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Gary Energizes Happy Heating - Level 5 - "Win-Win"

Dec 21, 2019

{This blog post is part of an ongoing series of posts that tell a story.  If you haven't read the previous posts, you will be lost.  Here is the first post in this series.}

“The most important single central fact about a free market is that no exchange takes place unless both parties benefit.” ~ Milton Friedman

After enjoying two years at Level 4, Gary was having monthly coaching sessions with Russ to keep him from his tendency to micromanage his employees. 

In one of Russ and Gary’s monthly coaching sessions, Gary said, “I love it that my people are happy and that their enthusiasm is rubbing off on our customers.  Our numbers show the growth, too.  Our growth was slow at first, but my team continued working and grew revenues over 85% from where we were two years ago.”

Russ smiled, “That’s great, Gary.  I can’t help but notice that you sound a little down about your great progress.”

“I’m bored, Russ.  All I do is roam around the office seeing if anyone needs support.  I feel like it’s such a waste of my time and talent.”

Russ responded, “I get it.  I suppose that’s my fault. I wanted you to empower your people so that they could feel the excitement of growing Happy Heating, but I forgot about you.  You also need to be excited about your growth, and you need to take an active role in that growth as well.”

“But I’ve delegated out all the roles for growth to my management team.  Even Penny is taking charge of finances and people.  All I do is meet with my management team a few times a month.  Honestly, I think they don’t need me.”

“You do have an important role to play in Happy Heating’s growth and I think that it’s time that we engage more seriously in what that role needs to be.  Your role is to create a long-term vision for your company.”

“Isn’t this what my staff did with their growth planning?”

“Not really.  The reason I wanted you to empower your people to grow your company was because you were stuck in Level 3 thinking.  A disadvantage of Level 3 energy is that it breeds complacency.  Most people at Level 3 are okay staying exactly where they are.  I felt that Happy Heating needed to embrace Level 4, compassion energy, to get you moving in a positive direction again. This compassion energy gave you a perspective of how to truly serve and nurture the human spirit of your employees and customers.  As a result, you witnessed growth that you didn’t think existed.  I think it’s time we talk about Level 5 energy.  In my opinion, Level 5 energy is the most important level for any business owner.”

Gary smiled, “You know in the past, I would have probably given you a hard time about talking about energy levels, but after watching how it has transformed my company, I’m a true believer.  What is Level 5 energy?”

Russ drew his familiar list on Gary’s office white board which now included this 5th energy level.

Level 1 – Victim – I Lose

Level 2 – Compete – I Win, You Lose

Level 3 – Responsible – I Win

Level 4 – Compassion – You Win

Level 5 – Opportunity – Win/Win

After Russ finished, he said, “Level 5 Energy is called Opportunity.  The core thought of Level 5 energy is Win/Win.”

“Russ, it seems like we’re already at Level 5.  My customers are happy, my employees are happy, and our company has never been better.”

“What about you, Gary?”

“I guess you’re right.  I’m bored and keep getting tempted to micromanage my folks like we have been talking about in our coaching sessions.”

“Your human spirit is no different than the spirit of your people. You need to be excited about coming to work each day and you crave a role to play in leading the vision of your company.  Opportunity energy is about seeing the opportunity that lies ahead for Happy Heating.”

“Again, isn’t that what my team did with their growth plans?”

“They looked at growing Happy Heating from within.  Your role is to look at innovative ways of growing Happy Heating… possibly through additional products and services, expanding locations, or other innovative ways that your employees can’t see.”

“What if my ideas are different than the ideas my staff came up with for growth?”

Russ smiled, “Haven’t you learned anything from our time together?  It’s not you against your employees. You are part of the team.  Your role is to create vision and watch your team get excited about growing to reach the vision you’ve established as your company’s leader.”

Gary sounded truly excited as he digested what Russ was saying, “I think I get it.  I can think about new ways Happy Heating can serve its customers and possibly even expand into different products or areas.”

“You got it!”

“Wow, Russ!  I think I’m going to love this role.”

