Ep. 111 | How to Grow Your Business Using a North Star
This week Gregory Shephard, serial entrepreneur, angel investor and creator of the BOSS business operating system joins Allison Hartsoe in the Accelerator. Greg explains the BOSS methodology then shares the first part of his method: using a North Star to grow your business. The North Star creates alignment first: what will you sell, who will buy it, why will they buy it and then most important, who will buy you?
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Allison Hartsoe: 00:00 This is the customer equity accelerator. If you are a marketing executive who wants to deliver bottom line impact by identifying and connecting with your revenue generating customers, then this is the show for you. I’m your host Allison Hartsoe, CEO of ambition data. Every other week. I bring you the leaders behind the customer centric revolution who share their expert advice. If you are ready to accelerate, let’s go. Welcome everybody. Today’s show is about using a Northstar to grow your business, and to help me discuss this topic is Greg Shephard. Greg is a serial entrepreneur, author, speaker, angel venture capital investor with a legacy of building and running sustainable growth businesses and also the creator of the Boss methodology, which if you don’t know stands for the business operating support system and something that we’re going to be talking a lot about today. Greg, welcome to the show.
Greg Shephard: 01:00 Well, thank you and thank you for having me, and that was a mouthful, huh? Probably we need to reduce that.
Allison Hartsoe: 01:05 I’ve seen worse, but tell us a little bit more about the mileage that you went through to get here because you have such a storied background. I think it’s just fascinating.
Greg Shephard: 01:16 Yeah. If people seem to get a kick out of it so, well, my mom was a nun and my dad was a priest, and they left the church because they went into the church to take care of children. So then they left the church and then they adopted and foster children, had like nine foster siblings, and then a sister and they were different nationalities, and so we were poor, right. So we didn’t have any money. We lived in Oakland for a while, which at the time was a pretty rough place to be. And so my mom moved us to near Tahoe in the mountains, and we camped on our property for two years in tents while we built our house, my uncle, my brother and I. And so I grew up that way. I would catch rattlesnakes and sell as exotic pets. I was selling Rubik’s cubes, and I would solve the Rubik’s cube and charge extra for that.
Greg Shephard: 01:58 And so I was an entrepreneur even back then. And then you know, and I would go knock mistletoe out of the trees, and my sister would tie it up, and I would sell it in front of the stores and the grocery store. And so I grew up that way. And then I got into business. And so we fast forward, and now I’ve done 12 startups and 12 exits. I have one four private equity Wars for transactions, 250 to 1,000,000,500 to a billion. I have a book coming out published by Forbes. I’m a Forbes council author, a Forbes author, a TEDx speaker. I write for entrepreneur, Forbes, Fortune, Huffington post, a lot of different places. And so the boss methodology was, I call it a technology, I think of it as an operating system, like a software operating system. And so I’ve got the core operating system, and like other operating systems and the agile methodology, I just kept improving it based on everything I would consume around me and turned it into an open-source thing. And I told people, I’m like, look, you know, add to it and make it yours. And so that’s been going for like 25 years. And so I got to a point where I wanted to just give it away to people to help other people who were in my situation because I mean, look, 80 to 90% of businesses fail and that is accepted. But it shouldn’t be. I mean, there’s no other industry in the planet that would go, Oh yeah, that’s fine.
Allison Hartsoe: 03:11 That’s so true. And I think the really interesting thing behind the operating system idea is that most entrepreneurs come out of college, or maybe are just given an idea that they believe business is this game of finding product-market fit. And then you just market like crazy and execute by acquiring customers and sell for a huge multiple and then retire on the beach and do it again. So I find that there’s probably something wrong with this picture that you pick up in the boss’ methodology.
Greg Shephard: 03:41 Yeah, so one of the things I did was I was trying to figure out for a long time why businesses were failing because I was just trying to solve this problem and I ended up learning that I needed to figure out what stages they were failing at first and then why they were failing at those stages. And then I needed to alter boss and wrap it around solving those things. And so I built a life cycle. Then with my partner at boss capital, that’s a life cycle business strategy. There are five stages in business, basic levels of businesses starting with being reactive versus proactive. And then, I align those with different stages like ideation stages and stuff. And then I aligned that with rounds of funding.
