July 28, 2025 • 38 mins
What if entrepreneurial success didn't have to come at the expense of your health, relationships, and happiness? Michael Erath, founder and CEO of Next Level Growth, challenges conventional business wisdom with a revolutionary approach born from personal experience.
After watching his manufacturing business crumble when his partner embezzled half a million dollars in 2008, Erath rebuilt from nothing to create a thriving consultancy with a powerful "just cause" - entrepreneurs deserve more than just financial returns; they deserve a meaningful return on life.
Through his work with hundreds of businesses, Erath has identified five core obsessions that separate elite organizations from the rest: great people, inspiring purpose, optimized playbooks, a culture of performance, and growing profits and cash flow. Unlike prescriptive operating systems that force companies into rigid molds, these principles provide a flexible framework that adapts to each organization's unique culture and goals.
"Most entrepreneurs achieve ROI at the expense of their friendships, family time, physical health, and emotional health," Erath explains. "With the risk they take and the leverage they have to take on, it doesn't seem fair." His firm tackles this injustice by guiding business leaders through customized growth strategies that prevent common pitfalls like outgrowing early-stage talent, failing to document crucial processes, or treating financial success as merely a byproduct.
What truly sets Next Level Growth apart is their commitment to practicing what they preach. They require no contracts, take all financial risk in new relationships, and only get paid if clients find value - resulting in relationships lasting nearly a decade and an impressive Net Promoter Score of 81.
Whether you're struggling to scale beyond current limitations or simply want to reclaim your life from a business that's become a prison, Erath's five obsessions framework offers a path forward that honors both your ambitions and your wellbeing. Discover how to build an elite organization without sacrificing what matters most.
Thanks for tuning in to this episode of Follow The Brand! We hope you enjoyed learning about the latest marketing trends and strategies in Personal Branding, Business and Career Development, Financial Empowerment, Technology Innovation, and Executive Presence. To keep up with the latest insights and updates from us, be sure to follow us at 5starbdm.com. See you next time on Follow The Brand!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Welcome everybody to the Final Brand Podcast.
This is your host, grantMcGaugh.
We're going to go all the wayout to a very, very hot location
.
Speaker 2 (00:11):
I mean hot, hot meaning it's actually very hot.
Speaker 1 (00:14):
I think it was 114 degrees is what I've been told
out in Phoenix Arizona, where Irun into Mr Michael Erath.
He's a next-level guy and I'mnot talking about it because
everybody's at 70 degrees, 80degrees and he's at 110, but
he's hot like that.
Right, this guy is like superhot.
He's next level in what he does.
(00:35):
So, Michael, you like tointroduce yourself.
Speaker 2 (00:38):
Sure, absolutely.
Thank you, grant.
Michael Erath I am the founderand CEO of Next Level Growth.
Michael Erath I am the founderand CEO of Next Level Growth.
We're a firm of former businessowners, ceos and presidents
turned business guides.
We've got 10 of us across thecountry and we're helping
entrepreneurial leaders doeverything they need to to build
elite organizations.
Speaker 1 (01:06):
Well, hey, I'm inspired by that already and
what you're doing, and I lovethe name Next Level Growth
because you always get an imageand a picture, and that's what I
do.
I work through imagery, and sowhen I see Next Level Growth and
what you're doing, I want tounderstand, though from your
perspective, how do you defineyour vision for helping
companies achieve the bestversion of their business?
Speaker 2 (01:27):
So that's a really good question.
As you unpack that, I think wetalk about elite organizations
and in the book so FiveObsessions of Elite
Organizations the book Ireleased in March that really
gets deep into what we do and itreally provides a how-to.
So instead of just givingconcepts, we actually give you
here are some things you can doto implement this in your
business.
(01:47):
But I talk about the definitionof an elite organization is
different for every organization.
Some people want to scale to acertain point, some people want
to achieve an exit and havefinancial freedom.
Some people just want theirlife back.
They don't want their businessto be a prison anymore.
So that definition of elite isvery unique to the individual
(02:13):
founders, owners oforganizations.
But what we've really found is,over the last probably two
decades, business operatingsystems have become quite
commonplace in theentrepreneurial community and
while that's been very positive,by their nature these business
operating systems are oftenhighly prescriptive and really
(02:37):
kind of have a prescriptivesystem to offer.
It puts primacy on the system,not the user, and it forces
people regardless of theircircumstances, cultures or
desires.
It forces them into kind of apredefined mold and that doesn't
(02:59):
always fit right, especiallywhen you're growing.
If you think about anadolescent that's growing, one
size fits all doesn't fit forvery long, right?
It does when you're growing.
If you think about you know, ifyou think about an adolescent
that's growing, one size fitsall doesn't fit for very long,
right, it does when you stopgrowing.
And so what we've reallyfocused on is trying to flip
that on its head and focus on.
What we've discovered is fivekey principles that underlie
every elite organization.
(03:19):
This holds true in business, itholds true in nonprofits, it
holds true in sports andregardless of the source of the
tools and concepts.
We work with entrepreneurs andtheir executive teams to really
lean into and obsess about thesefive things and go through a
constant improvement process tobuild out underlying systems and
(03:42):
structures to truly become acategory of one in their space
by excelling in these five areas, and so, as a result, they end
up with a business operatingsystem that underlies this, but
that's all custom, tailored tothem because it's based on a
pursuit of these five principles, irrespective or irregardless
(04:02):
of what the actual tools are andwhere they come from.
Speaker 1 (04:06):
Man, now, before we jump down, you talked about
something that piqued myinterest in the same thing that
you're talking about, somethings that Simon Sinek came out
with that we are looking forjust cause.
I think you mentioned justcause and we're looking for.
We establish what is the idealcause and we're looking for.
(04:27):
You know, we establish what isthe ideal that we're trying to
aspire to.
We're not this ideal.
Today.
We talk about some of theprinciples of different
countries and they come out likethis is our declaration and our
independence and this is whatwe believe in.
But we all know that at thetime you're not there, but you
aspire to do that.
If you're a sporting team,right, we just had I remember,
not today because I'm fromFlorida right, so the Florida
(04:49):
Panthers just went back to backin the hockey world.
I'm pretty excited about it,but I was around, you know them
for years and they never won achampionship, right, they
aspired every year.
You aspire to be a champion andyou do the work and you go
through the motions, but youdon't realize.
You know what it may take twodecades to truly, as an
organization, reach thatparticular desired state.
(05:11):
This is important to understand.
You focus you said the corefocus.
Now, what is the core focus?
How does the entrepreneurialoperating system, as you said,
the EOS model and this is what Iwant to understand how does it
uniquely support fast growthcompanies in maintaining their
clarity and their traction andtheir alignment as they try to
(05:35):
ascend to this goal?
Speaker 2 (05:37):
So one thing just to be clear.
So I spent about five yearsworking within the EOS community
as one of their coaches.
I left in 2020 and started NextLevel Growth, and that's when I
kind of made this pivot fromhaving a prescriptive system to
more of a principled approachwith more flexibility, and so
one of the things so, to yourpoint, when I was with EOS, but
(05:58):
even beyond that, as I wasstarting Next Level Growth when
I was with EOS, but even beyondthat, as I was starting Next
Level Growth we worked withcompanies to really understand
their purpose.
Or, as Simon Sinek wrote aboutin his earlier book, start With
why.
What's the why behind theorganization?
(06:27):
And a few years ago, I readanother book, a newer book by
Simon Sinek called the InfiniteGame, and he talks about things
that are important if you'regoing to build a business or an
organization intended to outlastyou, and part of his evolution
of thought, which I found reallyintriguing and we've evolved
and modified how we teachstrategy in some regards as a
result of this in this new bookhe talks about this concept of a
just cause, and so the way heexplains it is that your purpose
(06:49):
, or your why is your originstory.
It's why you built the business, it's why you started it in the
first place.
The just cause, I think, givesgreater clarity and alignment,
and it draws people in.
The just cause defines it as avision of a future state that
does not currently exist, butone about which you are so
(07:09):
passionate.
You'll devote your entirecareer to its advancement.
And so how that resonated withus.
We had landed on our purpose orwhy, around helping
entrepreneurial leaders buildelite organizations, and there's
a lot of flexibility in whatthe definition of elite is, as I
mentioned earlier.
However, as we started to thinkabout just cause, it really
(07:32):
forced me to think and go deepinto well, why is that purpose
important to me?
