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Which 3 People Do You Need In Every Business? with Ernesto Sirolli


Which 3 People Do You Need In Every Business? with Ernest Sirolli

How is one Italian responsible for over 50,000 companies around the world, and how did that all start from an over-regulated fishing village in Australia?

Dr. Ernesto Sirolli is one of the world’s leading consultants on the topic of economic development. He started working in the field of International Aid in Africa in 1971 and has since worked in Australia, New Zealand, Canada, the United Kingdom, Latin America and Asia in projects that promote local entrepreneurship and local self-determination.

Dr. Sirolli received a Laurea di Dottore in Political Sciences from Rome University in 1976 and a Ph.D. in Local Enterprise Facilitation from Murdoch University, Australia in 2004.

Dr. Ernesto Sirolli received The 2016 International Lifetime Achievement Award for Entrepreneurship Education at the House of Lords in London.

TEDx Talk (Over 3M views): Want to help someone? Shut up and listen!

Twitter: @sirollinstitute

LinkedIn: Ernesto Sirolli

Amazon: Ernesto’s Author Page

ToM Blast 7/28 and 7/29: Trinity of Management Blast – Online Experience

Listen to the podcast here:

Read Along as Karla and Ernesto discuss The Trinity of Management

Karla Nelson:  And welcome to the People Catalyst Podcast, Ernesto Sirolli.

Ernesto Sirolli: Hi, Karla. How are you?

Karla Nelson:  Hello. I should have said my dear friend, Ernesto Sirolli.

Ernesto Sirolli:  And you are a rolling all the R’s. You said so beautifully, Karla.

Karla Nelson:  Oh, thank you.

Ernesto Sirolli:  Very few people say Ernesto Sirolli the way-

Karla Nelson:  Well, you are Italian. And it sounds so nice that you’ve got such a beautiful Italian name. So well, thank you, sir. I appreciate that. And we are so excited to share with our listeners today about the work that you’ve done so amazingly all across the world, Ernesto. And for those of you who are listening, we’ll make sure we also include Ernesto’s TED Talk in the link that you can take a look at. It’s absolutely hysterical. And not funny at the same time, because we have these challenges that Ernesto has been working tirelessly now for what? 30, 35 years now, Ernesto?

Ernesto Sirolli:  Oh yeah, yeah. Absolutely. Yeah. 35 years at least.

Karla Nelson:  Yes.

Ernesto Sirolli:  Yeah.

Karla Nelson:  Wow. It’s amazing. Amazing accomplishment, and you’ve made such a big difference, you and your team, in so many different people’s lives and helping launch over 50,000 businesses internationally. And that’s just an amazing feat. And so can you share with our listeners a little bit about your entrepreneurial background, because I know your dad was a doctor and you kind of went a little bit different in that regard, but it’s actually kind of similar vein, right?

Ernesto Sirolli:  Yeah. I am the first one in seven generations not to be involved in the health professions. My ancestors were pharmacists and doctors. In particular, my grandfather was a surgeon in the first war, in the great war. And for those who like Hemingway, when you read the book Farewell to Arms, the book describes the years when Ernest Hemingway was a volunteer driving Red Cross trucks in the Alps of Italy. Well, he must’ve met my grandfather because my grandfather was a surgeon in that war, exactly the place described by Ernest Hemingway.

I decided not to follow what my ancestors did, but somehow, I was drawn to psychology, and then I applied psychology to the field of entrepreneurship. And I think that this could be of interest to your listeners, Karla, because your listeners are very, very aware of the importance of understanding character. If they are following your work, they understand that not all people are the same. In fact, if you can identify who are the people best suited for specific activities in a team, you will set up a much more successful company.

