Ep. 238: Josh Fonger - Creating a Systems-Minded Organization

< Intro >

– Welcome back to another
episode of Count Me In.

I'm your host, Adam Larson,

and I'm thrilled to have our special
guest with us today, Josh Fonger.

Josh is an experienced entrepreneur
and the CEO of WTS Enterprises.

In today's episode, Josh will
enlighten us on the crucial difference

between working in your
business versus working on it.

And why this shift is essential for growth,

particularly, for business owners and entrepreneurs.

We'll discuss how getting
caught up by day-to-day operations

can hinder business growth,
innovations, and long-term vision.

Josh is an expert in helping
companies navigate this challenge,

by utilizing the Work the System, or WTS, method.

He emphasizes the importance of backfilling

our current tasks and responsibilities.

So we can jump ahead and
lead our organizations effectively.

But it's not just about the concept.

Josh provides practical insight, on
how to take action and implement

a systematic approach to run a business.

So get ready and gain some valuable
insights, tips, and strategies.

As we explore the power of a systems
mindset, with our incredible guest.

Let's dive right in.

< Music >

– Josh, I want to thank you so
much for coming on the podcast.

Really excited to talk about entrepreneurs,

and that systems mindset that you talk about.

But to get started, maybe,
we can start by discussing

the difference of working in your
business versus working on it,

and why that's essential for growth, especially,

for business owners and entrepreneurs?

– Yes, and this is not a new concept.

I think people have been aware
of this, heard this, for decades.

Popularized by The E Myth,
Michael Gerber's, bestselling book.

And the key thing that I do is help
companies, actually, make that happen.

The big the big issue, of course,
whether it's a manager, an owner,

or a CEO, is that they are
doing the work as a technician,

instead of leading the work or growing the

And, so, that's the key thing,
is that if you're doing the work,

then no one is doing the business growth,

no one's doing the innovation,
no one's doing the expansion.

No one's casting the vision
for the next series of years.

Instead, they're talking about the next five
minutes, and maybe the next five hours,

and that's really the issue

is that companies stay stuck
when they're looking short term.

And, so, what I focus in on is helping, mechanically,

because it's more than just an idea.

They need to think differently,

but then they, actually, have
to take different actions.

Is help business owners and leaders
take those actions, in a methodical,

mechanical way, so that they're
backfilling what they're currently doing.

Because you can't just jump ahead
somebody's got to do the work.

And, so, there needs to be a way,

which we call working the
system, or the WTS method,

a way to backfill what you're currently doing.

So you can jump ahead and lead the organization.

And, the idea, again, simple enough, work
on the business instead of in the business.

But, mechanically, and infrastructure wise,

to do that takes some heavy lifting,
some rolling up of the sleeves.

That's what we want all of our clients to
get is that, there's a process you can take.

And if you work the process, you
work your systems, that freedom

and that growth will become a mechanical reality.

– So maybe we can dig in in
a little bit more into this work,

this system method that you're talking about.

I know that you have a book, that we'll put
a link in the show notes for everybody,

maybe, you can talk a
little bit more about that.

How does that enable your business owners

to do things like increase
profits, reduce time?

I know those are a lot of
things that you speak about,

maybe we can talk a little more detail on that.

– Yes, so everyone uses all their time,

and everyone, essentially, uses all of their
resources, and so you're bound by those.

And, so, the way to expand
your business, expand your life,

is to do a better job with those resources.

And, so, working the system
is all about getting more efficient.

And, so, how do we do that?

Well, we help people not just react
to the problems of their business

or the stimuli that's coming their way.

But instead take charge
or take control of the systems

that they know are going to keep happening.

So instead of just reacting
to a phone call coming in.

Instead manage or control that system,

so that you and your team know how
to answer the call, to be the best with it.

And let's just say answering the phone

is one of 300 different systems
that maybe your company has.

And instead of winging each
system and following it

the way you've always done it before.

If you take the time to look at
each system, as a separate entity,

and then figure out what is the
best way to make it the fastest,

the lowest cost, the highest
efficiency, the highest profitability.

What are the ways we can
optimize each of those little pieces,

which can be done if they're written
down and looked at objectively.

