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

October 16, 2023 | 30 Minutes

Join host Adam Larson as he sits down with the brilliant entrepreneur and CEO of WTS Enterprises, Josh Fonger. In this episode, Josh delves into the captivating topic of the systems mindset for entrepreneurs and business owners. Uncover the secrets behind working on your business rather than in it and discover how this shift can drive exponential growth and success. Josh, with his wealth of knowledge and experience, reveals how business owners can streamline and optimize their processes, increasing profits and reducing time. If you're ready to take your business to the next level, don't miss this dynamic conversation with Josh Fonger.

Full Transcript:
< Intro >
Adam:            Welcome back to another episode of Count Me In. I'm your host, Adam Larson, and I'm thrilled to have our special guest with us today, Josh Fonger. Josh is an experienced entrepreneur and the CEO of WTS Enterprises. In today's episode, Josh will enlighten us on the crucial difference between working in your business versus working on it. And why this shift is essential for growth, particularly, for business owners and entrepreneurs. 
We'll discuss how getting caught up by day-to-day operations can hinder business growth, innovations, and long-term vision. Josh is an expert in helping companies navigate this challenge, by utilizing the Work the System, or WTS, method. He emphasizes the importance of backfilling our current tasks and responsibilities. 
So we can jump ahead and lead our organizations effectively. But it's not just about the concept. Josh provides practical insight, on how to take action and implement a systematic approach to run a business. So get ready and gain some valuable insights, tips, and strategies. As we explore the power of a systems mindset, with our incredible guest. Let's dive right in.
< Music >
Adam:             Josh, I want to thank you so much for coming on the podcast. Really excited to talk about entrepreneurs, and that systems mindset that you talk about. But to get started, maybe, we can start by discussing the difference of working in your business versus working on it, and why that's essential for growth, especially, for business owners and entrepreneurs?
Josh:               Yes, and this is not a new concept. I think people have been aware of this, heard this, for decades. Popularized by The E Myth, Michael Gerber's, bestselling book. And the key thing that I do is help companies, actually, make that happen. The big the big issue, of course, whether it's a manager, an owner, or a CEO, is that they are doing the work as a technician, instead of leading the work or growing the organization. 
And, so, that's the key thing, is that if you're doing the work, then no one is doing the business growth, no one's doing the innovation, no one's doing the expansion. No one's casting the vision for the next series of years. Instead, they're talking about the next five minutes, and maybe the next five hours, and that's really the issue is that companies stay stuck when they're looking short term. 
And, so, what I focus in on is helping, mechanically, because it's more than just an idea. They need to think differently, but then they, actually, have to take different actions. Is help business owners and leaders take those actions, in a methodical, mechanical way, so that they're backfilling what they're currently doing. Because you can't just jump ahead somebody's got to do the work. 
And, so, there needs to be a way, which we call working the system, or the WTS method, a way to backfill what you're currently doing. So you can jump ahead and lead the organization. 
And, the idea, again, simple enough, work on the business instead of in the business. But, mechanically, and infrastructure-wise, to do that takes some heavy lifting, some rolling up of the sleeves. That's what we want all of our clients to get is that, there's a process you can take. And if you work the process, you work your systems, that freedom and that growth will become a mechanical reality.
Adam:            So maybe we can dig in in a little bit more into this work, this system method that you're talking about. I know that you have a book, that we'll put a link in the show notes for everybody, maybe, you can talk a little bit more about that. How does that enable your business owners to do things like increase profits, reduce time? I know those are a lot of things that you speak about, maybe we can talk a little more detail on that.
Josh:               Yes, so everyone uses all their time, and everyone, essentially, uses all of their resources, and so you're bound by those. And, so, the way to expand your business, expand your life, is to do a better job with those resources. And, so, working the system is all about getting more efficient. And, so, how do we do that? Well, we help people not just react to the problems of their business or the stimuli that's coming their way. But instead, take charge or take control of the systems that they know are going to keep happening. 