Karla Nelson:  Mm-hmm (affirmative). Well-

Ernesto Sirolli:  Yeah. So, the same very much with me. I never studied business. I studied political sciences in Italy, and then I went to do a postgraduate, a doctorate in economic development. Very much development, local development and economic and social development are very, very important in any program of development. And I discovered that people are self-motivated. The entrepreneurs or people who wish to improve their lives. And so, there is no need to arrive in a community to tell people what to do. What is important is to create a listening, respectful, responsive infrastructure. What we have we call an enterprise facilitation program, where you offer free, confidential listening service to people who have their own ideas of what they would like to do to improve their lives. And instead of therefore telling them what to do with their lives, you simply help them with the, how. How do you transform your idea, your intelligence, your natural talent into a way of feeding yourself, feeding your family, creating jobs, and transforming the community through economic activities? So, we-

Karla Nelson:  That’s awesome. I love it. And I thank you for mentioning our work too, because people are different and you have to learn how to put the right people in the right place at the right time, doing the right thing. Can you share with us the three individuals that you’ve identified in any business-

Ernesto Sirolli:  Yeah.

Karla Nelson:  … that are necessary and how you came about figuring that out?

Ernesto Sirolli:  Actually, it happened when I set up my very, very first program of local economic development. I wanted to demonstrate that the intelligence already exists in the community, that you don’t have to arrive with the ideas. I simply wanted to prove that people have this intrinsic wish to improve themselves. And so, the only thing that we had to do was to listen to them. And in the small village where I was invited in Australia, on the coastline of Australia, there was a small community of 10,000 people that were struggling because they had lost their tuna fishing industry due to government regulations. The government had given all the tuna fishermen a couple of years to sell their rights to fish, or the government would close the entire fishery. And so, these fishermen were trying to sell their rights to fish at the best possible price.

And what happened to me was I was approached by five of the local, remaining five fishermen saying, “We have this dream about making money with tuna. Right now, the industry is really very poor returns. They only buyer for our tuna is one cannery. They pay 60 cents a kilo, and 60 cents a kilo for the best unit in the world. And unless we find better markets, we will have to basically give up and we will sell our rights for a pittance. And it’s a great pity because it’s a loss of a lifestyle. Not only livelihood, but also lifestyle. And we would like to hang on to our passion for fishing.”

And they had in mind that maybe they should sell their tuna to Japan. But when they approached the Department of Fishery, they were told that the Japanese only bought very large tunas, more than 60 pounds … Sorry, more than 180 pounds of weight. And they never caught such big tuna. Their tuna was smaller. So, they were told that there was no market in Japan for their tuna.

So, I had these five, very demoralized, young Australian fishermen. They were pretty broke and what I realized was that the five of them, the only thing they were passionate about was to catch the product. And I said to them, “Have you ever, ever met somebody who loves to market fish?” And they said, “What do you mean? No, we never met. When we have fish, we have radio. We radio the cannery and the cannery sends the trucks. But we have no idea how to find a market for our product.” And I said to them, “Would you like to meet somebody who has the passion for marketing?” And they said, “Oh yes, but is he very expensive?” I said, “How much money have you got?”

So, they got together a couple of hundred dollars each and we had a $1,000. With a $1,000, I organized for a marketing person, a marketing consultant to come and speak to them. And the marketing consultant said to them, “Have you ever shown this tuna, your small tuna to a Japanese who is in the industry?” And they said, “Not only we never shown that to a Japanese. First of all, the government told us that the Japanese don’t want small tuna. And the other thing is that we have never met a Japanese food stock. We have never seen a Japanese.” And I said to them, “Look, there are a million, a 180 million Japanese. If you want one, I’m going to find you one.” And what I did, I found a chef, a sushi chef from a restaurant in Australia, and we got the money. We convinced this guy to come down to the little village.

And when he saw the small tuna, it’s sliced that small, I’m talking about 60 pounds. When he got the 60-pound tuna and then he said that this is sushi, this is a sashimi and they

Karla Nelson:  That is my favorite tuna too. It’s so good.

Ernesto Sirolli:  And the fishermen said, “No.” And the guy said, “I beg your pardon? I’m Japanese. I’m a chef. I’m telling you that this is sushi.” And they said, “But we were told that the fish is too small to come to Japan.” He said, “We prefer the big one, but because it’s so expensive, we eat this every day.” So they discover that the tuna was perfectly okay to go into a restaurant and the five fishermen spoke to the marketing guy to say, “If we give you 140 tons of our tuna for you to sell on a commission basis only, because we don’t have money to pay you, but if we give you exclusivity on a commission basis, would you sell it for us?”

