Improving Team Performance Through Elimination | Ep 995

0:00I think that people have talked about culture in a lot of different videos and books. And the first thing that they do not answer is what a culture even is. And so they don't even define the thing that they are trying to help you, quote, build. And so I'll start by defining what culture is. And then I will give you the 80-20 of what it looks like to build one in a way that yields high performance. So culture is the rules that govern reinforcement, aka reward and punishment in a business. Now, what does that mean? Is it just this big list of rules? Well, sort of, and they're often spoken and unspoken, mostly unspoken.

0:44And people learn them the way that they learn everything, which is through action firsthand and observation secondhand. And so if someone shows up to a meeting late and it is someone's first week and no one says anything, they learn through observation that showing up is okay. If I show up, nothing happens. That is a rule. If then, right? Now, if they then show up and they are scolded, then they find out an additive to that note, which is if that person shows up late, nothing happens. If I do, I get in trouble. Or my boss cares and that boss doesn't. And so what happens is we develop this latticework of understanding of like, where do I get rewarded and where do I get punished?

1:29And then our behavior orients around that. And then when that happens systemically, we then describe the systemic behavior as the culture of the business. These are the spoken and unspoken rules of what gets rewarded and what gets punished in the business. And so if we think to ourselves, okay, this is the list of rules, and people learn through observation and through doing themselves and getting feedback, then to create a culture, it would mean that we would need to model the behavior that we want and reward as chief reinforcement officers, if you're the person who owns the business, the behavior we want and punish the behavior that we don't want.

2:06seems pretty straightforward. The issue is that it happens 24-7, 365, and it's happening in teams that you are not involved in, which is why you have to start cascading down through leadership the same behaviors to the leaders who then cascaded down. Now, I'll give you the shortcut, the 80-20 on making this work. If you want to have a high-performance team, the biggest signal that you can give, even more than promotions, and promotions are very big, is who you fire. Now, I want to be really clear about this because I think it's so important. I'm not saying have a fire everybody culture. I mean, you can if you want, but it's more so the minimum bar.

2:48And so the culture of a team is defined horizontally, not vertically. So really important. So it's not that if I say, hey, you need more A players, it means all of your employees need to be like you or like your executive team. That would be ridiculous, right? Like to demand the same level of skill from somebody who's earlier on in their career, or maybe a frontline, you know, employee that's customer facing, compared to, you know, a more seasoned executive would be ridiculous. And so that is not what I'm saying. And so I think people confuse this. We want to raise the bar horizontally within each department or function.

3:24And so let's say that we have customer service, because it's simple, simple one that most people understand. If we have a customer service team and we want to improve the culture, one of the easiest things that you can do is remove the people who suck because the culture is built from the bottom up. Meaning the, the worst person on the team is what you have signed off on as acceptable. And that becomes your bar. Like think about how real that is. Like, and I'll say this as somebody who has a company that has like a lot of winners and high performers, like every time we let go of mediocre people the team is stoked they're like dude they sucked thank god and like i'm glad you saw it i was gonna say something and the thing is it's like i want to beat them to the punch because then they have trust and confidence in our ability to make decisions right if the team feels like you wait forever to let people go it's very disheartening like there's nothing more demotivating to a winner than being forced to work with a loser.

4:23And so if you think about the great teams that exist, you think about like the, you know, the SEAL teams versus, you know, the General Army, there's nothing wrong with being in the General Army, obviously. But special ops and the most elite teams, they get there through elimination. They take it, they take this gigantic amount of people, and then they remove or they deny people. And when people are, you know, they cut them. You have to go through this whole thing. They cut them. Now we can't have people run through, you know, how, I don't know how many weeks, you know, bootcamp is whatever, but like however many weeks it is, I can't run someone through that.

4:56Right. And then find out now you can make the argument that the first 90 days of onboarding can function that way, which I think is a good way to think about it, but we have to be willing to make cuts. And so it's like, we need to lubricate within the organization, the ability for managers and leaders to let go of mediocre people. Cause the thing is, is you're never actually suffering from losers. Cause The true losers you'll get out because they're so painful. I mean, some of you guys don't. But I would say the decent business owners will at least get the losers out. The people who are limiting your business, though, are the mediocre middle that are clogging all the pipes by just being slow, having mediocre work that has to get reworked by somebody who's a winner and who actually cares.

5:35And it's the clock in, clock out behavior that is what creates mediocre organizations. And to be fair, that's the vast majority of organizations. And right now there's probably people in your business that have been thinking like, just blahs, just NPCs, they're just there, right? And you know what? God bless them. They can do whatever they want. It's just that just don't do it in my business, right? And so we have to create lubrication. We have to create rewards for people for letting go of bad people. Now, I've had enough rewards in my life for letting go of mediocrity that I try to sniff it out.

6:08But we have 200-plus people who work at Acquisition Tom just at the Cold Co. it's like I can't meet everybody. So I have to consistently reinforce that we need to raise the bar. But the bar, when we raise the bar, the actual action of raising the bar is lowering your tolerance for people doing mediocre work. And that means that you don't give nine chances, right? You give a few. And then after that, that's it, right? And so if you want to create Harvard, you have to have a 1 % acceptance rate or whatever the percentage acceptance rate is. Now, the difficulty with Harvard analogy versus the kind of boot camp analogy is that once someone's into Harvard, they basically don't get kicked out.

6:50So we kind of need to have it at two levels. And I would make the argument that I'd rather have a slightly easier way in because I think that our ability to judge other humans from one or two conversations and maybe a document is limited. But our ability to judge their output by what they do, much, much better. And I would also encourage you to shy away from allowing someone to explain away a lack of output. Because like anybody who's good at selling, which some of the most mediocre people are, is they're able to sell their excuses. And one of my favorite sayings from Napoleon is that he would prefer lucky generals.

