The Incredible Power of Processing Issues
You have control over your mind—not outside events. Realize this, and you will nd strength.
—Roman emperor Marcus Aurelius, Meditations
Every day, all day long, we are faced with issues. Your best customer threatens to walk away if you don’t lower your price. Your star employee says she’s leaving if you don’t give her equity. A pandemic causes the market to crash 30 percent in a single month. A bigger competitor is bullying you and trying to put you out of business. Your kid gets into a ght at school. The issues never stop.
You constantly hear people talk about the keys to success. It may be the most common question of amateur podcasters, probably because it’s safe and simple. You’ll hear answers ranging from “marry the right person” to “focus on health,” “work hard,” “have faith,” and a host of other things.
You’re going to have moments when you feel as though the world is coming to an end. An amateur panics, but a grand master doesn’t.
Before he does anything, he must rst “process” what’s happening. He has to do so while staying on an even keel. This is why stoicism is both so important and so challenging—and why Marcus Aurelius and Seneca are sages who have stood the test of time. Emotion can get the best of all of us and cloud our judgment. Sadly, I’ve learned this lesson the hard way too many times. It’s why my answer about the key to success for people at all levels of business is “Know
how to process issues.” Life is always happening; the way you respond is based on how you process issues.
Most entrepreneurs don’t fail because of a awed business model or an investor who backs out. They fail because they refuse to abandon their preconceived notions about work and life. They refuse to solve (and learn from) any and all kinds of problems as they arise.
Some people say that common sense can’t be taught. I can tell you that it can be taught, and it can be learned—because once you learn how to become a more strategic thinker, making important decisions is going to seem like second nature to you. Not long ago, I was a high-strung CEO with a horrible temper. In 2013, I had a panic attack that sent me to the hospital—and recurred every day for eighteen months. The main cause of the panic attacks was indecision! What kept me up at night and made my heart beat faster wasn’t my workload, which I could handle. The problem was that I could never stop thinking about issues. I would replay every decision and every conversation over and over in my mind. It was eating me alive and damaging both my business and personal life.
I had no peace of mind because I was so worried that I would make a wrong decision.
I know what it’s like to work eighteen-hour days and still feel as though you’re spinning your wheels. Like most of us, I spent my early career chasing certainty and treating every issue as though it were black or white, as though there were one right solution to every problem—if only I could gure out what that was. It was as unproductive as it was exhausting.
If I could learn how to process issues, you can, too. I’m going to show you how to solve any problem calmly and e ectively, no matter what the stakes. Building a business requires you to slay many dragons. Problems are inevitable; you’d better get a grip on solving them. To do so, you must be processing issues constantly.
1. Processing is the ability to make e ective decisions based on access to information at hand with the highest odds in your favor.
2. Processing is about subjecting every di cult choice, problem, or opportunity you face to a rigorous mental analysis.
3. Processing is playing out strategies, seeing the hidden consequences, and sequencing a series of moves to permanently solve problems.
The Most Important Trait to Process Effectively: Taking Responsibility
Great processors use the word “I” and see their role in whatever problem has occurred. They ask questions such as “How did I contribute to this? What did I do to cocreate this situation? How can I improve so I’ll be better equipped to handle something like this in the future?”
Poor processors play the victim and blame others and external events rather than seeing how they contributed to the problem. You know you’re witnessing a poor processor when you don’t hear the word “I.” You’ll hear him or her say things such as “All millennials are lazy. These kids have no work ethic. They are causing my business to su er.”
Expert processors replace the word “they” (or “you” or “it”) with the word “I.”
When dealing with the same issue, the expert processor will say, “I’m doing a poor job managing millennials. I need to see what my blind spots are. I need to learn how to better understand them so I know what motivates them. Or I need to hire a di erent demographic. No matter what, it’s on me to solve this problem.”
What di erentiates mediocre people from exceptional ones is how deeply they process. Most people are surface-level processors, but the best of the best go much deeper. Long-term thinking versus short-term thinking is the di erence between a grand master and an amateur. Surface-level processors are looking for a quick x. They are thinking only one move ahead, and their goal is to make the issue disappear for now. Deep-level processors look beneath the surface for causes. They are thinking several moves ahead and planning a sequence of moves to make sure the issue doesn’t happen again.
It’s important that you see how most people process issues. Blame and escape are the most common responses, and they may be your initial reaction, too. I get it. We’re all human. Reference this list to see which choice you are making.
Three Approaches to Dealing with an Issue
1. Find someone to blame. It’s much easier to externalize the problem than deal with it. If you can’t identify one person, email all your contacts, telling them to go to hell, followed by a row of middle- nger emojis.
