Tag: strategy

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Episode 137 – How a Fast Growth Service Firm Formalized Goal Setting to Get Focused – Member Case by Jason Mills

A strategy defines who you serve, what you do, how you do it, and how you do it differently. And a strategy begins with a clear set of goals. In this session, learn how a boutique adopted a formal goal setting methodology, called OKRs, to get focused on what matters most.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the Pro Serv podcast, a podcast for leaders of thriving boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of the boutique processor firm. My name is Greg Alexander. I’m the founder and today I’ll be your host. And in this episode we’re going to talk about a popular management methodology, goal setting methodology called Okay Hours. And the reason why I’m going to talk about this is several of our members are attempting to implement them and we’re learning a lot and we want to share some of those learnings. And if you’re not using OKRs, you might be using something similar, such as the boutique framework from collective 54 or iOS or scaling up. There’s a lot of kind of techniques out there and it’s important to have one. Today we’re going to talk about OKRs and we’ve got a role model with us. It’s a member of Collective 54 from a company called Tribal Scale. His name is Jason Mills. Jason, it’s good to see you. Thanks for being here. And please introduce yourself and your firm. 

Jason Mills [00:01:25] Thanks, Greg. My name is Jason Mills. I had engineering a tribal scale. We’re a boutique services firm specializing in platform and software development, using extreme programing, which is essentially test driven development coupled with peer programing. We also use this to provide a unique approach to digital transformation. 

Greg Alexander [00:01:45] Very good. So let’s start with the basics. What is your definition of OKRs? 

Jason Mills [00:01:53] So Oscars are basically, I guess, essentially company goals. The acronym ACRONYM stands for Objectives and key results. The objective portion be more of a loosely defined company goal and the key results, more of the how to get there. So yeah, but it’s kind of like a quick overview. 

Greg Alexander [00:02:15] Yeah. And for those that might be interested, they really became famous when John Daw introduced them to Google back in the late nineties. And many in the tech world, such as tribal scale, you know, have embraced them as a result and to much great success. So, Jason, now we understand what they are. Let me ask you, why did you and your firm start using them? 

Jason Mills [00:02:40] So we’ve we’ve done goal setting exercises for several years to drive personal growth and company initiatives. But in the past, it was really just the manager collaborating with the with a report. And we came to the realization that, yeah, it’s great if someone wants to get a certification to support their growth, but what if that doesn’t align with the company’s goals? So what can we do to eliminate this gap? And as we as we look to really align the company vision in the organization, OKRs became the model to try out for us. 

Greg Alexander [00:03:15] Okay, great. And when did you begin your. Okay, our implementation. 

Jason Mills [00:03:21] So we started end of last year really trying to get the framework in place and for preparation to really launch this in Q1 of this year. So we are about two quarters in almost at the end of the second quarter right now and definitely iterated a little bit on the process. But that’s that’s where we are at this point. 

Greg Alexander [00:03:43] Which is great. I mean, we caught you at exactly the right time. If you already had everything fully baked, the the conversation wouldn’t be as fruitful because I think there’s many that are in the middle of an implementation. So to hear your your story is going to be helpful to them. So tell us a little bit about, you know, what the journey has been so far. You know, how are you using them, What’s gone well, what hasn’t gone well, etc.? 

Jason Mills [00:04:06] Yeah, sure. So we’ve gone ahead and we created for essentially for company OKRs to help line the teams. The first one was lined with white glove service. That was like an example of one of the ones we use trying to provide that ten X value to our clients. The second was service offerings kind of like complements the first OKRs, and the third was thought leadership in the form of content generation through blogs. Speaking of speaking out on podcasts or attending meetups, and the fourth one was meaningful bench work. So we were in a situation last year where a lot of times people were on bench and we wanted to make sure that it aligned with its valuable time. We wanted to make sure aligned with like with what would benefit our clients and our business the best. So those were some of the the OKRs we choose to use. And then each department really gets their own. They can add a couple of extra OKRs if they like, based on what the department needs might be. 

Greg Alexander [00:05:13] Okay, so let’s double click into into one of them and I’m going to choose meaningful bench work because I think that’s a rich topic for our audience. You know, most of our members, sometimes they’re a little lumpy in their businesses and they can find, you know, talented people on the bench for a period of time. And then unfortunately, sometimes it goes the other way your 120% capacity and everyone’s burning the midnight oil. So so what is some examples of meaningful bench work? 

Jason Mills [00:05:42] So a lot of times like the default for us just was like, okay, we’re gonna we’re going to certification certifications always help our, you know, our company in regards to Azure or things like that. But we took it a step further and we we said, you know, whatever we’re working on, it should benefit either a client that we’re going to have in the future or a client that we have currently. And we took it a step further and said, you know, how do we know we’re succeeding in this? So we put together like a metric saying that, you know, we want to we want to use whatever knowledge they’ve gained within two months of of learning it. And that’s how we know if we succeeded with that. So so that’s an example. 

Greg Alexander [00:06:27] That is a great example. So you want to use whatever you learned within two months. I can’t help myself. Two months is a very precise number. How did you pick that? 

Jason Mills [00:06:39] Oh, I it’s like it felt right. Okay. It seems like, you know, when you’re when there’s a little bit of leeway before the next client starts up, it seems like a good amount of time to prep before you actually get deep into the project. So that’s just landed there. 

Greg Alexander [00:06:58] Yeah. Okay. Well, that makes sense. All right. And you know, at the top, I mentioned that OKRs is there’s other similar systems. A lot of our members use iOS. Some use scaling up, some use the boutique. I mean, there’s a lot of them out there. And I advocate for everyone. To me, there’s not a ton of difference between them. The important thing is to have one and be committed to it and implement it. Right? So. So was there any reason why you picked OKRs over the alternatives? 

