Episode 57 – Life Cycle: A Smart Strategy to Make Scaling Easier – Member Case with Chris Rozum

Boutiques often suffer from an identity crisis. This makes scaling harder than it needs to be. On this episode, we discuss business life cycle strategy with Chris Rozum, Founder & CEO, of Insite Managed Solutions, LLC.  


Sean Magennis [00:00:17] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. Our goal with this show is to help you grow, scale and exit your firm bigger and faster. I’m Sean Magennis, Collective 54 Advisory Board Member and your host. On this episode, I will make the case, boutiques often suffer from an identity crisis, and this makes scaling harder than it needs to be. I’ll try to prove this theory by interviewing Chris Rozum, founder and CEO of Insight Managed Solutions. Insight was founded in 2007, and it was established to provide a truly unique experience that marries together deep contact center expertise, enthusiasm for achieving unprecedented results and a culture of transferring knowledge. Insight then incorporates these characteristics into their suite of professional services, which are a site benchmarking, training, implementation workshops, process building, transfer staff, augmentation transformations and consulting. And you can find Chris at getinsight.io. Chris, great to see you and welcome. 

Chris Rozum [00:01:40] Welcome. Pleasure to be here, Sean. 

Sean Magennis [00:01:42] Thank you. Let’s start with an overview, Chris, can you briefly share with the audience an example of why it is critical to truly know what your firm is uniquely qualified to deliver in order to scale? 

Chris Rozum [00:01:57] Yeah, if I had to just put it into one specific example for us, it’s really about the human capital. Once we really know and are starting to lock in a bit of what our firm does, it really helps us zero in on the  hiring profile. What is the recruiting and testing approach we do to vet the people as they come in? How do we onboard and train them, which we’re not fantastic at today and we’re getting better at who gets into what is the organization Sure even kind of look like a little bit to include even roles and responsibilities on an engagement of who actually does what. And all these things are kind of different depending on what a firm is trying to do. But we found that we’re putting a lot of time and effort around those things. 

Sean Magennis [00:02:38] Fantastic. And you know, that human capital focus is, I think, vital not only in the context of the professional services firm, but your clients. Human capital, you know, is vital as well. So, Chris, they have five specific things that I’ll walk you through that we have found make it easier for a firm to scale. So the first one is sometimes a boutique suffers from an identity crisis. They’re unsure of the type of firm they are and the types of clients and projects they should pursue. This makes the challenge of scaling a boutique harder than it needs to be. What are your thoughts on this concept? 

Chris Rozum [00:03:21] You know, it was interesting when I first heard of the concept, I actually thought in my earlier days that I disagreed with it, and what I found was that I had not only myself, but I had two team members. Yes, that had the unique skill set and capability that they could basically take on any project they could because they were quick studies could could help solve problems that hadn’t been solved before, or they could provide industry expertise because we will learn really, really fast. And as you started to grow the business, though, I found it near impossible to be able to at the pace we wanted to grow to be able to find individuals that have that issue. It’s not smarts or talent, right? But that question to be able to announce any intensity. And there’s also a work ethic that is OK, working extreme hours to be able to run at that pace and love that energy around it. And so I’ve actually found as we’ve grown, I’ve not been able to replicate it. It held us back, created some less than desirable client experiences along the way because we signed up for some stuff that we didn’t want to do or couldn’t do. And we’re finding now that we’re having a lot more success in focusing on specific industries and getting deeper there, as well as focusing on services, even making hard choices around which ones we maybe don’t want to market and sell anymore. 

Sean Magennis [00:04:42] You know, and that’s probably, you know, half the battle is deciding, you know, when to say, no, you know, and we talk about that a lot. So we’ve also categorized three types of firms. First, we have what’s called an intellect firm and an intellect firm is typically hired by clients to solve difficult never before seen one of a kind problems. Second, we have a firm that we call a wisdom firm and a wisdom firm in our definition is hired by clients because they have been there and done that. The client problems new to that client, but it’s not a new problem. And third, we have what we call a method firm and a method firm is hired by clients because of their unique methodologies. The problem is well understood by the client, but by hiring a method firm, it can be sold faster and likely a lot cheaper. So, Chris, why, in your opinion, is it key to differentiate that time or what type of firm you are? 