Why does that really matter?
And it really goes back to myentrepreneurial journey myself
Very quickly.
I was second generation in thefamily manufacturing business.
I brought on a partner to helpus vertically integrate, became
(07:53):
really close friends with thatpartner, became his son's
godfather, found out in 2008, hehad embezzled half a million
dollars and was committing bankfraud.
I had taken the business toabout from eight to 45 million
in revenue.
We had about 200 employees, andwe ended up my wife and I lost
everything in 2009 as a resultof his crimes.
He spent two years in federalprison and we had to restart and
(08:16):
kind of bootstrap things.
We built a second business inthe same industry, grew that to
about 7 million before I exitedand started deciding to take
kind of the second half of mylife to give back from
everything I learned in thefirst half.
But what that led to was thisidea of a just cause.
And I had been a member of YPO,I still am and was a member of
(08:36):
EO Entrepreneurs Organizationand I spent a little bit of time
in Vistage and in all thesedifferent peer groups.
Something as I reflected on itbecame really clear to me, and
it's that most entrepreneurswhether they're currently going
through it, they've been throughit or they will go through it
to some degree achieve a returnon investment from their
(08:57):
business at the expense of theirfriendships, their time with
family, their physical health,even their emotional health,
their time with family, theirphysical health, even their
emotional health.
And when you think about therisk that entrepreneurs take I
mean they put their homes on theline.
Their entire financialwell-being is on the line.
With the risk they take and theleverage they have to take on
(09:19):
at times, it doesn't seem fairthat you would have to trade off
those things to the degree thatmost of us do.
And so that's where I started toreally get clear on this just
cause and the way we kind of sayit is that we believe that
(09:40):
entrepreneurial leaders deserveto earn more than a return on
investment.
They deserve to earn ameaningful return on life, and
that drives our daily purpose.
So that's kind of how we frameit.
So just cause is that beliefstatement, something that we
believe in.
The time will, I don't think,ever come where we don't have to
make those trade-offs asentrepreneurs, right, but that's
(10:00):
something that we want toadvance and we do that.
That's actually the belief thatdrives our daily purpose of
helping build eliteorganizations.
So it also helped frame, when Ibuilt out this firm, why I
wanted to only have partners andguides as part of the firm who
are former owners, ceos orpresidents of businesses that
(10:23):
reached 10 million or more inrevenue and had 50 or more
employees.
Because I think if you had fullP&L responsibility in an
organization that at leastreached that size, you have
likely experienced all of theemotions, all of the challenges,
all of the struggles that a 50million, $100 million company
will as well, and so it givesyou a level of empathy, it gives
(10:44):
you a level of understandingthat I think if you haven't had
that experience, it's verydifficult then to coach and
mentor somebody if they're goingthrough something that you
haven't experienced or beenthrough.
Speaker 1 (10:58):
I tell you you've answered the next question.
I was even thinking aboutasking him, meaning what makes
you different, what's yourdifferentiation?
And you've alluded to that.
I really, really appreciatethat.
I understand exactly whatyou're talking about.
Even in my own practice, wethink about the origin story and
then you think about the I callit the North Star.
(11:21):
What is your current, what areyou trying to accomplish?
And then you start to thinkabout, you know, that gap in
between.
Is it going to be worth thetime and effort and struggle to
achieve that North Star?
Do you truly understand theendeavor that you're asking
yourself to accomplish?
And, to your point, therelationships that you have.
(11:42):
Who's on board with you?
Are your family on board withyou?
Are your relationships, yourfriends, everything else?
And then when you talk aboutrolling the dice, I mean if
you're going to put yourfinancial well-being honestly,
you know what.
I'm taking these chips and I'mputting it on the table and I've
got.
I'm going to run and run andrun until I've crossed this
(12:05):
finish line.
That takes a lot of moxie.
I call it being brave.
You got to be brave in order todo something like that, to your
point in your origin story,which I felt.
Here you are, you got yourpartner in crime, so to speak,
right.
Literally you're going to bat,you know, and you're ramping
(12:25):
really good.
I mean, you get to the 40 50million dollar market revenue.
You're doing good, and then tofind out this guy is doing
something illegal.
That puts you both now injeopardy.
Kudos to you to like, hey, youstop, dust yourself off.
You're your wife like, let'stry again.
And you still are able to getto seven figures in business.
(12:48):
Michael hats off.
That is not.
That's not easy to do by anystretch of the imagination, and
you're able to do that.
So you've got some values, andhere's my question.
You've got some company valueslike excellence, impact and I'm
going to put resilience outthere some authenticity, some
(13:09):
skin in the game, some servantleadership that are central and
I want you to share a story.
You shared some of that already, but if you can share a story
of where one of these valuesmade a tangible difference for a
client of yours, can youelaborate on that?
Sure?
Speaker 2 (13:29):
Sure.
So you know, this goes back tothat idea of the just cause and
talking about what you believein.
I think when I'm talking to aprospect or another entrepreneur
, I have learned to be reallyopen and vulnerable about my
(13:49):
story and what I went through.
Vulnerable about my story andwhat I went through.
And it was interesting, right Imentioned before we started
recording, I was listening toyour podcast with Dr Davida
Price and she was talking aboutsharing some of her own trauma,
openly and vulnerably, and howthat one it allows her to speak
(14:09):
from a place of empathy and workwith people from a place of
empathy.
But it also, I think it helpspeople see you as real and it
helps you connect with people.
What I tend to find is, when Ishare that story, it's
remarkable the number ofbusiness leaders that will share
similar stories, the thingsthey've been through that they
never talk about, Because Ithink, as entrepreneurs, we feel
(14:32):
like it's a failure if we do.
And so what I?
What I have found is when, whenI can connect with somebody or
one of our partners can connectwith somebody, on that level, it
it forms a sense of a bondbecause it's like, okay, we have
, we have a really difficultshared experience.
Now you know yours wasdifferent than mine, but they
(14:54):
were highly similar, and thatbecomes almost like a magnet
between us that draws ustogether, because now it's kind
of like, okay, we're troops inthe foxhole together, right,
it's like it creates somethingrelational very quickly because
we're talking about and focusingon a belief.
It's not about how what I do isbetter than what you do or
(15:17):
whatever else.
It's about.
Let's get aligned on thatbelief first, and then it allows
us to lean into, if I think,the second part of that then.
So when we go from just causeand we believe the same thing,
so it makes sense to see if wecan do something together, then
the next is our purpose aroundbuilding elite organizations.
And this is almost kind of likea filter I use when I'm talking
(15:39):
to a prospect, because ifsomebody wants a better return
on life but they aren't willingto do the work that it takes to
build something elite, I don'twant to waste their money and I
don't want them wasting my time,right, and so all of this helps
kind of frame a filter todetermine that if I'm working
(15:59):
with the right people andthey're willing to trust me as
their guide.
We can do some really greatstuff together, but that those
things have to be aligned.
It can't be broken.
There's a.
There's a great.
I've had several clients reallylean into this.
There's a great short NickSaban video.
You're from Oklahoma so you maynot like Nick Saban too much,
but I'll.
I'm from Nebraska.
(16:20):
Oklahoma was an enemy, but Ihear what you're saying oh my
gosh, okay, I thought you wereokay, you're in Oklahoma now,
right?
Speaker 1 (16:27):
Omaha, Nebraska.
Speaker 2 (16:28):
I don't know what you're talking about.
Speaker 1 (16:33):
I thought I heard you say Oklahoma, oh and the A, I'm
an.
Speaker 2 (16:35):
ACC guy, so don't hold that against me.
But Saban talks about thisthing.
He calls it five choices and hesays we all have five choices
in life as to how we want to dothings.
Have you seen this?
I don't know if you've seenthis?
Speaker 1 (16:48):
No, I haven't.
I want to hear it.
Speaker 2 (16:50):
He says we can choose to be bad at what we do, which
unfortunately some people do.
We can choose to be average, wecan choose to be good, and he
said choosing to be good isprobably about all God expects
with whatever abilities he gaveyou.
But he said you can also chooseto be excellent or elite.
If you choose to be excellentor elite, you have to have a
special discipline, a specialdrive, a special focus and
(17:12):
passion to do things to a highstandard and a high level all of
the time.
And if you don't have that, youprobably never get past good.
