Latest / The Enterprisors / Utopia First
Transcript
- Tim Meadows-Smith: Welcome to the flip. Every successful CEO faces a choice. Keep doing what got you here, but no further, or flip to building what gets you there. Two 20 million pound businesses make different choices. 10 years later, one is worth 35 million. The other is worth 4.4 billion. That's not luck. That's not market timing. That's the flip. from founder dependent to enterprise, from hero to architect, from 35 million to 4.4 billion. This is the flip. And I'm Jo, and I'm here with Tim, my co-host. And today, Tim, we're going to talk about utopia first. Would you like to explain that? Yes, so Utopia First is a method of business planning that helps people to set better objectives and get more clarity over the path to success. But let's just back up for a moment because a lot of people who are in really quite substantial mid-sized businesses don't plan. No. ⁓ Most of them ⁓ operate with budgets as part of a command and control structure where the founder and the finance director get together and decide what the numbers are going to be and then they just issue budgets and that's supposed to keep them on track. And their idea of a business plan is a piece of paper that you take along to the bank when you want to borrow some money. Then you tuck it in a drawer again afterwards when you've either got it or more than likely not got it because the bank is never impressed with that sort of a plan. what impresses a bank is something where they can see that you had a plan and you've been measuring against it and there are differences between what you planned and what you actually did and they're even more interested if you've worked out and done something about the differences. But the olden days was a business plan exactly like you've just described, it's like this is what we're going to do, this is how we're going to do it, this is when we're going to do it and these are the figures. That's pretty much it. An operating plan is a tool for managing your business. It's actually what I call the meta process. It's the process that sits above all of the other processes and helps you to run it more effectively and to better understand what's really going on in the business so you can make smart decisions. And without that, you will always undershoot your potential. I know just just winging it by looking at what you did last year and then coming up with a budget for this year and then managing your cash to the budget might stop you from running out of money but it'll make sure that you are not very productive not very profitable and don't grow very fast and those are all things that people in mid-sized businesses can think ⁓ it's just how it is doesn't have to be. So the utopia first is working from where you personally want to be backwards and then covering that with the operating, how you operate and then the budget in order to create something that works for everybody, you the bank manager and the people that you're working for you. Yeah so of the minority that actually produce a proper business plan to operate to, almost all of them start from where they are now and think what could we reasonably do a bit better next year to generate a bit of growth and they often end up with a number that's about 5 % better than last year. If they're ambitious people, they might have 15 or even 20 % bigger. But just imagine if the real potential wasn't. 20 % bigger, was 50 % bigger, which after all is what you were doing probably five years ago. But you know, has ground to a halt. Why is it ground to a halt? Is the market more difficult? Probably not. Markets have always been difficult. It may be that you're reaching saturation point in your market. That's another reason for a cap. There's lots of external reasons why your growth might slow but most often the reason you've slowed is back to my five and a half inches the distance between your ears. absolutely. And Utopia First is something that solves two problems that people have in their heads when they try to plan. Okay what are they? The two problems are one most people focus only on the business they don't focus on the person development that's necessary to accompany that bigger business. And the second is that people find it difficult to imagine how you get from where you are now to something extraordinarily bigger. So this breaks that link. This picks a point in time that is so far out, you'd have real problems projecting to it. And it just invites you to say, in a perfect world, in 10 years time, what would your life be like? So how much money would you have in the bank? Would you have property? How often would you go on holiday every year? Which car would you be driving? What would your children be doing? Where would you be spending your time? This isn't a business plan, is it? This is not your traditional business This bit's nothing to do with your business plan. It's defining what your ideal life would be. Utopia. Yeah. you know, what you went into business for in the first place. When you went into business, you never thought you'd be doing 35 million. And if you had, you would have expected your life would already have all these things in it. And it hasn't. Your life is tough. You're stressed. You're working all the hours that you can find. People are dependent