Jason Mills [00:07:27] Well, they you know, they were naturally a good starting place if you haven’t done organizational goals before. There they were from what we the research we did, they were loose, flexible to change, interpreted in different ways which which, you know, some might think that’s not you you want to make sure they’re not interpreting the phrase, but it actually allows to generate some creativity among the teams to solve different problems. And they’re not tied to compensation, which alleviate some of the pressure as well. So they were basically very forgiving if we screw this up, which we were going to screw it up. Yeah. So anyway, U.S. has its value, too, but I know that’s more of an operating system. And now that we’re two quarters in, we’re actually experimenting a bit, but laying us on top of that to kind of like help us drive and execute a lot of the a lot of the things we want to do. 

Greg Alexander [00:08:19] So that’s fantastic. So the reasons why you chose it, one of the reasons anyways, was the flexibility. And since this was the first attempt at this, that was obviously valuable, I also, I did not know that OKRs were divorced from compensation. So that’s a valuable add right there and I can see the benefits of that. Some might argue against that, but I can see if you’re early in this process that that might make it more, I guess, less stress in getting it implemented and maybe less of a shock to the system. So that’s interesting. Okay. And then in terms of the six months that you’ve been at it, you know, if you were to do it over again right now, if you had a clean sheet of paper, is there any any gotchas, any failures that happened along the way that you wish you would have known? 

Jason Mills [00:09:06] I think overall it went pretty well. We implemented this using just basic spreadsheets. Seems I think you can kind of run the world on spreadsheets and and just set up the spreadsheets, you know, kind of like doing weekly check ins, whether our our OKRs were on track, off track, or if they were done. Kind of provides that simple, simple implementation as we get into it. I think one of the challenges for the engineering team in a lot of times engineering is that one of the larger sizes is that multiple parking levels. So not having that visibility into, you know, what are the managers, the managers, you know, kind of trying to deliver. So are we all in one bucket of thought leadership and no one’s putting any any knowledge into or any time into white glove service. So that was a challenge that, you know, we are kind of working through and evolving on. Hmm. 

Greg Alexander [00:10:03] And what what are your early hypotheses as to how you might overcome that challenge? 

Jason Mills [00:10:09] So we had, I would say like long term, maybe just finding like a tool that can kind of work through and manage it and provide that hierarchal visibility. When I was working at a former Life, I built performance management systems and, you know, clients created goals from very simple to very complicated scorecards, you know, tracking metrics on time and dollar delivery. But end of the day, they all wanted to see a one page dashboard with visibility all the way down the line. So right now we are using a tool that actually integrates with our Google calendar and allows us to kind of tag each meeting that everyone has with an Oscar. And that month we can see how much time was spent across the organization and on the on the specific. Okay. So it kind of provides that visibility to Head Start, right? 

Greg Alexander [00:11:04] Yeah, very cool. Any other, you know, tools that you all leveraged or, you know, quick hacks that people might take advantage of when you got going on this? 

Jason Mills [00:11:15] And we’re we’re piloting a couple of different things, like from the iOS standpoint. There’s there’s a couple different tools that just manage that whole process. So it’s like we’re using 90 right now, which is something that we’re that we’re trying out, which is a good. 

Greg Alexander [00:11:33] Thing about like learning tools around OKRs. Were there any books that you read, any videos you watched, anything like that that you can recall that jump to mind that were particularly helpful? 

Jason Mills [00:11:43] Yeah, there were some there’s a lot of great information on some websites. Definitely read the book Traction, which was a good one on iOS, trying to think of some other ones that come to mind, but those are kind of amazing. 

Greg Alexander [00:11:57] Okay, Got it. And then my last question before we wrap up is, you know, the implementation of OKRs. Is there one person who kind of owns the the whole thing or is it distributed? You know, who’s in charge on it? 

Jason Mills [00:12:11] Yeah. So the for us we have the our chief of staff and she owns the process, kind of like owns the master spreadsheet. And then we have the department leads that kind of like manage the okay for each department, everything kind of rolls up, and that’s kind of a bogey structure. 

Greg Alexander [00:12:28] Got it. Very good. Okay, Well, so for the listeners that are members, let me draw your attention to making sure you accept the meeting invite that will come out here shortly with Jason Mill’s name on it from tribal school. And if you attend that member only private Q&A session on Friday, which is when we have a role model sessions, you can double click on any of these items and ask your questions directly of Jason. So I encourage you to do that. If you’re not a member and you think you might want to consider it, go to collective 54 dot com. You can fill out a form and one of our reps will get in contact with you. And if you want to read about other things that we do or the topics we cover. In addition to this, I pointed towards the book The Boutique How to Start the Scale and Sell a professional services firm in a video is your thing on YouTube. We have a channel called Profiting in Professional Services and you can see some videos on that. But Jason, I appreciate you accepting my invitation when I reached out to you and sharing your journey so far. And congratulations on the progress that you’ve made and we learned a lot from you today. So thanks for being here. 

Jason Mills [00:13:35] Great. Thank you, Greg. 

Greg Alexander [00:13:36] All right. Okay. And for the rest of us, you know, I wish you the best of luck as you try to grow, scale and exit your firm in the future. We’ll talk to you on the next episode.

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Episode 115 – How a Software Consulting Firm Succeeded by Planting a Flag in Middle America – Member Case by Ashok Sivanand

In a post-Covid world, does geography still matter? Should you pursue clients, and employees, based on where they reside? It used to signal to clients that you were legit when your name was on a building downtown. Is this still true?  On this episode, Ashok Sivanand, CEO at Integral, shares how he thinks geography is still a mission critical element of strategy, but not for the reasons you might think. He moved to Detroit and is building a firm based on mid-western values. And it is these values, concentrated in this geography, which is contributing to his success. Hear from Ashok his remarkable story which started with him driving a forklift in a factory during the graveyard shift. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Surf Podcast with Collective 54, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to the needs of leaders of thriving boutique producer firms. My name’s Greg Alexander. I’m the founder and I’ll be your host. Today on in this episode, we’re going to talk about geography. I know that’s a weird subject. Probably weren’t anticipating that. However, strategy and a boutique processor firm is where to play and how to win. And since our community is made up of boutiques, many of them choose geographies that they can dominate. And it’s a very effective strategy. And we’ve got a great example of that today. Middle America, if you will. And we’ve got a great role model to discuss with us how he is factoring geography into his strategy and how he is trying to dominate middle America, if you will. His name is and I’m going to do my best here. My man. A shook, son of honored. How do I do? 

