Episode 69 – How a Marketing 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. Wow. 

Greg Alexander [00:01:01] And what is the 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. 

Greg Alexander [00:01:27] Great. So you’ve been around 20 years, which is fantastic, and that’s proof that whatever 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 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 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, Sunday night blues and so. So that’s kind of where it started, but it’s obviously become far more than that. I mean today, where I think was seven 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. 

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 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 in 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 the culture. 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. 

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 purpose. 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? Talking 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. I’ll think, 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 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. Yeah. 

Greg Alexander [00:07:45] 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 am I 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 fad, 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 type of gun culture 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, 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 is of the creative sort of rule the roost. Exactly. 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 the health 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 let 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 work in production. All of this thing makes the band work. It’s not, you know, any one component of it. 

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 piano. 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 sets. 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 the 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. Yeah. 

Greg Alexander [00:13:26] 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 Boise the underdog how challenge your brands 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. 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 first 

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

Greg Alexander [00:15:21] 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 like I said, it’s my favorite topic from a business standpoint. 

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.

Episode 27: The Boutique: The Subtle Art of Scaling Your Culture

As a firm scales its culture erodes. Bureaucracy creeps in as a firm gets larger. The owner shifts from an inspirational leader into a law enforcement officer which is not healthy. On this episode, we discuss how to build a great culture in professional services firms.

TRANSCRIPT

Sean Magennis [00:00:15] Welcome to The Boutique with Capital 54, a podcast for owners of professional services firms. My goal with this show is to help you grow scale and sell your firm at the right time for the right price and on the right terms. I am Sean Magennis, CEO of Capital 54 and your host. On this episode, I will make the case that as a firm scales its culture, erodes. Bureaucracy, creeps in as a firm, gets larger, this converts the owner from an inspirational leader into a law enforcement officer over time, which is not healthy. I’ll try to prove this theory by interviewing Greg Alexander, Capital 54’s chief investment officer. Greg, while owner and CEO of SBI, built one of the great cultures in professional services firms, he has much to share on the subject. Greg, good to see you. Welcome. Great subject.

Greg Alexander [00:01:21] Yeah. Sean, it’s good to be with you. I’m looking forward to today’s conversation.

Sean Magennis [00:01:25] Excellent. Greg, let’s start with an understanding as to why affirms culture erodes as it scales. Why does this happen?

Greg Alexander [00:01:34] You know, the reason is pretty simple. Founders of boutiques did not know how to scale a culture. And the root cause of this is there’s very little material available to founders on this subject. And most founders do not recognize the importance of scaling a culture until it’s too late.

Sean Magennis [00:01:50] And why is it important to scale a culture?

Greg Alexander [00:01:54] Culture defines how things get done, and defining how to do things matters, especially as the firm gets larger. There is more work to be done by more people. A hazing culture gets in the way of scaling because employees do not know how to behave. And when this happens, founders react by installing bureaucracy with lots of procedures and rules. This turns him or her into a law enforcement official. And once rules replace creative freedom, politics creep in and politics destroys firms. Employees shift their focus from serving the client to serving the boss and scale stalls out.

Sean Magennis [00:02:41] Boy, do I understand this one. Greg, you’ve taught our audience about the three life cycle stages of a professional services firm. Those are phase one growth, phase two scale and phase three exit. It appears that culture is a strength in phase one growth, but it becomes a weakness in phase two scale. Why is that?

Greg Alexander [00:03:10] That’s a great observation. You make a very important point here, Sean. The reason culture breaks down during phase two scale is because scaling is messy. The chaotic nature of scaling means that employees work while the system starts to break down due to all the growth. As previous methods are replaced with new procedures to accommodate the scale, employees struggle to adapt. And it is at this precise moment that they need to know how to behave. And this is when a strong culture can be very helpful. For example, let us imagine an exercise, a picture you and I meeting with a firm in Phase one growth. The firm is, let’s say, twenty five employees and has been in business for about five years. We ask each employee the following questions. Number one, what kind of behavior does the firm hire to? Number two, what types of behavior does the firm promote to? And number three, what types of behavior gets people fired? The answer is coming back from this group of 25 employees will be very similar and crystal clear. This will demonstrate employees know how to behave. Now, let us imagine, we are meeting with a firm in phase two scale. Let’s say this firm’s about 100 employees and has been in business for, let’s say, 15 years. We ask each employee the same three questions. What kind of behavior does the firm hire to what kind of behavior does the firm promote to? And what what types of behavior gets a person fired? The answers coming back from this group of 100 employees will be dissimilar and unclear. And this will show that employees do not know how to behave.

Sean Magennis [00:04:59] I can see that. And the hypothetical example makes common sense, but I’m not sure I understand the so what? Why should a listener care if employees do not know how to behave?

Greg Alexander [00:05:12] Good question. The reason our listeners should care is because during the scale phase, they cannot be everywhere and do everything themselves. They need to know their employees are representing the firm the way the founder wants it to be represented. Employee behavior shows up everywhere, shows up in sales calls, in job interviews and client meetings, etc.. If the culture does not scale, the firm will bring in the clients, hire the wrong employees for client satisfaction and so on and so on. And in the end, a eroding culture will result in missed budgets.