So I always share that earlywhen I'm talking with somebody
because I want to see how theyreact to that.
And if all you want is to begood, that's perfectly fine.
Yeah, that's absolutely fine.
(17:33):
It's your decision.
But if you choose to be, or youwant to be, excellent or elite,
like I, want to know thatyou're really willing to do that
level of work.
And it kind of ties into ourcore values that are at Next
Level Growth.
Our core values are takeownership, be resourceful, have
a thirst for learning and be funto work with Right and one of
the the interesting thing is andI think when you, as you talk
(17:56):
about values, when you get intoyour organization's values if
they're truly authentic, I thinkyou can look at your personal
life and think about who youenjoy being around and who you
don't, and how they do or don'talign with those same values.
And when I look at my friends,when I look at people I don't
enjoy being around the peoplethat are closest to me, as, as
(18:18):
human beings, they takeownership of things.
They're just wired that wayright.
They're resourceful people youknow, through very different
mediums, they're always tryingto learn.
You know they're.
They're.
They're focused on growth andthey're fun.
They smile, they laugh.
You know they're focused ongrowth and they're fun.
They smile, they laugh.
You know they're uh, they canjoke around.
And I think understanding thosevalues and being able to use
(18:38):
those for clients you work with,for people you associate with
personally, all of those things,uh, are very important in how
you operationalize relationshipsin your life.
Speaker 1 (18:49):
I agree with that.
I call that authenticity.
People are authentic and youalluded to earlier when you're
vulnerable, when you can sharethings that are.
You know they're difficult,they were emotional, you know
things that happened in yourpast.
Maybe it could be trauma, butwhen you can very openly share
with someone else not justbecause to share your story, you
(19:10):
know, hey, you know feel sorryfor me, type of thing.
No, it's a teaching tool toshow that I understand, that
I've been through these thingsand that I've moved on.
You can too, right, depending onwhere you're at in your journey
and I'm sure you talk to peopleat all phases of the
entrepreneurial journey, whetheryou're a startup or now you've
(19:33):
got your first.
You know six figures.
Now you're into seven figures,you're looking to get to eight.
So now you're scaling andyou're starting to see, hey,
your North Star is in view.
You can start to see thesethings.
I want to understand I thinkour artists would want to
understand what are some ofthose common growth traps?
You know those common growthtraps that you see in companies
(19:55):
after they hit certainmilestones, whether it's 5
million, maybe it's 50 millionrevenue.
But how do you help thoseleaders break through those
particular ceilings?
Speaker 2 (20:07):
So I'm going to frame this, if you don't mind,
through the lens of these fiveobsessions that we've really
discovered are underlyingprinciples around organizations
that become great.
So the first obsession is greatpeople, and this was really
made popular in Jim Collins'book Good to Great back in 2001
when that released.
He talks about this analogy ofhaving the right people in the
(20:28):
right seats on your bus seats onyour bus.
But very few people who agreewith that concept have an
underlying system that allowsthem to actually improve that
within their businesses.
Right, and so there's ahealthcare CEO named Paul
Batalden who I've got a quotefrom in the book.
(20:48):
He said that every system isperfectly designed to get the
results it gets.
So if you want a differentresult, you need a different
system.
Look at the systems that areunderlying it.
So when we talk about greatpeople, yeah, these are people
that fit the culture, they sharethe values, the behavioral core
values of the business and theyhave the skill sets, the
(21:08):
experience and the desire toconsistently perform their roles
to a high standard.
And we can measure thingsaround that.
I think one of the traps towhat you're asking is I've seen
organizations scale and theleadership team around the
founder is comprised of thepeople who help them get from a
(21:31):
million dollars to five milliondollars or a million to ten
million, but now their goal isto get to 100 million and those
early stage leaders were exactlywho they needed for that first
stage of growth.
They were the ones who were,you know, I their COO of a
restaurant company I worked with.
You know this is the guy that,like opening up a new restaurant
(21:52):
, is fixing plumbing because ofsinks leaking.
Like you, know, yeah, he's a COObut, like in that startup phase
, you got to do that, you got togrind, you got to hustle and do
those things, but at a certainlevel of scale to get from 10 to
50 or 10 to 100 those leadersare not equipped for that next
stage.
But the founder and this isperfectly natural, it's very
(22:12):
much human nature that founderfeels an obligation and a deep
sense of loyalty.
So we don't then go replacethem and hire the people that we
need to get to the 50 or 100.
And so that ends up becoming achoke point or holding us back.
And I think, as an entrepreneurin a privately held business,
(22:35):
when the time comes thatsomebody who was a great fit for
a certain stage is no longerthe right fit going forward, we
have the ability to make thattransition as pleasant for them
as possible.
Right, we control the severance, we control the.
You know, we can let themcontrol the narrative, we can
(22:55):
help them find the nextorganization, if we choose to do
that, and we can do it in a waythat's really kind both to the
organization and its growthgoals and also to the individual
.
I think it goes back to clearis kind.
Right, if we have clearexpectations and someone can no
longer meet those expectations,then it's time to have a
different conversation.
(23:16):
One of the things I've learnedas I've started now I'm in my
11th year as a business coach isthat underlying most of our
frustrations with people isunclear expectations.
I think, at the end of the day,we're not really good at
establishing clear expectationsbetween individuals that report
(23:37):
to us and ourselves, and that'swhat leads to a lot of
frustration.
So there's a lot of stuff ingreat people.
But then the second obsessionis what we call an inspiring
purpose invest all of theirmarketing energy in external
marketing and not internallymarketing their vision, their
(23:57):
purpose, their just cause, allof those things to employees and
team members.
And I think that's a big miss,because I could come to work for
an organization and fit thevalues and have the skills and
the experience, but if theleaders of that organization can
help me, emotionally attachedto an inspiring purpose, I will
always bring more creativity,passion and energy to my work
(24:20):
because I see it as part ofsomething bigger and that
literally works down to afrontline employee.
It's just something you have tobe intentional about.
So great people, inspiringpurpose.
The third obsession is optimizedplaybooks.
This is another area I see.
Organizations often createbottlenecks that they don't need
to, and the idea with optimizedplaybooks these are not
(24:42):
detailed SOPs and workinstructions.
These are you know think abouta football team lots of detail
in how you run the plays, butthe playbook is just making sure
that, if this is the situationon the field, this is the
strategy for the play.
This is where everybody's goingto move, so we know where
(25:02):
everybody's going to be.
What my role and responsibilityis in this situation?
And if all 11 players on yourside of the ball execute that
play properly and youconsistently execute your plays
properly throughout the game,you're likely to come out on top
.
It's usually the broken plays.
That's where the other teamgains an advantage.
Same thing in our businesses,right?
Whatever your business is,there are things that,
(25:26):
throughout that workflow, areconsistent every time and we
need to systemize those thingsand create playbooks for people.
These playbooks take pressureoff of people when they're
onboarding into their roles orwhen they're performing, and the
challenge or the trap is thatmost entrepreneurs feel like I'm
too busy to document thosethings.
I'm too busy to do all of this.
The irony is that the reasonyou're so busy is because you
(25:49):
don't have those things right.
If everybody knew what place torun you'd put out so many fires
and then just kind of quicklythe fourth and fifth.
The fourth is a culture ofperformance.
There's another choke pointhere, I think and this is not
intended to be a punitiveculture of performance kind of
thing, but I think we've got tohave a culture where people have
(26:09):
clear expectations of what weneed from them in their role.
We have to have clear data sothat they know when they're
winning right.
Imagine watching a sportingevent with no scoreboard.
Right, it would not be fun towatch.
It would feel like you'rewatching a team practice.
The players aren't going toplay as hard.
But if we know how much time'sleft, we know the score, we know
some of the key stats.
As humans, we tend to elevateour performance because we want
(26:32):
to win.
There's an innate desire in usto win.
So we've got to create aculture where we have that data.
It's available.
People know the score, theyknow the expectations.
But then we also have to builda system that's designed to
coach and develop people who areunderperforming, so long as
those people are coachable.
But there also need to beguardrails on that system so
(26:53):
that if someone is not coachable, or they're coachable but they
just don't have the aptitude forwhat we need of them in that
role, the system will eithercoach them into a different role
or it will coach them out ofthe organization.
So we're constantly coachingpeople up or out who are not
meeting expectations.
We're doing it in a way to tryto develop them.
