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Mike Michalowicz

Episode 61: The Pumpkin Plan: How to Grow a Business in Any Field, with Mike Michalowicz

By his 35th birthday, Mike Michalowicz had founded and sold two multi-million dollar companies. Confident that he had the formula to success, he became an angel investor and proceeded to lose his entire fortune.

The Pumpkin Plan | How to Grow a Business in Any Field

Then he started all over again, driven to find better ways to grow healthy, strong companies. Among other innovative strategies, Mike created the Profit First Formula, a way for businesses to ensure profitability from their very next deposit forward.

Mike is now running his third million dollar venture, is a former small business columnist for The Wall Street Journal; is the former MSNBC business makeover expert; is a popular keynote speaker on innovative entrepreneurial topics; and is the author of Profit First, Surge, The Pumpkin Plan and The Toilet Paper Entrepreneur, which BusinessWeek deemed the entrepreneurs cult classic.

What you’ll learn about in this episode:

  • Mike’s Pumpkin Plan system and the specific processes it includes
  • The lessons Mike learned from being an angel investor
  • How to determine whether a seed is strong and has potential
  • How to match the uniqueness of an idea with the demand
  • How to put a value on each client based upon the cringe or crush factor
  • The importance of focusing on a few strong ideas rather than many weak ideas
  • How to promote explosive growth
  • The critical questions that every business owner should ask their best customers

Ways to contact Mike:

Podcast eBooks:

The Power of Two

Episodes 1, 2 and 3 collide to bring you summary of lessons learned and systems created around Vision and Key Initiatives that help drive success to companies and businesses.

The Transition to Automation

In Episode 25, Vera talks with Heidi Rasmussen, CEO and Co-Founder of one of Inc 5000’s fastest growing companies in America – freshbenies. This eBook highlights part of the conversation to bring out the best lesson in automation and on-boarding for startups.

Using IT Strategically

In Episode 29, Vera talks with Tom Grooms, Vice President, Information Technology, and Chief Information Officer for CF Industries. This eBook is your guide for seeing IT as more than just a faster way to do your accounting.

The ZFactor Methodology

In Episode 35, Vera talks with Cindy Goldsberry, founder and partner of ZFactor Group. This eBook shows you how to take your business from vendor to value creator.

Transcript:

Announcer: Welcome to System Execution, the strategy and system behind today’s successful companies. Systems can make or break your company, but here we’ll solve your physical, technological and psychological systems issues by connecting you with experts that have succeeded in overcoming those challenges in their own business, and providing you the guidelines and tools you need to implement those same strategies for immediate results. Now here’s your host, Vera Fisher.

Vera: Today’s episode is sponsored by 97 Degrees West, the brand marketing agency located in Austin, Texas. 97 Degrees West serves regional and national companies in the health care, finance, energy and manufacturing industries. 97 Degrees West believes that an integrated approach to marketing that involves traditional and digital strategies that fit your customers buy-in journey yields the greatest impact on your bottom line. Go to www.97dwest.com to learn more.

Welcome to System Execution, a podcast devoted to using processes and systems to drive to a better outcome for your business. I’m Vera Fisher, your host. All businesses, no matter the size, relies on systems. Some of these are physical systems such as a distribution center or a factory. Some are technological. This could be your CRM, marketing or project management software, while others are psychological systems such as checklists and organizational charts. Many of these systems change and overlap in your business as it grows and develops.

Today’s guest, Mike Michalowicz, is a business author who is a former business columnist for the Wall Street Journal. Now, Mike has a really interesting story. By the time he turned 35, he had founded and sold two multimillion-dollar companies, so confident that he was that he had the formula to success, he became an angel investor and then quickly proceeded to lose his entire fortune. Then he started all over again, driven to find better ways to grow healthy, strong companies.

Among other innovative strategies, Mike has created the Profit First Formula, a way for businesses to ensure profitability from their very next deposit forward, and now he’s running his third million-dollar venture. He is also a former MSNBC business makeover expert, a great keynote speaker on innovative entrepreneurial topics, and is the author of “Profit First,” “Surge,” “The Pumpkin Plan,” and “The Toilet Paper Entrepreneur,” which Businessweek deemed “The entrepreneur’s cult classic.” Welcome to System Execution, Mike.

Mike: It’s a pleasure to be here. Thanks for having me here.