on you. Stuff is comfortable, but it's not great. It's not what you imagined your best life would be. So let's roll forward 10 years and let's define your best life in detail. would you have? And if that's saying to you, I'd only be in the office two days a week, you're only going to be in the office two days a week in your plan for 10 years out. Now, for you to have all of those things, all of that wealth and all of that freedom, your business is probably going to need to be way bigger than it is right now. You may be going to instead of only operating from one site in the UK, you may be going to go international or you may be going to have multiple sites across the UK. You may need to acquire a competitor. There's all kinds of things you may want to have. just let your mind go wild, define it and then in detail work out the organisation that you would have to have, what you would have to be doing to generate that number of customers, to renew, to show growth from that point for the next year, what would you be selling to people, how much would they be buying, how much would it be recurring income, how much would come from new customers, who would be running your HR, how many people in the HR, all the detail, absolutely everything. So in theory, you could drop that on somebody's desk, they could follow the blueprint and... the business would run. So we look at 10 years what I want for my life. Yeah. Then we map that out into what the business needs to be doing in order for me to be able to achieve that. And then we work backwards to where we are now. So we come back year by year by year, do we, to say, right, if I want to be on my turnover to be 100 million and it's 10 million now, I need to do X, Y, Z in order to be able to get that. But do I do it from starting point? Because no, because otherwise you can't imagine it, can you? Because you said You'd give up, you'd stop. So the way this works is once you've done all of that work and it's probably two, three, four days of work of spreadsheets and modelling and financials and all kinds of things to get all of the detail in place and you then say, great, I now know where I would like to be in 10 years. Now for that to happen, what would I need to have done in year nine to get there? And you then work that out, not in quite so much detail, but the key improvements that would have had to have taken place in year nine to achieve the year 10. You then do the same thing for year eight and for year seven and for year six and you come all the way back. There may still be a small gap between year two and where you are now, but it will be a manageable gap that you can kind of work through and you then say, okay, I've now got a clear path of all the things that I've got to do between now and 10 years time, all of the systems that have got to go in place and in which year we put it in place, all of the people we've got to hire, all of the people we've got to train, all of the customers we've got to recruit. And now you've got something that says to you, next year's plan looks like this and by quarter these are the big things that we're going to change. Interesting you said by quarter because if we do next year's planning just pop it in the the drawer for a year and then have a look at it. So how often do we review our quarterly plans? We review our plan every month. Every month. Our plan, our finance person will produce results looking at the key drivers of performance and you'll certainly look at revenue. and you'll look at profit and you'll look at cash but you might also be looking at ⁓ customer acquisitions you might also be looking at numbers of sales calls made you might be looking at conversion rates there'll be a number less than 10 of drivers of performance for your business that you will measure and review every month but you'll spend only Thank 10 or 15 % of your board meeting time looking at what's happened. You spend the other 80, 85 % of the time looking at what you've got to do in the next quarter to keep driving the improvement forward. This is all about understanding what's got to be achieved in the quarter to get the growth and that's the high level. The low level is each of your people needs to know how they make their difference to make that number happen. I was going to say that that needs a level of commitment and preparedness doesn't it for being... bringing in the numbers, bringing in the... So otherwise you do waste a lot of time arguing about what's happened. So you need to understand when you come to the table, you're bored every month, what's happened and what you need to do to go forward and what's coming next. But the big difference is that if you remember from the last session, we've got our voice of reason, the finance director whispering in our ear, 5 % is reasonable. And our ⁓ Utopia First method told us it's not 5%, it's 45%. Now to hit 45 % takes just a little bit of organising. 