2. Find a safe space to which to escape. Find a distraction. Check Instagram. Turn on the news, ESPN, or TMZ. Pretend you can multitask by clearing out your inbox. Better yet, call it a day and go home to your warm bed.
3. Find a way to process by taking responsibility. Take a deep breath and remind yourself that these are the moments that separate winners from losers.
The Great Ones Own Their Role
“My bad.”
These are two simple words that all the great ones use constantly. Winners also use phrases such as “This mistake is on me” and “We have no one to blame but ourselves.”
What do victims do? Blame the software. Blame the market. Blame their teammates. Blame their customers. Blame their managers. They point the nger at everyone but themselves. As a result, they keep making the same mistakes and keep losing.
I bet you know some of these people. They’re the ones who tell you that it’s always somebody else’s fault. It’s a constant victim story and a bottomless sea of complaints. Blaming others distracts them from seeing themselves as the common factor in all their interactions. The author and relationship coach Mark Manson said, “I always tell men, if every girl you date is unstable and crazy, that’s a re ection of your emotional maturity level. It’s a re ection of your con dence or lack of con dence. It’s a re ection of your neediness.”
Contrast victims to winners. They are easy to spot. They’re the ones who take ownership of issues.
Kids will say, “It broke.” Mature, accountable adults say, “I broke it.”
Joe Rogan is a perfect example of a leader who holds himself accountable. Rogan has found success in stand-up comedy, acting, martial arts, commentating on the UFC, and his own podcast. In my view, the key to his
success is his ability to process issues and accept responsibility. He doesn’t hold back his opinions and thoughts. He simply talks through how his mind operates and, in doing so, gives us a glimpse into how he processes issues.
On one of his podcasts, he was venting about how a guy he had partnered with to sell co ee used his platform in a way that didn’t sit right with Rogan. You could hear the frustration in his voice. Rather than blaming the other guy, Rogan took responsibility. Rather than saying that he had been victimized, he owned his role in what had happened. His exact words were “I f—in’ bought it. Here we have a problem that we’ve allowed to be created.”
He had every right to be angry. Most people would have focused on what the other person did. Rather than saying he had been sold (and was therefore a victim who had been taken advantage of), Rogan owned the fact that he had bought it (and cocreated the problem by being complicit). When you process issues and take responsibility, you stop blaming others. Sure, Rogan started out sounding angry, but as he processed the issue, he said, “I feel bad because I like the guy…. I don’t even think it’s intentional.” In other words, it didn’t take him long to realize that the root of his frustration was his own actions.
A pro who has been processing issues for decades understands that nobody does anything to him without his allowing it. Rather than becoming bitter, achievers use adversity as a lever to get better. In this case, Rogan directed his frustration to avoid making the same mistake again. When most people would be blasting someone else on social media or threatening a lawsuit, Rogan was educating himself. He said, “I’ve f—in’ read more about co ee over the last three weeks than I’ve ever wanted to read or thought I would ever have to.”
Processing Steps to Take When Someone Ticks
You Off
1. Take responsibility for your role in what happened. 2. State speci cally what you did to create the problem.
3. Channel your frustration into getting better and preventing future problems.
That’s winning processing in action. That’s an e ective approach by a person who has created a habit of tackling issues and using them for learning and
growth. It’s not innate and not something you learn overnight. However, it can de nitely be learned.
It can also be taught. If you manage people, you need to go beyond processing issues for yourself. You need to transfer the skill to your managers and employees. The best way is by example. When you become a deep-level processor, you set the example for how to tackle issues. This is essential to scaling your business.
I emphasize that processing issues is the most important skill to master because it’s something you’ll have to do several times a day for the rest of your life. For starters, shifting to someone who takes responsibility rather than blaming others will change everything. You will go from being a victim of circumstances to a person who creates his or her own reality.
How to Deal with a Crisis
I feel strongly about taking responsibility and owning your role in what happens. Acting like a victim is the opposite of being a grand master. At the same time, let’s recognize that things do happen outside your control. As we learned from the pandemic that started at the beginning of 2020, you are going to deal with external forces that have nothing to do with your choices.
Many things are not your fault.
Negative events happen that are beyond your control.
10 Types of Crises
1. Health
2. Technology/Cyber 3. Organizational
4. Violence
5. Revenge from a former employee 6. Defamation of character
7. Financial (personal or a market correction) 8. Black swan
9. Personal
10. Natural
Crises have di erent lifespans. Some last an hour, and others can last a quarter or even a year. Just as the stock market can’t stand uncertainty, neither can businesses. The unknown is what creates fear. When a crisis does happen, the responsibility of a leader increases tenfold. During heightened uncertainty, too many leaders make the mistake of going quiet. In the absence of a plan, they feel that saying nothing is better than saying the wrong thing.
