3 More Questions (Tom Hale) with David Novak and Koula Callahan

0:04David Novak:Happy Monday, everybody, and welcome to another edition of Three More Questions with David Novak. On these episodes, David and I debrief the conversation that he had with the previous week's guest. And David, today we're debriefing your conversation with Tom Hale, who is the CEO of Aura, who is the maker of Aura Rings. And I've been on the fence about getting an Aura ring for a while. After listening to this episode, I'm going to get one. Well, obviously you haven't gotten one yet because I don't see it on your finger. So you better get out there and do it. Well, one thing you didn't know if you're listening and thinking about getting an Aura ring, they are HSA and FSA eligible, which is great news for me because I have money in an HSA account and you're able to purchase a ring with that account.

0:47David Novak:And I'm so excited because I'm going to do it. Yeah. And I think Aura by far and away does the best job of really monitoring health. And that's really their focus and they stay true to that. You know, I've been using Whoop. OK, so I'm a Whoop person because I like organizing my exercise and knowing where I stand with my sleep and recovery. So I think that whole arena is so competitive. And it's also an arena where really standing for something really matters. And what I was really impressed with Tom was the fact that they know what Ori is, they know where they're taking it, and they have that focus and they're going to be true to that focus as they differentiate themselves.

1:30And, you know, so much is going on in the health world that they're on top of that they're really making the world a better place by helping people monitor what's really important to all of us. And that's your health and staying alive.

1:41David Novak:I love their kind of mantra, which is it's like giving your body a voice. Wearing an Oura ring is like giving your body a voice. Who wouldn't want to know what's going on inside of their body? And I just love that. And so I've got my Whoop, but maybe I got to go get the ring too. I think I'll have data overload. You know, something's got to go. You could have a competition between Whoop and Oura. David, these questions are really fun today. Let's roll right into them. All right, let's go.

2:15David Novak:Question number one, Tom says that leaders must serve as the counterbalance for their teams. What habits and practices, David, do you use to stay grounded so that you can show up for your team in that way? I just think the biggest thing, the most important responsibility a leader can have is to define reality. I think Napoleon said that, you know, is that you got to define reality. And I think what you have to do is keep the team rooted in reality and make sure you don't just fall for the newest thing that's happening, that you constantly bring people back to the reality that you face. And also continually define what hasn't been done yet.

2:57I always say that's the fun part of business, really defining the unfinished business and going after it. And so I think when you do those things, you keep people balanced in the sense that you're rooted in reality and you're letting everybody know, hey, we're not done yet. We got a lot more we can do. And the other thing that Napoleon said is you not only define reality, but you also want to create hope. As you manage these things, you're giving people the hope and the sense and the inspiration that you can actually get it done. But you know what, Cooley? You just can't get too excited or too down.

3:34You know, you got to try to keep yourself, you know, keep that rudder moving straight. And so you go right down the middle of the fairway.

3:42David Novak:I love that, David. It reminds me of what Alan Mulally talks about in your episode with him. What he has his directors do is they come to every meeting and they rate their priorities green, yellow, or red. If it's green, it's going well. Everything is smooth. They don't need to talk about much. If it's yellow, there might be some pressing issues, but they're resolvable in a short amount of time. If it's red, then it's red and we got to come up with a solution to get it back on track. And so I just love that simple visual as a reminder of, hey, we got some good stuff going here. But like you said, Davis, there's still some things that require our attention, some problems to be solved so that we can get everything moving in the right direction.

4:24That's a great example to bring up, Kula, because if you recall, when he first went to Ford, they were losing billions of dollars. And he had his first meeting and everybody came in and they talked about their projects and everybody rated their projects green. Yeah. And he goes, my God, we're losing money like hand over fist. You know, how in the hell can we all we have is just green projects. We've got to have somebody, you know, that's not getting something done. But, you know, he mentioned that. And then the next meeting, someone put up a red and he started clapping and applauding because he said, that's the kind of honesty we need around here.

5:00And then then everybody started bringing in yellows and reds. And of course, there were a few greens.

5:06David Novak:That's a great story. That's a great story. I think they had just posted a$17 billion loss. It was a lot of money. It's not one that I would want to post. Question number two. The way that Tom believes Aura can really maximize its impact is if it marries their mission with their performance. From your experience, how do great leaders keep those two forces in balance so that they don't lose sight of their purpose or their profitability? Well, let's face it. You're in business for a reason. You're in business to make money. And by making money, you create jobs and you satisfy customers. And that's really the name of the game.