So instead of just reacting to a phone call coming in. Instead, manage or control that system, so that you and your team know how to answer the call, to be the best with it. And let's just say answering the phone is one of 300 different systems that maybe your company has. And instead of winging each system and following it the way you've always done it before. 
If you take the time to look at each system, as a separate entity, and then figure out what is the best way to make it the fastest, the lowest cost, the highest efficiency, the highest profitability. What are the ways we can optimize each of those little pieces, which can be done if they're written down and looked at, objectively? You're going to find that the assemblage of those separate pieces are going to result, we're talking to math folks here, accountants, the result is going to be a much better business.
It's not going to be surprise when your company is running way better, way more profitably, when the separate pieces, that make up your business, are each improved by 5%, 10%, 20%. Each of these pieces are then going to equate to a multiple of what you ever thought possible. Because we work with companies, everyone's already working hard. Everyone's already doing their best. 
And, so, we let them know, "You have to work differently, if you're going to expand beyond your current best." Because everyone's already trying their best. Everyone's already working hard, everyone's already maxed out. 
So knowing that plateau is already reached, in the organizations we work with, the goal is, "Okay, well, now we're going to have to work differently. We're going to have to work in a different way." And that's going to be working on these separate systems.
Adam:            So a lot of times when you say the word systems, people think these are different softwares that I'm using, or different things like that. But you're talking systems as more of all the processes that you do, within your organization. Am I correct in that understanding?
Josh:               Yes, exactly, it's a very broad way, like the way you drive to work each day, is a system. The way you schedule a meeting, is a system. The way you answer the phone, it's a repeatable process that is going to happen again and again, and you can get control of it. Maybe you do get control of it with a software, but you don't have to. 
There could be ways where you say, "Hey, I process this invoice." And it's a system, it involves some mechanical parts, with some software, some automation, some people. Maybe a couple of different people, maybe, some physical envelopes, there's a bunch of different pieces that make up this system. But once you identify it, as a system, then you realize that the people can be switched out. 
In most organizations we work with, it's switching out managers, leaders, expensive people, to lower cost. More junior people who can do the same work, maybe, even better, maybe, even faster, if they are trained properly, with a system that's documented. And, so, that's what we're talking about with regards to systems.
Adam:            So when we talk about 'Work the system', it makes me think of the other book, The Systems Mindset by Sam Carpenter. Maybe we can talk a little bit about what that means, in reference to how we've been speaking right now?
Josh:               Yes, so whenever we're talking to leaders, they all get, "Hey, we should document our SOPs." That'll make sense because big companies do it, small companies don't, but they probably should if they want to get big someday, and so people get that. But what we want them to do is go a layer deeper, and think about everything in life. 
And, so, Sam Carpenter writes about it in terms of the systems mindset. And this is an outside and slightly elevated perspective on you, the things you do, the things your organization does. And realizing that each of the results you're experiencing in your life and in your business are resultants that happened because of the systems that led to it. And these separate pieces that led to these results you're in control of. You're in control of those systems. 
And, so, your results that you have currently today are not random. They can very logically be analyzed based on looking in the past. And, so, if you want to change the future results, you're going to need to change your systems to create new results. And the idea is it's supposed to be a very empowering mindset shift as opposed to "I'm a victim of my circumstances or my results." Instead it's "I can actually change those and do it in a very logical, mechanical, way if I look at the separate systems that got me there."
And, so, we want owners, managers, employees, top-down to all get this systems mindset. And instead of be defeated or frustrated with the current reality, realize, "Okay, instead of just focusing on different results, let's focus on different systems knowing that the results will take care of themselves." 
And, so, that's a lot of what I want people to do is not look at today, look at the systems that got them there and let's work on those. Knowing that if we do that, it might be a week, it might be a month, it might be six months, but we're going to see a massive change in the results. The results will happen because things will get faster and, usually, the first result is always, "I'm feeling less stressed. I'm feeling like work is just going smoother. There are just less mistakes. Why is it happening?" 
