VANNOY:
How to lead your business through change. Hi, I’m Mike Vannoy, vice President of Marketing at Assure, and this is a really cool topic for me. So much of the time of this weekly show, we talk about really tactical, practical things, payroll laws, HR laws, how to comply, but sometimes as entrepreneurs, business owners, we are so close to the day-to-day that we don’t see the major changes our businesses actually going through, even the economy our environments are going through. And we need to step back and examine that and really look at ourselves as leaders and are we focusing on ourselves and our development as much as we are our business. So the perfect guest to join me today to unpack this topic, Eric McNulty. He’s a seasoned business writer, speaker and thought leader. He serves as an associate director of the National Preparedness Leadership Initiative at Harvard University.
Previously, he was editor at large and director of conferences for Harvard Business Publishing. McNelly is a contributing editor and of strategy and business. He has written for Harvard Business Review, O’Reilly Media, Sloan Management Review, worthwhile Magazine and other publications. His case studies written for Harvard Business Review have been used in numerous professional and academic settings. He teaches in graduate and professional education programs at Harvard as well as executive programs at M I T and the University of California. He is the co-author of You’re IT Crisis Change and How to Lead When It Most Matters. Eric, welcome to the show. Mike, thanks so much for having me. Glad to be here. Excited about it. So I’m going to start out with something that might just sound stupid, but I feel like the average entrepreneur, they’re working their faces off, they’re grinding day in and day out, and I think sometimes this term leadership gets thrown around a little too loosely. Can you, maybe just from your perspective, you’ve seen and you write in your book about big change management leadership, what that looks like. Why is leadership so especially when we’re going through periods of change like we are right now,
MCNULTY:
I think it’s a great question because you’re right, I’ve been an entrepreneur, I’ve worked with entrepreneurs, and you’re right, they’re working to face off every single day and that begins a challenge because they’re, they’re so close to the business, they’re so close to some of the assumptions they’re making and where they’re going. It can be hard sometimes to bring everyone else along. So when I talk about leading, leading is a set of behaviors and managing a set of behaviors. So if managing is what we do, leading is why we do it. So the human factors, so if you’re just doing it all by yourself, you’re a solopreneur, fine leadership is not going to be a big issue for you. But as soon as you bring other people into the equation, they really need to understand not just where you’re going but why you’re going there, why what they’re doing matters, how they can contribute in a meaningful way. So it really is taking the time to help them understand the context in which you’re doing everything. Because if you’re just telling people what to do and point pushing them in a certain direction, that works for a little bit, but eventually it gets old and they really to engage them and really get their energy and all their ideas out there, you’ve got to help understand why. And that really is the essence of leading, is moving people forward into uncertainty with hope, with confidence, and with they believe that they can make a meaningful contribution.
VANNOY:
So from your perspective, what are the big buckets that entrepreneurs, small business owners or managers at mid-size companies, what are the big buckets that they should be focused on when it comes to managing, especially through change?
MCNULTY:
So I think when you’re looking at change, and we are, this is the year that perma crisis and poly crisis both made it into the dictionary. So we are in turbulent times, right? Change is T, it’s not just those are the big wildfire earthquake kind of change, but changes in the workforce, changes in the whole continuing battle of our hybrid work, the introduction of AI as a widely accessible technology. All those things are infusing change, which means you get a less certain picture of what’s going on. So I think for entrepreneurs, first of all, the thing is to do is take a bit of time to look toward the future. What are the faint signals on the horizon that may affect you? And take some time to reflect and be thinking about that. Because again, if you’re caught up in the day-to-day, you’re managing right now, you’re worrying about today, I get it.
Having been an entrepreneur, having the son of an entrepreneur, I know you’re worried about can you make payroll this week? Are we shipping our goods? All that stuff is top of mind. But if you aren’t paying attention to the faint signals on the horizon, you can’t anticipate what you’re going to need next. If you can’t anticipate, you won’t be ready. And then it’s really, really hard to catch up. So that change piece, again, be looking and taking a bit of time to do that, taking some time for yourself. Consider it a gift even it’s 10, 15 minutes every couple of days. Just take and try, think a wider view, that long view of what’s coming. That’s the thing to see what’s going be coming. You’re more ready for change and then talk to your people. In terms of change, we so often talk about it as things are fine, we change, things are fine. Again, change now is constant. So get people talk to ’em in terms of here’s what we’re doing now and why it might change. Here are the things I’m looking at that may cause us to change direction. Use your regular language. It will help them be less concerned about change because it’s part of what they do every day.
VANNOY:
Can you paint a picture, Eric, what that looks like? Super practical. So if you say 10, 15 minutes a day, just focus on what’s changing. What specifically would I even do? Because if I’m all consumed with how am I going to make payroll next week and collect these customer bills and I got jobs stacked in front of me, how do we give more specific instruction on what to actually sit down and do?
MCNULTY:
One thing I do, well, first of all, if you listen to podcasts like this one because you’re going to get some great ideas and get some different perspectives. The second thing I do on my LinkedIn feed, I follow some people who I know are good futurists and John Hale is somebody on the west coast who I follow, others who I know are thinking about the future. And that way if I just scan down my feed and see what pops up, I’ll get some new ideas that’ll pop in or some triggers I should, paying attention to something. Again, if you’re varying your news sources a bit, I remember, or the beginning of this year when chat G p T actually came out in November of last year, all of a sudden I saw five things pop up about chat, bt, a couple on podcasts, one on N P r, one on the New York Times, and just seeing those little pricks, I’m like, Ooh, I don’t know what that is, but I better figure out what it is because all of a sudden everyone’s talking about it. Basically, you vary things a bit, and again, you don’t have to go read something front to back, vary your news sources, find some podcasts and find some folks to follow, be it whatever your favorite social platform is, LinkedIn, Twitter, wherever it happens to be, who are thinking to the future, that will give you a little bit of inkling and tickle about what’s going to come.
