Ep 572: Operational Efficiency in the AI Era with Michael Greenberg

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The build a better agency podcast presented by a white label IQ will expose you to the best practices that drive growth, client and employee retention, and profitability, bringing his 25+ years of experience as both an agency owner and agency consultant. Please welcome your host, Drew McClellan. Hey everybody, Drew McClellan here from Agency Management Institute back with another episode of Build a Better Agency. Before I tell you about our guests, I want to of course say thanks to our friends at White Label IQ. They're the presenting sponsor of the podcast, as you know. Super grateful to them. One of the things that's cool about them is that they are built from an agency, that's how that was our origin story. And so they understand how agencies work and what that means is they are willing to structure how you work with them to kind of fit what you need. 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So head over to white label IQ dot com slash AMI to read more about them, to reach out to them. Let them know that you appreciate the podcast. And also if you've never worked with them before they've got a deal there where you can get some free hours on your project. Okay, so this one is going to be uncomfortable, I think. The episode is uncomfortable because it's going to force us to think about places where our agency is inefficient. So it takes a new AE six weeks to onboard. We have information silos in places like Harvest for time tracking and tasks in Asana and budgets in an Excel spreadsheet and our accounting and QuickBooks and all of those in pieces don't talk to each other. We have we don't have one place where scope and hours and all the margins line up and we can look at all of them at the same place. We often struggle to have a single source of truth. We have lots of data centers inside our agency or worse tribal knowledge. It's not online at all. It's in one of our team members heads or our heads. So you know, your best account director is the only one who knows how to build out a QBR for a client or something else. This is the reality for many agencies that we have disparate systems that don't work well together. Don't talk to each other and we do a lot of cutting and pasting and moving information back and forth, all of which costs us time and money. And so if that sounds familiar, then I think you're going to love, uncomfortably love our guest today. Michael Greenberg wrote a great book on operational efficiency and he talks about how we can audit what's happening in our agency and then how we improve it. So he talks about five levels of sort of operational excellence and how we're using our technology and what he's one point is that if you really want to leverage AI, you've got to get some foundational stuff ready first. And so we have to sort of audit where we're at foundationally before we can actually build out automated workflows and actually have AI run certain operations inside our agency, which I know many of you aspire to do. So without further ado, let's welcome Michael to the show and let's dig into this topic together. Okay. Michael, welcome to the podcast. Thanks for joining us. Ruth, thanks for having me. You bet. Tell everybody a little bit about your background, how you came to write the book. And then I've got a ton of questions that we're going to dig into, but first can introduce yourself to the audience. Yeah, definitely. So started out in venture back startups, spent a little time there, realized I was going to make a whole lot more if I wasn't playing the equity game and I started playing the cash flow game. Yep. So moved it into consulting for agencies first, mostly building little tools so that way they could get the tech enabled multiple on exit and then ended up working with a podcast network along the way was like, this is very interesting. And then spent the next seven, eight years building and selling two podcasting agencies went to work for a guy much more successful than me named Jesse Pooji who runs a venture studio called Gateway X here in St. Louis, Missouri. And he had built some big agencies. I was working with him and he said, you know, you should really go back out on your own. You know, you got the entrepreneurial bug. You're not going to last year forever. So about four years ago now, I took what I enjoyed doing most working there, which was building out the operations inside of these businesses. And I started an operations consulting and automation business called Third Brain. Chatsy PT came out about three months after I started the business. I had done some AI projects for agency clients in the past and fast forward two years. I had enough stuff to say, okay, I got to write this book. Another year later, published it. And the whole purpose of the book is to take everything you need to get ready for AI, not necessarily start using it too much, but build the foundation. And that was now a year ago that I published it. And we're still going strong. So in your book, you talk about sort of the maturation level of an agency in terms of their digital maturation. And you have a framework or a model that sort of helps someone measure how sort of how mature their agency is. And to your point, like, how ready are they to take on the technology, whether it's AI or whatever is coming around the corner? So talk us through that framework a little bit and help people, you know, as they're on the treadmill this morning or driving to work or wherever they're doing, walking the dog, how they can judge or value or grade their own shop. Absolutely. So generally, this sort of maturity cycle goes through two phases. The first one handles what we call levels one through three, which is information silos, a connectable cloud, and then getting to a unified data layer, what we call level three. And if you don't have a unified data layer, at least inside of the workflow or the department, you're trying to apply AI or any sort of automation to really, it's not going to work very well because you're not going to have the information you need to be able to do that work. But once you have that in place, then you can reach level four, which is automated workflows when we start using AI to assist inside of a human run