This Management Hack Took Me Years To Learn Ep 365

Summary Notes


In this video, Alex Hormozi, owner of, shares his insights on effective management strategies for entrepreneurs. He emphasizes the importance of understanding the three reasons why team members may not perform as expected: lack of motivation, training, or clarity in communication. Hormozi advises managers to focus on leading indicators—actions that directly influence desired outcomes—rather than lagging indicators, which are results of past actions. By identifying and acting upon the primary action that triggers subsequent actions, managers can achieve their goals more efficiently and avoid the common pitfall of focusing on outcomes without a clear action plan.

Summary Notes

Introduction to Management Hack

  • Alex Hormozi introduces the topic of the best management hack that took him years to learn.
  • He aims to share this hack with entrepreneurs and managers to help them manage their teams more effectively.

Best management hack that took me years to learn.

This quote introduces the central theme of the discussion, which is about sharing a significant management hack that Alex Hormozi has learned over the years.

Purpose of the Video

  • The video is intended for entrepreneurs and those in business looking to improve customer acquisition, revenue per customer, and customer retention.
  • It is also about sharing failures and lessons learned in the process of managing and growing a business.

Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe in this video.

This quote explains the broader purpose of the video series, which is to provide valuable insights into various aspects of business management and growth.

Alex Hormozi's Background

  • Alex Hormozi introduces himself as the owner of
  • He mentions the company's annual revenue to establish credibility.
  • The video's target audience is entrepreneurs and team leaders.

So by the way, my name is Alex Ramosi. I own We about $85 million a year.

Alex Hormozi shares his identity and credentials to build trust with the audience, indicating that the advice he is about to give comes from a place of experience and success.

The Management Triangle

  • Hormozi presents a mental model, a "triangle," to diagnose why team members may not be performing as expected.
  • The three corners of the triangle are lack of motivation ("not know why"), lack of training ("not know how"), and lack of clarity ("not know what").

There's only three reasons that they're doing that. Number one is that they are not motivated to do what you want them to do, which is they do not know why. The second one is that they do not know how to do what you want them to do. And the third is that they do not know what you want them to do.

This quote outlines the three fundamental reasons employees may fail to perform as desired, framing the problem in terms of motivation, training, and communication.

Solutions for Each Corner of the Triangle

  • For lack of motivation, the solution is to communicate the company's vision.
  • For lack of training, the solution is to provide adequate training and processes.
  • For lack of clarity, the solution is to improve communication methods.

The solve for that is telling them the vision of what you want in your company. ...which means they lack training and process that you have not taught them. ...which is either you have miscommunicated or you have poorly communicated, or you have not communicated via the medium or channel that they best understand.

The quote provides specific solutions to address each of the three issues identified in the management triangle, emphasizing the importance of vision, training, and clear communication.

Summary of Potential Performance Issues

  • Hormozi summarizes that employees may not perform if they don't understand what is expected, how to do it, or why it's important.
  • He acknowledges that some may have character issues, suggesting they might need to be let go.

So either the person doesn't know what you want them to do, they don't know how to do it, or they know both of those things and just not motivated to do it because they don't know why. Or they have weird character traits and you can let them go.

This quote recaps the reasons for underperformance and introduces character as a potential issue, implying that not all problems can be solved with management tactics.

Transition to a Key Management Tactic

  • Hormozi hints at a shift from traditional outcome-based management to a different approach.
  • He sets up the anticipation for revealing this management tactic.

But here's an interesting one, and this is the one that if you can shift all of your management tactics from what most people do, which is manage towards outcomes, to this special little widgety widget, then you will be successful.

The quote teases a significant shift in management strategy, suggesting that moving away from a focus on outcomes to another approach can lead to success.

Importance of Tracking Churn in Recurring Based Businesses

  • Churn is a critical metric in recurring based businesses, indicating the percentage of customers that leave each month.
  • Decreasing churn is a common goal as it increases the value of customers and grows the business if customer acquisition remains constant.