And, so, they feel it first, and then after that they start to notice it in terms of their time. The managers, the owners, I'm working with are like, "I got more time in my day or my week." They start to notice that they actually have some flexibility or some ability to work on those special projects, those initiatives that have pushed the company forward. And then they start reviewing their financial reports, or their metrics, or their KPIs, things that they're starting to track, and they're like, "Wow, our numbers are getting better." 
And then they start realizing, especially, if they're the owner or the profit sharing, that there's a lot more money at the end of the day. They can't, necessarily, point to one thing or another, it's all of these things that they've been worked on. The systems that they've empowered their team to work on are all working slightly better or a lot better, and that's what's, ultimately, ending up with the higher bottom line. 
Adam:            Yes, and I can't help but thinking, as we talk through this, it's very top-down mentality. And if you're a business owner, you're trying to share that with everybody. How do you inspire and motivate your employees, your middle managers, people underneath you? Because not everybody is able to have that systems mindset, all the time. If you're just low-level person who's just doing some more of the administrative work, it's hard to have that systems mindset. So how do you translate that to people's daily jobs?
Josh:               Yes, that's a great question. And the whole philosophy, the WTS method, is about empowering, enabling, that at the lowest level possible. And the more that your frontline employee gets it, and then they start to work in that way the better. And you want to top-down in terms of educate and inspire through a clear strategy, we call it the strategic objective, and clear principles, we call them operating principles. 
But then we want them to take ownership of their work. People like to have autonomy. People like to have ownership, and we give them autonomy and ownership of the work or the sphere they get to work in by saying, "Hey, why don't you help us generate the documented systems for this department or for what you do because you're already doing it." 
So you can write down the way it's being done, and then we all get to work on making it better and you get to optimize and improve because people like to improve. They like to get better, they like to be rewarded for improving their work. It's not that their work doesn't matter, their work matters so much that we want to write it down and make it even better. 
And, so, once they're inspired by the strategy and the vision, and once they realize that they're a part of making a great business, being congruent with the future. And once they see, "Hey, this company is going somewhere." We're not just going to stay chaotic and be a horrible place to work forever. 
We're actually building this infrastructure so I can see the leadership knows where they're going, and I want to be a part of this. And I want to be a part of making it better and then rewarded for what that's going to be. Whether that's promotion or higher pay because companies that systemize their business, they have more money, they have more profit, and, therefore, their people can get paid more and have more advancement. So they get to be a part of that.
So the more you can sell them on the vision of what they're a part of, and empower them, and give them autonomy through the systems they work on, the more they're going to actually enjoy their work, and that's the goal. 
That's the goal, but reality is some people, they don't care. Especially the lowest level folks, they're just coming to work, just a job, they don't really care that much. They like the way they're currently doing it. They don't really want the extra accountability; they don't want the extra administration. They don't want to optimize it's, "Whatever, who really cares?" They like to just follow their gut and that's good enough for them. 
Well, ultimately, as you're working on the strategy I'm talking about, the work with system method. Those people are not going to fit, they're not going to fit with the strategy, the culture, the direction you're going. And those people are either going to have to come on board or they're going to have to be, I guess, thrown overboard, for lack of better term. And, so, that is part of it. Part of it is that those types of people, since they don't embody the vision, can't be congruent with business. And, so, they have to be let go so that you can keep optimizing the business.
And, so, that is part of the process. I would say the faster you try to integrate this philosophy and this methodology in your business, the faster it goes, the more likely you're going to have more people leave or you're pushing them out. 
Maybe the more slow and steady you implement this, the more people will get brought along. Because they might not like it at first, but then they might get a taste of it and say, "Hey, my work is actually getting better, and things are smoother now, and I'm saving time." So they'll, eventually, buy-in, and they can be a part of making your company great. 
Adam:            Well, and it also allows them time. If you improve your daily process each day and it frees up time, it actually allows you time to think. It allows you time to come up with ideas. It allows you time to grow as an employee, as well, so that you can say, "Hey, I want to get to that level, too." So it's an even balance, if you kind of buy-in to that.