Chris Rozum [00:05:45] Yeah. You know, it goes a little bit back to the human capital piece a bit and that there’s really kind of two things and I think you hit on it is if you go more using every candidate intellect. Yes, I have found that requires a talent that has had certain background, timeline, experiences, exposures, reference points, kind of. All these things kind of come together across somebody’s journey that allows them to take intellect and and be able to solve problems that have never been solved before, which are kind of exciting to go do. But that comes, those individuals come at a certain compensation level. Yes, then also drive a certain rate level. Yes. And if you go to the other end of the spectrum, methods are where on that you can get consistent. You can put tools, templates, processes in place, look to have different type of talent. Tell them again, you can bring people and I’ll use my personal example. We hire folks into our firm that are not traditionally part of professional services consulting firm, and they are operators that have been working in contact centers, in operations, and then we bring them into this environment. And then what I attempted to do was put them on intellect, type work, and they may have not had enough reference points or experiences to have been effective there. Yes, we’re finding, though, by taking hands on operators and bringing them in in the methods world, we’re having a lot more success. So some of that is getting the right people in the right slots and all of that. But there’s someone helps figure out what your pricing is, what you’re looking at. And then from the sales perspective, how do you go sell to a message and set expectations with your clients that align with kind of these three different types of firms. 

Sean Magennis [00:07:28] That’s really good insight and great examples. I can see in your context how, you know, the nuances are very clear and then the difficulties of trying to teach somebody, you know, who’s not being an intellect, you know, that has its challenges. Some could rise to the occasion, but you make an excellent point. Number three, we recommend that owners and many of them or our listeners connect the type of client and project to the type of firm they are. You know, we recommend they only go off to work that the firm is staffed to handle based on skill level. What are your thoughts on this and you have touched on it? 

Chris Rozum [00:08:08] Yeah. You know, I think. It might depend on where somebody is at in their their life cycle. I know even our early stage it was. It was kind of exciting to go try some different things and see where we are good and capable, what actually resonated with our clients and and also what were some of the activities that we also enjoy. So there’s a little bit of that in the early stage. I think I know where my firm is is right now as we are in the scale high growth phase. Yes. Yeah. The it the governor for me to go do that now is if I’m having too many bumpiness with our clients and not the experiences that I’m wanting or my staff, attrition is too high because we’re over stressing and we’re pushing them beyond their skill sets, too fast. When we’re hitting those moments, it really causes me to govern back and say, No, we’re just going to focus. Yes, and those are kind of the two metrics that I’m looking at. And then as I find those get to kind of stable points, I will then look to venture on things that I think are close enough tangents that do push us a little outside, and it does allow us to be a little innovative. But I find myself, I have to balance this dance and assess and retract back a little bit. So it’s it’s maybe not so hard, fast in any given moment in time, but I tend to use those indicators to drive me towards when I want to be a little exploratory versus when when I really should be more disciplined. 

Sean Magennis [00:09:38] That’s really well put, and that dovetails nicely into our next question. You know, we see owners lacking discipline and thinking that all revenue is good revenue and they take any deal that comes their way. So can you unpack that for us? 

Chris Rozum [00:09:54] Yeah, I am totally guilty of that. I even still today will get into these moments. And it’s being opportunistic. We want to keep growing at the pace we’ve been growing. And and what I have realized, though, is is early on when we were smaller, I could look at something and say, You know what, I can do that I can figure it out. It’s a little outside the lane, but I can see a path on how we can get there to be successful. Yes, and timing as we grow. That’s not always the case. And so we are getting, if you will, kind of more governance around how to do that and how some of those names, some of those negative impacts that can hit in that type of situation. 

