Behavior Driven Management


Manage Your Money for Maximum Profit


Lesson Info

Behavior Driven Management

I want to go back to the cave, man. Mind wanna rewind to biology class in freshman year high school or wherever it is that you had biology class and and explain how to cave man mind works. The cave man. There was two types. There was the hunters and the gathers. Remember that class and the hunters were the males, and the gatherers were the females, and the hunters will go out, seek food, animals, whatever to hunt down. And the gatherers were protecting the tribe and also gathering, uh, um, berries and stuff like that to feed the tribe. Now the hunter as he walked through the woods, uh, he be with his other tribesmen, and they'd have these weapons where those rocks and spears and so forth and herbie crunching leaves under his feet, his mind was a tuned very quickly, or was designed to very quickly tune that out. So this crunching leaves should be ignored because it was a common repeating sound that he expected. Conversely, the second there was even a slightest twig cracking the distance...

. He would freeze and listen and look, because that represented either an opportunity or threat. It was dinner or he was dinner, you know, and we will something was gonna happen here, but something different required absolute tension, and so the caveman mind hasn't changed much it's still in our heads stay society's moved pretty quick speeds, but our minds haven't changed much. So when something different and unexpected presents itself, our minds instantly go into paying absolute tension to it because I could be an opportunity or threat repeating stuff stuff that we we do, our mind filters out, it could be ignored. It's you here writing pens and stuff as folks are taking notes, you hear typing keyboard in the background you just ignore it that's background noise but if we hear that pop up there because the construction workers, all of us will turn and start looking at that, their mind is wired to pay for something is different that's how the cave man operated the cave woman they think gathers the females would go and they would find that new barry on the tree, you know, but they've never seen before and what would she do? She would look and say this could be an opportunity threat. It could be poisonous, you kill me or this could feed our tribe so it required from the female mind absolute one hundred percent attention because it was different so the cave man mind had wiring to notice something that was different. Is it opportunity or threat? It also had the wiring for safety so as the caveman was going around and they hear that twig snap they pay absolute tension or something different now they see walking through is like a saber toothed tiger or something which if you know biology or history that's a total joke because the saber toothed tiger man does not exist at the same time that was hysterical I could just feel you a little laughing so hard inside right now so the saber toothed tiger comes walking by cave man kills up it falls over the cave man didn't run over and start digging into this thing it's that is it really dead so what did the cave man dio he looked at the guys and actually means that hey who's up for poking the saber toothed tiger one guy's that good you know to go do it you know when he walk over and he poked a sabre tooth tiger and it's a tired guy up and killed him oh god you know, the other guys were like j k o was kind of a jerk anyway yeah, right or he's long gone or if the saber tooth tiger when he when that first guy poked it didn't get him the other cavemen said it's safe and I ran to get it so the cave man mind says watch other people demonstrated behavior first before you do it it's safer to see other people do it first before you do it and fear we all know fear fear teaches us in the cave man mind if there's something to be afraid of that that means it's a threat that it has to require all attention to the disregard of anything else so if there's a a animal charging you it doesn't matter if you hear cracking branches in the distance you have an immediate issue you're about to be killed now that thing may be a monster too but it's not going to kill you right now and kill you ten seconds from now run away from this fear pay absolute tension to it if you've ever had a moment of extreme fear your mind you actually can feel the experience that we get that tunnel vision and everything goes in slow motion because your mind has become so maniacally focused on it well there's not a cave man mind operates uh and it operates in our lives today in modern society so I want to point out some experiences right and I want to share what you you've experienced to black friday they would know what black friday is one person's air one shopper here too okay okay there's no black friday to friday is how we do okay so black friday uh is the day for anyone that's paying attention and watching remotely right now black friday is the day after thanksgiving it's the greatest our biggest shopping day in us for us consumers currently so more stuff is purchased at retail stores on black friday than any other day of the year. But twenty five years ago, you know j k o you know j k oh, um, yeah, this is ring in my head. Black friday, uh, didn't exist. I mean, the day was there, but there wasn't all this consumption on this particular day. What happened? Retailers tuned into the cave man mind twenty five years ago. Major retailers, I believe it was kmart nordstrom's. Some other large