I find when companies do thiswell expectations and we're
(27:13):
doing it in a way to try todevelop them I find when
companies do this well, four outof five people you're able to
coach up.
It's not as common that peoplecan't make it.
And the other thing is becauseit's very clear and it's very
intentional and you're puttingthe effort into the people, but
you're also making it clear thatyou can't escape accountability
here.
People who aren't able to makeit will often, on their own
terms, self-select an exit,which is great, because now
(27:34):
they're not your HR problem.
So that's the importance behinda culture of performance.
And then, lastly, is thisobsession around growing profits
and cash flow, and when I cometo this one, often I hear people
say, well, profits and cash area byproduct of doing everything
else.
Right, and I just think that'sintellectually lazy, because if,
if you don't treat profit andcash as something that's
(27:59):
important because that's thefuel that goes back in the
engine.
If you treat it as a byproduct,it's going to be a byproduct.
But if I want to invest ingreat people in my organization,
I need to be profitable withgreat cash flow so I can be top
of market pay, I can providethem the benefits that will
attract the best of the best,and so all of those things have
to be operating in harmony toreally build something elite.
(28:23):
So I apologize, that was a longanswer, but sometimes no, no,
no.
Speaker 1 (28:27):
It's important to get those principles out because
it's the core principle aboutwhat you do and why you do it.
You brought up some very goodthings and I'm almost certain
you probably come across this asyou scaled.
Good things and I'm almostcertain you probably will come
across this as you scaled andowners have to, and I've seen
this because I work in theinvestment banking space also is
that you come to a point youmight need to exit.
(28:48):
You're like you know what?
This was fun up to this point,but maybe I'm the bottleneck and
I need to sell to someone elseand you see that a lot, there's
a merger, there's an acquisition, maybe that's how.
Hey, everybody, I'm glad we gothere, we won the game,
everybody gets paid out.
Here's your golden parachute,if that's where you want to look
(29:08):
at it.
And then the company goes toanother phase of its evolution
and then you can either be partof the board or you come in to
some equity packages and thingslike that, but you don't have to
do the day to day grind RightBefore.
So I love the way that you youframe your business performance
(29:31):
and you frame your businesscoaching and, what's very, very
important, to understand thevalues and the execution phases
that you're getting to.
I want to ask you this you know, and because you do a lot of
frameworks and you have a lot offormulas that you use, what are
your success metrics or youroutcomes that you're most proud
(29:51):
of, and how do they reflect onyour brand promise at next level
?
Speaker 2 (29:57):
growth.
So I appreciate that.
So in scaling up verne harnish,in the strategy section he
pulls a lot of strategy frommichael porter.
One of the concepts that's partof that system uh, that I love
is called a one phrase strategy,and the idea is if you can, if
you can really distill yourstrategy down to its core
(30:20):
essence and frame it in a shortphrase that people can remember
and use as a filter fordecisions on a daily basis, what
would that be?
And for us, what we reallylanded on is we call it,
experience matters.
So it's in a number ofdifferent ways.
It's the results experience ourclients have.
It's the experience they havein our work together.
(30:42):
It's our experience as seasonedowners, ceos and presidents.
So there's lots of differentpillars around how we look at
that.
To sign any contracts, we getpaid at the end of the work that
(31:02):
we do and only if they feellike it was valuable.
So we're the ones who take allthe financial risk going into a
new relationship.
And when we go on this journeywith a client, we make it very
easy for them to start, but wealso make it very easy for them
to fire us because they don'thave a contract to get out of.
So, literally, if I'm workingwith somebody and they call me
today and say that they don'tfeel like they're getting enough
value anymore, we stop chargingthem, we wish them well and we
(31:26):
end the engagement.
So what has been a reallywonderful outcome is I now have
clients that I am in my ninthand 10th year with of
consecutive work and they onlystay because they're continuing
to get value.
I'm continuing to evolve andgrow with them.
Our partners and guides arehaving similar experiences and
(31:49):
we define, you know, in good togreat.
Jim Collins talks about the BHAG.
The big, hairy, audacious goalis kind of like that you know
five, 10, 20 year, like what'sthe big thing you're going to
accomplish?
Well, we, we call it, we callthat the summit.
So we, we, we use this analogythat growing a business is like
climbing a mountain, so we callit the summit.
We have, we have two walls inour we've got a hallway in our
(32:10):
offices where we have all thelogos of the companies we've
worked with.
There's there's almost 150logos now on this wall.
We've got another wall that wemove logos to.
That's called our SummitSociety.
So any company that we workwith, when they reach that first
summit, we move them to thisSummit Society wall.
(32:31):
We've now got 19 companies onthat wall that we have actually
helped hit that first summit.
And when they go back and thinkabout when we first started
working together and they setthis big dream of what they
wanted to accomplish, like Ireally didn't think we were
going to be able to do it, youknow we got there faster,
whatever the case may be.
So that really, for us, is ametric we look at is the success
(32:53):
rate and we have a quarterlypulse where we're meeting
quarterly with our clients and alot of our success metrics are
based on their actual metrics.
We do surveys, we do a simplenet promoter score.
So if you're familiar with thenet promoter score negative to a
positive 100, right.
So if you use their calculus,it can be anywhere from negative
(33:16):
100 to a positive 100.
Our net promoter score right nowis an 81.
Nice Tesla is in the 70s,netflix is in the 70s, I believe
.
So anything 60 or higher isconsidered elite and that's
something that's also part ofour flywheel, part of our
business model, because most ofour clients come to us through
(33:37):
referral and that's another, Ithink, big success metric If
you're creating raving fans, whoare now the ones who are
providing you with new business.
That's about as perfect as youcan create it.
Speaker 1 (33:53):
Well, I think what I'm getting out of this is,
first of all, you have skin inthe game.
Getting out of this, first ofall, you have skin in the game.
You're not just talking aboutperformance and improvement and
next level growth.
It's like no, I'm gonna put mytime because it's your time and
your resources into this andprove to you that we're going to
achieve this milestone together, and I will only take
(34:16):
compensation as you achieve thatgoal.
First of all, you know that's ainvest in a, in a person like
(34:40):
michael earth.
I know it's erath, I I want mymind wants to say earth, but I
know it's erath.
And but you know, like I said,you know, don't come to me with
yeah, maybe this is something Iwant to do.
Like, though, you gotta want toknow what you want to do.
Then I'll take you to thatnorth star.
We're going to get theretogether and we're going to both
(35:01):
enjoy, you know, the valuesthat come from that.
You know, I think that'swonderful.
We're coming to the end of oursession, our podcast, and I want
you to tell, first of all, letus know about your book, how to
get the book right, how tocontact you, but before you give
us that?
I always ask you because it'simportant to me remind that
(35:23):
performer score.
Now you've come to the end ofthis podcast and you spent a
good 30 or 40 minutes on theFollow Brand podcast.
How was your experience?
Speaker 2 (35:36):
I would like to do it again.
I will start with that.
So that's a 10.
No-transcript.
Speaker 1 (35:55):
Love it, love it, love it.
So now you got to tell us howto get your book, because I want
to get a copy of that book.
Speaker 2 (36:00):
Yeah, absolutely so.
The book's available on Amazonand Audible Five Obsessions of
Elite Organizations.
I've also got a website,fiveobsessionscom, so people
who've read the book candownload resources there as well
, and you can also link to thebook through that website.
I also one of the things I didwas I've created an AI clone of
(36:22):
myself that's been trained onall of the different things that
we teach.
Everything I've ever in fact,even this podcast will be
transcribed and the clone willbe trained on it.
But the idea with the clone was,if a company is either too
small to afford one of us as apartner but wants to implement
the tools and the concepts thatare part of our approach and
(36:44):
they want some additionalguidance beyond just reading the
book and figuring it out forthemselves it's a very
inexpensive subscription to theclone they can get additional
resources and guidance andinsights from that.
So the clone can be accessedthrough the website
askmichaelerathcom.
That's also in the book, it'smentioned several times and then
, lastly, our website,nextlevelgrowthcom.
(37:06):
That's where you can meet theteam, get a better deep dive
into what we do, or on ourYouTube channel.
We've got a lot of contentthere as well.
Speaker 1 (37:15):
Man, I want to send a special thanks to the EREF
family because this has beenwonderful just talking to you,
hearing your story,understanding what you are about
.
