president of that factory, because he's going to say it's the board and it's the government. And they're going to try to basically spread responsibility in order to get off the X because if they can successfully do that, they've ruined your protest because it's like, well, he says it's out of his hands. We better stop protesting. And your job is to say you can change this. You're the president of the board. And so similarly, I think when I think about numbers and managing the numbers, there was a very natural human tendency to basically try to spread responsibility so that the pressure that they're feeling is diminished. And your job as a manager is to say, you are responsible for everything and everything that doesn't happen in our organization that drives this number. Go. Not do this project. You are responsible for everything that doesn't happen to make this number improved. And you need to let me know if there's some policy in place that's preventing that, but that's your call. You do not get to say he never got back to me. No. Or whatever, right? It's from Saul Linsky. Yeah. It's very good. And I'll tell you from the Midwest here in Ohio, there's a weird, it's not weird, but there is an interesting dynamic that plays out in leadership meetings where it's uncomfortable to apply that much direct pressure to even a leader on your team. The idea that you are going to be so direct with somebody and say, you are responsible for this. Nobody else. You need to come with me if there's a problem. Yeah. I'm not going to accept it. Yeah. In New Jersey, all day, baby. Yeah. All day. Yeah. Here in the Midwest, there's such a strong part of me that wants to be like, and I get that it's the holidays. Yeah. And I do know that you have to interface with Beth on this one, like caviating and caviating and caviating, even as the leader who's trying to assign this responsibility and accountability to a leadership team member, it's so difficult. It's, I don't know, I've been here too long where I have this trouble with being that direct with somebody, but I don't, I actually don't think I'm doing the many favors by not being that way. The thing is going back to Nick Saban, and I think he's not a good example of this actually, but I saw this somewhere else and it ties into numbers, which is everybody thinks that the only mode of being tough is being an asshole. It applies to parenting, too. And the research is clear. It's basically like high care, high standards. And the thing is everybody thinks high standards means, what the hell? You missed the fucking block and blah, blah, blah. And you're going to run on the line until I get tired. Instead of Peter, you broke my heart when you made that promise and you didn't deliver. I'm dying over here because I had so much confidence in you and I told the team, I don't know what it's going to take and I'm here for you. But if you miss a number again after practicing, like high care, high affection, hit him right between the stink and eyes, not throwing your hat and saying, "Dad, gum it and run on the sprints," right? And so that to me is the persona that I try to have, which is incredibly high care, but shoot him between the stink and the eyes, like break their heart with a lot of love. You know what I mean? I've seen you do this a couple times, one specific email comes to mind recently. And it's extremely unusual. It's very notable when it happens because it's not a common mode of behavior. And I do think it's very effective with most people. It is not a natural motion. No, it's artificial. I developed that skill. It was not, I didn't always do this. I tend to just try to always want to be like the chill guy. Yeah. But then it gets to a certain point and I just absolutely lose my mind. That's often. I mean, that's what like often these lives do, which is everything's fine. And then it's like you're bringing up and you forgot that. And it's like you don't want to do that as a boss either, you know? Yeah. You want to bring it up and you know, it's like dog training. Like when they make a mistake right there, like, hey, come on, let's hop on. Hey, you know, I love you. I think you're doing a great job. But if I see another typo go out, I'm going to fly to Ecuador and kick you in the ass. Clear? Yeah. Sorry. Right. Like, do you have like an acronym or like a little 10 minute YouTube video and where I could like brush up on the scale because I feel like it would be very useful for me to get in the habit. I'm serious. It would be very useful for me to get in the habit of behaving this way with people that work for me, with my kids, with my wife. Like, because I do tend to be too chill and then go way over the top and people are like, whoa. I'm going to ask a question that's going to be offensive. You're right. By the way, this ties the numbers because this is how you coach somebody in numbers, right? It's the thing. It's performance effectively, which is numbers are effective. I'm going to say something that's going to be, it's going to be offensive. Okay. It's going to be offensive. Are you ready? I'm ready. Okay. This is me being honest. Do you actually care about your team? Because the method is contingent on that. It is not fake. It is