Three Steps for Taking Your Idea From Mediocre to WOW! – 0003

March 26, 2019

Corresponding Doug Hall Newsletter: 

https://blog.doughall.com/newsletters/3-steps-for-taking-your-idea-from-mediocre-to-wow-driving-eureka-3

This is the third episode of the Driving Eureka! Podcast. Segment 1: 3 Steps for Taking Your Idea from Mediocre to WOW!; Segment 2: Bureaucracy and How It Kills Innovation; Segment 3: Brain Brew Whisk(e)y Academy. Subscribe to learn how to Find Filter and Fast Track Big Ideas!

Show Notes

[00:00:34]
Episode 3 Overview

[00:01:26]
Cervelo – A Story of Innovation

[00:04:55]
Step 1 – Going from Mediocre to WOW!

[00:08:03]
Step #2 – Going from Mediocre to WOW!

[00:11:14]
Step 3 – Going from Mediocre to WOW!

[00:12:47]
You have to Work on Something that Will Make a Difference

[00:14:49]
Getting Clarity on the Mission

[00:16:25]
Book – To Make Riders Faster

[00:18:38]
Six Books written by Doug

[00:22:09]
A New Book Coming: Busting Bureaucracy

[00:23:46]
Bureaucracy

[00:24:35]
#1 Bureaucracy Comes from Protectionism

[00:26:36]
#2 Bureaucracy Comes from Overreaction

[00:28:04]
#3 Bureaucracy Comes from Subversion

[00:33:16]
The One Thing You Need to Start a Distillery

[00:37:53]
The Magic of Making Whiskey

[00:40:39]
You Need Systems to Create Good Whiskey

[00:43:43]
Challenges to Making Distilled Spirits

[00:48:56]
Italian Manhattan

[00:49:33]
Step 1

[00:49:36]
Step 2

[00:49:47]
Step 4

[00:49:51]
Step 5

[00:50:15]
Next on Brain Brew Whiskey Academy

 

 

Transcript

Tripp: [00:00:01] Welcome to the Driving Eureka! podcasts where we share ideas and advice for helping you find filter and fast track big ideas.

 

Tripp: [00:00:14] Hi I’m Tripp Babbitt advisor to global organizations on the Deming philosophy and host of the Deming Institute podcast.

 

Doug: [00:00:23] And I’m Doug Hall inventor speaker teacher and whiskey maker. I’m also the founder of the Eureka ranch and author of the driving Eureka book.

 

[00:00:34] This is episode three of the Driving Eureka! newsletter and this week in Segment 1 are feature story is the Three Steps for Taking Your Idea from Mediocre to WOW!. In Segment 2 the driving Eureka book excerpt is about bureaucracy and how it kills innovation and in the final Brain Brew Whisky Academy segment. We will reveal the one thing you need to have to create a distillery. And this week’s craft cocktail recipe. The Italian Manhattan. So Doug let’s start by talking about the three steps for taking your idea from mediocre to Wow. What was the inspiration behind writing about this this week.

 

Doug: [00:01:26] Well it came from a conversation with a guy named Phil White and he is the co-founder of the performance by company Cervelo which really made history out of nowhere. These guys made bikes that went faster than anybody else.

 

Doug: [00:01:39] And he has since sold the company and I was sitting with him drinking a little bit of whiskey and he said Why would you waste your time commercializing a mediocre product. And it just hit me you know how many times do we spend time trying to better execute something that frankly at the end of the day is the same old same old as everybody else. I mean it just it pulls the guts out of you. I mean it doesn’t give you energy. It sucks the energy from it’s just just an energy drain. And and that’s the advantage that craft companies have because companies that are craft whether it’s craft beer craft spirits craft restaurants you know craft clothing companies I don’t care. They are the essence so craft is we care we care and we’re doing something that matters something that really matters and makes a difference. And so I started to think about this and say you know why is it that big companies do it but more importantly how. What could I give them. Could I give them three simple steps where they could move from mediocre to wow so they could not be doing mediocre but really push them. And so that was the whole basis of this thought and it’s one of these things right. I sat with him. We were in Toronto I saw him and I was flying back to Cincinnati and it’s just like you know you get something you had and it just bugs you. And so a my way of doing it when I get bugged about something is I write about it because in the writing it forces me to think and anyway is it just because people aren’t passionate enough I know we talk a little bit about passion.

 

Tripp: [00:03:21] Previous episodes is is that have to be in the calculus of of what you’re building when you’re when you’re thinking about in terms of a new product.

 

Doug: [00:03:33] Well I think it’s I don’t know which comes first the chicken or the egg. I don’t know if it’s like you’ve got to love it or the idea has to be meaningful that it’s really going to make a difference for people. So you love it. So I’m not sure where it comes from but it’s about doing meaningful stuff. And and frankly and I apologize for those who are offended but innovation engineering which we teach now in 20 campuses going to 100 next year the students we say what it is they have many Reverend definition of it which is you know it’s like Austin. The city has keep Austin weird which is like an unofficial slogan Austin Texas that they were the city fathers say what do you think about that they say we hate it.

 

Doug: [00:04:15] I said but it really works. They said Yeah I know but you know we’re Texas you know and here it is we’re here. And so I I excites work at it. But the students definition is you know we talk about all this lofty stuff of enabling people with innovation all this stuff they got. Now that’s not what it’s about. I go what’s it about this. Doug it’s it’s about doing cool shit that matters. That’s what you’re really talking about. That’s what the driving record books about that. That’s what it’s about is doing something that matters because when you do that it gives you energy.

