Podcast Episode 83: Profit vs Market Share
There is a common trap you can fall into when setting corporate strategy. By focusing on building a bigger business in order to chase market share, you may end up with a larger business that actually isn't more profitable. In fact, you can chase yourself into the commodity business, with a larger, busier, and effectively weaker business.
It pays off to focus on producing greater profit, not market share. The job of a leadership team should be to develop and execute a strategy that produces a higher return on capital, and a higher profit than the industry average.
This week on the podcast, Kevin and Brad talk about the competitive advantage of being focused on profit instead of market share.
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EPISODE TRANSCRIPT
Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Brad Giles 00:13
Welcome to the Growth Whisperers is where everything that we talked about is building enduring, great companies, companies that will last, companies that will endure. And that will be able to sustain the long weathered storms that the world seems to always throw at us. Today, I'm joined as always, by my co host, Kevin Lawrence, from Vancouver, Canada. G'day Kevin, how are you doing today?
Kevin Lawrence 00:42
Great, Brad. I'm looking forward to the show, as I always do.
Brad Giles 00:53
And as always, we like to start with a word or a phrase of the day, what might you have for us today?
Kevin Lawrence 01:00
Mine is refreshed. Just because I've been you know, taken taking the advice from my book, Your Oxygen Mask First. And, and having some recovery time over the last couple of weeks and just came back from a weekend at the spa, is a spa resort near us here up in the Okanagan, a place called sparkling hills. So had a couple of days there just to recover and relax and hang out in the pools and, and just yeah, lots of great time in nature and relaxing, which is good, feel energized and getting excited about taking on some new projects. How are you?
Brad Giles 01:37
Probably the opposite of that mine is profit per X. And really just contemplating how over the years, like 1020 years, profit per x as a simple central concept that we work with. So often we clients has evolved. And, you know, the more that we understand that deeper Our understanding is the more nuances kind of uncovered themselves. So the first time that you or I might have read about profit per X could have been in the 90s or the early 2000s. And just over that 20 year period, how much depth and nuance has grown into that. So refiners refresh,
Kevin Lawrence 02:29
those of you who are listening, no, we don't plan those the word of the day in advance, it just kind of comes out. So that's all well freestyle happen to work today.
Brad Giles 02:37
As it is, it is a mental note to set you up one day. Yeah, we do words that can't be doing together. Yeah. All right. So today, we're talking about why strategy should focus on producing more profit, not market share.
Kevin Lawrence 02:58
We can almost call it why market share should be a dirty word in your boardroom.
Brad Giles 03:04
But it isn't. But isn't that what we want to do that we want to grow market share in our company? What don't we want to grow? I thought we were called the growth whisperers.
Kevin Lawrence 03:13
Exactly. Unfortunately, when a lot of people focus on growing market share, it's just like less experienced CEOs and leaders that Chase revenue. And there's a place for market share. But it's a very specific place. But at a macro level, chasing market share is normally a fool's game. Because normally, just like when you chase sales, you make a whole bunch of bad choices, because you have such a volume focus, versus a quality focus. So almost a quantity, obsession versus a quality obsession. And if we know, in doing great businesses generally have a lot of quality, quality of people quality and process and quality of their profits and cash flow. So I think market share often is misunderstood. And I think it's a dirty word in many cases in amateurs word. It's an amateur perspective, because they don't realize the conflict, the the the cost of chasing market share, in many cases, although
Brad Giles 04:23
not all. Yeah, yeah. I mean, the job of the leadership team is to develop a strategy and execute that strategy that theoretically should produce better returns than the industry average.
Kevin Lawrence 04:39
Yes, that shows that they're smart, enter and they're running their business while are planning their business. Well, yeah, but unfortunately, sometimes people take concepts that would work in a very, very large business and apply it to a smaller medium business and it doesn't translate again. It depends on the strategy depends on the industry that Dan But the root of it is, you know what, with all of the clients we work with, we want them to build great businesses. And sometimes they get caught up in the large business focus and wanting to get massive. And I think that being big, is consistent with being great. But the challenge is being big is just big. Usually, there's the saying, you know, the bigger they are, the harder they fall, ie, if you're not smart in high ability, you can build a big, wobbly business
Brad Giles 05:29
that isn't profitable. That perfect, that isn't profitable. And if it's, it's kind of built without a strong foundation, yes, maybe you acquired 20 people in the industry, and you've got great size. But is there any, if we look from the customer's perspective, is there any reason apart from your size, why I should come to you and not go to the Nimble place up the road, who meets my needs better?