VANNOY:
So I love that. Just be intentional, right? And so don’t, I’m not taking shots at whatever news channel you watch, but don’t just watch your normal news channel. Be intentional about seeking out alternate views. So depending which way you lean, you might think the other news channel is terrible and you can’t stand it, suck it up and watch it because it’s important to know what other people think, whether it doesn’t mean you agree with, right? And I love your idea of just being intentional about seeking out blogs, podcasts, just don’t subscribe to just pure fun things. There’s nothing wrong with that. But your LinkedIn feeds seek out people who you believe to have those good opinions. Anything else that you would suggest of ways that entrepreneurs, business owners can be intentional about identifying change?
MCNULTY:
So one of the exercises I like to have people go through is to write down their assumptions about the future. So think about your business a year from now. What are the assumptions that underlie why you think your business is going to grow by 10% or you’re going to expand to another location, whatever that is. And then ask yourself what has to be true for that to come true? And what are the implications if one of my assumptions is not true? So if you think, okay, if I’m going to expand to another location, I’m assuming I’ll be able to hire the people to staff that location. I’m assuming I’ll have the financing available at a certain rate to be able to fund that opening all the things you’re assuming, and then begin to poke around and say again to what has to be true, what don’t I know about those factors and where’s the uncertainty, where’s the risk?
And that gives you some direction of poking around to say, what are some things I might not be aware of that might affect that? And it just opens your mind, opens take the broader perspective so that you’re not just caught on today. Because again, we operate with a series of assumptions too often we don’t articulate them and test them to see if they’re still valid. And all of a sudden we’re like, Wiley Coyote running off the cliff. We think everything’s fine, and you look down and you’re whoops, down you go. So you’ve got to be careful with that.
VANNOY:
I think it’s good advice and it relates, it resonates for me, businesses that’ve been part of, Hey, we’re super successful in these two locations growing like crazy in these two adjacent cities. Let’s open location number three and apply the same model as we did in the first two. And lo and behold, it didn’t work because we probably didn’t ask all those same questions, right? Labor pool was different, customer base was in fact different, more than we realized. It’s probably easier, Eric, to do that on things that you were intentionally going to do. I want to add this location, I want to add a product line, I want to expand my sales team. I want to add onto my building some capital equipment. So I think it’s probably intuitive for folks to go through that thought exercise. Help me remember the way you phrased it. I really liked it. For that to come true for those
MCNULTY:
Conditions. What has to be true for this to actually come true? And then if one of those assumptions is not true, what are the implications? If I can’t get enough people, if I can’t get financing at the right rate, do I have a secondary plan? What are my options? Where am I thinking I’m going to go?
VANNOY:
So I love that way of saying it. Here’s my fear. It’s probably intuitive when you’re going to do something intentional to engage in that advice. What about the change that’s coming at you that you don’t see? How do you stop in the moments of panic if you will? Maybe it’s not panic because it’s happened so fast, you don’t even know what’s happening to you. Maybe you’re going to the cliff a hundred miles an hour, choose your metaphor. But so much change I think that we deal with is based on what happens to us during the day, not what we plan to do.
MCNULTY:
That’s right. And that’s where that foresight and some scenario planning is so important. Even if you’re a small business to be thinking about future A, B and C and what does that look like? And again, it’s pulling your head up and not just being about the business today all the time, which can be really hard. I remember back in January of 2020, I teach an intensive leadership class every year at Harvard. And one of my students was from China, and she came up to wake up to me after class every day and said, I’m getting reports from back home about this disease and this infectious disease outbreak. What should we do? How should we be thinking about it? And I was like, whoa, I was barely making the news here. But then it was like, okay, because I have a bit of a public health background and learned about this, oh, let’s watch and see what are they doing about it in China?
China when they started hammering planks of water across doors, you knew it was going to be bad. And then as soon as the case hit Italy, you knew it was going to go worldwide. So I think again, you’re attuned to some of what’s happening in the news. That’s when you get the little pin pricks and if you don’t know about it, figure out who does know something about it to what you can find out about it. As I say right now, AI is causing all of a flurry. The best advice about it I’ve heard is from Scott Galloway, professor Go, nyu, NYUs that AI probably isn’t going to take your job. Someone who knows how to use AI is going to take your job. So they’re getting, yeah, and even if you’re running a local restaurant or a hardware store or whatever, you want to be thinking about how could ai, what about it could change my business?
And just start asking those questions. And you may not see it at first, but when you put things in the back of your, I mean the good thing about our brains is that most of what goes on there is unconscious. And if the signals are coming in while you’re sleeping, while you’re going for a walk, whatever, it begins to form new patterns and you begin to understand the world in a different way. So that’s again why it’s one of the things I would advise small business owners to do is make sure you take a bit of time to go for a run, walk, whatever it is you do take some time when you’re not focused on the business, they actually give your brain some unfocused time because when you do that, again, those subconscious circuits form new patterns. It puts together all the things that have been coming in, even things you didn’t realize you were learning or hearing or watching, and you begin to say, oh, that’s why we have great ideas in the shower. A great idea pops in. It’s because the brain had some unfocused time to put the connections together. So taking that time, and so often people work, they’re working 20 hours a day trying to make the business work, and they go to sleep for a couple and get back up and do it all over again thinking that unless you’re focused all the time, you’re going to fail. You want to focus really hard, but you want to give yourself some unfocused time as well. So again, your brain will assemble those new patterns.