And the marketing guy did some very quick calculation. They were selling it for 30 cents a pound. And the Japanese restaurant already wanted to buy for a $1.80 a pound.

Karla Nelson:  Wow.

Ernesto Sirolli:  And so, they said, “Oh my God, that is already such a margin.” The guy said, “Yes, I will do it.” And then the marketing guy organized and took some samples to Japan. We sent five tuna on a jumbo jet from Australia to Tokyo and the Japanese auctioned each tuna. So, they discovered that, “Oh my God, yes. We want this tuna in Japan.”

So, what I had to do, I had to call the fishermen to say, “Listen, okay. You given a contract to the marketing guy. Now you need to safeguard the contract by having a fantastic CFO who can grab hold of all the contracts and make sure that your finance is in good hands.” So, we organized for the wife or one of the fishermen, had been working in the biggest bank in the community for 13 years. She was a chartered accountant and she became in charge of the contract. And we sold 140 tons at auction at $7.50 per pound.

Karla Nelson:  Wow.

Ernesto Sirolli:  So then imagine the image now. The image is very, very clear. Five people in charge of product, one person in charge of marketing, one person in charge of financial management. That was my first multimillion-dollar project because in the first year they made $5.7 million selling the tuna in Japan. And so what happened is that then from that point on all the people coming to me, I had 60 clients in 24 months and we set up to 27 startups, and some of them were multimillion-dollar startups, always applying the same kind of technique. Who loves the product? Who loves the marketing? Who loves financial management?

And now 35 years later, we take absolutely no action unless people first realize who they are in the team and who they need to associate with to be successful. So, the first 20 minutes, when we speak to an entrepreneur, we listen very carefully. And then we said to them, “Okay, no business is ever started by one person in the universe. There is no evidence of a single human being that has set up ever a company alone. Not Edison, not Carnegie, not Rothschild, not Ford, not Bill Gates, not Steve Jobs. Nobody was ever alone. So, tell me, what do you love to do? Do you love to make it, do you love to sell it, or do you love to look after the money?”

And until the people have the introspection and the time to think about who they are. And it’s not about what they’ve learned, Karla.

Karla Nelson:  Mm-hmm (affirmative).

Ernesto Sirolli:  It’s not about what they studied. It’s what they passionately love to do. Until they declare what they passionately love to do we then tell them, “Okay, who is better than you, are doing beautifully what you have no talent for? You have no personality for?” And so, what we do from at the very first conversation, we draw a stupid little drawing, which is a smiley face at the top. That’s our client, our customer. And then we say, “Okay, you are the smiley face at the top, and underneath, there are three boxes. One box is for product, one is for marketing, one is for finance.” We say to the person, “If you could do for the rest of your life what you love to do, which one you will take care of?”

And we had people having absolute revelations. They said, “Oh my God. I love to produce the product. I’m spending all my time doing accounts and tried to do marketing, and I hate that.” And we said, “Well, that’s the death of the entrepreneurs.”

Karla Nelson:  Yes. Solitude.

Ernesto Sirolli:  Entrepreneurs end up doing three things badly. And you told me that when you told me the story of a woman entrepreneur that you went to visit, and she was a formidable … And she was a marketing person-

Karla Nelson:  Mm-hmm (affirmative).

Ernesto Sirolli:  … who had built a company through sales. And when you met her, she was

Karla Nelson:  Doing the books and hating every second of it.

Ernesto Sirolli:  And she hated it because she could not do what she loved because she had become a kind of self-improvised CEO that she hated doing. And instead of surrounding herself with people that she could delegate, she had surrounded herself with people who she then needed to micromanage to do everything.

Karla Nelson:  Mm-hmm (affirmative).

Ernesto Sirolli:  You remember the story you told me.

Karla Nelson:  Yeah. Well, I remember looking over going, “What’s that on your computer?” After she took 15 minutes to tell the story of how they launched their business, really came out of the fact that she just loved to do marketing.

Ernesto Sirolli:  Yeah.

Karla Nelson:  So, I just take a look over at the computer and you got QuickBooks up. I’m like, “That’s not marketing.”