Josh:               Exactly, yes, everyone can contribute. And even the lowest level person, I don't know, I'm just saying a street sweeper. And they might come in the first day of work and they might say, "Hey, you know what, actually, if we swept this way instead of that way, we could do it a little bit faster and the streets would be a little bit cleaner." Great innovation, anyone can contribute, even if it's something lower. And this might be 100-million-dollar company where the leaders are trying to innovate on a different scale, on a different trajectory. 
But if the lowest level person is also a part of that, that's what you want. You want everyone to be innovating with the extra time, the extra capacity, the less stress. When you have both the strategy, the principles, and the freedom of control over your systems to make them better, people like that. They like to test out, and experiment, and try to improve new things. 
As a manager and leader, you can actually allow your team to do that because they have the framework and the boundaries and the document system to start with. And then you're letting them do these micro experiments on their own, and then report back up what's working.
Adam:            A lot of times when you're a business owner, entrepreneur, you're still getting started. You're slowly growing. You might be listening to this and thinking, "That's great in theory, but I am constantly having to intervene in the daily operations. I constantly have to look at things because you're just growing." So how do you build that systems mindset, as you're growing? Because you don't want to wait too long so everybody gets set in their ways. But you also want to have that growth mindset. How do you balance that, especially, when you're getting started?
Josh:               Great question. Yes, I think that it's important for people to know that you're pursuing perfection. You're pursuing being the best business, that's a direction. But part of the way to get there is iterative and requires mistakes. Some industries are okay with more mistakes than others. So if you're a heart surgeon, probably, don't want to make too many mistakes. But if you're a creative agency and you're designing labels, well, it's okay if there are a few flubs along the way, as you're trying to optimize your business model. 
And, so, knowing what industry you're in, knowing what the tolerance is for mistakes, is going to allow you to take more risks, as you're growing the business. But companies that grow the business, every company I'm working with I say is on a train, they're already on the tracks, they're moving. So you're never going to get this perfect opportunity to stop the train and let's all work on making it better, it's moving. You've got income coming in, you got to provide a service, you got costs going out. You have things happening in real time. 
And, so, you have to do what you can while you're in the middle of it. So if you're in the middle of making a sale, work on that system. If you're in the middle of going to a convention, work on that system. If you're in the middle of hiring somebody, work on that system. 
So if you're working on systems as you're doing them, that's going to be the best approach because it's simple and you immediately get the benefit because you're in the middle of doing it, anyway. And that's all I want with my clients, is, "Hey, you're in the middle of hiring and you're going to do, let's just say, orientation, so record that orientation, great." 
So now the next time you're going to do orientation, maybe, you're going to use that recording, or maybe you're going to find a way to optimize it, or make it go a little faster. 
And then the next time you might realize you could delegate that to someone who's lower. And, then, maybe, there's a way you could add some technology so that it's better. 
And, so, each time you're finding a way to improve the system that you know is going to happen again and again, without getting stuck and saying, "Well, in the perfect scenario, someday, we'll perfect the system." Because the business is not static, so you have to make them nimble enough to always be improving. 
And, so, a lot of times, what I'll say is document as you go and record as you do things. Because at least you'll have a record of how it's done, the best you could do it today, of which to improve upon tomorrow. And with the hope that it might be someone different who could improve on that system. 
I think that the perfectionist clients that I have they don't like that because they don't want a record of them doing it not perfect. And your imperfect action is going to be as good as you're going to get today, so get a record of it. Whether it's in writing, or it's a screencast video, or it's an audio recording, a video recording, some record of it. 
So that that's going to be the baseline for the next time that system is run, and you'll always find little nuances, little ways, to improve it. Whether it's the experience, or lowering the cost, or making it faster, or optimizing some aspect of it. And that's what makes work interesting, and fun, and engaging, is someone might say, "Well, I've done this 100 times." But can you do it better? Can you do it faster? 
"Well, I don't know."
And the answer is always, yes, and that's what I always push my clients to do. And, then, usually, after we analyze one of their systems they say, "Gosh, I never realized we could do it that much better, if we actually took the time to focus on it."