I believe in what you're doingand I know that anyone that
takes the time to invest theirresources into working with you
(37:36):
will get tenfold back, becauseyou've done the research, you
understand what it takes toachieve the goal and I don't
think you're the kind of personlike that will say look, if
you're ready or you're not ready.
You would be very truthful intelling them this is what you
need to do to get there, anduntil you attain these skill
(37:56):
sets, you're not going to beable to get to that level.
And I think it's important tohave authentic conversations
with people and understand wherethey're at and they'll
appreciate you more and thenthey'll come back to you, just
like you just said You're goingto come back on my show.
This is going to be wonderfulbecause I'm going to get your
book and I'm going to take alook at that and we'll see if
we're going to scale ourbusiness to the point that we
(38:18):
want to get to.
So this has been wonderful.
I want to encourage your entireaudience to tune in to all the
episodes of Follow the Brandthat's at the number five.
That's number five, that'sfive-star, bdm B for brand D,
for development and formasterscom.
I want to thank you again forbeing on the show, michael.
Thank you, grant, I had awonderful time you.
Welcome everybody to the Final Brand Podcast.
This is your host, grantMcGaugh.
We're going to go all the wayout to a very, very hot location
.
Speaker 2 (00:11):
I mean hot, hot meaning it's actually very hot.
Speaker 1 (00:14):
I think it was 114 degrees is what I've been told
out in Phoenix Arizona, where Irun into Mr Michael Erath.
He's a next-level guy and I'mnot talking about it because
everybody's at 70 degrees, 80degrees and he's at 110, but
he's hot like that.
Right, this guy is like superhot.
He's next level in what he does.
(00:35):
So, Michael, you like tointroduce yourself.
Speaker 2 (00:38):
Sure, absolutely.
Thank you, grant.
Michael Erath I am the founderand CEO of Next Level Growth.
Michael Erath I am the founderand CEO of Next Level Growth.
We're a firm of former businessowners, ceos and presidents
turned business guides.
We've got 10 of us across thecountry and we're helping
entrepreneurial leaders doeverything they need to to build
elite organizations.
Speaker 1 (01:06):
Well, hey, I'm inspired by that already and
what you're doing, and I lovethe name Next Level Growth
because you always get an imageand a picture, and that's what I
do.
I work through imagery, and sowhen I see Next Level Growth and
what you're doing, I want tounderstand, though from your
perspective, how do you defineyour vision for helping
companies achieve the bestversion of their business?
Speaker 2 (01:27):
So that's a really good question.
As you unpack that, I think wetalk about elite organizations
and in the book so FiveObsessions of Elite
Organizations the book Ireleased in March that really
gets deep into what we do and itreally provides a how-to.
So instead of just givingconcepts, we actually give you
here are some things you can doto implement this in your
business.
(01:47):
But I talk about the definitionof an elite organization is
different for every organization.
Some people want to scale to acertain point, some people want
to achieve an exit and havefinancial freedom.
Some people just want theirlife back.
They don't want their businessto be a prison anymore.
So that definition of elite isvery unique to the individual
(02:13):
founders, owners oforganizations.
But what we've really found is,over the last probably two
decades, business operatingsystems have become quite
commonplace in theentrepreneurial community and
while that's been very positive,by their nature these business
operating systems are oftenhighly prescriptive and really
(02:37):
kind of have a prescriptivesystem to offer.
It puts primacy on the system,not the user, and it forces
people regardless of theircircumstances, cultures or
desires.
It forces them into kind of apredefined mold and that doesn't
(02:59):
always fit right, especiallywhen you're growing.
If you think about anadolescent that's growing, one
size fits all doesn't fit forvery long, right?
It does when you're growing.
If you think about you know, ifyou think about an adolescent
that's growing, one size fitsall doesn't fit for very long,
right, it does when you stopgrowing.
And so what we've reallyfocused on is trying to flip
that on its head and focus on.
What we've discovered is fivekey principles that underlie
every elite organization.
(03:19):
This holds true in business, itholds true in nonprofits, it
holds true in sports andregardless of the source of the
tools and concepts.
We work with entrepreneurs andtheir executive teams to really
lean into and obsess about thesefive things and go through a
constant improvement process tobuild out underlying systems and
(03:42):
structures to truly become acategory of one in their space
by excelling in these five areas, and so, as a result, they end
up with a business operatingsystem that underlies this, but
that's all custom, tailored tothem because it's based on a
pursuit of these five principles, irrespective or irregardless
(04:02):
of what the actual tools are andwhere they come from.
Speaker 1 (04:06):
Man, now, before we jump down, you talked about
something that piqued myinterest in the same thing that
you're talking about, somethings that Simon Sinek came out
with that we are looking forjust cause.
I think you mentioned justcause and we're looking for.
We establish what is the idealcause and we're looking for.
(04:27):
You know, we establish what isthe ideal that we're trying to
aspire to.
We're not this ideal.
Today.
We talk about some of theprinciples of different
countries and they come out likethis is our declaration and our
independence and this is whatwe believe in.
But we all know that at thetime you're not there, but you
aspire to do that.
If you're a sporting team,right, we just had I remember,
not today because I'm fromFlorida right, so the Florida
(04:49):
Panthers just went back to backin the hockey world.
I'm pretty excited about it,but I was around, you know them
for years and they never won achampionship, right, they
aspired every year.
You aspire to be a champion andyou do the work and you go
through the motions, but youdon't realize.
You know what it may take twodecades to truly, as an
organization, reach thatparticular desired state.
(05:11):
This is important to understand.
You focus you said the corefocus.
Now, what is the core focus?
How does the entrepreneurialoperating system, as you said,
the EOS model and this is what Iwant to understand how does it
uniquely support fast growthcompanies in maintaining their
clarity and their traction andtheir alignment as they try to
(05:35):
ascend to this goal?
Speaker 2 (05:37):
So one thing just to be clear.
So I spent about five yearsworking within the EOS community
as one of their coaches.
I left in 2020 and started NextLevel Growth, and that's when I
kind of made this pivot fromhaving a prescriptive system to
more of a principled approachwith more flexibility, and so
one of the things so, to yourpoint, when I was with EOS, but
(05:58):
even beyond that, as I wasstarting Next Level Growth when
I was with EOS, but even beyondthat, as I was starting Next
Level Growth we worked withcompanies to really understand
their purpose.
Or, as Simon Sinek wrote aboutin his earlier book, start With
why.
What's the why behind theorganization?
(06:27):
And a few years ago, I readanother book, a newer book by
Simon Sinek called the InfiniteGame, and he talks about things
that are important if you'regoing to build a business or an
organization intended to outlastyou, and part of his evolution
of thought, which I found reallyintriguing and we've evolved
and modified how we teachstrategy in some regards as a
result of this in this new bookhe talks about this concept of a
just cause, and so the way heexplains it is that your purpose
(06:49):
, or your why is your originstory.
It's why you built the business, it's why you started it in the
first place.
The just cause, I think, givesgreater clarity and alignment,
and it draws people in.
The just cause defines it as avision of a future state that
does not currently exist, butone about which you are so
(07:09):
passionate.
You'll devote your entirecareer to its advancement.
And so how that resonated withus.
We had landed on our purpose orwhy, around helping
entrepreneurial leaders buildelite organizations, and there's
a lot of flexibility in whatthe definition of elite is, as I
mentioned earlier.
However, as we started to thinkabout just cause, it really
(07:32):
forced me to think and go deepinto well, why is that purpose
important to me?
Why does that really matter?
And it really goes back to myentrepreneurial journey myself
Very quickly.
I was second generation in thefamily manufacturing business.
I brought on a partner to helpus vertically integrate, became
(07:53):
really close friends with thatpartner, became his son's
godfather, found out in 2008, hehad embezzled half a million
dollars and was committing bankfraud.
I had taken the business toabout from eight to 45 million
in revenue.
We had about 200 employees, andwe ended up my wife and I lost
everything in 2009 as a resultof his crimes.
He spent two years in federalprison and we had to restart and
(08:16):
kind of bootstrap things.
We built a second business inthe same industry, grew that to
about 7 million before I exitedand started deciding to take
kind of the second half of mylife to give back from
everything I learned in thefirst half.
But what that led to was thisidea of a just cause.
And I had been a member of YPO,I still am and was a member of
(08:36):
EO Entrepreneurs Organizationand I spent a little bit of time
in Vistage and in all thesedifferent peer groups.