Ernesto Sirolli:  Yeah. And we discovered years ago that at the beginning there is one person who has a dream, a vision, a talent. And for instance, they love to bake cakes. And 12 months later, they have opened up a shop and they hate their lives. Why? Because when they were baking cakes…

Karla Nelson:  They’re doing everything but besides baking cakes.

Ernesto Sirolli:  Exactly. Because they don’t have the time to bake the beautiful cakes any longer. Now they’re doing commercial baked products that they hate baking. And they spend all their time fighting fires because they did not know about certain taxation. They did not know how to prepare the window or the shop. They did not know how to smile. They actually, some of these people hate customers. They want to be in the … They became very good in the kitchen because they spent thousands of hours in solitude, because they enjoy their own companies. They don’t like people. Some of the craft people, they don’t actually love constantly to be dealing with the public.

Karla Nelson:  Yeah.

Ernesto Sirolli:  With the story of this poor baker is that 12 months later she absolutely hated having a shop, a baking shop, because she could not cope with both making, selling it to the public and try to do the finances. So, we teach something that we call the trinity of your management. And the Trinity of Management says only ever do in your business what you love to do. Surround yourself with people who are magnificent at doing what you hate doing.

Karla Nelson:  Yes. And I loved … There was one time you were speaking, Ernesto. And I don’t know if it was just us at lunch or if it were one of the many times I’d had the opportunity to hear you speak. But I love the fact that you were like, “The product person will put all the money into the product itself. The marketer will end up spending $3 or $4 to make it and $3 to sell it. And the financial manager just has to try to get those two to get along.”

Ernesto Sirolli:  Yeah. And the amazing thing is that the real product personality, he believes that he doesn’t need any marketing and any finance, because as soon as he invents the better mousetrap, the world will come to his door on their knees to get the mousetraps. What the product people are so arrogant. They believe that the only thing they have to do is to invent something that is irresistible.

Karla Nelson:  Yeah.

Ernesto Sirolli:  And so, what I have to say to them … I remember this guy in Latin America. He wanted to set up this business. And he was, you know, “I will produce the product. My brother is very good with finance.” And when I explained to them that nobody knew them, so they needed to have somebody to market the product, take it to the market, he … “No. That … No, no. My brother and I, we will be able to do everything.” But you see, he was absolutely discounting the importance of having somebody to tell your story. And every second word, he used the word because the Lord Jesus, because Jesus, because the Lord. He was very religious. And after an hour of listening to him and him denying the importance of telling the story, I stopped him. And I said, “Jesus Christ, fantastic service. Five evangelists to tell the story. Five evangelists.”

Karla Nelson:  Yeah.

Ernesto Sirolli:  Without the people telling who he was, we had never heard of him.

Karla Nelson:  Mm-hmm (affirmative).

Ernesto Sirolli:  So, my point is that …. Sorry, it’s a bit profane, but-

Karla Nelson:  Oh, no. Heck, you’ve got to have the marketing. You’ve got to have … I mean-

Ernesto Sirolli:  You need to have somebody that tells how wonderful … But marketing is two ways. Not only you tell people how wonderful this product is, but you listen to the feedback. And when people say no, the product people get terribly offended. But the marketing people love hearing no, because no is the beginning of a conversation. As soon as you hear no, you ask why not?

Karla Nelson:  Yeah, of course.

Ernesto Sirolli:  And people say, “I am lactose intolerant. I cannot have cheese made out of cow milk, but I can have cheese made out of goat milk.” “Ah, would you be interested in our goat cheese?” “Yes, I would.” “Fantastic.”

So then the marketing person comes back to the factory to say, “Where can we get goat cheese because I found a bunch of people who don’t want our cow milk cheese, but they want goat milk and maybe we can rebrand something that we can buy somewhere else.”

Karla Nelson:  Absolutely

Ernesto Sirolli:  So for marketing people, marketing people, don’t only represent what you want to sell, but actually give you the feedback that is so important for you to be able to actually understand what the market wants, because there is only one judge whether your idea will succeed or fail and it’s the market.

Karla Nelson:  Mm-hmm (affirmative). Yeah. So true. You have to have all three, but if the market says, no…

Ernesto Sirolli:  Forget about it. You know, market says no. Could be that you are a genius by you are 100 years before your times. And you are Nikola Tesla and you died poor because you had no team.