Kevin Lawrence 05:58
Correct. And that's the idea is, you know, if not, again, now, I'll make a case against sourcing, but there is a point when you could chase market share, and it could be a brilliant move. That's in a very specific niche, that, you know, you have a sustainable competitive advantage, and big juicy margins, right? Or, or at least you're so efficient, that you get big profitability on the business that you do substantial profitability, you know, in percentage terms. And, and there are places like that those are pocket pools, but generally people chase it as a macro strategy, versus a micro strategy. So if you find, if you're in an industry that normally runs, you know, 32%, gross margin, and 10%, you know, net income or EBITDA, and you find a little honey hole, where you can get 52% gross margin, and 23% EBITA. Go nuts. Chase that as long as you have a sustained competitive advantage. But most people just say, well, we gotta get market share. And they chase market share without doing the profit calculations, and ensuring that they're going to get to keep the business because they have some sort of sustainable advantage.
Brad Giles 07:14
Here's the killer question. Okay, if you or someone in your leadership team says we should acquire or aim to grow more market share the answer, or the qualifying question should be how will that help us to improve profit percentage or net profit? Percentage?
Kevin Lawrence 07:34
Or profit per X? Yes, yeah. So if we're, if we do a waterfall graph of our most profitable business, through to our least profitable if it's related to our most profitable business, let's go. But generally, people miss analyzing the profitability of that market share, they're gonna chase Yeah. And then they wonder why an enterprise that's doing a few 100 million, and then I'll use EBITA. And just for the example, yeah, and doing 12% EBITA. They wonder why it creeps down to nine over time. When they get up to 300 or 400 million. They're doing 9% He was it was because they mismanaged the business. They chased market share, ie volume, business, ie, often more commodity, lower priced business or lower profitability business. Because they go ahead, it's hard. We're not saying this is easy. But generally, the greatest businesses are very profitable. And they do everything in their power, not to take on profitable business. And to make sure that they price differently, so that they can stay profitable on all the business they
Brad Giles 08:45
And if you've got a competitor who's chasing market share, that's one of the best competitors to have. Because you can look and say, who are the best, most profitable customers that we can target and meet their needs better than they are? Because they only care about market share, we can take the profitable customers, and that's why they go from 12 to nine or nine to five or whatever it
Kevin Lawrence 09:11
is, yes, pacifically challenges and a lot of the cases, if you are not really clear on your strategy, you can get stuck into this market share mindset, because you're not smart, or you don't have a smart enough strategy to look at it from a competitive advantage point of view. Yeah, and that's, you know, and generally so one of our your key points here is that market share is the path to health. Usually commodity health, if you're not careful, it's a very, again, if you're a massive scale business, you could be playing a different game, but for most people, the uneducated pursuit of market share, if you're not looking into the lens of profitability, can be really really dangerous because next thing you know All your business is in that same mindset of chasing the market share, but not getting the juicy profit. And all it means is you should be having or maybe not you, somebody needs to go back to the drawing board and figure out how do we better meet our customers needs and get premium pricing. Because we have a competitive advantage, something meaningful in a way that the customer is thrilled that we exist, and, and willing to pay for it.
Brad Giles 10:28
Most industries, most products produce something relatively similar, a good or a service at around about the same price. So you have the job of strategy is to find a unique and valuable position that creates more profit compared to the competition. So you can do that only two ways. Either A, you pick out the customers where you can meet their need better, and they're prepared to pay more profit, because you're going to meet that need better. And therefore you can charge a premium for your service. And that's what most small to medium businesses with high profits are doing. Because they don't have the economies of scale to do the other way. Which is you can take out some of the things that people don't value. And then you can charge less than the industry average and still make a significant profit. And that's why the tech industry has been so very successful because they look at the typical business model and they say, Where's the fat? Where is the things that we don't need? Where
Kevin Lawrence 11:36
we cut out a layer, a middleman or middle person? Yep, no distributor level, whatever it is, they cut out something to reduce the costs and reduce the price.
