Michael: And welcome to HaBO Village Podcast. I'm Michael Redman.
Kathryn: And I'm Kathryn Redman.
Michael: Welcome back. We're excited to have you with us today. We're excited to be here, kind of a little pump and ready to go. Today we're going to talk about-
Kathryn: Fuzzy terms.
Michael: Fuzzy terms, which is part of communication. So, we're going to talk about communication as kind of the overall scope, how important it is in business. It's so critical. But, we're going to focus today on these things we've talked about, fuzzy terms.
Kathryn: And it's going to impact all four areas, so we're going to be able to give you examples that have impacts on all the four main areas, which are, Michael?
Michael: Leadership, marketing, management, finance.
Kathryn: Leadership, marketing, management, and finance.
Michael: And in those areas, then they impact the rest of the skills, right? We all know conceptually that communication is such a big deal, and this is going to be one of those podcasts that people are going to be able to refer back to for years to come probably, because it's such a specific subject. The term of fuzzy terms never ever goes away. And let me really quick define what we mean by fuzzy terms, and then we'll tell you a story about fuzzy terms.
Michael: Some of you may have heard the story or not, but fuzzy terms are this. That's a way of talking about abstract words in the English language. I'm sure they happen in other languages too, because that's why we have metaphors and syllogies, and analogies, and all those types of things, is because we're trying to actually describe more clearly something that maybe isn't as well-described or captured in a word, because that word can mean something different to different people.
Michael: So, let's talk about, for example-
Kathryn: Simple example would be-
Kathryn: Love. I love you.
Michael: I love ice cream.
Kathryn: I love pizza.
Michael: I love you. I love you enough to marry you and spend the rest of my life with you.
Kathryn: I love my dog.
Michael: And there's different levels of that, right? In the English language, love is a very abstract term, very abstract. If you go over to the Greek language, especially old Greek, ancient Greek, you're going to find that there's actually four different words in that language that we use the same word for.
Michael: And so, passion love, affinity love, a deep, deep, deep commitment love. There's multiple things. That's an abstract word. And depending on how you use that in a conversation is going to give clarity to it, but a lot of times, person A says I love you to person B-
Kathryn: Who says, "Well, I love you too, but"-
Michael: Or, I love you, and that kind of ... the commitment there is heard as, "Oh, you're making X commitment to me," when really, the speaker meant, "I'm making Y commitment to you."
Kathryn: Mm-hmm (affirmative).
Michael: Okay? Now, in a business context, that can get messed up on a regular basis, and let's dive into talking about what that might look like. So, let's start with leadership.
Kathryn: I thought you wanted to tell a story.
Michael: Oh. Yeah, yeah, yeah, yeah. Thanks.
Michael: So, the story.
Kathryn: So, again, you might have heard this, but the foundational story of where I learned about fuzzy terms is quite a scarring event in my life so-
Michael: It's important to say that I went back to college-
Kathryn: Okay. Set it up.
Michael: When I was 30. When I was 30, I went back to college, and I studied Communications degree at the University of California, Chico. And I studied ... I had a class that was really focused on one of these concepts, and I studied instructional design, designing training and education and performance improvement material for adults in business.
Kathryn: And this is while we were married.
Michael: Then I went back at 30. Jenna was already-
Kathryn: We had Jenna, so-
Michael: So, we had been married-
Kathryn: 10 years.
Michael: 10 years.
Kathryn: So, 10 year anniversary trip-
Michael: Take it away.
Kathryn: To Kauai. I mean, what a peaceful, relaxing place.
Michael: Very romantic.
Kathryn: I was working a pretty stressful job supporting Michael through school, and I-
Michael: She was a trooper.
Kathryn: I was a trooper. And we were in a position where I had actually left work, abandoned work, I was done, like don't call me unless something's burning down. Right? I actually left everything behind, which was super stunning for me. So, we're in the hot tub in Kauai.
Michael: At the hotel.
Kathryn: At the hotel. Well yeah, at the hotel. And we can see the ocean. And the goal of being in the hot tub is to relax and whale watch, like we're watching for whales. That's what we're doing.