Ashok Sivanand [00:01:28] Cos that’s probably a six out of ten. 

Greg Alexander [00:01:30] Oh, sorry about that. 

Ashok Sivanand [00:01:32] It’s a showcase debate and a shock. Savannah. 

Greg Alexander [00:01:37] Savannah. Okay. Sorry about that. I tell you what, I gave you permission to call me Joe Smith for the rest of the call. We can. We can get even that way. So please introduce yourself to the audience and tell us a little bit about your firm. 

Ashok Sivanand [00:01:51] Yeah, sure thing. So I started in a girl about five years ago, and what we do is help companies with transforming into technology companies. And we do that by building software products with them and using techniques like pair programing, where it’s very much like an apprentice style of teaching, learning almost like a pilot and copilot. Where are the companies that are looking to really transition their operations to being more tech enabled? Can do it at a very grassroots level in service of a strategy that most companies have today of wanting to become more like technology companies. The Fords of the world trying to go after the Teslas of the world, if you will. 

Greg Alexander [00:02:34] Yep. Okay, very good. So I was drawn to your story because to simplify strategy, which I’m dramatically oversimplifying where to play and how to win, where to play can be many things market segments, industry verticals, etc.. But one of the components is geography. And you have an interesting story on your take and geography and and how your focus on the automobile industry and as I understand it, middle America. And we’ll talk about what that means and in particular smaller cities. So just by way of introduction, would you mind explaining that part of your strategic approach? 

Ashok Sivanand [00:03:14] Yeah, sure thing. So we’re based out of Detroit, Michigan, and that’s where I founded the company. A little short history here. I moved to Detroit for what was meant to be a six month engagement with my last employer, and I was supposed to start their local practice here and go back to my hometown of Toronto. There was some reading between the lines about a promotion and everything that was waiting for me at a company that was going public. One thing that I did not factor into my spreadsheet was that I would really like living here. And I remember moving into this apartment in downtown Detroit, opening the windows all the way and looking out at the street and realizing this was never part of the spreadsheet. And we’re going to have to go back and address that. And this was in 2016, and Detroit is in you hear this in the news a lot about the revival story. And I think it’s true of not just Detroit and the auto industry, but can be said about a lot about middle America in many ways. It’s folks that you don’t see a lot in the news when it comes to up and coming technologies or up and coming services and a butt of jokes in some cases. And moving here, I realize that there’s a lot of myth busting for myself and a lot of invalidation of assumptions that I had coming in here and that there’s a lot of smart people here trying to do a lot of cool things with much more of a strong sense of community compared to a sense of competitiveness. But I was used to in the big cities and that’s something that stood out to me and I’ve got a little bit more of a history in the auto industry as well that made these really strong personal reasons for me to jump in and try doing this. 

Greg Alexander [00:04:56] If you wouldn’t mind, I’d love to hear of those personal reasons and your history in the automobile industry. 

Ashok Sivanand [00:05:01] Yeah, sure. I think so. One of my first real jobs was as a forklift driver in a manufacturing plant, and it was nightshift in East Hamilton in Canada. And Hamilton is a manufacturing town. Not too dissimilar from Detroit, was growing faster than Toronto was at a time when Detroit was growing faster than New York. And as manufacturing got outsourced and offshored, the city is kind of gone. The different towns that we know about now. And so the east side of the city is like many cities, the rougher part. And I was an international student. And so let’s just say I learned a lot that summer. And one of the things when it comes to that sort of my professional career was just getting to apply the systems, thinking that most electrical engineers have to do kind of watching electrons move through a circuit. I was able to see kind of how production was happening here and got to learn things like lean principles in terms of I was a forklift driver where I could really bring the most customer value by making sure that all the different parts of the lines were not blocked or starved and so forth, and then went on to work at GM at a plants in southern Ontario where they make the Chevrolet Equinox and now the GMC terrain. I believe it was actually a half Japanese half American plant. So Suzuki owned half the plant from General Motors, the other half. And we had like the movie Mr. Mom, we had like white shirts, blue pants. I had my name embroidered, and it was very different from most car factories that you’d see. And there was definitely a very strong Japanese influence to do how the production was done. I have in fact just this, but I’ve been told by a few people that it was the most efficient GM plant and a lot of folks kind of chalk that up or rationalize it to the the kind of Japanese influence. I, I shut the line down for 8 minutes one time. And at the time, gas prices are really high and these activities are selling like hotcakes. And I thought that I was going to lose my job the next day. And I called in. The general manager kind of conducted what I now know is a five rise exercise, and they made the process improvement right there. And then with all the right people in the room, understood the root cause of how this was allowed to happen. Where we’re burning turned to shut the line on for 8 minutes. And he, instead of firing me and thanked me for my transparency and I got much more confidence and got to learn a lot more about the mean. And so a couple of things that have happened since then. Number one, this was led to thousands. I was really bummed that all the software engineering talent was put on the building and manufacturing the cars more efficiently, and I couldn’t work on the vehicle itself and make it a more compelling vehicle to the consumer. And then flash forward, about ten years, I was working at a company called Pivotal Labs, and number one, they had taken a lot of these leading principles that had originated for building factories more efficiently and to running software teams with more humanity and ultimately getting more value for their customers. So a lot of it clicked for me. I didn’t understand a lot of the jargon, but the first principles were very obvious because it was all borrowed directly from from the Toyota production system and Lean. And the second thing is around 2015 was when that thing changed, where Consumer Reports said that more people were buying cars based on the technology in their compared to horsepower and torque, which were the the traditional selling factors. Right. And that was also the time that I was doing this little thing in Detroit. So the third part of the story was that I had I had I had, you know, be careful what you wish for type of thing, where I wanted to really be part of a compelling value proposition of the vehicle versus being hidden in the back room. And that was a time when when Detroit was really investing and becoming more of a technology town, companies like Ford were making big investments. And and I was at the you know, you could call it right place, right time for something that I’d hoped for ten years prior, understanding a lot of those first principles that somewhat ironically, the auto industry wanted to move their technology teams to working more like their manufacturing teams, believe it or not, in terms of getting the most efficiency and the best customer value out. But looking to Silicon Valley to teach them, even though a lot of it had originated in middle America the first place. 

