Category: Pro Serv Podcasts

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Episode 76 – How an IT Services Firm Built an Executive Leadership Team – Member Case with Matt Rosen

Matt Rosen

The quality of the executive leadership team is paramount as professional services firms grow, scale, and exit. In this episode, we speak with Matt Rosen, founder, and CEO of Allata. He shares how he structured his executive team to replicate himself, developed a succession plan, and spent time working on the vision of the future.  

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. 

My name is Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we have the privilege of talking to Matt Rosen and the leader of a company called Allata, which I’ll introduce in a moment. We’re going to talk about building a quality management team, and how he’s done that at his firm and hopefully learn a few things along the way. So, Matt, it’s good to see you. Would you introduce yourself to the audience, please? 

Matt Rosen [00:00:54] Yeah. Thanks for having me on the show, Greg. So my name is Matt Rosen, and I’m the founder and CEO of Allata. Allata is a tech consulting firm based in Dallas with offices in Pheonix, Boise, and Provo. And what we do is we help companies with their most complex technology initiatives from a strategy, architecture, development, and data standpoint. 

Greg Alexander [00:01:14] Okay, awesome. And Matt, when did you find the firm to grow? 

Matt Rosen [00:01:18] I founded the firm back in 2006. It was just myself and a developer. And now we’re over 220 people and growing quickly. 

Greg Alexander [00:01:25] It’s an incredible story. It really is. Congratulations on all that. So let me set up the topic because I asked you that question about when you founded it and where you are today because you’ve scaled so fast. And I think one of the reasons why you’ve done that is because you’ve been able to build a quality management team, and I’ve had the privilege of meeting a few of them. 

And it’s a big subject because sometimes, founders that are growing like that hit a bottleneck eventually. And that is, they’re kind of the hero within a group of helpers. It doesn’t work, you know. There’s just too much work for one person. And you got to hire senior people or develop senior people. You have to give them enough autonomy to make the contributions that they need to make, empower them to be successful. And I think you’ve done a really good job with that. 

So I’d like to start with an opening question, which is at a high level, explain to the audience kind of the organizational structure of your leadership team that reports to you by role. Maybe, I don’t know if you need to mention names, what by role? And tell me how you came to that conclusion and why you built it the way you built it. 

The Structure of an Executive Leadership Team Matters

Matt Rosen [00:02:35] So where we’re at today is I really have three direct reports. I have a chief strategy officer and she owns sales,marketing,go to market offerings as well as our partnerships. I have a chief technology officer and he’s really looking forward to the technology direction, what new trends d we should be jumping on. He’s also my personal helpdesk when I run into issues. And then I’ve got a chief operating officer, so the Office Leadership Report is sent to him. 

So I have leaders for four different groups in the company. There’s Dallas, Pheonix, Virtual and Boise, and then he’s got all our back office functions from recruiting, H.R to finance. And so really everything falls to the three of them. And underneath them they’ve got leadership structures and sales and marketing, especially at a delivery level. There’s four group leaders that almost all the consulting resources roll into. 

And then we’ve got practice lead. So for strategy, for architecture, for product and design, for technology solutions and for data, we’ve got vice presidents that head up each of those service lines, if you will, and people are really matrixed across the organization into their office leaders, as well as the practice leaders. 

Greg Alexander [00:03:51] What I find remarkable about your story is you’ve been around five or six years. You’ve grown like crazy, and yet you personally only have three direct reports. Now, I know underneath those three, they have their teams, but that’s pretty remarkable. 

Sometimes I see guys and gals like you with eight to ten , and they’re living almost miserable lives because there are not enough hours in the day. So how did you get it so tight to only three? 

A Professional Services Firm Needs Great Leaders

Matt Rosen [00:04:18] Well, you have to have really good leaders. I mean, that’s really what it comes down to. You’ve got to have people that you can set goals for. You know, I’m not a micromanager. I’m not even really a macro manager. I said high level goals, and I get the heck out of the way. I hire bright people, you know, I do have one-on-ones with the three of them. 

And I probably talk to the layer below them at least every other week. But, you know, we’ve got a real structured way in which we do a sales meeting every Monday. We do an operations meeting every Tuesday. I’m always in on those, or people are sending me a synopsis of them. So it gives me just enough information really to run the firm. And it took a while to really trust folks and hand things off, especially in the sales arena. 

That was based on one of the recommendations you made when I was early on in the Collective was, “You’ve got to stop being the hero sales guy.” That was really hard for me to let go of, but I finally have found a leader who came from a large firm, and she brought a lot of process with her and is now leading the sales team and is a very effective seller herself. 

A lot of it comes down to finding people that are great at doing the things that you don’t or can’t do well, empowering them to do their job, and staying out of their way unless they’re just not meeting their goals. They know that people are going to do things the way you do them. And that’s okay. 

Greg Alexander [00:05:27] Yep. Okay. So, awesome story. I’m really proud of you for what you did on the sale side, and it was hard for you to let go because you enjoyed it. I remember talking just. 

Matt Rosen [00:05:37] I still get involved. I still get pulled in from time to time, but I’m not actively leading sales cycles. I’m spinning them up from time to time but I’m handing them off. 

Greg Alexander [00:05:44] Yeah. And it’s tough to let go of the things that you really like to do. So that’s a great story to hear that you’re doing that. I know that your company is not for sale, but given your growth, I imagine the phone rings. And one of the things that potential acquirers are always looking at as part of their diligence is the quality of the management team. 

So if someone came to you with an offer you couldn’t refuse, you know, some crazy number that you’d be ridiculous if you didn’t take it. Do you know who your successor is and who you would hand the firm over to? Or would you plan on staying after the sale? And then if you were to hand it off, does everybody get pulled up the org chart, so to speak, so that the thing doesn’t fall apart post-sale? 

Matt Rosen [00:06:28] That’s a great question. You know, we’re not for sale. If some crazy offer came along, I would foresee myself sticking around for a couple of years to make sure that there was a smooth transition integration. Ultimately, I built this firm because I didn’t want to work for others, and know I wanted to build a firm that was sustainable and successful with or without me. 

So, you know, there definitely is a succession plan in place that we’re executing on. There’s definitely a couple of folks that could, with some training and tenure, probably step into my shoes. Nobody’s replaceable. It takes time for them to grow into the role. 

And what we’ve got is a really good mix of people that were career consultants and a mix of people that were in the industry. I had a lot of clients that were VPs about those that I was going to work for me. You’ve got this really nice group of leaders that have either consulted their whole careers or sat on the side of the desk of those that we’re selling to. That adds a lot of credibility when working with clients. 

How Professional Services Firm Owners Can Leverage Executive Leadership Teams to Their Advantage

Greg Alexander [00:07:25] Awesome. Glad to hear that. Sometimes when I talk to members and I suggest that they do what you’ve done, I hear particularly from maybe the younger firms, those that haven’t reached the scale that you’ve reached. They say, “Well if I have all these people that are going to do all this stuff, what am I going to do?” Which I tell them, “Hold on, you know, you’ll have plenty. If things go well, you’ll never ask that question again. There’s going to be too much to do.” 

So now that you have put this great team in place and you’ve elevated yourself, what do you personally spend your time on? 

Matt Rosen [00:08:01] You know, I spend my time thinking about where we need to head next. From a company’s perspective, what geos we might want to go into, what offerings we might want to have. I spend time visiting with a lot of our larger clients and spending time with them just understanding what’s important to them. Like a lot of them are my close personal friends. I spend time talking with leaders as they need, you know, strategic advice. 

You know, they might call me and say, “Hey, we’ve got this situation. What do you think?” And they run things by me, you know. By putting this great leadership team in place, it allows me to actually get out and, you know, play a round of golf every now and again, which I hadn’t done in about 20 years. 

So that’s kind of nice fun that, you know, folks like you or, you know, clients that like to get out there as well and enjoy a walk ruined by golf. But, you know, there’s always things you can be working on, looking for ways to make the firm better or, you know, taking leadership courses. 

Um, you know, doing interviews such as this, and really being a thought leader in your space as well as looking for how can you grow the firm maybe through M&A. So we’re actively talking to a couple of companies that might be accretive and be good partners for us as we grow. 

The Importance of Letting Go When Building a Leadership Team

Greg Alexander [00:09:10] Yeah. So listeners what we just heard there is that Matt spends his time on the business, not in the business, spends a little time in the business in the right spots, but he has a team that’s doing that for him. So he’s pursuing the vision, the future. And unless somebody is dedicated to that vision, the future, it never happens. You are just constantly in reaction mode. 

Matt is being proactive now and he’s leading. He’s not managing. There’s a difference between managing and leading. And what we’re hearing from Matt today is he’s leading, which is a great role model for all of us to follow. Got one more question regarding the management team and the structure in particular. 

I know when I went through this process that you have gone through the thing that I was less willing to give up and I clung to the most, which was a flaw, and I didn’t do it the right way. This was a mistake. It came to investment decisions when money was going to get spent. I held on to this money like it was my first communion money. I was unwilling to let anybody, you know, make those decisions other than me. How is that handled in your firm? Do you approve all expenses or do people have authority to do these types of things? 

Matt Rosen [00:10:23] So in this, I would say over the last twelve to eighteen months, we’ve moved to a budget. As long as people are spending what’s in that budget, there is not a problem with it. In fact, they put the budget in, in some respects, to control me from spending too much on different things. 

Greg Alexander [00:10:36] But the budget was for you. 

Matt Rosen [00:10:38] So that was actually from a year ago. But we’re doing a good job and you know, we’re performing ahead of plan as a result of it. So, no, you know, again, that comes back to empowering people. I mean, the only thing I’ve not given up is, you know, I’m the only one that sends wires. 

But other than that, people have corporate cards, they have budgets they can spend on what they need, we have a good controller, you know, authorizes money to go out. And so most of that I’ve given up and people make a lot of decisions where we spend that budget that’s been allocated without my involvement. 

How Does Allata Create a Budget for its Professional Services Firm?

Greg Alexander [00:11:10] Yeah. Interesting. That’s really inspiring. In the budget process,  it sounds like this is a relatively new thing, let’s say, in the last couple of years. So how do you guys create the budget? Is it done once a year? Is it done at the beginning of the year, or the end of the year? How does all that work? 

Matt Rosen [00:11:26] Yeah, it gets done, you know, as the year is wrapping up. So towards the end of 2021, we set the budget for 2022. You know, we reviewed it with the group leaders. You know, we had them put in things that they wanted. We were meeting with sales and marketing and the, you know, the practice leads and everyone kind of put in their wish list, and we kind of whittle it down to what we thought we could spend in addition to where we think we could achieve from a revenue top-line standpoint. 

And so we review it monthly, we do at the end of each month kind of a financial review, see how we’re tracking. And you know, if we’re doing ahead of plan, we might spend more on certain things or make more investments in certain areas. But the big you know, the big thing for 2022 is making sure we’re focused on EBITDA, building a sustainable organization and, you know, spending where we need to and not spending where we shouldn’t. Yeah. 

Greg Alexander [00:12:17] It’s great that you review it monthly. It’s kind of like a variance-to-plan type meeting. 

Matt Rosen [00:12:22] Absolutely. We go through line by line in the major categories, see where we are under, and see where we are over. And you know, we adjust as necessary as we go into the next month, and at least for January, we’re on track. We’ll see how we’re doing for February next week. Yeah. 

Greg Alexander [00:12:36] You know, the hardest part about budgeting for me was the forecasting part of it. You know, it’s easy to look at what’s happened and you can do the variance to plan on that. But then if someone says, “Hey, what’s going to happen in six months?” 

It’s tough because professional services can be a little lumpy. And, you know, it’s not as much forward visibility as we might like. Have you implemented any type of forecasting system that sits on top of the budget that predicts the future? And if so, how’s that going so far? 

Matt Rosen [00:13:02] You know, it’s really a combination of two tools. You know, we’ve got a CRM tool, as most organizations do, and we try and put it in as much as we know. We’ve got, you know, kind of a four-stage sales process and just waited. So, we’ve got that, kind of that weighted pipeline. And we’re always trying to have 2 to 3 X or revenue plan and we do pipeline. It never turns out to be that much because we tend to be a little bit conservative, but we have that weighted forecast of all the deals that are in the pipeline, what’s coming as well as our forecast of what we think clients are going to do between now and the end of the calendar year. 

And then we invest in a professional services automation tool that allows us to see weekly how we’re tracking a plan, making sure hours are up to date. We also have some modeling scenarios where we can figure out, you know, based on the people we have available, you know, what type of team can we put together, what’s their profitability? Because for the longest time we only understood margin at a company level. We didn’t understand it at a project or client level. 

And now we have that visibility and that visibility is allowing us to make smarter decisions. You know, I think about consulting hours. It’s like bananas. They spoil at the end of each month. So you’ve really got to manage them tightly and ensure that you’re watching them and leveraging them and try not to leave anything behind. Yeah. 

Greg Alexander [00:14:15] Question on the PSA platform, which I’m so glad to hear that you’ve installed. I’m a big advocate and I think it really helps, particularly on those two items, project and client level profitability and managing that inventory. What advice would you have for younger, smaller firms on when it’s appropriate to progress to the point where you would install a professional services automation tool? 

Matt Rosen [00:14:41] When the Excel spreadsheet starts breaking. 

Greg Alexander [00:14:44] Which happens early. Yeah. 

Matt Rosen [00:14:48] It was probably better. My team had to push me for years and I don’t mind mentioning the tool. We were able to cut a pretty good deal with them and they had professional services that helped us implement it. The challenge is you do have to take someone senior and have them help line your  implementation. 

So it is an investment, one that I had to be pushed on for a while. I should have done  that sooner. We probably would have actually been a bit more profitable. I probably waited a year or two too long. But now that we have it and we are seeing returns from it, we are capturing time that we weren’t previously. 

It’s allowing us to model up skill sets and understand where we need to be investing. You know, it probably is something we should have done two years prior and my team pushed me for it, but I held off because I wasn’t ready to make the investment. But I’m glad they finally pushed me to do that. That mix of harvest and spreadsheets was no longer getting the job done for 200 plus people. 

Greg Alexander [00:15:44] Yeah, exactly. Well, listen, man, you’re absolutely knocking it out of the park. I mean, every single thing you’re supposed to be doing to be on the business and scaling the business is working really great. And your results back it up.

And I want to, on behalf of the membership, just thank you publicly. This is a big contribution. You’re a role model for many. And hearing your story and how quickly you’ve gotten to this point is an inspiration. So thanks for being on the show. 

Matt Rosen [00:16:10] Yeah, thanks for having me on the show, Greg. Appreciate it. 

Greg Alexander [00:16:13] All right. And for those that are interested in learning more about this subject, building a quality management team, and others like it, pick up the book. It’s called The Boutique: How to Start, Scale, and Sell a Professional Services Firm. You can find it on Amazon. And for those that are listening that want to meet really bright professional services owners like Matt, consider joining our community. You can find it at collective54.com. Thanks again, Matt. Take care. Matt Rosen [00:16:36] Thanks. Take it easy.

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Episode 75 – How a Consulting Firm Leverages Specialists to Increase Scale – Member Case with Cynthia Klint

Cynthia Klint

The engagements you sell determine your market position and the team needed to deliver your service. In this episode, Cynthia Klint, CEO at BRC, shares how she leverages specialists to deliver client engagements and increase sales. 

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. 

My name is Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to discuss engagement type and how that drives the type of firm you become. And we have a member with us today. Her name is Cynthia Klint. Cynthia and I are going to have a discussion regarding this subject. Cynthia, it’s good to see you. Thanks for being here. 

Cynthia Klint [00:00:52] Sure. Happy to be here. Thanks for inviting me. 

Greg Alexander [00:00:54] And would you provide a proper introduction of yourself and your firm to the audience, please? 

Scaling a Business: Member Case with Biodynamic Research

Cynthia Klint [00:01:00] Sure. As you said, my name is Cynthia Klint. The company that I work for goes by BRC, but the long name is Biodynamic Research. We’ve been in business for about 36 years. I’ve been with the company for 23 of those years. And what we do is we help people understand how injuries happen. And we do that by answering two questions, primarily in a litigation setting. The first question is, did an injury occur, and if so, how? 

Greg Alexander [00:01:29] Wow. That’s a fascinating field. I can imagine the litigation services around that for sure. I hope no one’s ever asking me that question. I hope I never say yes that an injury occurred. 

Cynthia Klint [00:01:41] When people say they haven’t heard of us, I always tell them that they should be glad. It means they’ve probably never been in an accident that required litigation. 

Greg Alexander [00:01:50] Alright. So for context, who is the typical client? 

Cynthia Klint [00:01:57] Primarily, our clients are attorneys. Okay. Although we do work directly from time to time for individuals or insurance companies. 

What Are the Types of Engagements When Scaling a Consulting Firm?

Greg Alexander [00:02:05] Okay. Got it. Okay. So let me set up today’s conversation. Generally speaking, and I admit I am oversimplifying here, but in the time that we have, that’ll work. There’s kind of two types of engagement. 

