00:00:00 – Josh Fonger
Welcome to the work the System podcast, where we help entrepreneurs make more and work less by managing their systems. And I’m your host, Josh Fonger. And today we have a special guest. We have Sam Carpenter and of course, you all know Sam. Sam is. Let me grab the book – author of work the system now in his fourth edition. The simple mechanics of making more and working less. I’m excited to have Sam on today because obviously he wrote the book. He started the whole business. Everything we do here is based on this and Sam’s work, and we’ll be going through one of the key pillars of the work the system method which is operating principles. So, Sam, before we get into the nuts and bolts and how to create these principles and why they’re important, why don’t you share for the audience what it was like in CenturyTel before you had general operating principles, because I’m assuming things weren’t great and then you realized I should do something mechanical about it to get to where you are now. So, what was that like?
00:00:59 – Sam Carpenter
Yeah. So, CenturyTel is a high-tech telephone answering service, and I’ve had it for 39 years. Now, and it’s headquartered and Bend OR, and it’s grown a lot. My first 15 years were a nightmare. One night, I end the verge of the end of, of all of it and missing a payroll. I discovered something in my head and that was that my business. This was made-up of processes independent process. They didn’t have anything to do with each other. Yeah, they work together, but they were all independent. But I was going to lose a business and my life was chaos. I was working 80 to 100 hours a week. I was a single parent of two kids. It was a nightmare. And then one night I realized what I needed to do. I did not miss the payroll. I did what I needed to do to get my feet back under me because I was so excited about it and the chaos started to subside as I followed my vision of the company being a collection of systems how we answer the phones, how we hire somebody, how you fire somebody, how you handle a customer complaint. Ok, there’s hundreds and hundreds of separate systems in my business that taken independently. They really don’t have anything to do with each other. And with that vision, you’re able to fix them. One at a time and a lot of people are caught up in this. Well, if I just got smarter, I just got more sleep or I got another bank loan then.
00:02:33 – Sam Carpenter
All right, just hire this great manager who could come in and save me. That’s never going to happen because that great manager is going to run their own business so my… the contents of my book have to do with. What do you do to?
00:02:47 – Sam Carpenter
Exploit this one layer deeper, understanding that you have a business, an entity, but it’s made-up of all these separate systems. All these systems contribute, and it, and even if you’re even, if you have an awful business and you’re losing money. It’s still made-up of systems and you start with the most dysfunctional one and you go through, and you make it perfect, and you document it. And this is what people hate. I don’t want to do documentation. Well, sorry about that. But the difference between a big successful business and a small struggling one is the big one has documentation, so you got to do it.
00:03:25 -Sam Carpenter
You’re spending 80 hours a week working anyway. Take 10 hours a week find a way and start your documentation. The initial documentation is a strategic objective. There’s three main elements to they’ll work the system methodology. Protocol documents and that is the strategic objective and that’s on one page. That’s the summary of how you do things, how you want to do things where you want to go, what you don’t want to do. And then the second one is general operating principles, which we’ll talk about today. And then the third one is working procedures. Now, working procedures are all these separate systems that are documented. And just to put it in a nutshell they’ll take your biggest problem in the office.
00:04:16 Speaker 2 (Sam Carpenter)
This this person does this process this way and this person does it another way and they’ve all got a different way of doing it. For instance, answering the phone at the front desk. Anyway, you sit all your people down, you come up with the best possible way to handle the process. And in our case, answering the phone is a seven step. Working procedure and that’s just one of hundreds and hundreds if not thousands by now, and you put your people on it, your frontline people write them up for you and you get these perfect systems, and every system is working in its best way, as determined by you and your people 100% of the time. But let’s back up. Remember, we have the strategic objective operating principles and the working procedures I just talked about the middle document that you create, and this is for the owner to create as is the strategic objective, but the operating principles.