workflow and then level five, which is AI-powered operations. And that's when we're able to deploy agents or other things like that, more successfully and quickly across an organization. So you walk into a, let's say, a 30 to 40 person agency today. What level of maturation do you typically expect to find? Two. Okay. So most agencies have moved to the cloud. We have the occasional client where it's like, yeah, we do everything on our desktops and we don't have anything shared. I think these days, most agencies pretty much do all their work in cloud tools. Most of those tools are generally accessible via API or MCP, so we can get to all the data, but they just haven't put it together, and the end. often are still copy pasting things between tools, especially like, you know, CRM to project management. I don't know how many projects we've done now where it's, oh, well, we sell everything in HubSpot and then we copy all these details over and we go back over these 10 call recordings to fill out this intake form. And I'm like, you have all the information already. You just got to automate getting it into that system. Right. Why do you think agencies are where they're at? Why do you think they're either not further behind or further ahead? What is it that causes them to be a two? Yeah. So most businesses are at a two, especially if they've started in the past 10 or 20 years. We work with clients in more traditional industries, 40, 50 years old. They could still be doing stuff on carbon copies, which for those of you who don't know what that is, that's the little yellow piece of paper behind a normal piece of paper with special ink dots in it. So that way it automatically creates a copy when you write on it. It's all paper. But agencies are fundamentally a people business. You know, you scale by hiring more people for most agencies. And so you can brute force your way through. You don't necessarily have to build automations to connect everything if you can just hire one more person offshore as an example. Right. That being said, and this is sort of what we're seeing across across businesses is that works in most businesses. And you can get pretty big. You know, you can get to eight figures 10, 20, 30, 50 million without having to build much of these automations without building this technology infrastructure. But you can't use AI. Right. And so that everybody's using it on their own. Exactly. Yeah. And then you don't gain the same level of benefit. You know, if everyone raises by 10% productivity, that's not going to make the same change as if you can move the entire business forward, right? 10% because their individual contributions are too different. Yeah. So you use the phrase operational debt. Talk a little bit about that and how, how getting more mature from a technology point of view shifts that. Yeah. Definitely. So everyone who's owned an agency has, at some point, been a small agency. Right. And you probably have one person doing one key role. And they have not written down how they do it. Right. So when that person leaves, everything leaves with them, all that institutional knowledge. And that might be something as simple as an account manager leaving. And not you not knowing that they send an update email every week to their every one of their clients. Or it could be as complex as like, Oh, Joe does all of our ad words setups. And he knows exactly how to set up the keywords for our favorite type of client. And we can copy it out of one of his, but we don't really know the secret sauce. Right. And so these are tribal knowledge, which is one form of operational debt. An operational debt can take many forms, but generally it's. We're working around something instead of documenting it and building an SOP so we can grow and hand it off to multiple people. Or it's that we have set something up in such a way that it works, but it always breaks. Those tend to be the two most common examples. I think the tribal knowledge thing, I think everybody listening has felt the pain of that or feels the pain of that today. Yeah. And I don't, and I, and I think because agencies are moving at such a fast pace, they don't, they don't feel the load of it, the cost of it until to your point that person leaves. And then it's incredibly painful for a short period of time. Somebody knew comes along, they either can't figure out how Bob did it before he left. And they recreate. And now that now they're doing it, you know, Babette's way rather than Bob's way. Or sometimes you'll have a little bit of overlap. So Bob can train Babette, but there's a lot lost in the translation. But I don't know that a lot of agencies calculate the cost of that. So when you come in and you are meeting with a client, how are you helping them recognize the exposure that they have when things are not well documented? And then one of the ways I talk is a lot of agencies, there's, you know, let's say you have three account people, you know, there's a Bob of Babette and a Mary, all three of them are doing the same kind of work. But they all do it a little differently. And there's not really the agency way of doing it. So what do you think that costs an agency? Well, I think, you know, we've got operational debt. And when everyone's doing a little different, that becomes operational drag. So your ability to grow in scale and to deliver the same results to every client is limited by your ability to do the same thing for every client. And the way I like to talk about it is we've got another, I'm a big framework sky. And we've got a framework we talk about with clients in terms of sort of their north star goals for what they're trying to accomplish. And it's pretty much always the same three things. First, you need consistency in your operations. When you are doing everything the same way for every client and you have the same instructions and the same SOPs and the same training, then you end up with fewer errors. All your data ends up looking the same. You're able to put somebody new into a role without having that same, you know, six month training period. If they've done it before, it should only take them a month or two to learn how your agency does it a little different. And when that's all in place, your data is probably sitting in the right places. So you can build clarity, which means visibility into your projects and