Brad Giles 11:46
Yep, that's it, and yet still make more profit. Yep, they're creating a unique and valuable position that's different from the competition.
Kevin Lawrence 11:56
Yeah. So again, to kind of where we're at here is that market share is a place that if you're going to chase it, you better duel eyes wide open and know what the heck you're doing. And doing more volume of low profitable business, you can take and build a $250 million business at 3%. And you're making something the doctors dollars there, there's more dollars than when you're at 200 million or 100 million. That's also a very hard business to sustain. If the industry average profitability is in the 8%, or 9%. It's hard to sustain, because you're not going to have enough cash to put back into the business, to reinvest into things like innovation, or whatever it is that you need to do to stay competitive. So if you're kind of skimming the bottom, so again, the root of it is, if you're chasing volume, or when you're chasing volume, you need to be chasing the juiciest volume. And the only way you can do that well, is to have a really good strategy so that your competitive customers love you, and are happy to pay either a premium to do business with you. Or because of your unique approach. You can do it at a lower price, but also using a lower cost base to be able to do it. Yeah, so it's interesting. You know, one of my clients I worked with in the US had a big focus on this, it was interesting. We never ever talked to market share. We didn't even talk revenue. It was very, like, literally the company crossed a billion dollars in revenue. And we almost missed it. You know, it was interesting number two cross but we never even talked about it ever. We talked about gross margin, and EBITDA. And everything was gross margin, which is the money we make, you know, after a transaction is done at the transaction level, and even what sticks after we apply our overheads. So we would call and they grew incredibly, because that's all we were focused on. And the CEO again and again and again was saying, Hey, we've got to be out there finding creative ways to save our clients money. They were in a business where they could they did save their clients money by their offering because they were sort of a outsource solution. Yep. And they were constantly looking at solve a customer problem, save the money, and that they could do that in very, very profitable ways. But they constantly were looking at profitability, gross margin, and profitability. And then the volume came, more and more customers came but never marketshare never revenue.
Brad Giles 14:32
So you've just given two separate scenarios. One was a team who's producing 3%. I don't want to know what the second team was producing, but it's above a lot more, a lot more, a lot more. So let's look go back to the definition I said before the job of the leadership team is to produce an inactive strategy that you know is the highest return on investment or capital investment. The highest return on cash invested in the business that's possible by enacting and sorry, by developing and enacting that strategy. So therefore, the second leadership team were much more successful by virtue than the first, because they're getting a much higher return.
Kevin Lawrence 15:16
Yes, and because the CEO was very strategic, and they were obsessed with creating customer value, and in their market, because there was the people they were competing against, were established, big, slow, and expensive. They were not small, but smaller, nimble, and very creative. And so that they provided a notably better, they part of an excellent solution for their customers. And it can make spectacular problems. Interestingly, by the way, they could have made much more profit. But they didn't try and squeeze everything out of the orange. They left some there, because they wanted to grow and continue to scale the business. So they got very, very good returns. But there could have been more, but they because of their growth aspirations. They didn't want to run the business too tight. Yeah. Yeah. But they were doing but it was an excellent business. Yeah. Yeah. So at the root of all of this is that, you know, when you're going into a meeting is that it's in your planning for your next year, it's to be thinking about strategy, differentiation and growth through that lens versus market share, and how do we compete with our competitors? Hand to hand and getting, you know, getting, getting into price wars and silly things like that?
Brad Giles 16:46
Yeah, it's a nice simple question to ask the leadership team is, are they thinking about 10, fixing the revenue, or 10, fixing the profit. So when you think about the future think 10 years away, or 15 years away, or whatever it is, what comes to mind is it the revenue number will be much larger, or the profit number will be much larger? Now a nuance to that, as you can put in there, the profit per X? Yeah, subject that we've discussed previously, or the profit per unit, or whatever is the profit per x that we use for the business. But if you think about our profit will be 10 times larger than it is today, in 10 or 15 years, it gets you to think about a whole range of activities that are perhaps not profitable, or not ideal. When you think how are we going to get 10 times the profit in 10 years? It's a whole different range of activities. And that's what we're encouraging people to focus on today.