7:34So he was like, even if I had two generals and one of them is unlucky and one is lucky, he's like, I'd rather have the lucky one. And so if some person always just seems to have things that go wrong, it's usually not that luck is actually against them. It's that they don't understand how to create the conditions for success. And they don't know how to maximize their own likelihoods. And so if you want to create, you know, seal team six or a super high performing team, number one, you get there by not letting people stay. And I'm just telling you right now, let's say you've got a 10 person sales team and four of them are like not doing that well and they're kind of petering along.

8:12I have yet to have an exceptional salesperson. Every A I've ever had, I know within 14 days. Seven, really. Fourteen is being generous. And so if we're saying we only want A's, not B's, then you have to get rid of B's. Now, it's going to seem heartless because it's like they barely even gave me a chance. But the thing is, is like, assuming someone has gone through training, right? If you have any kind of training. you could just see the output. And so I would say I got asked yesterday, you know, a lot of wealthy entrepreneurs who are older than you, what would you say is the most important lesson you've learned from those people?

8:56And I thought about it for a second. I was like, to a man, there's one single direction that is 100 % correlated with the directional growth of the company, which is the tolerance of the entrepreneur for mediocrity and the quality of the team they surround themselves with. And those things are inversely correlated, or rather directly correlated, meaning you will have very high quality people if you do not tolerate mediocre people, because nothing turns off high quality people like low quality people. And as you continue to win more, you will be able to attract better people, which also means that was once good is now mediocre, which means that people need to grow with you or they need to get out.

9:42And I know that this is harsh, but I don't think you're listening to my stuff because you want to have your ears tickled. It's like if I look back at the difference between me now and me 15 years ago, the biggest difference is who I would determine or who I would label as good enough. And it makes sense that earlier on, I wasn't able to attract better talent. And so my bar had to be lower. But as you win more, and you have a better track record, you can attract better people, which means that you need to recalibrate, you need to adjust. And so I would ask myself the question, has the quality of my team improved since I started?

10:19And if the answer is yes, and your business has grown, then we think to ourselves, how high will my bar be in five years? And would five years from me now look at this moment and say, man, these people just aren't up to snuff. How quickly can I pull the standards I will have in five years into the present so that I can create the reality of winning and success that would have been aligned with that standard of excellence. And so this is just something that was top of mind for me is that like, if you want to have a better team, you do it through elimination. You do it through elimination. you get out everybody who sucks and then what you are left with is awesome like if you want to increase the IQ per square foot remove everything that is not high IQ like think about it let's actually dive deep into that for a second let's say that you wanted to have the highest actual IQ average right one person who's at 80 is going to draw the average down so much more than getting another 140 person, right?

11:26So let's say you've got three 140s and an 80. If you hire another 140, it will do less for the business, the average IQ than removing the 80. And so there's like, there's a lot to that little analogy. Like your bar will raise so much faster by eliminating the duds. And so I'm just saying, I'm trying to pass on a lesson that's, just, it served me so well. And it just requires you to be bold. And I think it's so difficult for people because it feels like a conflicting priority. We want to feel like good people. We want to be nice people. We understand that people have families. We understand people that have kids.

12:00They're trying to make a livelihood. Some people just don't have the horsepower to do it. And I think about it like this, which is that I am doing a disservice to everyone else in this business by allowing this person to be here. And so the question is, do I want to have local or global empathy? Do I want to have empathy for the person or do I want to have empathy for the business? Do I want empathy for everyone else on the team? And so when we shift from local to global, it means that you get to deal with the local pain while everyone else gets the global benefit. The reverse is that you get the local benefit and everyone else suffers the global pain.

12:38And so in some ways, it's like we have to be willing to take the emotional pain of doing what's required in order to protect and preserve and proliferate the culture of high performance that we ultimately want to build. And so I would encourage you to use that frame when you're having these hard conversations is that I'm going to take on this guilt, I'm going to take on this pain, so that everyone else here doesn't have to suffer. and I think that is probably one of the more charitable frames of of making the hard decisions around people because at the end of the day like even with AI you're still going to be dealing with people for the vast majority of people listening to this you have teams you have other humans and so if you're going to be dealing with other humans it's the messiness of the emotions that makes it so hard you already know logically what you need to do it's like right now you know what you need to do and everything between you knowing what you need to do and you doing it that delay is what is delaying the success you want and the growth you're looking for and the team and the culture that you ultimately want.

13:35Like, think about that. You know what to do. The delay between you knowing it and doing it, shrinking that is what makes you a better entrepreneur. And I would say like me looking at the best entrepreneurs that I've seen in my career, it's almost immediate. The moment they know it, they do it. And it's almost like, and this is why, you know, some of the highest level entrepreneurs to get this, this, this reputation of, you know, being sociopaths or, or like, you know, they don't care about people. It's like, no, people tell the story of the individual occurrence because telling a story about one person negatively infects 20 in 20 micro examples is not compelling, but having Steve jobs, just fire somebody or Zuck fire somebody or Elon fire somebody in what appears to be a ruthless way.

14:15Of course, I think you can do this, like treat people with respect, honor the individual. Absolutely. But you also have to honor the rest of the team and make those hard calls because no one else is going to do it. It is literally our job. It's our call. And it's our responsibility. And so anyways, if you want to build still team six, if you want to build a high performance team, it comes from cutting the bottom more than it comes from finding the people on the top. And the more concentrated the high performers are on the top, the more you will be able to attract them because they will also bring other high performers.

14:47So with that, lots of love. I'll see you next video. Bye.

14:55Thank you.