Allison Hartsoe: 04:20 I have to say it reminds me of a Rubik’s cube like you’ve got a lot of pieces fitting together.
Greg Shephard: 04:25 Yeah, I think that’s a compliment. So thank you. And so what I ended up with is the first thing I found out is that you have to start with the end in mind. And if you don’t start with the end in mind. Meaning if you’re raising capital, your investors are giving you money for a return and the return and for you and the investors, if you align the two, which you should because as an entrepreneur you are an investor, then you have to start thinking about who you’re going to sell your business to in the very beginning. So this is the point where a lot of investors and entrepreneurs will sort of debate. I’ve had a lot of arguments on stages and panels. Ultimately they always succeed to me because it makes perfect sense. If you think about it, when you sell your business, your entire business is only a product to your acquirer.
Greg Shephard: 05:07 Now, why would your entire business only day product your Inquirer? Because the acquirer has already absorbed the customer acquisition costs associated with building their customer base. And so they’ve absorbed that cost and what they need to do now in order to make that pay off more. To do a CAC to LTV ratio is to bring more products into, raise the value of every customer so that they can start making margin on the cost they’ve already absorbed into acquiring those customers. So if that’s the case, and that’s a synergy, right? If that strategic acquisition is the case, then your product just needs to align with their customers. They’re buying you for your product, so they’re buying your whole business as a product. Now back up for a second. What kind of an entrepreneur would build a product without a customer? Nobody. Right? So why would you build a business without a buyer in mind? Why wouldn’t you align those two things in the first place? Because your ideal customer profile needs to match the ideal customer profile of the company that’s buying you. Otherwise, they won’t buy you. And that’s not something you can do a year before you want to sell. You have to be doing that from the very beginning. And so I put together an alignment, I call it the North Star, which aligns with all of the, that’s just one of those things. But that’s the one that usually people go, Holy shit, I never thought about that.
Allison Hartsoe: 06:21 You’re exactly right, and I’ve seen this firsthand because when you, we play the venture game and my first company was a venture-backed company. It’s all about Go, go, go, spend, spend, spend, acquire, acquire, acquire, and the mentality we always had was wouldn’t you rather have a small piece of a big number than a bigger piece of a smaller number, and that is so problematic in so many ways because it plays into the venture capital, but would you call it like the drama of venture capital and that it doesn’t really leave anything for the entrepreneur. It doesn’t encourage the entrepreneur to think about that acquisition side, which means that you don’t have a sense of timing and you don’t have a sense of where this is going, and you don’t have a sense of how am I going to preserve some of the sweat equity that I put in to actually have an exit on the other side.
Greg Shephard: 07:09 Yeah, that’s for them. That’s not for you because I came from an entrepreneur and now I’m an investor. But I came as an entrepreneur. I’ve learned some of these lessons that you’re talking about. I mean, if you’re an entrepreneur, you want to preserve your equity. You want to sustain because equity is cash. Most entrepreneurs think of it as funny money, and they just sort of raise capital cause they’re in a frenzy to just get cash. So back up for a second. Let’s say that as an entrepreneur, it’s the opposite. You do not want to raise tons of cash to grow, grow, grow. That is not a good think about what are the value drivers, right? Growth margin and retention. Those are the three value drivers. Now, customer alignment, that is what they call attachment rate. So the number of your customers that align with your buyer, that attachment rate, or another value driver, none of those things say the amount of revenue that you have.
Greg Shephard: 07:59 And that’s because what matters is the multiple. Think about it. So if you have a million in revenue and in multiple of two and you have a million in revenue in a multiple of five, it’s way easier and less costly and takes less time to grow the multiple than it does to grow the revenue. The game that they play is to grow the revenue. And when you grow the revenue you, it costs money. You get into that circle. So the first thing you raise money you have to do around and you have to do an up round for a little bit, and then you do another round, around dilution takes place. You’re burning capital to grow, and now you have to sell for 50 million in order for you to make two instead of selling for 25 million, and then you make ten, so I sold a business about two or three months ago at $2.2 Million in revenue.