to your dashboards. If you're operating on a project basis, project costing, massive, I don't know how many friends I've had build. Oh, yeah, I got to a million, two million, I'm making five percent. Right. And then finally, once you have consistency and clarity, you can start to build capacity. And so you can take on more per person, you can raise that revenue per head count. And in doing so, you end up with the two, what I call the bonuses, which are cash flow and confidence. So you're making more as an agency owner is a business owner. And you have more confidence in your business because everyone is following that consistent process. Yeah. So here's my theory. Tell me if you think I'm, if I'm right or wrong, think agencies, I believe agencies are worse at this than like manufacturers. And I think it's one of those things where we sell process discipline to our clients, but we don't apply it to our own business. Fair? Absolutely fair. Yeah. And that's an exception to that. Okay. All right. The productized agency. Oh, okay. So we call them the wonder bread factory, right? So they, they look, we make wheat bread and white bread. You get it sliced. That's how it comes. Pick your, pick your flavor. But other than that, we don't, we don't do buns. We don't do cupcakes. You know, we're just a bread factory, right? Yep. And, you know, to your point, manufacturing requires that level of consistency. Whereas agencies, you know, when I'm starting my first agency, I'd sell one guy, yeah, we'll do B to B lead gen for content marketing. The next guy, yeah, we'll do, you know, we'll set you up your podcast. We'll do whatever you want. So long as you pay us, and we think we can do it. Right. And that's, I think a lot of agency owners get their start that way, especially when if you're growing from like freelancer to agency, and we're rewarded for that because you get more contracts, you get growth. A lot of times clients might choose another agency over you because they claim to have more capabilities. Yeah. But at least what I learned along the way was you get better margins and you get an easier business. If you're only doing the one or two things, you really do super well. And I think most agency owners, by year four, year five, we sort of figure that out. Some do some don't, right? I mean, a lot of, there's still a lot of, we're still a full service integrated marketing agency. And to your point, we probably do 10 or 12 things every day. But if you come up with something outside of that 10 or 12, you bet we do that too. Yeah. But then that goes back to the selling, you know, to the people as the product. You're selling hours in a lot of these cases. You know, maybe you use points or some other attraction, but that allows you that flexibility, which in fact hurts your ability to scale because it prevents you from gaining the consistency. And the exception is, you know, the great agency salesman, the real rain maker. Yeah, they'll sell anything to anyone. And they'll build this big old agency. And maybe along the way, they get a great operator who cleans things up in the background. But otherwise they end up at that one, two million make and five percent. Yeah. You know, your book talks about like remote first companies are mostly stuck at a level two kind of juggling apps that don't talk to one another. So have a lot of technology, have a, have a big time. stack, but they're all sort of independently operating. So that describes nearly every agency I know. Why do you think we get stuck there? I could say because we're tool obsessed. You know, we love the shiny new thing. Right. But I think ultimately it goes back to that sort of tribal knowledge, the lack of consistency and the growing on people where somebody new comes in, they add a new tool to the stack, or they see a shiny new tool and they're like, I think we, this will make me 10% better. Let's go buy it. And I can think of a few clients where, especially in agencies, this tends to be worse than in other businesses, you know, we'll come in and we'll look at their whole tech stack and be like, you know, you've got two or three tools that do the same thing. Right. Did you know that? Well, you know, yeah, but James uses this and Bob uses this and Joe uses this. And we can cut, I mean, I've seen, there was a one I'm thinking of this was about a year and a half ago now. They were around three million a year, about 20, 25 person agency. They mostly were doing like gym marketing, fitness marketing. They had, I think it was 13 separate tools. They used as a business. And we cut eight of them. And we were like, well, here's 50,000 back. Right. Yeah. Just in subscription costs. Exactly. And, you know, did it change the way they work? Yes. But did it hurt the way they work? Not after they got it was that initial adoption hump. Yeah. One of the things I found interesting about your book and the way you sort of think about this is you tied dollars to all of this. So the example that you were talking about in the book, the agency that did the fitness marketing, you know, you talked about sort of figuring out how many hours a week they were burning by just moving campaign data between systems. And what that really cost. And I don't think I don't think a lot of agencies do that math. So for somebody listening who's like, what, you know, yeah, you're right. So and so loves teamwork and somebody else loves this. And you know, we have, you know, we went and we have to use a lot of different tools because our clients use a lot of different tools. So we have to be in HubSpot and we have to be in, you know, MailChimp and we have to be in blah, blah, blah, blah. How do they quickly do the math to figure out what it's costing them a year to be that inefficient? Yeah. So I think there's sort of a couple, a couple shortcuts to this calculation because, you know, you can go and you can say, okay, everyone, track your time for a week, see how much time you spend in every tool. That's hard to get a bunch of people to do. They're not already tracking hours. But what you can do is you can say, okay, show me every time you're copy pasting between two tools. Copy pasting sounds like it takes a minute. Most of the time it takes five or 10. Yeah. And most of the time you're doing that several times a day, if not more. And so that's sort of one. Number two