 

Tripp: [00:04:47] Ok. So let’s talk about these three steps that you’ve written down for taking your idea from mediocre to wow.

 

Doug: [00:04:55] Step one. You’ve got to confront reality. You’ve got to get a sense of are you really great or not. And the way to do that if it’s a product or service you can do it with a service as well with a description of the different services is you got to run what’s called a paired comparison test. People would know it by like the Pepsi Challenge product T and product X. Which one do you like better. You compare yours against the other. Stripping the names off them and just say what is you do for people. What’s the competition do for people you know simple description on it. And then there’s something called Sensation transfer where you put a bunch of different traits so you know if we’re doing whiskey we would say which one would you be more likely to buy which is more new and different. And then what we might ask which one’s easier to drink which one tastes more expensive which one has a richer flavor. Which one would go better in cocktails. And you’re asking these things and you end up with scores that are like well we’re the same or we’re a 60 40 60 percent prefer us 40 percent them or two to one or three to one or four to one you know whatever it might be. And then in the traits you get to understand where are you winning and where you losing you know you could ask which is a better value for the money and etc. But the idea is head to head straight up test your idea against the competitor and what’s the competitor offer and what are you offering.

 

Doug: [00:06:28] Go head to head and you can do it with brand name. I like to do it without brand name I like the blind so that so that I don’t have that noise in it. But there’s reasons to do it both ways. That test tells you straight up where you stood with the Whiskey Company that we talked about at the end of each episode. The key thing for us was when we were able to take products that cost 70 to one hundred and fifty dollars and be preferred two to one in taste tests and we’re selling for 35 bucks. OK. So basically half the price twice as good as a craft person that rocks that really rocks and that gives you a lot of confidence that you can make something amazing but to go from mediocre fresh you’ve got to accept where you really are. And so many times we have these delusions in our head. And so confronting reality with some quantitative research is the first thing that you have to do.

 

Tripp: [00:07:23] Ok. And so so this guy also gets back then to going through your PDSA cycles and near improving it each time getting to where you want it to be. And you mention the meaningfully unique in there as far as the way to to measure against these others. Is it. Is it still using the meaningfully unique definition then to do these comparisons.

 

Doug: [00:07:50] Yeah it’s still doing that. You’re asking purchase intent. You’re asking new and different you’re waiting it to see where you stand up. Same. Same basis. You know it’s straight up you are you aren’t.

 

Doug: [00:08:03] And then the second step is if you’re not and you probably aren’t is you reinvented to win. In other words you you take the mindset of a craft whiskey beer or you know you know in the case of Phil White a bike company and you’ve got no money or time and you’ve got to turn around and beat the competition because outspending them on marketing is not gonna be an option. The only way you win as a craft company is you win by making a better product or service so you have to look at it and say OK how can we win. Look at the data and if you don’t know what to do then you can run we call it a create session or brainstorming to come up with ideas and and you can run surveys and we have various tools that we teach and that I teach in the driving Yreka book about running a problem survey or an idea start a survey to find out what things are hot buttons for customers and the whole process right quantity of tests basically takes about an hour and a customer in a box. If you have the systems right which we talked about and that we do in our classes and I write about in the book and so you gotta figure out how to win because if you’re not going to win you’re a commodity and you’re gonna be always having troubles with profitability.

 

Tripp: [00:09:21] So let me ask you this Doug and especially on this and this is something I guess has burned in my mind for a while you know for me it’s probably because I’ve worked primarily with service industry but you know whenever I see a product I say okay. Well that’s very tangible you and I get that you know you want to make that product a little bit better whether it’s an automobile or something like that. How does this play out from a service perspective. Because it seems like that would be so much harder to kind of OK you know I want to beat him and serve it. How do you can you throw an example or a story or something we’re in a service industry where you’ve kind of used this methodology.

 

Doug: [00:10:02] Well the key is you’ve got to quantify the benefit of what it is that you’re giving people. I mean people in service of what I tend to think is I’m nicer and the other guys are jerks. That’s why you should hire me.

 

Doug: [00:10:13] Well that’s a tiebreaker at the end of the day the question is what are you doing for me. You know if in the case of you know a Indy pit crew they can change your tires in under a minute but they’ve got different equipment and different systems for doing that where the local guy at the corner garages are going to do that. They’re both services their services with different purposes and different benefits. In the case of innovation engineering our promise to you for this service that you’re going to get is that you will increase innovation speed up your factory six and decrease risk up to 80 percent. That’s pretty specific. That’s pretty tangible. And so you’ve got to make the intangible tangible and ideally the best way. In fact it increases your odds 52 percent is to put a number to quantify the advantage customers you’re gonna get by using your service versus somebody else.

 

Tripp: [00:11:14] Ok. All right well let’s move to step three.

 

Doug: [00:11:17] Step three prototype rapid research and repeat. So we’ve confronted reality. Now we’re reinventing it to win. So now you make it real in some sort of a prototype you run it another test on it just like you did before and then you do it again and again and again until you win that’s it. That’s the whole deal and you keep pushing it and you do not go forward until you’ve got a product. In my case with the Whiskey Company we have to have a statistical win you know at the 95 percent confidence level. And my preference. And sometimes 60 40 will give you that depending upon the distribution. But my preference is to have a 2 to 1 win because I’m competing against mega international corporations with more money than sense.

