The Question That Actually Fixes Your Business | Ep 988
In this episode of The Game, Alex Hormozi introduces a systematic approach to identifying and solving business problems called the 6M (or MOSI-6) framework. This diagnostic tool helps business owners evaluate their operations across several key areas, including metrics, financial constraints, workforce management, and market considerations.
The framework emphasizes the importance of data-driven decision making, with Hormozi explaining how proper metrics serve as crucial indicators for business performance. He addresses common concerns about market limitations and staffing challenges, while providing context for using industry benchmarks to assess financial health. The framework offers business owners a structured method to pinpoint operational bottlenecks and implement targeted improvements.
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1-Page Summary
The 6M/MOSI-6 Framework For Diagnosing Business Issues
Alex Hormozi introduces the 6M framework (also known as MOSI-6) as a comprehensive approach to identifying and addressing root causes of business challenges. This structured framework consists of six key components that help business owners systematically evaluate and improve their operations.
Components of the 6M Framework
Metrics
Hormozi emphasizes that metrics are fundamental to business success. Without proper data and measurements, businesses cannot effectively track their performance or identify areas for improvement. He argues that robust metrics are crucial for understanding how to increase output and address other business constraints.
Money
Financial constraints can manifest in various ways, according to Hormozi. These typically include high lead costs, low close rates, and insufficient customer lifetime value. He suggests using industry averages as benchmarks to diagnose these financial issues effectively.
Manpower
Hormozi identifies the availability of qualified people and talent as a common business constraint. He particularly notes that businesses often struggle with having enough salespeople or agents. Understanding how to attract and retain talent, along with setting appropriate metrics for workforce management, is crucial for addressing these manpower issues.
Market Size
While market size is often cited as a concern, Hormozi argues that it's rarely a true limitation, especially in local markets with populations of 50,000 or more. He notes that only in exceptional cases, such as extremely remote areas, might market size require geographic expansion or targeting different customer segments.
Strategies For Addressing Root Causes
Hormozi describes metrics as "off-ramps" that businesses should focus on to return to productivity. He emphasizes that identifying and addressing the lack of metrics is crucial for overcoming business constraints and achieving success, allowing businesses to implement targeted strategies for improvement and growth.
1-Page Summary
Additional Materials
Clarifications
- The term "6M" traditionally comes from manufacturing and quality management, representing six key factors: Man, Machine, Material, Method, Measurement, and Mother Nature (Environment). "MOSI-6" is a variation or rebranding of this concept tailored for business diagnostics, focusing on six critical areas to analyze. Alex Hormozi adapted this framework to fit business challenges, emphasizing metrics, money, manpower, market size, and related factors. The framework's origin lies in systematic problem-solving approaches used in industrial and business contexts.
- Alex Hormozi is an entrepreneur and author known for his expertise in business growth and scaling. He has founded and grown multiple companies, particularly in the fitness and service industries. His frameworks are based on practical experience and data-driven strategies. This background gives his 6M/MOSI-6 framework credibility and relevance for diagnosing business issues.
- The 6M framework typically includes Metrics, Money, Manpower, Market Size, Methods, and Materials. Methods refer to the processes and systems used to deliver products or services efficiently. Materials cover the physical resources or inventory required for business operations. These last two components address operational and supply-side factors often critical to diagnosing business issues.
- Lead costs refer to the amount of money spent to attract a potential customer or lead. Close rates measure the percentage of leads that successfully become paying customers. Customer lifetime value estimates the total revenue a business expects from a single customer over the entire relationship. These metrics help businesses evaluate the efficiency and profitability of their sales and marketing efforts.
- Industry averages as benchmarks mean comparing your business’s key financial metrics, like lead costs or close rates, to the typical values reported by similar companies in your sector. This helps identify if your performance is below, at, or above standard levels. You can find these averages through industry reports, market research firms, or trade associations. Using these benchmarks highlights specific areas needing improvement relative to competitors.
- The metaphor of "metrics as off-ramps" means metrics provide clear exit points from confusion or stagnation in business processes. They signal when and where to take action to fix problems or improve performance. Without these off-ramps, businesses remain stuck on a highway of inefficiency with no guidance on how to change course. Metrics guide decision-making by showing measurable signs that indicate the need for intervention.