Something as I reflected on itbecame really clear to me, and
it's that most entrepreneurswhether they're currently going
through it, they've been throughit or they will go through it
to some degree achieve a returnon investment from their
(08:57):
business at the expense of theirfriendships, their time with
family, their physical health,even their emotional health,
their time with family, theirphysical health, even their
emotional health.
And when you think about therisk that entrepreneurs take I
mean they put their homes on theline.
Their entire financialwell-being is on the line.
With the risk they take and theleverage they have to take on
(09:19):
at times, it doesn't seem fairthat you would have to trade off
those things to the degree thatmost of us do.
And so that's where I started toreally get clear on this just
cause and the way we kind of sayit is that we believe that
(09:40):
entrepreneurial leaders deserveto earn more than a return on
investment.
They deserve to earn ameaningful return on life, and
that drives our daily purpose.
So that's kind of how we frameit.
So just cause is that beliefstatement, something that we
believe in.
The time will, I don't think,ever come where we don't have to
make those trade-offs asentrepreneurs, right, but that's
(10:00):
something that we want toadvance and we do that.
That's actually the belief thatdrives our daily purpose of
helping build eliteorganizations.
So it also helped frame, when Ibuilt out this firm, why I
wanted to only have partners andguides as part of the firm who
are former owners, ceos orpresidents of businesses that
(10:23):
reached 10 million or more inrevenue and had 50 or more
employees.
Because I think if you had fullP&L responsibility in an
organization that at leastreached that size, you have
likely experienced all of theemotions, all of the challenges,
all of the struggles that a 50million, $100 million company
will as well, and so it givesyou a level of empathy, it gives
(10:44):
you a level of understandingthat I think if you haven't had
that experience, it's verydifficult then to coach and
mentor somebody if they're goingthrough something that you
haven't experienced or beenthrough.
Speaker 1 (10:58):
I tell you you've answered the next question.
I was even thinking aboutasking him, meaning what makes
you different, what's yourdifferentiation?
And you've alluded to that.
I really, really appreciatethat.
I understand exactly whatyou're talking about.
Even in my own practice, wethink about the origin story and
then you think about the I callit the North Star.
(11:21):
What is your current, what areyou trying to accomplish?
And then you start to thinkabout, you know, that gap in
between.
Is it going to be worth thetime and effort and struggle to
achieve that North Star?
Do you truly understand theendeavor that you're asking
yourself to accomplish?
And, to your point, therelationships that you have.
(11:42):
Who's on board with you?
Are your family on board withyou?
Are your relationships, yourfriends, everything else?
And then when you talk aboutrolling the dice, I mean if
you're going to put yourfinancial well-being honestly,
you know what.
I'm taking these chips and I'mputting it on the table and I've
got.
I'm going to run and run andrun until I've crossed this
(12:05):
finish line.
That takes a lot of moxie.
I call it being brave.
You got to be brave in order todo something like that, to your
point in your origin story,which I felt.
Here you are, you got yourpartner in crime, so to speak,
right.
Literally you're going to bat,you know, and you're ramping
(12:25):
really good.
I mean, you get to the 40 50million dollar market revenue.
You're doing good, and then tofind out this guy is doing
something illegal.
That puts you both now injeopardy.
Kudos to you to like, hey, youstop, dust yourself off.
You're your wife like, let'stry again.
And you still are able to getto seven figures in business.
(12:48):
Michael hats off.
That is not.
That's not easy to do by anystretch of the imagination, and
you're able to do that.
So you've got some values, andhere's my question.
You've got some company valueslike excellence, impact and I'm
going to put resilience outthere some authenticity, some
(13:09):
skin in the game, some servantleadership that are central and
I want you to share a story.
You shared some of that already, but if you can share a story
of where one of these valuesmade a tangible difference for a
client of yours, can youelaborate on that?
Sure?
Speaker 2 (13:29):
Sure.
So you know, this goes back tothat idea of the just cause and
talking about what you believein.
I think when I'm talking to aprospect or another entrepreneur
, I have learned to be reallyopen and vulnerable about my
(13:49):
story and what I went through.
Vulnerable about my story andwhat I went through.
And it was interesting, right Imentioned before we started
recording, I was listening toyour podcast with Dr Davida
Price and she was talking aboutsharing some of her own trauma,
openly and vulnerably, and howthat one it allows her to speak
(14:09):
from a place of empathy and workwith people from a place of
empathy.
But it also, I think it helpspeople see you as real and it
helps you connect with people.
What I tend to find is, when Ishare that story, it's
remarkable the number ofbusiness leaders that will share
similar stories, the thingsthey've been through that they
never talk about, Because Ithink, as entrepreneurs, we feel
(14:32):
like it's a failure if we do.
And so what I?
What I have found is when, whenI can connect with somebody or
one of our partners can connectwith somebody, on that level, it
it forms a sense of a bondbecause it's like, okay, we have
, we have a really difficultshared experience.
Now you know yours wasdifferent than mine, but they
(14:54):
were highly similar, and thatbecomes almost like a magnet
between us that draws ustogether, because now it's kind
of like, okay, we're troops inthe foxhole together, right,
it's like it creates somethingrelational very quickly because
we're talking about and focusingon a belief.
It's not about how what I do isbetter than what you do or
(15:17):
whatever else.
It's about.
Let's get aligned on thatbelief first, and then it allows
us to lean into, if I think,the second part of that then.
So when we go from just causeand we believe the same thing,
so it makes sense to see if wecan do something together, then
the next is our purpose aroundbuilding elite organizations.
And this is almost kind of likea filter I use when I'm talking
(15:39):
to a prospect, because ifsomebody wants a better return
on life but they aren't willingto do the work that it takes to
build something elite, I don'twant to waste their money and I
don't want them wasting my time,right, and so all of this helps
kind of frame a filter todetermine that if I'm working
(15:59):
with the right people andthey're willing to trust me as
their guide.
We can do some really greatstuff together, but that those
things have to be aligned.
It can't be broken.
There's a.
There's a great.
I've had several clients reallylean into this.
There's a great short NickSaban video.
You're from Oklahoma so you maynot like Nick Saban too much,
but I'll.
I'm from Nebraska.
(16:20):
Oklahoma was an enemy, but Ihear what you're saying oh my
gosh, okay, I thought you wereokay, you're in Oklahoma now,
right?
Speaker 1 (16:27):
Omaha, Nebraska.
Speaker 2 (16:28):
I don't know what you're talking about.
Speaker 1 (16:33):
I thought I heard you say Oklahoma, oh and the A, I'm
an.
Speaker 2 (16:35):
ACC guy, so don't hold that against me.
But Saban talks about thisthing.
He calls it five choices and hesays we all have five choices
in life as to how we want to dothings.
Have you seen this?
I don't know if you've seenthis?
Speaker 1 (16:48):
No, I haven't.
I want to hear it.
Speaker 2 (16:50):
He says we can choose to be bad at what we do, which
unfortunately some people do.
We can choose to be average, wecan choose to be good, and he
said choosing to be good isprobably about all God expects
with whatever abilities he gaveyou.
But he said you can also chooseto be excellent or elite.
If you choose to be excellentor elite, you have to have a
special discipline, a specialdrive, a special focus and
(17:12):
passion to do things to a highstandard and a high level all of
the time.
And if you don't have that, youprobably never get past good.
So I always share that earlywhen I'm talking with somebody
because I want to see how theyreact to that.
And if all you want is to begood, that's perfectly fine.
Yeah, that's absolutely fine.
(17:33):
It's your decision.
But if you choose to be, or youwant to be, excellent or elite,
like I, want to know thatyou're really willing to do that
level of work.
And it kind of ties into ourcore values that are at Next
Level Growth.
Our core values are takeownership, be resourceful, have
a thirst for learning and be funto work with Right and one of
the the interesting thing is andI think when you, as you talk
(17:56):
about values, when you get intoyour organization's values if
they're truly authentic, I thinkyou can look at your personal
life and think about who youenjoy being around and who you
don't, and how they do or don'talign with those same values.
And when I look at my friends,when I look at people I don't
enjoy being around the peoplethat are closest to me, as, as
(18:18):
human beings, they takeownership of things.
They're just wired that wayright.
They're resourceful people youknow, through very different
mediums, they're always tryingto learn.
You know they're.
They're.
They're focused on growth andthey're fun.