VANNOY:
You mentioned a minute ago about being intentional about the new sources you seek out, we’ll see what’s in your feed, being intentional, trying to keep up on things that are going to be changing, studying the futurist if you will. But you also mentioned talking to employees. Let’s unpack that one a little bit. I think sometimes you feel like you’re the boss and so you feel like you’re supposed to have the answers. And sometimes folks struggle asking their employees about what they think because they think their employees might be wrong, or if they’re right, maybe they aren’t going to have the capital to actually implement their suggestions. Could this backfire Omni, what advice would you give business owners for how to a playbook if you will, how should they be engaging with their employees to identify change?
MCNULTY:
One of the things I’ve learned about strong leaders over the years is that they’re really good at asking questions and they’re really good at listening. If you’re the smartest person in the room, you’re probably in the wrong room. And that if you start with the assumption that,
VANNOY:
Or you’re the only person in the room
MCNULTY:
Or you’re the only person in the room, right? Exactly. But if you start with the assumption that no one has all of the answer, but everyone may have part of the answer that will open you up. And again, the clerk, the frontline employee, whoever it happens to be, may not have the fully baked out solution. But even just asking them, what are you listening to? What are you paying attention to? What podcasts are you listening to? What TikTok people you following just to get a sense of what’s on their radar. Because people see different things based on their generation, their gender, their ethnic background. We pay attention to different things. We process things a bit differently. And so you can get really interesting feeds as to what’s going on that you may not be attuned to. And so again, it’s part of varying those sources of input. And again, it’s not a sign of weakness, it’s a sign of strength that you’re actually asking people what gets in the way of you doing what we ask you to do? What are the obstacles? It’s an exercise. I always encourage companies to go through large or small. It’s just, Hey, we’ve asked you to do this. We’ve asked you to have a smile on your face whenever you work with a customer.
I noticed you weren’t smiling. Why not? Well, it’s because our computer system is slow and gets in my way or I’ve got to put an order through and I keep getting an error message. That kind of feedback helps you solve the problems. And maybe you can’t solve them all right now, but at least if you’re aware of me and say, okay, I got to work on this because it’s getting in the way of something I want to have happen. Curiosity is a superpower. The more you use it, the more you use it, the better off you’re going to be.
VANNOY:
I mean, there’s nobody touches in most businesses, this is true. Nobody touches your customer more than the frontline employee, right? That’s right. Whether it’s the hostest at the restaurant and the waitstaff and the bartender, or if it’s a sales organization, it’s a sales person who then hands it to an implementation person in the software business who then hands it to a customer support person. These people, they know what’s broken, but more than broken, they know what’s changing. If they’ve been in their job for a while, maybe a good question to ask them is not just what are the challenges, what are the new challenges? What’s different about today than six months or two years ago in your job?
MCNULTY:
That’s right. That’s right. And I think when you look at this whole great reassessment, resignation, whatever you want to call it, that’s happened since we’ve hopefully come out of covid. Part of that is before covid, we operated under a bunch of assumptions. We didn’t really question. We went to the office, you went wherever you went, you had to go and you worked from nine to five or in case of entrepreneurs, you worked from six to 6 24 7. But we didn’t question a lot of that and people said, oh, it’s not possible. And all of a sudden the context changed radically and quickly. We had to adapt instantly. And now part of going back is people are saying, this part of my work life doesn’t make sense anymore. A friend who does real estate development in the UK said to me, he said, no one wants to drive an hour to go up an elevator to sit at a desk and read email only to go down the elevator and drive an hour home.
They could have done that from home. It’s different if you’re in a customer facing role where you actually have to be in personal people. It’s different if you’re in trades, there’s reasons you have to be on site in different businesses, but for a lot of functions, again, commuting sucks. Let’s face it, nobody likes it. Childcare and elder care are tough. There’s lots of challenges, and when people saw a different way of working, they’re like, Hey, this makes more sense now. I think the smart employers are listening to people and saying, okay, let’s listen to what they’re asking for. Let’s talk about the job that actually has to get done and see where the right fit is and what about a workplace would make it so engaging that people would want to get here or when can I say, you know what? You can do that work from home or whoever you want to do it. It’s having that conversation that could be tough sometimes for people who are used to being in charge and telling people what to do. And so I think it takes some courage to engage with your employees and say, help me figure this out. I think your point, right? You have to ask them and talk to them.
VANNOY:
You know what? That’s a whole webinar series we could do on that topic alone. But I do think, and we were chatting about this before the show today, I think this is one of those areas that is sneaking up on entrepreneurs. I hear a lot of, I mean the biggest, most well-known public figure CEOs of big companies that you see on C N B C who are quite emphatic that we’re going to be an in the office company and our people are going to be in the office. And it’s not just the fact that that’s a competing viewpoint versus employee’s viewpoint that I hate commuting and I’m more productive and I have just kind of come back to the fact that I don’t care who’s even right or wrong in this scenario. Supply and demand is going to dictate this thing in what we’re talking birth rates from 30, 40 years ago have determined the available workforce today, and the G D P does this, which requires X number of employees to both consume the productivity but also produce the productivity and the labor availability has done this.