- Market size is generally not a limitation because many businesses can find enough potential customers within a sufficiently large population to sustain growth. A "local market" typically refers to a geographic area with at least 50,000 people, providing a broad enough customer base for most businesses. In such markets, businesses can often segment customers or expand offerings rather than needing to increase geographic reach. Only in very remote or sparsely populated areas does market size become a significant constraint.
- "Geographic expansion" means growing a business by entering new physical locations or regions beyond the current market area. "Targeting different customer segments" involves identifying and marketing to new groups of potential customers with distinct needs or characteristics. Both strategies aim to increase the total number of potential buyers. These approaches help overcome limitations when the existing market is too small or saturated.
- Attracting talent involves offering competitive salaries, clear career growth, and a positive work culture. Retaining talent requires ongoing training, recognition, and opportunities for advancement. Strong leadership and open communication also help maintain employee engagement. Providing work-life balance and benefits supports long-term retention.
- Metrics reveal where business constraints exist by quantifying performance in key areas. They help pinpoint specific bottlenecks, such as low sales conversion or high customer acquisition costs. Without metrics, businesses cannot identify which part of their process limits growth. Thus, metrics guide targeted actions to remove these constraints effectively.
Counterarguments
- Metrics, while crucial, may not always capture the qualitative aspects of business performance, such as customer satisfaction or employee morale.
- Financial constraints are not solely diagnosed by industry averages, as unique business models or innovative strategies might not fit within these benchmarks.
- Manpower issues may not always be solved by simply attracting and retaining talent; sometimes, the problem lies in the business processes or the organizational structure.
- Market size might be a more significant constraint than Hormozi suggests, especially for niche markets or industries with a limited customer base.
- Geographic expansion or targeting different customer segments might be necessary strategies for growth, even in markets with more than 50,000 people, depending on the industry and competition.
- Overemphasis on metrics can lead to a narrow focus that neglects other important aspects of the business, such as culture, brand, or long-term strategic positioning.
- The framework may not be equally applicable to all types of businesses, such as non-profits or social enterprises, where financial metrics are not the primary measure of success.
- The 6M framework assumes a level of business maturity that may not be present in startups or very small businesses, which might require a different approach to diagnose and address their unique challenges.
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The 6m/Mosi-6 Framework For Diagnosing Business Issues
Alex Hormozi presents the 6M framework, also known as MOSI-6, as a structured approach that serves as a decision tree for identifying the root causes of business challenges.
6m/Mosi-6 Framework: A Structured Approach To Identifying Root Causes of Business Challenges
Framework: Six Components
This framework is composed of six key components that, when assessed, can help business owners and managers to uncover and understand the underlying issues that are preventing growth or causing other complexities within their operations.
Address Components to Overcome Business Constraints
By systematically addressing each of these compon ...
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The 6m/Mosi-6 Framework For Diagnosing Business Issues
Additional Materials
Clarifications
- The "6M" or "MOSI-6" refers to six key factors commonly analyzed in business problem-solving: Man, Machine, Material, Method, Measurement, and Mother Nature (Environment). These categories help identify specific areas where issues may arise within a business. The framework is adapted from quality management and manufacturing principles to diagnose broader business challenges. Understanding each "M" ensures a thorough examination of potential root causes.
- The 6M or MOSI-6 framework typically includes six components: Man (people), Machine (equipment), Method (processes), Material (resources), Measurement (data/metrics), and Mother Nature (environment). These elements help diagnose issues by examining all critical areas affecting business performance. Each component represents a potential source of problems or inefficiencies. Addressing them systematically ensures a thorough analysis of business challenges.
- The 6m/Mosi-6 framework functions as a decision tree by guiding users through a step-by-step process of evaluating each of the six components in sequence. At each step, the assessment helps identify whether that component is a root cause of the business issue or if the investigation should move to the next component. This structured flow narrows down potential problems systematically, preventing random or unfocused troubleshooting. It ensures that decisions are based on logical progression rather than guesswork.