00:05:13 – Sam Carpenter
Our guidelines for decision making, we have 30 and in my book in the appendix is a list of all 30 of them and what they are or what you believe. So, if you think you know how you want to control your life, and I’m sure you do, business owners who are listening to this. You need to decide what you believe, and you put it down in in Appendix B in the back of the work the system is our 30. It’s happened to be we ended up with 30, 30 principles of operation. So, whenever there’s kind of what we call a gray area decision, somebody in the organization doesn’t know exactly. There’s no working procedure for it. They don’t know exactly what to do. They can fall back on one of these principles that is effective for that. One of them is to give you an idea, there are no rats nests, literally or figuratively, so you don’t have any confusion in the office. Everything’s filed away, everything is in order. If you walk in our office, which you’ve done a billion times, Josh in bend over again, everything’s completely in order, everything is and why do we do that? Because that’s what I believe is proper, that’s why and there’s… there’s 29 other ones and you can get the 1st.
00:06:38 – Sam Carpenter
Yeah, you can’t get that in the download. You have to get the book. You can get the book online, Josh, if anybody wants to get back to you that that you can send them copies or whatever of our operating principles, but really you need all the all you need, all the documents, all three of the documents but operating principles are so key because once you know where you’re going and how you want to get.
00:07:03 – Sam Carpenter
There, you’re gonna have a billion decisions for you and your people to make. How do you decide? Well, you go back to your operating principles, which have to do with what you believe about how the world works. And I’m a mechanical guy. I believe you get your mechanics fixed 1st, 1st and then the good thoughts and the positive personality come after you get your mechanical nightmare fixed and so the operating principles keep everybody straight. Everybody’s making the same decisions, making getting everything going in a straight line. And I’ll just add this here, Josh and I’ll stop.
00:07:44 – Sam Carpenter
But it’s so important in your business that every element of your business is going in the straight line to a point. Right. For instance, it might be. I wanna have a 25% bottom line. I want to have 1000 customers depending on what kind of business you have; I really don’t want to work more than two or 3 hours a month and have my business churn out money. So, my wife and I can travel and we in the last four months. We’ve been to Israel, Istanbul bend over Oahu? Ohh God, we got been in a couple other places too. We do a lot of traveling. We’ve got our dogs and actually I gotta say, speaking for me after perfecting this and then applying to our regular business, it’s a call center.
00:08:35 – Sam Carpenter
Of all things, with 60 employees is all, all across the United States. I have exactly the life I want precisely the life I want. I work two or three hours a month, maybe on high level H&D stuff with our IT technician, our IT engineer and also with that’s Marcello. And then Andi, our CEO, she’s back in Bend, Marcello’s in Italy. We have seven people in Italy, and I get to travel to Europe and these are very, very good people that have been with me for years and years and years. I think on these 20 years now, we have somebody’s been with us 32 years. So, you create through your strategic objective and your operating principles, a very good place to work and that’s in the book two, chapter 16, how do you create a nice place to work where people want to be there? Well, you give them decision making ability and that’s what the general operating principles.