You're going to find that the assemblage

of those separate pieces are going to result,

we're talking to math folks here, accountants,

the result is going to be a much better business.

It's not going to be surprise when
your company is running way better,

way more profitably, when the separate
pieces, that make up your business,

are each improved by 5%, 10%, 20%.

Each of these pieces are then
going to equate to a multiple

of what you ever thought possible.

Because we work with companies,
everyone's already working hard.

Everyone's already doing their best.

And, so, we let them know,
"You have to work differently,

if you're going to expand
beyond your current best."

Because everyone's already trying their best.

Everyone's already working hard,
everyone's already maxed out.

So knowing that plateau is already reached,

in the organizations we work with,

the goal is, "Okay, well, now we're
going to have to work differently.

We're going to have to work
in a different way."

And that's going to be working
on these separate systems.

– So a lot of times when you say
the word systems, people think

these are different softwares that
I'm using, or different things like that.

But you're talking systems as more
of all the processes that you do,

within your organization.

Am I correct in that understanding?

– Yes, exactly, it's a very broad way,

like the way you drive to
work each day, is a system.

The way you schedule a meeting, is a system.

The way you answer the phone,
it's a repeatable process

that is going to happen again and
again, and you can get control of it.

Maybe you do get control of it
with a software, but you don't have to.

There could be ways where you
say, "Hey, I process this invoice."

And it's a system, it involves some
mechanical parts, with some software,

some automation, some people.

Maybe a couple of different people,
maybe, some physical envelopes,

there's a bunch of different
pieces that make up this system.

But once you identify it, as a system,

then you realize that the
people can be switched out.

In most organizations we work
with, it's switching out managers,

leaders, expensive people, to lower cost.

More junior people who can do
the same work, maybe, even better,

maybe, even faster, if they are trained
properly, with a system that's documented.

And, so, that's what we're talking
about with regards to systems.

– So when we talk about 'Work the system',

it makes me think of the other book, The
Systems Mindset by Sam Carpenter.

Maybe we can talk a little bit about
what that means, in reference

to how we've been speaking right now?

– Yes, so whenever we're talking to leaders,

they all get, "Hey, we should
document our SOPs."

That'll make sense because big
companies do it, small companies don't,

but they probably should, if they want to
get big someday, and so people get that.

But what we want them to do is go a layer
deeper, and think about everything in life.

And, so, Sam Carpenter writes about
it in terms of the systems mindset.

And this is an outside and slightly
elevated perspective on you,

the things you do, the things
your organization does.

And realizing that each of the results
you're experiencing in your life

and in your business are resultants that happened

because of the systems that led to it.

And these separate pieces that led
to these results you're in control of.

You're in control of those systems.

And, so, your results that you have
currently today are not random.

They can very logically be analyzed
based on looking in the past.

And, so, if you want to change the future
results, you're going to need to change

your systems to create new results.

And the idea is it's supposed to be
a very empowering mindset shift

as opposed to "I'm a victim of my
circumstances or my results."

Instead it's "I can actually change those
and do it in a very logical, mechanical, way

if I look at the separate
systems that got me there."

And, so, we want owners, managers, employees,

top-down to all get this systems mindset.

And instead of be defeated or
frustrated with the current reality,

realize, "Okay, instead of just
focusing on different results,

let's focus on different systems
knowing that the results

will take care of themselves."

And, so, that's a lot of what I want
people to do is not look at today,

look at the systems that got them
there and let's work on those.

Knowing that if we do that, it might
be a week, it might be a month,

it might be six months, but we're going
to see a massive change in the results.

The results will happen
because things will get faster

and, usually, the first result is
always, "I'm feeling less stressed.

I'm feeling like work is just going
smoother, there are less mistakes.

Why is it happening?"

And, so, they feel it first, and then
after that they start to notice it

in terms of their time.

The managers, the owners, I'm working with

are like, "I got more time
in my day or my week."

They start to notice that they
actually have some flexibility

or some ability to work on those
special projects, those initiatives

that have pushed the company forward.

And then they start reviewing their
financial reports, or their metrics,

or their KPIs, things that
they're starting to track,

and they're like, "Wow, our
numbers are getting better."

And then they start realizing, especially,
if they're the owner or the profit sharing,

that there's a lot more money
at the end of the day.