Michael: Whales jumping up and down.
Michael: It was cool.
Kathryn: Yeah. It was super, super cool. But, in the middle of this-
Kathryn: Super relaxing environment that we're supposed to be in, Michael starts describing and talking about fuzzy terms.
Michael: It was something new I had learned and I wanted to share it with my wife.
Kathryn: He was very excited. So, he starts processing this through, and one of the things that happens when you're talking about fuzzy terms is he's interacting with me, and I'm responding to questions he's asking, and then he's consistently saying, "Well, but what do you mean by that?"
Michael: Okay. So, just the context of this, it's absolutely correct. There's no facts that are inaccurate at this point.
Kathryn: It's a story, so whatever.
Kathryn: They're memories.
Michael: What I was doing, and I was doing a goal analysis. One of the things you do when you define a fuzzy term is you can, one of the ways to do it is to do the exercise the five why's.
Kathryn: Oh yes.
Michael: What do you mean? And this is where I learned if you don't tell the people you're doing this exercise with what's going on, you can really frustrate them. But, what you do is you identify a fuzzy term. You drill down here's a word, what do you mean by that? Okay, what do you mean by that? Because oftentimes, when we have fuzzy terms, we initially define a fuzzy term with another fuzzy term.
Kathryn: Yes. And we assume ... because it's in our head, we assume that the word means what it means, and of course you know what that means, and why are you bugging me, and why are you making me crazy about this. So, we probably did about, I don't know, five or six iterations of this before-
Michael: I was-
Kathryn: I just-
Michael: Working on our divorce.
Kathryn: I just looked at him and said, "You have got to stop. I am whale watching and relaxing, and this is not appropriate." And so, we've never ... I can't even think of the term fuzzy terms without sort of being back in that traumatic experience with my beloved.
Michael: And you know what? If you're behaving like everybody else that we tell this story to behaves, your mouth is somewhat open and you're just shaking your head. You may be laughing, and you're thinking, "you're a moron, Michael. What were you thinking?" And everybody does that, and it's okay, because I go back-
Kathryn: Yeah. Had to run-
Michael: And I go, "I don't know what I was thinking."
Kathryn: Had to ruin a romantic moment.
Michael: Totally sucked into goals analysis and fuzzy terms. Totally.
Kathryn: In a hot tub when we were supposed to be whale watching. It was not bueno.
Michael: It was awesome. I'd say it was sexy, but-
Kathryn: It was no bueno. It was not.
Michael: Okay. So, that's kind of how Kathyrn got introduced to goal analysis, and, well-
Kathryn: We're going to try to traumatize you less.
Michael: To fuzzy terms. But nonetheless, when we came back, over the last ... well, we've been married 23 years.
Michael: Almost 24 years.
Kathryn: Heading to 24.
Michael: And we have seen it over and over and over and over again, and it's part of our consulting, to try and make sure we're defining these things.
Kathryn: We actually do get to warn clients upfront when Michael's doing the consulting, especially when we're doing sort of the initial brand consulting, and really learning what their story is, that he's going to frustrate them, because he's going to say, "Okay, but what do you mean by that word?" Or, "What do you mean by that term?" And-
Michael: Usually we warn people upfront, and this is a tip for you. When you warn your team or people upfront that you want to better understand so you're going to use an exercise that then they get less frustrated, because they understand where you're going, what you're doing, and they don't feel like they're just being prodded and-
Michael: And you're being argumentative. So, let's talk about leadership and how that affects fuzzy terms, and what goes on, stuttering now, what goes on in the leadership area.
Kathryn: So, one example is it's one thing to define skills. It's another thing to define behavior.
Michael: Oh. Good. Good.
Kathryn: So, one of the examples, and we probably need to just give a little bit of a shout-out here, so there's a book that-
Michael: One of my heroes in this area.
Kathryn: Yeah. That Michael came across in school, and there's actually a six pack by a guy called Robert F. Mager, M-A-G-E-R.