00:09:38 – Sam Carpenter
Engender is to get your people to make their own decisions based on this. Well, for us it’s 30 principles that they can make decisions and the big thing is your people is please I’d rather have you make a bad decision and be afraid to make any decision at all. How in God’s name or you go from 80 weeks. 80 hours a week to three hours a month. If you don’t trust your people, well, you have to guide them and show them what you want the operating principles took our business from going in this direction in that direction. Think of the governments, think of the US government in Washington, DC or think of any number of state governments. They’re going in this direction. They’re going in this direction or thinking about the next election. But they’re not taking care of constituents so for a business since we can’t rig elections and get rid of that person or we can’t levy taxes. What do you do? You have to become super-efficient. And so, we get all our systems, and the general operating principles are… are exactly what directs this. We get them all going in one direction. So, we’re not all I just did a video, a weekly video I just finished it a few minutes ago. I’m in Kentucky, where we live in our house, but it’s… don’t be willy-nilly go in one direction. You want all your subsystems; you know the subsystem of how do you answer the phone at the front desk should you know, if you’ve got your strategic objective right, it should be a number of things. It should make you look your business look good. It should make your person look good. They should have a smile on their face, and it should exude confidence because we know where we’re going, and right now Central tells around a 30% profit without me being there and I engineered that, it didn’t take me 40 years to get there I got there. Ohh, the 15 years were a nightmare, and I was working. I was really working 80 to 100 hours a week and within a year I was down under 40 and then it dropped off. Dropped, dropped really fast. You know the story, Josh, you’ve been with me a long time but if you don’t have everybody making decisions pointed in the strategic, objective direction, you’re just inefficient. You and you want to be efficient. This is mechanical. You can’t be going over here and can’t be going over there, and you have a problem at home and this initiative stops. You got to have backup personnel for everybody, and you’ve got to have everything down on paper and there’s a lot of a lot of people I know here where we live in Kentucky, we have a property management development company here too. A lot of the subcontractors are going to just beat themselves to death till they retire and that’s because they have no good single direction. Everything’s a fire kill, right? Everything’s fire.
00:12:31 -Sam Carpenter
So that’s another way to put this and I’ll finish up here with this first part. Josh is we went from a fire killing existence. Everybody in the office really high intensity and anxiety to never having to kill fires because the fire killing is absorbed by our systems that are constantly refined and perfected. So, I get to live in Kentucky and the headquarters is in Bend OR and we have a ton of people down where you are down near where you live in Tennessee, Josh. And then up here in Kentucky and Texas and Arizona and Idaho and we have a tough time finding people, haven’t hired anybody from Oregon for a long time and this is one of those states because nobody can pass a drug test. And I can’t have stoners answer an emergency calls for doctors. So anyway, none of this could have happened if we didn’t have our operating principles and everything flowing in a straight direction toward the target.
00:13:32 – Josh Fonger
That’s a great summation, and for those people who have not read the book, I just want to reiterate work the system. Of course, you get it on Amazon, and you got to workwithsystem.com. Sam Carpenter has a summary. You can find there. He does weekly videos you can find there as well. And I believe you even have the 1st 4 chapters available so.
00:13:53 – Sam Carpenter
For free? Yeah, yeah.
00:13:54 – Josh Fonger
So, if you have not checked that out, certainly do that now. What I’m curious about is, you know, with all the clients I work with, they love the story, they love where you’re at, Sam, and they can resonate with where you started because they’re there, you know, so my clients are struggling. They’re working those long hours. They wish they had a business that was running well, but it’s not. And then they hear this idea of operating principles, and they like the theory of it, but then they are afraid to commit to principles they’re afraid to enforce principles. They’re afraid to kind of release them because they don’t know if they’re going to be received well and they kind of just sit on the fence.
00:14:32 – Josh Fonger
So maybe you can tell us what was it like when you released yours and what did? What did your team say? And how did you use them?
00:14:47 – Sam Carpenter
Well, yeah, that’s great. Great. Let’s talk about that. So, the three. The strategic objective, the operating principles, and the working procedures. So, the cool thing was I put the documentation together for the strategic objective and the operating principles myself, ok. It took me maybe six months to refine both of them exactly, but they haven’t changed in 38 years. What happened was we took our first system and dissected it and made it perfect, and I suddenly saved 2 hours a week.
00:15:18 – Sam Carpenter
Ok. And it took me 8 hours with my I only had, I think, 12 people at the time. It took me 8 hours of time to sit down and write this stuff out. And then I again, I look at it and not it. Maybe not every day, but every couple of days to refine it over a period of months. But the first iteration of it was 90. I had 90% of everything take accounted for but go to the working procedure so that those 30 principles help me put that procedure together for how we answer the phone at the front desk.