This war for talent is a permanent thing for the next, I’m going to call it 30, 50 years minus the wildcard of ai. We just don’t know, but it’s easy to say as the ceo, E O, that you think we’re more effective in the office together and I’m going to assist everybody. Doesn’t. The fact is employees are going to vote with their feet and maybe the C is right, maybe you are in fact more productive, maybe you’re less productive. Also, lots of studies would show the most productivity comes from a hybrid environment, but it kind of doesn’t matter. Employees are going to vote with their feet. And so this is an area of change that I think all entrepreneurs, all business owners, you’re going to have to navigate even in silly scenarios like maybe you’re a restaurateur. Well, obviously all of our employees have to come to the place of business.
Employees still have options to go work someplace where they don’t have to. So what accommodations can you make? Right? What else might you say about how to manage through what I would call our much more macro changes that it’s not the truck that just smashed into the front office of my building. It’s not the pandemic that just hit, it’s not the law that just changed that I had now have to react to. These are some really big macro trends happening that it might not feel like the overnight impact of something when we think of the word change.
MCNULTY:
No, I think you’re right. And these population shifts, as you say, have been coming for quite some time, and it’s no surprise to those who’ve been watching that. We have what appears to be a labor shortage right now. And you’re right, people are voting with their feet and I think going forward, career choices are going to be made in part based on whether you want to be in person with other people or you want to be remote or a hybrid. That’s be part of what you do right now, if you don’t want to be outside, you don’t go into construction because that’s part of the job. You make your choices what you’re going to do. You’re not going into the forest service if you don’t want to see blood. You don’t become a doctor. So there are things that go into the career choices you make.
I think where we work and how we work, it’s going to be part of that. That’s part of the ongoing conversation. Now. It’s sort of new table stakes. So I think, again, when you do this, we are social animals. All mammals are social, and so we’d like to be with other humans, and so what kind of environment can you create in which I’m happy to be there. If you’re somebody who wants people in the office, I always hear about, well, you miss out on mentoring, and when I say, so, show me your mentoring plan and I get a blank stare.
You create the time and accountability for your managers to be mentoring people and you get a blank stare. I’m not saying you have to have a four inch binder of policy to the mentoring program, but if part of what you want people to do is to be together, make sure they are actually getting exposed to clients, make sure you are, again, giving time and accountability to the managers to develop people. You’re measuring them on that. You’re letting people help solve problems together. That’s very a great way to engage people. You’re making the time they get to spend with customers as pleasant an experience as possible. I started my career. I was one of those customer service people at Bloomingdale’s in New York, so I used to take returns and get yelled at a lot, which the getting yelled at part wasn’t a lot of fun in the beginning until you realize that people just needed to vent. And then if I could solve their problem and that’s happy, I felt really good about that. And so helping people find out what brings them joy in their work, no matter how mundane the task may be, but how can we help them find some joy and meaning in it and then they’re going to want to come together? Or if it makes more sense to stay home, you have to understand that as well.
VANNOY:
Eric, let’s pivot for a second. I want to talk about people new to leadership, and I don’t want to get in some leadership definition of, Hey, we’re all leaders, blah, blah, blah. I’m talking about new to supervising people, new to managing processes and organization. I think there’s so many. When I think about, say the average small business owner, say 25 employees, it’s probably the guy who was a great contractor doing bathrooms and kitchens that ended up hiring an assistant that ended up hiring two or three crews and now finds themselves the owner of a remodeling business. It’s the hairstylist who has been behind the chair for five or 10 years and now owns a salon in maybe multiple locations of salons. It’s the architect who started out, or the lawyer who started out as hung a shingle out and practicing attorney, and all of a sudden now they own a practice. They find themselves in leadership positions, not accidentally, but they have come up through what I would say the craft of their work, not necessarily focusing on, okay, I now have to start the job now requires something different of me. One of those things includes a broader leadership capacity and skillset. What’s your coaching for those folks as they, and maybe we could even talk about different phases in that journey that they’re in.
MCNULTY:
It’s probably the biggest group of people I work with or people who’ve commended that leadership position through technical or operational expertise. And all of a sudden you’re like, okay, what do I do now? Because my operational expertise isn’t going to solve this one. Managing people leading people is hard. It’s messy. It’s complicated because people are hard and messy and complicated. And so I think that what I have seen working is first of all, when you become a leader, you realize it’s not about you, it’s about them, and it’s about the relationship you have with ’em. When people are looking, they need direction and guidance. Are you there to give it to them? They have questions. Are you open to answering them? Are you helping them connect their work to that larger picture that you may see? But they may not have made that leap yet.
One thing I encourage all of your listeners to do is that there’s a video on YouTube called Everyone Has a Story 2018. You search on that on YouTube, you’ll find it in Chick-fil-A, a training video. It’s been up there and it’s a crowded fast food restaurant on a Saturday afternoon. And they go through all the people who were there. Some are happy, some are sad, some have just gotten a bad diagnosis for disease. Other people have just learned they graduated or been accepted to college. But all the stories behind the people in the business. And that ultimately, I think that the shift I think in thinking about this is seeing the purpose and what you’re really doing. And this goes back to the credited properly, the understanding what job your customer hires you to do. Clay Christensen popularize this. If you’re cutting hair, for example, if you’re in a hair salon, cutting hair is a commodity business.