"vice based business, or rather any kind of recurring based business, which all businesses are recurring to one degree or another, but if you'd like to have a more recurring based business, then one of the things that you're going to track is churn, which is the percentage of customers that leave month over month over month."

This quote emphasizes the significance of churn as a metric in businesses that rely on recurring customers, suggesting that all businesses have some form of recurring aspect.

The Problem with Setting Churn Reduction as a Goal

  • Setting a goal to reduce churn by a certain percentage seems smart because it is specific, measurable, realistic, actionable, and timely.
  • However, the issue is that churn is a lagging indicator, which means it reflects past activity and does not necessarily guide future actions.

"And they say, sounds good, Alex, that's a great idea, because if we reduce our churn, we're going to make our customers worth more and we'll not have to acquire as many. Or if we acquire the same amount, we'll be a bigger business than we were last year, just if we do the same thing."

This quote outlines the logical reasoning behind wanting to reduce churn, highlighting the benefits of increased customer value and business growth without needing additional customer acquisition.

"The problem is that it is a lagging indicator."

The quote succinctly states the issue with focusing on churn reduction as a primary goal, indicating that it does not provide immediate actionable data for proactive business strategies.

The Importance of Leading Indicators

  • Leading indicators are essential for setting goals because they predict future performance and can be influenced directly.
  • Focusing on leading indicators helps businesses achieve their goals more effectively than when they focus on lagging indicators.

"And so I'll tell you a quick story about this, and hopefully it'll drive it home. So I had. And this is what's fucking crazy, is like, I still do this stuff and my own business, and I still mess this up. So I'm leaving this to you because I can tell you, when we accomplish our goals, it's because we are focused on leading indicators rather than ladding indicators."

Alex Hormozi shares a personal anecdote to illustrate the importance of leading indicators over lagging indicators in achieving business goals, admitting that even experienced business owners can overlook this principle.

A Case Study: Outbound Sales Goal Setting

  • In one of Alex Hormozi's companies, the goal was to increase outbound sales, a lagging indicator.
  • The management decided to hire five more outbound reps as a leading indicator, predicting that this would increase calls and sales.

"So the outbound team sets their goal. They say, we want to do this. And I said, no, guys, we need to make this a leading indicator. So what are we going to do to do this? And so the manager said, we need to hire five more outbound reps. I was like, that is a wonderful leading indicator because if we hire five more outbound reps, then we're going to make more dials, which is going to make more calls, which is going to blah, blah, blah, blah, blah, right?"

Alex Hormozi explains the process of shifting the focus from a lagging indicator (outbound sales) to a leading indicator (hiring outbound reps) and the expected positive chain reaction this would cause in terms of increased calls and sales.

The Unexpected Outcome

  • Despite setting a leading indicator as a goal, the expected outcome did not materialize.
  • The transcript cuts off before explaining why the goal was not achieved, leaving the story incomplete.

"Guess what happened. Didn't happen."

This quote reveals that despite the strategic shift to focus on a leading indicator, the desired increase in outbound sales did not occur. The quote does not provide an explanation, indicating an incomplete narrative.

Outbound Sales Strategy

  • Outbound sales require a sequence of actions, starting with hiring business development representatives (BDRs).
  • More calls are needed to increase outbound sales, which in turn requires more BDRs.
  • The hiring of BDRs is identified as a leading indicator for achieving sales goals.

In order to get more calls, we're going to need more bdrs, right? And so we need to hire five more bdrs.

This quote emphasizes the direct relationship between the number of BDRs and the ability to make more sales calls, highlighting the necessity of hiring as a first step in the sales strategy.

Business Growth Invitation

  • Alex Hormozi extends an invitation to large business owners aiming for significant growth.
  • is offered as a resource for businesses to seek assistance in scaling up.

Anyone? Guess mozanation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to 5100 million dollars plus, we would love to talk to you.

Alex Hormozi is inviting business owners who are looking to grow their already substantial businesses to even greater heights, indicating that his team at specializes in such scaling.