00:15:56 – Sam Carpenter
And that was the second one actually. The first one was we had a problem in billing that I was helping with every day. And so, I was spending, I don’t know, two hours a day doing this thing. And I wrote up a procedure based on the operating principles. And I suddenly didn’t do it anymore. So, imagine saving yourself 2 hours a day for 40 years. That’s a lot of time. Back to yourself. And that’s what we did over and over and over again. But my point is this, until you know where you’re headed, and until you know what you believe… you can’t have your first success, and once you have your first success, you know when I had my first success, it was all hands, all hands on deck and within months we have straightening out the business to where we are today. But really, we got it all straightened out within a year or two, maybe it took five years because there was a lawsuit in there with the former partner and that kind of took us off base for a while, but I’d say within five years I had the business of my dreams rather than losing the business and my life went from chaos to order and that’s what we do in our office. I think it’s important. Point, let me throw this in here. Your management people and you… business owner should be working on pointing fingers to have other people do the work. If you’re doing the work all day, it’s never going to stop so if you’re a plumber and you’re working on your you know, forget it. You’re going to work long hours for the rest of your life, but if you think you’re a good plumber and you could hire somebody to help you and bring them along, and we give them a piece of the action somehow, then pretty soon you got 6 people and you actually have a business that’s worth something and you get some time, ok?
00:17:48 – Sam Carpenter
It’s how doctors’ clinics work. It’s how every big business works, the chief, propagator of the business, the chief, the owner of the business, is not in the middle of things all the time, and that’s what I figured out because I was there at 80 to 100. All these Sam Carpenter could fix any problem and I can fix a computer. You’ve heard me say this. Josh, you could fix the computer. I could hire somebody. I could fire somebody. I could clean the bathroom. I could do everything and that’s not the way to run a business. It’s not the way to find the ultimate it’s not the way to get to the ultimate destination, which is freedom. The operating principles are critical. Let me read a couple more here. Josh short ones #3 out of 30, we draw solid lines, thus providing the exact status of where things stand documented procedures are the main defense against gray area of problems. Let me find another short one. The money we save, or waste is not monopoly money we are careful not to devalue the worth of a dollar just because it has to do with the business.
00:18:55 – Sam Carpenter
We find the simplest solution, and this is the epigraph of this book. Is Occam’s law, also called the law of economy states quote entities are not to be multiplied beyond necessity. The simplest solution is invariably the correct solution. So back in the day, well, everybody who works for me understands this. But back in the day somebody bring. Hey, we have this problem and here’s the solution I said. It’s too complicate then we gotta do something else that’s simpler. So anyway, we have 30 of them in here, and let’s see. Let me read one more.
00:19:34 -Sam Carpenter
Mastery of the English, mastery of the English language is critical. We are aware of how we sound and what we write. We do whatever we can to improve. We are patient. As a coworker, corrects us. And so, I’m an author. So that’s a big deal to me that your people need to be literate, they need to be able to talk to people out there. Well, that’s one of our 30 principles. See. So, we won’t hire somebody to there’s some things about hiring people in the book, too. And again, I think that’s that is chapter 16, there’s 12. Whoops, they have to jump through and in, in a sense, those are operating principles for hiring one is if they’re late, we’re not going to hire them. If they’re late to the interview, if they come dressed like a slob, we’re not gonna hire them. If they come in and they don’t know anything about the business, we’re not going to waste our time. We’re not going to hire them. We’re not going to go through the whole interview process. There’s 12 steps in chapter 16 about how we hire people. We rarely make a mistake hiring people. But if you don’t have these operating principles, these rules of the road this person’s going to be over here and this person’s going to be you running the company or not? And then I’ll get back to the first part of your question, Josh, well, people don’t people can’t seem to get going. They know what they need to do and my response to that is get a pair, OK.
00:20:59 – Sam Carpenter
I get a spine and take control of your business. It’s your business, the world out there is against you. You’ve got competent competitors that will happily take your clients. You could spend a few hours a week getting a grip on your business and giving it direction. It may take a year to get it right.