 

Doug: [00:12:08] You know some of these giant companies in Japan that who own you know a third of the Bourbon that’s made and they a lot of money and I can’t compete against them unless I have a better product and that’s what I’m going for.

 

Tripp: [00:12:24] Do. I mean you run into a problem when you’re working with with different companies where people you know they start to these cycles and they basically start to say geez. You know I’m done. I’m tired of you know going through these cycles that that we have to do and just kind of give up or is or do you guys have methodology stick to have them propel themselves forward.

 

Doug: [00:12:47] Well that’s where it gets back to mission. I mean it’s it’s got to be a mission that’s a worthy mission. If your mission is just to make more money for the shareholders. Screw that but if you’re going to make a difference in people’s lives if you’re going to enable people if you’re going to make them healthier better what is it that you’re doing that’s going to make the world a better place. A little tiny part of it that you’re part of. How are you going to help them do this. I mean the company they work with you know they make anchoring systems for oil rigs like up in the North Sea and that and it’s a really difficult thing they float these rigs out and they have to hold them very tight to a very tight tolerance. Well I mean there’s safety issues that are associated with this. This financial issues associated with this. It’s it is a very challenging stressful thing and if you can reduce people’s stress in the process of doing this and you can make it happen faster I mean you get a sense of pride that you’re you’re making something that’s going to make a difference for people whether it’s a piece of art or a oil rig anchoring system.

 

Tripp: [00:13:52] Ok. Well we have and we haven’t really touched on this but I just want to bring it up and I want to spend a lot of time on it. But you know you also this system that you’re going through in Driving Eureka! is the you’re you’re building it in early in some of the actions you take from the very beginning would you can you can you just touch upon kind of how you start.

 

Tripp: [00:14:20] You know when you’ve got before you even really start generating ideas as far as you know the narrative that type of thing because if you had been all that kind of precedes this and I don’t want people to get the impression that you know oh well I just start prototyping these things you know these products there’s a whole series of things that are happening when they when they read the book that they have to understand that kind of build in that thing that keeps you going. And if you will.

 

Doug: [00:14:49] Yeah. The thing before anything else is education. You’ve got to educate people that there’s a whole nother way of working. It’s not about beating you up I mean famously Dr. Demi said 94 percent of the problem is the system 6 percent to worker and it’s the same thing with quality as it is with innovation and it’s the thinking system because you were never taught how to do it. So you’ve got to educate them. But having educated people and getting them to understand some fundamentals then the next step where they take an online course or in-person course doesn’t matter. The next step is you have what’s called the blue card which is the and the military calls a commander’s intent which sets out clearly the mission of what you’re doing.

 

Doug: [00:15:32] It sets up the narrative as to why is this very important. What are we looking for ideas for and then importantly the boundaries the strategic and tactical boundaries. It says these are the rules of engagement. The military has gone to this in replacement of before that they had command to control where they would tell people what to do. Now they give them the big picture and give me an understanding because the goal is without further order. You would know exactly what to go do.

 

Doug: [00:16:00] You’re trying to help get it into people’s heads so they really understand where it is. Because when the folks are out there whether they’re wandering through cities or towns or whatever it might be in the military you know there isn’t time there isn’t time to go back and say can I do this. They need to be able to act in the moment. OK. Same thing with innovation. We need to have the clarity as to what the mission is and that mission is what gives us our motivation.

 

Tripp: [00:16:25] Ok very good. Now the last thing you mentioned in here on these going from mediocre to WoW is is Phil’s book To Make Riders Faster.

 

Doug: [00:16:36] And it Yeah it to make writers faster if you want to hear the real story. Anna his wife wrote this book to make writers faster. Go online you can get it. It’s it’s one of the best books I’ve read this year and it really goes behind the scenes to give you an example. I mean you know we make innovation really flashy and fancy but you know film tells the story of they’re out in Vegas for one of the bike shows had no money. They were dirt ball poor and they’re trying to hustle to break into this market and the bike they had to do a bunch of work on the thing. He goes over to the hardware store and all they had for paint was flat black grill paint so he sprays the bike with that and they set it up in the booth and people come by and people were saying my God I love that paint job. Can can I get that paint job. Can I get that flat. I was like Oh yeah yeah do what you gotta do.

 

Doug: [00:17:35] And that’s the real world. I you know there this is the good the bad and the ugly. It’s just it just has an authenticity to it as a book that I think and it did just a beautiful job with it so much To Make Riders Faster faster you get the idea faster. That’s it. Do one thing great. And Phil is he’s become a very good friend and just a really smart guy

 

Tripp: [00:18:12] It’s time now for the Driving Eureka! book excerpt with legendary inventor Doug Hall.

 

Tripp: [00:18:26] Ok so we want to start segment two and the topic is “Bureaucracy” and how it kills innovation. But before we do that I just want to.

 

Tripp: [00:18:38] We talked about it. We’ve touched on it off and on but you this is your seventh book Driving Eureka. Can we talk just a minute about you know your six previous books as far as what you’ve some of the other things you’ve written.