Karla Nelson:  Mmm. That’s a good point.

Ernesto Sirolli:  And the fact you were a genius, Nikola Tesla only made one friend while he was in America and the friend was a poet. And Nikola Tesla never trusted anybody with his ideas, and he died broke and he died-

Karla Nelson:  And nobody knew about his idea.

Ernesto Sirolli:  And nobody knew how fantastic a brain Nikola Tesla was. So, I-

Karla Nelson:  Well-

Ernesto Sirolli:  … use his example as a warning. No matter what kind of genius you are, if nobody knows what you’re doing and if you’re not prepared to also listen to what is needed right now, you are at risk.

Karla Nelson:  I love that. So, you got to have the great product, fantastic marketing and the financial management to be able to then make sure you’re not spending X to build it and something else to market it.

Ernesto Sirolli:  Exactly.

Karla Nelson:  That’s awesome. Can you, as we wrap up, one more question, Ernesto, on the Trinity of Management. You lent a little bit earlier in the podcast of how you came up with the individuals. Nobody. Not Edison, not Ford, none of them built a company by themselves. Can you share the actual research you did, which is pretty incredible?

Ernesto Sirolli:  Yeah. I wrote a book about it and I was very, very curious about these geniuses who knew how to do everything. And when I started to do the research, I discovered that no, it is an invention of the media. It’s not true that those people were geniuses. Henry Ford was bankrupt twice by age 46. And he was a P, a product person with no marketing and no finance for the previous two Ford companies. And the third time when he looked for finance, he got an investor who said, “I will not invest in you unless you have a CFO that is exceptional. And by the way, I know this person. And if you accept my friend as your CFO, I will invest money in it.”

And so, he was obliged to have a CFO that Henry Ford would have otherwise never, never, ever accepted. And the CFO of Henry Ford was James Couzens who was actually a management genius and it was James Couzens who invented the absolute need for the $5, the daily wage for the Ford Motor Company employees. And it was James Couzens that basically is the creator of American middle classes, because he paid the Ford people so much that they became loyal to the company and decide to buy Ford cars.

Karla Nelson:  Yeah. If you still go to the Motor City, man. Everybody drives a Ford there still.

Ernesto Sirolli:  Absolutely. So, my point is incredible, fantastic stories. I did the research on the 100 most iconic companies. I told you some names, but I looked at US Steel and Mary Kay. And I looked at all the early Silicon Valley stories and was always two, three, four people working together, and it was never one person.

Karla Nelson:  Love it.

Ernesto Sirolli:  So very important. And for those who are interested, they can look at … I have a couple of books being published. They are available on Amazon. And one is Ripples From the Zambezi, that talks about my work, early years in Africa. And then the other one is How To Start A Company and Ignite Your Life. And that’s where I talk about the research.

Karla Nelson:  Excellent. And can you share with us, Ernesto, this event that you have coming up here, July 28th and 29th. I believe it’s going to be at 8:00 AM Pacific Standard time. You’re going to have people-

Ernesto Sirolli:  Yeah, three hours every morning. It is a course online on the Trinity of Management where we are going to do a deeper understanding of how you can self-assess who you are truly. Whether you are the P, the M, the F, or whether you are the person who has a passion for creating a team. So, whether you are the administrator personality. And then what we are going to do, we are going to give you some exercise to be able to find out right now in your startup or in your company who you have in place, and how good are the people in charge of product marketing and finance. So, it’s two mornings; the 28th of July, 29th of July from 8:00 AM to lunchtime. Yeah,

Karla Nelson:  Excellent. And I’ll make sure we put a link in … or my team puts a link in the podcast as well, because we did this special podcast. We wanted to make sure we helped and supported these amazing efforts that you and your team have produced over the past 35 years. And Ernesto, thank you so much for being on the show. Always a pleasure, my friend.

Ernesto Sirolli:  Thank you very much. It was fantastic. Thank you for thinking of us.

Karla Nelson:  Absolutely.

Ernesto Sirolli:  Bye

Karla Nelson:  Any time. I’ll be in touch.

Ernesto Sirolli:  Bye-bye. Bye. Bye.

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