Sean Magennis [00:10:37] That’s well articulated. And I think clearly understanding the risk reward of taking on projects that may not be be good in in the face of your scaling opportunity. And it also brings up the reality of sustainability and making sure that you can replicate what you indicated, you know, you alluded to earlier. So the final yeah, sure jump in. 

Chris Rozum [00:10:58] I think your viewers listeners would also appreciate this. So I have done this for a long enough period of time. Now that I’m getting more disciplined this year, it is much harder to unwind now that I am of this size and scale to to be more disciplined. And it’s a couple of one of the biggest things is how do you now unwind trying to take on every single project that’s out there? Yes, but not have a gap in revenue. So and slow down. And that’s what I’m dealing with right now is I’m trying to be more disciplined. How do I not just flip the light switch and now I lose 20 percent revenue and I got to then climb my way back up? So a bit of my learning along the way is how you make that shift early enough. Yes. You at least get to the size we are today. 

Sean Magennis [00:11:44] And then also, you know which which we see a lot of our members in collective 54 and I’m sure in a lot of our listeners is looking at the profitability of every client project because some projects, even though you may have this culture of taking them on, maybe at break breakeven or you may actually if you really do the math, you may be losing money on them. So that discipline, even though it’s tough to do if you’re looking at your numbers, you can prove out with facts that there’s maybe a good reason to do it right. 

Chris Rozum [00:12:15] Yeah, yeah, you’re exactly right. I actually had a conversation with the client next week where it’s it’s a loss to break even and we’re we either got to fix it or we’ll have to step away from it. 

Sean Magennis [00:12:26] Yeah, well, that’s exactly right. And then the final one is, you know, the firm’s just like us, as human beings are different based on where on the on the lifecycle curve they are. So, for example, it’s very common for boutique professional services firms when they first start to be an intellect. But the partners have some secret sauce, you know, they have a solution to a brand new problem. Then as time passes, that IP gets out. Others have it, and eventually it becomes a commodity and owner manages a firm very differently. When it’s an intellect firm than a wisdom or a method for everything is different. So, for example, pricing, staffing, utilization, salaries. So lifecycle management to us refers to the active management by the owner of the boutique as it scales through these lifestyle stages. What’s your opinion on adopting this life cycle management philosophy? 

Chris Rozum [00:13:26] Yeah, it’s I wish I knew about it years ago when I started through the firm, right? I think I think too. Yeah. You know, it’s as I look back, and for me, there were actually very clear markers. And whether you tie it to revenue or you tied to headcount in our my firm, they all correlate together. Yes, by the way, and even what my job was from from one to 15 folks, right at 15 was this really clear marker that I had to do some things different and where I even spent my time and where you were. Now I have a manager, Reverse admits, managing some of the work engagements and how do I sell and do some of these things that you talked about? And and how do you do that in a profitable way that you don’t make over invest in the organization? So I found that one to 15 was kind of a band for me. Yes, that 15 to 50 was the next band that I could do it away. Yeah. And and and when we crossed the 50, I spent a whole bunch of time to say now, how do I go from 50 to five hundred? Yes. Put that structure and roles and responsibilities and who does what. And even my job and where I’m spending my time and what I’m doing in a different way. And and those are kind of the markers for me that happen to be there. I think some other firms might have some different markers based on bill rates and stuff like that, but it was they were really like… 

Sean Magennis [00:14:44] Crisp, really clear. No, that’s really well said. So in your case, one to 15 was a band 15 to 50 and then 50 plus as you’re getting to five hundred. I mean, that is exactly the way we want our listeners to think and to really be highly present in in acknowledging and looking for those signals because it does it, to your point, require a very different set of skills, a different orientation to your time. I’m sure you’re working much more on your business now than you’ve ever done before. 