Going silent during a crisis is an example of making the easy choice instead of the e ective choice. In fact, the importance of frequent and quality communication magni es during a crisis. When everyone is freaking out, it’s incumbent upon you, the leader, to be the calm in the storm. Decisiveness, resiliency, and calmly processing issues are even more critical at this time.
The way you react either shortens or extends the crisis. Let’s put every crisis on a scale from 1 to 10.
What extends or decreases the lifespan of a
crisis:
1. Your strategies
2. Your level of poise
3. Your overexaggeration of a crisis: Turning a 3 into a 9 4. Your downplaying of a crisis: Turning a 9 into a 3
5. Your ability to see ve moves ahead.
There’s no reason to blame yourself for an accident or a pandemic. You didn’t create the crisis. It’s your reaction to the crisis that will determine the life or death of your business.
Embrace Math and Use Investment Time Return (ITR)
If you think I’ve gone a bit overboard emphasizing the need to accept responsibility, I plead guilty as charged. So much of processing is about
perspective. Instead of blaming external events, you have to shift to seeing yourself as both the creator and the solver of issues. This is hardly a “soft” skill, and it’s one that I can’t emphasize enough. I also can’t emphasize enough that expert processors possess both emotional and analytical tools. Now let’s put those analytical muscles to work.
Most issues involve time and money. We make bad decisions when we don’t factor both into our processing. Amateurs react rst and think second. They decide emotionally and rationalize logically: “Oh, I’m not going to spend any money on new hires right now, when things are i y.” Or they may say, “That new software is cool! We’ve got to get that in place tomorrow.”
What you hear in those statements is emotion. A stoic would advise you to take a more measured approach. The software may be cool, but have you calculated how long it will take you to pay back your investment? Have you taken the time to gure out the true cost of a new hire (salary and bene ts are only part of the equation) as well as the expected revenue bump that person will create?
You can’t make decisions without analyzing properly and thinking several moves ahead. I’ve probably said “ITR” (Investment Time Return) to my team a million times. Maybe they’re tired of hearing me saying it, but they know how valuable it is. Here’s the ITR formula:
Before making a decision, start out with the “rule of three” by creating three di erent proposals for dealing with an issue, each with a di erent price tag. When people don’t know how I work, they come to me with an idea and say, “Here’s how much it’s going to cost.”
If they do that, I’ll ask them for two other proposals. Having three di erent proposals/cost estimates helps stretch the dollar. Having three proposals gives you options for maximizing the value of whatever action you take. And don’t tell me that we have only one option. If you think that, you’ll in ate rather than stretch your dollars.
Next, gure out your time frame. For instance, if you spend $100,000, you can get something done in six months, but if you spend $200,000, you can nish it in three months. Then you can ask yourself: Is it worth spending twice the money to get the project done in half the time?
Making this determination is a combination of your cash ow and the urgency of the project. If it’s heart-attack urgent, you’d better spend the additional money. Then again, if you have to borrow to nance the project, you’d better factor the cost of capital into the equation.
After you have calculated the cost and time, gure out the return. Let’s say a project that costs $200,000 and will take a year to complete will lower your risk of losing clients by 8 percent. You are currently writing 30,000 orders a year.
Thirty thousand contracts times 8 percent equals 2,400 contracts. If each contract is worth $200, the total return is $480,000.
You don’t have to be a math genius to gure out that this investment is worth it. But you need to dig a little deeper into the numbers. Make a list of the blind spots or things that could go wrong with the decision. It’s easy to think about what could go right, but it’s also important to see the downside.
Take a page from Dale Carnegie’s book How to Stop Worrying and Start Living and look at the worst-case scenario. In this situation, the worst that can happen is losing $200,000. Can you live with that? Will it put you out of business? Your decision should be based on knowing what your all-in risk will be instead of just winging it or looking solely at the positive potential.
People tend to justify their decisions by running best-case numbers. You need to be realistic with your assumptions. Even if the investment saved only 4
percent of the policies (.04 × 30,000 × 200), you’re still looking at a revenue bump of $240,000. If you have to borrow at 12 percent to nance the project (increasing your true expense to $224,000), it’s still worth it. In fact, it’s a good idea to gure out the breakeven of any project before committing to it.