genuine. I deeply care about you. And if I don't feel that, I don't do that. I don't say that to some guy who started two days ago. I deeply care about you and I want you to succeed. I say that shit to bincey. Bincey, I will do anything to make you successful. But if you fuck this up again, we might need to make a change, right? So you have to make sure you are not as one of the things I learned in my old career. You are not as good of a liar as you think you are. And if you don't genuinely, when you sit that person down and say, I genuinely want you to be successful. You do not say the words because John told you that you have to genuinely believe in their success. And then when you are honest, they feel it. So it's not like a script. Yeah. That's my question for you. I know you're wide. I do. I do. And I can, I'm following you a little bit now. I think where I was wanting to start is, yeah, give me the right words. But actually, now that you say that, it's becoming a little more clear to me that if I think about the problem that I have in my mind and the impact of that problem is going to have on this person and the company and the area that they're responsible for. And then cultivate in my mind like authenticity. I do actually care about authenticity. Yeah, I do actually care about this person. I really don't want them to be successful. But you know that if this is read for another six weeks, your hand is going to be forced. Tell them that. Yeah. You know, tell them that like what you can get away with that we've talked about this before. What really works well for me is bringing things into the conversation. Peter, I want to give you some feedback. And this is hard, dude. I thought about this all weekend because, dude, you're my boy. You know that. You know, when you wear shitty Christmas sweaters on lazy leverage, it ruins the thumbnail. And I know, you know, they match your kids, but our views have fallen off a cliff since, you know, the cold weather came to Ohio. And so, I'm not your boss. You know, we're partners. We'll do a lot of business together, but ultimately, it reflects poorly on my brand. You know, and so I just wanted to, right, but like bring it into the conversation, right? Like, hey, I got this feedback at our last offsite to be more direct. And if it's okay with you, I wanted to do that. It might not come out perfectly. I'm still practicing because I'd okay. Yeah. Tell him, don't, if you really have a relationship, people will line that. I don't really. You're so experienced with this. Yeah. Well, it's my job, dude. Yeah. The job was people, like, yeah, irrational people in high stakes environments. So, yeah. But it's just like EQ stuff. When you've got it, it's just you have it. It's just kind of like connecting some of the neutrons. Totally. It's just like a new motion for me. Yeah. Okay. Final thoughts on numbers, technology, tool, books, you know, we made some book recommendation. I mean, this book is fantastic. The effect of manager. It's on my, it's one of my books. Yeah. Mark Horseman and two co authors. Yeah, I first read this, not this past summer, but the summer before that got a lot out of it and had, actually, the leadership team read it. I love it. Okay. Mine is off the wall. I have committed to some health stuff right after Thanksgiving. And since then, I a little too much to do was Turkey, did you? It's just I, for whatever reason, I like doing stuff. I've done it before. Not new years because I've already got ahead, had, you know, head full steam before New Year's. And I like the discipline of doing it during all holidays. It feels hard, which I like. But I am very, very deep in ketosis, which is basically less than 20 netgram carbs a day. And I've been like that since Thanksgiving, about a month now. And for those of you who've, if you've struggled, I would recommend it's hard and it's extreme. But if you're like, I want to fight the 30s and 40s dad bod, I feel good. I'm sharp. I feel really good. Like, so I would just recommend from a personal experience. If you're kind of like, what's the fat one, mezzo morph? I'm the fat one, whatever that one is. Dezo morph, mezzo morph. You know, there's like, whatever. But if you're somebody who's like, got naturally carries more weight than you should, you know, there's no cravings. You don't get hungry, just because there's no kind of insulin spike, the triggers hungry. So I've just, I've, every time I do it, I'm like, I should do this more. I should do this like every year. And I'm pretty deep into it and really, really enjoying it. So recommending that for anybody who who wants to get on that wagon. Cool. Cool, man. All right, John. Another good episode of books. Sounds good, man. See you. All right. All right, confession time. This podcast was originally going to be a side project, something we'd put together whenever we had the time. But Dan really pushed us to get serious and honestly, I'm super glad he did. He's been instrumental in getting this show up and running. So if you're a business owner, looking to expand your B2B reach with content creation, whether it's top of funnel, mid funnel, bottom of funnel, Dankerner, he's your guy. Hit him up at Dankerner or at remixelot.com.