Episode 168 – Thriving Amidst the Heat: Navigating a Sudden Surge in Industry Competition – Member Case by Brad McAllister

In this session, we delve into the challenges and opportunities presented when your industry segment suddenly becomes the hotbed of competition. With both heavyweight corporations and agile boutiques flocking to capitalize on the trend, how do you ensure your firm doesn’t just survive but thrives? We’ll explore strategic insights, share expert advice, and discuss real-world examples that have successfully navigated these waters. From differentiating your firm to innovating your offerings and optimizing operations, get ready to learn how to stand out and stay ahead in an increasingly crowded market. Join us as we uncover the keys to turning industry heat into your competitive advantage.


Greg Alexander [00:00:15] Hey, everybody. This is Greg Alexander. Welcome to the Pro Serv Podcast brought to you by Collective 54. The first community, dedicated to the needs of the boutique professional services firm. And on this episode, we’re gonna talk about what happens when your sector gets hot, and we have a fantastic guest with us. His name is Brad McAllister, and Brad works in the sustainability space, and he was in the sustainability space way before that was the thing and we want to hear his story and how his strategy has changed as the sector got hot and it attracted more and more competitors. So, Brad, would you please introduce yourself to the audience?

Brad McAllister [00:00:57] Yeah. Hey, hey, Greg. First of all, thanks for having me today. It’s honor to be here. I appreciate you seeing something in our story, work with sharing, with the members and hopefully they get to get something out of it. As you mentioned, my name is Brad McAllister. I’m one of the two co-founders of WAP Sustainability. I serve as the company’s President, COO. If, if you’re familiar with EOS, I’m the Integrator, then the, in the whole system, I know there’s a lot of EOS afficionados on the call. WAP Sustainability – we’ve  been in business for about 15 years as Greg said, you know, early in the sustainability journey. We predominantly help companies kind of navigate that confusing space, of ESG, sustainability and climate change. And we do this through analytics, reporting, and help with strategy and with, in various sectors.

Greg Alexander [00:01:54] Okay. Sounds great. So the reason why I wanted you on this show is because when we spoke last, you told me that in the early days, no one was really focused on sustainability. You know, and it was you, and some mission driven people that had a belief in this sector and you got involved and developed some expertise and had a nice business. And then all of a sudden, you know, the world got interested in what you were interested in and it got really hot and a whole bunch of people entered your space. A whole new set of competitors, everything from other niche boutiques, to mega firms. So tell everybody when that happened, what caused it? And then I want to jump in and hear a little bit about how you reacted to all of that change.

Brad McAllister [00:02:41] Yeah. And, and continuing to react to it. I mean, we’ve all heard that the only constant of life has changed. I mean, that is, you know, it is our market in a nutshell. As you mentioned, we’ve been, in the business for about 15 years. I met my co-founder, in grad school. We were part of the first sustainability cohort at a university here in Tennessee. I had studied Environmental Science. I come from an Ecology background. He too had an Environmental Science background. I was taking, some classes, MBA classes at the time. And so, we had some kind of synergies in the way that we saw, the market. We didn’t really know where it was going. I mean, you know, at that time, my parents were, you know, still clueless on how it was actually going to make money, in life, and, you know, there’s some funny stories about, you know, being in college and, you know, going out and, you know, trying to meet people and, you know, I made a switch from Pre-med to, you know, Ecology at one point and there was a clear delineation on how interested girls were to talk to me at the bar.

So, when I made that, so, you know, long story short, I mean, we really kind of on an early edge and, you know, I was inspired by by some readings and such. And I think, well. my business partner, you know, he was inspired as well. And so we got lucky with a few early clients at the early stage of it all, Walmart kind of came into the picture. We all remember that time when Walmart was, you know, kind of, the demon business, right? Putting out, you know, mom and pop shops throughout the country out of business. And, and they were looking for a way, I don’t know if they would agree with the synopsis. But this is my synopsis that, you know, sustainability was one of the ways that they could help, you know, clear their name, right? Detract from some of that bad stuff. So, what they had done in the early days of this is that… they engage their suppliers for the first time in a way that the suppliers had never been engaged before. And there was the sustainability survey that went out and ask for things like, you know, what your carbon footprint, you know, what are, your social indicator metrics? You know, a handful of other stuff, and companies didn’t know how to respond to that. But just so happened, you know, well, I had a little experience in that and, you know, we got some early clients. And while Walmart had good intentions or had intentions… they weren’t really driving the market, right, there’s a handful of suppliers, and those suppliers, you know, if you looked at the pie chart of their, you know, who they were selling to, that pie chart was, you know, 90-95 percent Walmart, you know, talk about key, you know, key customer risk there. And, and so those were the clients that we initially got. But there’s a whole host of other clients that are potential clients that weren’t really interested in going down that space because there wasn’t much pressure, right? They didn’t have that pie chart where it was 95 percent. So we stayed small servicing that market for quite a while. It’s just a business partner and I, for about six years, I think it was six or seven, seven years.