Kevin Lawrence 17:53
Yes. So a couple of questions that you suggested. Another couple questions are sort of, in addition to what you suggested bread would be is how can we get our customers gladly paying 25%? More? Yeah, picking a number, right? Or how, at the same price, can we deliver what we're doing? At 25%? less cost? Right, and really thinking about that? What would we need to do? Right? Or What other problems do our customers have that we could solve? It was zooming up to a higher level, right? Yeah. And, you know, there's other strategic questions, but really, to open up your mind towards creating more value. Another one is, how can we double the value we create for our customers? You know, how can you look into their systems and their supply chain and what they're doing, and offer additional solutions that would help to streamline that and save them or make them more money inside their own business. And now you're really thinking strategically, and I've seen some amazing models of what people have done, and saw some great stuff that we did in retail, where you put the hat of the customer being in this case, it was a brand, and what does that brand need? And how can we better provide that for them. And as a result, coming up with different models and ways to lock up their business and drive more revenue for them. So lots of examples, but we want to give keep our mind on competitive advantage solving problems that the customers are thrilled to pay for in some way. And again, staying out of that darn commodity, hell
Brad Giles 19:45
yeah. And so next week, we're going to talk about the eight common strategy mistakes that people make. And so that's, I guess it's kind of a part two under this one. But yeah, with thinking this is about avoiding commodity health stopping thinking about growing revenues. And so we're really going to talk about the strategy mistakes that people make. But back to this episode. So we need to be thinking about widget growth at the same time. So yes, we Yes. So whilst we've really stressed today that we need to grow our profits, what we're trying to do is compound the profit, growth, as well as the unit's growth or the quantity of things that goods or services that we sell. But not only focusing on that second one, the goods or services, we're trying to get a compounding impact there.
Kevin Lawrence 20:48
Yeah, I had a conversation with the CEO this week, and their profit growth has been excellent, but their unit growth has not meaning that they're making more money off their existing customers, which is outstanding. Yeah. But at some point, if the growth engine itself in terms of units is not growing, your growth won't sustain, you can only get that extra margin extra profit for so long. Until that stops, and then it will be flat. And sometimes you can decline. Because the new a new business engine has stopped, interestingly, what we talked about for the CEO, because they've done it lots in the past, but it's keeping the new client, you know, the new local acquisition forefront in their reporting and their goals. Yeah, and this happens to a lot of companies, they, even if they're focused incredibly well on profitability, growth and all that good stuff. You still need to manage the unit growth, and it easily fades, because the whole team slips more into account management, then, you know, landing of new accounts or business development.
Brad Giles 21:56
That's so funny. About a year ago, I took a client for I took a call sorry, from a CEO. And well, he was a former CEO. Now he was the chairman of the board or main shareholder. And so he was a little bit beside himself, because he said, Look, we had, he had stepped out successfully, and they decided to appoint the CFO, the Chief Financial Officer into the C roll C E. O roll the to basically run
Kevin Lawrence 22:26
the business. I've been to the end of this movie.
Brad Giles 22:30
Yeah. And he said, That was a couple, two or three years ago, hadn't spoken to this guy in that time. And he said, so it's great that I've stepped out. And he said, It's a family business that a family sits back, and they're loving the fact that the profit grew. He said, We've never made as much profit as we have now.
Kevin Lawrence 22:48
But for how many? How many? For how many months? Yeah,
Brad Giles 22:51
well, it was, well, that profit was, I would say, two to three years. He said they were just the dollar profit has been unbelievable. We couldn't get our head around, that this business could make that much profit. But he said, there's been this sense of dread that started to step into the family because the revenue has gone backwards. Sure that yeah, it's gone back about five to 10% Every year, over the last 10 years. And he said So yeah, we're making more profit. But as business people we know this is this is not a good story. Like it's not
Kevin Lawrence 23:32
because you're you got caught up in optimizing. It's a very common scenario, streamlining, optimizing, cutting unnecessary cost, but then you kill the growth engine or you kill the value prop one of the two, whatever, you know, it's it happens all the time.
Brad Giles 23:46
Yeah, they switch off the strategy switch. They switch off any and they kill
Kevin Lawrence 23:51
the competitive advantage. Yeah. And they just milk it until there's nothing left to milk.