People actually don’t come to you for that. They come to you because they want to look great for that big date that they’re coming up. They want to be more confident in the job interview they’re about to have. Maybe they’re beginning to lose their hair because of chemo treatments. If you help them make that transition with some grace and dignity, that’s the stuff you do when you’re doing that remodeling business. You’re helping people build a happy home, a place where their family can gather and enjoy great meals together. It’s not just hanging cabinets and sticking in plumbing. That’s commodity stuff. And when you get, you can connect people to that and tell those stories, help them reflect on the customers they’ve been with or what people have told them they’re going to do in that new kitchen. If you talk about some of the customers who come through your location and share that, again, that connects people to a deeper meaning, and that’s leading people.
That’s really not just telling them what to do, but helping them understand why they do what they do. And we do an exercise in my exec ed programs where we always ask people, tell us about a leader you knew who you followed enthusiastically could be. So they’ve worked with or a coach or someone in a faith-based community. They got to know the person. And inevitably the answers to come back are not that they went to a fancy school, apologies to my friends at Harvard, or they drove a fancy car or they were well dressed, it’s they had integrity. They’d listen. They had people’s backs, they brought people together, they developed people. It’s those of who you are as a person, your character, and then what you were able to do. You communicated clearly. You made decisions, resolved, conflict, those kinds of things. It really was attending to the greater good of the group so that you can achieve that mission together. You can do what the business is trying to do as a leader. You’re creating the conditions in which all those people can do their best, so you all succeed.
VANNOY:
And how do you help entrepreneurs turn these strategies into tactical action plans? So I’ve been swinging a hammer installing kitchen cabinets for the last decade. Now I’ve just hired my first crew. Leadership is completely new to me. How do they even begin this process?
MCNULTY:
So part of it, I think, is to have a conversation with that group, sit down and sort of ask them, hopefully you’ve learn a bit about where they’re from, why they’re doing this, why they want to do this work. And for some people it’s just going to be, Hey, I need a paycheck, right? I’ve got to scale. I need a paycheck. That’s all. I’m here for other people. You’ll learn that, yeah, I’m trying to save to get my kid through college, or I really want to buy a house and I am hoping this trade will give me some reliable income and I can get that done. Once you begin to understand what motivates people, then you can connect with them and connect to the work and make sure you’re even trying to steer them the opportunities to be able to do what they need to do.
If you find out that somebody has an elder, perhaps a parent, they have to take care of, you can give a little bit of flex in the schedule so you know what their challenge is and they’re trying to help ’em out in return. You may ask them to work some days that somebody else needs a break, but their particular schedule requires something different. But understanding who people are and what motivates them and caring about that, that’s what connects you to people as a leader. And again, there may be times you say, Hey, we’ve got to get this done. There’s no flexibility here. We got to meet a deadline. But when you say that, if people know you care about them and you understand what motivates them, they’re more than willing to suck it up and get it done. If they know we’re on the same team, you’ve got my back. And it isn’t just that you’re going to, the old beatings will continue until morale improves. Joke from the seventies. It isn’t just that. It is we’re pulling together. And again, I’ve seen teams. I do a lot of crisis work, teams that are working in ridiculous circumstances for really long hours, but pulling through and getting great things done because they took care of each other. They cared about each other, and they knew that leader cared about them as well.
VANNOY:
It’s got a couple of questions I want to make sure I try to remember before I forget. There’s a story you shared in your book talking about, and we’ll segue here to teamwork and seeing things. There was a workshop, seeing things different about, the goal is to pair everybody in the room, pair up with each other and put your arm resting, and your goal is to get the other person’s back of the hand on the table as many times as possible. Can you take us through this, because I think that’s just a beautiful exercise about how to look at problems differently and when you’re a leader, how you have to
MCNULTY:
Absolutely. So it’s usually an hour, an hour and a half into a seminar. So we’ve been talking and having slides and sharing some ideas and techniques, but then to pause and say, okay, we’ve been doing a lot of talking here. Let’s get some physical exercise. Turn to the person next to you and get into an arm wrestling position. Your goal in the next 30 seconds is to get the back of that person’s hand down as many times as you can, wait until I say, go get ready, go. And about half the room will be like this, right? They’ll be pushing back and forth and seeing the strongest. And about half the room all of a sudden starts going like this and waving their hands back and forth because the framing for the exercise was get into an arm wrestling position. And people hear that and they’re like, okay, I’m arm wrestling.
The real goal, the instructions are get the other person’s hand down as many times as possible. The way you actually achieve the goal is by cooperating. And boom, we both win when we go back and forth. When you’re in that arm wrestling position is the win or lose situation. So one person’s going to prevail, one person’s going to lose, and that can create a lot of conflict when you say constructions. So how you frame things as a leader is very, very important. And again, for a long time, think in large companies is a management philosophy was let’s make sure everybody competes against each other internally as hard as possible. That’s how we’re going to get the best result. If we don’t keep people competing, they’re not going to win. Work now is very team-based oftentimes, and you’re looking at larger goal. I really don’t want sales and marketing fighting with each other.
It’s much better if they work together, if they waving back and forth, but then we can meet customer needs. We don’t want the warehouse and our retail operations yelling at each other and fighting. We want them going like this. And so sadly, the exercise doesn’t work as well in person. Now, if we put it in the book, if people get the answer before we do it, but it’s a great thing, again, if I have somebody for a week refer back to that probably 20 times. Remember the arm wrestling story? It’s part of what you said earlier about being intentional. We as humans are good collaborators. We’re good competitors. We push that compete button over and over and over again. We always do. We aren’t nearly as intentional about pushing the collaborate button. So as a leader, you want to be thinking of both of those are viable options. When do I want people to compete? When do I want ’em to collaborate? Let’s make sure I’m setting the stage so they engage in the right behavior.