00:21:19 – Sam Carpenter
But I’ll guarantee you there’s nothing in my book that sounds weird, and I know nothing I’ve said today yet sounds weird. Maybe I’ll say something weird, but it’s believable and you don’t have to send me money I don’t. I make money in the books, but it’s a fraction of a percent of what I make with CenturyTel and a couple of other businesses I’ve got going. But I run the businesses with an iron hand, but at the same time, I give my people a lot of latitude with the documentation and make up their own minds about what to do next. Strategic objective operating principles, working procedures. There’s examples of them in the book. I’m not trying to sell the book again, I but everything is in here. I made this. This started as a handbook for my staff and it turned into a book and now it’s in its fourth edition, first published in 2008. Everything in there, everything is in there to turn your life around. And of course, it won’t be just your business that turns around. Remember two or three hours a month. Wow, what a life that is. You can go fishing or whatever. Walk your dogs. Hey, we show our ears my dogs.
00:22:23 – Josh Fonger
That’s correct.
00:22:28 – Sam Carpenter
Can you see?
00:22:29 – Josh Fonger
I can see you.
00:22:30 – Sam Carpenter
That’s just in Pearl. They go with me everywhere. I love those dogs. They’re home and I’m in Kentucky, and that’s what you have in Kentucky is you have hounds. Anyway, that’s a long, convoluted answer to your question, Josh, what’s next?
00:22:44 – Josh Fonger
No, I think that’s exactly people need to hear is that they need to have a spine and they need to do it. The alternative is to do, and I didn’t tell you this right before I got this call. As you know, Sam, we got a lot of clients I’m working right now and one that’s on the fence about starting to work with me as a coaching client, he said “Well, I’m going to wait for the stars to align” and I said I said you should check out chapter one of Sam’s book, you know, in terms of.
00:23:11 – Sam Carpenter
No, you need to make the stars align what is wrong with you, you know.
00:23:15 – Josh Fonger
Chapter one being a control is a good thing as in like you know, take control. Like actually you can.
00:23:20 – Sam Carpenter
So yeah, being.
00:23:21 – Josh Fonger
You can mechanically make a change right now so.
00:23:24 – Sam Carpenter
Your leader. You’re a CEO. You’re a leader. Act like one. Don’t act like ohh, everything’s against me. And I’ll just have to wait until the stars aligned. It’s that everything has to do with courage. Every decision that’s made, even getting up from after I talk to you and going in the kitchen and get a bottle of water takes a little bit of courage to get up and go do it, right. Well, it’s the same with hiring and firing and I always use the example. Let me give you a great example. People love this example, but so you’ve got a small business. You’ve got 30 people. I don’t know if you have a product or a service or both? But so, your brother in law’s in charge of the sales department, and he’s lazy and you feel like you can’t fire him because your wife will get mad at you, remember he’s your brother-in-law. Well, if he’s holding, if he’s dragging down the whole works and you’re worried your wife’s going to get mad at you? What the hell is wrong with you? I mean, come on if you’re sure that he did be fired, go to your wife, and say he needs to go. And here’s why and fire his ****. There’s no excuse for laziness or there’s no excuse for you know. Ohh, how could I say it? Disloyalty. Those are the two things that I just fire somebody on the spot. If I see that happening, run your business. Get a different salesperson in there. You’re doing everything else right? And this one guy is not selling your product or your service correctly.
00:24:56 – Sam Carpenter
This is why, well, he’s because he’s related and he’s just not that good at but anyway, so a lot of this is, well, all of it is just courage. And I go back to the previous question, Josh, I can’t, I just can’t seem to get going. Come on, man, get off it and grab hold of it. Your wife will respect you. Your employees will respect you and you will feel really good about yourself. But find out how to do it. Get the book at least use Josh, Josh, you’ve had over 1000 people in your coaching and you’re coaching in your consulting, and I don’t think you had one failure and maybe somebody quit because there was a death in the family or something. But there isn’t anybody who asked for their money back it’s just always guaranteed it’s.