5 % just happens without working too hard, we've got to actually get everybody lined up, focused, properly trained, understanding, making decisions for themselves at many times the rate they before rather than bringing you problems they're bringing you issues and solutions so that you are no longer having to initiate everything, decide on everything, you are simply being presented with we've got an issue I've worked out a potential solution can I go with it? you're actually changing the culture? Changing everything but what you're doing is you're saying I now am really clear about what's success looks like for me and I'm really clear about what success looks like for my business and we are not deviating from the path and it's not a question of if it's now a question of how. Right. We've now got our problem-solving capability that we've proven ever since we founded the business we're damn good at solving problems we've now defined the problem and it's now how. And we're now working out not if we're going to grow, we are going to grow at 45%, now it's how. But you won't ever get that approved in your board meeting and supporters without using a technique and a methodology that shows them that it's possible. You have to have believers. Right, so what is that technique and methodology then? Well, it is, as I've described, utopia first. You literally allow your mind to be freed from all of the practicalities, all of what if, why this, it is, why we can't, to forget about how, just what is it that we want. Right, nice. We take the dream and put it into a practical want with a structure around it and then we take that want and we turn it into goals and we break it down on a clear pathway with my milestones and objectives and now we're looking for supporters and people who can work out how. So the goals are yearly, quarterly, monthly, daily. All of your people including the person who sweeps the warehouse floor has a number. you'll probably be curious what's the number for the person who sweeps the warehouse for? It is zero minutes lost by the forklift driver because there was rubbish that he had to drive over. Everybody makes a contribution that is measurable, they know what's being measured and they try to improve on it. Yeah, absolutely. Everybody. I read a book, what book did I read? I don't know. It's about a guy who had a... manufacturing company and he needed to improve. was everybody, everybody from where, from what you say, the warehouse floor right over the top. how can we make it more efficient? Where are the blockages? So we borrowed this from Japan. mean, back in the 1980s, it became very fashionable to go and study Japanese businesses, who, by the way, have a 20-year business plan. And when I asked the chairman of one of the major trading houses in Tokyo, said, excuse me, I've heard that you have a 20 year business plan. How big is it? And he said, me, he called his secretary and she bought it in and put it on the table. How big was it? The 20 year, it was a big tone, but the fact of the matter was it existed and all of the detail was in it. And of course what we learned from Japanese companies because companies like Toyota and Mitsubishi were ripping General Motors and Ford apart, because of their quality and the thing that Japanese companies work on is continuous improvement. And so the processes of continuous improvement are brought about by having this meta-operating system, which is your business operating plan, and breaking it down so everybody understands what they're responsible for. And they're empowered to get on and deliver it. They don't have to come and ask. You give them the freedom because you've set boundaries and given them scope. They've got the freedom to get on and work out how they deliver what you want rather than bringing you the problem and saying how do I do it. So the person who cleans up the factory floor has got permission, doesn't need to come and ask for permission, he doesn't need to come and ask for permission to actually sort out the waste disposal at the end of the day because it's not being taken. they can do that can they? So the kind of thing would be the person who's responsible with the brush for keeping the warehouse floor cleaned would say to his supervisor how would it be if I took my tea break different time to the fork drivers because when they're not buzzing about I can actually get more done. Really, know, that's a how do I achieve that without interrupting the people who've got a productivity issue. How many boxes do we get out the door in an hour? Yeah, fair number. Which contributes to profit. we're only getting 500 boxes out an hour when we could get 750 an hour, it's costing more per box to move stuff onto trucks. That's productivity. You get productivity gains by allowing the people who do the job to make it better. They know. Yeah they do. If you go in as a consultant and only sit in the boardroom and only listen to the directors, you never find out anything. The interesting thing is to take the directors and say, we're going to go on a tour of your factory and find out how many of them actually know the names of the people who are working in the warehouse. They usually don't, much less what they're doing or how they do it. Yet somehow they've got to write a plan that says what their productivity is going to be. Well they do, they make it up. Exactly that. It's called a budget. Yes, absolutely. Guided by the CFO. And it delivers 5 % instead of 45%. Absolutely. And the same thing can map out across the service industry as well, can't it? Everything. has a different way. Services are just production of advice and materials and outcomes. All of that can be put together more effectively. mean we've got this