retail stores came together and said, we have a great day for consumers itt's friday after thanksgiving. Now, if you think about this day it's the day after thanksgiving thanksgiving is a non religious holiday here in the us, which means none of us have religious obligations and they said, and then the next day friday, no one goes toe work. Basically, every business is closed, so you have people that have no obligations who are home on friday they said the best part, jeff, is the day before they were with their family. S so this's, this is like a perfect day with people that are home want to get get out and have no obligations otherwise but how can people aren't buying now? Here's the interesting thing, twenty six years ago, thirty years ago, going back stores were doing these sales, these discounts we're going on to dr consumption and sure enough, on this particular friday for thanksgiving, they were doing sales and so forth, but there was no spike in sales. Well, they leveraged uh, the call for safety number. The cave man sees one guy poke the saber toothed tiger. If the tiger is ok, they can all come and collect the food. The meat like friday work the same way these retailers called uh uh, actors, consumers and said actors is that we want you to come to our store at five o'clock in the morning when you come to the k mart, come to the store and start shaking the doors and pushing like you want to get in and we want you you're saying there's a sale going on? We want to get the great sale these actors came this particular day, twenty five years ago, they show up there's a couple hundred people came or thing cause the news crews in town and says, people at our store, we're not sure what's going on news crews came lights light up, we're sitting, you know, in some pumpkin pie with your coffee in the morning and then the tv comes on and we see all these other consumers down there right now what's going on something great must be going on how I didn't know what am I doing at home with my family and we shot out and we no maybe not you individually but the majority of people started making purchases that day we started replicating other people's behave there's someone shopped on black friday in this room that what will admit it yeah you're admitting it not anymore no not on purpose have you ever give a standing ovation but yes I have done that okay did you start I don't want to even if you don't want to because you have tio yes okay so most maybe you don't shop on black friday a lot of consumers dio but you are still you still have the cave man mind going on and it happens most for everyone with standing ovations who's giving the standing ovation here ok ok did you start this innovation now did you know did you only for you thank you good you got the check already uh did you start it now most of us never started standing ovation that we participate in why? Because the call to replicate others it's the cave man mind here's a standing ovation on actor a play or someone creative live name like mccalla wits does a presentation first person stands up start applauding now the two people next that person like they're standing it's kind of awkward to be sitting I should do it and by the way someone else there popped up and stood up I should stand right and then the ovation wave breaks out across the crowd and you know, most plays uh most performances have was called assaults these air people you know that right? Oh tell them tell me what it is it's the person who has planted there teo to generate that the energy that's good that's dinner so that they act so that the actors are confident that they're you know that they're there uh pushing that story forward exactly yeah, so assault will do things like what? Well like comment teo teo the to the actors on stage or the presenter on stage or so the energy's speech the salt will ask a question it was an actor and it's a funny scene, right? So and then when this comes first innovation the salt stands up first and claps first, right? So there's actors in your audience I'm sorry the ruin this for you there is there's no way it actually physically is you're really turning up the heat okay for may but right so there's actors in every audience that you have these big responses because your behavior even right now is we're in this room is being dictated by the people around you by the folks around you and so rick in your mind, your paintings that john was going to be okay and your mind's measuring to stay within the safety range of replicating others because we're the cave man minds wired that way, and so these plays when a standing ovation breaks out inevitably assaults they stand there applies is fantastic and you only need three or four in the audience get him in the general vicinity near each other so people can see a couple and then we start replicating and breaks out that's how stay innovations work and remember this when it comes to our business, we're doing the exact same thing we're monitoring the behavior of everyone else and we're trying to replicate it. Why? Because it's the safest thing to do it's the safest thing to do uh, mob effects this is another extreme even in recent news there's there's mobs happiness it's unfortunate but if you think of any of those individuals that are in a mob that are runing property or hurting other people, any of these individuals, if you took them out of that scenario just put him just by themselves on the street they would never behave that way they wouldn't just kick in doors and break things or hurt