Michael: And you can't drink the six-pack. It's six books.
Kathryn: Oh yeah. Sorry. It's a six pack of books.
Michael: Six pack of books.
Kathryn: Of which one of them is Goal Analysis, where this concept of fuzzy terms is laid out beautifully. So, if you were to say, as a leader, "I want you to demonstrate a positive attitude toward the company," a positive attitude, what does that look like? What does it mean? Because here's the thing. The important thing in communication, especially when you are looking for somebody to perform any certain way, is are you giving them instructions that are measurable, that are actually observable-
Kathryn: And then, as you're working with people, do you have clear agreement between you on what it looks like? So-
Michael: Now, one of the analogies I love, or the stories that I love, and I think we can use it in management when we get there, is the one about the receptionist. So, let's come to the receptionist.
Kathryn: We'll come back to the receptionist.
Michael: And let's deal with leadership, because let's define leadership, what we mean by leadership, we will say this over and over again, is your internal leadership development of you the leader. The things you need to know about clarity and organization and who you are and your own maturity, and your own awareness. That's part of leadership, your own internal development.
Michael: Then, there's the external parts where the organization has to have a clear vision. It has to have a clear direction as a company, and it has to have clear values. And so, basically what you're defining is clarity with values and a core purpose, and a goal on the horizon, a North Star, that we talk about describing as your BHAG. With those three things and a clear description of your BHAG, we use those to say that's one of the parts of the other part of leadership, the external part of leadership, the actions that you have to have, of giving your company clarity.
Michael: And then out of that, you start developing all kinds of job descriptions, tasks, and everything else that management handles. So, when you handle those two things of vision and your own internal stuff and setting up systems and things like that, and making sure that the company's running in that direction with the guide rails, or in our case, where we live, there's a huge river that goes through our valley. We call it Sacramento River, and there's levees. And the levees are there to help guide the river, and not let it just wander everywhere. And in that- go ahead.
Kathryn: Just in case you're wondering, if you've never heard the term BHAG, it stands for big-hearted hairy audacious goal.
Michael: That's the polite version.
Kathryn: That's the polite version. There's other versions that you can think of all on your own, but big-hearted hairy audacious goal. But, the point being, you as the leader want to define, as a Passion and Provision company, you want to define your culture. And so, the way that you speak is going to have a dramatic impact on whether or not you are defining your culture and it's happening the way that you want it to.
Michael: Well, and not just culture, the culture is impacted by how people behave and what they do. There's a lot of behavior in that. The other part you're defining, on top of how you want people to behave and act, is what you want them to actually do.
Michael: And where you're going as a company. We want to make sure we don't forget that. But, so, let's talk about in the midst of leadership, when we're talking about that, you're going to have to bring clarity to what is this goal. Where are we going? And what are our values? And how are we defining it?
Michael: Now, here's what happens. Love. Let's talk about values. Values are great behavioral fuzzies, oftentimes. One of-
Kathryn: Integrity. What do you mean by integrity?
Michael: What do you mean? Disney talks about being happy, right? They want to create wholesome entertainment. Okay. Define that for me. I know for a fact that there are some people who are going to define wholesome differently than others. It's an abstract term. Happy. Happiest place on Earth. What do you mean by that? There are some people who do not believe Disneyland is happy.
Kathryn: There are some people wandering around Disneyland who are not happy.
Michael: Who are not happy people. And we love Disneyland. As you've listened to our podcast before, you will know. We are avid fans of the way they do business, and of the experience they give. But, those are great terms. So, when you're talking about values, you have to define that fuzzy term within the context of your company, within the context of the relationship, or the conversation. At this moment, we're going to talk about this value of ... what was the one you used?
Michael: Integrity. We want you to have integrity in our company. We value integrity. Okay. Half a Bubble Out, we value competence, character, trust-
Michael: Fun, and not vulnerability, but the word-
Michael: Authenticity, which okay, two fuzzy terms right there.
Kathryn: Well, all of those are fuzzy terms.