They can't, necessarily, point to one
thing or another, it's all of these things

that they've been worked on.

The systems that they've empowered
their team to work on, are all working

slightly better or a lot better,
and that's what's, ultimately,

ending up with the higher bottom line.

– Yes, and I can't help but thinking,

as we talk through this,
it's very top-down mentality.

And if you're a business owner, you're
trying to share that with everybody.

How do you inspire and motivate your
employees, your middle managers,

people underneath you?

Because not everybody is able to have
that systems mindset, all the time.

If you're just low-level person

who's just doing some more
of the administrative work,

it's hard to have that systems mindset.

So how do you translate
that to people's daily jobs?

– Yes, that's a great question, and the
whole philosophy, the WTS method,

is about empowering, enabling,
that at the lowest level possible.

And the more that your
frontline employee gets it,

and then they start to work
in that way the better.

And you want to top-down
in terms of educate and inspire

through a clear strategy,
we call it the strategic objective,

and clear principles, we call
them operating principles.

But then we want them to
take ownership of their work.

People like to have autonomy.

People like to have ownership, and
we give them autonomy and ownership,

of the work or the sphere
they get to work in by saying,

"Hey, why don't you help us generate the
documented systems for this department

or for what you do because
you're already doing it."

So you can write down the way it's
being done, and then we all get

to work on making it better and
you get to optimize and improve

because people like to improve.

They like to get better, they like to be
rewarded for improving their work.

It's not that their work doesn't
matter, their work matters so much

that we want to write it down
and make it even better.

And, so, once they're inspired
by the strategy and the vision,

and once they realize that they're
a part of making a great business,

being congruent with the future.

And once they see, "Hey, this
company is going somewhere."

We're not just going to stay chaotic
and be a horrible place to work forever.

We're actually building this infrastructure,

so I can see the leadership
knows where they're going,

and I want to be a part of this.

And I want to be a part of making it better

and then rewarded for what that's
going to be, whether that's promotion

or higher pay because companies
that systemize their business,

they have more money, they have more profit.

Therefore, their people can get paid
more and have more advancement.

So they get to be a part of that.

So the more you can sell them on
the vision of what they're a part of,

and empower them, and give them autonomy

through the systems they work on,

the more they're going to actually
enjoy their work, and that's the goal.

That's the goal, but reality is
some people, they don't care.

Especially the lowest level folks,
they're just coming to work, just a job,

they don't really care that much.

They like the way they're currently doing it.

They don't really want the extra accountability,

they don't want the extra administration.

They don't want to optimize it's,
"Whatever, who really cares?"

They like to just follow their gut
and that's good enough for them.

Well, ultimately, as you're working
on the strategy I'm talking about,

the work with system method.

Those people are not going to fit,
they're not going to fit with the strategy,

the culture, the direction you're going.

And those people are either
going to have to come on board

or they're going to have to be, I guess,
thrown overboard, for lack of better term.

And, so, that is part of it.

Part of it is that those types of people,
since they don't embody the vision,

can't be congruent with business.

And, so, they have to be let go so that
you can keep optimizing the business.

And, so, that is part of the process.

I would say the faster you try
to integrate this philosophy

and this methodology in your
business, the faster it goes,

the more likely you're going to have more
people leave or you're pushing them out.

Maybe the more slow and
steady you implement this,

the more people will get brought along.

Because they might not like it at first,
but then they might get a taste of it

and say, "Hey, my work is actually getting
better, and things are smoother now,

and I'm saving time."

So they'll, eventually, buy-in,

and they can be a part of
making your company great.

– Well, and it also allows them time.

If you improve your daily process
each day and it frees up time,

it actually allows you time to think.

It allows you time to come up with ideas.

It allows you time to grow
as an employee, as well,

so that you can say, "Hey, I want
to get to that level, too."

So it's an even balance,
if you kind of buy-in to that.

– Exactly, yes, everyone can contribute.

And even the lowest level person, I don't
know, I'm just saying a street sweeper.

And they might come in the first
day of work and they might say,

"Hey, you know what, actually, if we
swept this way instead of that way,

we could do it a little bit faster and the
streets would be a little bit cleaner."

Great innovation, anyone can
contribute, even if it's something lower.