Greg Alexander [00:09:23] Man, I tell you what, that is an incredible story From driving a forklift on the midnight shift to founding a software company and embracing a new small city, hats off to you mad. Respect for your courage and enjoying it journey. And thanks for sharing it. All right. Well, let’s talk about this concept of geography. So you just laid out what you’re focused on and why does the opportunity exist and how have you been able to, I guess, walk away from the temptation of being the next hot shot in Silicon Valley? 

Ashok Sivanand [00:10:00] Yeah, I think some of it is really values driven. And I know that you talk about iOS. I was lucky to have found iOS multiple years ago and we always knew we had what we had read the Netflix Culture Deck and said, Hey, we got it. We got to build one of our own decks this way. And I’d show up to the office on a Sunday and say, Okay, today we’re going to do culture and I’m going to write the culture down today. And I’d go home with an empty whiteboard. And just having ordered a lot of Uber eats iOS really helped us. Yeah, use a framework to arrive at the values and I think the values that are really important here, how we build software, our values work and melody, accountability and kindness and kindness is the one that stands out a lot to both our talent base as well as our customer base, because they both talk about, Hey, this is something that’s often forgotten. It’s something that’s often overlooked because we need to make a quarterly deadline where we need to hit a milestone, and that’s the first one to get out the door. Accountability is oftentimes kind of front and center. And I think the values that what kept me here in Detroit very much aligned with how I think software should be built. We’re building these code bases not to get one big launch out, but a long term iterative process. And we’ve got to think of the long term and we got to think of the team that we’re building it in the long term, the people that we’re building it for. And so taking the humanness out of it, taking the kindness out of it, really makes it a very short term prerogatives. And I think I haven’t fully understood the causation around it, but there’s definitely a huge correlation between finding folks who can act with those kind of values at the same time, deliver, show up, hold each other accountable. Kindness isn’t the same thing as niceness. Doesn’t mean we’re we’re not. We’re not we’re shying away from having difficult conversations. It means we’re really understanding that the other person I’m trying to problem solve with here is a human, too. And whether it’s a customer or whether it’s an end user that we’re trying to build for and have that rooted back in. And for some reason it’s been a lot easier to find. To find that kind of talent in middle America compared to the cities on the coasts or big cities like Toronto. And I think the customers also start to see that. Where when they engage with us, they see that come through in the engagement and every interaction in the meetings and the weekly cadence where as much as we want to be service oriented, that we do show up and we push back and we do point out some potential flaws in the way they’re thinking and offer them better opportunities as opposed to falling in line just because they’re the customer and the customer’s always right. And and I think that’s that’s something that, you know, exists both on the supply and demand side around here. And and interestingly, there’s folks, especially since the pandemic, is that us folks have kind of moved all over the place and we’ve become more of a hybrid company hybrid in the sense that we hire folks across the country and we come together or very specific in-person engagements or in-person workshops or conferences and folks on the coast to tend to want to come and work in this kind of Midwestern vibe, as you call it. And, you know, more objectively, the values that are that are listed on their careers page despite being based out of California or New York City, because they find that the employment opportunities that they have available to them there don’t necessarily align with who they have. And I think, as you know, I’m not the first one to say it on here. I’m sure that if you can find a value alignment with your colleagues and with your clients, a lot of the other stuff, like salaries and stuff, no longer are top of mind. You just have to pay market, make sure you’re not ripping anyone off. And folks feel like a stronger sense of purpose and community and working together and building is building these products together, solving these problems together. So I think that’s something that I haven’t fully been able to get into a spreadsheet, but it’s it’s a hypothesis that seems to keep paying off. Yeah. 

Greg Alexander [00:14:08] So you answer one of my questions, which was, you know, COVID now makes everybody remote or hybrid. So is geography still as relevant as it once was? It seems like it still is being applied slightly differently. The other side of the geography question and back to strategy, where to play, how to win in geography is part of where to play is. Back in the day, not too long ago, the clients at times would prefer local providers for a whole variety of reasons. You know, and I have read about what Ford Motor Company and the other great companies in Detroit are trying to do to revitalize Detroit. And I admire them for doing that. But now it’s post-COVID, you know, is that does it do the clients still want to do business with local providers or is it now geographically agnostic? 

