3 Levels of Growth for Employees & Entrepreneurs Ep 305

Summary Notes


In this insightful discussion, the host emphasizes the importance of adopting frameworks for business growth, sharing his journey from building his first eight-figure company in six years to rapidly creating multiple successful ventures. He introduces a three-level framework for evaluating employees and personal development: starting as an individual contributor focused on 'doing,' evolving into a manager who teaches 'how,' and ultimately becoming a leader who systematizes the 'who.' This progression is crucial for scaling a business, as it enables entrepreneurs to identify bottlenecks and develop departments effectively. The host also stresses the dynamic nature of identity and the need for entrepreneurs to continuously grow to inspire and lead their teams effectively, ultimately achieving a business that thrives independently of their constant involvement.

Summary Notes

Importance of Learning Frameworks

  • Learning frameworks is crucial for business growth and problem-solving.
  • Frameworks provide structured thinking and allow for easier resolution of past challenges.
  • Reflecting on past accomplishments highlights the value of frameworks.

"Owners, I think we can all agree that one of the most important things that happens as we grow is that we learn frameworks."

The speaker emphasizes the collective understanding among business owners that frameworks are essential for growth and problem-solving.

Evolution of Business Success

  • The speaker's first eight-figure company took six years to build.
  • Subsequent companies reached multiple eight figures more quickly, demonstrating accelerated success.
  • Over $120 million in sales achieved across various industries.
  • This success is attributed to the development and application of key frameworks.

"And so it took me six years to build my first eight figure company, six and a half to build my first eight and a half figure, sorry, multiple eight figure company, because that was the same company. The next company that I did that was multiple eight figures was it took me a year to build, and the one after that took me six months."

The speaker outlines their journey of building successful companies, noting the reduced time it took to achieve significant revenue milestones, showcasing the effectiveness of their frameworks.

Three Levels of Employee Talent

  • The speaker introduces a nine-grid framework to categorize employee talent.
  • This framework applies to both business owners and their teams.
  • Recognizing one's level or an employee's level is crucial for growth and development.

"And one of the key frameworks that I've developed or helps me think through things is something I'm going to share with you today."

The speaker is about to share a key framework that has aided their thought process and business success.

Level One: Individual Contributor

  • At the start, learning what to do is the focus, which involves acquiring skills.
  • An individual contributor must get things done themselves.
  • Recognizing this stage is important for understanding what actions to take next.

"The simplest way to think about this is in the beginning you have to learn what to do, all right? These are the skills, right. And that's because what you are in the beginning is an individual contributor."

The speaker describes the first level where learning and doing are the primary responsibilities of an individual contributor.

Level Two: Manager

  • After mastering what to do, the next step is understanding how to do it.
  • This knowledge prepares one for the managerial role, which involves overseeing others.
  • A manager ensures that the team performs tasks correctly.

"The second level here is understanding how. All right, so you started to do it, right. The what you figured this out, but then you have to figure out the how you're actually doing it. And the reason for that is because the next level, you become a manager, all right?"

The speaker explains the second level of the framework, which is about understanding the processes behind tasks, a necessary step before becoming a manager.

Individual Contributor to Teacher

  • The initial stage involves being an individual contributor focusing on understanding the task.
  • The next stage is to teach others how to replicate the skills acquired.
  • Teaching is a key transition from doing to managing.

"At the beginning you're doing, as an individual contributor, you have to focus on what it is, right. The next level, you're doing all the doing and you're like, you know what? I feel like I understand this better, right? I feel like I understand the sequence of how this works, right? And then you can teach other people how to replicate that skill."

The quote explains the progression from learning and performing a task to gaining a deep understanding and then teaching others to do the same. It highlights the shift from execution to education, which is integral for scaling abilities within a team or organization.

Managerial Insight

  • Managers should understand how tasks work but don't necessarily need to perform better than individual contributors.
  • Understanding the sequence and the process is crucial for management.
  • This insight is critical for evaluating employees' potential to become managers.