And this might be 100-million-dollar
company where the leaders

are trying to innovate on a different
scale, on a different trajectory.

But if the lowest level person is also
a part of that, that's what you want.

You want everyone to be
innovating with the extra time,

the extra capacity, the less stress.

When you have both the strategy, the
principles, and the freedom of control

over your systems to make
them better, people like that.

They like to test out, and experiment,
and try to improve new things.

And as a manager and leader, you can
actually allow your team to do that

because they have the framework
and the boundaries

and the document system to start with.

And then you're letting them do these
micro experiments on their own,

and then report back up what's working.

– A lot of times when you're
a business owner, entrepreneur,

you're still getting started,
you're slowly growing.

You might be listening to this and
thinking, "That's great in theory,

but I am constantly having to
intervene in the daily operations.

I constantly have to look at things
because you're just growing."

So how do you build that systems
mindset, as you're growing?

Because you don't want to wait too
long so everybody gets set in their ways.

But you also want to have that growth mindset.

How do you balance that, especially,
when you're getting started?

– Great question, yes, I think
that it's important for people

to know that you're pursuing perfection.

You're pursuing being the best
business, that's a direction.

But part of the way to get there
is iterative and requires mistakes.

Some industries are okay with
more mistakes than others.

So if you're a heart surgeon, probably, you
don't want to make too many mistakes.

But if you're a creative agency
and you're designing labels,

well, it's okay if there are
a few flubs along the way,

as you're trying to optimize
your business model.

And, so, knowing what industry you're in,

knowing what the tolerance is for
mistakes, is going to allow you to

take more risks, as you're growing the business.

But companies that grow the business,
every company I'm working with

I say is on a train, they're already
on the tracks, they're moving.

So you're never going to get this
perfect opportunity to stop the train

and let's all work on making
it better, now, it's moving.

You've got income coming in,
you got to provide a service,

you got costs going out.

You have things happening in real time.

And, so, you have to do what you
can while you're in the middle of it.

So if you're in the middle of
making a sale, work on that system.

If you're in the middle of going to a
convention, work on that system.

If you're in the middle of hiring
somebody, work on that system.

So if you're working on
systems as you're doing them,

that's going to be the best approach

because it's simple and
you immediately get the benefit

because you're in the middle
of doing it, anyway.

And that's all I want with my clients,

is, "Hey, you're in the middle of
hiring and you're going to do,

let's just say, orientation,
so record that orientation, great."

So now the next time you're
going to do orientation,

maybe, you're going to use that recording,

or maybe you're going to find a way to
optimize it, or make it go a little faster.

And then the next time you might realize

you could delegate that to someone who's lower.

And, then, maybe, there's a way you could
add some technology so that it's better.

And, so, each time you're finding
a way to improve the system

that you know is going to happen again
and again, without getting stuck

and saying, "Well, in the perfect scenario,
someday, we'll perfect the system."

Because the business is not static,

so you have to make them nimble
enough to always be improving.

And, so, a lot of times, what
I'll say is document as you go

and record as you do things.

Because at least you'll have a
record of how it's done,

the best you could do it today,
of which to improve upon tomorrow.

And with the hope that it
might be someone different

who could improve on that system.

I think that the perfectionist clients
that I have they don't like that

because they don't want a
record of them doing it not perfect.

And your imperfect action

is going to be as good as you're going
to get today, so get a record of it.

Whether it's in writing, or it's a screencast
video, or it's an audio recording,

a video recording, some record of it.

So that that's going to be the baseline
for the next time that system is run,

and you'll always find little nuances,
little ways, to improve it.

Whether it's the experience, or
lowering the cost, or making it faster,

or optimizing some aspect of it.

And that's what makes work
interesting, and fun, and engaging,

is someone might say,
"Well, I've done this 100 times."

But can you do it better?
Can you do it faster?

"Well, I don't know."

And the answer is always, yes, and that's
what I always push my clients to do.

And, then, usually, after we analyze
one of their systems they say,

"Gosh, I never realized we
could do it that much better,

if we actually took the time to focus on it."

– I like that mindset, that concept
idea that you're never finished.

And that's, sometimes, when
people go through these processes,

of these massive strategy sessions,
and they go off to off-sites

and have consultants come in,
and they do all these things.