Ashok Sivanand [00:14:53] I think geographically you still have to be willing to show up. Okay. And we’re seeing different companies come back to the office in different ways. GM is doing it a slightly different way than maybe I would where they’re saying, hey, twice a week, three times a week, we’ve got to come into the office. And that’s one way to go about it. I’ve noticed at Ford they seem to be a little bit more specific about what type of interactions they prescribe for in-person interactions. So they’re like, Hey, we do quarterly plannings, we do workshops. I’d like for you to come in so we can do that on a whiteboard versus trying to figure out how to do it over Zoom. But once you know what the work is and when it’s due and who your stakeholders are and why we’re doing it and everything else, the strategy part is all understand we’re lying and we feel like there’s trust between the team. Then go do it wherever you need to do it. When you put your heads down and get the execution done. And so we were always huge proponents of in-person. The the fact that we were one of the catch 22 is about being in a city like Detroit, is that we there’s a lot of opportunity, but there isn’t necessarily the talent base that you move to meet the demands of that opportunity. And so going hybrid allowed us to expand to a larger power base. At the same time, we set expectations pretty early with our folks that, hey, you’re going to be commuting way less than your last job or you’re going to be traveling a little bit more. And we make sure that every time we start a new engagement that we we go out of our way and make sure that the client’s willing to come in person and do it as well. And we fly in from wherever. So I think in terms of your question, I notice that there are some other firms who are still maybe stuck in that convenient space of just after the pandemic hit where no one had to travel. Travel costs were lower. There was a lot more convenience to it. And I don’t necessarily think that convenience outweighs the community that you can build with those in-person interactions, especially when you try to build trust with a new to meet or with a new client where that trust goes a long way six weeks later, and inevitably you’re going to have some friction. Do you earn the benefit of doubt with the client where they will get into problem solving mode versus people solving mode? Those are all things that we’ve noticed. Go right away when when we spend that time to show up in person. And again, I don’t want to speak for Midwesterner as being somewhat of an impact here, but I do sense that there’s a little bit more of a midwestern value of showing up to someone’s house, breaking bread with someone and building those trusted relationships before really getting down to our own and the bottom line. And so it’s maybe a little bit more metaphorical in terms of does the geography still matter? I think the the Midwest, the Midwestern values are still very much valid, whether you’re local or not. Yeah. 

Greg Alexander [00:17:42] Well said. Well, listen, we’re at our time window here. I could talk to you about this forever. But, you know, just to put an exclamation point on that last statement, we’re in the service business, so relationships matter. And relationships happen when they get face to face. It maybe it’s happening differently now. Maybe it’s not every day, but it does matter. So I think for the folks that are listening to this boutique service rooms, you have an opportunity to differentiate there, you know, and because sometimes big companies like the big auto companies, they do business with smaller firms because of that relationship factor. I mean, who wants to be just another client of Accenture, whereas they can be, you know, your most important client kind of concept. So try to take advantage of geography when you can. Well, listen, on behalf of the membership, just wanted to thank you publicly for being here. I’m really looking forward to the Friday Q&A session with the members. I know they’re going to have a ton of questions on how you learned learned the Toyota production system and the five whys off of a forklift and how that made its way to Detroit. You often don’t hear people say, I live in Detroit and love it, and that’s contrarian by itself. But and we’d love to hear all about that. And, you know, we’re now that it’s post-COVID, we collectively are starting to do some event events. So when the weather gets warmer, I’m going to call you and say, hey, I’m going to get 1012 collective 54 is going to come see you in Detroit. Want to show us around the city. So like fun. 

Ashok Sivanand [00:19:08] Okay, that sounds great. I look forward to it. 

Greg Alexander [00:19:10] Awesome. All right. All right, listeners, let me give you a couple of calls to action. So if you’re a member, be sure to attend the Friday Q&A session regarding geography here and with The Shook. Couple of tools I want to draw your attention to. So in the Boutique companion course, that’s the e-learning modules built around the boutique framework, There’s a strategy template that you can download and it talks a little bit more about geography. We also just wrote an EO slash collective 54 integration plan, got a lot of members that run the U.S. We run our firm in the U.S. We love it. We think it does need to be customized to be relevant to professional service. So if you’re in your iOS shop and want to learn more about that, go to the resource center and download that. If you’re not a member and you want to be because you want to meet really cool people like you did today, go to collective 54 dot com, fill out the contact us form and somebody will get in contact with you. If you’re not ready to be a member but you want you want some more outstanding content like this podcast. Subscribe to collective 54 insights and you’ll get three things. Monday, a blog, Wednesday, a podcast, and Friday a chart. Okay with that. Thanks for listening. And until next time. Best of luck.

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Episode 100 – How A Communications Agency Is Beating The Recession Today By Focusing On Key Clients – Member Case with Todd Rapp

Have you defined your growth strategy to build a sustainable firm? On this episode, Todd Rapp, Owner and CEO at Rapp Strategies, Inc., speaks on how the firm continues to grow and flourish by focusing on their key clients.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serve podcast with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to helping you grow, scale and someday exit your professional services firm. My name is Greg Alexander. I’m the founder of this wonderful group and I’ll be your host today. And on this episode, I’m going to talk to you about strategy. And I’m careful with that word because it’s the most often used word in the business lexicon, I guess. But at the time of this recording, it’s early November and we’re getting ourselves ready for 2023, which by all measures looks to be like an interesting time. So it’s a good it’s a good time for us to have this conversation and we’ll define it, and we’ll discuss what to do with it, how to build it, etc.. And we’re very lucky that we have an exceptional role model with us. We have Todd Rapp with us and he’s going to share about things about his firm and and how he has built his strategy and how he uses it to achieve the success that he’s had recently. So, Todd, welcome to the show and please introduce yourself. 

Todd Rapp [00:01:33] Well, thanks, Greg, and I appreciate the kind words. I’m Todd Rapp. I own a public affairs firm, which is really a specialized public relations company in Minneapolis. We are it’s been a company that’s been in existence for 40 years. But in in my case, I’ve been an owner of this only since 2008 and the sole owner since 2017. Our focus is on helping clients basically in two different areas. The first area is that we help clients with a significant number of either public issues or maybe they’re involved in, say, public construction projects and we help them with strategic communications. And then the second type of client, or those who who also are fairly public facing and they’re really focused on reputation management and risk mitigation. And so we provide strategic counsel and communications services for them. 

Greg Alexander [00:02:27] Okay, fantastic. You know, one part of your journey that I really love and I’d like to spend a moment on, it’s slightly off topic, but we don’t get a chance to speak as often. So I want to put this out there. You know, we have members of Collective 54 that have done what you have done, meaning that there is an original founder, a group of founders, and they start the firm and that’s kind of the first generation. And then somebody takes over for them initially, partially, and then eventually in totality becomes the founder. That’s generation to to use the academic terminology, and then they carry the firm forward. I’d love to hear from you just briefly kind of how that happened with with your company. And if you have any advice for people like you maybe a few years ago that are working for a firm, want to own it someday. 