 

Doug: [00:18:53] Yeah so. So my books I basically write about two things I write about innovation and courage. And of course the two things are related because fear shuts us down. And so that that’s basically what all of my books are about. Some of the books like jumpstart your brain. My first book was really about fresh ideas and how to create ideas then jumpstart your business brain dealt with not only finding ideas but finding and filtering ideas to go do that and now you’re driving Eureka is fine filtering fast track. I mean if you wanted to deal with the sequence of how those have gone along the way I’ve written books the one called Maverick mindset called North Pole tenderfoot where I went to the North Pole neophyte who had no business doing it. It’s kind of a very fun outrageous story. There’s an excerpt for it in the back of the driving Eureka book. It’s just a great story of what’s it like to be a newbie in a place we you know with people that have done Everest and all of these things and you know everybody has jobs on it.

 

Doug: [00:20:06] My job was I wasn’t even the cook I was the pot washer for the cook. And Ed it’s a carnival of of things that happen and nobody dies. One guy almost does a toe is lost but it is it’s a fun book. It was it became a play that I’ve performed and it really speaks to courage. Jim what’s it take. And Faith you see those realities to it. And then I along the way I wrote a book called meaningful marketing which was a deep dive 2000 academic articles a deep deep review of the academic literature and you know the reviewers for market research societies thought it was an epic work. Nobody in the world wanted it because it was just too dense.

 

Doug: [00:20:58] However it served its purpose because it became the academic foundation for innovation engineering because I had done basically AP HD worth of academic literature review. They became the basis for it. So it didn’t sell a lot but it it became a very very it’s a foundation for everything that we do now. So so maverick mindset North Pole tenderfoot on courage the rest of them all on innovation someone finds funding and find filters some fine filter and fast track and the essence of my business books is just get Driving Eureka because Jumpstart Your Brain has collapsed into a chapter with the latest information on it and then communicate you get the piece from Jumpstart your Business Brain that you don’t have. So this really is this is the book that brings it all together.

 

Tripp: [00:21:50] Okay. And just because I’m curious Doug I I. You keep teasing me with this eighth book. Is there any insight that you can give us on what that might be or what that’s going to be about.

 

Doug: [00:22:02] Well actually it’s it’s funny because the segment this week is on that very subject.

 

Doug: [00:22:09] It’s it’s called the new book’s gonna be called Busting Bureaucracy Busting Bureaucracy. The fourth step antidote because what you find is when you do innovation innovation equals Change. Change means uncertainty and uncertainty means fear. And so the best way to prevent change or these disruptions is by implementing bureaucratic systems – rules regulations reporting things that prevent people from doing anything that could be a little bit different.

 

Doug: [00:22:45] Ok. And so bureaucracy is was not designed to be an evil thing. It was about organizing people to do things. But it’s become a control system as opposed to an enabling system. And so the new book is about how can we bust the bureaucracy and we’ll go through more of it in in future segments. But by applying the Deming system with profound knowledge a four step process to take in that bureaucracy diagnosing it and getting on the path to relieving yourself of those stresses.

 

Tripp: [00:23:24] Ok well that is a good front for your book excerpt which is bureaucracy. The easiest way to kill innovation. Let’s talk about that a little bit why you chose it what and how maybe that fits into your new book. Was that the inspiration for the new book or are you already kind of thinking in those terms.

 

Doug: [00:23:46] Yeah. So when I was writing driving Eureka you could quickly get caught that people want to do cool stuff. I mean they wanted to cool things but the system won’t allow them to do it. And so I put a chapter in driving Eureka about bureaucracy as a small chapter and that’s what. And then I kept writing writing writing and I went Oh my God I’m supposed to keep this book Small I can’t do that in this book. It’s out of scope. It’s out of the boundaries so all of that got cut out and it’s being used in the new book. I just put in a section to do it. And so the excerpt this week is talking about this importance of bureaucracy. I mean we know it. And Tom Peters said it was a friend he said after you get a dozen people you have a hopeless bureaucracy. So even in small companies we break into our silos and do it.

 

Doug: [00:24:35] And so there are three bad systems which are what we call a negative bureaucracy. I generally created for one of three reasons. The first is protectionism you know one department is if the organization has set up KPI eyes on the department level instead of the company level or weighted them 80 percent on your departmental performance and 20 percent on company performance then what is a human to do but to optimize their department even if it costs other departments money.

 

Doug: [00:25:13] And you see this you see this all over the place where it’s like dude I’m sorry that I’m screwing your department but man I got to make my numbers you know I mean my bonus I just heard a situation just yesterday I heard a story of a because it’s nearing the end of the year that a company made a decision a a dumb decision but they did it because the KPI eyes they will get a bigger bonus because they did that even though it’s literally going to cost it’s wasted money and it’s going to cost the company money. But that’s how management set the rules. And if management’s going to set stupid rules they’re going to get stupid stuff. That’s just the way it is.

 

Tripp: [00:25:58] Oh then there’s so many stories on that. I mean I could definitely tell you I know them all but one of the most prominent ones is in I.T. departments of organizations you know especially with project management now.

 

Tripp: [00:26:13] They check the box of completed the project and they all have a big party and yes they get bonuses and things of that sort. Software don’t work but hey we. We finished it on time. So that’s right. It just it’s that kind of functional separation of work where I live we did our job you know even though it wasn’t anything of quality.