Greg Shephard: 08:42 It was acquired for 48,000,750.
Allison Hartsoe: 08:44 Oh, that’s amazing.
Greg Shephard: 08:45 Yeah. And that’s because you have the North star from the very beginning, and you align the business to your IBP, your ideal buyer profile the whole time. And if you do that correctly and you drive it all the way out to that point, what you end up with is a business that they’re willing to pay a multiple for because they can see that they’re on the left of the bell curve. So when you look at this bell curve, you have the business at the bottom of the left of the bell curve and the very top of the bell curve. The buyer of your business wants to buy it as low on the left of the bell curve as possible because that means they have the upside. Now, as an entrepreneur, you want to sell it as high on that bell curve as you can because that means you’ve built as much value as you can to sell the business.
Greg Shephard: 09:27 So there is a misalignment right there and the misalignment has to do with greed. So one of the things that I do is I try to sell businesses in three years at two to five X two investors, period. Now, and I’ve been successfully doing that, and that’s for a lot of reasons. And that’s one of the reasons is because, in technology businesses, it takes about three years for somebody to catch up with you. So anything past three years, you risk somebody coming right up behind you and eating your lunch just like Facebook did with MySpace and Google did with Yahoo. And the stories go on, right? So that’s first thing. The second thing is the longer you keep your business, the more you’re required to grow, the more money you have to raise. So you changed the logic, and you start thinking in terms of multiples, how do I make my business have a larger multiple, so I don’t need to invest so much money, so I don’t need to raise so much money, so it doesn’t take so long and on and on.
Greg Shephard: 10:18 And so then you look at what are the values of the buyer? Well, of course, the value drivers, growth margin and retention. But attachment rate is the main value drivers. So growth in a software company you want to see, you know, on 20% growth and your gross margin needs to be 70 75% and your retention rate, which is a huge value driver, needs to be around 90 and then your attachment rates. So simply put the math there is let’s say your IBP, your ideal buyer profile has 10,000 customers. All right? And then you say, I’m going to take a base of those. Maybe I take a hundred of those customers, and I’m going to market to those a hundred customers. And if I can show growth margin and retention on those hundred customers and then I can show that maybe 50% of them bought my product. Now I have an argument to go back to the buyer.
Greg Shephard: 11:03 You have 25,000 customers. I’m telling you that I could get 12 and a half thousand, and here’s the proof, and I can do it at scale margin, and I can retain them. Retention and the growth says that these customers will come on at this ramp. Now you’ve changed the entire situation, and now you get a higher multiple. And you get around all that other stuff. Now, whenever I do this with investors, they’re furious, right? They’re like, you just took away our opportunity right to buy because they want to buy the company on sale. But the bottom line is that’s what I mean when you talk about greed and stuff and the fear of loss, the fear of lost out on opportunity, lost cash, all that sort of thing is not a weapon you should have in your arsenal. Instead, you need to be focused on what are the key things that you need to accomplish. And that’s why I call it the Northstar because you can see the North star from anywhere and you’re always focused in line directly that straight path to the North star. And so if you don’t have that plan together and you’re not checking your pulse along the way, it’s like somebody crossing the ocean, and you’re two degrees off on your compass, and now you’re in a different continent. By the time you get there and now you decide, Oh, I’m going to sell my business. No, that’s not going to happen.
Allison Hartsoe: 12:06 It does. And I also want to circle back on the Northstar has many components. The ideal customer profile and the ideal buyer profile are critical components, but they’re just part of the picture. Do you want to walk through the full structure of it?
Greg Shephard: 12:22 Yeah, sure. So when I do these things, it doesn’t take a genius to make things complicated. So when I go over this stuff, people go, Oh, that’s pretty simple. And I’m like, perfect. That’s what took me so long to make it really simple. So you start out with what? So what is your business, and what is your product? And that’s just description, feature and benefit. And then you go into who. So who is your customer, and who is your buyer? And that’s the description of your ideal buyer profile and your ideal customer profile. And that’s made out of user stories. So user stories or customer stories are, I am so-and-so, I work at such and such, and I want to accomplish this so that I can that and that formula. And you do five traditionally three to five of those stories�same thing with the buyer.