Todd Rapp [00:03:16] Well, first of all, Greg, how long do you have? Because this is I mean, you know, I think, you know, for for me, I mean, this was a firm that was really highly successful in the marketplace. But I think you could also argue that the reputation maybe exceeded the footprint, if you know what I mean. That is that it was a lifestyle firm for the two owners, and they brought me in 20 years ago to be the managing director. And one of the first things I decided was that I better learn pretty quickly about how the financials work, how we drive revenue, how we build efficiencies inside the office and and try to capitalize on those. And that may have been more of a lucky choice than it was a strategic choice, but it really helped as I got to the position where I became president. And then, you know, eventually I was in a place where I could succeed. Each of the owners at different times. Yeah. It was also really a siloed business and all that stuff. Something we talked about, Mark Collective 54, that you really have to owners who have their own business operations, but then they shared a staff, administrative services account, team, things like that. And the and it worked really well for them. But as I took over the firm and started thinking about things, I decided we needed more of an integrated strategy, that if it was okay to have people become part of the firm who have their own book of business, obviously, but we still needed the firm to be well connected in terms of the mission and in terms of everybody’s alignment on what the financial success would look like. 

Greg Alexander [00:04:56] Interesting. You know, we people ask me sometimes, what does Collective 54 do? And if I’m at a cocktail party, I give them a single sentence. And that is the business of expertize. And what I mean by that is, is that our members are all experts in their domain and they’re brilliant, but sometimes they could use help on the business side of that. You know, for example, today we’re going to talk about strategy. You mentioned understanding the financials. There was an equity event that that happened. There’s all these business components that are just as important as the expertize. So and it was maybe a topic for another day, but I just I knew that about your journey, and I just wanted to ask you about it. Okay, let me frame up our conversation regarding strategy, and I’m going to use an old kind of framework to position this. So the literature on strategy would say that a company or firm of any size has four options of a strategy. So the first is they can choose product differentiation. So in our case, that would be service differentiation. And therefore all their resources, their time, money and people are dedicated to towards being different, maybe, maybe not even bigger, but just different. So that’s one strategy. The second strategy is I’m going to win on price. So I’m able to operate my firm at a cost structure that’s lower than my competitors and therefore I can charge less to my clients. And I went on pricing. There’s lots of examples of great companies that do that. For example, Wal-Mart in the retail industry. The third one is service. So I’m going to overinvest in the client experience, and that’s how I’m going to differentiate, you know, a company that comes to mind. There would be maybe the Four Seasons hotel chain. They they sell a commodity product, a 500 square foot hotel room. But because of the the guest experience that differentiate it and in the fourth one is called the focus strategy. And this is where a firm picks a an industry and a segment within that industry. And they understand the needs of those customers better than anybody else. And they tailor their entire. Company and value chain, if you will, to meeting the unique needs of that particular customer segment. And because of that, they win. So put you on the spot here a little bit. What of those four? If I forced you to choose one, which is an unfair thing, but I’m going to do it today anyways. If I forced you to pick one, which one does your firm embrace? 

Todd Rapp [00:07:32] I would say more likely the fourth. And that is that we provide a very what I think the market understands is is a pretty clear value to our clients. And we work through a lot of different industries. We’re fortunate to work for the the largest health system in the Twin Cities, the largest health insurance company in the state, several of the largest electric utilities of the upper Midwest. I mean, we we’re fortunate to be in that space with the market for that type of customer where they really value what we provide in terms of strategic advice and and communication paths. It’s interesting you talked about that. You know, starting off, I immediately thought about, well, how can we use price as a better differentiator? And what I learned was it’s about value, right? People will make an investment in a partnership with a firm if they if they know that that you’re focused on their business results, first and foremost. And we’ve been really lucky in that way. I would say that a majority of the revenue that we receive, probably a substantial majority, is from relationships that we’ve had more than ten years. And and those are those with organizations who will consistently need to be in the public space, in some cases at smaller firms, so that they were on a growth path. And they needed somebody like us to come in and just and be good counselors and advisors for them. And, you know, one of the relationships I’m proudest of, there’s a small engineering firm that grew up to be large enough that they attracted the interest of Blackstone and and ended up being acquired. Yeah, I know. We played at least a modest role in that as we helped them position themselves in the marketplace. That’s what’s kind of fun, but I think it ends up therefore being the last category that we’ve differentiated ourselves and the services we provide is different than, say, pure public relations and really focused on reputation and also our business growth in a highly public setting. 

Greg Alexander [00:09:37] So tell me about reputation, and I’m interested in that as an area of your focus, because professional services are what is what known as Credence Goods. And what I mean by that is when clients hire a professional services provider, they they have to make a leap of faith. They can’t test out the service usually before they buy it. You know, sometimes when you buy a product, maybe you can have a sample. You know, you go to a restaurant, you look at the wine list, you order a bottle of wine and the waiter pours you before you commit to the entire bottle. With services, you don’t really have an opportunity to do that. And so it’s called the credence good. So therefore it’s largely bought on reputation. And the reputation of your firm is what moves through the word of mouth channel and leads to the growth. So since you’re an expert on reputation for our listeners, your peers, founders, leaders of boutique professional services firms, what should their what should the basics of their reputation management approach be? 