There’s no high-level math here. You simply need to think through the Investment Time Return (ITR) formula and make sound projections. It doesn’t mean that you need an advanced degree in calculus. It does mean that you can’t be lazy with the numbers and you need to think about several di erent outcomes, which is how you should always think. ITR is a critical skill and one that you’ll use time and time again.
Great Processors Rarely Repeat Their Mistakes
Years ago, I had a chance to invest in an apparel company. I like fashion, and I was impressed by both the product and personality of the owner, Ray. Plus I thought I saw an opportunity when Ray was willing to sell 60 percent of his company for only a hundred grand.
My business was on re at the time. I was patting myself on the back for being liquid enough to buy a big equity stake in that business. Why should I bother doing research when Ray was such a sincere and talented guy?
Right after the deal closed, I became a lot more popular. In fact, my phone didn’t stop ringing. As soon as word got out to Ray’s creditors that he had an investor with deep pockets, they lined up to get their money back. I fought back. I got stubborn. I ended up wasting far too many hours—hours that took away from my actual business—to ght those people. I blamed the creditors. I blamed Ray. I blamed everybody not named Patrick. And I kept digging a deeper hole for myself.
There’s a wise expression that makes perfect sense: when you’re in a hole, stop digging. The problem is that when you’re in that hole, you’re often too angry and too emotional to do anything but ght for your life. Those are the moments when it’s important to have smart people around you who aren’t afraid to pull you out of the hole. Thankfully, with nudging from my inner circle, I nally relented and threw in the towel on the founder, accepting the loss and getting back to work on my primary business.
I was more upset about my decision-making process than about the money itself. I went against my own nonnegotiables—investing in an industry I knew nothing about, looking past the personal issues of a charismatic founder, trying to generalize instead of specialize—and it ended up costing me. My gut told me from the beginning that I shouldn’t get involved, but I failed to think more than one move ahead. I was surface-level processing, and I paid a price for it.
When I nally took responsibility, I understood my role in the asco. I re ected on all the mistakes I had made. I had not done proper research or performed due diligence. I had invested in an industry outside my sphere of competency. I had been both cocky and greedy. I had failed to remember the simple wisdom: if it seems too good to be true, it probably is.
Once I owned my mistakes, I was left with a closet full of clothes to remind me of a $100,000 mistake, not including all the time I’d wasted. If you’re going to lose, don’t lose the lesson. Again, you’re going to use experiences to become either bitter or better. To get better, you must re ect on your mistakes. I was reminded of how Magnus Carlsen, after a loss, would analyze every decision he had made to see exactly where and how things had gone wrong. Every master, both in chess and in business, learns more from studying the moves that led to defeat than the ones that led to victory.
The Eight Traits of a Great Processor
The people I know who are expert processors have very di erent personalities and business strategies, but they share the following eight traits:
1. They ask lots of questions. Having more data leads to making better assumptions. What caused this? How can we solve it? How can we prevent it from happening again?
2. They don’t care about being right or wrong. They’re interested only in the truth. Great processors want to handle the situation and move on. If someone else has a better idea, great. Ego doesn’t become an obstacle to making the right decision.
3. They don’t make excuses. Wasting time and e ort on why things went wrong isn’t their style.
4. They like to be challenged. Their priority is handling a situation quickly and e ectively, and if other people have a solution—even if it di ers from their own— they want to hear it. They relish people who cause them to consider alternatives or defend their position.
5. They’re curious. You can’t solve problems without knowledge. Processors are always learning more about their business and how it works. They love critical details as much as big ideas.
6. They prevent more problems than they solve. People who are really good at processing issues are also really good at spotting yellow ags before they turn red.
7. They make great negotiators. Curious problem solvers use logic to nd a win for all parties involved.
8. They’re more interested in permanently solving a problem than putting a Band-Aid on it.
Expert Processors Look Forward to Confronting Issues (They Treat Them Like a Game)
It’s not a coincidence that great processors who possess these qualities become leaders. As they build a track record of processing issues logically and e ciently and meet people’s needs, they earn the trust of everyone who works with them.
Expert processors don’t fear issues. They welcome them and treat them like a game. If your top sales producer threatens to leave, you start by taking responsibility. This leads you to own the fact that your compensation plan stinks and you have no strategy for retention. Plus, your sales training isn’t the best, and you need to nd ways to improve it. Rather than panicking, you embrace the situation. You say to yourself, “Not only do we get to gure out how to
retain him, we will also develop a strategy to build the most loyal sales force in the business.” This doesn’t mean that you should linger in your realization of a weakness. Instead, it calls for processing it and planning your next moves.
Your mindset is everything. When you start viewing a crisis as an opportunity, you are winning the game.