And, then, they sit and say,
"Okay, this is our new model."

And they leave it in place for
another ten years, and they realize,

"Oh, wait, we should have
been improving this all along."

So I love this idea that you're
saying that you're never done,

you're constantly looking at the systems.

– Exactly, yes, a lot of times, I'll fly
in or I'll work with a new client,

and they will have documented all of
their procedures, in their entire business,

but they did it like, five years ago.

And, so, they'll say, "We got
everything documented, already.

But the issue is we don't do any of those
things the way we did it five years ago.

So all of this stuff we documented
is obsolete, it's trash."

And we've got different people,
we've got different technology,

we've got different products now,
different services, different price points,

different locations, it's all different now.

And instead of seeing, documenting
the systems of the business as a project,

with a finish line, like you said.

Instead it's a mindset, it's a strategy,

it's a way to operate, and if you
operate with that strategy,

then it is always going to be a
culture of continuous improvement.

Not just in theory, a culture
of continuous improvement,

but it's going to be in practice

because you're going to see, "Hey, we
just improved the way we punch in

and punch out it in the morning and at night.

That system got slightly
better than last week."

"Hey, we just improved the way we,
whatever it is, order inventory

because we tweaked the way we did our
system, and now it's a little bit better."

And, so, you can mechanically see, yes,
the culture of continuous improvement

is not just this idea that
leaders like to talk about.

It's actually happening and we're
seeing the results in our systems,

and then we're seeing it in the bottom line.

– I love that idea because you
have to continuously improve.

You have to continuously look
at things in order to become better.

And let's say somebody's listening to this
and saying, "I'm really interested in this."

Are there common mistakes or challenges,
maybe, some examples you can share

that you've seen that people
can look out for,

as they're trying to move toward this mindset.

– Yes, the common mistakes and challenges,

we could talk for hours on that.

But the most common ones is
that if you have multiple leaders

and one person buys into it
but the other leaders don't,

then, you're going to have problems.

So one owner is saying, "Hey, team,
we're going to start working on this."

But the other owners or managers
are saying, "No, move faster."

If you can't constantly be rushing
and reacting really fast

and, simultaneously, slowing down,

analyzing your systems
and making them better.

And, so, if you have leadership
that does not agree on this initiative,

then it never works, I see it all the time.

I also see it when there is a lower
manager, not the owner or the CEO,

but someone who's a mid-manager, or lower.

They try to implement this, also it doesn't
work because the long-term benefits

of what's happening in their organization,
they don't see, and they don't care about.

And, so, again, they are pushing their
managers to react and perform,

as opposed to build out their systems.

And, so, they're not appreciating

the infrastructure that's being worked,
and I've seen that happen often.

I also see companies where
they overcomplicate it,

where they'll say, "We love this idea.

So now we want every procedure,

in our entire business,
documented in the next 60 days.

We want them all to have diagrams.

We want them all to have automations.

We want them all to be in special formatting."

And they make it too big, too complicated,
too fast, and the team never absorbs it.

And they end up realizing they're spending
$700 on each procedure they document

and they do it for about a month and
they say, "This is way too expensive,

this is way too hard,
we're never going to do this."

And, so, the stopping/starting with
initiatives like this is extremely common.

Where they make it too big,
they make it too complicated,

and they might make it overly secure as well.

Whereas they need like five levels of
passwords to get into the system,

to update it, and then no one ever updates it.

And, so, my advice to everyone like this

is to keep it as simple as possible
because the simpler it is,

the more you can engage everybody.

So if it's as simple as saying,
"Hey, you know what?

We're going to be hiring
that new person tomorrow.

We should probably document how
we onboard them with a checklist,

to make sure that they get all
the things that they need."

That sounds good.

Write it down on a piece of paper,
maybe, someone types it up, great,

and we have a new system now,
and then it can get refined.

But you got to start with
something really simple,

and so people can start
to get traction with it.

– Yes, starting simple makes a lot of
sense because I'm sure somebody

wants to jump in with both
feet and try everything.

But you can see what works and
what works within the organization,

within that culture, and you
have to adjust accordingly.