“Before I go on to my next topic, you have to ensure that you continue to involve your team as you plan your vision.”

“What?  Why can’t this be ‘my ‘role?” 

“It is your role to create a vision that everyone follows.  It’s also your role to engage your employees in that vision. The best way to win their support is to have them give you input.  You’ll still be the ultimate arbiter of which direction you go.”

“Okay.  That makes sense.  What’s this other topic, you wanted to cover?”

“A few years ago, I brought up the idea of legacy.  At that time, I didn’t think it was appropriate to talk about creating an exit plan, but now I do.”

“Look, Russ.  A few years ago, I informed you that I was only 40-years old.  This year I’m a few years older.  How can I be thinking of retirement?”

“I didn’t use the word ‘retirement’, nor am I implying that you ever need to retire.”

“Then what do you mean by ‘exit plan’?”

“It is a fact that all small business owners have to exit their company.  Some will exit by dying and leaving a mess for the survivors.  Others will try to leave their company to their sons or daughters, and most will try to sell their company.”

“Remember? I put the buy/sell agreement in place to take care of my family and employees in case I die.  I think it’s much too early to talk about selling my company when we’re just starting to enjoy the ride.”

“I just talked about how you will now set a vision in place for your company on how you can expand your territory or add new products or services.  It’s quite important to have an end-goal in mind when you are making these grand plans.”

“It seems like if we grow, and continue to be profitable, multiple buyers would be interested in buying Happy Heating when the time is right.  Right?”

“You’re certainly right about that.  If Happy Heating is making money, and you are not a big part of that money-making recipe, and your employees guarantee they will work just as hard for the new owner, you should be able to get sufficient financial resources to pay for a reasonable retirement.”

“It sounds like you’re placing a lot of conditions on Happy Heating’s profitability if I were out of the picture.  Why couldn’t someone else make just as much money from Happy Heating as I’ll be making?”

“First of all, after what we went through in the past four years, I’m a little surprised you believe someone could simply pick up where you left off.  A new owner may or may not be at the same level of maturity that you are after these past four years of personal growth.”

Gary contemplated what Russ said.  He doesn’t know how he could have navigated the past four years without Russ’s urging to expose how he thought about his company and his people.  He agreed with Russ that a new owner would be starting from a completely different set of thoughts and beliefs and could alienate a staff who now loved coming to work at Happy Heating.

Russ continued, “Secondly, if you want to position your company for a strategic sale in the future, you need to start now.”

“What is a strategic sale?”

“Companies are valued differently if they are sold for financial benefit to the buyer, or strategic reasons.”

Gary got a clean pad of paper and a pen, “I’m all ears.  What’s the difference between a strategic and financial sale?”

“A financial sale is simply multiplying your adjusted income by a multiple.  For small companies this multiple is usually 2.  If you were to sell your current company that just made its record profit of $250,000 this past year, your company would be worth $500,000 in a financial sale.”

“What?  There’s no way I’d sell Happy Heating for $500,000!”

“Actually, a buyer would probably consider your annual profitability to be the average of your last three years in business, so a financial buyer would probably offer closer to $260,000 for Happy Heating.”

Gary had laid down his pen and paper and was noticeably agitated, “You’re just trying to make me mad.  That makes no sense at all.  Happy Heating is trending up and things are only going to get better.”

“Gary, I’m not trying to make you mad.  I’m simply telling you how a financial sale works with small companies.”

“Okay, so how would a strategic sale work?”

“A strategic sale is not based so much on your average profitability, but rather it’s based on the value your company can provide the buying company.”

Gary looked confused, “I’m not sure I understand.”

“Let me use a simple example.  Let’s say that a small thumbtack manufacture makes a special thumbtack that it owns a patent on and this thumbtack is very popular in their small community.  When you look at the financial statements of this thumbtack company, it makes $10,000 a year selling in its local community.”

Gary interrupted, “Sounds like a loser.”

Russ smiled, “You’d think so.  However, Office Depot notices this thumbtack company and estimates that it can make $10 Million off these cool thumbtacks in its stores. What do you think this little thumbtack company is worth to Office Depot?”