is context switching. There's been a lot of psychological studies around this where when people switch context, they're losing 15 minutes, 20 minutes on each side. Right. And so if if somebody's, you're like, oh, I noticed you have five tools open right now. And you're clicking between them back and forth. That means they're looking at a new interface every time they might be in the flow or so they claim. But in reality, you watch them and they're clicking and then they watch them like stop for a sec, pause, reload, deep going. And then sort of at the highest level, you can look at this and you can ask and look and say, okay, how many people do we have that are really masters of these different tools that we're working with? Yeah. And that's that's when it really gets interesting. Like very commonly you mentioned teamwork. We'll see a company have teamwork and Monday or Monday and click up or yeah, we use air table and click up and Monday and Google sheets and it all depends. And that's a sign that the disorganization is there, even if they don't realize it. So I think at least for us, we really try to measure it because as we're documenting a workflow so we can do this sort of automation or apply AI to it, we need to understand every step. And so we get to see how screwed up they've become. Right. But just at the highest level, you can sort of count the number of tools be like, oh, this person is our email specialist. They're in MailChimp and HubSpot and, you know, be high and they're in all these tools every day. Well, that's okay. So long as all they're doing is copying and pasting what they're writing into those tools. But three of these tools have APIs where we could be writing them all in one consistent format and Google Docs. And then it could auto translate them in. And that would save us, you know, with some of those tools, it's a real pain to set up those emails and that could end up saving you an hour or two a day. Yeah. Yeah. So in the book, you have an agency case study. So I'm talking about the agency roll up. So, you know, 100 people built by acquisition and every acquired shop that they bought had their own tech stack. And so I just got more and more complicated. Walk everybody through that case study real quickly and just sort of tell them what you discovered, what you what was broken in terms of, you know, how they were working. And what did you do? How did you help them sort that out? Yeah, absolutely. So they when they started with us, they were, I think about 60 people. And they had acquired one business so far. They got the funding for the rollup. And the original core business was about 50 of those 60 people. So they were acquiring much smaller agencies and just adding them on. They were using click up the previous agency. They just acquired was on Monday. And every time they would go to buy an agency, they would just look and say, Hey, does this add on a set of capabilities that is interesting to us? Or does this bring us a book of business that is going to be valuable? But they never considered the actual integration cost. So when we went in for that first one, it was luckily it was early. So it was a little simpler. You know, we could say, OK, let's see how this small agency works. Let's document it all. The big agency we had already been working with for a little while, we sort of understood the way they did their work. And it became clear, OK, this new agency, they do nothing that you do right now. So we're just going to take everything they do. And we're going to move it from Monday into click up. Easy. The next few, not as easy. It was, Oh, we're acquiring a book of business. We're acquiring talent. We have several overlapping processes. And so then it became sort of a multi-step workflow. First, we have to say, OK, how does this new acquisition line up against the existing business? Where's the overlap? Where's the new stuff? New stuff? We translate over. We move it into the new system. Stuff where there's overlap will do they do something better than you do right now? Right. Good chance. No. Occasionally, yes. And then we can build that into the process. And across the whole thing, then, as they continue to scale, when they start scaling like that, a lot of the agencies they acquired didn't have sort of middle management. They didn't have project managers or any of that. So, you know, capacity assignment infrastructure. And so we took the rules that they would use to do this work. And it very commonly for agencies, we end up building some sort of AI project management assist in their system. And so we baked that in. So that way, when a new client signed on sales guy could check these are the services they're using. And then it would automatically create the client lists and folders and set everything up. And when we do something like that, it allows us to do resource forecasting. And it allows us to build out the standards not only for the for the original agency, but then apply those standards and make sure they're applied across all the new acquisitions along the way. And because we're sort of building this, you know, or revising it across the board, we end up making SOPs for everything that we're doing along the way. And that makes it easy then for us to say, okay, new agency, we're keeping these eight people from this acquired agency. This is how we do this thing at this company. It worked out all of that sounds great. It also sounds incredibly time consuming and cumbersome. So yes, if somebody's like, yeah, I want to do that. And we're going to take a quick break. But when we come back, when they, if somebody's like, yeah, I know that I know that we're inefficient. I know we have too many systems, you know, our systems, and I'll talk to each other. We certainly don't have agents operating in the background, kind of operating the operations of our agency. And they're like, this sounds great, but I don't even know where to start. When we come back from break, let's talk about kind of how do you unpack this? How do you make this manageable in a business where everybody is. running as fast as they can just to put out the client fires and do all the work. And now I've got to take time to stop and document how we do everything and move things from one system to another. I think a lot of agencies are stuck at a level two because that just