 

Doug: [00:26:36] So yeah it’s number two is overreaction. So bureaucracies get created sometimes because of the the locus to the local control versus the whole different missions. But it also by overreaction in other words a random event what we call a special cause event occurs somebody makes a mistake. And so because of that there’s a search for the guilty and rather than saying hey this is a random event this is unlikely to happen again we institute more rules so to prevent this random event from happening and the net result is we’ve made everything harder. And an example of this is a Walt Disney contract. I’ve done a number of projects for Walt Disney and the contract is epic in size and you start down through it and it’s like ridiculous and you go you know I remember pulling out one page and asking the person we were talking to said Why do you have this. And they said oh well 30 years ago Walt had a problem and he said I don’t wanna ever see that happen again. It’s now new rules are put in and that creates a hopeless bureaucracy. And when you start to ask people why do you have this rule. I don’t know. And you go probably not helpful. Probably not helpful.

 

Tripp: [00:27:57] They’re knee jerk reactions for people to protect themselves. It’s just that it’s human nature.

 

Doug: [00:28:04] That’s right. So you get protection and you got overreaction and sometimes it’s just plain subversion. And you’ve got a diffusion curve you’ve got somebody that’s a late adopter or a laggard who literally their mission in life is to get retired or what it is. And so they’re going to use rules and regulations to slow down or kill the ideas and they do it in a very passive aggressive way. They say well let’s. We need to make sure we’re careful for the thing and the greatest one for that is brand. Well you know this could hurt the brand name like like it’s a thing you know. And while you know we wouldn’t want to take a risk that could be a risk of this. Yeah. There’s a there’s a risk of that. But you know there’s also a risk if you don’t do anything you’re gonna die. Let’s talk about that risk. Well no no no. Let’s let’s be prudent and practical. Let’s not let’s not do something crazy. And so that’s also a thing that’s gone and and in in the case of all of these we have to have an honest conversation with people and say OK what is the purpose of this bureaucracy. Why is it here. What is the aim of it. What are we trying to do now we’re trying to do that. How can we. Is this the bright process for us to do it. So for example I had a situation that’s going by where we had old wood that we wanted to use one to use 200 year wood. This is wood from Virgin forests in the U.S. and it would be an old barn.

 

Doug: [00:29:41] It may have come down in Kentucky and we couldn’t use the wood because the rules were you have to have a letter from where the tree was cut. And what’s happened to that wood since the tree was cut. Well of course this is 20 years. So it’s like how do I know you know this is old stuff you know.

 

Doug: [00:30:01] And and I went back to. So what is the aim. Well the aim is we want to make sure the people are safe. There’s no pollutants like that. I agree with that a now by what method can we do it. One is this to have a person testify to it but the other is maybe we can have a lab tested they agreed we had the lab test it and sure enough the product was actually cleaner than current wood because it was less pollutants when that tree grew so you have to go back to the aim and start just a reasonable conversation with people.

 

Doug: [00:30:33] But you can’t ignore these things and it going around them you’re just going to get slapped later. So you’ve got to confront these realities have an open conversation about the aim and then start the process to improve it.

 

Tripp: [00:30:46] So it’s this kind of upfront death threat work then is that the way it seems to be a different category but kind of the same thing.

 

Doug: [00:30:54] It’s actually more so as you get into it it’s really more in development that this comes up that you end up in these issues associated with regulatory production manufacturing et cetera et cetera et cetera. That’s really more where these things come up.

 

Tripp: [00:31:13] Ok you just do as I was listening to you talk it just it sounded to me like you know that you know a death threat associate with the product. Because I can almost see somebody sitting you know as part of a team and raising their hand and saying Yeah. Biggest death threat that we have here is you know our bureaucracy or our management or whatever.

 

Doug: [00:31:36] It pretty much does all the time. But and that’s life. But so now we do with it you know and we make it better and we make a step better and then we make another step better. And soon you have a real fun place to work.

 

Tripp: [00:31:50]  So this is in driving Eureka you mentioned even the detail of this is in the pages 74 to 84. For those of you that are going to buy that book Driving Eureka!

 

Doug: [00:32:03] That’s right. So there’s a quick outline there on how to do it. And it’s also covered in the online innovation sharing fundamentals course if you want to take that there’s a section in there on it and it’ll all be blown out. Much greater detail this is actually a college course. This is the the 5th course that students take on campus the entire college courses on nothing but we call it system driven leadership which is because leaders job a primary job is to help improve systems. This is the brain through whisky Academy podcasts where we’re going to take you behind the scenes on what it takes to build a whiskey distillery business

 

Tripp: [00:32:53] Eureka! Ranch team led by Doug Hall are creating a craft whiskey campaign. Like has never been done before.

 

Tripp: [00:33:02] Doug you teased us the last episode about revealing the one thing you need to have to create a distillery for this week’s episode. I’ve been waiting. Tell me.

 

Doug: [00:33:16] So if you if you’re going to create a distillery the one thing you have to have which I am learning because I don’t have it is you have to have massive patients massive patients. It is absolutely mind numbing you know to sell distilled spirits even beer is easier wine is easier but to sell distilled spirits whether it’s in the U.K. Canada or in the U.S. there is a massive flow of paperwork that you have to deal with and rules and regulations. Now it’s an incredibly it can be an incredibly good business. It can be incredibly profitable business but recognize you are going into one of the most difficult it’s probably one of the only industries in the world that has federal regulations state and provincial regulations and sometimes even city regulations that can vary with regards to hours you can sell etc.. I mean it is it is ridiculous. Usually you’ve got to deal with you know a federal set of rules. It’s rare that you have federal regional and local that you’ll have to deal with and the rules in one province versus an extra one state versus next can be totally different and so you’ve got to have patience and you’ve got to work your way through these rules. And so there is software you can get for this word distillery to do it. There are systems you have to put in place and so very early on. I mean we just talked about systems and bureaucracy.