There’s what I call elephant hunting, and that is a really big engagement. And, you know, they could they could last months, if not years, and cost hundreds of thousands, if not millions of dollars. And firms that have those types of engagements tend to have, relatively speaking, a smaller number of clients. But each client spends a lot of money, and that’s one style of firm. 

In contrast, theother type of firm, which I call rabbit hunters, are firms that do small, quick, inexpensive engagements. But, they do them in volume. And they tend to have lots and lots and lots of clients, but each client only spends a little. 

And the important thing here is to understand what type of engagements you’re selling and, therefore, what type of company you’re becoming. Because in the end, we become who we serve. And I would suggest that scaling a business is easier when you pick one or the other, and it becomes more difficult when you try to do both. 

I’m not saying one is better than the other. I’m just advocating for picking one over the other. So, Cynthia, given my oversimplification, if I was to force you to put yourself in one of those two categories, which category you in? 

Cynthia Klint [00:03:41] It’s a really tough question to answer. And like several members has said that the yes/no is a tough question. I’m you know, I thought about this a lot. I went back and reread the chapter. And if I had to be forced to pick, I would say we’re more like the rabbit. Okay. The both of our cases tend to be quicker turn, lower revenue. But quite frankly, we’re a combination of the two. 

Greg Alexander [00:04:12] You are. Okay. And and that’s okay. I mean, you’ve been in business for 36 years. Obviously, it’s working. Right. So if you have both styles in the firm. Is it true or false that it is  difficult to manage and difficult to scale? 

Cynthia Klint [00:04:35] It is true. I think it certainly complicates the way that you manage the different clients and the way that you manage the logistics in supporting those different clients. 

Greg Alexander [00:04:49] Yeah, and that’s the real challenge, right, because… 

Cynthia Klint [00:04:51] Absolutely. 

Greg Alexander [00:04:52] You have to staff these projects, right? And and it’s a different staffing model, usually in the rabbit space, if you will. A single person might have many, many, many clients. So therefore, he or she is only spending so much time with each client. It’s just mathematics. 

On the other side of it, you know, if you’re in the elephant business, you might have one or two clients and you’re spending a ton of time with those one or two clients. So when you say logistically, it’s difficult to manage, is that what you’re referring to? Are there other logistical items? 

What Difficulties Can You Face With These Engagement Types?

Cynthia Klint [00:05:27] So in litigation, you’re probably familiar that, you know, litigation can drag out for a really long time. And most cases, I would say the desire is to move toward some sort of settlement. And that’s why I say that the bulk of what we do is is really the smaller cases or the quick return cases. 

Logistically, what’s difficult is really maintaining the ability to manage the longer term cases because like you said, we have some cases that literally have been our books on our books for 20 years. But most of them are shorter. 

And one of the things that’s happened in litigation is there’s a push toward a quicker turnaround. And that’s something that we’re really working toward being able to manage because you have to staff or have processes that support. The same client can bring you a rabbit case and an elephant case. 

Greg Alexander [00:06:30] Oh, really? 

Cynthia Klint [00:06:31] And so the thing is, you want to be able to say yes, regardless of the turnaround time. When they come to us, it’s because they need our help. They need us to help clarify what’s happening. Yeah. And so we want to be able to do that objectively, accurately, but we sometimes need to be able to do that quickly. 

So, from a logistics standpoint, it’s about the processes, the staffing, and calendar management. We’re driven by court deadlines. So our deadlines are very much on the outside. And so we have to be in lockstep with our client to make sure that we can meet the deadlines that they’re really subject to. Does that answer your question?

Greg Alexander [00:07:17] In fact, I have several follow up questions, if I may. So now I know why you have both because you have one client that can bring you two scenarios. And I mean, what are you going to do? Tell that client no. Of course not. Right. 

So you have to be responsive to that client’s individual needs. So my follow-up question would be: Does the client understand that what he or she is asking for is two different things? And is he accommodating, or do you have to educate? 

Cynthia Klint [00:07:47] So again, I hate to sound like a lawyer, but yes and no, because they do understand. But oftentimes our clients are under the gun as well. And so they may understand, but it doesn’t change the fact that they need us to help them in that situation. 

And so they often are very accommodating. They work with us. They do their best to create timelines that make it possible for us to do a thorough job, which is something we always want to do and always strive to do. So, they do understand. They do work with us, but sometimes they have no control over that deadline. 

And so, you know, we are here to provide the best answers that we can, not necessarily the answers that they want, but the best answers that we can with the time and the information that we’re provided. Right. 

Greg Alexander [00:08:41] You know, for the listeners, this is a very unusual case. And I’m so glad that we’re on the call today because it’s a rich learning experience. Normally, in normal situations, it’s much easier because there’s a certain type of client, maybe a Fortune 500 company, and they’re only going to do the big projects. And then there’s another type of client, the small business, and they can do small projects. 

And in Cynthia’s case, it’s one client with two different needs. And what makes it even more complicated is that the timeline is dictated by the court’s deadline. It’s not dictated by the project team, and it’s not dictated by the client. It’s dictated by an independent third party. 

And boy, I would imagine that makes it rather stressful. Like, does the working backward from that timeline and that deadline being outside of your control, how do you scope work? 

Scaling a Consulting Firm: How Does Biodyancmic Research Scope Work?

Cynthia Klint [00:09:31] Well, being in business this long, we’ve gotten pretty good at it. So, you know, there’s several components that go into our work product. So ultimately, the work product is the objective opinion of the expert. You know, we employ physicians with engineering degrees as well as accident reconstructionists who are engineers. And so, again, their goal is to understand what happened not only in the accident or in the incident, but what happened to the person. 

And so we’re getting different kinds of materials, legal documents, medical documents. You know, sometimes if there’s a product involved, we may be getting product information. And so what we’ve done is, is really the model that Collective 54 promotes, which is leveraging. 

We have specialists in each of those areas, and so we have nurses who will go through and organize the medical records to make it more efficient for the experts. We have paralegals, so that do the same thing with legal documents and so forth. So scoping, it really is about understanding the volume of the materials and then being able to apply our experience, knowledge, and determine for the client what our timeline looks like. 

And it can be variable because if you have something that, for example, if you have a case with a long medical history, you can have thousands and thousands of pages of medical records that have to be dealt with. And so, our goal is to take our experience and really apply it to that and give the client an understanding of what the timeline can be and what the cost may be as it relates to that. 

How This Consulting Firm Matches Revenue with Expenses

Greg Alexander [00:11:09] Now, with this group of specialists; paralegals, the nurses, the engineers, it’s a fascinating story. I had no idea this existed. It’s really intriguing. Well, maybe I have another question. I was going to ask, How do you match revenue with expenses? 

Because the way it normally works in pro serve is you get a project and it’s worth X amount of dollars. You staff it and that’s your cost and the deltas, your profit. Do you know what the revenue is or are you waiting for the settlement? How does it work? 

Cynthia Klint [00:11:44] So that’s a great question, Greg. We are not on a contingency basis because we are objective. So we’re hired to look at something very objectively. And it is irrespective of the outcome. So we don’t really have a dog in the fight, so to speak. 

Our job is to come in and really give insight and clarity and educate the client as to what happened so that they can make a decision on how to proceed with their case. And sometimes the answer is not what a client may want to hear. And it’s still our job to share that information because that’s helpful information as they make decisions. 

Greg Alexander [00:12:19] Right. 

Cynthia Klint [00:12:20] So the way that the revenue is, we build time and materials  and so we will bill on a monthly basis. 

Greg Alexander [00:12:29] And with these specialists  I mentioned, the nurses and engineers. What was the third one I mentioned?. Paralegals. Excuse me. Are they, you know, I think in senior, mid-level and junior staff and I think about associated cost and rates for that, is it that simple or is it more complicated in your scenario? 

Cynthia Klint [00:12:50] So it actually has several more layers than what you’ve described. So we have our physicians with engineering degrees and that’s really \the most client facing role. So that is the expert that the client is hiring. And so they are the person who is providing consultation and giving an opinion and that kind of thing. 

In that role, they’re acting as what we call biomechanics. So what happened to the person? We also have the engineers and those we have various levels of. Let me back up. The physicians, we have various levels based on experience. One of the big components in an expert’s career is obtaining experience in a testifying situation. 

So giving an opinion is one component, but testifying is another component. And the more senior you become, the more testifying history you build, the more in demand you are. Because you’ve proven that not only can you come up with an objective opinion, but you can communicate that to a jury, a judge or a client. And so the more senior you are, you have a higher billing rate. 

And then we have that same model in our engineering group. Same thing. So the engineers are looking at the vehicle dynamics. So not so much the application of the forces to the body, but more how does the vehicle move? How do the forces apply to the body? And so we have different levels there. 

The staff, the support staff, the paralegals, the nurses, other groups that we have that support. We have a technical librarian and we have a test facility. We have a group that we call the Technical Resource Group. So all of these work in support of these two groups, the physician, and the engineer. And they’re all at a fixed rate by department. 

Greg Alexander [00:14:42] Okay. And that’s how you drive your leverage model. Is through those tiers? 

Cynthia Klint [00:14:49] Yes, absolutely. And the goal is always to get the client the opinion in a way that is least costly to them. Yeah. Because you have a physician at their billing, right. Organizing all the materials. But that doesn’t seem like a very good use of their time or cost. 

Scaling a Business: Engagement Type Determines the Type of Firm You Are

Greg Alexander [00:15:07] Right. Very good. Yeah. Okay. Well, very good. Well, let’s conclude here. So today we were talking about how the type of engagement you market and deliver determines the type of firm you are. And we had a very real case here because it’s not as black and white as we would want it to be. And Cynthia’s thought about this a lot. 

And what I find fascinating about her case as even though it’s a blend, they have figured out a leverage model and they’ve done it through two things: specializing their labor force and working backwards from the client’s need so that they get the client what they need with the right level of investment and money and time. 

This is a really interesting case and I’m not surprised your firm has been around as long as you have. That’s a really specialized service. So, Cynthia, thank you for being on the show. It was, it was wonderful to have you here. 

Cynthia Klint [00:16:01] Thanks. Thanks for having me. 

Greg Alexander [00:16:03] Okay. And for those that are interested in this topic, the engagement type and those like it can pick up a copy of the book, The Boutique: How to Start Scale and Sell A Professional Services Firm. You can also find it on Amazon. I’m proud to say we just hit number one in our little niche category. 

And then for those that are interested in meeting leaders of professional services firms like Cynthia, consider joining our mastermind community, it’s collective54.com. Thank you. And Cynthia, have a good rest of your day. Okay. 

Cynthia Klint [00:16:33] Thanks so much. Greg Alexander [00:16:34] All right. Bye bye.

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Episode 74: How a Demand Generation Agency Scaled Its Company Culture With a Remote Workforce – Member Case with Bart Bartlett

Bart Bartlett

The cultural fit of employees, clients, and potential acquirers are all critical to the success of the professional services firm. In this episode, Bart Bartlett, CEO at DemandZen, shares how he instills the core values of the firm within his remote team.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. 

I’m the founder, Greg Alexander, and I’ll be your host today. And on this episode, we’re going to talk to Bart Bartlett from DemandZen. And today, I’m going to talk about culture fit. So, Bart, welcome to the show. 

Bart Bartlett [00:00:45] Thank you, sir. 

Greg Alexander [00:00:46] Good to see you. If you wouldn’t mind, introduce yourself and your firm and tell everybody what you do. 

Bart Bartlett [00:00:55] Sure. So I’m Bart Bartlett, the CEO, and co-founder of DemandZen. We focus on the top of funnel demand generation for B2B tech companies and have done so in one form or another since about 2004. 

Why Culture Fit is Important When Scaling a Business

Greg Alexander [00:01:08] Okay, fantastic. So today we’re going to talk about culture fit. And this is a very interesting subject because as a firm grows and scales, particularly at the exit, and if they’re going to merge with somebody, culture fit, underlining the word ‘fit’ becomes a really big deal. Now, why is that? 

Well, according to a recent article in the Harvard Business Review, somewhere between 70-90% of acquisitions fail. And they cite the reason why they fail is a misalignment of cultures. And then there has been quite a bit of research from the great consulting firm McKinsey on this very subject as well. 

So we’re going to try to unpack this. And when we try to apply the word culture fit not only to an acquisition strategy, whether you’re the buyer or seller, but also on your journey up to that point through the growth and scale stage. 

And I want to start Bart, I’m going to use the ten question checklist in the book here to guide our conversation. And I want to start with question number two, which is: Does the founder’s origin story shed a light on the boutique’s culture? 

So I know a lot about your origin story, and I won’t ask you to recite it here because it’s a long and very interesting story. But let’s focus on whether or not it does shed a light on your culture. So describe DemandZen’s culture fit and tie it back to the origin story. 

Bart Bartlett [00:02:31] Sure. So our culture is really driven by core values and I’m stepping on my words cause I’m not used to having it here, so. And we basically make those a part of the interview process, a part of the onboarding process. And I would say a part of the ongoing process. Right? 

So we try and be values driven as an organization. Iin terms of how that came from our origin, DemandZen basically we merged two other companies. And it’s been almost eight years ago now. And at that point we had about seven people. And after about six months, we basically just surveyed everyone and said, “what’s important to you both personally and professionally?” 

And we synthesize that into our core values, and then we just try and run the business in line with those values, whether it be recruiting or how we interact with customers or the clients that we think we can do the best work for versus clients that we may need to let go. Right. It’s all just sort of values-led. 

Greg Alexander [00:03:36] Okay. And eight years ago, you merged two companies, still a small firm at that point, seven people. Again, what are you guys out now in terms of number of employees? 

Bart Bartlett [00:03:46] We’re at about seventy-five employees. 

Greg Alexander [00:03:48] Okay. So a ten X scale in approximately seven, eight years. And so the culture is going to get challenged when you go through that type of growth. Let’s first talk about when you brought those two companies together. 

Was there a culture fit when you merged them or did the culture need to be adapted to merge the two companies together? 

How DemandZen Built a Culture For a Remote Workforce

Bart Bartlett [00:04:09] So in this particular case, I worked with the prior company as a client across three different startups. So I was pretty familiar with the organization that I was merging into. And on my side, it was just me and an employee, right? So it wasn’t a large company per say. Yeah. And there were maybe five people in the prior company when we merged. So I would say we were reasonably familiar with each other. 

Greg Alexander [00:04:36] Okay. So it was an easy fit because you’d had a prior working relationship. Okay, great. So then everything’s values-driven, which I love. Maybe share a few examples of what your values are now. 

Bart Bartlett [00:04:49] Sure. So first and foremost, we’re results-driven just as a performance-based marketing agency, we have to be. But we also focus on solving problems. That’s essentially what we do for clients is help them solve their demand generation challenges. 

But we also just when we talk to our employees, we’ve been a remote organization for a long time. So we just explain that if you can figure something out for yourself, you know, just Google it. Spend a couple of minutes trying to understand it, and figure it out that that process is a lot more efficient for the business. 

Greg Alexander [00:05:22] Yeah. Sometimes I’m fascinated by the concept that you were remote before all of us were forced to become remote and you ten X’d your employee headcount being remote. 

I hear from members at times that cultures fall away or fall apart when trying to scale a business as much as you have remotely. And you clearly are proof that that’s not true. Did you have to do anything differently given the remote nature of your workforce? 

Bart Bartlett [00:05:47] Well, I would view it more as I’m proof that you can make every possible mistake in the book and survive it while scaling culture and  a business. So, you know, we had to learn to do a lot of this stuff via trial and error. 

There’s a lot of ways you can support disseminating culture remotely. Right. So one, you know, we get on the phone, the senior team gets on the phone with new hires as part of their onboarding process and says, these are our values. This is the story. This is where each of the values comes from and why we think it’s important to the business. You know, we effectively have  to prioritize communicating around our values. 

We also use a micro bonus platform called Bonusly so that anyone in the company can give anyone else a bonus in line with core values at any time. So if you think about it, it’s like a network effect. 

So the more employees you have, the more micro bonus thing you’re doing in line with core values. And then that all goes into a Slack channel. So yeah, so our core values are basically emphasized by our employees all day, every day. 

Greg Alexander [00:06:54] Okay. So I want to make sure I understand that because that’s an innovative way of driving values into the business constantly. So let’s say you and I are employees together at DemandZen. I notice you living the values in some way. You did something that was evidence to me you were living the values. So through Bonusly, I nominate you for a bonus. I award you a bonus. How does it work? 

Bart Bartlett [00:07:15] You award a bonus. You would say, “I’m giving Bart ten Bonusly points.” We call them Zen bucks, I think. And you know, so you get ten Zen bucks for awesome performance or, you know, essentially solving problems or being flexible. 

Greg Alexander [00:07:32] That’s really cool. 

Bart Bartlett [00:07:33] Yeah. 

Greg Alexander [00:07:35] What I like about that is its bottoms up as opposed to top-down. It’s the employees reinforcing the values themselves as opposed to being told to do so by the leadership team. Interesting. 