Greg Shephard: 13:05 And then you get a sort of perspective on them, and you think through things like let’s say as an example, what is your customer willing to pay for and what are your customer not willing to pay for and what are they willing to pay more for versus less? What are they willing to do themselves? What are they not willing to do themselves? What does success look like to them? What does excellent service look like to them, and what does excellent service look like to you? So there is an alignment, there’s a whole bunch of these things, and you can go to the website. I have all this stuff in there, but there’s a whole bunch of tools in there that allow you to line that up. And then you, next question is why? Why would somebody buy your company and why would somebody buy your product?
Greg Shephard: 13:40 And then when, what’s the time horizon, you know if you’re thinking you sit out and you go, well I’m going to sell my business in 10 years, that’s too long of a hot time horizon because it’s so far out that things can change. I mean, look at COVID 19 things can change like that. Boom, done. Now you’re pivoting completely. So you have to do with what you can see on over the horizon. That’s what I call the time horizon. And then how much now when I say how much, I don’t mean how much are you selling the business for? I mean, how much do you want to make? Because you can sell the business for 100 million to make a million. Or you can sell a business for 25 million and make 10 million. So it doesn’t matter how much, you know, people always go, wow, I want to sell a business for 100 million.
Greg Shephard: 14:18 And I’m like, okay, first of all, there’s a cliff after 50 million. There’s a huge failure rate after 50 million. And there’s a lot of reasons for that. Second of all, most entrepreneurs can’t handle a business like startup entrepreneurs can’t handle a business past 50 million. They don’t have the experience. So you have to get a new, so that’s something. And then third, that doesn’t mean you’re going to make more money in most cases, like what you were talking about earlier, to your point, you make less money because you take huge amounts of dilution over time and you become dependent on the investors. So there’s this huge dependency on them, and then you become more and flexible to their needs because you need the cash and you get into this really weird cycle of, it’s almost like an addiction. So that structure of the Northstar gives you the norm, gives you all the components of where you’re going, when you’re supposed to be there, how you’re going to get there, who you’re going to talk to, why those people would want to talk to you, what your business is, what your product is and all of that stuff.
Greg Shephard: 15:11 And that Northstar that gets you directionally correct. Most entrepreneurs, they have a deck. I look at 200 a month that it doesn’t do, it doesn’t say anything about how they’re going to get there, anything. It just says, this is my idea, and this is the problem I’m solving and whatever, and dah, dah, dah, dah, dah. But everything’s missing. The meat of it is actually missing because we don’t use business plans anymore because they were overwritten pieces of trash, really. But we never filled that up with anything else. We just said, okay, here’s a debt, my idea how much you want to raise, blah, blah, blah, blah, blah. And as an investor, you bet on the horse or the Jack, and most investors are like, you got to bet on the management team. You’ve got to bet on the management team. The problem is that jockey has never ridden a horse before, and you know that because they’re coming to you for money and if they don’t have money, it means that they haven’t won before. So now you’re betting on a jockey that’s never been on a horse. So this is where one of the big failure rates come. The jockey comes back to the table and says, I need to do another round. The investors like, what did you do? And they’re like, well I fell off the horse whole bunch of times.
Allison Hartsoe: 16:08 That’s not very inspiring for the investor, is it?
Greg Shephard: 16:10 Yeah. Investors like, no, I’m not going to give you money, or I’m going to lower your valuation or whatever. That’s a bad path. So what you have to do as an investor is you have to realize that the jockey has never ridden a horse and you have to bet on the horse and then you have to help the jockey. And that’s when I started saying, Oh, I need to get boss out there because Boss is this sort of operating system that a jockey can use to sort of work through the process where the investors aren’t going to help them. And it also gives them a rational argument to con to talk with the board and say, listen, I don’t think I need to raise more money cause they’re always gonna want you to raise more money at the lowest valuation because they bet on nine out of 10 failings. So it means the one has to be a home run. So they got to get a big piece of a bunch of stuff. If the whole thing is wrong, the whole philosophy is wrong. It’s just not. You know what I’m saying?