“Wow!  I guess Office Depot would pay $20 Million for this thumbtack company.”

“Maybe not $20 Million, but I think you get the picture.  So, which type of exit is most appealing to you?”

“Russ, we install furnaces and air conditioners.  It’s not rocket-science.  We can’t get patents like your specialty thumbtack store.”

“There are all sorts of ways to create unique strategic value for Happy Heating that another buying company will find attractive.  That’s why I wanted to talk about this topic before you start creating a vision for Happy Heating.”

“I’m sorry, I guess I still don’t understand how an HVAC service company can be that attractive to a large company.”

“I don’t know either. This will be something you may want to discuss with your team as you plan out the vision for Happy Heating.”

“How would my team feel, if they thought that I’d sell the company out from under them at some point?”

“Gary, that’s something you’ll have to judge when discussing specific details about your vision.  Some of your staff may be motivated to help you create a more innovative company because they see a better future for themselves in this larger organization.  Others may feel fearful that their job may be eliminated if you were to be acquired by a larger company.  You’ll have to judge when it’s right to share your legacy vision with others.  Most of the time, I believe it works to your advantage to be completely honest about where your company is going.”

“I’ll try to be judicious about how I involve my management team.”

“One more thing.”

“Are you kidding me, Russ?  My head is already reeling from what you’ve tried to teach me so far.”

Russ smiled, “Sorry, but it’s important that you embrace opportunity energy while you are creating your vision and thinking about these new opportunities.”

“That seems rather obvious, Russ.”

“Yes, but it’s important to know that opportunity energy’s core thought is win/win.  In other words, while you may be thinking about wins for Happy Heating, make sure that you also consider genuine wins for the market place and your employees as well.”

After Gary’s meeting with Russ, he felt overwhelmed.  It took him a few days to digest all that Russ had told him in that short meeting.  He was excited to start thinking outside of the box about ideas to grow Happy Heating.  He was eager to plan how Happy Heating could be sold some day, just like the thumbtack company.  Gary couldn’t remember being this excited about coming to work since he started Happy Heating nine years ago.

Gary had called a meeting with Penny, Sally and Oliver to discuss the future of Happy Heating.  They all met in their conference room.  An easel with big pieces of paper and several pens were located at the front of the room. 

Gary set up a clear agenda on how their strategic planning meeting would go.  First, Gary would announce the purpose of the meeting.  He would talk about how he wanted to grow Happy Heating into different markets or different locations.  The second part of the meeting would involve a brain-storming session where everyone could throw out ideas about added services and products that Happy Heating could offer.  After that they would talk about the top ideas and pick a few that Gary would work on further to create Happy Heating’s new vision.

After Gary made his introduction, he offered, “It’s now time to brain-storm ideas.”

After his announcement, the room fell silent for a few seconds before the first idea came to the surface.

Sally blurted out, “We could give special deals to hotels.  I’ve noticed a lot of hotels in our town that have aging HVAC systems and we can capture that business.”

Gary wrote down “Hotel deals” on the easel.

Oliver spoke up, “What if we offer a free year of service with every new installation?  I think that would capture more clients and may even get them to continue their service contracts after that year is up.”

After a few seconds of silence, Oliver added, “What if we open up another Happy Heating branch in Neighborville?”

Sally offered, “What about paying existing clients for referrals?”

Penny said, “What about special bonuses for employees who go above and beyond?”

Oliver said, “What if we create a humidifier campaign to add humidifiers to all of our existing client’s furnaces?  I know that many want this but forgot to install them the first time around.”

Gary wrote down all the ideas offered so far on the easel.

Gary said, “You’re all offering great ideas, I’m curious how we can be unique in our market place.  Maybe do something that no one has done before in HVAC services.  What other services do you think people need who are buying HVAC equipment?”

Sally offered, “What if we offer energy audits for homes and commercial buildings for an additional cost?”