Michael: All of them are fuzzies. So, what do you have to do in leadership as you're bringing clarity? You may be saying right now, "Oh, I totally get it. This is making so much sense," and others of you are saying right now to yourself or out loud in the car or whatever, "This is the stupidest thing in the world. You don't need to do this. You just say it, and people should know what it means. It only means one thing." It really doesn't. This is the point of fuzzy terms, is it can be confusing for people.
Michael: So, what we do is we say, "What's the word?" Fun. And how does fun impact work? And how do we define it? What do we mean by fun? So, we put a sentence or two at the end of all of our values, and we describe what we mean by that. And then if we need to have further conversation or write it out somewhere, we can. Fun doesn't mean at work ... at Half A Bubble Out, fun does not mean you don't do work.
Michael: Fun does not mean that we replace getting stuff done for clients with playing ping pong, or anything like that. It doesn't mean we replace. What it means is we try and create an environment where you're having fun, enjoying, and fun moments are mixed in with work. Part of what you're doing, if you're ideally in a good position and everything else, sometimes your work itself is fun.
Kathryn: Well, when you get people in the right places-
Kathryn: Then, when they're ... like, one of our employees, just a couple of days ago, was watching a training video that we wanted her to watch, and it was on something to do with e-commerce, and I heard her say, "Oh my gosh. This is so much fun." And so, that sense of actually creating an environment where people are in the right place in the right bus allows you to-
Kathryn: Have them actually say it's really fun doing this. For me, when I'm interacting with a client and I see lightbulbs go on, and we've written stuff, or we've helped give them words to talk about themselves in ways that they didn't know how to ... they just didn't have the words. And I see them come to life. For me, that is fun. Like, that's just delightful. It absolutely fills my soul.
Kathryn: So, when we talk about fun, we're saying, "And what we mean by this is ..." all of those things. So-
Michael: Yes. Absolutely. And Passion and Provision, that's part of our core purpose, is to help leaders like you, small businesses, create Passion and Provision companies where you and the company and your employees thrive, okay? So, we define that and we break that down. Provision's not as big a deal, but we have to define both. So really quick, provision means that you have all the resources you need for the needs of today and the vision and growth of tomorrow. Passion is not I am super excited on the front end. Passion really comes from when you find your true passion, passion usually comes out of doing.
Michael: So, when you help people find, like Kathryn was saying, those right places. When they're on the right bus on the right seat and the bus is pointed in the right direction, and the right group of people are there, then what happens is you get that sense of satisfaction that starts to well up and become very strong, and that is oftentimes what we describe as passion.
Kathryn: Yeah. And if you need more on that, go back to one of the first couple podcasts.
Kathryn: We really talk about what do we mean by Passion and Provision.
Michael: Way more.
Kathryn: And what don't we mean by it.
Michael: Okay. So-
Kathryn: In leadership, one of the things that's real is that it's incredible how often we will hear a leader say, "I know exactly how I want them to act, and I've told them, and yet, they're not doing what I said."
Michael: in small companies, leadership and management makes over a lot, because the leader has a lot of one-on-one accountability over their employees, right?
Michael: So, that's a real good point. I know exactly what. Why won't they behave that way? Well, we'll come back to management. Let's step over to marketing real quick, because marketing is significant in the fact that you're communicating to people. In sales, often you're communicating on a one-on-one. And sales, in my mind, there are people that disagree with this, but we're just going to tell you, we're going to define it because this is the way we're talking about it. Sales fits into marketing. It's part of the overall marketing process, and you'll get that in the first couple of podcasts too.
Michael: There are two parts of a business plan. There are the finances and the marketing plan, and the marketing plan describes everything else. So, sales is in that. Unless it's a one-on-one sales process, where you can see people and react and have an interaction, a lot of marketing is one way. You're communicating out, and you don't have an immediate response back. The feedback loop is sometimes non-existent, except for sales, so it's a very long feedback loop. Sometimes it's a little shorter, people leave comments on your website or things like that, or they call complaining, or they tell you it's great.