- The 6m/Mosi-6 framework addresses challenges such as stagnant revenue, declining customer engagement, operational inefficiencies, and market competition. It helps identify constraints in areas like marketing, management, manpower, materials, machines, and money. These constraints often limit growth, profitability, or scalability. By diagnosing these specific issues, businesses can target solutions effectively.
- Systematically addressing the 6M components involves evaluating each area—such as manpower, methods, machines, materials, measurements, and mother nature (environment)—to identify weaknesses or inefficiencies. This typically starts with data collection and analysis for each component to pinpoint specific problems. Next, prioritize issues based on their impact on business performance and develop targeted actio ...
Counterarguments
- The 6M framework may not be universally applicable to all businesses, especially those with unique or non-traditional structures.
- Relying on a single framework like MOSI-6 could lead to a narrow focus, potentially overlooking external factors or industry-specific challenges.
- The effectiveness of the framework is dependent on the accurate and honest assessment of the business components, which can be influenced by bias or incomplete information.
- The framework assumes that all business challenges can be diagnosed and resolved through internal analysis, which may not account for uncontrollable external variables such as market fluctuations or regulatory changes.
- The 6M framework may oversimplify complex business issues, leading to solutions that are not nuanced or tailored enough to be effect ...
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Components of the 6M Framework
The 6M Framework is a structure to address key areas of business that contribute to its growth and sustainability. Alex Hormozi emphasizes the critical role of metrics, manpower, market size, and financial constraints within this framework.
Metrics Are Data and Measurements Businesses Use to Track Performance and Progress
Metrics are essential for tracking a business's performance and progress. Alex Hormozi argues that without metrics, a business cannot understand what they’re doing right or recognize areas in need of improvement.
Lack of Metrics Hinders Understanding of Successes and Needed Improvements
Hormozi observes that businesses often don't know what they’re doing correctly due to a lack of quantifiable data or predictable processes. If the business cannot answer why it can't do more of the work it's currently doing, it's an indication that the business lacks sufficient metrics.
Robust Metrics Identify Opportunities to Increase Output
He argues that robust metrics are vital in identifying opportunities to increase output. By knowing how talent is attracted, a business can address manpower issues, which is crucial for growth.
Evaluating if the Business Pursues the Right Opportunities and Strategies to Achieve Goals
Entrepreneurs should embrace uncertainty in their business endeavors. Instead of seeing challenges as model issues, Hormozi advises reframing them as management challenges to foster entrepreneurial resilience.
Money Explores Financial Constraints Impacting the Business's Growth
There can be several financial barriers to a business's growth. Hormozi breaks these down into categories: high lead costs, low close rates, and insufficient customer lifetime value.
High Lead Costs, Low Close Rates, Insufficient Customer Lifetime Value
Managing these financial constraints involves analyzing lead costs and closing rates against industry standards. Hormozi suggests that industry averages can help diagnose financial issues.
Manpower: Available People and Talent
Having the right people and talent is often a constraint for businesses. Hormozi identifies a lack of salespeople or agents as a common constraint that businesses encounter.
A Common Constraint: Lacking the Right People, Skills, and Resources
Understandin ...
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Components of the 6M Framework
Additional Materials
Clarifications
- The 6M Framework is a business analysis tool that examines six key factors: Man, Machine, Material, Method, Measurement, and Mother Nature (environment). It helps identify constraints and areas for improvement in operations and strategy. Each "M" represents a critical component influencing business performance and growth. This framework is often used in manufacturing and management to optimize processes and resources.
- Metrics in business are specific measurements like sales revenue, customer acquisition cost, and conversion rates. They provide concrete data to evaluate how well different parts of the business are performing. For example, tracking monthly sales growth helps identify if marketing efforts are effective. Without these numbers, decisions rely on guesswork rather than evidence.
- Lead costs refer to the amount of money spent to attract a potential customer or inquiry. Close rates measure the percentage of leads that successfully convert into paying customers. Customer lifetime value estimates the total revenue a business expects from a single customer over the entire relationship. These metrics help businesses assess the efficiency and profitability of their sales and marketing efforts.