Allison Hartsoe: 16:58 I couldn’t agree with you more. I have been on the receiving end of that, and it’s such a shock when you were the darling of the portfolio, and then all of a sudden, you’re just one of 10 that they’re betting on, and that is not helping the jockey in your example. It’s more like, okay, you didn’t realize you were in the gambling scenario and all of a sudden you’re trying to run your company and the your board is like, okay, onto the next thing.
Greg Shephard: 17:21 Yeah. Essentially they write you off right when they make the investment. That’s why all of the funds have this huge risk management piece of their business because what they’re trying to do is forecast the losses. They call it risk, like how much exposure do you have? And I don’t think that way. I think because, as an investor, you’re like, how much exposure do I have? It’s my whole life. Like I’ve got everything in this deal. And these guys have one chip, which is meaningless to them in this deal, especially if its a fund versus like for as an example in my group, we’re all angels. It’s our money. It’s not like a fund’s money, and the funds bet on overalls, and they’re all their numbers are aligned that way. And so I thought the whole system is just flawed. Once I figured all this stuff out and studied it long enough, and then I started working on Boss to fix this problem, and then it started with the Northstar, you know, back to that, right? It started with the Northstar, which was other, okay, well, first of all, we got to get it. We can’t have ready fire aim here. First of all, we have to have ready, aim, fire, and the aim is the center of the target and that’s the North star.
Allison Hartsoe: 18:21 So we oftentimes talk about the North star as customer lifetime value and some of the components that you’re outlining do fit with customer lifetime value. But do you see the way you’ve described the Northstar is so much more robust, and yet we have people like John Doerr throwing up measure what matters and the need to focus on certain KPIs? How does the broader Northstar strategy fit into the metrics approach?
Greg Shephard: 18:49 So when you look at a business, you have a lot of different areas of the business that matter. There’s a lifecycle of business. And so the first thing you have to start out with the North star, and that’s basically where am I going? And then you have to put together a strategy, and that’s how am I going to get there. So that strategy is just to plan. And the strategy phase of Boss includes the mission, the objectives, and the key results, the measures, the priorities, and the delegation. So these are different tools. So when I put together Boss, I studied every operating system. I don’t know of any that I haven’t studied. So I studied them all and then I tried them in different businesses in different stages and test them out. And so what I learned is that six Sigma is a great system.
Greg Shephard: 19:26 And it’s a good operating system, but you don’t do it in a startup and you don’t do it in strategy. You do it in standardization. It’s a different stage and lean is a good thing, but you don’t do that when the company is more mature. So you have like these different processes that are good at different stages. So after you do the Northstar and you’ve done a SWOT analysis on the North star strengths, weaknesses, opportunities and threats, then you have to figure out what are my deli, how am I going to get all this work done? Yeah, delegate this stuff. So all businesses, I’ve baked them into four functional areas. So these FAS functional areas, sales and marketing, service delivery, shared services and product and technology. Those four areas align with growth, margin retention. They are directly aligned with the value drivers of the business.
Greg Shephard: 20:10 So the functional area leaders, which is the C suite, they make the mission. The missions then are from X to Y by date. I want to get this done by this date. So I want to go from dollar amount, percentage, or number, some integer to this other bias or dates or time confined. Then they work with their management teams. So this is anybody in the middle management layer. And if you’re only you, you do them all. Very simple. So the middle management layer says, okay, these are the objectives, you know, three to five objectives. Those objectives are accomplished, the mission’s accomplished, the mission’s accomplished, that value driver is accomplished. Does that make sense? Ladder all the way up. And then underneath that are the key results. That piece I got from, okay ours. And so the key result is the tasks themselves. And that’s done by managers, team leaders, and rank and file employees.
Greg Shephard: 20:59 So now what you’ve got is you’ve got your Northstar that created your missions and all of the things that are going down. Now what you have to do is you have to prioritize them. Now you’ve got this big list of things. They’re surely not all the same. So now, what you do is you do an urgent versus important metric and an impact versus effort metric. So traditionally speaking, urgent things happen when important things are ignored. So people always say there’s a fire. And you know, when I look at businesses, if somebody is sitting in a conference room and they have to be on their phone, there’s fires, they’re not handling the important things. People are getting up walking out. I mean that’s the first sign. You’re like, look, you can’t sit here for an hour and let your team run things. You got a bigger problem.