Brad Giles 23:57
Yeah, yeah, it's the dry cow scenario. Awesome. Yeah, so we need to ensure to circle back we got to make sure that we will plan to grow unit growth, as well as profit. But the primary question, as we said earlier, is, let's ensure that we're focusing not on growing revenue, but instead focusing on growing profit and then asking the subsequent questions
Kevin Lawrence 24:29
growing the honey holes in market share, not the macro market share growing into places that were strongest have a sustainable competitive advantage. And then generally we get paid for that. never mind the fact that we're building loyal long term customer relationships versus ones where if we don't have a great advantage, they might easily go somewhere else. Awesome. Awesome. I love this one. And whenever people start talking about market share, Brett I get fired up. I'm like, You need to probably learn a few things. And be and I And sometimes they really do know their stuff. But it says you got to be very smart and sophisticated if you're going to start to try and chase market share. It's a very very tricky, tricky game. Alright, well thanks for listening this has been the growth whispers podcast with Brad and I'm Kevin for the video Vision version then go to youtube.com and search for the growth whispers for Brad evolution partners.com.au And for myself, Lawrence and co.com Hope you have an amazing week. Stay out of commodity hell and chase the honey holes of competitive advantage. Have a great one.
Podcast Episode 82: Profit = Intelligence x Discipline
This week on The Growth Whisperers podcast, Brad Giles and Kevin Lawrence talk about the two critical variables that impact your profit. Intelligence and Discipline.
If you have the intelligence to create a profitable strategy but don't have the business discipline, it will negatively impact your profit. If you have the discipline to run an effective and efficient business but don't have the intelligence to build a strategy that grows your margin, it will negatively impact your profit.
The show helps listeners to zoom out and perhaps understand why they might not be making the profit that they want. Discover ways to look at your discipline, your intelligence and your profit through a different perspective that could have a large impact on your profit, and the enjoyment you get from your business.
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EPISODE TRANSCRIPT
Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Brad Giles 00:13
Hi there, welcome to the growth whispers where everything that we talk about is building enduring great companies, companies that will last, companies that will continually produce and build momentum, and really give you the life that you've kind of enjoy, love and can be proud of. I'm Brad Giles. And as always, I'm joined today by with my co host, Kevin Lawrence. Good day, Kevin, how you doing today?
Kevin Lawrence 00:40
I'm doing great, Brad. I like that intro that was good.
Brad Giles 00:44
Well, you think after 82 episodes, we'd be getting a little bit better at this. And so hopefully, it's a little bit better than the first one. So everything good in your world.
Kevin Lawrence 00:56
Things are great. I'm excited. I'm really you know, this. This is a really interesting show, because we talked about it over a few weeks doing this show. And it's a real simple piece that we're talking about. But it really made me think I'm really looking forward to sharing it today. Yeah, good. Yeah.
Brad Giles 01:12
Yeah. It's been sitting around that we've been toying with I agree. And it's good. So we always like to begin with a word or phrase of the day. So Kev, what have you got today? For us any thing from the vault? It
Kevin Lawrence 01:27
is, it's just the word. One of my favorite words is simple. And I shared in last week's show, we had our team retreat up in Whistler, and we had 10 of us for two and a half, three days. And as we're going through everything, and we had some new members of our team, one of the things that kept reinforcing is simple, simple, simple, simple, simple, not interested in complex things, because they don't scale very well. And just my love of simplicity. And when I realized that I remember hearing about, I think, Well, there's two, there's two, just two quotes. One is its attribute it to Mark Twain. I don't know if it actually is because when I had someone on my team do the research, it didn't come up as being legit. Although it's he's quoted as saying it many, many times. It's, I would have written you a shorter letter. But I didn't have the time. Yeah. Just it's hard to be succinct. It's hard to be right to the point. And the same thing is, is when you watch a master at anything, you watch a master painter looks like it looks like it's like the easiest thing in the world. And it takes a couple minutes for a masterpiece. And in the work that was so simple, simple and simplicity I just how it works. Time and time again. And complexity is normally created by people who are not yet masters.