VANNOY:
The two things that really stuck with me reading that story, number one is the planning and preparation and the setup of the problem. So you as a leader, how you define the problem matters, and you said that beautifully. It’s like you told them to get into an arm wrestling position. So you’ve already primed them to think, I’m going to have you arm wrestle, right? And so to simply stop you get what you think is an obvious assignment, and just pause could be a very short pause, could be a long pause, could be hours, weeks of planning, whatever, but to really think, what is the actual best way for me to achieve this objective? So that’s number one. The thing that would be stuck with me the most is talk about the responses of the participants depending on the path that they chose, how they felt and what their reactions were. I think this is so telling.
MCNULTY:
That’s right. So when the people who are arm wrestling who are fighting like this, they talk about, I got one, I got zero. It’s always I got, and it’s a low number. The people who were waiting back and forth, usually we got, or we got 20 each or we got 40 together. It’s very much again, that collective achievement. So if you’ve got that crew on the remodeling crew going into a job, do you care that one person hammered 175 nails in and somebody else did 120? No, it’s we got this work done together. So now we’ve moved progress the project from this phase to the next phase and we’re ready to go. That’s what we want people helping each other out and making sure that they’re working in synchrony because the larger goal is to finish the project because you can’t, well, careful that I don’t want step into contractor land, but you shouldn’t go on to the next project until you finish this one in terms of sequencing. So you want that to get done in a way that people work together to get the greatest good out of labor. They’re exerting.
VANNOY:
And a little confession, as you were telling this story, I’m like, I know damn well I would’ve fallen for the trap because in my mancave brain I’d be like, I want to prove this person wrong. I can beat them. And one of the words that you used was, and I think was that they were tired. They wore themselves out. And so I think about how do you manage your energy as an entrepreneur? How do you manage and conserve the energy of your team? If at the end of the exercise everyone’s exhausted and it’s me versus them versus this back and forth, I can just imagine the room bursting in laughter. Like, oh my gosh, this is so fun. We figured out a better way. It wasn’t tiring at all. It was actually the only hard part is I hit the back of my knuckles so many times. I mean, you could just envision the fun conversations that have it and how the process itself led to comradery.
MCNULTY:
That’s right. And it’s particularly tough for entrepreneurs because again, you start out, you’ve had a business idea, you’re probably a loaner. Maybe you’ve got a business partner and you’re fighting hard to convince the bank to loan you money. You’re trying to find space, whatever you’re trying to do there, but you’re have to fight really, really hard. So you put your competitor brain in overdrive. So it can be hard to shift back and say, you know what? Now it’s time. I got to make sure this larger team is working well together. That maybe again, with some external stakeholders, our key suppliers, maybe our bank, whoever it happens to be, we’re actually working together as best we can and not fighting each other. You want people to be able to, again, what’s your desired outcome and what’s the best path to get there? And it takes some maturity and it takes a bit of experience to say, okay, you know what? Competing is going to get us there today, but tomorrow collaboration is what we got to do. We got to work together.
VANNOY:
Biggest. What are the most common mistakes that you see entrepreneurs making when they are thrust into leadership positions of whether it’s of their own making or not?
MCNULTY:
So one that I have seen over and over again is that they get so bought into their vision for what this business is going to be, that whenever anybody pushes back at all, they see it as betrayal. And again, this is people who work for you or may be seeing a problem, Hey, here’s something that’s not going to work. Here’s a glitch in the system. And you bring it to them and they’re like, you just don’t believe hard enough. You’ve got to buy into this vision. And you just get to keep pushing. And they aren’t open to getting the feedback that people are trying to tell them, Hey, here’s a pothole coming up. Let’s not drive into it. But they aren’t open to that. So that’s one is, again, remember that you are not infallible. You don’t know everything. The people around you have valuable perspectives, and they may very well be bringing you a legitimate problem that needs to get solved so it doesn’t become a bigger problem at the time.
So that’s certainly one. The second is they work themselves so hard, they drive themselves so hard that they do get emotionally and physically exhausted. I remember I was working for one startup was probably 50 people in headquarters at the time and had some retail locations, 50 year old, c e o, 50 something c year old, c e o, seemingly healthy, vibrant, smart guy. Went to the gym one night, got him a treadmill, had a heart attack and died. But he’s just been a really hard driving person and hadn’t taken care of himself. So I think as an entrepreneur, what you really want is you need to be stronger, longer. And so taking some time to take care of yourself isn’t taking your eye off the ball. It’s making sure that you’re there to see the ball a year, two years, five years from now, if to get to the business to the point where you want it, whether you’re going to run it, sell it, or whatever your ultimate goal is, but taking the time to take care of yourself and let your people take care of themselves as well.
You’ve got to be able to create that space of just an article in Harvard Business Review recently. It’s called the 85% Solution, which chosen research that actually asking people to give 85%, not 110% was how you get peak performance over time so that they can drive really hard. But again, you need that type to recharge. You, sprint, you need to recharge. So it’s that. And yet again, entrepreneurs because they drive themselves so hard, drive others really hard. I worked with a large global company, but a new C E O came in with a turnaround. It was a pretty desperate turnaround. And she asked me to interview her senior team and do an evaluation of them. And I came back to her and I said, they’re really smart, they’re really capable. You are outrunning ’em and they’re going to fall down because the c e O was someone who needed about four hours sleep was again, really, really driven. Saw the mission, how to drive at it. I said, people can’t keep up with you. You’re a physical anomaly, and if you don’t give them some weight to regroup, they’re going to leave. And indeed, about within two years, half that team was gone. They just couldn’t keep up physically and maintain a family in any other kind of life. So watch out for that. And again, go ahead.