- "Model issues" refer to fundamental flaws in the business design or strategy that prevent success. "Management challenges" involve difficulties in executing or managing the existing business model effectively. Alex Hormozi suggests viewing problems as management challenges to encourage problem-solving within the current framework. This mindset promotes adaptability and resilience rather than abandoning the business model.
- Setting metrics for talent attraction involves defining specific, measurable goals such as the number of qualified applicants per month or the time taken to fill open positions. Businesses track these metrics to evaluate the effectiveness of their recruitment strategies. Key performance indicators might include applicant quality, source of hire, and retention rates. Regularly reviewing these metrics helps refine hiring processes and improve talent acquisition outcomes.
- A local market population of 50,000 or more is often considered sufficient because it provides a large enough customer base to support diverse business needs and sustain growth. This threshold allows for enough demand to achieve economies of scale and justify marketing and operational expenses. Smaller populations may limit sales volume and revenue potential, making growth more challenging. Therefore, businesses in markets below this size might need to expand geographically or diversify their target audience.
- "Manpower" refers to the workforce or the human resources available to ...
Counterarguments
- Metrics, while essential, can sometimes be misleading if not properly selected or if they encourage the wrong behaviors.
- Embracing uncertainty is important, but businesses also need to have a solid risk management strategy to mitigate potential negative impacts.
- Financial constraints are not always diagnosable through industry standards as unique business models may not fit the standard mold.
- The right people and skills are crucial, but focusing too much on manpower can overlook the importance of automation and technology in scaling a business.
- Market size might not be a limiting factor in many cases, but market saturation and competition within a given market size can significantly impact growth potential.
- Geographic expansion or targeting different customer segments may not always be viable due to operational, logistical, or cultural challenges.
- The assumption that small local markets can support gr ...
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Strategies For Addressing Root Causes
Identify Sub-issues or Constraints Holding the Business Back
Addressing Root Causes For Business Success
Hormozi describes metrics as "off-ramps," suggesting that once these metrics are identified, the business should focus on overcoming them to return to productivity. Identifying and addressing the lack of metrics is a critical strategy for overcoming business constraints and achieving ...
Here’s what you’ll find in our full summary
Strategies For Addressing Root Causes
Additional Materials
Clarifications
- In a business context, "metrics" are quantifiable measures used to track and assess the performance of various aspects of a company. They help businesses understand how well they are achieving their goals. Common examples include sales revenue, customer acquisition cost, and conversion rates. Metrics provide data-driven insights for decision-making and improvement.
- In Hormozi's context, "off-ramps" are specific points where a business can lose momentum or face obstacles. They act like exit points from the main path to success, signaling problems that need fixing. Identifying these off-ramps helps businesses focus on critical issues that block progress. By addressing them, companies can get back on track toward their goals.
- Key performance indicators (KPIs) are specific, measurable values that show how effectively a business is achieving its key objectives. They vary by industry and company goals, such as sales revenue, customer retention, or production efficiency. KPIs help businesses track progress, identify problems, and make informed decisions. Choosing relevant KPIs ensures focus on the most impactful areas for growth and improvement.
- Metrics themselves are measurements, not constraints, but they reveal where problems exist. When a metric shows poor performance, it highlights a specific area holding the business back. These problem areas, or "off-ramps," act as constraints by limiting growth or efficiency. Fixing issues behind these metrics removes barriers and improves overall success.
- Identifying metrics involves pinpointing specific data points that reflect business performance, such as sales numbers or customer retention rates. Addressing these metrics means analyzing why they are underperforming and implementing targeted actions to improve them. This process often includes setting measurable goals, monitoring progress regularly, and adjusting strategies based on results. Effective metric management helps uncover hidden ...
Counterarguments
- Metrics may not always be the root cause of productivity issues; they could be symptomatic of deeper underlying problems such as organizational culture or market conditions.
- Overemphasis on metrics can lead to a narrow focus, potentially neglecting qualitative factors that are harder to measure but equally important for business success.
- Identifying metrics is only the first step; the ability to interpret them correctly and take appropriate action is crucial, and not all businesses may have the expertise to do this effectively.
- Metrics can sometimes incentivize the wrong behaviors if they are not aligned with the long-term goals of the business.
- Tailored strategies based on metrics may not be sufficient if they do not consider t ...
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