Bart Bartlett [00:07:44] Well, yeah, we effectively try and come from both directions. Right. Like, I realize it was really important for us to communicate the values as part of the onboarding. So I knew it was in recruiting and I knew it was in training. But essentially, as you come to the end of your first week in training, you’re talking to the three senior managers of the company about the core values and where they came from. 

Greg Alexander [00:08:04] And when you’re in a job interview and you’re assessing someone’s fit, their cultural fit. You know, they’re going to come into the company and fit in and be able to live our values. It’s a tough thing to do in a job interview, but clearly you’re doing it. So how do you incorporate your values into your screening process? 

How to Incorporate Culture Fit and Company Values into the Interview Process?

Bart Bartlett [00:08:24] Well, I would say we do it to the best of our abilities, right? So we communicate the values early and often. We talk about how they’re expressed in the business. And I would say we also try and sort of challenge people a little bit through the interview process to just see if they’re going to fit. 

Greg Alexander [00:08:45] Yeah, you know, in my old firm, we had a very, very thick culture. And at times it was a strength of the times and other times, it was a weakness. We would attempt to do what you’re doing, which is screen for values and cultural fit during the interview process. 

But sometimes we’d make a mistake and a new employee would join. And then the system just rejected the new employee. Like within the first thirty or forty-five days. It was just obvious to everybody, including the new employee, that it wasn’t a good fit. And we had a lot of infant mortality. 

And I look back on it now and I’m glad because it actually helped us. But at the time it was very painful and it caused a lot of grief because we were growing quickly and we needed capable staff to do the work. Are you experiencing something similar to that? 

Bart Bartlett [00:09:30] Oh yeah, absolutely. I wouldn’t say it happens that often, but there are definitely situations where we have employees and we’re like, you know, they’re a decent employee, they’re a good person, not a cultural fit. And sometimes it’s hard, right? 

Like you just, you know that they can’t stay with the organization. I mean, what we try and do is give them coaching and kind of show them where some of the gaps are and then, you know, see if they can make that adjustment. It’s very difficult, right? 

It’s like to some extent, a lot of these things are driven by personality and just that is their approach to communication and it’s hard for tigers to change their stripes when they don’t necessarily want to. 

Greg Alexander [00:10:13] So even if someone is productive, and a good person and all that…I mean, has no ethical challenges, but if they’re not a cultural fit, then you part ways with them anyways, even though they can do the job. 

Bart Bartlett [00:10:25] Yeah. 

Greg Alexander [00:10:26] Yeah. Interesting. That’s a strong commitment to the culture fit. I applaud you for that. Okay. So as you scaled from your seven people to your seventy plus people and you scaled the culture, sometimes I see a few things at work there. 

Legends, cultural legends. So people that were on the journey and they become role models that others look to. And also artifacts, you know, things that are present, that are almost physical reminders of what the culture is. Now that might not be the case with you, given the fact that you’re remote. But let’s talk about each one of those. Do you have kind of DemandZen legends, you know, people that others look up to? 

Legends and Artifacts: Why They Are Important for Culture Fit

Bart Bartlett [00:11:08] I would say we do. But they’re more among the employee population. Right. Like we’ve got senior callers who’ve been with us for six or seven years. And so a lot of that experience comes from, I would say the senior team members. So we sort of have probably fewer founder-led legends. We probably do have more artifacts than you would otherwise expect. 

Greg Alexander [00:11:34] So tell me a little bit about that. 

Bart Bartlett [00:11:37] So we I mean, we realized that to make core values effective, they need to be sort of obvious and repetitive. So there’s DemandZen core value coffee mugs, there’s the DemandZen core value t-shirt, there’s the DemandZen core values screensaver and. 

Greg Alexander [00:11:56] And you found those things to work. 

Bart Bartlett [00:12:00] Well, you know, it’s like marketing, right? We make the impressions. I don’t know if we can truly measure their effects, but yeah, I’d say most people in the company have a pretty idea what our core values are. 

Greg Alexander [00:12:11] Yeah, for sure. And they’re proud to wear the DemandZen t-shirts and drink out of the DemandZen coffee cups and all that. And it’s in you know, it’s a great example. It’s never one thing, you know, it’s the, it’s the accumulation of many, many things that reinforce a culture. 

Okay, very cool. Let’s extend culture. I guess this would be my last line of questioning if I’m moving down the checklist here. Now, extend the culture fit to clients. Are there, is it obvious that there are certain clients that are going to be good clients because they align with your values and your culture? And is that part of how you select clients? 

Is Company Culture Important When Selecting Clients For a Professional Services Firm?

Bart Bartlett [00:12:46] Well, I would say it’s a part of how we choose which clients we want to retain and renew. 

Greg Alexander [00:12:53] Interesting. Right. 

Bart Bartlett [00:12:54] And it’s a complicated dance. So essentially, you know, we have clients who do not communicate effectively. 

Greg Alexander [00:13:03] Yeah. 

Bart Bartlett [00:13:04] And they may be super vehement about how they communicate and how they approach us. Right. But that might not be a fit for just how we do business. And so with those clients, you know, it’s challenging. 

One of our cultural values is being open and honest. So we try and ask the right questions and present alternatives in working with clients. But if they just won’t bite on any of that, they’re probably not a good fit for us. 

Greg Alexander [00:13:36] And it makes it tough to be successful in that setting. I mean, you guys do things a certain way and not that you’re not flexible, but like a basic requirement is communication. And if the client’s not going to communicate, it makes it really hard for you to do your job. Yeah, that’s interesting. Have you ever fired a client because of that? 

Bart Bartlett [00:13:59] Yes. 

Greg Alexander [00:14:00] Wow. That takes a lot of courage. 

Bart Bartlett [00:14:03] Well, we kind of just have to do it right. Like, if you don’t, if you have clients that are continuously challenging and how they interface with your team, at some point, you got to make a choice. Right. 

And we deal with a lot of early-stage startups, right? Yep. So there’s a lot of founders. There are a lot of senior team members who feel incredibly strongly and passionate about what they do. And, you know, I tell people DemandZen is my startup, right. I’m pretty familiar with that mindset. 

But you have to be able to express it in a way that’s healthy for your partners. And if it’s not, then then we just have a choice to make. Right? Do I want to keep the employees who I think are really good at what they do? Or this client who is being an ass? 

Greg Alexander [00:14:47] Yeah. Yeah. Because the employees that are on that client are having a miserable experience. And if you don’t do something about it, you’re going to lose them. Right? Yeah. 

Yeah. That’s great advice. Well, listen, I think we’re at the time window where we try to keep these things short. But today we talked about cultural fit with Bart Bartlett from the DemandZen. And Bart, you’re a great member. I love having you in the group. You shared lots of wisdom with us today. I appreciate it very much. 

Bart Bartlett [00:15:11] Thank you for having me. Greg Alexander [00:15:11] All right. Okay. For those that are listening to this, if you want to learn more about this subject, culture fit, and others, you can pick up our book, The Boutique: How to Start, Scale, and Sell A Professional Services Firm, which I’m proud to say just became an Amazon bestseller in our niche. And if you’re interested in joining our mastermind community, visit us at Collective54.com. Thanks again, Bart. Take care. Cheers.

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Episode 73 – How a 63-Year-Old Ad Agency Stays Relevant by Launching New Service Offerings – Member Case with Marc Cooper

As professional services firms scale, developing new service offerings is critical to staying relevant with your clients. In this episode, we hear from Marc Cooper, President and Partner at Junction59, to learn how his firm uncovers new client needs and develops new service offerings as part of a business scaling strategy.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. I’m the founder. My name’s Greg Alexander, and I’m also your host today. And on this episode, I’m going to talk to Mark Cooper, and we’re going to talk about designing new services. So, Marc, welcome to the show. 

Marc Cooper [00:00:47] Thanks for having me today. 

Greg Alexander [00:00:49] Would you mind properly introducing yourself to the audience, please? 

Marc Cooper [00:00:53] Absolutely. I’m Marc Cooper, and I’m the president of Junction 59. We’re a Canadian integrated ad agency based out of Toronto. We like to say that we work at the intersection of people and points of view where ideas meet to make a better tomorrow. 

Greg Alexander [00:01:10] Okay, very good. And what types of clients do you serve, Marc? 

Marc Cooper [00:01:15] So we’ve a broad range of clients actually that reflect, I would say, the Canadian landscape. But for the most part, we divide up into three different categories: B2B clients and B2C clients who are interested in reaching their clients throughout the journey. So a lot of direct marketing and journey marketing. And then not-for-profit  clients. 

Greg Alexander [00:01:41] Okay. 

Marc Cooper [00:01:42] All about fundraising. 

Greg Alexander [00:01:43] Very good. Okay. So the topic today is about designing new service lines as a way to scale your firm in the common-sense explanation. It’s pretty basic. And it says if you have one thing to sell and deliver, scaling a business  is going to be hard. So at some point in the journey, you know, firms invest in additional service lines so that they can go back to their happy client base with new things to talk to them about and potentially earn expansion revenue. 

So let me start with kind of a 30,000-foot  question, which is, how many service lines do you have today? And how has that evolved since the founding of the firm many years ago? 

Marc Cooper [00:02:25] Well, it’s an interesting question because in a marketing and communications business, you know, you could bucket all of our services under marketing communications and say we have one service. Yeah, but of course, you know, as the industry has evolved and different platforms have come to life, you know, there are lots of agencies that specialize just in digital, just in traditional print or television or out of home. 

And then across that, you’ve got some that have a strategy and some that don’t. So if you start to look at all of the different service offerings that we have at a much more sort of focused level, I would say we have upwards of 30 to 40 different services that we’re able to offer. 

Greg Alexander [00:03:14] And you’ve been around for how long? 

Marc Cooper [00:03:17] We’ve been in business since 1959, which is where the 59 and Junction  59 comes from. 

Business Scaling Strategy: How to Identify the Need for Additional Services

Greg Alexander [00:03:21] No kidding. My goodness. Well, okay, so 30 to 40 different offerings, I guess, unique services. And I understand bundled together into a solution that you might sell a client. 

So since your firm has been around so long and developed so many services, what advice would you give those listening that might have one or two things that they sell and deliver? How would they go about identifying the need for additional services? And then how would they go about developing those into something that could be sold and executed against? 

Marc Cooper [00:03:56] Sure. Well, we have a number of different ways that we do it. One of them is quarterly business reviews. At the end of every quarter, we sit down, and we look at the work we’ve done for a client over that past quarter. Then we look at the work that their competitors might have in the market, and we look for opportunities, including any trends that are happening in the marketplace with their customers. 

Then we sit down and talk to the client about what we’ve done, you know, all under the guise of how could we get better at what we’re doing for them, but also to point out opportunities where they might do things a little different when going to talk to their customers. And it’s usually at that point that a service offering that we have that we may not have been offering to them comes up in discussion. 

And I think for us, over the years, what would happen is the same service offerings were coming up over and over again with particular clients. You know, we do group our clients into like-minded  sort of buckets across those three buckets we serve. So it’s not surprising to learn that, you know, a high-tech company and a telecommunications company might start to see the need to do a particular type of marketing. 

And when we didn’t offer those services, we would always find a partner we could work with to offer them a service. But as they came up over and over again, we decided it was time to bring those services in-house and offer those services directly to our clients. So it created a whole new service offering. 

Greg Alexander [00:05:33] Interesting. So the quarterly business review, the QBR, so that’s done between your team and the client. And it’s a review. It’s always a best practice to do such a thing, and it naturally comes up during those QBRs  where the client would express new needs. Is it my understanding that correctly? 

Marc Cooper [00:05:52] That’s right, yeah. Or we would suggest new needs based on what we see their competitors or the market doing. 

How to Develop Additional Services Internally When Scaling a Business?

Greg Alexander [00:06:00] Okay, very good. Now, let’s say that you spot a trend, you know, and you’re hearing the same thing enough times where you say, “Jesus, there’s something here.” At first, you service that need by partnering with others, and that makes total sense. But then it’s a substantial enough business that it might be worth investing in that capability in-house. 

Let’s for the purposes of education today, let’s assume we’re at that point. So you’ve made the decision to bring this service in-house, and you’re going to develop it internally. How do you do it? 

Marc Cooper [00:06:33] Well, you know, being an entrepreneur, there’s always that leap of faith. Right. But you go out, and you’re hiring  for the role. And honestly, instead of working with the third-party  service provider that you were bringing in, you work with your internal team. 

Our clients tend to care more about the partners in the agency that are delivering their service than they do about the individuals that are actually working on all the different components. So they gladly accept a new name on a call or in a meeting that’s going to be helping to build out their solution. 

Greg Alexander [00:07:18] Yep. And the focus at that point of the new service line that you’ve developed, is it to bring it to the existing client base and therefore expand the revenue stream from the current clients? Or are you also taking it out to new pursuits? 

Marc Cooper [00:07:35] Yeah, I think it’s like everything we do, right. About 70% of the business is servicing the existing clients. But then you’re always thinking, you know, maybe you hit that break-even  point where it makes sense to bring them in and sell them off to your existing clients. 

But now how do you make that incremental revenue and use  it as a way to go out, reach new clients and new prospects, you know. Ss maybe a new foot in the door to build a bigger relationship with those new clients is always sort of top of mind. Yeah. 

Greg Alexander [00:08:04] What I love about this approach is it’s outward in, you know, you’re listening to the client and then responding. Sometimes, owners of professional service firm boutiques that are trying to scale, they do the opposite. 

You know, they’re educating themselves in their domain, and they get excited about the new hot thing. And they put forward all this effort to hire some people and design methodologies and automate with tech, etc. And then they go, and they take it to their customers, and it doesn’t sell. And they can’t understand why. I’ve made that mistake myself in the past, and it’s painful when it happens. Have you been able to avoid that, or from time to time, does that happen to you as well? 

Marc Cooper [00:08:44] No, I think like everybody we’re human that we think we know better and we try a few things. But I would say the majority of the time, it’s because we’re listening to our clients. We’ve heard them ask for something, and we do it. Yeah, you know, but every once in a while, you try to also be ahead of the curve. And if you’re going to be ahead of the curve, that’s when you have to try 

I think an experiment. Maybe even if you haven’t heard as many clients say they want something. Yeah. But you know, most of the time, it’s listening to your clients and delivering on what they’re looking for. Okay. Biggest payoff. 

Tactics for Developing New Service Lines for Your Professional Services Firm

1. Client Advisory Board

Greg Alexander [00:09:22] You know, there are  a few other tactics that members are using to develop new service lines, to listen to the clients, to see what the need is. We talked about your example of the quarterly business review. Another one that I’m seeing gaining traction is the Client Advisory Board. 

And just to simply explain that you collect a few clients of yours, you meet with them maybe twice a year for a day and a half or so. And in this particular case, a client is saying, you know, here are the challenges that I’m having in my business right now, now and in the future. And they’re giving feedback into kind of what your roadmap may or may not be. What are your thoughts on a client advisory board? 

Marc Cooper [00:10:00] You know, I love the idea, and it’s something that we’ve talked a little bit about but haven’t really pursued as much as we should. But, you know, one of the things that we do like to do is bring clients together for social events. 

And when you see each, you know, your clients actually interacting with each other and talking about what they’ve learned, you know, outside what’s necessary of the agency relationship, you can see that there’s something really powerful happening there where those clients are sharing their own experiences with each other. So to tap into that and get them to focus on how we could get better delivering against their needs, I think it would be well worth exploring even deeper. 

Greg Alexander [00:10:46] Yeah, it’s something that I’ve done in my past and in what I would suggest is it’s a way to formalize it. You know, the informal way of getting clients together and socializing is very beneficial for sure. And I’m glad you’re doing that. This would be the next logical step. You know, you would formalize it. 

What I always liked about it is, you know, it’s one of the only times where the client’s presenting to you. So imagine yourself in a conference room, and you’re sitting there, and the clients walk you through their deck, which is a really, really cool thing. Okay. 

2. Client Satisfaction Reviews

Greg Alexander [00:11:12] Another thing that we hear is client satisfaction reviews, or sometimes people use NPS as an example, and there’s a way to structure those survey tools to collect ideas for new service lines. Do you do any type of client satisfaction reporting? 

Marc Cooper [00:11:31] So we have a scorecard that we make available to clients after every project and now after every significant project. We have a lot of projects as an ad agency where we might be changing an offer in a banner ad, and we don’t necessarily seek big feedback on that. But on the more significant projects we seek feedback, and the feedback is really a lot of it’s about process and creativity, making sure we’re bringing the right ideas to the table. 

So there are a few times, especially when it comes down to were we being proactive for their business, where we bring in the latest and greatest ideas to the table. That’s where some of those new service opportunities pop up when they think they indicate maybe that, you know, we did a seven out of ten on something. 

It  inspires a conversation, but we don’t have a formal spot to actually ask, was there anything else that we could have delivered that we didn’t or anything like that? And I think as I’ve been researching this more, I think that’s an area where I want to spend more time. Yeah. 