 

More on Mike’s Background

Vera: Well, Mike, before you share your very specific process around your Pumpkin Plan system, which I can’t wait to hear about, please tell us a little bit more about your experience. I want to hear a little bit about losing your entire fortune and then starting all over again.

Mike: Yeah, not necessarily a proud moment for me, but a very impactful one and a life changer. As you shared, I was in the good position to build a couple companies in the technology space. I sold a couple of them, one to private equity, one was acquired by a Fortune 500, and thought I had the answer to all things entrepreneurial. I decided to become an angel investor, started ten companies simultaneously. I was the worst angel investor of all time. I actually now take on a new title, the Angel of Death, because I was so efficient at ruining companies, and realized in hindsight that I had moved into a space I had no right to be in. I had no experience, no ability, and I didn’t understand the importance of having complementary businesses. They were all in very disparate spaces.

That became a resurgence for me, though. I decided to devote my life into what I was passionate about, which was being an author, and part of the books I’ve written, or mostly I’ve written, is with the intent of actually fixing my own misguidance, my own errors, and improving and building systems for myself. In every business I’ve owned since … I operate my third multimillion-dollar company now but I also own two other businesses … every business I’m involved in, I am a big believer of implementing systems and using specifically the systems that I write about.

 

What Is The Pumpkin Plan System?

Vera: Well, awesome, Mike. I know that in your bio, you’ve written several books, but for today’s conversation the one that’s the most intriguing, aside from just its name, is this whole system or process that you have around your Pumpkin Plan system, so let’s go ahead and get started, and why don’t you start with what the heck is a Pumpkin Plan system?

Mike: Yeah, yeah. I discovered this one early on. I was trying to grow my first company, and thought that delivering broad enough services to a broad market was the right growth strategy, which actually prevents growth. I worked with a business coach. His name was Frank, and one day he goes to me, “I think you really need to learn how to grow a business by looking at something in nature, and specifically,” he told me, “I want to you look at pumpkins, but not ordinary pumpkins, these colossal pumpkins.” You’ve seen pictures of them, where it’s a person leaning against a pumpkin that’s literally as big as a car.

I spent a year of my life studying colossal pumpkin farming while growing my business and applying the mechanisms, and the big discovery was this, that the process of growing colossal pumpkin versus ordinary pumpkin is not that different. Maybe 5 or 6% of the stuff they do is different, but it’s those few things that they do differently that result in explosive, organic healthy growth. What I started to do was translate the steps in growing a colossal pumpkin to growing a colossal business, and sure enough it worked for me. It worked for clients that I consulted on, and it ultimately became a book.

 

The Pumpkin Plan System: Seed Selection

Vera: Okay. For what it’s worth, listeners, I think of the Berenstain Bears when I think of the big pumpkin, the colossal pumpkin, so I don’t know if any of you guys remember that from yesteryear of a long time ago, but okay, so I really can’t wait, Mike. Let’s start with the first part. I guess you have to plant the seed, right? That makes sense.

Mike: Very good, yeah. Yeah, and actually even before you plant the seed, it’s seed selection. Here’s the comparison. Ordinary farmers are in the quantity game. Their holiday is Halloween, is the fall season, and you want to plant as many seeds in the springtime so you can capture as many clients, as many people buying your pumpkins, in the fall season. There’s a massive amount of waste. Next time you go pumpkin picking, just observe the field after Halloween. You’ll see it’s not too atypical to have 50 percent of the pumpkins abandoned, lost, rotting in the field, but you’re in the quantity game. You make up for it on volume.

What was interesting about colossal farmers is they will take seeds and put it under a microscope before they plant it, to evaluate how well that seed will match with the soil content, the environment, the weather conditions. You can grow colossal seeds in the most northern parts of Canada to somewhere along the Equator and anywhere in between, but different seeds are necessary to have colossal growth. The parallel to business is most businesses are in the cheap, easy seed game, the quantity game. You know, who are the clients that I can just serve that’ll buy my stuff? What’s the product that I can get out the door as quickly as possible that will be purchased? Where colossal entrepreneurs, I’ve found, pick a seed that has the most potential for colossal growth.