 

Doug: [00:34:54] You’ve got to build your systems so to enable people in fact when you know we’re setting up there we’re going to coach people who want to start the distillery or they want to convert from brewery and distillery or whatever. And one of the big things we’re putting together is training courses and systems to help them get there the easy way because every mistake you can imagine we’re pretty much been making it with brain brew distilling as we’ve been going on this stuff. Things that you take for granted like we were getting wood and then come to find out you know you know you’d call somebody to buy a barrel or something and they’d sell t. I think that was great. Then come to find out you find out that oh no there’s very big differences you can get your oak from the Ohio Valley which right near the Ohio River you can get it nor then you can get it Southern you can get it kiln dried you can get it air dried you know you got all of these and then how long was it air dried and all of these traits or it had something else in it. And how long was that when you did it.

 

Doug: [00:35:58] All of those traits have a huge impact on your taste and so we had to build. For example we make product and all of us on the product was horrible for a week. We couldn’t make product it was good and we weren’t thinking anything of it. And then when we chase down in what we figured out was we had some wood that had a totally different character than what we thought it was for various reasons. And so we have to have a whole system our wood quality system to manage the wood that’s coming into the distillery is probably the most important thing for driving our quality is making sure that you’ve got that right wood because 70 percent of the flavor comes from the wood and and this stuff becomes mind numbing you know you want to do the flashy stuff the brands you want to do the tasting events you want to do the tours and you want to have the fun.

 

Doug: [00:36:47] Well it’s fundamental discipline on legal rules and production systems that you really have to have.

 

Tripp: [00:36:56] And you know it’s interesting as I’m listening to you talk and you’re talking about the wood I I think of how tough it must be to get a consistent product. You know this is the thing to heart had trouble with right at the Bell Telephone labs which was you know getting consistent phones out the door but with wood I would think the variation would be so great. How do you get a consistent taste from that.

 

Doug: [00:37:20] Well and it’s something that I mean in some of the big distillers have really started to get into this because that is the secret. See that’s the big difference. People think beer and distilling think it’s the same with beer.

 

Doug: [00:37:33] The brewer is really important because you brew the product and you drink it with whiskey the distilling is really not that important. I mean it’s mostly computer to run it anyways and but it just filling it it’s such a high alcohol pretty much is corn it’s wheat it’s riots primarily and as long as you don’t do it badly there isn’t a whole lot of difference.

 

Doug: [00:37:53] There’s not a lot of upside in being a better distiller. I mean you can be a bad distiller that’s no good. You can have a dirty product but if you make a decently product and if you’re using some of the computer girl stuff it’s fine. It’s just not a big deal to make whiskey to make the raw spirit the magic at a distillery. It’s not the distiller the magic is what’s called the whiskey maker OK.

 

Doug: [00:38:16] Our top person in the distillery is the Wiz chief whiskey maker the master whiskey maker Joe I mean he’s the most important guy because he’s the guy that really makes the whiskey now in our case we do different things but at a at a classic distillery what they would do is there is such variance in this would end in how it changes depending upon where it’s in the warehouse is it near a window is it at the top of the wreck is it at the bottom of the wreck. All of that product is different. So what they do is they make a bunch of this product and then somebody sits in a room and takes little samples and puts them together and crafts the whiskey you know that’s how it’s created that’s how the stuff’s stuff’s created and they mix it to a certain taste and that’s why when the bourbon guys did single barrel and pick barrels one of the great challenges for them for capacity was to have stuff that was in the neighborhood of the same taste because it can have a pretty high variance I mean there basically is no quality process if quality is defined as hitting a certain standard in the whiskey business because it’s random with the wood it’s random with where the barrel is what are the seasons like it’s just a dynamic thing.

 

Doug: [00:39:31] What we’ve done with brain brew because we cut the wood into pieces and we inspect it and we’re very high quality and we control the heating and cooling cycles is we’ve dramatically reduced the variance in the process. And in fact just last night I was tasting a new version we have three as I talked about paired comparison tests. We just talked about that. I’ve got three paired comparison tests running tonight on some things for upgrades to two of our products we’re looking to see if can we improve the products and see if we’ve made them better or not. And one of the upgrades one of its value is is it’s a much more there’s much less variance in this wood much less variance. And so you know if the product even if the product scored the same I would switch to the new one because I know it’s going to dramatically reduce our variance and improve the quality of what we can deliver for people. So it’s a different mindset. It’s a different mindset. And so interestingly what I found in hiring people is you know you have a distillery it’s a cool thing everybody wants to do it you know all the millennials come up you know all the guys got beer statues they all show up. I love them.

 

Doug: [00:40:39] I love them but you know I’m the old fart in the group. But you know they all want to do it because they think it’s a neat thing to go to. What I have found is hiring people from who’ve worked kitchens and I’m not talking celebrity chefs I’m talking about people they may run the kitchen or they run the line. You do not survive in the restaurant business. If you do not embrace systems you just can’t do it. You can’t do it. You’re never gonna get stuff out. And so there has to be high discipline where things go. I mean the kitchen is the original lean five s everything you know everything in its place systems work systems hand movements. You have to be incredibly efficient because the restaurant sits with nobody in it. And then all of a sudden he shows up at nighttime and it’s like game time and you have to run as fast as you possibly can to get the stuff out there and a high quality you’ve got to have discipline systems with your pre prep that you’ve done in that. And so what I bring in kitchen guys and I say OK I’m going to have you talk about systems. They come in and we make they’ll I’ll have to go through the innovation and training classes they gotta go all the way up to the micro classes because I won’t you don’t work for me if you don’t do that.