Greg Shephard: 21:36 So what I do is I prioritize stuff. So you have urgent things and important things, and then your next layer is impact versus effort. And now you have a priority of things. So then the next thing you have to do is you have to say, all right, who’s going to do what? We’ve got to delegate this and to make sure everybody’s included. I use the RACI model. So the RACI model is role are responsible. The person who’s doing the job accountable, the person that’s usually the C-suite consulted because of the people that you have to collaborate with an informed that’s letting you know what happens afterwards. So now what you have is you have the North star, and you have your strategy broken down. You have it prioritized and you have a delegated. Now you can get into KPIs, but KPIs, if you have the wrong KPIs and you don’t align the strategy, if you think about it, if you don’t have the Northstar and then strategies is off, KPIs are going to be, and you could be doing the right thing wrong or the wrong thing, right?
Greg Shephard: 22:25 So you see a lot of businesses are like, I’m hitting all my KPIs and they go out of business. Well, they’re the wrong KPIs. Why were they the wrong KPIs? Because they were measuring a strategy that wasn’t aligned with the North star.
Allison Hartsoe: 22:35 So, you’re essentially saying that when you put the North star together correctly, that your KPIs will automatically lead you to where you want to go. But if you just go out there and put KPIs down, you can go crazy in any number of directions that don’t actually take you where you want to go.
Greg Shephard: 22:51 Yeah. We’ll go back to the previous conversation with regards to growth versus multiple. So your KPI is sales need to grow, sales need to grow, sales need to grow instead of quality. And so what happens there now is that you just had the wrong KPI. You’re a person that’s running S and M sales and marketing is crushing it, but you’re not making it any headway.
Greg Shephard: 23:12 So it’s the alignment of these things are essential. The whole program is essential. And that’s why the operating systems that I found like measure what matters and everything that has to do with all the books on KPIs and six of you, okay, ours, no GSM and 40 X and everything out there, right? Lean, agile, Kanban, IGA, go on and on. These things have pieces that are good, but it’s not a holistic solution. And what I was trying to do is say, these things are genius, these ideas are great, so let’s pick the best pieces of them and then align them with the best areas in the life cycle of a business up against why businesses are failing to solve the problem.
Allison Hartsoe: 23:48 Right. Now I think on your website there are a couple of informational videos that help people understand a little bit about what we’ve been talking about because this is like a whole week’s worth of meals all in one sitting. It’s,
Greg Shephard: 24:01 Yeah, people are drinking out of a fire hose. So.
Allison Hartsoe: 24:03 It’s a lot that you’ve digested.
Greg Shephard: 24:05 Yeah, I teach it at universities now and the book is published by Forbes, and it’s coming out later this year. We’ll depending on the COVID thing and when the release cycle is and all that stuff, but it was supposed to be out at the end of this year, but I’d put in a lot of effort to try to give entrepreneurs the tools they need to be more successful because that’s my mission. And so there are videos on the, we have a new one on COVID-19 it’s just Gregoryshepherd.com/Covid19, and there’s a whole program that we’d get a module that we built specifically for crisis management.
Allison Hartsoe: 24:37 We’re going to talk more about that in our next episode.
Greg Shephard: 24:39 Yeah. And then there is like everything on Northstar. I mean, I tried to do everything and if you don’t see something that’s helping you, then let me know. And now we’re putting together an Academy in Alliance with the University of San Diego to, and the economic development folks to try to help entrepreneurs that are early-stage entrepreneurs get through this by teaching them Boss. Yeah. So I’m doing my best folks to try and help out. So thank you. Hopefully, you don’t have to go through what I went through.
Allison Hartsoe: 25:05 So when a company has gone through this system, how much time did they spend on the Northstar? How much time did they spend on different stages? Because it is a robust system and I imagine it isn’t something you just do overnight.