Greg Alexander [00:12:39] You know, it’s a pretty easy fix. You know, you add a sentence or two or a question or two to a survey and send it out. And and when I’ve used that before in the past, it was, it was the origination of some really good ideas. And what I love about it, it’s easy to execute. So that’s a good idea for the audience to kick around. 

3. Win-Loss Reviews

Greg Alexander [00:12:56] Okay. Kind of a kissing cousin to that would be win-loss  reviews. And what this is is that for new pursuits, you mentioned 30% of your business comes from new clients. You know, after the sales campaign for those that you’ve won and for those of you lost. You know, some type of feedback mechanism with the prospect that went through the sales campaign to understand why you won and why you lost. And sometimes, that can be a fantastic way to identify new opportunities for service line extension. Have you experimented with that at all? 

Marc Cooper [00:13:24] Yeah, we have. You know, every time we do a pitch, especially in a formal RFP, we ask for a debrief afterwards, win or lose, and we sit down. Sometimes it’s with the procurement manager. Sometimes it’s with one of the review panel. But we’re always looking to figure out why did we win and why did we lose. 

There was one instance where we actually won a very large client. They’ve been with us now for 12 years. Fantastic relationship. And we discovered that we won for a reason we had never anticipated. It was because, during our pitch presentation, we put an emphasis on the great quality we put into the production of the end product. 

And we’re a creative agency, but we still talked a little bit about the production that goes into the end product, and that was what differentiated us from the others in that particular pitch. So since then, we’ve been actually able to monetize the fact that we have better standards or put a bigger emphasis on the production there. And so it actually helped us make that a bit more of a service offering than just a table stake  that we thought it was. 

Greg Alexander [00:14:41] That’s a great story. I appreciate you sharing that. That’s a real pragmatic implementation of that technique, and it’s working really well for you. So now inspire many others to do the same. Okay. 

4. Conferences

Greg Alexander [00:14:51] And the last idea I want to get your opinion on is, I guess before the pandemic, we would all go to some conferences. There’s lots of industry conferences, and I always found those very interesting to go to stimulate creativity or new things. 

We could bring up everything from just the agenda to see what the topics are, because normally whoever’s putting on the conference surveyed the audience to see what should be discussed. I also liked walking the trade show floor to see what all the other vendors are doing. Did you use conferences as a way to stimulate ideas for new services? 

Marc Cooper [00:15:25] Yeah, we still do to a certain extent in the virtual conferences. You know what we like to do. I mean, we attend all the marketing and advertising conferences that we should that are, you know, in the marketing and advertising field. But we also like to attend conferences that are in our clients’ industry. 

Yeah, a lot of them have an industry association that  put on an annual conference. So not only do we attend, but where we can, we try to present, we try to get a speaking role, whether it’s on the main stage or in a side room. And it gives us an opportunity to explain to our clients that not only do we care about their business, we care about their industry. And we want to learn as much as we can so that we can be a true extension of their team. And while we’re doing that, of course, we open ourselves up to a whole new audience because we come across as experts within that particular niche. 

Greg Alexander [00:16:23] It’s a great idea. I mean, it’s such a subtle thing, but if you’re going like in your case as a marketing agency, if you go into just the shows for agencies, it’s a little bit of, you know, everybody talking about the same thing, right? It’s a little of an echo chamber. 

But if you go to the conferences of your clients, it’s now a step beyond that, and you’re hearing how other people in that industry might need your services. And that can be a great source of inspiration for new service lines. Awesome. 

Marc Cooper [00:16:54] Absolutely. We also have in the past acted as judges for those industry associations when they have their own marketing awards. And so that opens us up to other, you know, our clients and their competitors even at those associations ceremonies. 

Greg Alexander [00:17:13] That’s a great idea for sure. Plus, it has lots of credibility. If you’re judging American Idol, you know, you’ve become a celebrity, right? Alight, Marc. Well, listen fantastic input today. Thank you very much for that. If the audience members would like to get a hold of you to continue the conversation, what’s the best, best way to reach you. 

Marc Cooper [00:17:33] If they can head over to Junction59.com,and there’s a lot of information there about us and including all my contact information. 

Greg Alexander [00:17:42] Okay, fantastic. And for those listening, if you want to learn more about this subject, how to develop new service lines, how to develop a business scaling strategy, and many others, you can pick up a copy of our book called “The Boutique: How to Start, Scale, and Sell A Professional Services Firm,” which I’m proud to say just became an Amazon number one bestseller in our little niche. 

And then also, if you’re interested in meeting great people like Marc, you might consider joining our mastermind community. And you can find us at Collective54.com. But Marc, thanks again. It was great to say hello to you and to listen to how you’re implementing this particular business scaling technique. 

Marc Cooper [00:18:18] Great. Thanks for having me on today, Greg. Really appreciate it. 

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Episode 72 – How an E-commerce Consulting Firm Developed Multi-Year Client Relationships – Member Case with Bart Mroz

Firms that focus on delivering a great client experience along with their high-quality work reach scale. In this podcast episode, we interview Bart Mroz, CEO at SUMO Heavy Industries, to discuss the client experience and trust-building to develop long-term client relationships. If you wish to grow your consulting business, you must understand how to navigate client relationships.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54. A podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. I’m the founder, Greg Alexander, and I’ll also be your host today. And on this episode, we’re going to talk about client experience, and our guest today is member Bart Mroz. Bart, good to see you. 

Bart Mroz [00:00:45] Hello there. How are you? 

Greg Alexander [00:00:46] Pretty good. Would you mind properly introducing yourself to the audience? 

Bart Mroz [00:00:51] Sure. I am the CEO of SUMO Heavy Industries. We are an e-commerce consulting firm. We’ve been around for almost 12 years and started as a web development shop. Grew into a lot more consulting work then than just, you know, development. 

Greg Alexander [00:01:09] I’m looking at these sumo wrestlers behind your shoulder, and I can see the name of your company. So I have to ask, where did that originate from? 

Bart Mroz [00:01:19] I wish therewas a crazier story, but it’s actually our Director of Marketing and myself have known each other for almost 20 years now, and the SU is actually him in it. And the MO is me. And then we didn’t want to have a company name that’s like web development or anything like that and everything in Japan is heavy and industries. 

And ironically, our little tagline sometimes says surprisingly agile, which sumo wrestlers are. So we build a work on big things, but we’re also a really small team, and we’re surprisingly agile. Very cool. So it kind of fit. 

Greg Alexander [00:01:54] Yeah, it does fit . Yeah. Excellent. All right. So today, we’re going to talk about client experience, and I’m going to set this up a little bit. So it’s my opinion that when boutiques are trying to scale, they need to get more sophisticated in the client experience and understand the difference between quality and service. 

And most of our members are true domain experts as you are Bart , and they focus entirely sometimes on the quality, meaning I delivered what I said I was going to do. But the experience of the client goes through along the way is equally important because usually, clients are doing this for maybe for the first time, and they’re engaging with you and building a relationship. 

And there are all kinds of emotional feelings that are happening as we go through the engagement. And clients can become long-term  clients if they literally feel good about the relationship, and that feel good is in addition to the results that you produce. 

Sometimes professional service firms don’t scale because they just produce great results, and they wonder why they don’t have longstanding client relationships. They’ll hear things like, “Greg, I’m doing a great job, and I got fired.” Or, “Hey, I’m clearly the best service provider, but I didn’t get hired.” And that’s because sometimes clients can’t tell. They can’t recognize your brilliance. And what separates the fast-growing firms from the average firm is  this dimension of client experience. 

So, I guess, let me start with my first question Bart,  and  that is just maybe a broad overview of what your thoughts are regarding client experience. And you know, have you documented it or how do you think about that with your firm? 

How to Grow Your Consulting Business: Pay Attention to the Client Experience

Bart Mroz [00:03:39] It’s a huge part of our firm. So in our almost 12 years, we switched to a full retainer kind of company. So it’s a long-term sort of process. I think our longest client has been with us for 11 years now. So our shortest is two months, but we just signed a few new clients. 

So there’s that average like five years right now, which is yeah. So it’s a long term. We are there all the time. We happened to be in an industry that’s e-commerce that’s longer. But it’s all about…For us, sure, we produce awesome work and work with clients, but it’s helping them understand it. 

So I know this is like a long round about thing, but it sets up the whole course of this. It is like half our clients are about 25 million dollars and under online sales, and half of them are one hundred and over. Two different versions and two different things you have to do with them, right? 

The smaller client needs the hand-holding and being them with them at all times. And it could be anything right, they are  like we’re trying to get a new vendor, and we have nothing to do with it. We’re not going to make money off of that, but we’re helping a client get through that process. And it makes it simple for us too. Um, because then we know what the vendor is. 

We can help them with that on the largest client. It’s having those relationships where they’re just longer for us. And the way I can kind of describe that, if it is ever a technical sort of engagement you always have the internal technical team come to the table, right? Oh my God, they’re bringing you consultants and what’s going to happen. And it eventually becomes where they tell most of the senior staff to leave and let the developers talk because it’s the idea of like making relationships that way. 

So for us, to grow your consulting business, it’s about the relationship. It’s about being friendly and just kind of hand-holding a lot of times at the beginning of the relationship, and eventually, it becomes a long-term type thing for us. 

Navigating Client Relationships: How to Work With a Client and Their Team

Greg Alexander [00:05:39] You know, that example you just gave us about the internal team coming to the table, and they’re like, “Oh gosh, how come the consultants are here?” You know, it’s a great story for us to maybe pick on a little bit because I think sometimes we forget that external consultants, whatever type you are, it’s a threat to the internal team. 

The internal team might think, “Hey, this is my job, I know what I’m doing. What do we need these guys for?” So when you’ve dealt with that, and clearly you have multiyear relationships with your clients, how do you overcome that particular concept of they’re threatened by you? 

Bart Mroz [00:06:16] We don’t sit in that meeting, but for us, it’s always been understanding that our job is to walk in the client and make them better than we left them. But that means most of those answers are going to be with the people that been there forever. So, in reality, as a consultant, our job is to take those people’s  sort of answers and present them to the management and go, “Hey, this is what’s had to happen.” 

By the way, we’ll work with your team because they know better how to implement them. So that’s kind of like a weird way of looking at it, but it gets us on the same page with the people actually doing the work. 

Greg Alexander [00:06:52] Yeah. So we’re talking about client experience and how emotionally charged client relationships can be. We just discussed one of the emotions, which is threatened. Another one that I run into all the time is clients can be worried. And what I mean that is they can be worried that you’re going to make them look bad in the process. 

So in that example that you just gave us, you’re working with the team, and you uncover an answer to a problem. You present it up to management. Does the team ever feel like you’re going to make them look bad? And how do you get around that? 

Bart Mroz [00:07:20] I think it’s more of they might. But we don’t feel that just because we tried to make that relationship with that team very solid and the knowledge between the two. I don’t. It’s a weird way of looking at it, but the teams kind of jive really well within the first few weeks. We go through a we call it… We have what we call our discovery process, a weight-in, and it’s a longer process, but it’s that whole relationship building at the same time while we’re actually learning the client’s business. 

It’s a part of that and I think just being in the trenches of with people and going, we can help you. That’s where it doesn’t. It’s the trust factor. Eventually, I think that from many years of doing this, we have this weird knack of being very friendly and making sure those guys are together because we know where some of that work comes from. 

Greg Alexander [00:08:22] Yeah. So this process you just mentioned the weight-in which obviously works very nicely with the name of your firm. Is this like a formal process to try to overcome some of these trust issues? 

Bart Mroz [00:08:35] Yes, it is what we start our relationships with every time or our projects. It’s a two-month  process. It’s very structured, with a lot of phone calls and a lot of Zoom calls, and it’s spread out between, it depends on the client. We work in e-commerce. The ferocity they’re looking at includes, what the client needs, what the business looks like, what the tools are, and code reviews. Those kinds  of things are very important. It’s very structured on purpose. It’s also very long. It’s not your typical discovery. 

Greg Alexander [00:09:03] Yeah, I love it. I think it’s a great idea. And what I like about it is that it’s built for scale, meaning every client goes through the way. And so all of your employees, after a while, are going to get really good at conducting the weigh-in, and you’re hardwiring the client experience right into the delivery of the work. 

And that’s probably one of the reasons why your client relationships are so long and tenure. Okay, let’s talk about another emotion, which is ignorance. You know, you’re clearly an expert, and you go into your clients, and they might not know as much as you know about this particular thing. And you know, they might feel stupid at times. So during the weigh-in  process, how do you help them open up and not feel dumb? 

Bart Mroz [00:09:43] It’s asking those questions and making sure my sort of employees, my staff, all the management understand it’s not. It’s asking questions, right? And no question is wrong. It’s about their business. So, in reality, the way we walk in is like, “Sure. We know how to solve a problem.” But, the client knows their business, right? 

They might not know what kind of tools they need to solve that problem. But our job is to kind of get that from them. So I feel like that’s the weird reverse. Like, that’s where it kind of reversed that is that we’re just curious basically about the business itself. And then we work through, “All right. Hey, listen, you know, you have an old system, you’ve been in the business for a while. Let’s help you go through that.” And that’s asking questions. 

How to Earn Client Trust When Growing Your Consulting Business

Greg Alexander [00:10:28] Yeah, OK. All right. Then one more emotion that I’d like to share with you and see if the weigh-in process, which is your client experience journey, addresses this, and that is this issue of suspicion. You know, sometimes relationships get destroyed because people are suspicious, like, who are these guys? And can I trust them? You know, it takes time to earn trust. And even though the weigh-in process is long, by most standards, it’s still short. It’s only a couple of months. So how do you earn trust that quickly? 

Bart Mroz [00:11:01] So a lot of the clients we have now are coming from people who left and went to other places. And some of them, I think, would just find a client that the guy that the person that brought us in, he’s on his fourth. So you just bring us in. But this is just over the years working through sort of the process of learning people, understanding them. And then, in reality, it’s having a good reference network. 

I mean, that’s you know, and I know that’s may be a cop-out , but it isn’t. If it’s a brand new, we’ve never seen a person before, that is just making sure that we are  making them comfortable, making sure they are comfortable. And we had sort of one. I think we’ve had weigh-ins  where we do for just two months, and we get to a point where it’s like, “Guys, this product is not going to go anywhere. Or, you can take it. It’s too small for us to actually execute. You can take this whole plan with you and go ahead. And people had come back to us or went somewhere else. So that’s our trust, but that’s the trust we built. 

Greg Alexander [00:12:06] Yeah, that’s fantastic. All right. Well, I love it. I mean, this is a best practice here. So for those listening to this, challenge yourself to do what Bart does, which is document your client experience, not just the quality of your work. Think about the emotional context of your client and how you build trust quickly. 

Maybe come up with your version of the weigh-in , and it will go a long way as you try to scale a business. And Bart’s an example because his client relationships are measured in years, not weeks and months, which most of us are. 

Well, Bart, thanks again, man. I appreciate you being here and dropping mad wisdom on us. And for those that want to learn more about this subject or others like it, you can find our book called “The Boutique: How to Start, Scale, and Sell A Professional Services Firm” on Amazon. I’m proud to say I just became a bestseller in our niche, and if those of you who are interested in meeting bright, capable people like Bart, consider joining our mastermind  community, and you can find us at Collective54.com. Bart, thanks again. I appreciate it. 

Bart Mroz [00:13:09] Thank you so much. This was great. Greg Alexander [00:13:10] OK, take care.

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Episode 71 – How a Learning and Development Firm Retains Key Employees – Member Case with Renee Safrata

renee safrata

There is a direct correlation between employee loyalty and the valuation of a professional services firm. In this episode, we interview Renée Safrata, CEO & Founder of Vivo Team, to discuss employee loyalty and the invisible balance sheet.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. I’m Greg Alexander, founder, and today I’ll be your host. And on this episode, I’m going to talk to Renee Safrata, and we’re going to talk about employee loyalty. So, Renee, it’s nice to see you today. Welcome. 

Renee Safrata [00:00:43] Thanks, Greg. Nice to see you as well. 

Greg Alexander [00:00:45] Renee, you’re one of the more interesting members that I’ve come into contact with. I understand we’re speaking to you, and you’re in Barbados. Is that correct? 

Renee Safrata [00:00:53] That’s correct. I am in Barbados. I am doing a digital nomad trial, and I don’t know if I’ll go back to Canada, but I probably won’t go back home. But I will go back to Canada at some point. 

Greg Alexander [00:01:03] Wow. So are you one of the folks that when COVID hit you decided to make changes? Is that how it came about? 

Renee Safrata [00:01:11] No. You know, it’s actually a bit different. We’ve been doing digital for ten years. Everything digital. My husband and I were always thinking of a digital nomad lifestyle. We were probably planning on doing this just before COVID hit, which, by the way, isn’t it odd? It’s almost like two years exactly this week, right when we all got thrown into lockdown? 