others, but when others are starting to do it, then it builds on each other and they replicate each other cave man mind that's the way we're wired uh we talked about staying ovations uh in money management is the same way money management the same way your friends'll say how's how's business going it's going great then they'll say it's going great and we start saying going great and then we look for ways to justify house great we'll look at all the sales always great customers and we ignore the profit so we replicate others what what are your ideas? Have you experienced this too? Yeah rina you know what you're talking about mobs and I was just thinking about I mean my industry in in media and television and the popularity of certain types of shows right and how a lot of these shows are replicating riel life situations and I wonder and this gets brought up in a lot of different scenarios where uh life what is it that life imitates art in art? You know and what kind of responsibility do we have or not have as people who are entrepreneurs to make a positive impact verses something else? Yeah, no it's really significant I'll tell you one the most important things you can do to make your business healthy is they say you can't pick your family but you can pick your friends who you electing to hang out with you if you hang out other entrepreneurs four five folks that are just driven to be profitable in a very healthy way you're almost assuring your success if you're hanging out with people that are struggling themselves, you're almost assuring your struggle. So what I encourage you to do is is today I mean, listen, there's there's ten of us going through this experience together today we don't have to be in the same neighborhood or the same town we can still communicate, I encourage us to start saying, hey, I'm really committed to the profitability of business if you are I'm in with you and let's let's support each other because this me hearing about your profitably your dry for it it's gonna drive me and mine's gonna drive you support and the folks online too. Like what in court crave life is such a great community, we can support each other just reach out to each other, support each other, encourage each other. Yeah, I grew up in a small town in the midwest when I first became a business person that's where I was and there was a few jewish business people in our community number in many midwest, you know you don't see them, they're out joy z or someone it's like everywhere get out if I was visiting with one of these guys who's very successful his observations time was you know, he said, what I notice he said with you non jewish business people, he said, is that you root for the other non jewish business people to fail. He said the jewish business community roots for their other jewish business people to succeed interesting and I always remember that because I thought it's true yeah, way always want to find out that they're having a struggle to yeah makes us feel better about our struggle rather than celebrating their success. Yeah, it's I so true some of our I don't have you ever had this experience? But with friends as a friend has a success somewhere and what's the real thought going on in your head? I know in my head sometimes a friendly, successful and jealousy kicks ass god I've been trying to for ever so long and he just gets it and poor little part of me wants to pull him back down, get him backto, you know, grounded where he should be so there's that that competitive spirit but when we're working with a group of people that are all supporting something knew there could be this upward spiral and the competitive nature will still kick in, but would it be nice to be competitive around profitability as opposed to top line and many of us compete around top line? How big's your business, how employees you got it's about this grow grow grow and were bragging about things that are killing our bottom line were bragging about things that are only killing our business another great example so here's the formula we've gone over this uh and I'm gonna keep on driving this home I want you to start living this way we've been told to live this way I want you to live that way all right before you stared this for too long I have a question for you there's gonna be too don't look at it yet that turned out to the words I want you just instinctively pick one's a center one defines a center one defines a saint okay so just look at real quick which one's a sinner instinctually which one's the center which one's the saint sinner who are these two listings these two type people which was the centre which was the same you she'll pick it out like this what's with your mind say instantly think like of the two lines which is this is a defines a person this defines a person which one's the center which one's the same well stop center correct who said that good ok not everything agree with that no no top is the scene okay? We'll look at the words right? Yeah, I mean they give you too much time you look at all the individual words um there's the words exactly the same right logically you cannot determine who the center or the saint is because every single word is here but behave really most people put awaiting its called the prime ing effect the prime ing effect puts a disproportionate weight on what we see first okay when you saw these words if you're english dramatic reader you start left to right you see the word hate so I say which one's the center which one's the st your mind sees the word