Michael: But in the midst of it, understanding how you reach ... how you understand what's going on with clarity, because so many of our clients at so many other companies go about talking about their marketing and they use gobbly gook, what we call gobbly gook, and they also use ... are affected by the disease of the expert. So, they're using terms that are just, as far as you're concerned, everybody in your industry and your company, they just know them. It makes perfect sense to you. You know exactly what you mean.
Michael: But then, all of a sudden you say it, and somebody else is like, "I didn't know it," or worse yet, they don't ... if they don't know it, they may ask the question, "What did you mean by that?" But, if they have another impression of that term, they can be totally misled by what you're doing. It takes the focus and diffuses it of your marketing message, which ultimately reduces sales.
Kathryn: Yeah. Really good example of that is that we were talking with somebody about their culture, and the things that they hold most important, and one of the words that we were using was value, that value matters. And for us, what we mean by value is that whatever it is that we've delivering to you meets or exceeds your expectations and is worth every penny that you invested. That's how we're defining value. For the-
Michael: In the context of value pricing.
Kathryn: Yes. And for the client, there was a cultural barrier. Client comes from processing life in Asia, and there, value is all about being the cheapest. So, the very thing that we were trying to communicate with the word value was completely missed, because for him, value triggered-
Michael: You're the best value-
Kathryn: You're the best value, you're the cheapest, and you only care about price. So, it was really interesting, just that example of a term that we understood what we meant by it, but the client didn't understand what we meant by it.
Kathryn: And so, yeah.
Michael: Huge. So, hopefully this is making sense, and I wish I could look through the microphone and look at you and go, "Yeah, this is it. You're getting-"
Kathryn: You're nodding.
Michael: This is making sense. So, at the mass media level or at the mass communications level, you don't have that easy feedback, so you have to be even more careful and understand your market research. There's some great market research out there, systems and processes, I'm going to recommend Ryan Levesk's ask method. They do a good job of understanding really talking about market research and using surveys and stuff, and doing stuff digitally online. It's important to know, because the closer you can align your verbage about how you describe your product and service, the problem you're solving, the more you can align it with the people who are listening and you're selling it to, and what they're saying, the less opportunity you have for confusion and getting lost in fuzzy terms, in gobbly gook, and getting lost in the disease of the expert.
Michael: Because you hear, "I need more sales." And that's what somebody's saying as a problem. And you're saying, "We do an amazing job of increasing your converging rate, and closing the gaps in that, or in your sales funnel." And they're saying, "I need more customers." You mean the same thing, but that can be confusing. And if somebody says, "I want more customers," I'm going to come to them and I'm going to say, "You know what? I have a solution to help you get more customers." "You do?" "Yeah, relevance helps people pay attention." That's what we mean, in abstract terms. If you can define it in that conversation, doesn't matter if they go somewhere else later, because as we roll into management, what we see is this whole idea that a lot of one-on-one conversation. Go from the mass to the one-on-one.
Michael: And you want your people in your company to ... you need your systems to work right, but you want your people to understand what their tasks are. What are you asking them to do? So, let's go back. We said we'd go back to the ... my favorite classic explanation of the receptionist. Here's the instruction that is given to a receptionist.
Michael: When people come in, when they answer the phone, or they come in through the door, especially coming through the door, I want you to greet them and be friendly. I want you to be warm and friendly when people show up at our office, warm and friendly. Totally, totally abstract terms. Totally fuzzy, because what is person A goes, "Oh I get it. Warm and friendly," and they smile, and they jump up, and they're so glad to see them, and they shake their hand, and they bring them a cup of coffee or cocoa or anything else, because they just want to be ... you said warm, so they're just trying to be as warm as possible.
Michael: The other person, you look at them and they go, "Hi there. Welcome to Half a Bubble Out. What can I do for you?" And they don't smile, and they don't offer them anything, and they don't even look at them in the eyes. And you say, "Well, I wanted you to be warm and friendly." And they go, "Well, I was being warm and friendly." Like, no you weren't. No you weren't.
Kathryn: No. You were being formal and cold.