VANNOY:
I was going to say, I think there’s probably a lot more people hate doing finger wagging, but I think there’s a lot of people think that they’re that anomaly and they’re not performing at their best. I mean, there’s a reason the airline says you put the face mask on yourself before the child because you can’t help anybody if you’re not performing.
MCNULTY:
That’s right. That’s right. And I think that as we talked about earlier, making sure that you take your view up and look around once in a while so you’re seeing what’s coming at you, what the future holds, and don’t just get stuck with today. That’s a pretty obvious one. And then one of the things we talk about in the book, and this comes from working yourself too hard, is trying to lead from what we call the emotional basement. So we have an instinctual freeze flight fight response. Every animal on the planet comes with it, the key survival mechanism. You’re in a truly life-threatening situation, and so you face a threat, your amygdala, and then your hind brain fires up and it triggers this freeze flight fight. It preempts all of your logical thinking, irrational thinking, because it’s just thinking survivor die.
If you have to jump out the way of a car, that’s a really good instinct to have. But if you are facing a non-life threatening situation can be really, really bad, that’s when you hit reply all with that angry response to the email or you start yelling at people in public. You’re reacting instead of responding. And so I think when entrepreneurs and other business owners need to do is learn how to breathe, when you feel that panic coming on or that threat, it’s the landlord just up to your rent, 20% or the key employee just quit before you do anything. Take three deep breaths, takes about 30 seconds, so it’s not going to get in the way of taking action. When you control your breathing, you control everything else, your heart rate will slow down. You’ll preempt that freeze slight bite response. You’ll be able to actually compose an intelligent response, which puts you more in control, and it’s going to get you where you want to go. Ultimately, it’s not going to alienate people, and it’s actually going to put you in a position where you can take more effective action.
VANNOY:
The flight or fight was super helpful not to have to think whether you had to run from the saber-tooth tiger.
So we are all hardwired that way just because that’s how we’re built. One of the techniques that I like, and I’m curious for your thoughts, Gary Vaynerchuk talks a lot about this well-known media guy, speaker, about even the things that maybe technically aren’t your fault, they’re your fault. And so his perspective, and I almost think this is as a technique, right? It’s like, okay, they raised my rent 20%. Do I fly off the handle and send a scathing email to the landlord, call ’em a crook, and therefore not helping my future negotiation standpoint? Or do I say, man, I missed that one. I should have saw that coming in and should have put a better a ratchet clause in the first agreement that I had to prevent this problem. The employee that you thought was so loyal that quit, do you blow ’em up and talk crap on ’em? Or do you say, man, I must not have created an environment that they thought that they could have been successful here. And so even things that it’s not fair, blaming yourself, maybe it really by all objective standards, it’s not his technique, is that you blame yourself for everything as the entrepreneur because it’s a humbling exercise and it forces you to think about what would the solution be without acting like you just saw the saber tooth tiger. I’m curious for your thoughts on that strategy.
MCNULTY:
Well, I think, I don’t love the word blame, but I do like asking yourself, why didn’t I see that coming? What did I miss? Because again, you learn through experience. We all learn through experience and just trying to ask yourself. So when something goes away, you don’t want it to go, then you have to ask yourself, how could it have gone differently? How could I have seen this coming? What will I do differently next time? I don’t think you want to weigh yourself down too much with what can come with blame of, oh, I’m no good. I don’t know how to negotiate a lease. I’m a bum. But to say, okay, you know what? This is the first time I negotiated a commercial lease. Clearly I missed some things. What am I going to make sure I learn for next time and be writing that stuff down?
I’m big on leaders, keeping a journal. Write those things down and you’ll learn. I remember the first time I saw a commercial lease, I would’ve gotten completely screwed. Someone who had more experience looked at it and said, no, you’re not agreeing to that. Here’s the alternative language you want to put in here, because they have been through it and they have made the mistakes. So learned that going through. And then I’m also a big fan of entrepreneur, c e o, peer learning groups, people that may not be in the same business as you, but they’re roughly the same size, size business, and to be able to share expertise. So when you’re saying, Hey, I’m going, I was in a freestanding location, now I’m looking, going into the shopping center, talk to somebody else who’s had a lease in the shopping center to see what worked, what should I be looking out for here? Or again, a key person to leave, someone to talk it over with. That’s really, really helpful to have those peers who you can reach out to and get some advice that’s not too close to the business, but not too far away from the business.
VANNOY:
Yeah, maybe the last thing I talk about is, so we talked about all kinds of ways to approach change, some changes change that you’re planning. I’m going to open the third location, I’m going to launch a new product line, and what are the questions I can ask myself? Talk about how to be more intentional about just seeking out new information, whether it’s news sources, data feeds, whatever, social feeds about trying to see as far to the future as you can, right? Talk about asking your employees, asking customers questions, and we talked about taking care of yourself first. All tactics to either better prepare for change or be ready for change. Ultimately, when change happens, you’re going to probably have to implement change. So change happens to you. You’re going to have to implement change on others, and then whenever you do that, there’s going to be conflict. So as a leader, especially our new leaders, new early leaders, what advice do you have for them when they’re the ones navigating change and how to then successfully implement change on or with others?