Leading vs. Lagging Indicators

  • Selecting the correct leading indicator is crucial for goal achievement in management.
  • Leading indicators must be the first action in a sequence of events, not just a preceding action.
  • Focusing on outcomes as indicators is ineffective, as they do not guide daily actions.
  • The true leading indicator involves the initial actions that trigger subsequent steps toward the goal.
  • Actions, not metrics, are achievable and should be the focus of objectives.
  • Identifying the primary action that will precipitate all other necessary actions is key to success.

When you pick the leading indicator, it can't just be the thing that happens before. It has to be the thing that happens first.

Alex Hormozi stresses the importance of identifying the initial action that triggers the sequence leading to the desired outcome, rather than just any preceding action.

And the third time when I heard the same freaking goal again, I was like, we're not making this mistake again.

Reflecting on past failures to achieve goals, Alex Hormozi resolves to focus on the correct leading indicators to ensure that the necessary actions are taken to meet objectives.

Lagging is what most people do is when they put the objective metric. And that's silly, because no one can accomplish a metric. They can accomplish tasks, they can accomplish actions.

Alex Hormozi criticizes the common mistake of using lagging indicators, such as final metrics, as goals, and emphasizes the importance of actionable tasks that lead to those metrics.

Identifying Primary Actions for Company Goals

  • The importance of identifying the true first action required to achieve a company's ultimate goal.
  • Misidentifying these actions can lead to stagnant progress despite consistent efforts.
  • Correctly identifying the primary action can lead to rapid achievement of goals.

"And so this might be one of the most important things that happens in a company is figuring out and determining what is the true first action, primary action that is required to accomplish what we would ultimately like, which is an increase in x, right."

This quote emphasizes the significance of discerning the initial, most crucial action that will lead to the desired outcome in a company's strategy.

"And so the thing is, we have to continue to pull the thread until you identify what the actual weak link is in the chain of dominoes."

Alex Hormozi stresses the need for continuous analysis to discover the fundamental weakness or pivotal point that, when addressed, can initiate a cascade of successful outcomes.

The Impact of Focusing on the Wrong Metrics

  • Focusing on lagging or incorrect indicators can prevent progress.
  • Identifying leading indicators that are not the primary action can still be misleading.
  • The correct identification of the primary action can lead to swift and efficient goal achievement.

"But it was because we were focused on the wrong thing. We were focused on lagging indicators, or not the primary indicator."

Alex Hormozi explains that their lack of progress was due to concentrating on the wrong metrics, which did not directly influence the desired outcome.

The Role of Leadership in Goal Achievement

  • The responsibility of company leaders to discern and focus on the correct primary action.
  • Leadership must differentiate between outcome-based goals and the actions that directly lead to those outcomes.
  • The CEO or owner must exercise discernment to identify and prioritize the correct actions for the company's success.

"And as soon as you can identify that, and that is the job of the owner, that is the job of the CEO, is to have the discernment to say, no, that's not the thing. This is the thing. And this is what we're going to focus on."

Alex Hormozi underscores the crucial role of leadership in recognizing the true primary action necessary for goal achievement and steering the company's focus towards it.

The Consequences of Misaligned Goals and Actions

  • Repeatedly failing to achieve a goal may be due to setting outcome-based goals without identifying the primary action.
  • Leadership must ensure that the actions they prioritize are the true source of the desired outcome.

"If you have had a goal and you've written it quarter over, quarter, month over month, you've written the same number and you have not accomplished it and you are not making progress towards it, then it is likely because the goal that you are setting is one outcome based, and two, the actions that you believe are required to accomplish that goal are not the primary action, but simply preceding actions that are still not the source of the creation of the outcome."

Alex Hormozi points out that a lack of progress towards a goal often indicates a misalignment between the goal itself and the actions believed to be necessary to achieve it. He suggests that the actions focused on may not be the root actions that generate the desired outcome.

What others are sharing

Go To Library

Want to Deciphr in private?
- It's completely free

Deciphr Now
Footer background
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon

© 2024 Deciphr

Terms and ConditionsPrivacy Policy