Sean Magennis [00:05:45] Yep, OK, I get it now. A strong culture is how a founder can succeed without having to be personally involved in everything. Greg, I recently listened to an interview. An interview you did on John Warrillow’s Built to Sell podcast. It became very popular as thousands of people have now listened to it. One of the reasons it was so well-received is you talked about the famous SBI culture. Would you share some of this with our audience today?

Greg Alexander [00:06:16] Sure, boy, there is a lot to share here, and I should not repeat what I shared with John as listeners of this show can go listen to that one. But let me share some of the story with you here. So my firm, SBI, was in the consulting space. One of the challenges in that industry is very high employee turnover. It is not uncommon for consulting firms to run it, let’s say 30 to 40 percent annual employee turnover. And we ran it less than 10 percent for years. One of the reasons for the high turnover in consulting is big consulting firms fire employees for not being compliant with the procedures in the rules. I mean, these firms have an operating manual for how to eat lunch. It’s insane. Personally, I hate rules. I recruited mavericks and hired rule breakers. My firm only had three rules. This meant an employee back then can only get fired for three reasons. And they were number one, if you steal from me, you’re gone. Number two, if you lie to me, you’re gone. And number three, if you mess with it with another employee’s ideal life, then you were fired. So, for example, if you goose an expense report, you were out. If you lied to me about a project or the outcome of a sales call, you were gone. And as it related to number three, we had every employee tell us what their ideal life was, meaning exactly how they wanted to live in the role the job with us played in that life. If you were someone who caused a teammate to be miserable, you got fired. This meant no midnight emails, no finger pointing, you know, none of that bad behavior. So my basic philosophy was you had lifetime employment with me, if he did not break the three rules, I hired adults and I treated them like adults. I did not question their work ethic and I did not let suspicion destroy trust. It was an innocent until proven guilty culture, not the other way around, as so many companies are. Everybody was clear as to what behavior got you fired. The net result of this was we scaled rapidly, we won big, we won fast, and we won more often than the typical firm. And this is what led to our remarkable exit. In my case, we scaled our culture by keeping it very basic. We prevented bureaucracy from creeping in and we relentlessly eliminated politics from affecting behavior. And I should note, this culture was not for everyone, but that was OK. I liked it that way. I wanted lots and lots of people to tell me I was nuts and that they would never work for me because those that opted into my tribe were my peeps, so to speak. I knew if I could recruit enough of my peeps, I could really do something special. And we did.

Sean Magennis [00:08:59] Greg, this is a great story. And my journey with you is is so bang on with this. I mean, it’s it really, truly is remarkable. I encourage your listeners to look to Greg as a role model in how to really scale a culture. Doing so is very important to be true to yourself and lead with your authenticity. And now a word from our sponsor, Collective 54, Collective 54 is a membership organization for owners of professional services firms. Members joined to work with their industry peers to grow scale and someday sell their firms at the right time for the right price and on the right terms. Let us meet one of the collective 54 members.

Courtney Kehl [00:09:48] Hi, my name is Courtney Kehll. I own Expert Marketing Advisors. We serve B2B tech companies across the U.S. These clients turn to us for help with establishing best practices, growing and scaling up companies, as well as even launching or plugging in holes across there and marketing. If you need help with any of these areas or even interested in partnering, reach out to me at www.expertmarketingadvisors.com.

Sean Magennis [00:10:14] If you are trying to grow scale or sell your firm and feel you would benefit from being a part of a community of peers, visit collective54.com.

Sean Magennis [00:10:30] OK, 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 a listener to apply the lessons to his or her 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. In this instance, if you answer yes to eight or more of these questions, your culture is working for you. If you want to know too many times, culture is more than likely getting in the way of your attempts to scale. Let’s begin.

Sean Magennis [00:11:12] Number one is your culture important to the success of your boutique? Number two, does every employee understand the way things get done around here? Number three, does every employee understand what you are trying to accomplish? Number four, does every employee understand how they personally contribute to these goals? Number five, is it clear which behaviors are awarded? And number six, is it clear which behaviors are punished? Number seven, is it clear which function inside the boutique is the dominant function? Number eight, is the leader of that function, the leader of the boutique? Number nine, is the culture scaling naturally the way you want it to? And number ten, are you nurturing the culture as you scale?

Greg Alexander [00:12:21] You know, nine and ten are related and worth adding a little something to them. So cultures should scale naturally if the culture is healthy. Yep. Then people are going to take ownership of it and they’re going to scale it for you. If that’s not happening, then it’s upon it’s the responsibility of the founder to nurture it. You know, almost think about it like a plant. You know, you’ve got to fertilize it, you’ve got to water it. And there’s things you can do to nurture the culture to make sure it’s happening.

Sean Magennis [00:12:51] Critical. Great finishing comment, Greg. So in summary, culture allows a boutique to retain its identity as it scales. Culture is a welcome substitute for bureaucracy that can plague scaling boutiques. If you enjoyed the show and want to learn more, pick up a copy of Greg Alexander’s book titled The Boutique How to Start Scale and Sell a Professional Services Firm. I’m Sean Magennis. Thank you for listening.