wonderful thing called AI that's multiplying the effectiveness of that by 7, 8, 900 percent. Yes, absolutely. So a lot of these things that were previously being charged thousands of pounds for are now available at just a few tens of pounds. Yeah, yeah. interesting enough, getting some, our next episode is with an AI expert so we can talk over that one and how that applies. the moment, obviously, applies more to services than But the thing about all of this is... people who are running mid-sized businesses, leading mid-sized businesses, need to understand how they become bigger ⁓ leaders and not only leaders for themselves, but how do they create and develop more leaders in their organization so that they can stop being a leader and become a visionary, a creator of environments. The stages of maturity are to go from doing everything through deciding everything through delegating, through leading, through creating other leaders, through to visionary and environment creator. And that's the journey that people need to go on. And they get stuck at supervision. And then they get stuck at delegation. then they get- a of people don't like to delegate. They don't trust, do they? No one can do it as well as I can. we're back to that whole stuck at that- Would you you rather be worth 35 million or 4.4 billion? Well, I know what I would rather be, but then there are some people that... the psychology that won't let them do it. There are people who work a lifetime creating a business that is turning over 20, 30 million, which is where you've got to. They come to retirement and nobody will buy it. Yes. And if they could get somebody to buy it, it would be a multiple of three or four times earnings, where it could be a multiple of 15 times earnings if you'd got the systems in processes in place that meant that it ran without you. learning how to do this stuff is not embarrassing. Nobody knows how to do this. Nobody is born with the ability to do these things. Nobody understands it by osmosis. We all have to learn it and you can only learn it if you surround yourself with people who actually know and have done it. absolutely. And so part of what we're doing with this podcast is to... show you the tools, show you the how, but also introduce you to people who have done it or in the process of doing it. And even those that have actually those that have made big mistakes as well that haven't managed to do it and they then they know why. So everything that we do is helping you understand the processes that people have gone through. It's actually worked the processes and giving you some of the processes. But the thing, the big thing in this episode is the utopia. Start with the end in mind. Start with the end in mind and make sure that you get number one yourself right first because without that you will end up building something that means you never achieve your personal success. You need to build something that is designed to deliver your personal version of success. It is a structure to serve you, not you serving the structure. And so does that tie into the deeper why I'm doing this, the purpose behind something? That's part of you defining your own... success. You can't live life on purpose until you've understood yourself and defined what you would like to see looking back on your last day on earth. Yeah, okay so we start with the last day on It's philosophical, I'm not a religious man, I'm very pragmatic and practical but at the end of our you know, 75, 80 years, however long we are fortunate to be given, we will want to look back and say, I made a pretty good use of my life. Or we can look back and just wish I'd done things differently. And what a shame. You know, it's much better to be able to look back and say, I have thoroughly enjoyed the ride. Brilliant. So and then of course, you are then willing to put the effort in and to make the differences and to change the structure and the strategies and to get everything in place. If you're doing it for that reason, if you're doing it just for money, it just kind of all just as you say, we up flat aligning at Phoenix. of those mistakes. it all begins with just understanding that this is the enemy of success is ego. Humility, curiosity and an appetite for learning is what drives success. The smaller you are in the room, the bigger you will become. If you are the smartest person in the room, you are You're cramping your own ability to grow. You need to find another room. we need other people to lift us up. We do, yeah. Always. No, you're absolutely right. You are who you spend your time with, so you need to spend your time with. Absolutely. I think that's quite a good place to stop, you? It probably is. And so our next episode is going to be with Gerard Fogarty and he is bringing AI to the table. So Gerard is a young genius. I was very fortunate to meet him. He is a man who wrote the agentic controls for the robots that run the Ferrari factory in the think it's Jarin, but he is one of the world's in AI and is somebody who has a lot to tell us as mid-sized business owners just what it means for us and how we can release some resources to help us to do some of these other things, give us the space to do some of these other things that will help us to grow. Fabulous, look forward to that. Thanks very much Tim. Great, thank you.