– Yes, any change initiative,
the bigger the change initiative,

the more drastic, the faster,
the less it gets absorbed.

And, so, it's always better to start small
and to build momentum, to build buy-in,

and make sure everyone is on
board, and to give it time to work.

So just because it's an idea, now,
it needs to actually be put into writing.

Then it needs to be put into
practice and, then, in practice,

the feedback loop needs to come back,
with additional tweaks and optimizations

for absorption, for, buy-in.

And, then, management needs to, actually,

make sure they're consistent with a
new way and possibly even measure it

to see the results, and hold people
accountable to those results.

And, then, that system has been
utilized, let's say for a few months,

now it's fully absorbed into that particular
department, that was a lot of work.

And you can do multiple, at the same time,

but you can't do too many,
at the same time, too fast.

Because, again, the full absorption
of the system never happens,

so you never get the benefit.

And, so, I'm always big on pushing
people towards this strategy,

and then letting them know that this is
going to provide you benefit immediately,

starting tomorrow, and in the
future, for decades to come.

But you have to always be going,

maybe you have your foot in
the pedal at 30 miles an hour today,

40 tomorrow, 40 the next day.

Maybe 10 miles an hour, during a
really rough season, for a few months,

but then back up to 20 miles an hour.

But we have to always be going forward,
and maybe just slam the accelerator

and say, "We're going to 90 tomorrow."

It's just not going to work.

And, so, I'd rather see continuous
progress, going forward, at a slow speed

than stop/start, stop/start because
those just kill change initiatives.

– Yes, so as we look to the future,
there are so many things changing.

The markets, you've got inflations, you've
got things like generative AI taking over.

There are so many things happening.

How do you see this work?

The system method evolve in the future.

Are there trends and different
advances that you see

that could influence this method?

– Yes, so I think that the
method is not going to change.

This whole idea of leaders, and
managers, and owners getting stuck,

but needing to move beyond that,
that's been around forever.

You just need to have a clear strategy,
clear principles, clear procedures,

that's not going to change,
that's been around forever.

The thing is that change

is new opportunities in technology and innovation.

New ways to work instead of just
working on an agrarian family business,

with your relatives, we now have the
Internet and international business.

So there's a lot of ways to get a lot of
work done, with a lot of great people

that are not, necessarily, in your own
backyard, and that's nothing new.

And, then, the technology innovations,

and abilities to use whether it's AI or
automations, is obviously exploding

and, then, the ways to use that
are continuing to expand.

And, so, I think that the more
nimble you build your systems,

the more you're going to be able to
react to the changing marketplaces.

Whereas maybe 50 years ago,
things were a little bit more stable

and you could build a system,
and it'd be the same for 10 years.

Now you build out your system
and you have to stress test it,

and evaluate it, and it might need to
be modified more rapidly, more often.

And you might need to be less
dependent on a person doing it,

like, "Hey, that's Ricky's system,
he always does it great."

Well, people are jumping around a lot
more, they're less loyal to their employers,

and they're more likely to move.

And, so, you might need to focus
more on the system being simple,

and delegable, and dividable,

as opposed to, "Well, I know Ricky is going
to be here 20 years, so it's good enough."

Because that's not the future
of culture and business, I don't think.

But I will tell you, this book, Work the
System, I'm showing it on the video,

I know no one sees the video,
but Work the System, Sam Carpenter,

the author of the book,
he's had the same employees.

After he shifted his mindset,
shifted his strategy,

pretty much all of his employees,
eventually, got worked out of the business.

And as he brought in new team members

who embraced this strategy and embraced
his philosophy, they've been with him

for decades, some 20 plus years.

And they love working there
because it's calm, it's serene.

They love working there
because they do great work.

They love working there
because they get paid more there

than they get paid anywhere else,
doing the job they're doing

because there's so much additional
profit because it's being run so well.

And, so, once someone
works in a company like that,

they don't want to go somewhere else.

And, so, the more you build in
the systems in your business,

you're going to increase the
longevity of your people.

– Yes, well, Josh, you've got
some great insights.

Everybody, please take a look at the
show notes for links to the books,

and to connect with Josh.

And, thank you so much for
coming on the podcast, today.

– Hey, great to be here, Adam.

< Outro >

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Adam Larson
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