I’ve mentored some great young entrepreneurs during my career, and I’ve had the privilege of watching them become phenomenal at processing issues. I’ve seen that skill set elevate them above their peers time and again; it’s why I put
processing at the top of my list for aspiring entrepreneurs, as well as for my own kids.
Once a month, get together in a room with your leadership team—or simply a group of three to ve trusted, open-minded peers—and spend an hour focused on the next big problem to solve. What I do in these meetings is bring up issues and let the team have a collaborative debate on the topic. The stronger the debate, the closer we get to the best decision. Listen instead of argue. Remain curious.
This is the key to entrepreneurial success. Make processing best practices part of your company culture, and this ability will seep into the heads of your people, who will get better and better at using it. It will improve the bottom line, sure, but it will also produce better leaders and better human beings. All the world’s problems are issues to be processed, and though you may not be in a position to solve world hunger, you can solve issues in the world in which you live and work.
Most of us don’t process issues naturally. It’s like marriage. Think about the couples you know who have deeper issues that they’re unwilling to address. They avoid certain subjects—problems with sex, in-laws, religion—until they blow up the marriage. Perhaps they manage to stay together for a while, often doing so for the sake of the kids. They’re not happy; they may live together, but they are psychologically apart. And when they get older, they can’t stand it anymore and get divorced. They’ve wasted so many years being angry because they never addressed their issues.
When you refuse to process issues, you live a lie and pay the consequences. Don’t waste your time, personally or professionally.
If you can learn how to face reality and make decisions based on your own compass, you can succeed in business. The hype you read on the internet would have you believe that some are born with the “bug,” a natural appetite for risk that leads directly to success. The truth is a lot more basic. Over a lifetime, success in business (whether as an entrepreneur, as an intrapreneur, or in any career choice) requires a particular mindset, an aggressive and unyielding approach to solving problems. The best strategy is to hone your ability to process issues.
5
How to Solve for X: A Methodology for E ective Decision Making
In forty hours I shall be in battle, with little information, and on the spur of the moment will have to make the most momentous decisions, but I believe that one’s spirit enlarges with responsibility and that, with God’s help, I shall make them and make them right. It seems that my whole life has been pointed to this moment. When this job is done, I presume I will be pointed to the next step in the ladder of destiny. If I do my full duty, the rest will take care of itself.
—General George S. Patton
Processing issues is such an important topic that I want to expand on the last chapter—and give you a speci c methodology for processing and decision making.
In my view, one of the keys to success is having a system. Those who have a system for making better decisions win. Some decisions are quick, while others take time. You need a speci c methodology to attack any issue, the same way a chess master knows how to play any opening or defend against one once the match starts.
I needed to develop a system I could trust to help me sort through exactly what I needed to x and to help me see all of my options. I needed to develop an organized way of thinking that would enable me to make choices with the highest odds of success, both in the moment and in the long term. The system I
eventually developed didn’t always yield the perfect choice, but because I was thorough in how I approached and dissected issues, it left me feeling complete. What nally gave me peace of mind and put an end to the panic attacks was having a methodology. For the rst time in my life, I could actually put issues to bed and move on without feeling fear and regret owing through my veins.
The ability to solve problems well is the ability to take a complex issue you’re facing and break it down into a step-by-step formula that helps you identify the root of the problem. It’s the same for business as it is for algebra. That’s why people often hear me use the expression “Solve for X.”
Think about X as the unknown variable. In math, once you gure out what X is, you solve the problem. In business and in life, if you identify X, you also solve the problem.
Though X is an unknown, it’s not unknowable. Your job is to gure out exactly what you’re solving for.
Look at life as a big list of mathematical problems to solve. Many of the decisions you make in your life today are based on a list of formulas you have gathered in your mind. How to cook spaghetti is a formula. How to get to work the fastest is a formula. How to increase your income is a formula.
If you’re not ful lled and happy with the current results in di erent areas of your life, it’s most likely due to your needing to make some adjustments in some of the formulas you’ve been using for a while. Your way of thinking got you to where you are today. In order for things to change, your way of thinking needs to change. And this may be, by far, the most di cult thing for you to do. It’s not easy to admit that many of the decisions you’ve been making have been based on a broken formula.
You need to be prepared for X—all the unknowns that will emerge during the course of running a business.
Get to the Source by Solving for X
A colleague named Charlie recently said to me, “You know what? I just don’t know if I love this anymore.”
“What is this?” I asked. He looked confused.
“You said you don’t know if you love this anymore. What is this?” Charlie said that he was referring to the nancial services business.