"Managers don't necessarily need to know how to do something better than an individual contributor. There's always going to be niche, expertise, et cetera. But they should understand how it works."

The quote emphasizes that a manager's role is not to outperform in specific tasks but to have a comprehensive understanding of the processes to effectively manage and guide others.

Leadership and Systematization

  • Leaders are distinct from managers and are essential for scaling a business.
  • The concept of 'building the machine that builds the machine' is introduced.
  • Systematization is the process of creating structures that teach and manage tasks autonomously.
  • This level of leadership is associated with significant business growth.

"The title here is a leader, all right? And these are very different than managers, which is something that I had to realize as I was scaling the business. And usually at this level, this is where you're at your three ish, million dollar a year level. And this is what allows you to crack open to the million plus per month level. So 10 million plus is you have to have leaders that are engaged, right? And the thing that you're doing here is you're systematizing."

This quote delineates the role of leadership in business growth, specifically how leaders must engage in systematizing operations to reach higher financial milestones. It differentiates between the roles of leaders and managers in the context of business expansion.

Grading and Departmental Analysis

  • Self-assessment and team member evaluation are based on the aforementioned levels of development.
  • Departments within a business can also be graded on these levels.
  • The growth of a business from a solopreneur to a team is marked by the delegation of various functions to team members.
  • This grading system can help determine the level of involvement required in each department.

"But if you think through this in terms of your own frameworks, the reason that I like this is that you can actually grade yourself in terms of where you're at. You can grade yourself in terms of where a team member is at, and you can even grade departments within your business, which, depending on what your size is, your departments might be things that you are doing, right?"

The quote explains how the framework of progressing from individual contributor to leader can be used to evaluate personal development, assess team members' capabilities, and analyze the maturity of different departments within a business.

Podcast Growth and Community Support

  • The podcast relies on word-of-mouth for growth, eschewing traditional advertising and sponsorships.
  • The host encourages listeners to share the podcast as a means of support.

"Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads, I don't do sponsorships, I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about."

This quote underscores the importance of community and listener engagement in the organic growth of the podcast. It highlights the host's reliance on the audience's recommendations rather than conventional marketing strategies.

Delegation and Business Systematization

  • The goal for an entrepreneur is to achieve a level of delegation where the business operates independently of their direct involvement.
  • A truly delegated business allows the entrepreneur to focus on providing vision and strategic insight rather than day-to-day operations.
  • An indication of successful delegation is when the entrepreneur is not on the company's Slack channel and only has scheduled meetings with the person in charge.
  • A systematized business allows for consistent growth without the entrepreneur's direct involvement between scheduled meetings.
  • Delegation can be evaluated at both the business level and the department level, helping to identify areas for improvement.
  • The concept of "building the machine that builds the machine" applies to various departments, such as sales, marketing, and product development.
  • Entrepreneurs should strive to create systems that train and empower employees, reducing the need for their constant input.
  • An entrepreneur's strengths can often become bottlenecks if they do not delegate and systematize effectively.

"And eventually, the goal is that you can move, right, move above, right. Me equals CEO. And so you have a team of leaders who are building the machine that builds the machine for you so that the actual whole thing works without you being there, besides providing the vision and strategic insight for making decisions, right?"

This quote emphasizes the ultimate objective of an entrepreneur to transition from an operational role to a strategic one, where they provide vision and make key decisions while a capable team manages the daily operations.

"I define this within a business where I'm no longer on the Slack channel. So in our portfolio companies, if I am no longer on the slack for that company, meaning no one can reach me besides the one person who's in charge for that company. That is what I believe is a truly delegated business that acts as a portfolio where you are actually an owner."

The speaker uses their absence from the company's Slack channel as a metric for successful delegation, indicating that they have entrusted responsibilities to a reliable team, leaving them to only communicate with the person leading the company.

"You can check all the boxes at a business level, but you can also just look at this as a department level. And the reason I think this is so important is that it can give you a grade that you can look at to improve."