 

Doug: [00:41:44] That’s it because systems are not to go. I don’t care how great you are. Ninety four percent of it’s the system. OK now people say well my unimportant No you’re critical because you’re going to help us make the systems better. You’re a system architect. And so we’re gonna get systems and work systems down and we’re gonna document them and have them and fortunately innovations during they have some cools trailblazer software that makes this painless to do it. And and to document the things and it’s those systems the restaurant people don’t even blink they go Yeah I get it. What’s the big deal. That’s how we do it. Where I bring other people and you know marketing people and they go I now I like to feel it. And I’m like I’m not just sitting feeling it dude I’m interested and reproduce stably 52 weeks a year delivering high quality product and making happen.

 

Doug: [00:42:31] And one of the biggest things trip that we’re gonna do as we expand innovation the brain brew offering and we license other distilleries to offer custom whiskey so they can do personal whiskey experiences is we’re going to bring them that systems mindset. And part of my hope is that not only do we you know sell some custom whiskeys make them some money but we also help make their lives better. And so you know it and this where we’ll put in the piece on it it you know if you’re interested in doing this we’re going to introduce it in February at the craft spirits show an in in Minneapolis. But it’s going to be possible for you to take your distillery up a notch to create your own distillery for you know less than 10 cents on the dollar versus what it would normally cost and to get into the whiskey business in a much smarter and more effective way.

 

Tripp: [00:43:22] Very cool. Yeah that’s awesome. I went one thing that comes up and this is going to be I mean you said a whole bunch of really good things there but it just kind of set in my mind Get me off on this variation you know with the wood and everything. So you kind of talked about gin and vodka and those types of things being different.

 

Tripp: [00:43:43] What are what are some of the known challenges associated with those things too. I mean not a lot of detail I’m just curious.

 

Doug: [00:43:52] Yeah it’s gin. OK. So. So vodka you basically distill it to a higher level and so that there’s no taste to it. And so it’s a relatively straightforward thing. There are some things with regards to the water addition and managing P.H. and stuff like that and you can run it through the still multiple times and there’s a lot more voodoo and vodka than there is anything else it’s pretty much vodka as vodka is vodka. You can have dirty vodka as has a lot of heavy alcohols or you can have a clean vodka because it’s more refined. And so it’s a pretty straight chemistry experiment now of running the still gin is basically flavored vodka. It’s vodka flavored with juniper predominantly Juniper.

 

Doug: [00:44:38] That’s the definition of gin pretty much on the world. Now people are really pushing that pretty hard right now because the classic London dry gin would would have a lot of juniper and be very juniper forward and we’re now making these things that are botanical vodkas is what I call them not much of a gin in there.

 

Doug: [00:45:03] The big problem with gin is generally gin. The combination of some citrus and some spice classically orange because it’s more stable but it could be other could be lime and different things and you can do it different ways you can do it with natural ones you can do with chemicals most are with chemicals but that doesn’t matter chemical flavorings it is what it is. The problem with those is once you open the bottle A bottle of gin will last you about six months you might make it nine if it’s cold. Definitely not going to go over a year all of the fruit will drop out.

 

Doug: [00:45:48] It’s just it’s just going to it’s just going to drop out of there it’s going to get oxidized now. I mean if you overdosed with chemicals you can make it stay if it’s staying that I’m scared about something else. But you know now this is my opinion OK. And I know people screaming about it. The thing is is that people have old bottles of gin and they go about my joints. And then I ask OK how do you how do you do that. You make it in a fine dry martini. Oh no I don’t. I just drink it with tonic. I said OK. So let me make sure I get this right. You put an ounce and a half of gin in it has a spice note to it. The fruit’s gone but then you throw in some some tonic which has got its basically it’s a sweet soft drink sweet sparkling water is what tonic is and you’ve thrown it all at sugar and the tonic spices and you don’t it doesn’t seem too bad. Well no wonder no wonder you don’t know. I’ll challenge you to this.

 

Doug: [00:46:42] Go buy a fresh bottle of whatever it is that you’ve got. Take that old bottle and taste the two side by side. You know if you need to you know add a third water to it so to take the AP the percent alcohol down and you’ll find it’s just gone it’s just gone and it’s for that reason that I’m not doing a gin we’re gonna do a vodka because my high school sweetheart and wife loves likes vodka my French martinis that use it. So we’ll make a vodka but I’m not going to do a gin. We can make one but if we do we’re just gonna offer it to the distillery fresh and it’s gonna be you know basically 30 days and after 30 days we dump it is what we’re gonna do. Because when you get this citrus and the fruit right it’s a magical taste and it creates a magical martini. And so so that’s the issue there is managing that that problem. Spice rums. No problem. The spice stays fine. It’s the fruit notes that are the problem.

 

Tripp: [00:47:44] Ok. Thank you for that. I realized I was just curious as to how I mean there’s a whole series of questions I have associated with that. But what. Let’s let’s focus and move on.

 

Tripp: [00:47:56] So your craft cocktail recipe that you put in to the newsletter this week was the Italian Manhattan. Tell us about the Italian Manhattan.