“Well, that’s not what this is for me, even though we’re in the same eld. Think about it. If you’re in the real estate business, do you love bricks? If you’re in pharmaceutical sales, do you love pills? Rede ne what this means to you. For me, it’s the people. I love people, I’m curious about them. Every day at work, I’m studying people, learning their tendencies, and making moves to bring out the best in them.”
“Oh, I never thought about it like that before.”
Our conversation motivated him to think di erently. He processed what this was—the X for which he needed to solve—and tried to get to the root of his frustration.
Solving for X means isolating your problem. It’s not enough to say that your problem is your boss. You need to drill down to determine if it’s a lack of autonomy, merit-based pay, or intellectual challenge. You can’t solve for “your boss.” You can solve for a more speci c, isolated issue.
Charlie had to become clear about the true source of his dissatisfaction. If he was feeling run-down, maybe what he needed was a break to recharge. In his case, he was feeling run-down because he had put on weight. He realized that he needed to start getting up earlier and get back to his exercise routine. That was step one.
Then he had to process deeper. His self-esteem was down because he was in a sales slump. As a result, each rejection hurt worse. He was in a downward spiral with momentum working against him. Upon more re ection, he realized that he didn’t hate selling nancial services. What he hated was feeling exhausted all the time and underperforming at selling nancial services. He thrived on the achievement and sense of accomplishment.
Processing deeply means going below the surface. Of course you’re going to have days when your motivation wavers. It’s normal to feel burned out at times. It’s your job to probe deeply and isolate the X that’s causing your pain.
Charlie decided to take it a step further. He reminded himself why he had chosen to become an entrepreneur. He thought about how his former boss had made him feel when he had given a senior position to his underquali ed son instead of the guy who had busted his tail for him for ve years. He thought about how much he had hated that job and visualized all the things that had driven him to sign up for this crazy life.
By solving for X, he was able to make decisions about his work that improved both his outlook and his income.
How to Solve for X
When we don’t have a methodology, we’re prone to going in circles, paralyzed by fear. When we do have one, we have an organized approach for processing issues. A methodology will allow you to process any issue in an organized way.
Processing When Your Business Is on the Line
The most crucial issue I faced appeared just when I thought I had realized my dream. I was only thirty, and I had nally made the leap to starting my own agency. Within ve weeks of my founding the company, Aegon, a $400 billion industry giant, led a lawsuit against me. It had one simple goal: to put me out of business before I even began.
Aegon’s leaders and lawyers didn’t care about how hard I’d worked to save the money to launch my business. They didn’t care that I had just gotten married. They certainly didn’t care that I had convinced sixty-six loyal agents to give up their careers with established companies to join this crazy dreamer on a mission. For Aegon, suing me was just business (and it was also just business years later when the CEO who had sued me ended up joining my advisory board). I didn’t take it personally, even though my entire life savings was on the line.
That lawsuit was the biggest test I had ever faced. Instead of doing what most entrepreneurs do when things go sideways—blame, complain, rage, and spin in circles because of all the doubt—I decided I would no longer wrestle with the things I couldn’t control.
What I needed to do was become clear on what I could and could not control. I made two lists, as follows.
What I Can Control
Plotting my next moves My daily e ort
My choice of attorney and other resources
Keeping our sales force and our leaders focused on slaying the next dragon
What I Can’t Control
Why Aegon chose to sue me
Whether the lawsuit would put us out of business Whether other insurance carriers would drop our contract
Rather than panicking or overreacting, I crafted a strategy for how to weather the storm and achieve my long-term goals. I chose to settle; I cut a huge check and moved on. Even though the expense crippled us, because I had thought about my next ve moves, we were able to stay in business. The important thing wasn’t getting revenge on Aegon or winning a lawsuit; I made a decision that freed us to focus on growing our licensed sales force and maintaining our momentum.
A funny thing happened after I cut that big check: I was nally able to sleep again. It’s not often that you gain peace of mind after su ering such a big loss, but because I had processed the issue thoroughly and thought about my next moves, I was able to put the ordeal behind me, con dent in the fact that I had fully analyzed the situation and come to the right decision.
In the past, I might have allowed ego, emotion, and fear to get the best of me and fought the lawsuit, even if it meant losing the company and bankrupting my family. That sure would have felt good—for about three minutes. Instead, I processed the issue by going step by step through my methodology—as you can see in the chart that follows.
Identifying the Real Issue and the Deepest Why
The best entrepreneurs look past symptoms and get to the heart of a problem. To do so, let’s hone in on a critical part of this methodology—identifying the real issue and the deepest why—so you can get even better at solving for X.