The quote suggests that delegation and systematization should be assessed at both the overall business and individual department levels, providing a framework for identifying strengths and areas for improvement.

"That's where you start looking at, like, hiring one, two, three salespeople a month, right. And you put them through the machine that builds salespeople."

This quote illustrates the concept of creating a system that not only performs a function, like sales, but also replicates itself by training new salespeople, thus ensuring scalability and reducing reliance on the entrepreneur.

"It's actually your strengths oftentimes, which become almost always the bottleneck in the business, because the things that you don't know, you're far more comfortable giving away to people so that they can build these things, right, because they have better expertise, because they know how to do teach, et cetera."

The speaker acknowledges that an entrepreneur's strengths can paradoxically hinder business growth if they do not delegate those areas effectively, suggesting that comfort in letting go of tasks one is less skilled at can lead to better delegation and systematization.

Identifying and Overcoming Bottlenecks in Business

  • The speaker discusses a framework for identifying bottlenecks within the various departments of a company.
  • Emphasizes the importance of determining if employees know their responsibilities, possess the necessary skills, and understand the sequence of tasks.
  • Stresses the need for a system or 'machine' that can teach and replicate skills across the workforce.
  • Regular quarterly reviews of the business using the framework can help in tracking progress and identifying areas for improvement.

"And so I think if you can think through this framework for each of the departments that you have in your company, you'll figure out where your bottlenecks are, and it'll at least give you a grade."

This quote outlines the utility of the framework in diagnosing bottlenecks within a company's departments, suggesting that it can provide a measurable assessment or 'grade' of performance.

The Challenge of Leadership Transition in Growth

  • The speaker references LinkedIn founder Reed Hoffman's insights on the difficulty most employees face in advancing to higher levels of responsibility.
  • Rapid growth companies often need to replace managers with leaders as they scale.
  • The speaker notes that good managers are not always good leaders, and vice versa.
  • The importance of entrepreneurs mastering various levels of skills to recognize and teach them is highlighted.

"And what's interesting, if you listen to Reed Hoffman, founder of LinkedIn, he talks about the difficulty for most employees, most people, to jump these levels."

This quote introduces Reed Hoffman's perspective on the challenges employees face when attempting to advance to higher levels of responsibility, particularly in leadership roles.

The Growth-Oriented Nature of Entrepreneurship

  • Entrepreneurship is described as a growth-oriented occupation requiring self-improvement to lead effectively.
  • The speaker discusses the importance of entrepreneurs developing their character and leadership traits to inspire and attract higher-level employees.
  • There is a contrast between working for someone less knowledgeable versus someone who is inspiring and possesses admirable traits.
  • The speaker criticizes the common but flawed perspective of entrepreneurs who overestimate their team's capabilities.

"Because ultimately, what we're doing is we have to walk the path that every person who is behind us must walk, which is why entrepreneurship is such a growth oriented occupation."

This quote emphasizes the necessity for entrepreneurs to lead by example and continuously grow, as they pave the way for those who follow in their footsteps.

The Importance of Accurate Team Assessment

  • Entrepreneurs often express love for their teams but also share negative experiences, indicating a flawed judgment.
  • The speaker suggests that entrepreneurs frequently change their opinions about their teams, which undermines their credibility.
  • An accurate assessment of team performance and characteristics is critical for sustained business success.

"And I can't say the amount of times that I've talked to somebody, they said their team was awesome. Then I talked to them nine months later, like, oh, no, that team wasn't awesome. This team's awesome, right?"

This quote illustrates the inconsistency with which some entrepreneurs evaluate their teams, highlighting the need for a more stable and accurate perspective on team performance.

Utilizing Frameworks for Business Improvement

  • The speaker encourages the use of the discussed frameworks to help businesses apply improvements faster.
  • By identifying and addressing bottlenecks, businesses can progress towards their goals more effectively.

"If you have these frameworks, you can look at your own businesses, apply things."

This quote suggests that the application of the frameworks can facilitate improvements within a business, helping to overcome challenges and achieve objectives.

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