MCNULTY:
So I think it is always better to do this with people than two people. So I think part of what you want to do is share the changes you were seeing and ask who’s seeing them as well or who’s seeing something different. Again, I think you can trust them at any level to say, Hey, we’re seeing this trend in the industry, or we’re hearing about this change in the economic climate. What are you seeing? Explain to them how you’re processing the information and why you’re concerned about it. Because again, people understand the why the hardest thing about change. If you don’t understand why it’s happening, we all embrace change and we think it’s going to be good for us, or we understand the rationale behind it. It’s when we don’t understand it or blindsides us that we really push back hard. So I think engaging people in that conversation, and it’s part of developing people.
We already talked earlier about mentoring and developing people, helping them understand how you make decisions, how you evaluate different things you’re looking at that’s developing them, so you’re actually investing in them as you do this, and they’re going to give you their wisdom back. I think the other really important question, and I get this from my friend who a very wise friend named Dane Dunton, he always asks what wants to happen? So often we think of change as what do we want to have happen? What do I want to have happen? And flip that around and say, what wants to happen? It just puts you in a different frame again, looking at, okay, my customers aren’t coming anymore. They’re going to a competitor across town. Why is that happening? What wants to happen here? Why are they choosing them over me? I can’t attract the people I’m trying to get to.
We have a mental health crisis in this country. It’s just a lot of social stress on a lot of levels, and we could, again, a whole nother webinar series. We could talk about that. But when you see people wanting to spend more time at home, take care of themselves, that’s because people are super stressed. We both have very stressful system. So when you say what wants to happen, it needs to be released out for that. Can we make it a productive one or do we want to have people acting out and doing bad things? When you look at AI coming into a business, what wants to happen here? Well, there’s probably a lot of routinized dull tasks that a machine may be able to do better. That means I can engage people in a higher level, more productive kind of work that only they can do.
So put yourself in the, not just in the driver’s seat, but more in the navigator’s chair. I’ve spent a lot of time in kayaks out in the ocean, and you have to have a confidence in yourself and where you want to go, that you can handle your kayak, you can handle your boat, but a whole lot of respect for that ocean and mother nature and what she can kick up in a hurry. And so it’s again, looking around and saying, looking at the weather and saying, what’s about to happen here? I may not get a big voice in it. I just got to steer myself through it. So that humbling exercise of asking, what’s going to go on and what do those larger forces want to play out, helps you better navigate how you can fit within it and get to where you want to go.
VANNOY:
I love that question. What wants to happen, because my follow up question to managing change implementing two versus with others is presumably there’s a process of collaboration or ideally there’s a process of collaboration. It’s not just top down, this is what’s going to happen. I’ll explain it to you if you want, but we’re doing it no matter what. The best ideas generally come collaboratively, and even if the idea doesn’t improve, at least to the process. But as you were saying the question, what wants to happen here? I kind of go back to the hold arm wrestling thing. Now I’m partnering with you. When I say what wants to happen here about ai, I’m in the field of marketing here, so I’m talking to my team. It’s like, okay, you don’t want to use it. You’re a little afraid of it. Big picture with AI and chat G P T, what wants to happen here. It’s like, oh boy. Yeah. Either I or my replacement is going to learn how to use it, right? I mean, it’s like all of a sudden the conversation’s like, how can we do this? How can we make the most of this? Not are you going to force me to, it feels more collaborative. What more would you say about that?
MCNULTY:
I think that’s so true. I think even decision where you can explain to people why and you’re looking at it and say, Hey, our margins just went from here to here, or our costs went from here to here, and people can accept it. Unlike Jack Nicholson in, oh God, I’m forgetting the name of the movie all of a sudden. But the famous line was, you can’t handle the truth. People can handle the truth. And I think when we actually speak to them honestly and openly, they get it. And they may get angry for a little bit. They may be unhappy that they’re the ones who just got cut, but they’re much more accepting of it when you are upfront and truthful about it, and if you’ve developed them in a way that they understand the business and what’s going on, and again, they may have ideas of different ways to approach it, but when you trust them enough to be truly part of your enterprise, they’ll repay that trust. If you’re developing them, even if they go somewhere else, they will not forget that you were good to them and they’ll refer people back or they come back to you themselves. So I think that being courageous enough to trust people, trust the people around you is really the hallmark of a leader performing at their best, and I think that’s the thing I would love to carry forward.
VANNOY:
Eric, I really enjoyed our conversation here today. What would you say, maybe just closing thoughts, if you could kind of put a framework around this for entrepreneurs, the importance of leadership and a framework for how they should be thinking about developing their leadership skills.
MCNULTY:
I think that ultimately, first of all, I have so much confidence and appreciation for entrepreneurs. I think we were in a great time and there are going to be a lot of new businesses started in the next decades. The conditions are right for it. So in doing that, think about the human enterprise and not just the product or service. And so that’s what will make you a leader. And again, being able to attract the people you need who are going to create the best possible thing you could, who are going to be good with your customers, who’re going to be good to each other and bring you the success you want to achieve. You won’t do it alone. You’ll do it with a team. There’s no entrepreneur who’s growing innovative size all by themselves. You have to be with others. So making sure you attend to yourself, the human factors in the enterprise yourself, the people around you that will truly make you a success and get you the results you hope to achieve.
VANNOY:
Could have said it better. Wonderful. Appreciate your time today, appreciate the conversation, and thanks to everybody else for joining us today. Hopefully you enjoyed it as much as I do. Until next week’s show. Thanks everybody. Have a good week.