Todd Rapp [00:10:45] For their own firms. Obviously, number one, I think above all, the rest is integrity towards client goals. I mean, I think that’s the if you understand the what your client needs and understands the uniqueness of them, then you can apply your experiences and your knowledge in ways that help them out. And that’s really that’s what we do. It’s value add. I think a second thing that’s that’s really important is is a level of honesty. We’ve told our clients that we are we are passionate advocates, but we’re dispassionate advisors. And by that, I mean we have to be able to tell the clients when they’re going down a path that that’s not going to be successful. And we have to have their trust that the that the advice that we’re giving is based on what their needs are and not necessarily what the financial needs are of my firm. I think the one other issue about reputation is that you have to know what it is you’re trying to do. I, I do a lot of information, interviews with students, and I tell them that we’re not here in this market because we can help target sell stocks or we can help them open stores. But we’ve been fortunate enough that at times when a company like a Target has had some significant reputation challenges, they call us and say, Let’s talk through them and let’s figure out the best path. I think if you’re going to have a solid reputation, you better know exactly what you do well and be willing to accept. There’s other things out there that you don’t do well and don’t just chase contracts because you want to you want to grow immediate revenue. That’s not going to help you, I don’t think grow long term orbit. 

Greg Alexander [00:12:31] Interesting. Okay. One more question. My team, in preparation for this interview, told me that you’ve had a banner year here in 2022 and congratulations on that. And in your already prepared for 2023, with two months left in the year to go and you’ve got your strategy laid out. So a lot of firms right now, given the uncertainty of the economic environment that we’re in, aren’t doing as well as you’re doing. And in they’re reacting to what their strategy is going to be in 2023 and making lots of changes to their original assumptions, which strategies are filled with assumptions? So what were the drivers around your success for 22? And and what is the source of optimism for 23? 

Todd Rapp [00:13:18] Well, Greg, honestly, I don’t know if I started 2022 with the right plan. I was thinking I was focused on geographic expansion and I started down that path. And after a few months and a couple of failures in doing that, I stopped for a second and I just said, you know, the market that we’re in right now still has a lot of room for growth. And coming out of COVID, there’s going to be client demand for services just because know the nature of public issues, the client demand was going to grow. And so I rethought how, both in terms of my staff and in terms of my time, how we should spend that time. And it worked out. It’s been it’s been a successful last, say, eight or nine months of the year. And I now see I’ve got a pretty clear vision as to the client work we have going into 2022 and where I think the growth is now in saying that I haven’t put away that geographic strategy in any way, that’s still going to be part of the growth in 2020 324. But I think what I concluded was that our firm was in a position where we needed to make sure the home base was as strong as possible before we started looking at either partnerships or acquisitions or that are outside of our direct market and it’s been working. 

Greg Alexander [00:14:40] It’s interesting. Congrats on being able to pivot. You know, that’s a key component of strategy formulation. You know, in Todd’s example, he went into the I think in geographic expansion, that was probably a lot of energy and effort around that and passion around that. And then, you know, the market reacted differently and there was an opportunity to stay closer to home and double down on that. And the strategy has to be flexible enough to be able to make those changes. So I could talk to you about this forever. Thank God. We’re going to have our member Q&A on Friday on an upcoming Friday. So we try to keep these short. So unfortunately, we’re out of time here and I’m going to have to bring this to a close. But on behalf of the membership, you know, the way these things work is we we make deposits in the knowledge bank. That’s why it’s called the collective. And then and then therefore, we were able to do kind of withdrawals from the knowledge bank because the knowledge bank is so robust from all the partners. And you made a huge contribution today and it was wonderful to hear your story and and congratulations on all your success. And I wish you the best in 2023. 

Todd Rapp [00:15:43] Greg thank you. Thank you. Not just for this opportunity to thank you for the support that you give entrepreneurs and professional service firms and the great work of your staff. This has been one of the better decisions I’ve made in the last few years as joining the collective. 

Greg Alexander [00:15:57] Well, thanks for saying that. I appreciate it. My staff and I love to hear those those feedback. Okay. So if you’re a founder of or a leader of a boutique professional services firm and you would like to belong to a community of peers and meet great people like Todd, consider joining Collective 54 and you can apply for membership at Collective 54. Com And if you want to educate yourself some more on topics like this and others, think about subscribing to Collective 54 Insights, which you can find at Collective 54 dot com. And this provides a chart of the week which is our expression of benchmarking data, a weekly podcast like this one, a leading blog in the industry, and lots of other things. Like I’ve got an Amazon eBook that was a bestseller on Amazon called The Boutique – How to Start Scale and Sell Professional Services Firm. So if you want to educate yourself what’s great resources out there and consider, consider subscribing to Collective 54 INSIGHT. So to the audience, thanks for listening and I look forward to the next episode.

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Episode 47: The Boutique: THE DOS AND DON’TS OF STRATEGY DEVELOPMENT FOR BOUTIQUES

Scaling a boutique professional services firm requires a strategy. Yet many owners have a collection of tactics and call it a strategy. Learn about how firms should approach creating their strategy.   

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’m Sean Magennis, CEO of Capital 54 and your host. On this episode, I will make the case that to scale the boutique requires a strategy and that a collection of tactics is not a strategy. I’ll try to prove this theory by interviewing Greg Alexander, Capital 54’s chief investment officer, Greg is considered by some as a master strategist and has a lot to share on this topic. Greg, great to see you. Welcome.

Greg Alexander [00:01:08] Thanks, Sean. This is very timely. I was looking at it from the other day who was trying to raise capital, and I asked them for their strategy doc. They sent me a spreadsheet populated with business plan assumptions. And as you know, that’s not a strategy. And this reminded me of how much work we must do in this area.

Sean Magennis [00:01:24] Yes. You know, for some reasons, there’s a knowledge gap in this area. Why do you think that is?

Greg Alexander [00:01:30] I think founders of boutiques know they need a strategy, and I feel as if they want one, yet when they look for help, all they run into is how to materials for product companies. And this leads them down the wrong path. Strategy for a professional services firm is very different. And unfortunately, there’s just not a lot out there on this topic.

Sean Magennis [00:01:50] Well, Greg, that’s what we are here for. And maybe this podcast will help. Heck, maybe there’s a new book in this for you.