It’s crazy, but we got thrown into lockdown, and so we thought, OK, let’s take that. We’re here; we’re at home. Let’s take the opportunity to clear out our home. So we cleared it out down to two laptop bags and two carry-on bags. And we left Canada, and we don’t want to go home. We’re very happy here. 

It’s fantastic. And you know what? I thought, Greg, I thought we’d meet a lot of retired people, but we’re just meeting people doing the same thing. And so it’s really exciting. 

Greg Alexander [00:02:02] It is exciting. It’s a new world we’re living in. Good for you. Taking advantage of this new world and doing exciting things. OK, so let’s jump into this concept of employee loyalty. And I’d like to start by maybe having you explain to the audience a little bit about your firm and what you do. 

Member Case Study: Who are the Vivo Team?

Renee Safrata [00:02:19] Yeah, sure. So first of all, we create just winning companies and we do that by inspiring leaders. So our mission is to help increase competence, motivation, and collaboration in the pursuit of outstanding results. That’s what we do at Vivo Team. 

We have been doing it digitally for ten years because twelve years ago, we took two years to research the workplace of 2020, and we didn’t expect a pandemic. But we did understand that teams would be coming in from distributed teams from all over across multiple time zones and that leaders wouldn’t be necessarily in contact every day, all day with their teams. 

So we recognized that the learning and development space was not going to participate in that because gone would be the days of going into a classroom, face to face learning, and development. So what we do in Vivo Team is we use behavioral science to understand and diagnose how leaders are connected to their teams against the six key indicators of highly functioning teams. What’s the gap between the leaders and the teams? 

And as well, what we do is what we call space learning. So it’s in the flow of the day. It’s an on trend learning style one hour per week so that you learn something, you take it away, and you apply it. You come back, you learn something more, you take it away, and apply it. 

So what we’re doing is we’re actually selling learning development paths for leaders and teams. And what we’re doing is we’re providing to the C-suite a measure of evidence-based performance, which is really exciting as well. 

Greg Alexander [00:03:54] Okay, fantastic. Appreciate the introduction. Okay. So when I talk about employee loyalty, I think about it through the lens of an investor, which is my day job at Capital 54. And if I’m doing diligence on a pro serv firm, I’m always asking about employee turnover. 

The reason why that is is because when you buy a professional services firm, the assets are the people. And if they’re turning over, then there’s not a lot of assets. And unfortunately, at the time of this call with you today, we’re dealing with the Great Resignation and turnover has spiked, which is devastating when that happens. 

So the work that you do with clients, does any of it address this specific issue of employee turnover? 

How to Address Employee Loyalty and Turnover as a Professional Services Firm?

Renee Safrata [00:04:37] Absolutely, absolutely. And I’m going to be perhaps a bit provocative and say that maybe we need to shift the word of employee loyalty into really looking at what does the employee want? Because you’re right, the pandemic has created this paradigm shift where that invisible balance sheet, the assets of the people, they have more choice now. 

And just like you said in the introduction, I’m working from Barbados. I have more choice. So does employee loyalty actually exist? Or should we actually be focusing as investors, as you’re saying, on the intellectual capital of the knowledge workers and how tight our invisible balance sheet is? 

I think a lot of employers recognized that they were using only the traditional balance sheet and that their invisible balance sheet was extremely weak going into covid and it started to fragment and employees now have way more choice. So they are going to be the ones who are determining what’s going on. So unless you figure out what they want, it’s going to be tough. I’ll stop there. 

Greg Alexander [00:05:45] I love the idea of the invisible balance sheet. I’m going to blatantly steal that and I’ll give you attribution, I promise. But that’s a great way to think about it. If I think about your firm in particular and the digital nomad lifestyle that you’re living in, I’m assuming that your employees are living something similar to that. How do you retain your key staff? 

Employee Loyalty: How Does the Vivo Team Retain Key Employees?

Renee Safrata [00:06:09] Yeah, it’s a great question. And you know what, again, it hasn’t just happened in the last couple of years. Again, we’re Canadian, so our employees have been right from the East Coast to the West Coast in British Columbia, Ontario, and Nova Scotia, Halifax for ten years. 

We have attracted great employees because of our values, our vision, and their desire to be better,to contribute, and to bring innovation to the table. So good people can work anywhere. They also want to be held to account. So if they have good leaders and managers that are connected with them tightly around their accountabilities, now we’ve started to get a great equation. 

And by the way, Greg, you’re not stealing anything from me because the invisible balance sheet started in 1988 in Sweden, so it’s not my thing. We just talk about it a lot. Yeah. 

Greg Alexander [00:07:07] You know, you just talked about your mission, the vision, the values. That’s something that I advocate for. And I think those three things in particular: mission, vision, and values — that’s what makes up the employee value proposition. 

My belief is that each boutique needs two value propositions: a value proposition for clients (why they should buy from you, and why they should hire you), and a value proposition for your employees. You know why they should work for you. Because you’re right, they can work anywhere. They’re making a choice to work for you. 

So let’s start with the first one mission. So what is the mission of your firm? 

What is Vivo Team’s Mission?

Renee Safrata [00:07:45] Yeah, the mission of our firm is really to develop competence, motivation, and collaboration in the pursuit of outstanding results. So I always think of the mission. You’re right be for what’s external to my customers. But I also want my employees to be able to achieve that as well in their day-to-day and in their career achievement with us. 

Greg Alexander [00:08:07] So you were able to answer that question very succinctly and immediately, which tells me it’s real. And you’ve given some thought to this. So how did you develop that mission statement? 

What is Vivo Team’s Mission Statement?

Renee Safrata [00:08:18] With our team. So our team has participated in all of the core values, the vision, and the mission. And what I say to our team on a regular basis is the Vivo team is the vehicle for your career. Get on the bus. Be with us as long as you feel like you’re contributing, and you can be held to account, and you can get great career achievement. But get off it and go somewhere else when you’re ready for that. 

So again, to the beginning of this conversation, I think that kind of disrupts employee loyalty. But if we can think about that invisible balance sheet as people bring their innovation and their contributions to work and wanting to be here, what we as leaders and companies really need to understand is the platinum rule. 

What do they want? Like, what are they looking for in their career? And if we can connect to that and by the way, the leaders and the managers are really the front lines for that, aren’t they? They’re the people that are connecting with their people every day, and they have to understand those nuances of what is important. The soft skills, essentially, because hopefully they’ve got hard skills. What are the soft skills of how that intellectual capital is going to keep growing? 

Greg Alexander [00:09:37] So what we’re learning from Renee is that the mission is real. It’s not some academic exercise that nobody pays attention to. It’s created with the employees. It’s lived every day so that employees jump out of bed every morning and they can’t wait to go to work. 

And when you have a mission like that, a compelling reason to work at a firm, then you’re going to have, you know, very strong employee engagement. And I would say lots of employee loyalty, although it sounds like maybe that’s a little outdated concept, but it will keep retention where it needs to be, which is obviously very important. 

OK, let’s move to the vision side of things, and I think your vision is a picture of the future, something inspiring that says, you know, this is the goal that we’re shooting for. You know, if we’re successful, this is what it’s going to look like for everybody. So have you codified your vision as well as you have your mission now? 

What is Vivo Team’s Vision For the Future?

Renee Safrata [00:10:26] Very simply, we want to create winning companies and inspiring leaders. And if we can do that around the globe, we’re happy. 

Greg Alexander [00:10:33] OK. Sometimes when I hear vision statements and I love that and that is inspiring, there is numbers associated with it. You know, we want this much revenue of this many employees or this many clients, et cetera. And it sounds like you chose not to include that. Was that a deliberate choice? 

Renee Safrata [00:10:50] Yeah. I think of those sitting in our strategies and in our objectives for the years. Making smart, strong strategic decisions and smart tactical decisions. Smart meaning, Specific, Measurable, yadda yadda yadda. 

When I think of vision and mission, I think and I try to get all of our people to think of it like this as well. Your vision when you go to sleep at night is something you want to dream about. Your mission when you’re in the shower in the morning, that’s something that you want to think about doing every day. 

Greg Alexander [00:11:21] Yeah, that’s a good way to think about it. Ok, kind of the third pillar here is the values. And you mentioned that earlier that you’ve thought about this and the way that I think about values for what it’s worth is, how am I going to behave? What are your firm’s values and how were they developed? 

What Are Vivo Team’s Company Values?

Renee Safrata [00:11:42] Yeah. So I’ll start with how they were developed. They were developed online with all of our team together in a brainstorming session. We use storyboard. We thought about what are the behaviors that we demonstrate on a regular basis and what is of high value to us. 

We prioritize those. We had discussions around them, came up with a series of words that represented those core values. And then we essentially curated it down to three: we’re creators, we’re leaders, and we’re champions. 

And again, Greg, I’m going to say that what’s important for me about that as leader of the company is I want to make sure that everybody — going back to employee loyalty, employee engagement, and the intellectual capital of our organization — everybody can embrace that, that I too want to be a creator. I want to be a leader. I want to be a champion. And if they can have that excitment. Again, we’ve got something to build on. The vehicle gets more exciting. 

Greg Alexander [00:12:48] You know, members at Collective 54 are professional services firms and boutiques that are growing. Some of them have hit the scale stage and some have grown so much and scaled so much that they’re at the exit stage. And I often ask them this question, which I just asked you which you answered with the three values. “What are they?” And then I say, “how are they used?” 

And I hear sometimes that they’re used to make hiring decisions. They’re used in employee evaluations. They’re used to determine promotions when they’re available. And unfortunately, sometimes when people aren’t living the values, they’re used as a reason to separate from an employee. 

Do you believe in that concept of using values in that way? Or do you have a different perspective on things? 

Renee Safrata [00:13:30] Absolutely. Absolutely. And what I would say, in addition to that, is that I’m sure a lot of the companies that we’re talking to are utilizing Slack. That Vivo, what we do weekly is we speak to what are the behaviors that I or others demonstrated in alignment with those values. 

So we have a Slack channel that comes every week and at the end of the week, if you haven’t done it by Friday, it comes up and it says, “Hey, where have you seen creators, leaders and champions this week?” 

And so we’re activating that peer-to-peer feedback, which is as well important. I think you mentioned in your chapter about annual performance reviews. Well, that’s too long these days. It is too long. We got to have this as a regular feedback and feed forward have to be a regular thing across our organization. 

Greg Alexander [00:14:25] So that’s a brilliant strategy. You’re reinforcing the values every week through a modern communication channel like Slack and its peer-to-peer, which means it’s believable. You know, it’s not artificial, it’s bottoms-up. Organic, authentic. That’s a brilliant idea. I love that very much. 

Renee Safrata [00:14:42] And it’s behavioral-based, right? We ask this question all the time, “how can I make sure on a regular basis that I am behaving in behaviors that demonstrate what we have articulated as our values?” 

This, by the way, Greg is really, really easy then when we give this idea to leaders and managers and they look at behaviors, they can give people feedback on the behaviors that they notice that are not in alignment with getting great project results or finishing great, you know, great tactics and great strategies in the company. 

Greg Alexander [00:15:20] If members are listening to this, if they want some help and they want to talk to you about it, how do they find you? 

Renee Safrata [00:15:27] Easy. Renee with two e’s. R-E-N-E-E at vivoteam.com or on WhatsApp. 

Greg Alexander [00:15:36] OK, fantastic. Well, Renee, on behalf of the membership, thank you so much for being here today. It was wonderful. You really do an exceptional job in this particular area. And we’re lucky to have you in the membership. So thank you very much. 

Renee Safrata [00:15:48] Greg, can I say one thing about what I really appreciate about this whole membership? 

Greg Alexander [00:15:53] Sure. 

Renee Safrata [00:15:54] I appreciate from the beginning of reading your book to every day you show up online. You have a positive spin that all of us can do this. That’s exciting. Thank you. 

Greg Alexander [00:16:09] Well, thank you for saying that. That’s inspirational because I do believe we can all do this. And that’s another way to make me happier than to see our members reach their goals by, you know, employing some of these concepts. So thanks for saying that. 

Renee Safrata [00:16:21] Thanks, Greg. Greg Alexander [00:16:22] OK. So for those that want to learn more about this topic and others, you can find our book, The Boutique: How to Start, Scale, and Sell a Professional Services Firm on Amazon. If you’re interested in joining the community, you can go to Collective54.com. And with that, we’ll wrap it up and we’ll see you on the next episode. Thanks, everybody.

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Episode 70 – How a Consulting Firm Invested Successfully in Business Development Management

Member case with Ken Yager

As a firm scales, it must make a significant change to its sales strategy. On this episode, we interview Ken Yager of Newpoint Advisors to understand how he invested in business development management, coaching, and training to scale his firm.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54 for a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. 

My name’s Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk about business development during the scale stage, and we’re going to do so with one of our members, Ken Yager. Ken, welcome to the show. And would you please introduce yourself? 

Ken Yager [00:00:50] Thanks, Greg. Glad to be here. I’m Ken Yager. I’m the founder of New Point. We are a nine-year-old turnaround consulting firm exclusively focused on small, distressed companies trying to address a problem in our industry, which was that it was unaddressed – that problems with small companies were unaddressable by the industry structure that we were in. 

Greg Alexander [00:01:11] Interesting. So so who hires you? Is it the banks that are doing the work out or how? How does it work? 

Ken Yager [00:01:18] You’reu right to the point? I like that, yes, our industry is a two step sort of thing. We have to have it. We tend to work off referrals. Lenders will send us to companies and companies will hire us, and then we have to find a balance where we’re representing all parties. Okay. 

Greg Alexander [00:01:34] So can I have to tell you the only member that I’ve met so far that I hope I never do business with? Because I’d only do business wtih youyou if I were in trouble? 

Ken Yager [00:01:42] Yeah, exactly. You don’t want to see me darken your door. But and I never wish our services on anyone, but we’re there when you need us. 

Balancing new and existing clients

Greg Alexander [00:01:49] Yeah, that’s a good point. OK. So we were talking about business development, which is a very particular thing. Those two words during the scale stage. And I’ll set this up briefly and then I’ll ask Ken some questions. So when you’re a young firm – not like Ken, nine years into his journey- you don’t have any clients. So all of your business development efforts are spent on acquiring new accounts because you have to, as you establish yourself. When you enter the scale stage, which is typically somewhere between years six and tenor so life gets easier and it gets easier because you have happy clients. 

You’ve done work with them, they’re referring their friends, you’re getting some word of mouth. So the sales effort gets easier. It’s never as easy as you want it to be, but it’s easier than in the early days. However, it does require a change in the way that you sell because again, you have these clients that you can go back to and you can get expansion sales from them as opposed to going to new clients. 

Now, I’m not saying that you don’t need new clients. Of course, every boutique owner needs new clients, but the mix changes. Personally, I believe the mix should be about 80/20 at this stage, 80 percent from existing accounts and 20 percent from new accounts. Particularly if you can hold on to your clients for a while. Sometimes it doesn’t always work out that way. Maybe it’s 60/40, you know, existing to new. But the point here is it should be. The majority should be revenue from existing accounts as opposed to new accounts as you’re starting to scale. And that’s a good barometer. So let me start there with you., Ken. If you were to maybe speak in percentages in terms of mix, what’s your pie chart look like right now between revenue from existing accounts versus new accounts 

Ken Yager [00:03:38] It’sgoing to be 80 percent existing accounts. And of course, the twist here for us is that we are talking about referral sources, people who are sending us these potential new clients to work with. But yes, it’s really consistent. 

Greg Alexander [00:03:53] So in that scenario, a lender is your client and they – they’ll have a portfolio of loans. They hire you to help them with one situation that goes well. Next time they have that situation, you’re the first call. And I understanding that correctly, 

Ken Yager [00:04:07] That’s pretty close to it. Yes, it’s sometimes you have to live with a list of three, but if you’re sort of a favored son and you get an extra nudge into – into the crowd. All right. 

Investing in relationships

Greg Alexander [00:04:17] So when you think about your efforts as a leader of the organization and you’re going to direct your time, your people, your budget towards generating business, given the fact that it’s an 80/20 split for you. How do you invest in those existing relationships in order to grow them? 

Ken Yager [00:04:36] Well, it’s sort of a time management. It’s well, we like to teach everyone. Yes, definitely a time management skill, which is to be consistent and constant and not coming and going. Typical consultant things are to get real busy. Forget the client for a while. The referral sources then wake up one morning in a wee bit of a a panic and go back. Yeah, so we work very hard and making sure everyone knows this is a weekly exercise and this is how you intentionally fit it into your schedule with all your client duties. 

Greg Alexander [00:05:03] So it’s a weekly exercise. 

Ken Yager [00:05:05] Yeah, you know, it’s there are certain people you will touch for a whole quarter, but every week there’s someone you can be reaching out to on a list of people that you should be talking to. 

Greg Alexander [00:05:14] And you as a leader of the firm, how do you inspect or make sure that that’s happening because I love the frequency of that. And that’s probably a reason why you guys are doing so well, but that’s a lot. How do you make sure it’s happening? 