Michael: Right? Other abstract terms. So, here's the way we ... you're going right now, some of you are going, "Yeah, yeah, yeah. We struggle with that." Others of you are like, "I have this problem. It doesn't seem that difficult to ask somebody to be friendly," or whatever you're at, thinking in your mind right now, it just doesn't seem that difficult. But here's how you solve it.
Michael: You explain something. It's observable. The biggest problem with these terms, especially with managing people and their performance, and wanting to improve their performance, is that you need to give them direction in a way that is observable and measurable. So, here's what I say. I say to somebody, if they're not ... first of all, I kind of use fuzzy terms at the receptionist level to try and see what they're going to do and gauge them. I'm evaluating how much instruction they need or not. And then, if they need more instruction, I say, "Here's what I would like. I would like you to say some version of, 'Hi, welcome to Half a Bubble Out. How may I help you?' I want you to smile, and show your teeth."
Kathryn: That's very important. It's amazing how many people smile without showing their teeth.
Michael: Right. I want you to smile-
Kathryn: It looks like a grimace.
Michael: Yes. I want you to smile. And if they can't do that, then I'll go to the next level of putting them in front of a mirror and teaching them what a smile looks like, the way that I define a smile. I want them to smile, and I want them to look at the person in the eyes when they speak to them. It's really simple. Those three things, to be friendly and welcoming, and I don't even worry about warm because warm can be interpreted. "Hi there, welcome to Half a Bubble Out. How may I help you?" Look them in the eye, and smile while you're saying it.
Kathryn: And that is true, whether you're welcoming somebody in the door, or answering the phone, because you probably know this intuitively, but you can hear a smile, and it changes the tone of voice really for the person who's answering the phone. And so, to be able to say, "Every time you answer the phone, I really need you to smile and be conscious of that," because that translates across the phone line. So, very, very observable, very tangible behavior to define what we mean when we want our receptionist to do the work.
Michael: And you can see ... now, that's a very simple task, very straightforward. Expand that out to complex issues. I want you to be efficient at work.
Kathryn: I want you to write exceptional content.
Michael: In the marketing area, it's like that's the worst, right?
Kathryn: What does exceptional content mean?
Michael: I hate it, and people who think they're doing good coaching and training go, "Just write exceptional content, and people will be drawn to it." Okay. Define exceptional. Quite frankly, our definition of exceptional is much lower than a lot of people's, and that was backwards.
Kathryn: Actually, our definition of exceptional is much higher.
Michael: Oh yes. I said that backwards.
Kathryn: You did, and that was an important ... that's an important distinction.
Michael: It's higher. But, what we didn't know, is we didn't know what the ... when we were learning four or five years ago on what that looked like, we thought that it took X amount of hours to create what they were describing as what you needed for search engine optimization, content marketing, lots of that kind of stuff. And what we ended up doing, realizing, was what we needed to be good content, exceptional content, because that's how they were talking about it, was half the work. We say, by defining the fuzzy term, we actually cut the work in half.
Michael: And that was huge. And that's one of the ways it affected our bottom line.
Kathryn: Yep. The other place that really is important when you're dealing with the management side of things is job descriptions and hiring.
Kathryn: So, the way that you define your terms begins to matter a lot, and we have learned this the hard way. I'll give you the simple example. So, we are an ad agency. That means, in practical terms, we, on behalf of our clients, we negotiate contracts by media, and do that kind of-
Michael: That's not all we do, but-
Kathryn: It's not all we do, but it's a part of what we do.
Michael: It's a part of what we do.
Kathryn: And so, many years ago, now I think it's probably been 7 or 8 years ago, we hired a couple folks who had come from ad agencies where that really was the absolute ... that is what they did. It was the only thing they did.
Michael: By advertising and making-
Kathryn: By advertising-
Kathryn: Make ads. Put those things out there in traditional media. And it was very difficult for those hires to understand a more holistic approach, and they were very frustrated, because the thing that they thought they were being hired to do, just because we are an ad agency, did not translate. And so, we had to really have to work on that, and one of the employees didn't work out, and it just wasn't a good fit, because what she was really good at, we didn't need that. We needed a bunch of other stuff, and that was just a fraction of the job.