hate and you put a waiting on that disproportionately you see love so your mind says I hate that sound like a center we often put somewhere above the seventy to eighty percent wait there the next words called a validator the next word validates our our belief so we say this wouldn't look like the centre the next word we see anger right at the center that confirms that the rest of words become almost irrelevant so eighty percent the weight is put in the first two words in the remaining twenty percent it's here we often justify these words so this one is, uh physical proof hate okay, that sound like a sinner validator oh yes it's definitely a center and these become just if irs we justify single indifference you're clearly a sinner is indifferent towards society care they care about no one you love they've never experienced love in their life that's your whole problem center conversely, this one we say oh curry the same saints are known for their love and their caring, validated indifference you know, they probably have experienced a loss of indifference in their in their life almost irrelevant anger they have to confront anger and hatred. This is what they're trying to cure the world of anger and hate. Now, the thing I wanted to point out here is we make a determination in the very beginning of what we see when we see that bank balances a big bank balance we are primed to say business is great have you had the experience big check comes in so when I ask you how's business going like it's coming together things were kicking going this is amazing, right? Just go like this, you know, all the time. Yeah have you all experience that when a big cheque comes in the bank balance is nice have you money? Have you? Yeah, yeah, you've been primed that's normal human behavior we see something and then we decide that's the way it's going to be and as we're talking about before when we believe something to be the truth, we start behaving that way now conversely than the bank balance goes down that's when we throw our hands up in the air and say god business is horrible nothing's working this is all falling apart I'm not telling you you can change yourself in yourself easily um nor should you I just want you to make your your behaviour to become conscious that you're just aware this is how we operate this will become our biggest ally once we implement profit first fully the fear response we talked about this fear response we put this disproportionate focus on what's coming forward so matched up with was what presently in front of us so match fear to prime ing and we could get in real trouble if if businesses you know it's been a bad week one client's really angry and if you don't get this fixed right away there's any real trouble may sue you fear gets invoked and then if you have a bad bank balance you're primed you matches to up and it's a disaster like nothing's working uh my whole business is falling apart all these years of effort it's fine collapsing conversely client sends you a cheque you see nice back bank balance we get primed the other way the authority effect um what was this guy what's he do for profession dr apparently the doctor right? Right. You can get cancer and he's a doctor for god's sake this man's a doctor jim it's called the authority effect when we watch television commercials and that that doctor comes on in the white robe and the stuff and he's talking about you know this great miracle medicine it's more likely to be consumed as being truthful because we've been trained when you see someone like this they know about health or the body right if you go to a gym and someone comes dressed like this just like I am or someone comes with, you know ah tank top t shirt and shorts and stuff like that who's more likely going to give you the better physical training the person dressed in the gym clothes we've been primed when you see something to have a certain expectation for that person it's called and and when there once for a person is called the authority effect, we see this guy and we're more likely to take his advice we put a disproportionate trust and authorities here's a challenge when it comes to the money in your business if you get are getting financial advice from someone that says only I used the old school way you have a manager money this other way because of the authority effect were going to say, oh yeah that they have to be right they have the knowledge and experience right and that points back to the challenge of axioms when there is a perpetual belief like the world is flat thes authority figures will come and say the world is flat and then we will say, okay, if an authority says his flat's gotta pee so you just want to drive the point home is that you're going to be challenged a sze yu try to implement profit in a new way by authority figures not because there they're bad people whatsoever it's just that's the way they've been primed and prepared and were more likely to listen to folks and just a plug in for what jeff is doing with our company profit first professionals or some authorities there challenging that figure um the community effect we already touched on this there's there's different types of accountability there's what's called implied accountability and then there's what's called select accountability implied accountability is where you are forced to become accountable because the circumstances you're in your your family, for example are your default piers there's forced kind of relations with them? It's implied, and you're held to whatever