They smile, they laugh.
You know they're focused ongrowth and they're fun.
They smile, they laugh.
You know they're uh, they canjoke around.
And I think understanding thosevalues and being able to use
(18:38):
those for clients you work with,for people you associate with
personally, all of those things,uh, are very important in how
you operationalize relationshipsin your life.
Speaker 1 (18:49):
I agree with that.
I call that authenticity.
People are authentic and youalluded to earlier when you're
vulnerable, when you can sharethings that are.
You know they're difficult,they were emotional, you know
things that happened in yourpast.
Maybe it could be trauma, butwhen you can very openly share
with someone else not justbecause to share your story, you
(19:10):
know, hey, you know feel sorryfor me, type of thing.
No, it's a teaching tool toshow that I understand, that
I've been through these thingsand that I've moved on.
You can too, right, depending onwhere you're at in your journey
and I'm sure you talk to peopleat all phases of the
entrepreneurial journey, whetheryou're a startup or now you've
(19:33):
got your first.
You know six figures.
Now you're into seven figures,you're looking to get to eight.
So now you're scaling andyou're starting to see, hey,
your North Star is in view.
You can start to see thesethings.
I want to understand I thinkour artists would want to
understand what are some ofthose common growth traps?
You know those common growthtraps that you see in companies
(19:55):
after they hit certainmilestones, whether it's 5
million, maybe it's 50 millionrevenue.
But how do you help thoseleaders break through those
particular ceilings?
Speaker 2 (20:07):
So I'm going to frame this, if you don't mind,
through the lens of these fiveobsessions that we've really
discovered are underlyingprinciples around organizations
that become great.
So the first obsession is greatpeople, and this was really
made popular in Jim Collins'book Good to Great back in 2001
when that released.
He talks about this analogy ofhaving the right people in the
(20:28):
right seats on your bus seats onyour bus.
But very few people who agreewith that concept have an
underlying system that allowsthem to actually improve that
within their businesses.
Right, and so there's ahealthcare CEO named Paul
Batalden who I've got a quotefrom in the book.
(20:48):
He said that every system isperfectly designed to get the
results it gets.
So if you want a differentresult, you need a different
system.
Look at the systems that areunderlying it.
So when we talk about greatpeople, yeah, these are people
that fit the culture, they sharethe values, the behavioral core
values of the business and theyhave the skill sets, the
(21:08):
experience and the desire toconsistently perform their roles
to a high standard.
And we can measure thingsaround that.
I think one of the traps towhat you're asking is I've seen
organizations scale and theleadership team around the
founder is comprised of thepeople who help them get from a
(21:31):
million dollars to five milliondollars or a million to ten
million, but now their goal isto get to 100 million and those
early stage leaders were exactlywho they needed for that first
stage of growth.
They were the ones who were,you know, I their COO of a
restaurant company I worked with.
You know this is the guy that,like opening up a new restaurant
(21:52):
, is fixing plumbing because ofsinks leaking.
Like you, know, yeah, he's a COObut, like in that startup phase
, you got to do that, you got togrind, you got to hustle and do
those things, but at a certainlevel of scale to get from 10 to
50 or 10 to 100 those leadersare not equipped for that next
stage.
But the founder and this isperfectly natural, it's very
(22:12):
much human nature that founderfeels an obligation and a deep
sense of loyalty.
So we don't then go replacethem and hire the people that we
need to get to the 50 or 100.
And so that ends up becoming achoke point or holding us back.
And I think, as an entrepreneurin a privately held business,
(22:35):
when the time comes thatsomebody who was a great fit for
a certain stage is no longerthe right fit going forward, we
have the ability to make thattransition as pleasant for them
as possible.
Right, we control the severance, we control the.
You know, we can let themcontrol the narrative, we can
(22:55):
help them find the nextorganization, if we choose to do
that, and we can do it in a waythat's really kind both to the
organization and its growthgoals and also to the individual
.
I think it goes back to clearis kind.
Right, if we have clearexpectations and someone can no
longer meet those expectations,then it's time to have a
different conversation.
(23:16):
One of the things I've learnedas I've started now I'm in my
11th year as a business coach isthat underlying most of our
frustrations with people isunclear expectations.
I think, at the end of the day,we're not really good at
establishing clear expectationsbetween individuals that report
(23:37):
to us and ourselves, and that'swhat leads to a lot of
frustration.
So there's a lot of stuff ingreat people.
But then the second obsessionis what we call an inspiring
purpose invest all of theirmarketing energy in external
marketing and not internallymarketing their vision, their
(23:57):
purpose, their just cause, allof those things to employees and
team members.
And I think that's a big miss,because I could come to work for
an organization and fit thevalues and have the skills and
the experience, but if theleaders of that organization can
help me, emotionally attachedto an inspiring purpose, I will
always bring more creativity,passion and energy to my work
(24:20):
because I see it as part ofsomething bigger and that
literally works down to afrontline employee.
It's just something you have tobe intentional about.
So great people, inspiringpurpose.
The third obsession is optimizedplaybooks.
This is another area I see.
Organizations often createbottlenecks that they don't need
to, and the idea with optimizedplaybooks these are not
(24:42):
detailed SOPs and workinstructions.
These are you know think abouta football team lots of detail
in how you run the plays, butthe playbook is just making sure
that, if this is the situationon the field, this is the
strategy for the play.
This is where everybody's goingto move, so we know where
(25:02):
everybody's going to be.
What my role and responsibilityis in this situation?
And if all 11 players on yourside of the ball execute that
play properly and youconsistently execute your plays
properly throughout the game,you're likely to come out on top
.
It's usually the broken plays.
That's where the other teamgains an advantage.
Same thing in our businesses,right?
Whatever your business is,there are things that,
(25:26):
throughout that workflow, areconsistent every time and we
need to systemize those thingsand create playbooks for people.
These playbooks take pressureoff of people when they're
onboarding into their roles orwhen they're performing, and the
challenge or the trap is thatmost entrepreneurs feel like I'm
too busy to document thosethings.
I'm too busy to do all of this.
The irony is that the reasonyou're so busy is because you
(25:49):
don't have those things right.
If everybody knew what place torun you'd put out so many fires
and then just kind of quicklythe fourth and fifth.
The fourth is a culture ofperformance.
There's another choke pointhere, I think and this is not
intended to be a punitiveculture of performance kind of
thing, but I think we've got tohave a culture where people have
(26:09):
clear expectations of what weneed from them in their role.
We have to have clear data sothat they know when they're
winning right.
Imagine watching a sportingevent with no scoreboard.
Right, it would not be fun towatch.
It would feel like you'rewatching a team practice.
The players aren't going toplay as hard.
But if we know how much time'sleft, we know the score, we know
some of the key stats.
As humans, we tend to elevateour performance because we want
(26:32):
to win.
There's an innate desire in usto win.
So we've got to create aculture where we have that data.
It's available.
People know the score, theyknow the expectations.
But then we also have to builda system that's designed to
coach and develop people who areunderperforming, so long as
those people are coachable.
But there also need to beguardrails on that system so
(26:53):
that if someone is not coachable, or they're coachable but they
just don't have the aptitude forwhat we need of them in that
role, the system will eithercoach them into a different role
or it will coach them out ofthe organization.
So we're constantly coachingpeople up or out who are not
meeting expectations.
We're doing it in a way to tryto develop them.
I find when companies do thiswell expectations and we're
(27:13):
doing it in a way to try todevelop them I find when
companies do this well, four outof five people you're able to
coach up.
It's not as common that peoplecan't make it.
And the other thing is becauseit's very clear and it's very
intentional and you're puttingthe effort into the people, but
you're also making it clear thatyou can't escape accountability
here.
People who aren't able to makeit will often, on their own
terms, self-select an exit,which is great, because now
(27:34):
they're not your HR problem.
So that's the importance behinda culture of performance.
And then, lastly, is thisobsession around growing profits
and cash flow, and when I cometo this one, often I hear people
say, well, profits and cash area byproduct of doing everything
else.
Right, and I just think that'sintellectually lazy, because if,
if you don't treat profit andcash as something that's
(27:59):
important because that's thefuel that goes back in the
engine.
If you treat it as a byproduct,it's going to be a byproduct.
But if I want to invest ingreat people in my organization,
I need to be profitable withgreat cash flow so I can be top
of market pay, I can providethem the benefits that will
attract the best of the best,and so all of those things have
to be operating in harmony toreally build something elite.