And then the commercial building space got involved. You may be familiar with LEED buildings. You, you see those plaques sometimes when you walk into, you know, buildings well, LEED started to expand the criteria of their certification to go beyond just energy efficiency, to focus on the materials that we’re actually going into the building. And materials and products, that’s the stuff we were focusing on with those Walmart suppliers. And so some of the services from those Walmart suppliers could be transferred to these building products suppliers. And so that happened, you know, seven, you know, seven years into our existence or so. And, and that caused us to, you know, basically service those two markets: consumer products onto big box stores, and then commercial buildings. And at that point, you know, decided to, you know, bring on another, you know, minority partner into the organization to support the building products space. And then we service that for a while. And then, you know, I guess what is it four years ago now? Or so? You know, it was five of us, we have a little smaller office in Chattanooga and COVID happened, and we shut the doors on that office not knowing what would happen.

Well, fast forward to today, and, you know, various other drivers which we can get to in this conversation, happened and we went from five people March of 2020 to about 55 today, just four years later. And what’s happened in that span is, you know, governments got involved, you know, investment communities got involved. Other big box stores have gotten involved. So it’s just kind of this perfect storm, of interest around, you know, climate change, you know, sustainability, biodiversity. And then, you know, the social elements of sustainability.

Greg Alexander [00:07:54] That was a great thank you for sharing that. And congratulations on, you know, an incredible success story. I mean from five people to 55 people in four years is just amazing. The part of the story that I really want to spend time on, because I think it’s transferable to our other members, it might not be in the sustainability space, is that a lot of competitors rush into the market because there was all this demand. So how did you react to that?

Brad McAllister [00:08:24] Yeah, yeah, we’ve seen other, you know, boutiques come into the space. We’ve seen big engineering firms come into this space. We’ve seen some of the big four come into this space. What we found is, you know, the old adage, “Culture eats strategy for breakfast.” What we, what we’ve done is highly invest in the culture of the company. We kind of create, the foundation of why we do what we do, how we do what we do, and in doing that, we’ve you know, created, you know, a feeling of culture of, you know, being action oriented, having a growth mindset into the organization. And so what we tried to do is empower our employees, to support the development of new services, or foster the kind of the next generation of consultants within the organization. That’s been pretty powerful as we’ve had some people leave for some of those other organizations chasing, you know, bigger paychecks if you will. I mean, it’s hard to compete with a Deloitte, right? But what we found is they’ve come back due to a lot of, the cultural elements of the organization. So that’s one way that we’ve done it. It’s also, you know, because we were early adopters in this space, we’ve positioned ourselves really well in places that other, you know, other organizations, less nimble, less agile organizations, are unable to.

You know, I think one of, the, you know, early successes early learnings that, we found was it’s more important to be where your customers are, not where your competitors are talking about the work, so, you know, if you think about conferences in any industry, sustainability is just one example. You know, you can only be in one place at one time. So do you go to the conferences in which people are talking about sustainability, or do you go to the conferences in which maybe sustainability is just a small little topic that your competitors aren’t there. And so we found success going into direct industry within, you know, those events that are targeted at the industry but not targeted at sustainability.

Greg Alexander [00:10:36] Perfect. Kind of zig when…

Brad McAllister [00:10:40] The zing in on a zag, that’s right, yeah. Yeah.

Greg Alexander [00:10:43] Let me, let me double click on the employee thing for a moment. And actually before I jump into that just to share with the audience—remember when you’re in professional services, you’re in two markets. The first is the employee market. So you’re competing for people to work at your firm. And when you’re in a sector like sustainability, you have a unique skill set, you can pretty much work wherever you want. So it’s a, very competitive market for high quality employees. And they’re also competing for clients. You know, I mean with all these players in your space, clients have options and you’ve got to win the clients, with two very distinct markets. So you use culture as your differentiator in the employee market, you know, to get people to work for you versus the bad guys. So give me maybe I don’t know one or two things that you think is unique about your culture and distinctly unique as compared to maybe, you know, the big firms, the Deloitte’s of the world.