Oliver added, “Yeah… and then we offer follow up installation services like new lights, added insulation and new windows to make our client’s buildings more energy efficient?”

Gary encouraged as he wrote, “Great ideas… keep ’m coming.”

Penny shouted, “What if we network with other trades who work on homes and buildings like we do?”

Sally added, “We already do that Penny, but what if we worked with other trades to offer bundled projects?”

Gary asked, “How is that any different than subcontracting to a general contractor who hires us to do work on construction projects?”

Sally responded, “I suppose you’re right, but what if we were the prime contractor instead of subcontracting to a general contractor?”

Oliver added, “And what if we hired trades people to do the work instead of subcontracted to them so that we could keep those profits?”

Penny chimed in, “We’d have to add more people, if that happened.”

The Happy Heating brainstorming session was quite energetic, and Gary counted over 30-ideas in all.  While the team did spend some time prioritizing the different ideas, Gary found that he was still overwhelmed.  He decided he would give Russ a call and ask for some help trying to figure out which ideas were best for Happy Heating.

Gary started, “Russ, our management team came up with several ideas about how Happy Heating can expand its impact with our customers while also growing our business.  My problem is I’m overwhelmed with all these ideas.  I don’t think we can implement them all, but I also don’t want to overlook some ideas that may be winners.  What should I do?”

“It looks like you’ve run into the one challenge with Level 5 energy.  It’s called ‘paralysis by analysis’.”

“So, how do I overcome this ‘paralysis’?”

“I’d like you to do a mental exercise.  Are you game?”


“Close your eyes.  Now envision a spinning wheel in front of you.  On this wheel is every idea that was given to you by your team in your brain storming session.  Now spin your imaginary wheel.  Do you see it spinning?”


“The wheel is slowing down.  Tick, tick, tick… tick.  Before the wheel stops, which idea do you hope the wheel stops on?”

“The energy efficiency idea.”

“Great… tell me more about the energy efficiency idea.”

“Sally came up with an idea to perform energy audits for our customers, and then Oliver suggested we add installation of windows, lights and other products that could make our client’s homes more energy efficient.”

“There you go.  It sounds like you’ve got your new direction.”

“What?  Russ, forgive me, but your method for picking a direction seems hardly scientific.”

“Us coaches have a core principle that many disagree with, but I’m going to throw it out there anyway.  The principle is ‘There are No Mistakes’.”

“What is that supposed to mean?”

“It means that of all of the 30 ideas you could have picked from, there was no wrong idea.”

“Great!  So, why even go through this mental spinning wheel exercise?”

“I wanted to know which idea you were most excited about.  That will be the idea that has the most energy behind it and will have the most likely chance of success.”

“If there are no mistakes, I could have picked any of the other 29 and succeeded as well. Right?”

“Not necessarily.  If you picked an idea and didn’t feel excited about the idea, you would lose interest and that idea would fail.  Not because it was a mistake, but because of your lack of desire to make it work.”

After a pause in the conversation, Russ continued, “When I asked you to tell me which idea was selected by the wheel, you used your intuition to choose.  While this doesn’t always work, it certainly can clear the ‘analysis’ fog that most leaders find themselves in when they’re paralyzed by overthinking.”

“You’re right, Russ. I’m excited about doing this energy efficiency work for our customers. I’m not exactly sure how I put all of this together.”

“Now that you’ve decided on direction, it’s time for analysis.  Go ahead and start creating lists of tasks that you need to do and delegate those tasks to your people.”

“But they are all so busy with their own work.  How will they have time to do all of this extra research that it will take to grow Happy Heating?”

“I suggest you use the open-ended questioning techniques we’ve discussed in the past.  Ask your folks to solve that problem for you.  Believe me, they want to help if they can.  And if they can’t, they’ll tell you.  Whatever you do, don’t go back to sitting in your closed office on your computer trying to figure it all out on your own.”

Gary knew what he needed to do.  He was going down the path of adding energy efficiency services to his HVAC work.  He also would involve his team.  This was probably the biggest challenge.  In the past, Gary would complete some spreadsheet in his office and then tell his employees what they needed to do.  It felt quite inefficient engaging his busy managers in doing what he felt was his job in the first place. 