Michael: Yeah, I know. That's a big deal. Okay. So, that wraps up management, and then let's just talk about finance real quick on the back end here. Finance, like we're talking about numbers, right? How could there be any abstract-ness in something as plain and simple as numbers, Kathryn?
Kathryn: I'm not sure. I think they're very plain, and they tell me everything that I need to know.
Michael: Well, okay. So, let's talk about this. Here's what happens when you ... a friend of ours and a business partner in another company, and I regularly have this conversation, he's got a regular beef. It's a fair beef. All these companies out there, they talk about I made this much money.
Kathryn: So, profit.
Michael: We made ... well, that's part of his beef, right?
Kathryn: Ah. Yes. So top line.
Michael: Or is it top line, bottom line, what is it? And quite frankly, the challenges without clear definitions and clear knowledge, and you don't know who knows what until you define it, is when I say, "We had this campaign and we made $30,000." Well, was that your gross profit?
Kathryn: Your net profit?
Michael: Was that your net profit?
Kathryn: You include cost of goods in there? What's going on?
Michael: Yeah, right? And so, we all know that there's times when ... like in some industries, there's a 5% margin. What I mean by that, for those of you that don't understand, or might be thinking of something else, is literally, there's only 5% profit. There's 5% extra after you've paid for everything, the product, the service, the time, everything. There's only a 5% margin.
Kathryn: And all of the expenses to run your office.
Michael: All of that. Right?
Kathryn: All of it.
Michael: And that is, at the end of the day, all that's left. But, somebody may say, somebody else may have another product where literally the cost to make the product, and the time it takes to administer it, is ... there is an 80 or 90% profit. All right? An 80 or 90% margin that is all profit, net profit. It's cash you can spend because you've paid all of your expenses and everything else.
Michael: But, both people can say, "We made." Now, that's a great example I was told a few months ago by one of my friends in the Bay Area that is in the car industry. They were talking about different stuff, and they were doing competitive analysis. By the time it airs, True Car will still be around. TrueCar.com, they're selling cars online. They're entering into that market. And they're trying to be competitive.
Michael: And in 2015, the numbers I was told was they made 250 million dollars.
Michael: They made 250 million dollars.
Kathryn: What should it cost them to make 250 million dollars, Michael?
Michael: They spent 50 million dollars on their expenses.
Kathryn: That is a profitable company.
Michael: They spent 200 million dollars on their ads.
Kathryn: That is not a profitable company.
Michael: They made 250 million dollars, but they weren't profitable.
Michael: There was no ... so, what does that look like? Oh my goodness. It cost them 250 million dollars to make 250 million dollars. No profit. But, they made it. So, there's a fuzzy in finance terms, and when you start to use KPIs-
Kathryn: Key performance indicators.
Kathryn: Translating your acronyms.
Michael: Acronyms can be fuzzy.
Kathryn: Disease of the expert.
Michael: Right. They can be fuzzies totally. When you start talking about key performance indicators, these KPIs that you're measuring in your company, and using in your finance, then you, first of all, start going we have to define what we mean by this measurement, that it's an important key measurement, and it indicates our performance. And here's what we mean by it. Here's exactly what we're measuring. here's what we're not measuring, and here's how it indicates a part of the picture of how we're performing, how well we're performing.
Michael: Those are all significant important things to define and think about. Okay. You've all encountered this fuzzy term concept over and over and over again.
Michael: But, what we're giving you is the power to codify it at some level, either, this may be the first time you're codifying it, or it may be just an extension, and deepening your ability to codify it, or it may be, for some of you, just a really good refresher on something you already know, because when you're doing this, once you know that fuzzies exist, you can really start to identify why was there a miscommunication.