Greg Shephard: 25:17 No, no. You have to invest a lot of time. You should invest a lot of time in the Northstar. No, it takes, usually, it’s several two-hour meetings, and really it’s taxing on the brain. So you don’t want to try to pound it out in one session because people just get tired and they just, you know how it goes, right? You do one of those long meetings, and the productivity just slopes off on, there’s a bell curve. So what I do is I’ll do several, two-hour meetings. So it depends on the management team. Sometimes I can get through it in a month or a week. It depends on what they’ve thought through already. Sometimes they haven’t thought through or anything, and you have to like actually work through it. Sometimes people have thought through parts, and they go, yeah, I have an ICP, I have an ideal customer profile.
Greg Shephard: 25:56 Okay good. That’s a start. Or I have a description on my business, and we have a one-page boss plan which talks about does values and all that stuff. So you know what your business is and all that’s part of the North star. That one-page plan, which has a three-year plan, a one year plan and a three-month plan. That one part can take 10 15 hours. So what you have to remember though, is that what you do in the front. So the way I explained it to people is I say, listen, if you’re going to go from my house to your house and I have no map, I could drive around forever, right? I’ll never get there. But if I have your address and I put it into a GPS, the GPS is going to say it’s going to take you this long.
Greg Shephard: 26:35 And at this point you’re going to make a turn. And at this point, you’re gonna make a turn, and eventually, I’ll get there. But I have a map that guides me there. Now is it worth the time and investment to get a map put together, or do you just want to start working randomly and spinning around in circles? And so that’s the delay, right? Put in time in the beginning and do it right. And you’ll get there way before everybody else. And it may appear as other people. It may appear to you that other people are getting there before you, but they won’t finish the line before you. They will be behind you if they even make it.
Allison Hartsoe: 27:06 So is the creation of the North star the most likely point of failure for most entrepreneurs? Is it that they have trouble getting through the process to initially figure out where they’re going to go, or is there a more likely point of failure later on? Like around execution or some other cage?
Greg Shephard: 27:23 Yeah, I mean the first point of failure when I studied this is right after they get around actually. So they go to an accelerator, whatever they can put together a deck, they get an investment because they’re really good at selling it. A lot of them fall off before that, but I don’t count those because I can’t get data on it. So then they get their first round, and they can’t get their second round, and then they fail, and that’s the first one. And that’s because they don’t have a strategy to get there. Now the North star catches up with you later on when you get to around B round or when you try to exit. So by that time, it’s too late. That’s why at the very beginning because if you have to have that. Everything aligns to that. The other problem happens when you do have a plan put together.
Greg Shephard: 28:01 You do have a strategy you put together, you don’t have a delegated, and there are no swim lanes, and people are slamming into each other, so that’s important and the prioritization is important because you could do things in the wrong order. People choose to do things they want to do first. Always instinctually, everybody procrastinates. It’s very rare that people go, I have to do this because that’s what this says. Even though I could do this thing, this is going to take me four hours. This thing’s going to take me 10 minutes. I’m going to do a 10-minute thing first. Usually is what people say. That’s not necessarily the best solution, and then you go down the line, and you get into execution, which is the third phase of Boss. In execution, this is where the analogy I use for people and say, you want to lose some weight, and everybody goes, okay, are you going to lose weight?
Greg Shephard: 28:40 Well, they’ll say the Northstar is to lose weight by this amount of time, blah, blah, blah, whatever. And then you say, well, how am I going to lose weight? Everybody? What? Diet and exercise and the same thing. Okay, diet and exercise, I’m gonna lose weight. And then you put together a plan, and you’re like, okay, I’m going to go to the gym, I’m going to eat this, I’m going to do that, I’m gonna do this. And then everything falls apart at execution. As soon as the donut lies in front of your desk, boom, game over, you go out to dinner. You know? So what I do with the execution stage is to keep everybody in alignment and a lot of the software development processes, so not just the agile methodology, but the different flavors. So the Kanban, the lean, the scrum, those things are more execution plans.