(28:23):
So I apologize, that was a longanswer, but sometimes no, no,
no.
Speaker 1 (28:27):
It's important to get those principles out because
it's the core principle aboutwhat you do and why you do it.
You brought up some very goodthings and I'm almost certain
you probably come across this asyou scaled.
Good things and I'm almostcertain you probably will come
across this as you scaled andowners have to, and I've seen
this because I work in theinvestment banking space also is
that you come to a point youmight need to exit.
(28:48):
You're like you know what?
This was fun up to this point,but maybe I'm the bottleneck and
I need to sell to someone elseand you see that a lot, there's
a merger, there's an acquisition, maybe that's how.
Hey, everybody, I'm glad we gothere, we won the game,
everybody gets paid out.
Here's your golden parachute,if that's where you want to look
(29:08):
at it.
And then the company goes toanother phase of its evolution
and then you can either be partof the board or you come in to
some equity packages and thingslike that, but you don't have to
do the day to day grind RightBefore.
So I love the way that you youframe your business performance
(29:31):
and you frame your businesscoaching and, what's very, very
important, to understand thevalues and the execution phases
that you're getting to.
I want to ask you this you know, and because you do a lot of
frameworks and you have a lot offormulas that you use, what are
your success metrics or youroutcomes that you're most proud
(29:51):
of, and how do they reflect onyour brand promise at next level
?
Speaker 2 (29:57):
growth.
So I appreciate that.
So in scaling up verne harnish,in the strategy section he
pulls a lot of strategy frommichael porter.
One of the concepts that's partof that system uh, that I love
is called a one phrase strategy,and the idea is if you can, if
you can really distill yourstrategy down to its core
(30:20):
essence and frame it in a shortphrase that people can remember
and use as a filter fordecisions on a daily basis, what
would that be?
And for us, what we reallylanded on is we call it,
experience matters.
So it's in a number ofdifferent ways.
It's the results experience ourclients have.
It's the experience they havein our work together.
(30:42):
It's our experience as seasonedowners, ceos and presidents.
So there's lots of differentpillars around how we look at
that.
To sign any contracts, we getpaid at the end of the work that
(31:02):
we do and only if they feellike it was valuable.
So we're the ones who take allthe financial risk going into a
new relationship.
And when we go on this journeywith a client, we make it very
easy for them to start, but wealso make it very easy for them
to fire us because they don'thave a contract to get out of.
So, literally, if I'm workingwith somebody and they call me
today and say that they don'tfeel like they're getting enough
value anymore, we stop chargingthem, we wish them well and we
(31:26):
end the engagement.
So what has been a reallywonderful outcome is I now have
clients that I am in my ninthand 10th year with of
consecutive work and they onlystay because they're continuing
to get value.
I'm continuing to evolve andgrow with them.
Our partners and guides arehaving similar experiences and
(31:49):
we define, you know, in good togreat.
Jim Collins talks about the BHAG.
The big, hairy, audacious goalis kind of like that you know
five, 10, 20 year, like what'sthe big thing you're going to
accomplish?
Well, we, we call it, we callthat the summit.
So we, we, we use this analogythat growing a business is like
climbing a mountain, so we callit the summit.
We have, we have two walls inour we've got a hallway in our
(32:10):
offices where we have all thelogos of the companies we've
worked with.
There's there's almost 150logos now on this wall.
We've got another wall that wemove logos to.
That's called our SummitSociety.
So any company that we workwith, when they reach that first
summit, we move them to thisSummit Society wall.
(32:31):
We've now got 19 companies onthat wall that we have actually
helped hit that first summit.
And when they go back and thinkabout when we first started
working together and they setthis big dream of what they
wanted to accomplish, like Ireally didn't think we were
going to be able to do it, youknow we got there faster,
whatever the case may be.
So that really, for us, is ametric we look at is the success
(32:53):
rate and we have a quarterlypulse where we're meeting
quarterly with our clients and alot of our success metrics are
based on their actual metrics.
We do surveys, we do a simplenet promoter score.
So if you're familiar with thenet promoter score negative to a
positive 100, right.
So if you use their calculus,it can be anywhere from negative
(33:16):
100 to a positive 100.
Our net promoter score right nowis an 81.
Nice Tesla is in the 70s,netflix is in the 70s, I believe
.
So anything 60 or higher isconsidered elite and that's
something that's also part ofour flywheel, part of our
business model, because most ofour clients come to us through
(33:37):
referral and that's another, Ithink, big success metric If
you're creating raving fans, whoare now the ones who are
providing you with new business.
That's about as perfect as youcan create it.
Speaker 1 (33:53):
Well, I think what I'm getting out of this is,
first of all, you have skin inthe game.
Getting out of this, first ofall, you have skin in the game.
You're not just talking aboutperformance and improvement and
next level growth.
It's like no, I'm gonna put mytime because it's your time and
your resources into this andprove to you that we're going to
achieve this milestone together, and I will only take
(34:16):
compensation as you achieve thatgoal.
First of all, you know that's ainvest in a, in a person like
(34:40):
michael earth.
I know it's erath, I I want mymind wants to say earth, but I
know it's erath.
And but you know, like I said,you know, don't come to me with
yeah, maybe this is something Iwant to do.
Like, though, you gotta want toknow what you want to do.
Then I'll take you to thatnorth star.
We're going to get theretogether and we're going to both
(35:01):
enjoy, you know, the valuesthat come from that.
You know, I think that'swonderful.
We're coming to the end of oursession, our podcast, and I want
you to tell, first of all, letus know about your book, how to
get the book right, how tocontact you, but before you give
us that?
I always ask you because it'simportant to me remind that
(35:23):
performer score.
Now you've come to the end ofthis podcast and you spent a
good 30 or 40 minutes on theFollow Brand podcast.
How was your experience?
Speaker 2 (35:36):
I would like to do it again.
I will start with that.
So that's a 10.
No-transcript.
Speaker 1 (35:55):
Love it, love it, love it.
So now you got to tell us howto get your book, because I want
to get a copy of that book.
Speaker 2 (36:00):
Yeah, absolutely so.
The book's available on Amazonand Audible Five Obsessions of
Elite Organizations.
I've also got a website,fiveobsessionscom, so people
who've read the book candownload resources there as well
, and you can also link to thebook through that website.
I also one of the things I didwas I've created an AI clone of
(36:22):
myself that's been trained onall of the different things that
we teach.
Everything I've ever in fact,even this podcast will be
transcribed and the clone willbe trained on it.
But the idea with the clone was,if a company is either too
small to afford one of us as apartner but wants to implement
the tools and the concepts thatare part of our approach and
(36:44):
they want some additionalguidance beyond just reading the
book and figuring it out forthemselves it's a very
inexpensive subscription to theclone they can get additional
resources and guidance andinsights from that.
So the clone can be accessedthrough the website
askmichaelerathcom.
That's also in the book, it'smentioned several times and then
, lastly, our website,nextlevelgrowthcom.
(37:06):
That's where you can meet theteam, get a better deep dive
into what we do, or on ourYouTube channel.
We've got a lot of contentthere as well.
Speaker 1 (37:15):
Man, I want to send a special thanks to the EREF
family because this has beenwonderful just talking to you,
hearing your story,understanding what you are about
.
I believe in what you're doingand I know that anyone that
takes the time to invest theirresources into working with you
(37:36):
will get tenfold back, becauseyou've done the research, you
understand what it takes toachieve the goal and I don't
think you're the kind of personlike that will say look, if
you're ready or you're not ready.
You would be very truthful intelling them this is what you
need to do to get there, anduntil you attain these skill
(37:56):
sets, you're not going to beable to get to that level.
And I think it's important tohave authentic conversations
with people and understand wherethey're at and they'll
appreciate you more and thenthey'll come back to you, just
like you just said You're goingto come back on my show.
This is going to be wonderfulbecause I'm going to get your
book and I'm going to take alook at that and we'll see if
we're going to scale ourbusiness to the point that we
(38:18):
want to get to.
So this has been wonderful.
I want to encourage your entireaudience to tune in to all the
episodes of Follow the Brandthat's at the number five.
That's number five, that'sfive-star, bdm B for brand D,
for development and formasterscom.
I want to thank you again forbeing on the show, michael.
Thank you, grant, I had awonderful time you.
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