Michael: You can start to hone in on oh, and you do it in the rear where you're like, "I told you, and I gave you this assignment, and it didn't get done, so let's figure out why we didn't hit the target." But, you also, the better you get at it, the more you start to realize in a single conversation when it's starting to seem like it's drifting ... you know the conversation when you're talking to somebody and you are starting to feel like it sounds like you're talking about the same thing, but it's starting to feel like maybe you might not be starting to talk about the same thing.
Michael: And then it starts to drift off, and you're like, "Oh, we're really ... I would never. That means nothing compared ... we don't want that outcome." "You said you wanted that outcome." "No, I said I wanted, and you assumed that that meant." You can start to spot those things, and you can, when those communications happen, you can drill back and go, "Oh. How do you define this word? What I meant by that was ... I can see how it could be confusing. For this conversation, I'm defining it as this. Does that change this conversation?" "Yes."
Kathryn: Yeah. So, as we sort of begin to come to a wrap on this, we really want to recommend that you look at ... like, take just a few minutes. If you've developed goals for your company, if you've developed even values or a mission statement, it's worth taking a look and really asking yourself, "Am I assuming people understand what I mean by this? And what words in there could potentially have multiple meanings?" So, an easy way to check is if you throw a word into your mission statement, like, "We are going to be the best company, da da da da." Okay.
Kathryn: What does best mean? Right? And do you know how to measure that? Do your people know what you mean by best? And so, just to be able to really look at some of the things that you've placed out there that you want people to understand about who you are, could they be misinterpreted? And if they are, or if they could be, then it's worth the exercise to begin to hone and craft and be able to say, "I want us to be the best, and what I mean by that is," and then define it. Is it a numbers game? Is it just people like us more? What is it that you mean by that?
Kathryn: So, those are the exercises that we really want you to go through, having listened to this, is really think about just what you're saying to your people, as well as to your customers, and is it translatable in the way ... are you seeing them understand it the way that you want them to?
Michael: Is it measurable? Is it observable? Is the action or behavior observable? Is the results measurable? And right off the bat, if you can say yes to both, and describe, and somebody totally separate from you could look at it and say, "Yes. That is 1/8 cup full, and I have a measuring cup, and this is how I would do it," then great. If you define welcoming, and friendly, as a smile, a greeting, and eye contact, now you have something that's observable. And then, if you need to refine the observing even more, you can continue to refine.
Kathryn: And you can ask the person that you're wanting that of, do you understand? Tell me what it is that I want from you. And they can describe that to you, and then ultimately, you have clear agreement between yourself and that person as to what you mean by warm and friendly in this case.
Michael: Yeah. And as we go on and talk about performance improvement later on in other podcasts, writing those agreements down is key.
Michael: All right. So, that's today's podcast on goal analysis and fuzzy terms, more specifically.
Kathryn: Hopefully that was a little less painful than when you were trying to whale watch-
Kathryn: And relax in a hot tub, because you actually chose to listen to this-
Michael: Oh wow.
Kathryn: Didn't you?
Michael: La la la la.
Kathryn: So hopefully a little less traumatic.
Michael: All right. So, our goal again. How do you create Passion and Provision companies? That's our heart and goal. How do you create those places where your company is thriving, and so are you, and everyone else in it? And what does that look like? And this is one of those tools, one of those keys, to good communication, because every Passion and Provision company, Passion and Provision abstracts, and they ... communication is key to that. And fuzzy terms are key to it.
Michael: So, thank you so much for joining us. A real quick some housekeeping stuff for you. Please, we love to hear your feedback. It's super important to us and it helps us really as we're creating content for you all, and training instructions and stuff. So, please leave a message on halfabubbleout.com's blog podcast for the ... because you'll find the HaBO Village podcast at halfabubbleout.com. You also would love ... we would love comments and ratings on iTunes, because it's really based on those comments and ratings that we get seen and found in iTunes.
Kathryn: And then we can help other people besides you.
Michael: And we want to.
Kathryn: Our listener.
Michael: And we want to. So, that said, have a great day. Thank you for joining us. Again, we really appreciate it, and we really hope that you are going to have a much more effective and fulfilling week.
Kathryn: Take care.
Michael: Buh bye.