Chris Rozum [00:15:15] And as of today, yes, we’re working to change that a little bit. Yeah. And, you know, in their spots throughout the journey where I have drifted around a little bit and you know, I go back to some of the indicators that I gave before, which were also really got sensitive around these markers. Where where did I have some client experiences and we have high expectations? There’s a lot of times our clients don’t feel it, but were they not what we wanted to deliver? Got it. And what’s going on with our employee culture stress? Is it turning into attrition? Those are the two things that I saw at 15 started to really break. A 50 really started to break. So we’ll continue to monitor those. 

Sean Magennis [00:15:53] Outstanding Chris, this has been this has been great. Getting your perspective on this is fantastic. So, you know, again, it’s this is an illustration as to why there are only about 4000 firms of about the 1.5 million that truly reach scale. You’ve done that. It’s hard to do and you’re still scaling. It takes an exceptionally skilled owner like yourself to pull it off. So this takes us to the end of this episode, and as is customary, we end each show with a tool. We do so because this allows you are listening to the app to apply these lessons to your firm. Our preferred tool is a checklist, and our style of checklist is a yes no questionnaire. We aim to keep it simple by asking only 10 questions. So in this instance, if you answer yes to questions one through three, you’re an intellect firm. If you answer questions, if you answered yes to questions four to six, you’re a wisdom firm. And if you answer yes to seven to nine, you are a method firm. And lastly, if you answer yes to question 10, lifecycle management should be a top priority. So, Chris, thank you for graciously agreeing to be our peer example today. I’ll ask you the yes, no question so we can all learn from this example. So let’s begin. 

Sean Magennis [00:17:14] Number one, do your clients hire you for never before seen problems? 

Chris Rozum [00:17:20] Not so much today. 

Sean Magennis [00:17:23] Number two, do you employ leading experts in the field? 

Chris Rozum [00:17:29] Yes, we do. 

Sean Magennis [00:17:30] Three. Do you have legally protected intellectual property? 

Chris Rozum [00:17:36] We do, we have a pattern as well as a bunch of copyrights. 

Sean Magennis [00:17:39] Number four, do your clients hire you because you have solved their problems before? 

Chris Rozum [00:17:46] Yes. 

Sean Magennis [00:17:47] Number five, do your clients hire you because you have direct relevant case studies? 

Chris Rozum [00:17:54] Yes, they do. 

Sean Magennis [00:17:56] Do your clients hire you because you help them avoid common mistakes? 

Chris Rozum [00:18:03] Yes, but less today. 

Sean Magennis [00:18:06] OK, got it. Do your clients hire you because they’re busy and need an extra pair of hands? 

Chris Rozum [00:18:12] Yeah, absolutely. That’s much more dominant today. 

Sean Magennis [00:18:15] Yes. Number eight, do your clients hire you because you can get the work done quickly? 

Chris Rozum [00:18:21] Yep, more of that today than before. 

Sean Magennis [00:18:23] Number nine. Do your clients hire you because you have an army of trained people to deploy immediately? 

Chris Rozum [00:18:30] Yes, they do. 

Sean Magennis [00:18:31] Yup, that’s your that’s your bread and butter. And number ten, does your service offerings start out as leading edge and over time become commoditized? 

Chris Rozum [00:18:43] Not so much as of yet. It’s interesting, we’re somewhat we’re solving some same problems we were solving 14 years ago. See, things have maybe matured, but so this one surprised me when I said no. 

Sean Magennis [00:18:55] Great. Great. That’s what it’s designed to do. So in summary, a lack of a life cycle awareness can make scaling more difficult than it needs to be. It can lead to poor cash flow. Unhappy clients and employees Chris, a huge thank you to you for sharing your expertize today if you enjoyed the show and want to learn more. Pick up a copy of the book The Boutique How to Start, Scale and Sell the professional services firm written by Collective 54 founder Greg Alexander.

And for more expert support. Check out Collective 54 the first mastermind community for founders and leaders of boutique professional services firms. Collective 54 will help you grow, scale and exit your firm bigger and faster.

Go to Collective54.com to learn more.

Thank you for listening.