Ken Yager [00:05:27] We work also. Well, first off, we have a CRM system. We work off Zoho. We have a – we have retained a part time sales manager that helps coach everyone to make sure that they’re on that system. And then we constantly train people on how to use the system so they get past the awkwardness. We have a lot of professional service people who for years didn’t use a CRM, and now they’re using one. It’s a bit of a trick, to get used to it. 

Greg Alexander [00:05:53] Yeah, that is a new behavior for them to learn. I want to explore this part time sales manager. That’s an innovative approach. So what led you to that? 

Ken Yager [00:06:03] Well, we couldn’t afford a full time person for sure, not of the caliber we wanted. So part time is a way to sort of sip at it, if you will, and take that take as much as we can, but bring the professionalism at the same moment to people. So they kind of went -one of our teammates is struggling with the sales issue. They’re going to someone who they can really trust and feel like they’re a senior person. Yeah, and we treat that person as a senior person. Everyone kind of gets the sense that they’re a person to go to. 

Greg Alexander [00:06:28] Yeah, that’s really interesting. I hadn’t heard that example in this use case, and I like it quite a bit. So the thinking was was pretty basic. You couldn’t afford a full time person, but you wanted to – you wanted somebody to play that role because it was that important to you. Now I’m assuming that those dollars that you’re investing in, that part time sales manager are, I mean, there’s no billable hours to place against that. So that’s a true investment. Is that correct? 

Ken Yager [00:06:57] That’s exactly right. So it needs to pay for itself. And so those people that we’ve given sales duties to need to find deals and convert. Yeah. 

Investment courage

Greg Alexander [00:07:06] And. I’m curious as to how you had the courage to do that, sometimes when faced with the decision I can, I can pull money out of the business and stick it in the front pocket of my jeans, or I can invest it in a part time sales manager. It requires courage to make the investments so, so think back to when you didn’t have the part time sales manager and you made the decision to do it. What? What was your decision making process and how did you finally say, screw it, I’m going to make this happen? 

Ken Yager [00:07:36] This is a classic. I was feeling pain. I was at a pain point, and it was that the sales were, you know, as much as I knew, we had to build a sales force. I knew I couldn’t put all the pennies and dollars into it. I was watching it literally slip through my fingers, trying to manage it myself. And so I said, nNo, no, this task has to be broken off to someone else or I’m never going to get there. And so that’s – that pain started and it kept growing and I finally listened to it one day. 

Greg Alexander [00:08:05] That’s excellent. OK. Part of that pain, of course, is in most process firms. They don’t have a dedicated sales team at this stage. They’ll have kind of producer types who also happen to sell. And that time management, which is an item that you brought up that I want to dive into now a little bit in more depth, which is OK, o I have X amount of hours. I’m trying to get to a utility utilization target. Let’s just for today, say at 75 percent that I need to build myself out at – that remaining 25 percent, that non billable time. Some portion of that needs to be invested back into these relationships. Was it that formulaic for you? And are you measuring time that precisely or is it more guidelines, gut instinct? 

Ken Yager [00:08:54] The precise side of it was a bit of gut, which is to say, I’m going to trust you to know how to apply your time. But we sell people like we would like you to be will be able to build 30 hours a week. We want you to dedicate 10 hours a week to our call admin and team meetings and stuff. We can’t build a clients for training and things like that. 

And when you’re at full capacity, I want to see you at 10 hours of marketing a week, orup to, trying to do research or trying to talk to people. And if you just give him that, that sense of the precision of like, Oh, I can now look at my calendar and say, Oh, 10 hours, where do I put the 10 hours in? Or Coach teaches them how to put that on their calendar. So it’s actually there when they show up to that time slot in their – in their week. And then we also kind of build a model that shows them if you put – if you make so many touches, it converts eventually to so many leads to so many deals when you got to go back to those hours you had available. And so they kind of can do the math off of that, it helps. Yeah. 

Allocating for relationships

Greg Alexander [00:09:54] Listen, I absolutely love what you’re doing. Sometimes we forget that non billable hours is a budget.. When I talk to members, sometimes they say, Well, I don’t have any market – I don’t have a marketing budget. I suggest you do. You’re already spending money on it right now and you just don’t know it. 

So a portion of people’s non billable time is going towards developing these relationships. Do you know what that portion is? And can you track the fact that it’s consistently happening and is equality? So in your scenario, you’ve compartment – compartmentalized everybody’s time, you’re directing the hours in quantity and quality, and you’re providing them a coach to make it happen. That’s absolutely fantastic. It’s a lot for us to learn today on that example alone. 

Sometimes this is a tough question to answer, but I’ll ask it anyways, because as many things that can contribute, but that approach that you’re using. What have been the results? Can you point to anything specifically? 

Ken Yager [00:10:54] Yes. I’d say four years ago, so right about that five year mark, I was 100 percent of our sales. And now about 25 to 30 percent of our sales.. So it’s starting to happen, and a lot of that group is loaded in very late. Unfortunately for us, came in during COVID, which had a couple of twists and turns for our team, our team in our industry. So some of those people really haven’t even had to flourish yet. So a lot of investment at this moment that we’re waiting to kind of see what happens. I think it’s going to break out pretty nicely here the next year. 

Greg Alexander [00:11:23] So congratulations on that. I mean, the fact that you’re cutting it in half. So the business continues to grow, but your personal selling efforts have been cut in half, which is great because some day if you want to retire and sell your firm down the road, you’re going to have to prove to a potential acquirer that you’re not required in order to generate revenue. There’s other people in the company that are doing it, and they’re doing it well. And because you’re tracking it in the way that you’re tracking it, you’ll precisely be able to say to them, just like you did to me – Hey, at this date, here’s what happened. Here’s a before and after results. Do you ever foresee in the future you representing zero percent? 

Ken Yager [00:12:00] Oh yes, I have a stated mission that I aim to get fired from marketing projects and admin at various stages in the -My career, so I’m working very hard getting fired, I –

Getting conulstants into sales 

Greg Alexander [00:12:12] those sound like your three favorite activities. Yeah, that’s funny. That’s fantastic. One  – one last question for you. Sometimes consultants. They don’t like the word sales. They’re slightly more willing to accept the term marketing. But when they when they get asked to do this type of activity I’ve seen in some scenarios, I don’t want to say they think they’re above it, but they don’t think it’s part of their job and their job is to execute the work once it’s been sold. Have you run into that and do you have any advice for those that are listening on how to deal with that? 

Ken Yager [00:12:48] Two pieces that come to mind. One, we actually go even further than networking and marketing. We talk about networking and just telling your  -we’re talking about telling your friends about what you do, which is a very it kind of simplifies it for construction and for people who are more professional service kind of driven. 

And we also talk about instead of territories, talk about tribes. So it just your friends, the people that you like and be with them and try to make it as natural as possible. And – and then the last it is…. I’m trying to think. Pardon me, choking on my words here. 

The other part is some people don’t make it, you’re – you’re really not going to turn it. Here’s the first thing. You’re not going to turn someone who isn’t totally motivated to sell into, you know, into a selling machine.  Maybe over time, a long time, maybe their careers, their lives change. We’ve had one or two of those moments. Well, you’re talking about changing someone 15, 20 percent. So if they’re not going to do it, don’t torture themselves or yourself. 

Conclusion

Greg Alexander [00:13:53] Yeah, that’s good advice. I love progressive past marketing networking, and I love moving from territories to tribes. That makes it approachable for the people that we just described there. It makes it more doable for them. All right, Ken, we’re running out of time here. But listen, that was awesome. I mean, you shared some brand new insights for us. Not surprised that you’re having as much success as you are. I appreciate you being a member and making a contribution today. 

Ken Yager [00:14:21] Thank you, Greg, for the time today and I enjoy being a part of Collective 54. It’s been a really great ride. Greg Alexander [00:14:26] Great. OK, for those that are listening, if you want to learn more about this topic, business development during the scale, stage or others like it. Pick up a copy of the book The Boutique How to Start, Scale and Sell a professional services firm, which I’m proud to say, just hit number one on Amazon in our little niche. And if you want to meet great people, I can consider joining our mastermind community to find us a collective54.com. Thanks again. Take care!

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Episode 69 – How a Challenger Brand Advertising Agency Won the War On Talent

Member Case with Mike Sullivan

As professional services firms scale, the culture erodes. Bureaucracy creeps in and employees shift from serving the client to serving the boss which stalls scaling. On this episode, we discuss scaling culture with Mike Sullivan, CEO of Loomis. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders. A boutique professional services firms, for those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk about culture and we’re going to do so with our friend and member, Mike Sullivan. Mike, it’s good to see you. And would you please properly introduce yourself to the audience? 

Mike Sullivan [00:00:48] Yeah. Hey, Greg, good to see you too. So I’m Mike Sullivan, president and CEO of the Loomis Agency here in Dallas, Texas, and I’ve occupied this seat for 20 years, if you can believe it. 

Greg Alexander [00:01:01] Wow. And what doesthe Loomis agency do? 

Mike Sullivan [00:01:03] Well, we call ourselves a challenger brand advertising agency. And what that means specifically is that we specialize in the unique needs of challenger brands. And Challenger brands are defined as really classically any brand that isn’t number one in its market, but it goes well beyond that, too. And we can have a discussion around that if you like, but that’s – that’s what we do. 

Culture and scaling

Greg Alexander [00:01:27] Great. So you’ve been around 20 years, which is fantastic, and that’s proof that whatever it is you’re doing is working. What role has culture played for you over the years in growing and scaling and sustaining your for – your firm’s performance? 

Mike Sullivan [00:01:42] Yeah. So the firm has actually been around thirty-five years. So my partner Paul Lewis, I joined him in the year 2000. I came in as president and culture was something that I think Paul, you know what he thought about culture and he thought about yogurt. You know, I mean, nobody was talking about culture. You know, nobody was talking about the team member experience, if you will. And that’s no slight on Paul. I mean, nobody was really in the 90s. It just wasn’t the topic du jour, but it is now, obviously. 

And so when I came in, you know, the agency was in a very different place, it was much smaller. There was no intentionality behind hiring and bringing the right folks in. It was just, can you do this job? Good, go do it kind of thing with no guidance beyond that. And I began to slowly shape and shift that based on my own guiding principle for the agency, which was simple. 

I just wanted to create the kind of employment environment where people look forward to going to work on Monday morning, you know, no Sunday night blues and so on. So that’s kind of where it started, but it’s obviously become far more than that. I mean today, where I think we’reseven time best places to work. Morning News Dallas Business Journal. I think culture is a real differentiator for our agency, and we can talk about that. But there’s your short answer. 

Fighting “the way things are” 

Greg Alexander [00:03:11] Congratulations, you know, and the the agency world, unfortunately, I would say over the years has earned a reputation for not having great cultures. It can be a little transactional and lots of burnout. But clearly, if you’re winning these types of awards, that’s not the case with you. And maybe that’s why you guys are standing out the way that you are. When I think about culture, I think about everything you just said for sure, and it’s mission critical. 

But I’m always putting it in the context of how does how does it help me scale my firm? And one of the ways that it does is that when you get to a certain side size the founders, the partners can’t be everywhere at all times and there has to be this thing called “this is the way we do it around here”. And I know that sounds crazy, but you know, things get done a certain way without, you know, bureaucracy like procedures and policies. It just “this is the way we do things”. Has that happened at your firm? 

Mike Sullivan [00:04:05] It absolutely has happened. And Greg, it starts with identifying the kind of team members you want to have inside your organization, really, if you back it all the way back up to, you know, sort of vision, values, mission, that sort of thing. And then you go and you find people who fit that and you don’t get it right – you know, right off the start and you may you may get one that works well and maybe one that doesn’t, but you tune that over time. 

And because culture is, yeah, it’s all the things that we say and write down and talk about. This is what we stand for, but it’s really even more than that. It’s – it’s all the unwritten, unspoken, unsaid things. And so that – that creates that replication that I think you’re speaking it. So good things get replicated in aculture. Bad things get replicated in a culture. So the intentionality around that is really important. So when you’re applying that to the hiring environment, it’s  really important to get that right. And I keep coming back to hiring because I just think it obviously it all starts with the people, you know, creating the culture and sustaining it, rebuilding it. It’s a living thing. It’s not static. 

Connecting vision

Greg Alexander [00:05:11] Yeah, you’re right. It does come back to the people. And you do your best in the interview process to select the right people based on a set of values. But it is an imprecise science and sometimes you’re going to get those things wrong and the culture has to accept or reject people as they come into the organization. So it stays consistent. And you know, you have a strong culture when that’s happening. 

You know, you mentioned the word vision, which is a favorite word of mine, and that is, you know, you’re creating a vision of the future, the aspirations of the firm. Sometimes I think our members, which are partners and founders of boutique firms, you might even call them challengers Mike in your world. Sometimes they failed to connect the vision with an individual. So if I’m an employee, how do I contribute personally towards the accomplishment of the vision? And when I do so, you know “what’s in it for me?” Yeah, sometimes that’s missing from these vision statements. What are your thoughts on that? 

Mike Sullivan [00:06:09] No, I agree completely. You know, team members need to, and that’s why this just such a big, big part of what we do. Walking in the door, we’ve got this little actually little purpose book. But you know, I talk about this in terms of, oh, it’s got our vision, our values, our mission, all that stuff. You know, we like to say we are, let’s see, using creativity and service of capitalism.

 And so what is it that our folks are doing on a daily basis to help advance the… And help create the business impact that we’re trying to create for our clients and getting them connected to that, tTalking about this, getting me excited about this, like we’ve got a series of workshops, challenger workshops that we do in the agency. We get people enrolled in it. 

They need to understand that, you know, our agencies positioning is connected to our vision and that is helping challengers win. You know, I don’t think the – don’t outspend the competition, outthink them you know, kind of thing. But but yeah, people on the team need to understand it, which I think is, you know, the first objective making sure that everybody has a shared understanding of what the vision is and then understand how they can contribute to it. 

You know, at the end of the day, in a good high-performing culture, people feel like A) they belong and B), they have a purpose and they’re connected to. And sometimes I think we think in terms of purpose, like it’s a bit grandiose purpose. No, my purpose in this organization is to help do these things so that we can accomplish this on behalf of our client. 

Self-governing culture

Greg Alexander [00:07:45] Yeah. You know, utopia, which are perfection, which none of us obtain, but this is what we’re shooting for, is this concept of a self-governing culture, a self-governing team. And what that means is that the culture is reinforced through behaviors that get rewarded, behaviors that get punished. 

But it’s not this kind of top-down, you know, dictator driven, founder driven way. It’s almost bottoms up where people are policing themselves, so to speak, which makes the job of the founder or the partner so much easier. Has your firm reached that level or have you gotten close to that? And what are your maybe general thoughts on this concept of a self-governing culture? 

Mike Sullivan [00:08:29] OK. So, yeah, absolutely. Self-governing, I have a little trouble with because I think it’s a rule, because maybe it implies to me a little bit of tuning out for leadership, which can never happen. Leaderships really got to be tapped into and connected to the culture. Leaders are so important for setting the tone and the pace and culture. 

Again, it’s what said, what’s done. If I am being congruent with the things that I say, believe me or are watching that? But yes, definitely. Once your culture becomes, I think, good and stable and sound and consistency across time is important and you invite the right people in to help you continue to perpetuate that. Yeah, it becomes self-sustaining in that respect. Absolutely. 

And it’s amazing. You know, when you – even the healthiest cultures, we’ve got 65 people. I think when you just get one higher rung, you know, it’s – it’s amazing the disturbance that that causes, you know? And again, it becomes and I like to say, look, if it’s not a fit, you’re going to glow in the dark, you know, and you do. And so it becomes a self-selecting culture in that respect, too. 

Greg Alexander [00:09:39] I love that – if it’s not a fit, it’s going to glow in the dark. It’s a really great way of saying that, for sure. And you’re right. I mean, one or two people out of 65 can make a difference, surprisingly, but it does, because it’s just a ripple effect. This is really something.

 Another topic onculture I find intriguing, particularly for boutique firms – firms like yours is… Sometimes it tends to be a dominant department or dominant function, like in my Old Firm, the rainmakers they – they kind of ruled the place and everybody else took – took the lead from them and that. It was the right thing for us, it’s not the right thing for everybody, but it was the right thing for us. Is there a function in your firm that is kind of the lead horse, so to speak, and sets the tone? Or is it more kind of, you know, democratic? 

Mike Sullivan [00:10:28] You know, that’s a great question, Greg. I believe in our firm that we’re pretty even with respect to that, that there’s that very often in the ad agency world, you’ll find a shop that is, it will say it’s a creative driven agency,  the creatives sort of rule the roost.. Many agencies that have that kind of reputation or as an account driven, you know, and it’s just, you know, the account people are running the show – sales driven organizations. 

That, too, is a culture that that is the culture. I don’t believe that we’re oriented in any one particular fashion, but that’s always something to check in on. And you know, you don’t want to overweight one group at the expense of another because again, that creates disharmony. 