X isn’t always obvious. In fact, the real issue may be hiding behind a lot of emotion and biased opinions. That’s why you’ve got to cut through the clutter in your mind. What’s real and what isn’t? Are you focusing on something because it’s someone else’s opinion or your own false assumption? Are you blowing up something beyond what it is because your ego is hurt? Are you separating emotion from logic?
Once you’ve eliminated the “nonissue” issues, focus on causes. You’re looking to identify “burning platforms” and “golden gates.”
Burning platforms: Hot problems that you have to deal with immediately Golden gates: Bright opportunities that you need to enter quickly
Once you’ve identi ed the real issues, start asking “Why?” Keep doing so until you reach a point where you can’t ask “Why?” anymore—or when you’re forced to repeat an explanation you’ve already discovered. That is your deepest why and the real cause of your problem. For example:
We lost our top customer. Why?
A competing product costs less. Why? Because it has fewer features. Why?
Because most customers don’t need all of the features in our product. Aha!
Now you’ve identi ed one of the main reasons why you didn’t hit your numbers: because your product doesn’t t your customer’s need. Solving the problem, then, becomes relatively easy: you need to o er a less expensive version of the product that has fewer features.
Use this iterative, questioning approach for any issue. Let’s say your top salesperson has left the company. As you ask why, you discover that the salesperson left because your compensation plan had been designed for mediocre salespeople instead of stars and had been designed that way because your sales director and your CFO hadn’t been communicating properly. The rst solution is to revisit your compensation plan within the next ten days. The second solution is to have the sales director and the CFO check in with each other quarterly to make sure that each is aware of what the other needs.
If your new product’s shipment was delayed, most people are going to be looking for someone to blame. Remember, though, that great processors look for causes—because causes lead to solutions. By asking why, you nd that the delay happened because your best engineer quit when her manager told her she couldn’t work from home one day a week—for no good reason. The solution: implement a more exible work arrangement that will lead to improved employee retention.
Five Questions to Ask to Identify the Real Issue
1. Do I know what the real issue is, or am I looking at a symptom? 2. Does the team have the data regarding the real issue?
3. Is the issue real, or is it an assumption or someone else’s opinion? 4. Is there a tangible issue, or is it simply a hurt ego?
5. Am I thinking emotionally or logically?
Going Pro at Playing Offense and Defense
As an entrepreneur, you feel as though you’re going to have to face a million di erent types of decisions, right? Actually, only two kinds of events will require you to make decisions:
1. Offense. The opportunity to make money or advance your business or career. The choices here often revolve around growth, expansion, marketing, and sales.
2. Defense. The opportunity to solve a problem, to stop losing money, or to stop moving backward in some way. The choices here frequently involve legal matters such as compliance and protection against competitors or market corrections.
Once the problem or opportunity you’re facing can be categorized as o ense or defense, it immediately becomes less intimidating. You’ve labeled it, and whether it’s o ense or defense, you’ve dealt with both types of issues in the past. Decision making then goes from something scary and unfamiliar to something manageable.
Playing o ense involves looking for opportunities to make money or advance growth, expansion, marketing, and sales. Playing defense involves solving a problem, preventing the loss of money, or going backward. Issues such as compliance, legal, and nancial hedging fall into the defense category.
Doing the Math Is More Art Than Science
I brought in Alice Terlecky to be our chief operating o cer. She’d previously been with Paci c Life, a major insurance company, where she had been very successful. After she became our COO, I noticed that it was taking an unusually long time to process policy applications.
I was frustrated and wanted to know what was going on. I sat down with Alice and asked her to walk me through exactly what happens when an application comes in. I asked a lot of questions to help me determine the ow: what each step was, what actions were involved, and how long each took. It was the same kind of analysis a manufacturing consultant would conduct on an assembly line to identify bottlenecks.
Then I asked Alice another question: Which of those steps required a hands-on method, and which could be run automatically by technology that we could buy or create?
We talked about what functions had to be performed by human beings and which ones could be handled by computers. We gured out that if our carriers could handle a certain step via software (only a small number did at that point), it would signi cantly reduce the application processing time. Alice eventually helped me understand why the process had slowed down. She had implemented a new system to help improve the quality of our insurance policies, which made a world of di erence in our possible liability. As pleased as I was to hear about the quality improvement, I still wanted to speed up the processing time.
I had Alice set up a call with all the carriers who weren’t using the software and pitched them on it. Then I brought it up during our next board meeting and asked how much it would cost to cut an additional period of time from our internal process. We determined that, best-case scenario, we would need to employ four IT guys at $150,000 a year for twelve months to be able to do so. When we tacked on other expenses, it was easily going to be a million-dollar project.