Greg Shephard: 29:17 So I use a lot of that. So what did you do yesterday? What are you going to do today? You have any blockers? This kind of stuff. And then you’ve got accountability and execution, and then you move into standardization. Now we are on this podcast because people want to learn from my experience, and people go to school because they want to learn from previous experience�the whole reason. Yet, businesses don’t do that. People learn. There’s tribal knowledge. There are intellectual property standardization documents that. So you don’t backward, you always go forward. When you do that, and you document in standardization who is supposed to do something, that’s the accountable person, when does it get done? That’s the trigger, and then how does it get done, which is the best practice itself, and now what you have is you have everybody doing the same thing. You have the best practices aligned.
Greg Shephard: 29:57 When you go to sell a company, you can show them, this is how my business works and when you go to the fifth stage of Boss, which is Kaizen continuous improvement, you take a loop, and you go through your best practices, and you look, and you know that everybody’s doing things the same way. That’s the other thing with KPIs where we were talking about earlier, people will measure KPIs, but they’re totally broken. If you have two people in the same department doing things differently, your KPIs are going to be drastically flawed. So you have to have the best practices, otherwise, your KPIs are worthless. People have to be doing things the same way for the numbers to be telling. So if the boss system was made for all of this stuff, I mean it’s taken me a lifetime. So you know, it was made to solve these different problems all the way down the funnel or the life cycle of a business.
Allison Hartsoe: 30:39 All right? And it is a complicated system. So if people want to understand, either take a look at the boss one sheet or if they want to be alerted as to when your book comes out, how can they get in touch or otherwise get connected to the system?
Greg Shephard: 30:58 You go to Gregoryshephard.com G R E G R Y S H E P a R d.com, and there’s a place where you can register for a newsletter. The website’s always getting updated. Social media is always getting updated. I do a great deal of work to try to educate people, not just on what Boss is, but as Boss goes through iterations and gets enhanced. I mean, I’ve interviewed Navy seals, first fighting wing of the air force police officers, fire departments. I constantly am trying to seek ways that people solve problems and run processes and efficient teams. And so all things are constantly being updated in there. So the whole thing about boss as an open-source operating system is that it’s open for criticism and enhancements and it’s agile, meaning it changes on the fly. The problem I found with a lot of the other systems is that they were a set system. It was like this is how it is. That’s it.
Allison Hartsoe: 31:52 And they were culturally contextual to a particular group of companies or a particular way of doing business.
Greg Shephard: 31:58 Yeah. And what I was trying to do is make it so that you had something that was sort of a framework that people could bolt on things too, like an operating system. So you have an OS, and then you have Excel for this, and you have a word for that and so on and so it was built out that way. So if they go to the website, they’ll see they’ll get updates. My social media is constantly being updated. There’s a lot of cool stuff for speaking events that I’m at or whatever. It’s all there, so that’s where I send people.
Allison Hartsoe: 32:21 That’s the central operating system for Boss. Well, Greg, thank you for everything that you’re doing to help entrepreneurs figure out how to navigate more effectively. I think your perspective and your experience is so unique and it really is appropriate for this time that we’re going through where I think there’ll be a lot more entrepreneurs and they’ll need a lot more support. Maybe just if we’re lucky, the whole greed is good mantra. We’ll switch into more of a wealth distribution mentality with systems like boss supporting it along the way.
Greg Shephard: 32:54 That’s the goal. If we can make more millionaires, if we can make more entrepreneurs succeed and those are good people that are charitable and care about one another and come up with ideas, that’s enhancing not just the planet but those on it. Everything on it, the animals, the plants, the people, everything, right? Cause we’re all one ecosystem. Then I feel like I’m doing a good thing. So that’s what I’m after.
Allison Hartsoe: 33:15 Perfect. I think that’s what we all want. So as always, links to everything we discussed are@ambitiondata.com/podcast. Greg, thank you so much for joining us today and for sharing these powerful ideas.
Greg Shephard: 33:27 You’re very welcome, and thank you for what you’re doing.
Allison Hartsoe: 33:30 Remember, when you use your data effectively, you can build customer equity, you can build strong companies. This is not magic. It is a very specific journey that you can follow to get results. See you next time on the customer equity accelerator.