sounds like it's impossible to do. So let's take a quick break and come back and have you answer that question. Hey everybody, just want to remind you before we get back to the show that we have a very engaged Facebook group. It's a private group just for podcast listeners and agency owners that are in the AMI community and to find it if you're not a member, head over to facebook.com/groups/babapodcast. So again, facebook.com/groups/babpodcast. All you have to do is answer a few questions to make sure that you are an actual agency owner or leader and we will let you write in and you can join over 1700 other agency owners and leaders. And I'm telling you, there's probably 10 or 15 conversations that are started every day that are going to be a value to you. So come join us. All right, we are back with Michael Greenberg and we're talking about really operational efficiency inside an agency around technology, but it's bigger than that. I mean, it's certainly added to Nolan and all of that as well. So before the break, I said to you, it all sounds great, but it also sounds, oh my god, like this would be so much work to do. Talk about how does somebody, how does somebody start this? I know for you, the framework is or the sequences, people, process tools, and you are, I would say rather dogmatic about that order. So how do we get it backwards wrong? And why is that the right order? Talk us through, if somebody's like, yep, I want this efficiency, I want, I want to get rid of some of the subscription costs, but more importantly, I really want to codify the way we work so that everybody kind of is doing the same thing in the same ways. There is an agency way of doing these things because that's going to help me grow and scale and take better advantage of all the AI tools out there. How does somebody even start? So first you start with your people. And the reason for this is very simple, you can't get anything done if people aren't on board with it. And in many cases, this might look like, oh, let's make sure everyone's using Claude or Codex in their day-to-day work. And it might be, oh, you know, Joe, he's been doing AdWords the same way forever. He clicks through everything. Let's give him a tool that does the setup for him in the way he's always done it and just automates all those clicks. The reason we do that is because in order to get people using these tools and in order to extract the knowledge about the process when we talked about tribal knowledge earlier in order to actually get that tribal knowledge out, you need them on board. Right. And so when we do that, we win the people over so we can get the understanding of the process. And if we don't understand the process, we can't select or build the right tool to accelerate that process. And so first we get the people on board, then we document the processes and we optimize them where we can inside of the workflows. And then finally, we accelerate them with AI. And that's when we apply tools. And that's when we can say, oh, you know, you don't need these three project management tools. You really need one. Though honestly, I can normally say that much earlier. We got to convince everyone that's the right decision before we make a move on it. Okay. So in most cases, I'm going to guess I know when we come into an agency that everybody is relatively attached to the tools that they have. So how do you help people get on board? So that you can because you talk about like that this transition or the implementation of your methodology is, you know, 20% technical and 80% cultural. So I think that I think that because it's mostly about the people, I think that's where everybody gives up. Right. You talk about it in a team meeting. Sounds like a great idea. And then somebody's like, well, I think it's a great idea for all of you people. But I can't possibly give up Monday.com for, you know, because client blah, blah, blah, blah. And then all of a sudden we're done. So how do you get everyone on the same page? Right. What is there a process that you take people through? Is it just, you know, head banging on a brick wall for a while? Like what when you come in and help an agency, first of all, I suspect when they hire you to come in, they've, they're at some level of frustration that's allowing them to make a financial commitment to bring someone in from the outside to help them figure this out. But how do you get everyone on the same page? Yeah. So we, we solve this in a few ways. One is the way we work with clients is fundamentally a little different than a lot of other groups. And then two is, I've got a whole bag of tricks. So generally when we work with a client, especially with an agency, we tend to embed somebody inside of that organization. And so they're there, you know, 20 or 40 hours a week working with the team when somebody says, Hey, I want a tool that does this. They're the person who goes and builds that. And somebody says, Hey, can you help me use cloud or use chat GPT to do this thing faster? They're the one who helps them. And so that lets us win support early on. And you're right. It's often we're getting called in when, oh, you know, we're getting stuck because we can't add enough writers to continue growing this or these other pieces. So we're often coming in with some sort of core project, but along the way, we get to embed somebody who can help with a lot of the little stuff. That's not always the case, but it tends to work very well because it lets them get comfortable, get familiar and build trust, which is very important for getting people on board. The other side, as I mentioned, I have a whole bag of tricks. We probably don't have time to go through all of them today, but I'll give you my favorite too. So one is people are super competitive. And I think in agencies, this is maybe more than average in terms of competitive spirit. And so we often recommend clients and we've seen many times it work super effectively give out a weekly award or a monthly award for the most AI usage for the best process documentation, these sort of things where when somebody sees, you know, oh, Joe got the, you know, the special hat on his desk this week. Right. Because he did this thing. They want that. Right. And that it could be a hat, it could be a trophy. It depends on the company. In some cases, it's been a very nice