A million dollars is an eye-popping number. It’s also a number that means nothing without more analysis. That’s why we took the time to break down the numbers:
We could save ve minutes of processing time per policy.
Five minutes times 30,000 policies per year is 150,000 minutes (2,500 hours). 2,500 hours times $20 an hour (our labor cost savings) is $50,000.
Investment Time Return (ITR) is a tool that becomes more valuable the more you use it. I’m giving you this scenario so that, once again, you can work your analytical muscles. Every issue you face is going to have its own set of challenges. Solving them is not just a matter of “doing the math.” It’s knowing how to think through an issue so you know which numbers to plug in. ITR is useful only when you make the right assumptions.
In this case, we could see that it would take twenty years to get a return on our investment. If we stopped there (as any amateur thinker would), the math would tell us it wasn’t worth it.
Investment: $1 million Time: 18 months to complete
Return: $50,000 per year (based on current sales)
That was back in 2017. At that point, I had projected our growth for the next decade.
Being a great decision maker is more art than science. Yes, having a methodology helps. You need to be methodical, and you need to understand the numbers. You also have to learn how to analyze the numbers. Solving the question of how to process policies faster went beyond determining the labor cost saved. In some cases, doing so might win us business. In others, increasing throughput
would improve the satisfaction of both our customers and our agents. But the real missing factor in this analysis was our growth rate.
When I extrapolated our growth rate, the numbers looked like this:
Year 1: 30,000 policies Year 2: 60,000 policies Year 3: 120,000 policies Year 4: 180,000 policies
Year 5: 240,000 policies
$50,000 in savings $100,000 in savings $200,000 in savings $300,000 in savings $400,000 in savings
When we factored in our growth rate, we could see that instead of taking twenty years to pay back the million-dollar investment, it would take less than ve years. What had looked like a no-go project quickly became a go project.
Here’s another thing I learned: IT projects almost always take longer and cost more money than you expect. You need to err on the conservative side when making your time and cost assumptions. As it turned out, the cost of the project more than doubled. The reason, however, was more positive than negative. At each stage of the process, we kept digging to see what other processes we could speed up. With each new nding, the cost of the project increased. The good news was that our processing speed more than tripled, and the long-term savings far exceeded the nal cost.
With the bene t of hindsight, investing in our process ow seemed like the obvious choice. But go back and think about the potential blind spots. I could have just accepted that Alice, given her extensive experience, was moving the applications along as fast as possible. I could have assumed that for her to be adequately thorough would take additional time. I could have made the assumption that the cost of speeding up the process was not worth the return.
Are you seeing what it takes to be a great decision maker? It’s both art and science. The methodology gives you structure. ITR gives you a speci c formula. Your projections give you the numbers to plug into the formula. Staying curious means always looking to improve and tweaking your projections. Your mind gives you the ability to put it all together and make the right decision. It took all of these skills, and more, for me to pass my greatest test and survive what could have been a crippling lawsuit.
The Latin root of the word “decision” means “to cut o .” When you make a decision, you are cut o from taking some other course of action. Now, that may sound limiting, but it’s not; it’s liberating. Plus, the alternative is indecision and stagnation.
It’s human nature to have blind spots. Laziness, fear, and greed all cause us to accept the information we’re given and not dig deeper. As a result, we often miss a critical piece of the puzzle and make bad decisions—or fail to make good ones.
Using this methodology along with ITR takes time, and it also takes practice. Don’t expect to become a master processor and be able to solve for X instantly. And listen: If you always want to be right or always fear that you’re wrong, you’re going to have trouble processing. Absolute right or wrong act like processing roadblocks. It’s okay to make mistakes. It’s the willingness to examine your mistakes that will prevent you from making them again.
Be patient. If you keep working at becoming a better processor, the result will be more than worth it—it will make a huge di erence in your business and your life.
MOVE 2
Master the Ability to Reason
THE INCREDIBLE POWER OF PROCESSING ISSUES
1. Moving forward, take 100 percent responsibility for anything that doesn’t work out. See your role as the one who created the issue and has the power to solve it. Apply the Investment Time Return (ITR) formula in order to make better decisions and stretch your resources. Re ect on any possible mistakes or weaknesses, and make your next move(s) accordingly.
HOW TO SOLVE FOR X: A METHODOLOGY FOR
EFFECTIVE DECISION MAKING
2. Share the Solve for X methodology with your leadership team and use it to process three problems you’re currently facing. The Solve for X worksheet can be found in Appendix B. Make sure you identify their true causes and the reasons they happened.