Brad McAllister [00:11:37] Yeah. I find that a hard question to answer because kind of, you live in it, right? And I’ve never been in those other places. You know, some of our kind of core values of the organization, you know, being action-oriented, having a growth mindset, being technical translators and being relationship-focused. I think is really key. I mean, those are the adages, we communicate those continuously through the organization. You know, we say we’re accelerating sustainability through relationships because, you know, we feel like that’s what’s sticky, both for employees, and clients as well.

You know, we’ve… yeah, there’s some other things we do that I think you and I could probably have a debate about it, to be honest with you. You know, tracking hours is something we don’t do within the organization. You know, we don’t ask people to do that and I’ll give a plug to you guys, you know, I’m sorry, one of, your block sessions on, you know, resource utilization. And so I’m gonna have to try to explore, you know, how to actually do that, you know, when we don’t track hours. But that’s a big part of our culture as well. You know, we’re not, you know, we don’t nickel and dime clients. You know, we don’t really use the term scope creep. You know, sales is a bad word up-sales is a really bad word within the organization. You know, we like to think about it as business development, you know, as a relationship development. You know, we don’t do much marketing either as an organization. You know, we see our marketing as setting really intelligent people out into the world, to build relationships through, you know, presentations and, you know, expo’s, and those types of things. So, I think all that stuff kind of leans into it. You know, the other thing is when we made our first HR hire, when was this? I guess three years ago, we found somebody who… you know, I didn’t you know, the HR portion of HR wasn’t her expertise, the culture portion of HR was her expertise. Yeah, diversity was her expertise. You know, we figured she could learn, you know, the red tape of HR, but not everybody can learn, the cultural elements, of what makes a company like ours.

Greg Alexander [00:14:10] You know, those examples are really good examples but maybe for a counter-intuitive way. So let me try to connect the thoughts for some of our listeners. You know, we’re talking about, you know, how to operate a firm and how to change the operations of a firm when your sector gets hot. So for example, in your space, you don’t have to do any marketing because, the word sustainability is marketing in and of itself right? There’s so much demand, right? You don’t have to track hours because you have a different problem. You, you have more demand than you know what to do with. So optimizing around the hour that’s something that people do in a very mature market when growth rates start to slow. In your space, there would be a mistake to do that. You know, all the things that you’re doing right now, are the things due: not nickel and dime clients, focus on relationship building, because there’s so much wind in your sails. Maybe at some point, and I don’t know if this will even happen in my lifetime, because I think what you do for a living is gonna be here forever. But maybe at your point, your industry like others, most in fact, does mature. Demand starts to get reduced, commodity services start to enter the equation. Consolidation starts to happen and clients start to value other things like price over value, or maybe they don’t value relationships as much as they once did. I mean industries do mature.

So the lesson for the listeners is that when you’re in the hot sector and you have the luxury of that, you’ve got to pick and choose what elements of the playbook matter to you. So in Brad case, culture matters a ton in this space right now, that’s the right strategy. When you hire an executive member of your team, in his case HR, you don’t really care about things like compliance because that’s not the big value add. The big value add is the diversity is the culture et cetera. So that’s the lesson. And maybe we can conclude on this because, we try to keep these podcasts short and we’ll save the rest of this is such a rich conversation for the member Q and A. But that’s the lesson. The lesson is, you pick and choose the plays to run from your playbook, you know, based on the context that you’re in at the moment and time. And, and Brad story is a great one. So, Brad, on behalf of the membership, we’re very lucky to have you in our group because you’re an outlier, you know, to go from 5 to 55 people, in four years, is remarkable and there’s so much to learn from the outlier. So, thanks for being there today.

Brad McAllister [00:16:44] Yeah, my, my pleasure. Greg. I’m excited, you know, I’ve been a member of with you guys for just a handful of months now and, you know, your comment there about market consolidation changing in the market. I mean, that will happen in our space. And, you know, I, I’m excited to be part of this group to learn from other members who may be in a market that’s in a different maturity state because we’re heading in that direction. So it’s a great example of the kind of, the give and take that we give each other and, you know, being members, of Collective 54.

Greg Alexander [00:17:15] Yeah, exactly. All right. So I’ll conclude with a couple of calls to action. So if you’re listening to this, you’re not a member. You want to become one, go to Collective54.com and fill it on application. We’ll get in contact with you if you are a member and you wanna double click into Brad story, look for the Outlook meeting invite that we’ll be sending you for his private Q and A session which will be one hour in length on an upcoming Friday role model session. But until then, I wish you the best of luck until the next episode as you try to grow scale and sell your firm, take care. Thank you.

Brad McAllister [00:17:47] Thanks Greg!