bottle of whiskey, but it changes depending by fundamentally the, the idea is the same. You award people for doing this thing and you allow it to generate some competition around it. The second one is a little harder for to pull off, especially the hectic life of agencies. Yeah. But I've seen enough agencies do it now that I know it's possible in almost every case. And that's setting aside dedicated half day or a day, often during your offsite or around a quarterly transition time. And, you know, a lot of us have slow periods throughout our year. That sort of thing to have everyone do sort of an AI hackathon. And you get together and everyone tries to build new things. I'll tell you, you know, this works best in web dev agencies because they're already working with that sort of stuff. But we've seen a work in creative agencies. We've seen a work in design agencies. We've seen it across the board. And that lets everyone build things and it gives them the freedom to play around and stretch their creative muscles. And then they can come back together and show off. And very often we will do some sort of award or people's choice at the end of that as well to accomplish the same thing. Yeah, we are a competitive people for sure. Yeah. Absolutely. Okay. So, who owns this? So, you know, in a typical 20-person agency, 30-person agency, they don't have a director of digital operations. They don't, you know, so I think, you know, this is, is it a COO if there is one? Is it an ops manager or a traffic manager? Is it the agency owner on nights and weekends? Like, typically who is going to drive this process, this evolution? Yeah. It's generally whoever the functional head of operations is. Okay. So, I'd say, you know, in that midsize to larger agency that is a COO or a VP ops, in smaller businesses, it's often going to be the CEO. So, you know, some of my biggest success stories over the years have been, oh yeah, we're a seven-person agency. We decide to hire a COO. People brought us in, we operationalize, we get to deploy some of this AI much earlier on, and then they're able to scale much more smoothly to the mid-millions. And in other cases, inside of much larger agencies, to like some of the roll-ups we talked about, once they get to 80, 100, 150, 200 people in head count, it becomes possible to have a dedicated role or multiple dedicated roles just for this sort of work. And in some cases, that's clients contracting with us to embed that team. In other cases, we sort of start the process and then we trade them or leave behind team members who move on to the client's payroll. So, one of the things that to me, all of this is like the precursor to really starting to use AI in a way that actually makes you money rather than cost you money. It's really about operational efficiency and, you know, kind of getting more bang for your buck and all of that. And in the book, you talk about that AI is sort of the best intern that will ever have super stupid, really, not that bright. But if you tell it exactly what to do step by step. And I think this is, this is where a lot of people are stuck. A lot of agencies are stuck using AI. They're all, they're all using it individually, first of all. And they're all using it typically as a one off as a, as a research partner or to, to draft something that they're going to edit later or something like that. But they're not really using it operationally to run, to kind of in the background of running the business. So you talk about really great intern. And in other words, you have to tell it exactly what to do. But when you do tell it exactly what to do. Boy, it follows your instructions to the letter. As long as they have that step by step instructions. So in a lot of ways as I was, as I was going through the book and I was thinking about our conversation. And every day as we're talking to agencies about how they're using AI, it's really more of a, it's more of a documentation problem than an AI adoption problem. Is that what you're seeing as well? A little bit of comedy, a little bit of comedy. I think agencies that really want to use AI often have a documentation problem that it prevents them from using it as well as they'd like. But especially with some of the more established agencies we've worked with, you know, I'm thinking of a particular case, a fairly recent client of ours, about 15 people in ads management paid as, you know, mostly media buying for social. They had simply not adopted AI because they didn't need to. They, you know, they got good enough results. They were doing well. But what changed for them was we spent a day, well, half day, showed them how to do creative generation using AI to spin out new versions of their best performers. And then it was oh, we can use AI everywhere. And it's sort of changed overnight. That I think is absolutely the rarer case, especially because agencies, you know, tend to be competitive as we mentioned. They're fast moving. You want to stay on the edge of the technology in the industry. And that means using AI. But in doing that, you know, you stay all the way at the edge. You don't spend the time building that foundation. And so often what holds back the adoption to your point is absolutely the lack of documentation or the lack of like operational foundation. So what's the one place? So if somebody's listening to this and they're going still sounds overwhelming, what's the one place that they can get a real AI win without fixing everything first? And then we're going to go back to okay, the fix. But if they want to get a big win with AI today, what's the place you would direct them first? Yeah. So my first few businesses, as I mentioned at the beginning, podcasting agencies. Yeah. And we had what we called rule zero, which was always be recording. So if you want just the simplest AI win, you can have record every one of your sales calls, record every client meeting. And then if you're using a tool like fireflies or a fathom, you can hook up your AI directly to that through what's called MCP connections. And you can have your codex or your cloud code, then go in and pull the transcripts. I keep all of my transcripts in a single file on my computer. And I have them broken out into every client and time stamped by date. And then you can have an entire record and you can say, Hey, what have we been