The real quick assessment of what makes a strong potential seed is first of all a truly distinct offering, often an amplification of the leader of that group. The example I like to use is Steve Jobs. Steve Jobs had a real uniqueness about him that he leveraged in Apple. What it is … and a lot of people don’t know this … Steve Jobs had a phobia of buttons. You’ve got to Google this. It’s true. There’s a reason he wore a turtleneck. It’s because buttons freaked him out. What he did is, because of this phobia of buttons, that uniqueness, he leveraged it in his products. The iPhone now is button-free, but it used to be just one button, where the competing product, the Blackberry, had a full keyboard on it, so he leveraged his uniqueness.

The second part of the colossal seeds is matching that uniqueness to client demand. Who are the top clients that want to buy that uniqueness on a recurring basis? Those are the customers we need to target. The third kind of intersecting element, making it a Venn diagram, is systemization, meaning how do I deliver a unique offering to a top client and do it on automatic, where I can deliver it, have them raving about the experience, paying me, and do it all while I’m sleeping? That’s what systemization is, where the business runs on automatic.

Vera: Uh-huh. You know, Mike, I think a lot of folks out there, when they’ve got that seed, that idea, they’re not spending the appropriate time figuring out the other parts of that seed, rather if it’s really going to grow, if it’s the right seed for the right audience, et cetera. How much time do you … or can you quantify the amount of time that you spend on really looking at that seed?

Mike: Yeah, I can. I mean, the very beginning … and I know this is not the audience we’re talking to … but in the very beginning of the business where you have no clients, there is a lot of testing. You’ve got to sell something to somebody and see to some degree what sticks. Once you have an existing client base, we go through the next step of evaluating our top clients, and I have a real process.

Look at your clients and sort them out by revenue over the last year. The clients who have generated the most revenue for you are indicating through their behavior, by buying, that they value your offering. I have a saying that we can trust people’s wallets, not their words. People will say gracious things because that’s socially appropriate, but it’s not necessarily as representative of their true feelings as their actions. When a customer buys from you repeatedly, they’re demonstrating that they value you.

That’s the first assessment, sort clients by revenue, but what we need to do next is then put a value on each client based upon what I call the crush or cringe factor. This is also a simple process. When that customer calls, the Caller ID pops up, are you having a crush on them and excited to be talking with them, or is it a big cringe like, “Oh, my gosh, I can’t stand these people, send them to voicemail”? The reason this is important is, while many people feel that all customers are created equal, we have to treat them all exceptionally well, the reality is we give preferential treatment to the clients that we have preference toward.

If a client is someone that we don’t like doing business with, we will naturally provide them a secondary level of service by putting them into voicemail, delaying our response, putting them off to the end of the day. The customers that pay us the most and that intersect with what we like the most, those are the ones we need to concentrate our efforts on, because there’s two things that can happen. One is we can do more business with those clients, but secondly is they are the gateway, the pathway, to finding more clients just like them.

 

The Pumpkin Plan System: Pumpkin Farming

Vera: Okay, that’s super-cool. All right, so next, so you’ve figured out, you’ve got the seed. What’s the next step?

Mike: Yeah, so the next step is actually what we talked about. I call it client analysis, but when it comes to the pumpkin farming, what was interesting is ordinary farmers focus on weak elements of a pumpkin. You know, what’s the weakest sprout, and once they find a weak sprout, they loosen the soil and give it extra water, and the strong spouts are left alone to fend for themselves.

Because again, ordinary farms are in the quantity game. The more that can grow, the better, so you focus on the weak. Colossal farmers, on the other hand, focus on the strong. They look for the strong sprouts, loosen the soil for those sprouts and give them water, because they know that those have the most potential for colossal growth.

Well, the translation we already started touching on is, with your clientele, who are your strongest clients? If we want to have colossal growth, it’s focusing actually on our strongest elements of our business, but it’s the strongest clients we have, and amplifying them, concentrating on them. There’s other elements too, though. What is our strongest-selling product? Of our product line … and products could translate to services … of our offering, what’s the strongest elements? The ones that customers have the best experience with, that generate the most profit. Let’s concentrate our efforts on that.

Where we have an intersection of our best customers buying our best offering, there’s where explosive growth happens. We need to concentrate on our efforts there. The key is this evaluation. Most businesses that I’ve consulted with over time really don’t have a good sense of who their best customers are or where their best offering is, and therefore they try to sell as many things to as many people as possible, but that goes back to the ordinary pumpkin farmer. We’re spreading ourselves thin. It dilutes our ability to be the world’s best.