Adam:            I like that mindset, that concept idea that you're never finished. And that's, sometimes, when people go through these processes, of these massive strategy sessions, and they go off to off-sites and have consultants come in, and they do all these things. And, then, they sit and say, "Okay, this is our new model." And they leave it in place for another ten years, and they realize, "Oh, wait, we should have been improving this all along." So I love this idea that you're saying that you're never done, you're constantly looking at the systems.
Josh:               Exactly, yes. A lot of times, I'll fly in or I'll work with a new client, and they will have documented all of their procedures, in their entire business, but they did it like, five years ago. So they'll say, "We got everything documented, already. But the issue is we don't do any of those things the way we did it five years ago. And, so, all of this stuff we documented is obsolete, it's trash." And we've got different people, we've got different technology, we've got different products now, different services, different price points, different locations, it's all different now. 
And instead of seeing, documenting the systems of the business as a project, with a finish line, like you said. Instead it's a mindset, it's a strategy, it's a way to operate, and if you operate with that strategy, then it is always going to be a culture of continuous improvement. Not just in theory, a culture of continuous improvement, but it's going to be in practice because you're going to see, "Hey, we just improved the way we punch in and punch out it in the morning and at night. That system got slightly better than last week."
"Hey, we just improved the way we, whatever it is, order inventory because we tweaked the way we did our system, and now it's a little bit better." And, so, you can mechanically see, yes, the culture of continuous improvement is not just this idea that leaders like to talk about. It's actually happening and we're seeing the results in our systems, and then we're seeing it in the bottom line.
Adam:            I love that idea because you have to continuously improve. You have to continuously look at things in order to become better. And let's say somebody's listening to this and saying, "I'm really interested in this." Are there common mistakes or challenges, maybe, some examples you can share that you've seen that people can look out for, as they're trying to move toward this mindset.
Josh:               Yes, the common mistakes and challenges, we could talk for hours on that. But the most common ones are that if you have multiple leaders and one person buys into it but the other leaders don't, then, you're going to have problems. So one owner is saying, "Hey, team, we're going to start working on this." But the other owners or managers are saying, "No, move faster."
If you can't constantly be rushing and reacting really fast and, simultaneously, slowing down, analyzing your systems and making them better. And, so, if you have leadership that does not agree on this initiative, then it never works, I see it all the time. 
I also see it when there is a lower manager, not the owner or the CEO, but someone who's a mid-manager, or lower. They try to implement this, also it doesn't work because the long-term benefits of what's happening in their organization, they don't see, and they don't care about. And, so, again, they are pushing their managers to react and perform, as opposed to build out their systems. And, so, they're not appreciating the infrastructure that's being worked, and I've seen that happen often. 
I also see companies where they overcomplicate it, where they'll say, "We love this idea. So now we want every procedure, in our entire business, documented in the next 60 days. We want them all to have diagrams. We want them all to have automations. We want them all to be in special formatting." And they make it too big, too complicated, too fast, and the team never absorbs it. 
And they end up realizing they're spending $700 on each procedure they document and they do it for about a month and they say, "This is way too expensive, this is way too hard, we're never going to do this."
And, so, the stopping/starting with initiatives like this is extremely common. Where they make it too big, they make it too complicated, and they might make it overly secure as well. Whereas they need like five levels of passwords to get into the system, to update it, 
and then no one ever updates it. And, so, my advice to everyone like this is to keep it as simple as possible because the simpler it is, the more you can engage everybody. 
So if it's as simple as saying, "Hey, you know what? We're going to be hiring that new person tomorrow. We should probably document how we onboard them with a checklist, to make sure that they get all the things that they need." That sounds good. Write it down on a piece of paper, maybe, someone types it up, great, and we have a new system now, and then it can get refined. But you got to start with something really simple, and so people can start to get traction with it.
Adam:            Yes, starting simple makes a lot of sense because I'm sure somebody wants to jump in with both feet and try everything. But you can see what works and what works within the organization, within that culture, and you have to adjust accordingly.
