Clockwork by Mike Michalowicz

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1. Clockworking a business means turning it into a system that not only can run without you, but grows without you.
2. To do this, you must build yourself out of the business.
3. Hiring and delegation are the keys here, but doing them well is tricky.

The goal with Clockwork: You aren’t forced to leave, you are freed to leave. You can do the work you want to do.

Mike offers loads of success stories of people who now work on the things they want, or work less, or don’t work at all - and their company is growing

Queen Bee Role (QBR)

“QBR is the activity that supports your brand promise - what you’re ‘known for’ in your customer base”

E.g. FedEx is overnight delivery. The activity is logistics. If their CS goes a bit up or down, nbd. If the overnight goes a bit up or down, big impact.

Some people serve the QBR directly, others indirectly. People who serve it directly must have their time protected. Usually the owners are the most directly involved with serving the QBR. The QBR must be served for the business to survive and grow.

The 4 Phases of Activity

There are 4 phases of activity that you engage in as an entrepreneur Doing, Deciding, Delegating, Designing. Mike calls these the 4 Ds. You are engaged in all four to varying degrees throughout the course of your business’s evolution. The business always will be doing all 4 - but our goal is to get YOU to be Doing less and Designing more.

1. Doing - task execution. You are good at this otherwise you wouldn’t be an entrepreneur.
2. Deciding - the intro to delegating. Deciding is the kind of work you do where tasks are assigned to other people, but you’re still involved (they come to you with questions, need your help solving problems etc). *It is extremely common for entrepreneurs to get bottlenecked and stuck in this kind of work because they’re bad at hiring and transferring.
3. Delegating - delegating is where you assign the task to an employee as well as empower them to make decisions about executing that task. They’re fully accountable for the completion. There are steps to follow to perform successful delegation (otherwise you get stuck in Deciding). More below.
4. Designing - work where you are creating better results, efficiency or reducing cost. Honing your vision, fixing flows when things are suboptimal. The opposite of the “daily grind”.

What happens is Parkinson’s law strikes and little to no time is available for Design. You get stuck on Doing and often that means you’re serving the QBR less. The result is you become a slave to your business, rather than your business serving you and growth is stifled.

• The objective is to decrease the amount of doing, deciding and delegating work that owners do, while increasing design work.
• Shifting from doing to designing is a throttle, not a switch
• Divide your annual cost by 2000 to get your hourly. E.g. you're $75k, then you're $37.5/hr. Can I get someone to do it cheaper than $37.5/hr?
• The cost is not just rate margin though - it’s also opportunity. These are hours you could be spending directly serving the QBR.

Mike believes that the optimal 4D mix in terms of hours for a company (not individual) is 80% doing, 2% deciding, 8% delegating, 10% designing - averaging everyone’s 4D time spends.

Implementing the 4 Ds

• Start setting aside 1% per week for design (about 1 hour) - this is about adopting the mindset
• Do a 4D analysis of your own time (doing, deciding, delegating, designing) - can do it backwards
• Create hub and spoke diagram from QBR and time analysis - visual demo of what’s taking you away from QBR, what’s eating your time
• Based on what takes me farthest away, start to trash trim or transfer (TTT)
• Repeat as needed, eg monthly, attempting to slowly increase the amount of time spent designing & decreasing time spent on the other 3

Trash Time and Transfer

• Trash - not sure if it’s needed? Stop doing it and see what happens
• Trim - make it efficient, if you have to keep it
• For transfers, don’t bother writing SOPs. Do a live capture as you do the work. Hand off before it’s perfected, then work with the person to get it right.
• For transfers and re-organization, adjust roles & shift resources to optimally match inherent strength of people to jobs that need them the most
• When doing design work, always look to simplify processes to get the same results or better with less effort

On transferring:

• The people you transfer to will have questions. Answer them, then put them in charge of making the updates to the recorded process. They become the teacher.
• Capture in a method that is non interruptive, so they can re-capture all the time
• Once transferred, figure out what your measurable is for that system and to whom it needs to be reported for monitoring
• Make one person responsible, so you know exactly who to talk to

On Delegation

Entrepreneurs fuck themselves by never getting good at delegation. They get overwhelmed, hire help, hand things off - then get inundated with questions, poor performance. They think “Why can’t this person just have a partner level approach to the business?” The answer is because they suck at hiring and they suck at delegating. Delegating is a process.

Most entrepreneurs have trust issues. This is a huge liability. Deal with this by hiring well and moving work over slowly and in stages (marriage analogy).

Steps of delegation:

1. Give the person the tasks to do, but you still make decisions
2. Give the person responsibility to make decisions, but they don’t own the result they are trying to achieve
3. Allow them determination of the result of tasks, but they don’t own the outcome (benefit it delivers to the company)
4. Get them to own the outcome

Personal note: this is such an important concept, but muddied by these confusing steps. My advice is to use common sense here. Your goal is to get them to own it.

Rivers follow the easiest path. Do NOT make decisions for them. If you do, they can do no wrong and they’re rewarded for bugging you. If it doesn’t work, it’ not their fault. If it works, they did as they were supposed to. It’s safe for them - and they don’t have to think. The problem is that the real learning is in the doing. Mike’s solution:

1. If they come requesting help, ask them “what do you think we should do?” If they persist, say “you’re smart and we hired you to find answers - please come back to me with your best answer and we will discuss”
2. When they answer, nod and give your thumbs up - even if you disagree with the decision, let them do it*
3. After the execution is done, for anything with significant outcomes, do a debrief and have the employee share what they learned and will do differently. Always debrief AFTER execution.

*the only time to intervene is if you see them making a decision that will have dire consequences. That’s the difference between mentoring and deciding for them.

Another tip for delegation is to have the person you’re delegating to conduct an interview with you - brings out the details in your mind, they proactively ask questions, condensed.

On Hiring

• Hiring skill can be a trap. Professionals can come in with their own idea of how to do things, and it’s often not a great fit
• Hire for culture, a “get it done” attitude, and a desire to do the type of work you need.
• Don’t hire because you like the person (tendency), hire because you respect them
• Move slowly with new hires (marriage analogy). Delegate in stages.
• It’s essential to have mission alignment between company and employee. Be clear about yours before hiring and moving them in.
• Unsure if you can afford a new hire? Set up a bank account for it. This will prove or disprove if the business can support the employee.
• Often an initial drop in your personal income with a hire so look at annual impact and your annual income

Misc Tips

• (On customer demographic) “If you want big success, you need to first focus on a small community and empower that community to carry you to bigger markets” - multiple supporting examples, including founder of Ugg who started with surf community niche.
• Refine your offering to your best customers until you get something they are ecstatically buying and recommending
• Mike: it is a mistake to assume that great people only want FT work. Lots of people want to work an amount that fits a specific schedule.

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