missing with this client? Or what's the underlying piece? And just that alone is massive. If you're doing ads management or stuff like that and you have your client work in similar data streams, then you can pull it in and say, Hey, does our client notice? And we are delivering these great results. Are we sending them an update email every week based on this stuff? And that in my opinion, that's sort of the lowest hanging fruit of a win. Okay. All right. So as we kind of round the bend on the hour, it's Monday morning, coffee is still hot. What is the one thing I as an agency owner? How do I start? I mean, I guess you got to make sure to this is one of those cases where local agencies, you know, account management ownership tends to be sort of the smallest piece of the organizational chart. So you sit everyone down and you say, Okay, we want to record every client to direction going forward. And we're all going to use the same tool, right? Yep. I would buy Fireflies, Fireflies.ai. They have a great API and that makes it really easy to capture information. And then I would, your team is already using AI. I guarantee it. So yeah, take a show of hands, choose code X, chat GPT or a cloud, a cloud code, pick one by a team subscription. So that way you can get the data privacy you need and hook up Fireflies to that AI tool. And then have each one of them connect their email in the same way. And you don't want it to start writing and sending emails yet, but you do want it to be able to read all in your back and forth with your clients. And if you use Slack for that or teams, integrate that in the same way. And then just stop there for a little while. Have everyone build up and I assume you have a share drive if you're running an agency. Maybe you don't in which case go get a share drive on Google or one drive, but assuming you do then build those client folders with all of the interaction details inside of that share drive. And I realize that's more than a one step process. But the one step you can do is just getting the recorder in place. So that way everyone can start sharing that information easier. Okay, all right. If somebody's going to fix one process this quarter, maybe two processes in this calendar, you you and I are recording this in late August of 26. So if people are listening in real time and you're staying up with the episodes, you're with us, but if somebody's catching up later. So if I want to if I want to fix two processes in the next, you know, five or six months, where would you start? Where's the greatest ROI for an agency specifically? Do you believe in terms of fixing these processes? Client intake and on porting massive one. You know, I don't know how many times I've seen an agency with a 60 question onboarding form. And yet they need all those answers, but they've probably gotten half of them at least during the earlier calls. And so just automating as much as possible inside of the client intake, you know, after they sign or making sure they've signed and then getting that information together. And then progress reporting. I think this is something I see a lot of agencies, especially smaller agencies sort of miss the boat on as they're trying to scale is I have generally told people you want to be reporting to your client on what you did, even if you did nothing that week, every single week, right? Because just having the visibility and the consistency of communication is 80% of what they're paying you for. Maybe not 80% in every case, but certainly in many cases for those of us who are working in various outsourced roles, they want that higher level of communication. And so just automating that sort of reporting becomes very possible if everyone's in the same project management system. And you have those client communications documented. It becomes very easy for you to say, we did these 10 things for you this week. And oh, by the way, here's the hours tracking on them if they're buying hours. And these are the 10 things we're going to do next week. And that just makes everyone's lives easier. Yeah. Yeah. As people are thinking about this and they're thinking, oh gosh, I've got to do this, right? I have to figure out somebody on the team. How technically savvy today does someone have to be to do all of these things you said? I've got fireflies. I'm going to first of all, I'm going to set everybody's computer up so everything they do is recorded. And it's going to go somewhere and it's going to get put in the folders like how skilled tech from a technology point of view, does someone have to be to be able to do this? What level of person do I need? So setting up fireflies for everyone, depending on the specifics of your agencies, like IT tech setup, that is not a code thing. So we hire a lot of people, we call AI operators, and they come from project management backgrounds, they come from no code, zappier building backgrounds, and then we educate them into a lot of these processes in the way we work. And they can do almost everything we've talked about today. So fair, I would not consider that deeply technical by any means, they're not an engineer. In the case of some of our larger ads management clients, where they're doing lead tracking and performance marketing for enterprise companies or Fortune 500s, that sort of stuff, they need an engineer to set up a data warehouse. But the average agency just needs somebody who really loves technology, and who is already adopting and using these tools, and then they need to sit with team members and show them how to use them effectively. Yeah, I think that's got to be a big part of it is the training and all of that. Like clicking on the buttons to make things work is one thing, getting everybody to actually do it is a whole different thing to your point. And there's going to certainly be some training, but also some hand holding and some accountability that has to be baked in. Otherwise, everybody's going to go back to doing it the way they've always done it. Yeah, and that's, you know, once you get up to a 10 or 15 person agency, that's why you often need half a person to focus on this for six months or a year to get it all, get everyone up to speed and get it all documented. And then things become much easier. Yeah, I think that's right. This has been fascinating, Michael. And I, we could talk for another three