Josh:               Yes, any change initiative, the bigger the change initiative, the more drastic, the faster, the less it gets absorbed. And, so, it's always better to start small and to build momentum, to build buy-in, and make sure everyone is on board, and to give it time to work. So just because it's an idea, now, it needs to actually be put into writing. 
Then it needs to be put into practice and, then, in practice, the feedback loop needs to come back, with additional tweaks and optimizations for absorption, for buy-in. And, then, management needs to, actually, make sure they're consistent with a new way and possibly even measure it to see the results, and hold people accountable to those results. 
And, then, that system has been utilized, let's say for a few months, now, it's fully absorbed into that particular department, that was a lot of work. And you can do multiple, at the same time, but you can't do too many, at the same time, too fast. Because, again, the full absorption of the system never happens, so you never get the benefit. 
And, so, I'm always big on pushing people towards this strategy, and then letting them know that this is going to provide you benefit immediately, starting tomorrow, and in the future for decades to come. But you have to always be going. Maybe you have your foot in the pedal at 30 miles an hour, today, 40 tomorrow, 40 the next day. Maybe 10 miles an hour, during a really rough season, for a few months, but then back up to 20 miles an hour. 
But we have to always be going forward, and maybe just slam the accelerator and say, "We're going to 90 tomorrow." It's just not going to work. And, so, I'd rather see continuous progress, going forward, at a slow speed than stop/start, stop/start because those just kill change initiatives. 
Adam:            Yes, so as we look to the future, there are so many things changing. The markets, you've got inflations, you've got things like generative AI taking over. There are so many things happening. How do you see this work? The system method evolve in the future. Are there trends and different advances that you see that could influence this method?
Josh:               Yes, so I think that the method is not going to change. This whole idea of leaders, and managers, and owners getting stuck, but needing to move beyond that, that's been around forever. You just need to have a clear strategy, clear principles, clear procedures, that's not going to change. That's been around forever. 
The thing is that change is new opportunities in technology and innovation. New ways to work, instead of just working on an agrarian family business, with your relatives, we now have the Internet and international business. So there's a lot of ways to get a lot of work done, with a lot of great people that are not, necessarily, in your own backyard, and that's nothing new. And, then, the technology innovations, and abilities to use whether it's AI or automations, is obviously exploding and, then, the ways to use that are continuing to expand. 
And, so, I think that the more nimble you build your systems, the more you're going to be able to react to the changing marketplaces. Whereas maybe 50 years ago, things were a little bit more stable and you could build a system, and it'd be the same for 10 years. Now, you build out your system and you have to stress test it, and evaluate it, and it might need to be modified more rapidly, more often. And you might need to be less dependent on a person doing it, like, "Hey, that's Ricky's system, he always does it great."
Well, people are jumping around a lot more. They're less loyal to their employers, and they're more likely to move. And, so, you might need to focus more on the system being simple, and delegable, and dividable, as opposed to, "Well, I know Ricky is going to be here 20 years, so it's good enough." Because that's not the future of culture and business, I don't think. 
But I will tell you, this book, Work the System, I'm showing it on the video, I know no one sees the video, but Work the System, Sam Carpenter, the author of the book, he's had the same employees. After he shifted his mindset, shifted his strategy, pretty much all of his employees, eventually, got worked out of the business. 
And as he brought in new team members who embraced this strategy and embraced his philosophy, they've been with him for decades, some 20 plus years. And they love working there because it's calm, it's serene. They love working there because they do great work. They love working there because they get paid more there than they get paid anywhere else, doing the job they're doing because there's so much additional profit because it's being run so well. 
And, so, once someone works in a company like that, they don't want to go somewhere else. And, so, the more you build in the systems in your business, you're going to increase the longevity of your people. 
Adam:            Yes, well, Josh, you've got some great insights. Everybody, please take a look at the show notes for links to the books and to connect with Josh. And, thank you so much for coming on the podcast, today.
Josh:               Hey, great to be here, Adam.
< Outro >
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