 

The Pumpkin Plan System: Critical Questions

Vera: Okay. Let’s say that you are going now, you’ve done your client evaluation, which in my head I’m kind of doing it as we’re talking. We’ve figured out that intersection, and we know that we want to get more of the ones that really value what we offer and we like them and they pay us money, so how do we get to that next stage of really making that work?

Mike: Yeah, this is where the magic happens. First, once you identify them, we need to get face time with them. I’m a big believer in that, and if you can’t meet with them face to face, get on a videoconference. Again, we can’t trust people’s words but we can trust their actions, and that’s the reason to get face time. As we interview them and learn about them, we want to see how they respond behaviorally.

I’ve found there’s three critical questions to ask our best customers. As an example, with my first company, once I started to learn this process, I identified that my best customer on a revenue basis and the one I enjoyed working with the most was a hedge fund. I took out the manager of this hedge fund … his name was Larry … and started asking questions. At first blush they don’t seem significant, but these are Jedi mind tricks. I’ll explain the trick behind them.

The first question I asked Larry, and I think our listeners today should be asking their best clients, is ask them what are you doing right. “What am I doing right?” What’s interesting is I asked Larry, in my technology service business, what was I doing right. He says, “You know, one thing I really value about you, Mike, is the responsiveness. When our network has a problem, you have someone on site usually within two or three hours, and that’s the responsiveness that, as a hedge fund, we need. Our last computer company sometimes took a day or two to get to us, and that’s not acceptable.”

Here’s the Jedi mind trick. When you ask your best customer what you’re doing right, they in fact will not tell you what you’re doing right. They will tell you what they judge you by. That’s an important factor, what they’re determining is the most important element of you. When I asked Larry what am I doing right, he says, “Mike, what I judge you by is your responsiveness.” What he was saying is he measures how quickly I respond, and therefore he was giving me the opportunity to provide him with extraordinary service.

That day forward, I would dispatch my technicians or myself to be within a very close proximity of Larry’s office, so if he did have a problem, I could now get someone on site on average under a half hour, and Larry was blown away. He was thrilled, but the thing was I knew he would be, because he told me the formula. The key to the Jedi mind trick here is this. When you ask your best customers what you’re doing right, they will tell you what you in fact need to improve. That’s the trick.

Two more quick questions. Ask your best customers what’s wrong with your industry. Never ask them what’s wrong with you, by the way, because people rarely speak the truth face to face. It’s the dirt on your face. You know, you don’t want to embarrass the other person so you don’t say it, but the second that person leaves the room, you’re like, “You wouldn’t believe that mud that was on their cheek.” What we need to do is ask our best customers what’s wrong with our industry, because that’s basically removing ourselves from the room, and they can beat up on our industry because it’s not us.

The Jedi mind trick is of course they’re talking about us. I asked Larry, I said, “Hey, what don’t you like about the computer industry,” and he told me about the billing practices of his last company, how cloudy it was and confusing. What he was telling me was the thing I needed to improve. Whatever’s wrong with your industry is the thing you need to fix. You know, maximize what you’re doing right, uplevel it, and what the industry’s doing wrong, set out to fix it.

The third and final question is to ask your best clients about the vendor network. Ask your best clients about the other vendors they depend on, and that question maybe I can save to a little later on because that is a distinct step in the Pumpkin Plan, and it’s such a powerful step in growing a colossal business or a colossal division in a business, is knowing the other vendors that your best customer depends on.

Vera: When you ask them that, you’re just simply asking them, “Who else is in your network of vendors that you rely on?”

Mike: Right, right, and there’s a special hack around it which is simply this. When I ask Larry, “What other vendors do you depend on,” he kind of looks at me and says, “Why do you care?” My response is, “Well, I want to collaborate with them to serve you better.” The key is if I’m just saying, “Hey, give me other vendors so I can get leads from them, I’m actually diluting my relationship with Larry. I’m taking myself away from my key customer.

If I approach Larry saying, “I want to know your other vendors so that I can collaborate with them and collectively we can serve you better,” maybe the one vendor is providing an information feed … for hedge funds that’s important … and I’m the computer guy. “If I understand who they are and how their feed works, maybe I can better design and spec out the computers you use.” By doing this, I’m better serving our mutual client, Larry, and in my case … and I’ve experienced this over and over … they’re willing to open their black book of all their vendors, and you build a very powerful network this way.