You know, if you’re not optimized… a lot of times and I think this is really true for founders, you know, my background, for example, is account service and strategy. And so early in my career and early when I started doing this, I really did. You know, I was a little heavier on that side of things and maybe appreciating more what the account team was delivering and how hard their job was? Well, I had to even that out my own approach. I had to check in and go, Wait a minute. My media group, my creative group, you know, the folks working production. All of thesethings makes the band work. It’s not, you know, any one component of it. 

Maturing in the developmental cycle

Greg Alexander [00:11:52] So my own journey is something similar. You know, I was I was in the Rainmaker Group and I hired in my image and the Rainmaker Group became the dominant group. And I ran into a scalability problem because most of my team at that point didn’t truly understand what was required to scale. And what I mean by that is we would just go out and sell work, and we wouldn’t think about how we were going to deliver that work and the impact that had on profitability. 

And it wasn’t until those people got promoted to the partnership tier and they were equity owners, and they understood how things flowed through a PNO. Did they change their opinion on things? Oh, I don’t want to sign that piece of work because that actually is going to cause us harm. But that type of client and that piece of work makes a lot more sense to us. So maybe, maybe, maybe sometimes that’s just a function of maturity and where a firm is in their developmental cycle. 

Mike Sullivan [00:12:46] I think so, Greg. And within the leadership, I was very much like that – new business guy. It’s like, gosh, you know, I mean, just go up, get new business. It’ll, you know, revenue takes care of everything. It can cause a lot of challenges. And and thankfully, my executive creative director Tina Tackett, who’s been with us for  – she started the same day I did 20 years ago. She’s has tamed me appropriately. You know, and I have a complete and I think kind of respect for the process, as it were – that younger Mike Sullivan just never would have comprehended. It took a while, but I definitely got. 

Priority of culture

Greg Alexander [00:13:26]Yeah.  So your firm is winning awards for a great place to work. You know, you have cultural artifacts like your book you just showed me, which is great. I would suggest to the audience that you have an advanced perspective on culture, which is probably the reason why you’re having so much success. How do you – this would be my last question. There’s only so many hours in the day and you’re running a substantial firm. You probably have a to do list the size of Texas, and you could just only get to so many things. So so where does culture fall from a priority perspective and – and how do you allocate time towards it? 

Mike Sullivan [00:14:06] You know, Greg, honestly, for me, it’s number one. I mean it all, it really is number one. In fact, here’s the other book you know The Voice ofthe Underdog: How Challenger rands Create Distinction by Thinking Culture First.

 I’m always thinking about this stuff, you know, because I believe that if you get culture right, it does allow you to scale. For instance, you know, we our average tenure among our employees is almost three times the industry average. As a result, our average client tenure is three times the industry average-  that creates instability, stability, it a smoothness in the organization that you don’t always find in the agency world. And I think there is just so many cascading advantages that spill from that. And it’s like I said, it’s the number one thing that I think I think about. 

Greg Alexander [00:14:57] Yeah, that’s a bold statement. I know you got a lot to think about the number one thing that’s really strong. So give us the name of that book again. And if people want to read more about this, how do they find it? 

Mike Sullivan [00:15:06] Yeah, it’s the voice of the – Voice of the Underdog: How Challenger Brands Create Distinction by Thinking Culture First. 

Greg Alexander [00:15:13] And they can find it online?

Mike Sullivan [00:15:14] Mike Sullivan and Michael Tuggle. Yes, on Amazon, you know, like good stuff. Yeah,.Yeah, yeah, 

Greg Alexander [00:15:21] OK. And if members want to find you personally and reach out to your read about you, where can they do that? 

Mike Sullivan [00:15:28] So they can certainly shoot me an email at [email protected]. That is our URL. Theloomisagency.com. And yeah, I’d love to talk to folks about this. This is one of – like I said, it’s my favorite topic from a business standpoint. 

Conclusion

Greg Alexander [00:15:45] So, all right. Well, listen, you’re a great member. We’re lucky to have you. Thank you very much for being here today. I really appreciate it. 

Mike Sullivan [00:15:51] Thanks so much for having me on. I appreciate it. Okay. Greg Alexander [00:15:55] And for those that want to learn more about this subject and others, you can pick up our book called The Boutique How to Start, Scale and Sell a professional services firm, which I’m proud to say, just hit bestseller status on Amazon and our little niche so you can find it there. And then if you want to meet other great people like Mike, consider joining our mastermind community, which is Collective54.com OK, thanks everybody. Thanks again, Mike. Appreciate it.

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Episode 68 – How to Disrupt a Large Market with Innovative Services

Member Case with Scott Conard

The service offering is how firms deliver value to their client. Designing it correctly is mission-critical. On this episode, we discuss how to re-think innovative services design by interviewing Scott Conard, Founder of Converging Health. 

TRANSCRIPT

Greg Alexander [00:00:14] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale and exit from bigger and faster. My name is Greg Alexander. I’m the founder, and today I’ll be your host. And on this episode, I have the pleasure to talk to Dr. Scott Conard. 

And today we’re going to talk about how to apply innovation to your service offering. And Dr. Scott’s got a great story around that. So welcome. Thanks for being on the show. And would you please provide an introduction about yourself andyour firm to the audience? 

Scott Conard [00:00:55] Yeah, thank you, Greg. My name’s Scott Conard, my firm is Converging Health, we’ve been in business for the last seven years and we do ITconsulting for broker consultants and directly to corporations to help them decrease the costs and increase the value. 

The Cost of healthcare

Greg Alexander [00:01:17] So, Scott, one of the things that the reason why I want to talk to you about this particular subject is that you’re going after a big problem, which I’m not going to do it justice, but the cost of health care for lack of a more precise term. 

And you’ve been able to combine three interesting things, in my opinion, and I’d like you to explain this because there’s a point in all this and that is obviously human capital, expertise, technology and data to bring an innovative solution to market. So would you – would you explain to everybody about what your solution is and what it does? 

Scott Conard [00:01:53] Absolutely. So, Greg, probably the best way that they can – those listening can relate to it is every year when you get your health benefit bill and they say, Oh, it’s going to be five, 10, 15 this year could be 15 to 25 percent more than it was last year, which honestly for manufacturing and service companies could destroy their bottom line. 

And in fact, it has destroyed some companies. Bottom line. There’s this primordial scream. We’ve got to do this different. We’ve got to do it better. And I remember experiencing that back in the 90s when they would bring you my bill of the year. So what’s happened is that the health care industry has become 20 percent of the GDP. It’s gotten incredibly complicated. 

Only 30 percent of the money that’s paid into health care is actually paid for care. The other 70 percent is middlemen in some way, shape or form  -or fraud, waste and abuse. And so to get access to this and to understand what’s actually happening to your money, you’ve got to have technology, you’ve got to have the ability to analyze and look at how your money is being spent, which requires data analysis. 

So being a doctor, having grown up in this environment, seeing all these perversions of what should be, you know, an employer paying money to get the employees andtheir family members excellent care. I developed an IP platform that takes the claims, pharmacy and eligibility and zeroes in on what companies are paying. And itelucidates where they’re being taken advantage of and what they can do to decrease their costs. So it’s it’s a minimal human capital, but you have to have human capital to go do the evaluation, but then technology and data to reveal what’s going on. 

Innovation in services

Greg Alexander [00:03:35] It’s fascinating. And I mean, when I hear those statistics on, you know, 15 to 20 percent price increases anda small percentage of it actually go into care. I mean, I literally want to get sick when I hear those things. 

But you’re right. I mean, I’m experiencing that myself, and it’s incredibly frustrating. So to me, this is an opportunity to disrupt a legacy industry and do something better, faster and cheaper than what is being done today. And I believe that you’re a disruptor, and that’s why I wanted to have you on the show. 

And very often people don’t put the word innovation or disruption into the service bucket. You know, they want to talk about, you know, Elon Musk and Jeff Bezos or somebody like that. But here you are innovating in a very real way, in a very disruptive way. What – how did you get to this point? Because some of our members, they want to do this, but they don’t even know where to start. They think it’s so daunting that they they kind of give up on it. So what led you to this point? 

Scott Conard [00:04:34] Well, Greg, the thing is, to be honest, I mean, I’m a family doctor, I’m practicing medicine, I’m watching the industrial – medical industrial complex put barrier after barrier afterbarrier in front of me is a doctor trying to care for people, and I’m seeing the price go up higher and higher and higher for the people paying for it. It doesn’t make any sense. 

So for me, I started to dive into being a businessman and entrepreneur. I’m like, Well, wait a minute, this is crazy. There’s got to be a way to dissect this and understand it. And so my career was practicing medicine, becoming frustrated, building a group, trying to get leverage. That group got as big as 500 doctors at one time and still getting an appointment with, you know, Blue Cross, Aetna, Sydney United Healthcare was difficult. 

We were doing $500 million of the business and they wouldn’t talk to me. But when that sold and I became the chief medical officer of a mid-size broker firm all of a sudden I could get their attention and they’d come talk to me. And – and so I realize now I was buying a couple of billion dollars worth of health care for the corporation.

 So I, you know, started off as a doctor who figured out what to do. Then I was a leader of the physician group and figured out how traumatic the system was on doctors, both personally and trying to manage them, and then realized that the broker consultant world has tremendous leverage if they woulduse it properly. 

And corporations through the broker consultant can do it. But unfortunately, the sophistication of health care has left behind the, I don’t want to say, intellectual abilities- , because there’s a lot of very smart people and brokerage consulting firms, but their model is very relational. 

You know, let’s go play golf, let’s go to the club. Gosh, I love you, man. You’re my best friend. They’re going to have social IQs that are off the wall, emotional IQs that are really strong, but the analytic, scientific exploration they’ve had in their past, let’s just say there’s not that high. 

So the broker consultant world has gotten left behind, and so they’ve turned to these really strange perversions to increase their bottom line. And that’s where we’re at today. So you’ve got these big brokerage houses. I give you an example, Greg, we just heard about last week is another example of the hundreds I’ve already known about. So these big consulting firms will say, Hey, if you want a transparency company or if you want a second opinion company, here are the three we recommend. 

And little do both companies realize, but they make those three companies pay them a quarter of a million dollars to be on that list. And then when the bid comes through for those services, guess what? They’re raised to cover the broker consultants, you know, firms, you know, rider,kicker, if you will, and the broker consultant firm that is supposed to be representing the company and protecting the company is actually getting these other flows of income that have nothing to do with defending the company. 

Greg Alexander [00:07:45] I mean, it sounds like an incredible conflict of interest. Is that is it even legal? 

Scott Conard [00:07:51] That’s the rule, now. It’s not the exception, whether it’s insurance companies, you know, again, we could go through 50 examples for how insurance companies are doing very similar things to – to find revenue inside the flow. And the amazing thing is they won’t give people their data to look at it frequently, so they won’t even let you see what’s going on. 

The broker consultants, some of them are pure consultants where they actually take a fee and they will not take these, you know, the –  the broker part of it is where you get a lot of these perverse incentives, not the consultant side. So you can be very sure that you need to be careful about that. And then you know, you’ve got all the other middlemen, all these vendors point solutions. Literally billions of dollars of “quote-unquote” innovation health care, which actually at the end of the day ends up being additional fees to corporations. And that’s why the non-medical part of this has gotten so large. 

The Converging Health solution

Greg Alexander [00:08:52] Hmm. OK, so your innovative solution, particularly in the data side, does what exactly? 

Scott Conard [00:09:01] Very simply, we look at the contracts for a corporation with these different than, you know, the PBM. The insurance company and other contracts that are there and understand the flow of money, follow the money, you’ll figure it out. So we understand the flow of money. That’s my – that’s the people I work with. They’re the – the people who are more the… It will be divided into eight principles on each side. So they have the – each side that is the contractual and the fixed cost side of it. 

I do the clinical evaluation to see are the people receiving good care? Do they have access to excellent providers? Are they using those providers? And are the incentives in the system set up so that they encourage people to engage in their health and to get taken care of? Or what we see more often than not now is if you actually lean into trying to take care of yourself, you end up getting hit with the big bills repetitively. 

And so people withdraw from care and then they have things go a long time before they get intervened on. And then it’s very severe and very expensive. So I’m the clinician that’s looking at everything. We have the contractual fixed cost side that looks at everything, and we put that together and come back to the company and say, Here’s what’s working. Here’s what’s not working. Here’s what you can do about it. 

And… I would say that 90 percent of the time, maybe 95 percent of the time, there’s 10 percent of what a company’s paying that can be fixed within the next enrollment period or the next cycle. You can get rid of 10 percent of costs. 

With the clinical side of it, that takes a little longer within two years, two and a half years. You’re talking about another 10 percent of costs that can be removed, so you can think about the fact the average company is spending 10000 to 12000 dollars right now for their health benefits. And we are able to save 2000 of the 10000 over the next two years. It’s a tremendous value (per employee). Yeah, that’s per employee. 

Greg Alexander [00:11:08] Yeah. I mean, that adds up in a hurry. That’s a big number. OK, so 

Scott Conard [00:11:12] straight to the bottom line. So. 

Convincing the corporate customers

Greg Alexander [00:11:14] Yeah, exactly. OK, so obviously incredibly innovative thing combination again of expertize data tech to go after this big, big, big problem in trying to disrupt it when taking something that innovative to market and calling on the end customer in this case, the big corporation. Are they… Is there a big kind of evangelism or education that needs to be done, or do they get it right away? 

Scott Conard [00:11:42] No, well, the thing is, if you were t…o this is – this is the catch 22. If you were to meet with the CEO and CFO and you were to share what’s happening, how to figure it out, it’d be a relatively quick meeting. What happens, though, is they delegate everything to H.R. and H.R. Folks… I appreciate them. But they are not part of the C-suite. They do not get rewarded for innovation. They do not get rewarded for taking any chances.

 And so you get a lot of – literally the first question I usually get is what is everybody else doing? How many clients do you have and who are they? Because they’re more concerned about job preservation than they are actually doing what’s right for the corporation? So you have to literally – the CFO wants to save money just as hard as they can. The H.R. wants to be no disruption, and the CEO wants to be very popular and make as much money as possible. 

But what happens to me frequently I will be with the CEO or CFO. They’re like, We got to do this. They delegate me to the H.R. and you can never get it over the finish line, like no matter how hard the CEO or CFO told them to do it. It’s not the business they’re in. But most companies don’t realize, they’re running a health care business inside their business. 

Greg Alexander [00:13:00] Yeah, it certainly sounds like it.. 

Scott Conard [00:13:03] Yeah. 

Health Convergence early adopters

Greg Alexander [00:13:04] OK, now you’ve had some success. I know it’s whenever you’re bringing an innovation like this to market, there’s lots of obstacles to overcome andwalls to run through. But share with the audience a little bit about, you know, the early adopters or the innovators that you’ve been able to sell to. And and where does a firm stand right now? 

Scott Conard [00:13:22] Okay. So we have about 40 companies that we’re working with. We’re working with a number of broker consulting firms. So the converging health is providing the clinical and IT support for a number of consulting firms, one in particular. And so we, you know, our growth, we’ve been 30 to 40 percent growth over the last two years. COVIDreally, as you can imagine, took some wind out of our sails. 

We thought we’d be 40, 50 percent growth two years ago and go up from there. What we find is once we start working with somebody, we have incredibly high retention and they telland there areother people. So it’s very much growing dramatically as we get in and get things going. 

So right now, we’ve got about 40 companies. We are the thing that’s fascinating to me, Greg, is Istarted off thinking, I’m going to serve self-insured companies in the mid-market where I get a YPO type leader who’s able to make decisions and we’re not delegated and we can make things happen. And that’s the segment that I’ve been focused on. 

Believe it or not, I just got hired by a huge health care system in New York City, and because they said, what you’re doing is going to help us with our Medicare and Medicaid risk contracts. And so now I have a contract for one hundred and seventy seven thousand lives that the same I.T. analytics is serving. Ihave a captive of smaller companies that has hired us, that we’re doing that we’re doing their I.T. analytics. 

And so what’s happening is that, believe it or not, the amount of pain, even at ten to twelve thousand dollars per employee that corporations are serving, they’re not willing to spend the energy to get it done frequently, even 40 of them. But that that’s a we would like to be 400 or 4000 and other segments are coming to us and saying what you’re doing matters and it makes a big difference. 

So the federal government right now is forcing hospital systems to take financial risks for Medicare and Medicaid, and they’re like, Holy cow, we’ve got to figure out how to have people be healthy and spend less money and your system does that. 

And so it’s an interesting life for me right now because those with whom I thought I would be serving, I think what’s going to happen is this year when they get told, Hey, it’s going to be 15 percent, 25 percent more next year for health insurance, they’ll they’ll, you know, there’ll be a premier, you’ll scream and maybe another 40 or 50 will come on board. And at some point in the next three years, this is just so unsustainable that the marketplace is going to there’s going to be ready to act and not just hear about it, get excited about it delegated and then come back a year later and say, Yeah, we should have done that. 