 

Doug: [00:48:09] Well it’s so classic Manhattan is sweet vermouth and bourbon and Rye some mix some one to one. We like to do and have a two to one two parts bourbon one part rye sometimes and then with a little bit of bitters and maybe in a wipe of orange on the rim. Pretty much a classic Manhattan. It’s a pretty heavy drink. And so for this one here took it to a different place to make it a clean and complex state with a 2 to 1 ratio. So it’s two ounces of our Noble Oak bourbon and one ounce of Limoncello from Italy which is an Italian lemon liqueur.

 

Doug: [00:48:56] And it really makes it very fresh and clean still has the complexity of a Manhattan. And my wife Debbie actually makes limoncello a lot of lemons have to give up their skins it’s all come from the skins coming out. And she makes it every holiday season and and so this is kind of just a neat twist and it gives us a lightness and a brightness to it which just I think makes it a lot of fun. And in fact as I’m as I’m talking about it here I’m thinking I’m going to have one of those tonight I think I think that’s going to have because it really is.

 

Doug: [00:49:33] It is pretty good so just a rocks glass add some ice.

 

Doug: [00:49:36] Two ounces of a bourbon our Noble Oak look at nobleoak.com. You can see it it’s about half the country right now. It’s perfect for this.

 

Doug: [00:49:47] An ounce of limoncello you get a relatively decent one.

 

Doug: [00:49:51] And start a bar 13 times and you get yourself a wonderful cocktail.

 

Tripp: [00:49:57] Very good. So can you tease us again as far as the next step aside as far as what we might expect in either a cocktail recipe or what we might talk about in Brain Brew Whiskey Academy.

 

Doug: [00:50:15] Well, next month. I’m gonna get into really nitty gritty. OK. So we’ve talked about meaningful uniqueness. I’m going to literally take you step by step how to do it yourself. So we’re going to show you step by step. I’m gonna I’m gonna give you exactly how you can do it yourself so that you can check and make sure that whatever it is whether you’re doing a gin or you’re doing a vodka or you’re doing cocktails or you’re you’re doing your whiskey. How can you find out if a product. So we’ve talked about meaningfully unique this lot. I’ve kind of thrown my quickly on how to do it. I’m going to take it step by step how you do it because the most important thing is meaningful unique.

 

Doug: [00:50:58] So what I’m finding as I travel around the world and talk to craft distillers and taste their products is the challenge a lot of them have is their product is pretty much the same as everybody else’s. You see the beer guys the beer guys won the craft beer market happened because the big brewers had reduced the bitterness units to make these very light drinks that you could pound down a lot and the beer folks came in with bigger taste bigger flavor really unique tastes versus the mass market stuff. And so it was just it was more meaningful unique and it worked. They work they got the business the problem craft spirits have is most of their products are about the same as the others and the big distillers which are mostly owned by big corporations. I mean most of the Bourbons that sound very folksy are really owned by big corporations a Japanese owned a whole bunch of them and Europeans own a whole bunch of them because it’s been hot. These folks have gotten they’ve learned from the beer guys and so they’re pushing the edges. They’re doing the bigger flavors. They’re doing the bigger tastes. And so that means as craft people we have to break the rules even more. We’ve got to stretch the envelope and do things that are even more unique which is why with brain brew we’re doing like five rye. I mean that’s like nuts and we’re taking and using 200 year old wood and and so to add that incredible richness and depth really pushing the edge as well. That’s exactly what they’ve got to do. And and when we go through this I’m going to show you how to measure that exact thing okay.

 

Tripp: [00:52:38] And so you’re basically seeing a whole trend going on here and you don’t believe then that the the big distilleries are going to be able to react to this. Is that because you’ve mentioned before about the distilleries basically being more craft oriented that we’ll see something like we did pre prohibition. What you are predicting is that this void flecked bitter term is going to be filled by these by different craft distilleries.

 

Doug: [00:53:12] Does that kind of. It’s two steps. OK so step one is I think the local distillery pub beer tap house if they’re allowed to. If that state allows them to serve cocktails and drinks that local place just because it’s local is going to have a business that exist whether or not they become a good sized business and they get some decent volume is going to depend upon how meaningfully unique their product is. It’s not enough to just taste good. You have to taste wicked good. I mean it has to be something you can’t get anywhere else. And that’s going to be the determinant. There’s a projection by the craft distillers that shows what size will craft spirits get to. And it shows huge variance on the end under different scenarios. And I think the difference is going to be product and I fully intend the brain Brew Crew and I fully intend to put in the hands of the craft folks the ability to do incredibly cool new tastes and do just like the beer guys did and just stretch the envelope.

 

Tripp: [00:54:15] Okay. Very cool. I’m looking forward to the rest of of that. Now I’m anxious to get to the next episode.

 

Doug: [00:54:23] Well thank you much. Hey we’ll see you next week.

 

Tripp: [00:54:38] Because we appreciate you as a listener. We are offering for limited time for things a one hour abridged audio of the driving Eureka book a subscription to the driving Eureka newsletter which contains weekly advice from Doug Hall on how to find filter and fast track big ideas and the newsletter. Has other offers that are not paid public. The driving Eureka prescription for success. You answer questions and we’ll help you assess your ability to find filter and fast track big ideas and you get advice on how to grow your ability to innovate. And the last item. Access to a Doug Hall interview with a radio legend. To get these offers. Go to w w w dot Doug Hall dot com forward slash podcast. And don’t forget to subscribe to the driving Eureka podcast on iTunes.

 

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