 

The Pumpkin Plan System: Saturation Systems

Vera: That is awesome. All right, so we’ve gone through that. I’ve written down all of those questions. What are we doing right, what’s wrong with our industry, and then getting them to give us our vendor network or give us a few, so we’ve gone through that process and what happens with this information?

Mike: Yep. What happens is the third step in the Pumpkin Plan, which is the process of watering. If you’re an ordinary pumpkin farmer, just to run this analogy through, you use a technique called saturation systems. If you drive down any country road and you see those big tubes above the fields, those are saturation systems. It’s an intense dumping of water on plants, because you get one shot. Usually during the night these systems run, so that there’s no evaporative effect.

The colossal pumpkin farmer, though, uses a quenching process. They’ll literally go to the biggest, strongest sprout. They’ll give it an optimal amount of water. They’ll leave the plant and come back maybe an hour later and give it an optimal amount of water once again, and they’ll do this process upwards of 15 times a day. It’s actually during this phase that a colossal pumpkin will start growing about 10 times to 20 times faster than an ordinary pumpkin, by optimizing the water intake.

Well, what I found with entrepreneurs, the parallel is traditional business uses saturation, particularly saturation marketing. They identify either a client base they’re targeting or the next opportunity that knocks on the door, and then they attack it with saying, “Buy from me, buy from me.” It used to be the old-fashioned version was you’d go to a networking event, and that guy that walks in the room with a pocket stacked with cards, and he’s handing them out saying, “You’ve got do business with me, we’ve never met before, you should be buying from me,” and that guy goes back to his office and his phone never rings, because he’s saturating. He’s actually killing roots of relationships with the intensity.

The modern version of remarketing, my daughter now has a license and she was looking to buy a car. I was willing to do some research to help her out before she made her purchase, and I found that a used Toyota Corolla is the safest and most reliable car. I’ll never forget looking at this Toyota Corolla because every day since, every website I go to, there’s a freaking advertisement for Toyota Corollas. This web ad is chasing me, and that’s called remarketing. The challenge of remarketing is, for some consumers … me being one of them … it’s too intense. It’s like, “Hold on, chill, I was just looking,” and now it’s chasing me and it actually dilutes the relationship.

I found there’s a better approach used by colossal entrepreneurs, if you will, and what it is is the quenching process. Very similar to the other process of saturation, but subtly different and impactfully much greater. What it is is targeting a very specific community through educational and entertainment and engagement processes, the three E’s, Educate, Entertain, Engage.

What I would do, for example, is once I identified my best customer was Larry, the hedge fund, I said to myself, “What if I had ten clones of Larry? Well, that would be remarkable for my business.” I think that’s actually any business listening, even if you’re a mid-cap or a large corporation. I’ve worked with Fortune 500s on this process, and if GE picks up ten clones of its best customer, it is a banner year.

I identify my best customer, then I find out where do they congregate. Hedge funds go to certain conferences, hedge funds read certain magazines, and my job is to appear there in either an educational format, an engagement format or an entertainment format, not to sell myself but just to get the customer aware of my presence and learning from me in some capacity.

A consistent presence gives the customer a feel that you’re everywhere. I was at their conferences, I was in their magazines, and I naturally started picking up business because that’s the essence of Know, Like and Trust. They see you frequently, they enjoy the interaction with you because they’re learning something, they’re being entertained in some way.

By the way, when I say entertainment, I’m not saying that you’re some kind of clown or juggler or something. When I say entertaining, I just mean that you’re presenting something that engages them at a level beyond just facts. Maybe it’s storytelling, which is a very entertaining methodology, case studies and stuff like that. By doing this, I had the awareness of customers, and it was just a matter of time before they started calling upon me because they perceived me as the definitive authority, constantly being in that space.

Vera: Wow. All right, so that is really interesting, because the first thing I would think that some folks would immediately go to is, “Wow, that watering system takes a lot of time.”