hours, I think. But if folks want to get a copy of the book, they want to read about some of the examples that we've been talking through on the show, where they want to reach you, or they want to follow up with you in some way. What's the best way for them to track you down and to continue the conversation? Yeah. So first off, you can get a copy of the book on Amazon, or if you're a digital guy and you don't like the hard copies, you can go to digitalopsplaybook.com and get a, I've got the ePub and the PDF, just as a free download there. If you want to reach out to me, you can find me in thirdbrain.co. That's number three, R-D-B-R-A-I-N.co. And you can find me on social media at Gentive Tech. Okay, and we'll put all of that in the show notes, for sure. This has been fascinating. So fast forward for me as we wrap, where do you think agencies will be in terms of all of this stuff in 12 months? How will we mature? Is it like you're gonna be left in the dust if you're not on board doing this right now, or is this sort of a slow burn situation, do you think? I think it's a little faster in agencies than it is in the wider business ecosystem. Yeah. But much of what agencies do is specialist knowledge. It's, let me get access to this specialist who really deeply understands this thing. Many of the times that's like understanding people, you know, writing copy of these sort of things where AI is not as good at it yet. And if they never be good at it, because they're teaching all the AI to code and not to become great copywriters. Right, right, right. So I think at least for agencies, we are going to see, and I think this trend we've been seeing for many years, more and more super specialized agencies come up. Yeah. Where they are using AI to speed up their workflows and to increase the quality of delivery and consistency of delivery while not adding as much headcount. And so we're gonna see sort of the integrated firms reduce in size once again, or move to more of a subcontracting general contractor system, agency of record that we've seen in some of the bigger contracts in the past. And we're going to see in some cases, agency is simply not move forward. And in other cases, I think we're gonna see more rollups occur as like, oh, we have a great process for building websites now. We are going to go acquire 30 other books of business, web design agencies. And we're gonna be this big web design and development management rollup. And I think we're just gonna see really acceleration of the existing trends, I guess. Yeah. I don't necessarily see it totally changing anything. Though I will say like in podcasting, we saw podcast show notes as an agency specific and as a specialized group, essentially dissolve with AI. And I think we will probably see a few more of those cases as AI delivers capabilities that just replaced the need for a dedicated provider. Yeah, yeah. It's an interesting time to be in the business for sure. Michael, thank you so much for being on the show today. Thanks for sharing your expertise. And hopefully for inspiring people that this is doable and it's manageable. And if they want to keep growing, it's probably somewhat necessary. So we do have to find our way to the path, I think. Yeah. If I could leave them with one last note of confidence. Yeah. I think in the wider business ecosystem, this is gonna take where maybe hitting our plateau next year in 2027, 2028. And it's gonna be another five to 10 years to get everyone up to speed. Agencies might be two years faster. So this is not something you need to do tomorrow, but it is something that you need on your annual planning. Yeah, yeah. Yeah, I think you're right. I think we have the capacity to do it. We just have to make the room for it. And then we can be as we always are a leading indicator of what's coming for other businesses for sure. Yeah, and yeah, the returns are there. Yeah, I've seen them enough to know. You know, you set aside 50,000 for a year, you can get most of this done. Yeah, yeah. Thank you very much, Michael, for being on the show. This wraps up everybody another episode of Build a Better Agency. Homework is real clear. It is figuring out how do you begin to get efficient in terms of using the tools by your operational efficiencies, moving probably for most of us are at a level two. How do we move to that level three? And Michael gave you the game planets. It really is as simple as starting by capturing everything you do, whether it's internal meetings, external meetings, whatever it is, and then automating that gathering of that data so that you have it in a folder online that everyone can access and that you can start to query that folder, right? And start to then build from that folder. So that's homework for you this week. So everybody, pull your team together, talk about how to do this. Gamify it if you need to. So everybody's on board because we all love the competition and we love a prize. I don't care if it's a Starbucks gift card or it's a goofy trophy on your desk, whatever it may be. Everybody loves that. But this is not the time for us to stay still. This is an opportunity for us to get more efficient. All of you are thinking about your realized billable hour. This is a way for you to get more done with less people. And to get all of your people being more efficient both for your agency and for your clients. And so this is a great opportunity bottom line for you to make more money without spending more money. So painful for the short run, probably, but huge gain. So that's your homework. Before I let you go, two quick things. Of course, thanks to our friends at White Label IQ, they're the presenting sponsor of the podcast. So white label IQ dot com backslash AMI. I talked about them at the top of the hour. And as always, just a reminder, I know I don't get to do this. If you don't keep coming back and listening. So thank you so much for carving out a little bit of time to hang out with me this week and to meet Michael and to hear from him. I'll be back next week. And I hope you will too. OK, all right. See you next week. Come back next week for another episode designed to help you build a stronger, more stable, and sustainable agency. Check out our workshops, coaching and consulting packages, and other professional development opportunities at agencymanagementinstitute.com.