5:48So making money is an inescapable fact of life when it comes to running a business. If you don't make money and you don't grow, you won't have very many jobs for very long, including your own. So to me, the mission that you have should be a mission that if you execute it properly, you're going to drive tons of profitability. And Jim Collins used to call it the magic of the and, you know, it's mission and profits, you know, not one without the other. So I just think that whatever mission you have, you got to see how it leads to making money. And, you know, I always say this as well, that you never start out by just making money.

6:30You start out with like, okay, how do you build the people capability you need bring those people on board then they're going to satisfy customers then you're going to make money and but you know what really brings great people in is the mission people do not wake up every day wanting to be a part of something mediocre they want to be a part of something great so if you can create a mission that people can get behind you get the best people and then those good people go to work and they satisfy customers and then that's how you make money so they're they're inextricably linked

7:02David Novak:Question number three. Aura is a subscription business. And in the episode, Tom talks about their strategy around retaining customers. And it's this V over P ratio or value over price. And I love how simple this is. What other levers should leaders be paying attention to in order to keep customers loyal and keep retention high? I think what you're really talking about is how do you lead? How do you lead in your category? How do you lead versus competition? How do you lead for your customers? And there are two ways you stay the leader. I always say, be the leader, act like the leader. Well, what do leaders do?

7:41Number one, they create more value for their customers in competition. As long as you're doing that, you're going to win and you're going to have a great business. But when your competition starts creating more value for your customers than you are, then you're heading down a bad path. So you got to make sure you're continually creating more value for your customers than competition. The second thing you have to do is you got to block every significant competitive move. If somebody comes in and does something a lot better than you, you're going to lose customers, especially if that better than you is something that's important to your customers, which is unfortunately the case that happens for a lot of businesses that they don't respond to.

8:27So those two things really, I think are absolutely critical. The final point is, is that every business is driven by heavy users. You know, heavy users usually count, they might be 5 % of your customer base, but they count for 70 % of your profits or your revenue, all right? So you got to know your heavy user better than anybody. You know, these are the people you cannot afford to lose. So you got to constantly be reinforcing all the things that makes your brand or your company important and relevant to that heavy user. And you got to make sure that you're just totally in tune with them and know where they're at and know how you can excite them, delight them, and surprise them.

9:09And when you do that, you will keep your current users.

9:12David Novak:I love, David, when you ask Tom, how do you stay competitive and relevant when all of this wearable tech is getting more and more innovative as the days go by, it seems like. And he, like you said earlier, really, really knows what their unique value is. And he says, you know, the whoops of the world, the Fitbits, those are really focused on fitness. But Aura is really focused on health and helping you understand what you can do, even if you don't exercise every day, to optimize your health so you live a longer, healthier life. And I think that part of creating more value for customers is really knowing what that unique differentiator is and doubling down on it as you lead your teams, as you talk through what the product innovation should be, as you talk through marketing and sales campaigns, knowing what that is and then communicating that well and then innovating on that contributes to that value over price ratio that Tom talks about.

10:05Right. Yeah. And double down, triple down, quadruple down, stay focused on it because any business that's worth it's all owns its heavy user and really make sure that you don't lose those customers. And usually the people you don't have, they're so much harder to attract. That means you got to bring the light user in. Boy, bringing those light users in takes a lot of money and a lot of time and effort. You want to try to do both, but boy, once you get a user, never lose them. I love it.

10:33David Novak:I love it. David, I had an alt question for this show, and it's not part of our official three more questions, but I want to ask it just to see what you'd say. Well, fire away. In the episode Tom talks about, I mentioned this before, Aura's mission being to give your body a voice. David, if your body had a voice, what would it be telling you right now? It'd be saying, God, you're in such good shape. Keep it up. I love it. You know what? Probably right. You've been hitting the gym. I have been hitting the gym and I'm going to keep hitting it. Or, or cool. It'd also be saying you better slow down a little bit because you just hurts your need.

11:12You got a big golf tournament coming up and you better be ready for it.

11:16David Novak:There you go. It probably is saying that. Listen to it. That's the total picture.

11:26David Novak:Well, David, that does it for our episode of three more questions for today. Thank you so much for tuning in to another episode of How Leaders Lead, where our mission is to make the world a better place by developing better leaders. And if you carve out just a little time with us each and every week will help you build the confidence you need to lead well. And coming up next on How Leaders Lead is my conversation with Clark Hunt, the chairman and CEO of the Kansas City Chiefs, my team.