Mike: Oh, sure, right? It takes a lot of time and a lot of money. One of the examples I like to use is Coca-Cola, because they have an infinite budget. Coca-Cola does this to all of us, but I know we don’t have a Coca-Cola budget. When the Olympics was on recently, I was watching it, and they break from a competition and they say, “We’re going to go to the gold ceremony after this commercial break,” and then you see that liter of Coke up there with that beautiful bead of sweat dripping down, and there’s a polar bear drinking it.

None of us are saying, “Oh, my gosh, I need to run to a store right now to buy a soda,” or saying, “I need to run to the store and buy a polar bear.” That’s not the objective. The objective is to entertain us. The objective is to show us that red logo, because when we are in the market to buy soda and we see either a liter of Coke or a liter of a generic competitor, we’re more likely to buy Coke and pay a premium for it, even though in a blind taste test we, most consumers, can’t distinguish the difference. We do distinguish the difference because we’ve been educated and entertained about Coca-Cola.

What I’m suggesting for us is we don’t have Coca-Cola’s budget, but if we pick a narrow community … and we already figured out how, it’s by picking our best customer … then by appearing where they appear, very quickly we become the Coca-Cola. It doesn’t take much effort, but it takes effort. We have to appear. The funny thing is, if our clients go to a specific conference, you don’t even necessarily have to have a booth at that conference. You don’t have to be an overt marketer. It’s just that you have the attendance and the participation there.

There’s an awareness campaign, is what we’re looking to do. Maybe be a speaker at a conference. Maybe write articles for journals. By the way, those are the exact two and exclusive techniques I’ve used to become a dominant awareness, if you will, in the market that I’m currently selling to, which is accountants and bookkeepers, just by doing those two things. It’s not taken much effort, but it’s taken a very concentrated effort. That’s what brought me results.

 

The Pumpkin Plan System: The Root System

Vera: Does the process stop there? I’m real curious, just from the 5 or 7% that those colossal pumpkin farmers do differently than a regular farmer. Is it the watering system?

Mike: Yeah, the water system’s a big thing. The seed selection’s a big thing we talked about, the focus on the strong sprouts. There’s two more major steps they take, so I’ll give you the fourth kind of step. It’s the root system. This is what was interesting. What I found that ordinary pumpkin farmers do is they focus on the surface level. They look for signs of blight, disease, and they’ll throw down chemicals to eradicate that disease. It’s a very quick and effective process if you’re in the quantity game, and that’s what ordinary farmers are in. You just throw the surface-level solution down, and the majority of pumpkins will survive.

Colossal farmers, I’ve found, though, look at the root system, something that’s underground. They use special gear, in fact, to analyze the root system, and the reason they do this is the root system is the most critical element of the plant. Any damage to the root system and the entire plant dies, but a healthy, strong root system will facilitate the fastest, strongest growth. Some pumpkins at this phase can put on 50 pounds a day with a healthy root system.

Well, the parallel in business is that most entrepreneurs, most business owners, most eaters, are focused on some surface-level maneuvers. Ironically, the most surface-level technique I’ve discovered is the process of asking for referrals. What we do is we go to our existing client base, we provide a service or product, and at the conclusion of it we ask our client, “How was your experience?” They will typically say it was just fine, and remember that point I made earlier that clients will speak the truth through their wallets, not their words. The fact that they say it was just fine or a great experience doesn’t necessarily mean it’s true, but it’s also a trigger for us.

When we hear, oh, you had a great experience, we know that’s an opportunity to ask for the referral, so we say, “Hey, do you have any other acquaintances, perhaps even family, that could use our service?” What we have to realize is this causes two problems. One is that we run the risk of offending our client. Basically we just took their money and said, “Ah, your money’s not good enough, I need your family too,” right? It’s a little offensive to some clients, but the riskier part is the formation of dilution, which means if I ask you for a referral and you refer me to someone else, that means I don’t have as much time to spend with you anymore. It’s actually diluting my ability to serve you.

The referral system, while we’ve all been trained to do it, it’s a very surface-level mechanism. It’s that quick chemical we throw down in hopes to make some stuff flourish, and it rarely works that effectively. What I’ve found that colossal leaders do is they tap into the root system, which is that one question I mentioned earlier. Ask your best clients what other vendors do they depend on. When you ask your client that, they’ll kind of look at you like a deer in the headlights and say, “What do you mean, and why do you care?” We have to authentically pursue this collaboration effort.