standards or expectations they have there's also select accountability implied accountability can become your enemy when it comes to profitability. If you're the people that you're acquainted with are focusing on the top line and not the bottom my health of your business, it can hurt you, but I'm encouraging you do already mentioned this is to do select accountability pick the people you wanna hang out with that air driving profitability and you're more likely to become like them um I just wanna move through little more quickly because we have donna coming on in a few minutes uh the momentum effect um going back to the cave man when the cave man approached a new food items they the gatherers saw that barry do you think she took that barrier fruit off the tree and said I've never seen this before it's different a little risky let me just eat this whole thing and see how it is or did she take a little nibble and see if her tongue felt different or if there was some kind of poison there they took small bite it's so we are wired's people if we were to take a risk of doing something new to go in just by dipping the toe and just a little bit and not diving in deep when it comes to implementing and make your business more profitable the biggest risk that you can run his once once you're his concept is just to try in one big bite we're not wired to do things that way and then when if it doesn't work if you have any trouble you'll say well it doesn't work I got to go back to the way it was it was safer to go back to the way it wass so as you implement this process of improving profit in your business doing small bites don't go all in right away small little steps our minds are wired teo extract benefit in small bites you've probably all heard this too as we implement new systems um the perfectionist in us can kill us. So as we go through implementing profit first in your business, if you try to get us perfect from day one, you're bound to fail. I presume you're rock stacks. You didn't make the perfect one of the first try, but you did start right and that's how it works in profitability, we're gonna have problems, we may have setbacks, it isn't gonna work perfectly well how you started today and taking small steps and we'll get momentum. Um, there's a fascinating study in the health industry for weight loss and there's a thing called the one percent technique um, there was a study about exercise and there's, no question that exercise is a great way to become physically fit, right? There's no, no discussion about that there's an absolute correlation between exercise and fitness and the more exercise you get to a certain point, the more fit you are before you get the pleading returns. So the prescription for most people that wanna lose weight, the fit is experts, they weren't out more. You go run three days a week and do this and do that, but most people don't stick with it because it's a big bite there's, a better technique for implementing fitness and what they found is by only doing one percent. Of the ultimate goal start off that way one percent so what they did is they said, ok, you want to lose fifteen pounds? Whatever the wait is what's one percent of that it's just, you know, it's less in the pound, I mean, we've got a little progress well, to do that, they would say instead of going for this big run and doing stuff, do you watch tv every so often people? So, you know, watching tv, how do you watch tv sitting or standing? Well, sitting here is the one percent change I simply want you to do same thing I've always been doing, but just stand and says, sitting watching tv and sure enough, you'll burn more calories at this, they won't you have some success at let's say well, when you're watching tv, why don't you just move your feet and chef your feet every so often and that becomes weak too, or we three of the regiment and you slowly start building up one percent at a time and very quickly, usually with like three, four months people that could never imagine themselves running a mile are running too so prophet first in fixing our businesses it's the small siri's of winds lets through one percent one percent one percent keep stringing it together

Class Description

Ready to take full control of your business’s financial health? Join Mike Michalowicz, author of The Pumpkin Plan, The Toilet Paper Entrepreneur and his newest book Profit First, for an immersion into understanding the shockingly simple principles behind financial management and leveraging it to grow your business.

In this course, you’ll learn the core four principles of financial health and how to use them to create a profitable "rhythm" for your company. You’ll also learn about the psychology of managing your debt, whether you’re struggling with credit card debt, loans, or personal guarantees. Mike will also cover ways to bring new money into your business through cost-cutting, renegotiating, finding lost revenue opportunities, and much more.

By the end of this course, you will have escaped the panic-driven cycle of operating check-to-check and you’ll have a foolproof way of ensuring that your business becomes permanently profitable... from the very first day that you watch this course.


Ella Heath Photography

Wonderful class!! Not only is the content very impactful and life-changing but Mike's funny character made the class very entertaining - the marker on the forehead story made my husband and me laugh to tears!! We are implementing Profit First right away. Thank you CL for hosting such an amazing class.