He set up a meeting with his staff to once again plan out the expansion of Happy Heating.  He created a list of open-ended questions designed to engage his staff and sent them out in an email.

Penny, Sally and Oliver all came to the meeting early.  Gary noticed a buzz in the room as he entered and closed the conference room door.

Gary announced, “I hope you all had a chance to read the questions I emailed earlier this week.”

As soon as Gary started talking the buzz stopped, and Gary knew that he had put a damper on whatever conversation was happening as he entered the room.

Gary prompted, “Sorry for that.  It sounds like you all were talking about something interesting when I entered the room.  I’d love it if you would share your insights.”

The room was quite for a few seconds and then Sally spoke up, “Gary, we were just talking about your questions.  While Oliver and I have a lot of interest in the energy auditing and energy efficiency retrofits, we really don’t have the time to take on more tasks to explore this further.  Penny told us that she has some time and would love to help you out with finding answers to the questions you gave us.”

Penny nodded her head in approval of Sally’s statement.  Gary didn’t know how to respond to this epiphany by his team.  He was ready to talk about all his questions with the team, and deep down inside, he didn’t think that Penny had the ability to answer the technical questions about this energy efficiency idea.  Gary was convinced that he needed Sally’s sales and marketing expertise and Oliver’s field expertise for many of the technical questions that would surely arise with this new idea.

Gary looked at Penny, “Do you feel you’re up to the task of answering all of these questions, Penny?”

As soon as the question left his mouth, he knew that he asked the wrong question.  Russ had warned him about using close-ended questions.  Russ always said that a close-ended question is a way that we tend to control others.  We create a hidden premise in the question that forces the responder into a corner.  In this case, Gary had implied to Penny that she didn’t have the ability to deal with the complex issues of this energy efficiency idea.  She would either react with a YES out of ego; or NO to back away from the challenge.

Penny responded to Gary’s answer, “Yes.  I think I can rely on Sally or Oliver if I get in over my head.”

Gary felt relieved that Penny was brave enough to give him an open-ended answer even though his question was somewhat controlling.  He now knew that he needed to offer encouragement and support.

Gary responded, “That’s great, Penny.  Oliver and Sally, you’re free to get back to your work.  I think Penny and I can work out the details of Happy Heating’s expansion.  I’m grateful that you have stepped up to this challenge, Penny.”

Penny smiled as did Oliver and Sally as they exited the conference room.

Gary and Penny worked on the details of Happy Heating’s expansion plans.  As would be expected, they seemed to create more questions than answers at first. 

‘How will this new offer change their current sales process?’

‘What added costs would be required for the energy audit?’

‘What types of employees would need to be added to conduct audits?’

‘How would they negotiate pricing on lights and windows?’

‘How could this change diminish the momentum they had created with their current growth plans?’

‘How would Happy Heating’s name need to change if they wanted to market themselves as an energy efficiency company?’

Penny was eager to do research and answer all the questions that arose.  Gary and Penny met on a weekly basis to discuss progress and make any course corrections that were needed.  As Penny was working out the details of the expansion, Gary was creating spreadsheets and forecasting costs and anticipated revenues of Happy Heating’s expansion.  It turned out that while Penny knew few of the technical answers to their questions, she was great at asking around and connecting with experts who could answer her questions.

After three months of planning, Penny and Gary were ready to roll out their expansion plans to the rest of the employees.  They reserved a room at the local Marriott Hotel and ordered a catered lunch to make a grand presentation of their plan.  Oliver and Sally had their own parts to play in the presentation and while they did little work in the planning, they were fully aware of the expansion plans as they got weekly updates of Gary and Penny’s progress.

The rollout was spectacular.  Technicians, sales people and managers were all excited to embark on their new opportunity to expand Happy Heating’s focus into this new energy efficiency marketplace.  If successful, Happy Heating would double revenues in their current territory within a two-year period.