What I told my hedge fund client, Larry, when I asked him this question, I said, “Larry, if I collaborate with all the other vendors you work with, I can find ways to collectively we can serve you better. We can work more cohesively, and my work will complement as opposed to detract from them, if I know simply who they are.” Larry, when he heard this, by the way, he was blown away. I was the first vendor of his ever to ask this question, and I’ll say this to actually your listeners, Vera. If they ask this question of their clientele, I’ll bet you they’ll be the first ever to ask their clients.

My client was just thrilled that I was seeking this out, but then the real magic happened when I called the other vendors. Specifically I remember calling this trading desk manufacturer who makes a trading desk for hedge funds and brokerage firms, and I said, “Hey, Larry’s a client of mine and I’m this computer guy.” Once we got some dialogue going, we realized that when I was hooking up the computers on their trading desks, I was actually installing them improperly. I was running the wire in the wrong conduit in the desks, and when the desks were being modified, enhanced or changed around, the computer network was crashing.

That day forward, we started to install the computers properly based upon their specs, and what happened here was a real win/win/win. Larry, our mutual client, had a more stable computer system than ever before. He won. The trading desk company, they won because when they changed the desk around, the computer system didn’t have any problems, so it looked positively upon them, and I wasn’t called in for emergency repair. All three of us were winning, but the ultimate win came out of the natural relationship with that trading desk relationship.

It was maybe about 10 or 12 weeks after our initial dialogue about Larry. They called me up and said, “We have another hedge fund, someone similar to Larry, that we’re doing a trading desk for, and they don’t like their current computer vendor. They asked us if we know someone, and we’re wondering if you’re interested.” I’m like, “Heck, yeah.” A clone of my best customer?

The key is, tap into that vendor well. Strategic, strong partnering relationships, where you’re collectively serving a client better, not only serve that client better, not only do you and the other vendor flourish because you’re both winning, but the relationship can yield a tremendous amount of clones of your best customer.

Vera: Oh, that’s brilliant. I have never … and I literally have been in marketing, sales, for almost 30 years. I have never heard that. It is very good. I love it.

Mike: I love it. I like that that’s fresh to you. That’s awesome.

 

The Pumpkin Plan System: Grow by Saying No

Vera: Yeah, that’s brilliant. I love that. Let me ask you this, Mike. What are some of the pitfalls or some of the things that you’ve experienced that didn’t go so great, that you’d like to have our listeners be wary of or be forewarned, if you will, to some of the issues that could happen?

Mike: Yeah, and it’s funny, because that plays in perfectly to the final step of the Pumpkin Plan.

Vera: Oh, good.

Mike: It really does. It is that the way to grow is by saying no. Just an example of this, pointing back to Apple Computer and Steve Jobs, in his final interview before he passed away, the journalist asked him, “What do you attribute your success to?” Just a note, he grew Apple Computers twice, he grew Pixar to a billion-dollar operation. He attributed it to his ability to say no to some of the greatest opportunities in the world and have Apple focused on the few things, not trying to do everything, which by the way points to the pitfall, your question. The biggest pitfall I see leaders falling into is pursuing a huge amount of opportunity, which dilutes their ability to grow anything colossally.

One example I like to use is the one assured way never to grow a colossal pumpkin or anything colossal is by growing as much as possible. Literally, you can drive down any country field past any farm with massive amounts of plants growing, and there will never miraculously be a colossal vegetable growing in that open field, and the reason is all the energy, effort, is spread out. The farmer, she’s hauling by all these plants just trying to address each one as quickly as possible.

The pitfall is trying to do everything for everybody. The pitfall is trying to pursue more opportunity as opposed to less. Every time you spread yourself out, every time you take more on, you’re diluting yourself. When you dilute yourself, you basically prohibit any colossal growth.

Vera: That makes so much sense, and it almost gives us permission to say, “You know what, quit doing that,” right?

Mike: It does.

Vera: “Quit diluting yourself. Quit spreading yourself so thin,” because there’s nothing more horrible than working so hard to get a client that you really like, and then the next thing a year or two later they’re not with you anymore, because you simply didn’t have time for them.