Greg Alexander [00:01:57] I’m still recovering from the heavy lift of writing my last one, so maybe someone else can take that on.

Sean Magennis [00:02:03] Well, the boutique is fantastic, so let’s hope. OK, pick up on the thread on how strategy for product companies is different than strategies for services firms.

Greg Alexander [00:02:14] Sure. So here’s our strategy. And a product company gets built. The executive team builds a list of attributes that make a market attractive. These are items such as organic growth rates, number of companies, target trends and so on. This produces a list of vertical industries to pursue. This list of industries gets further segmented into a list of companies to pursue. And ultimately the data gets cut to names and accounts who might want to buy the products, including an estimate on spend potential. A debt gets created that says some version of the following. Our strategy is to target this list of clients in these industries. With these products, everybody nods in agreement. The Excel formulas are double checked and the and the goals get cascaded down to the department heads. This is a what exercise as in what are we going to do? This does not work for a professional services firm.

Sean Magennis [00:03:08] Why not Greg?

Greg Alexander [00:03:10] A strategy for professional services firms must be a how exercise. It starts with, how are we going to become more valuable to clients? Pro serve firms are better served with a how based strategy because of the nature of competition. Pro serve firms do not have the advantages present in product businesses which allow product businesses to get away with what based strategies. For instance, does Google have to ask how questions? No. How come? They have huge barriers to entry by controlling 60 percent of the search traffic. Pro serve firms do not have these types of advantages. For example, McKinsey is a top consulting firm in the world and they only have three percent market share. If they stop becoming more valuable to their clients, they are easily replaced. They do not have an install base locked into their firm. Does this make sense?

Greg Alexander [00:04:02] It does. Professional services firms need a different strategy development process built on how questions with the ultimate how question being how do I become more valuable to my clients? Can you give me some other How strategy questions that should be addressed in a boutique strategy?

Greg Alexander [00:04:23] So here are a few big ones that probably you could really think through and write many sophisticated answers to. So, for example, how do I raise client satisfaction? That’s a big macro question, huh? How can I elevate the skills in my team so I can raise prices? You know, oftentimes boutique owners don’t realize is a relationship between skill and price. Next, how can I redesign the work to improve utilization rates, you know, when’s the last time you broke out your work breakdown structure and reengineered the way you deliver the service?

Sean Magennis [00:04:57] Yes.

Greg Alexander [00:04:59] Or let’s say, how can I specialize in new ways of further differentiating us from the competitors? Because if you’re a boutique, you’re competing with generalist. So the more specialized you are, the more likely you’re going to win. So these are just a few. And they link back to the key macro question. How do I become more valuable to my clients?

Sean Magennis [00:05:19] Greg, is that it? Just switch from what to how?

Greg Alexander [00:05:25] I wish it were that easy. Each how question needs an answer and the answer must include another how. This is the how to part of the strategy, the action plans. This means a goal timeline, budget project team and accountability owners, deliverables and key milestones. This cuts through all the bullshit and gets to the action to be taken. And it is this style of strategy that that takes a pretty scale firm and scales them to a dominant player and their niche.

Sean Magennis [00:05:58] Greg, this is so different and and so clear. This is not a budgeting exercise. I love it. 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.

GQ Fu [00:06:33] Hi, my name is GQ co-founder and CEO of LTV Plus, we serve E Commerce and SAS businesses mainly based in North America and Europe, with some based in other parts of the world. When e-commerce and customer experience executives and directors have issues recruiting agents, training agents and expanding their coverage to meet the demands of their customers, they turn to LTV Plus to help them scale their customer service teams through world class customer service outsourcing. We solve this problem by providing highly trained, dedicated customer service agents that are selected based on the brands and industries they serve. We also provide recovery services to help generate more sales and full payment recovery services to recover lost revenue for subscriptions based online businesses. If you need help with scaling your customer service team to meet the demands of your customers, reach out to me at [email protected] or check out our website at ltvplus.com.

Sean Magennis [00:07:34] 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. OK, this takes us to the end of the episode, let’s try to help listeners apply this. 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 strategy is working for you. If you answer no, too many times, your strategy is more than likely getting in the way of your attempts to scale. So let’s begin.

Sean Magennis [00:08:36] Number one, does your strategy outline how the firm will develop new capabilities that the competitors do not have?

Greg Alexander [00:08:45] And of course, this assumes, you know, what the competitors have.

Sean Magennis [00:08:48] Precisely. Number two, does your strategy detail why the competitors cannot match them?

Greg Alexander [00:08:55] Yeah, an often overlooked is because you develop something. If it’s easily copied, that’s a tactic. It’s not a strategy.

Sean Magennis [00:09:01] Right. Number three, does your strategy specify how these capabilities will be pushed into the market? Number four, does the strategy, explain how your resources are going to be deployed? For example, money, people and time. Number five, does the strategy specify how this resource deployment is different than your competitors? Number six is the strategy supported by enough clients sourced evidence?

Greg Alexander [00:09:36] This is a big one. So oftentimes, you know, our founders who we love envision themselves as master strategists and they say the clients don’t know what they need. Let me tell them. That’s a big mistake.

Sean Magennis [00:09:49] Number seven, does the strategy specify who oversees each program?

Greg Alexander [00:09:54] Got to have an owner for everything.

Sean Magennis [00:09:56] Number eight, has the team been properly incented to execute the plan? Number nine, does the strategy detail how the competitors plan to beat you?

Greg Alexander [00:10:07] Yeah, so a good tool there is a SWAT. Understand, where you’re weak and how you might get attacked.

Sean Magennis [00:10:15] And number 10, does the strategy specify how to respond to competitor attacks? So in summary, a collection of tactics is not a strategy, nor is a financial model or an annual budget, a strategy outlining what is not as useful as a strategy that outlines how. Scaling does require a strategy, and it should be focused on making you more valuable to your clients.

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. Thank you, Greg.

I’m Sean Magennis and thank you to our audience for listening.

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