Happy Heating’s success was amazing over the next few years.  Oliver’s and Sally’s growth plans had already been working well.  With Penny’s help in creating even more expansion with the addition of the energy efficiency work, Happy Heating was poised to earn $4.5 Million in revenue with a record profit of $400,000.  The first year of their expansion was challenging… but they had expected a first-year loss as they invested in the new opportunity.  Gary took out a short-term loan to fund their expansion and quickly paid it off when customers responded to their new energy efficiency offering.

Penny’s plan didn’t involve a lot of expansion of employees, but rather hiring engineering firms and other contractors to do most of the additional work required to expand their energy efficiency services.  Engineers were glad to complete energy audits for their residential and commercial building owner clients at reasonable rates if they got follow up work to complete the design work as well.  Penny oversaw creating a list of lighting and window contractors.  Oliver helped Penny negotiate contracting terms.

Sales, marketing and operations had grown so much with the revenue expansion that Sally and Oliver had to promote supervisors to lead teams within their departments.

Happy Heating’s growth was not just good for Gary and his employees, his customers were able to gain a much better perspective of how they could reduce their utility costs and get new windows and lights for their homes and office buildings.  Happy Heating was truly living the Win/Win lifestyle.  Profits were great, employees were happy, and customers were delighted. 


Identifying Opportunity Energy

Opportunity energy is evident with multiple brainstorming sessions and a constant desire to innovate.  People who have a lot of opportunity energy are sometimes hard to nail down.  They will have a great idea one day and be committed to that idea and then change their mind and move in a completely different direction the next day.  While this energy is quite positive and anabolic, it also needs to have some controls in order to be effective.

Shifting Opportunity To Synergy

This shift will usually happen after a company or person has achieved a relatively high level of success and wants to expand their work beyond their company.  In most cases, a shift from Level 5 to Level 6 requires a larger world view.  This larger world view can be found in religious beliefs, or other spiritual realizations that you are not simply existing on your own but are part of a grander view.

Because this grander view often intersects with religious, and sometimes political views, it is often avoided in conversations at work.  Therefore, these shifts will rarely happen at work.  It’s important that however this shift happens, it happens in a safe space for your employees. 

If for instance you want to expand your company’s efforts to help the environment, some employees in your company may hold a political view that climate change is a contrived ploy by people lobbying against oil and gas companies.  This may not be your intent, but such efforts tend to elicit strong reactions.  Likewise, if you advocate your religious beliefs as a way for your company to expand beyond itself, others may believe you are trying to advocate for your religion in opposition to their religion.

Don’t avoid these shifts, but rather be sensitive to political or religious language that may prompt friction.  If you have genuinely lived at Level 4 – Compassion for any length of time, most employees will trust that your shift to Synergy – Level 6 will work out in the end and will not usurp their individual ideals.

Staying at Opportunity

I strive to get my business owners clients to Level 5, so it would be quite an accomplishment to be remain at Level 5.  At Level 5, your organization will be a beacon for the rest of your industry and be a leader in innovation and employee satisfaction.  You will constantly be challenging your employees and innovating for your customers.

Why Level Up?

The only challenge with not getting to Level 6 is that you may find Level 5 to be somewhat materialistic and empty.  Successful businesses are naturally beneficial to our world.  They provide people with meaningful employment and the world with better products and services they would not have otherwise.  However, if your company is doing well, it is a natural urging to do more for your community.  Most companies who live at Level 5 will create a lot of wealth.  This wealth can continue to be reinvested in the company’s growth, or you can start looking outward to how your good fortune can improve pockets of the world that are not so fortunate.

Core Energy Coaching™ and all core energy concepts described in this post are registered trademark belonging to Bruce Schneider and the Institute for Professional Excellence in Coaching (iPEC)

About Jeff Schuster

As a business coach and 30-year business veteran, I help my business owner clients change their mindset in a way that allows them the freedom and profitability they’ve always hoped for, but never thought possible. If you’d like to develop a successful business mindset, I offer online training along with individual and group coaching sessions.


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