Mike: Oh, my God. That’s horrible, yeah. Also it compromises our ability to be an authority or an expert. You know, if you would do one thing for one customer and then a new thing for the next customer, and then something yet different for another customer or you’re serving a dozen different services to all these different customers, I consider that being the general practitioner of your industry. Kind of like my general practitioner doctor can analyze a skin rash or a cough or a sickness, but she won’t say, “Hey, Mike, I think you have a heart problem. I’ve never done heart surgery before. Would you be interested in being my first patient?” I’m like, “No. I want to go to a heart surgeon that’s done thousands of operations.”

The lesson is this, is that clients, some clients, and many clients will seek a general practitioner because they see that their issue is simply a general issue that can be addressed by someone with general skills. That’s a value or a price shopper, but there is a portion of clients who see their situation as life-threatening. Just like a patient who has heart disease is willing to travel the world to find the world’s leading heart specialist and pay a massive premium because their life is on the line, there are businesses out there who see their business decision as putting their business’ life on the line, and they value then the expertise of someone that can solve that extremely high, and they’re willing to pay a premium.

They’re willing to seek us out, so we as a provider have a choice we can make. We can be a general practitioner and compete on price and serve a general audience, or we can decide to be an elite specialist. Pick a very narrow category, do a thousand heart operations in a row, and once you get so efficient and so capable in one specific skill, that’s when the world will seek you out.

 

What’s Next for Mike

Vera: Well, Mike, the insight you’ve provided around this Pumpkin Plan system is just super-informative, and I ‘m just loving all the takeaways that you’ve provided us. Before we wrap up our discussion, let’s talk about what your next challenge is. What’s next for Mike?

Mike: Yeah, it’s so funny that we’re talking, because I’m totally in pure systems mode. The next challenge for me, being an author, is the release of my next book, which is called “Clockwork,” and the subtitle is, “Design Your Business to Run Itself.” What I’ve found for entrepreneurs, for business leaders, for the entire C suite, is that we are working harder, that when we aren’t available to our business, the business suffers, and as a result we’re suffering. We’ve lost out on time and freedom for ourselves, which I don’t think is our end objective.

My challenge was to discover the process to having a business run itself, where we have the freedom to do what we want how we want within our business and not be controlled by our business. My big challenge is now rolling out this book and making big awareness around it as it comes out, this summer of 2018.

 

Mike’s Final Thoughts and How to Get in Touch

Vera: Well, Mike, you have shown us that processes are needed to get the work done and have provided a few of the nuances that our listeners need to hear regarding the execution of a successful system. Before we go, let’s close out today’s discussion with any final advice you want to share, anything that we may have missed, and then please tell us the best way we can connect with you.

Mike: Sure. One thing we missed, I think, or we didn’t talk about yet, is small steps. When I share these strategies like the Pumpkin Plan and the other stuff I do … and I’ve had the great privilege of traveling the world, I just returned from a two-week tour of India speaking in ten different cities … that people hear the system, they’re excited about it, but they don’t know where to start. What I want to share is to lower the bar as opposed to raise the bar, now you’ve heard the system.

My challenge to you is what’s the one smallest step you can take in the right direction? Can you look through your client list and just schedule that one lunch meeting with that one customer who’s your best customer and ask them three questions? That’s a low bar to set. If you try to implement all this stuff, I think that’s a risk, because it’s like going to the gym when you haven’t exercised, and you do a full workout and you injure yourself. My call to action is actually to reduce your actions, but take an action.

Then if you want to learn more about me and my books and all the work I’m doing, you can go to Mikemichalowicz.com. Here’s the deal, it’s a long Polish name. I struggle spelling it at times too, so I have a shortcut for you. My nickname in high school was Mike Motorbike, so you can go to Mikemotorbike.com. That’s an easy one to remember, and that’ll bring to you my site. I have all my books up there, free chapters for all my books, so you can explore them without making a purchase. I also have my own podcast up there and my Wall Street Journal articles are available. They’re in the Wall Street Journal archive. You can buy them there or you can get them for free on my website.

Vera: Well, System Execution fans, no matter how many notes you took or how often you relisten to this episode, the key is, every successful business uses systems to drive to a better outcome. Mike, thanks so much for being on System Execution today.

Mike: Thank you, Vera.

Announcer: We hope you found this episode of System Execution enlightening. For free examples, case studies, e-books and more, be sure to visit Systemexecution.com/resources. Contribute to the conversation by reaching out to Vera directly on email at Vera@systemexecution.com. Until our next episode, thank you for the privilege of your time.

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