Breaking assumptions

Greg Alexander [00:16:00] Yep. So, audience member, there’s there’s a lesson here that I want to underline through Scott’s  fantastic example. When you truly are innovative ,and he isand you’re going after really large problem, which he is, you got to hang in there because sometimes the original assumptions proved to be incorrect and there’s new things that happen that represent wonderful opportunities, as we just heard with the federal government. So the lesson here is to remind ourselves on the adoption curve and the great Jeffrey Moore once wrote about the adoption curve. 

And I’ll briefly summarize it here. Think of a bell curve, and whenever an innovation hits the market in the first place, it goes is the innovators meaning. And customers who like to be first. And they are willing to take a risk and experiment. Then it moves past innovators to the early adopter community, and these are people who also like to be early but not necessarily on the bleeding edge, but they see such a tremendous win that they’re willing to take a chance. 

Then once you get solidified in that group, you make it to the mainstream market and then that’s when all the great things happen. And that early majority and that mainstream market is when things really kick into gear. So if you want to be an innovator, as Scott is, you’ve got to make it through those cycles. 

And the way you do that is you just listen, you push as hard as you can into the market and you let a thousand flowers bloom because you never know where it’s going to take you. And that’s what it means to be an innovator. And so there are audience members who are trying to innovate their firms and disrupt other firms, larger firms and go after big giant problems, which as a percentage of our group, you got to hang in there as you go through those stages. 

And hopefully you’re hearing from Dr. Scott today an inspiring story. I mean, he got to 40 companies, right? That’s a lot. You know, sometimes early firms get to one or two, or three or four, and they don’t get past that – I mean, 40 issubstantial. And now he’s got this new wonderful market segment to go after,g iven the recent success story of New York. 

So, Scott, thanks for sharing your story. Today was inspirational. Every time I talk to you, I find myself rooting for you, and I hope that you keep pushing and you and you make it happen. And I hope those that are listening to this are inspired with by what what you’re trying to do. 

Conclusion 

Scott Conard [00:18:16] Well, Greg, thanks so much. And you know anybody listening to this. We do a free 30 day assessment where we take your contracts. We take your reports from Blue Cross United Cigna from last year. We do a bunch of work and then we come back and educate you. 

And it may not be the first year that you get that, that you engage with. There’ll be a moment where you go, Thank God, I talk to them and I know and understand what’s going on, because that made us an additional X million on the bottom line, particularly when you sell and you get a multiple of five to 12. There’s no reason to be decreasing your EBITDA because you’re paying too much for health care. 

Greg Alexander [00:18:52] So somebody that wants to take you up on that offer, how do they how do they get it? 

Scott Conard [00:18:58] [email protected]. Just say, hey, I want an assessment done and we’ll reach out to you. We’ll get it done. I have a team around me that that does the basic work and that I lean in and have the final meeting with you that we’ll show you and educate you at what’s going on. 

Greg Alexander [00:19:13] OK, awesome. OK, so for those that are interested in this subject and others like it growing and scaling a firm, check out the book The Boutique: How to Start, Scale and Sell a Professional Services Firm. You can find it on Amazon.

 And for those that want to meet really interesting people like Scott, consider joining our mastermind community. You can find it at Collective 54.com. Scott, thanks again and enjoy the rest of the conference, and hopefully I’ll see you soon. 

Scott Conard [00:19:42] Yeah, Greg, it’s been great being a part of Collective 54, it’s added so much to our corporation. I’d really encourage everybody hearing this to think about it and join. Greg Alexander [00:19:50] Hey, thanks for saying that. I appreciate it. Be good.

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Episode 67 – How a Consulting Firm Began to Productize It’s Offering– Member Case with  Adriaan Bouten

Professional services firms have more intellectual property than they may think. On this episode, we discuss how to monetize and productize your intellectual property by speaking with Adriaan Bouten, Founder of dPrism. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54 a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder, and I’ll be your host today. And on this episode, we’re going to talk to Adrian Bouten. And today’s topic is going to be about intellectual property. So, Adrian, it’s good to see you. Would you please provide a proper introduction to the audience? 

Adrian Bouten [00:00:49] Thanks, Greg. My name is Adrian Bouten. I’m the CEO and founder of Digital Prism Advisors. We help our clients with digital growth and digital transformation. 

Greg Alexander [00:01:00] OK, very good. How are things in beautiful Charleston, South Carolina right now? 

Adrian Bouten [00:01:05] Nice and sunny just came back from a morning walk and go, it’s 75 and sunny and in March. I’ll take that any day. 

Greg Alexander [00:01:13] Yeah, no question. You can hear it in my voice. I’m from Boston and March in Boston is not pretty. So I’m looking forward. I’m going to be there for Easter weekend, so I’m looking forward to it. OK, let’s jump into it. There’s a lot of confusion around this concept of intellectual property and comparing it to intellectual capital. And sometimes boutique owners either don’t think they have any or they think they have some, and it’s really not. So I want to just maybe start with an overview of what it is. So boutique owners are in the knowledge space, so they’re generating knowledge that has some value. Some of it is protected through intellectual property such as patents, copyrights and trademarks, and some of it is not protected but still valuable. That’s intellectual capital. So for example, if you’re able to charge more for your services and somebody down the street, the person’s paying you because of that additional intellectual capital that you have. And the reason why it’s important is someday when you go to sell your firm, part of your valuation is going to be tied to whether or not you have a little or a lot of this. You will literally be a number will get assigned to it as you go through the valuation. So Adrian, I wanted to just get your your thoughts on this to start out with maybe a little bit about your firm. Do you have do you do you find yourself in the category of IP or IC? 

Adrian Bouten [00:02:37] I find those to be in both. There is a lot of intellectual capital in methodologies and artifacts, but those are not protected. But we also have digital maturity assessment that is trademarked. We have been running for the last six years. 

Greg Alexander [00:02:57] OK, great. And this let’s start there because for those that haven’t been through this process before, tell me why you decided to get that trademarked and what was the process? 

Adrian Bouten [00:03:13] So the process was lengthy, but let me first hand why we trademarked it. The digital maturity assessment that we have prospects and clients complete is a methodology that helps us quickly understand where they were. That company currently is on a scale of one to five and digital maturity in different aspects. And it quickly helps us understand what they should be thinking about doing. How do they get to the next level of maturity? And it’s a whole methodology that way, and that’s more of an intellectual capital until we trademarked it and said, this is unique to us. We want to make sure that nobody can copy us on what we do here. And that’s how why we made that made it IP. 

Greg Alexander [00:04:01] Yeah, which is a great story and a great example, because that it solidifies the fact that you are different and somebody was willing to trademark what it is you’re doing, which is a validation point. So the process of getting a trademark, was it long? Was it expensive? Was it easy? Tell us a little bit about that. 

Adrian Bouten [00:04:21] It was longer than it should have been because we did it wrong as far we went through our general law firm and asked them to handle it, and they weren’t paying it because it’s not a. Not a good billing scenario for lawyers. So we ended up finding a stand alone trademark attorney that does nothing but and that about various mostly and it was inexpensive, took only a few months. 

Greg Alexander [00:04:52] OK, so that’s the advice then, is to hire an attorney that this is what they do. 

Adrian Bouten [00:04:58] This is what they do. And that’s probably true for most attorney type specialty things that you need. But it went very smoothly once we had that individual doing it. 

Greg Alexander [00:05:09] OK. And this digital maturity offering, do you charge clients for it or is it a giveaway? 

Adrian Bouten [00:05:18] It’s a giveaway because it’s a initial assessment. And then we go in business, a specialty consulting engagement. After that, we are talking about following it up with a more in-depth assessment that doesn’t involve consulting. That would be a charge for assessment of a few thousand dollars. So we don’t have anything in between to give away. And the Ford specialty consulting engagement.

Greg Alexander [00:05:47] OK, got it. And the and the reason why it’s it’s worth it to you to give it away is because if the client takes the time to go through it, it’s revealed some gaps and that would lead to consulting projects, right? That’s correct. Yeah, OK. And has it been kind of quote unquote productized or does it still require labor on your behalf to perform it? 

Adrian Bouten [00:06:09] We just finished product touting it. It is now we’re in testing trial testing. They’re going to release it this month, where it can be taken by somebody to automatically get the results. We get notification that somebody is taking it so we can follow up to its proper sales perspective. 

Greg Alexander [00:06:26] Fantastic. So audience, this is a great example, right? So you have this consulting company. They had this ability to assess an organization which most consulting companies have some form of assessment in their domain. It got turned into a maturity model, which then got trademarked and was monetized because it led to consulting work after the assessment was taking. Because it’s trademarked now, it’s protected, meaning people can’t can’t steal it from the prism and it’s not created value. And someday down the road, if this firm decides to sell itself, they’ll sit across the table from a potential acquirer and be able to point to, you know, this client originated from that assessment. This client originated from that assessment and so on, and you’ll be able to tie dollar dollar values of those client engagements back to this individual tool. And that’s a demonstration and proof in the eyes of a potential acquirer that this isn’t a body shop. There’s real intellectual capital into intellectual property that people are willing to pay for. And that’s really the big distinction here is that if you’re a body shop and you and you don’t have any of these methodologies, tools, systems and they’re not monetized, then it’s tough to sell that firm. If you can sell it, you going to sell it at a discount, which is what we don’t want to do. OK, the next question I have for you, Adrian, is because you have this intellectual property and plenty of intellectual capital behind that that you use for consulting engagements. Is that reflected in your rates and would would clients specifically attribute what they’re paying you to the methodologies or tools your eyes see? 

Adrian Bouten [00:08:14] So yes, it is reflected in the rates, but the client never sees our rates. We do everything. Fixed price, OK? So it’s more of a qualification that we know what we’re talking about. Once we do the assessment and have the conversation around it, that is in the client visible rates. 

Greg Alexander [00:08:34] Yeah, OK. So I’m going to leap to a conclusion there, but can correct me if I’m wrong. So you’re selling on fixed bed, which is great so you can get away from the hourly rate card thing, which is not where we want to be. And you put a proposal on the table that’s fixed bed and said, Mr. Client, you pay me, you’re going to get x y z. The client’s going to say, Well, how are you going to deliver x y z? And then you walk them through your your methodology that’s going to deliver. And therefore they have confidence that you can actually execute the project and you win versus the guy down the street. Is that correct? 

Adrian Bouten [00:09:03] That’s correct. Right. We actually quite often go down to the level of, let’s say we are talking about a 12 week engagement. We laid out week by week, what are we going to do? What are they going to see and what’s the value? 

Greg Alexander [00:09:16] Yeah. Another great example of how intellectual capital is used and monetized. In this case, it’s not. It’s monetized, but you’ve got to you have to really know what you’re doing in the monetization. Meaning because he has it, he’s able to charge fixed bed and fixed bids are a lot more profitable than hourly work. And that’s a subtle thing, but it’s a very important thing to distinguish. And if he didn’t have the methodology, the clients would ask questions like, What are you going to be doing? Why does it take 12 weeks? Who’s going to be on the team? You know, they’re going to try to negotiate down on an on an hourly rate basis, which is not where anybody wants to be. And because of the IC, Adrian’s able to avoid that. OK, let’s go to the next level of this. Some firms are quote unquote tech enabling themselves, and they’re taking these methods that you have, which you are deploying through consulting engagements. And you probably have now for many, many times over and over. And they’re turning him into software tools of some kind and they’re lacing licensing them to the client, either as part of the engagement or as kind of a leave behind. It’s a lot of work to pull that off. If done correctly, it can be very lucrative. But if done incorrectly, can be very costly. Have you considered that? 

Adrian Bouten [00:10:33] I have. I don’t feel I’m at the scale yet. To be able to do that because that takes an investment, but you’re talking about here, Greg. Yeah. And but I definitely am planning to do that. 

Greg Alexander [00:10:47] You are. And what is it about that that you find attractive? 

Adrian Bouten [00:10:54] Number one, profitability because it makes it more efficient and more profitable to do the engagement for our clients? Yeah. Right. And scalability. Yeah. 

Greg Alexander [00:11:06] You make it once and then you sell it delivered a thousand times without any labor. Right? 

Adrian Bouten [00:11:10] That’s right. 

Adrian Bouten [00:11:11] Yeah. 

Adrian Bouten [00:11:11] Totally. 

Greg Alexander [00:11:12] Yeah. Which is the big, big benefit. OK. Another area of intellectual capital and intellectual property I want to talk to you about today is this concept of certification. So you you go and you do a project for a client. Part of that project is you’re transferring knowledge and skills to that client so that when you do eventually leave, they can run or implement and whatever it is that you developed. Sometimes that requires some type of training or skills transfer, and a way to systematize that is to certify the client. Have you begun to experiment with that at all? 

Adrian Bouten [00:11:48] I have not. That is not something I’ve gotten into, which again, it’s something we’ve talked about as an option. But no, I have not. 

Greg Alexander [00:11:58] Yeah, that’s an interesting one. Sometimes clients ask for it, sometimes they don’t. What I find in my old business is. We would leave the engagement in like a year later, they would call us up. Something didn’t go right and then say, Hey, can you come back and train my team? And then we would position certification to them as part of the training initiative to say, OK, so let’s make sure this doesn’t happen again. We’re going to train your team there and have to prove to us that they can do X Y Z and they’ll do that through their certification. So audience members, this is an interesting thing to consider. Take some investment for sure, but it can generate a recurring revenue stream for you because most times certifications, people need to be recertified on some frequency. Like, for example, imagine if you’re an attorney, you know you’ve got to maintain continuing to maintain your license, same thing with accounting, etc. So that’s another idea. 

Adrian Bouten [00:12:47] And go ahead along the same lines. What we are planning on doing, probably in 2023, is to give the client a portal. To do self-assessment on a continuous basis, so that takes the last two things together a little bit. It does. It takes both technology enablement and the certification education training. Was that portal a client of us could choose to do a quarterly cycle? A daily cycle doesn’t make any sense, but they can. Due to self assessment around the organization themselves, and that will be an annual subscription fee. 

Greg Alexander [00:13:28] That’s a great idea. That’s tech enabling the certification. That’s the one punch right there. Yeah, that’s a great idea. Have you started exploring the cost in the effort associated with pulling that off? Is that is that easy? Is that difficult? 

Adrian Bouten [00:13:45] We ended up with a few hundred thousand dollars of investment needed for that. It’s more it’s six figures, yeah, but doesn’t have to be seven figures. 

Greg Alexander [00:13:54] Yeah, OK. That’s that’s good to know. So it might be approachable, you know, at a certain point in scale, sometimes tech enabling services outside of this idea can run into the many millions, and it’s outside of the the capability of a boutique to do it. OK. What are the types of intellectual capital do you have like, for example, sometimes people are collecting data and they ask a consulting firm, You know, how am I benchmarking against XYZ? Have you guys just as a natural course of doing your work? Do you collect data? 

Adrian Bouten [00:14:28] We do. And one of the most common things we do with our clients is doing what we call a market assessment and a market map. We collect data. What we do is we go to our clients customer and find out. Not just what they buy from our clients. But from who else do they buy, what adjacent products and services? And that whole methodology helps look from the end customer’s perspective back into our clients and that we then turn into an innovation cycle. 

Greg Alexander [00:15:09] Tell me about the innovation cycle 

Adrian Bouten [00:15:12] That innovation cycle is we look for whitespace in that market map that is adjacent to our client’s current product or service so that that have the brand right to step in to their. And then we do typically sometimes just because executive teams and sometimes with executive teams plus other select people from around our client, we do workshops as to where we apply successful innovation tools like examples of successful innovations in other industries, etc. and go straight up as our clients. From that, we usually end up with a couple of dozen opportunities, we now or we prioritize it. And then we start working with our client on one or two of those, maybe three. 

Greg Alexander [00:16:02] Interesting. So the market map, that’s another great example of intellectual capital and the ability to look into adjacent markets and bring back whitespace whitespace opportunities for clients. That’s a great example of IC. You know, body shops can’t do that kind of thing. They don’t have the method. Their talent is not capable of doing it. That’s a that’s a high skill service, and that’s why Adrian’s company is able to do what they’re able to do. So that’s really the lesson team today is intellectual property. Legally protected property is where we all want to get to. But there’s interim steps along the way which is commercializing monetizing your intellectual capital, and we saw several examples from you today and how to make that happen. And as he continues on his maturity, models, et cetera, et cetera, you know, those will lead to more highly scalable revenue streams. So, Adrian, it was a great episode today. Your examples were outstanding. What I loved about him was is that is that you’re in flight with this, you know, you’re clearly no longer a body shop and you’re on your path to building this highly scalable professional services organization by by, you know, monetizing and protecting all this knowledge that you’ve gained. So I appreciate you very much for being on the show. 

Adrian Bouten [00:17:23] Thank you Greg. 

Greg Alexander [00:17:24] All right. 

Adrian Bouten [00:17:24] Appreciate the opportunity. 

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