00:25:39 – Josh Fonger
It. Yeah, it always is. And I think well, that’s because your methodology name is very simple and very clear, and people just follow it. It’s very mechanical. If you give people a clear direction, clear structure, clear, clear principles, your team actually wants that at least the good ones on your team want that, and the bad ones, don’t they? They want to stay in a dysfunctional environment, but like you said, you do have to have the courage to not only put this in place in writing, but actually follow through with it. And that is that is a sticking point for some because they haven’t done that before in the past and they’re used to being a victim of their people and so I think this is a good message that they’re hearing today.
00:26:22 – Sam Carpenter
Well, 9 out of 10 of your competitors, your competitor’s viewer, you, you who are watching me right now. 9 out of 10 of your competitors are fire killing flying by the seat of their pants in 80% of every business, 80% of all businesses go out of business within five years. And there’s a reason for that. That’s because people don’t want. I don’t have time to do the documentation. I don’t have time to read a book. I don’t have time. I don’t want to spend the money on having Josh lead me through to get this done. It’s crazy. And I and Josh, I just, for the record, I need to say I don’t make any money from what you do. I make plenty of money with my other businesses. I don’t need to make any money. Josh runs his own independent business, WTSenterprises.com. I run workthsystem.com, which has to do with my books and so forth but Josh and I talk all the time. You’re coming up to hike, you’re down in.
00:27:21 – Josh Fonger
Yeah. Wait.
00:27:22 – Sam Carpenter
Northern Georgia, you’re coming up here pretty soon. We’ll meet halfway or whatever, and we’ll walk my dogs here or whatever.
00:27:30 – Josh Fonger
Looking forward to.
00:27:31 – Sam Carpenter
It’s funny you.
00:27:32 – Sam Carpenter
We were on opposite ends of the world for a while there. You were way over in Hawaii and yeah, it’s. It’s nice that we’re within a few hours of each other now.
00:27:41 – Josh Fonger
Yeah, definitely. Well, good. Well, Sam, I don’t. I don’t have any more questions. I know we’re running out of time here. Yeah, any. Any parting worries before we sign off today.
00:27:49 – Sam Carpenter
No, just if, if our viewers or listeners, there’s viewers and listeners here, if our viewers and listeners like this and would like more information and have questions, even a question we could base another one of these videos on, let Josh know or let me know go to workthesystem.com and send me an e-mail. It’s all there. I really enjoy doing this stuff. And I think Josh does too, and it’s it really, is it really is a system that works and it’s not weird is you don’t have to have all this faith in somebody and they’re not telling you. Well, I’ve got a Maserati out in the driveway. I’m also successful. There’s none of that going on. Well, I have an RSQ 8 in the garage, brand new one, but I think that if you have any questions personally or otherwise, and you’re halfway interested, let Josh know or let me know and we’ll get back to, ok. Sounds good. Yeah. Ok, good.
00:28:48 – Josh Fonger
Very good. Well, Sam, thanks a lot for, you know, making the time to be on the podcast. And thanks everybody for staying. Staying tuned to the Work the System Podcast. We do put out shows every so often. I’m sure Sam and I will be on again soon to talk about working procedures. And if you want to catch Sam’s videos you guys, put out a video once a week about the systems mindset and how to apply it to your life, your business, your world, and that’s at workthesystem.com. And of course, if you want to work directly with me, you go to WTSenterprises.com. Alright. Thanks everybody.
00:29:19 – Sam Carpenter
Right off, that’s right off the home page of my website too. Getting to you. Yeah. Yeah. All right. Thanks, Josh.
00:29:27 – Josh Fonger
Thanks Sam.
00:29:29 – Sam Carpenter
Thanks everybody. Bye.