Brad Giles 02:51
Awesome. Awesome. Yeah. So mine is courage. You and I've spoken many times about decision needs to be either Hell yeah. Or hell no. And trying to push the thinking around decisions to it's how do we get it to be a hell year? If it's not, then it's a hell no. But there's still an element of courage, especially with big decisions. It's just not that easy. And so you and I were talking before the show about, you know, some sort of aspects and some decisions that I'm making. And so it's about courage. It's like, yeah, sometimes even if it is a hell yeah. You've still got to have the courage to do it. Yes, you say simple courage.
Kevin Lawrence 03:36
It is simple courage or courage is simple. Courage is simple. All you have to do is spend some time and take a step. That's awesome. Cool. Well, let's let's dig into today. So today is a little bit of a math formula. They're not algebra, we're not getting that complicated, but math. And it really profit equals intelligence multiplied by discipline. Yeah. Now on their own, if you have intelligence, and no discipline, you know, intelligence times zero, you get nothing your intelligence is useless. And, you know, the others and we have a saying, you know, we use a lot is, you know, ideas are a dime a dozen. Yeah, you know, good ideas and good thoughts are nice, but they're not worth anything unless they're implemented. Now, the other side of the equation. So intelligence and no discipline equals zero profit, and no intelligence but a lot of discipline can also lead to zero profit. We call that barking up the wrong tree. You know, and it's, there's a metaphor there's a story comes from a dog chasing something I don't actually know what it's from but, but the point of it is that you can work so hard at something, but if it's not a great idea, or great pointed in the right direction, or the customers don't think it's a great idea, or you didn't promise Right, or who knows what, you can bust your butt for a big goose egg. So intelligence requires both discipline. And sorry, profit requires both intelligence and discipline. So a great
Brad Giles 05:15
way to think about this is beginning with a zero, but also a de rating factor. So imagine if your discipline is 50%, what it could be you around the business in terms of sticking to all the elements. I mean, this is really what you and I do we bring in to organizations, we bring in intelligence, and we bring in discipline. So let's look at discipline. And if you were only operating at 50%, of the discipline, that you could be, you know, then your intelligence, let's say was 100%, you're still not going to make the profit at the beginning of the equation that you should. But if your intelligence or your business model, or the way that you're working is only 50%. Like, you're only really making a very small amount of the profit that you shouldn't be.
Kevin Lawrence 06:11
Right. So in simple terms, if you're in, you know, if your profit could be $10 million. But, you know, based on our fully, you know, the most intelligent approach and the most disciplined approach, you know, but but in the case, if your intelligence is only running at about 70, and your disciplines running at about 70, now, you're still I think 70 is still a B student, not sure. But you know, but seven times seven is 49. That means you probably be hitting what 4.9 million a profit, or a, someone who maxed out the intelligent discipline can make 10. Let's take from there, you could have an eight intelligence and a to discipline, you're going to do 1.6 million a profit on a $10 million possibility, or flip that. So that's very intelligent, but horrible discipline. Or you can even take a moderate intelligence of five, and a discipline of 10. And you would get 5 million. Yeah, so you know, someone who's only a five, or intelligence business being five out of 10. But incredible discipline making 5 million bucks versus you can have eight or 10 intelligent people that would make dramatically less money because they don't have the discipline. So it's not meant to be math class, ladies and gentlemen, and friends. You know, it's, it's, it's just about really understanding that these two variables are really critical. And we're gonna dig into both of them a little bit more liberal way, in these modern times, is saying, ladies and gentlemen, still the right thing to say I don't think it is, is waters is saying, ladies and gentlemen, I think you need I'm just thinking about being politically correct, Brad.
Brad Giles 08:14
I would tell you a quick story is a team that I work with. And this individual, you know, was probably making about, I'm gonna say about 200 $250,000 in profit for quite a while for I'm talking years and years and years and years. 10 plus years, and it was just, it was just not there. Now, this individual didn't have the discipline. And that was the derailing factor. Okay, so, I harassed and harassed and harass this person about this discipline, and he just couldn't have it. So we employed a person around a particular role that he was doing to take over that to set some KPIs. As well, as we were already running a lot of the other disciplines within the business and profits. They were four times higher as a result, and that's part of where this thing can come from. Their business model was okay. I mean, really, if they had a much better intelligence factor, business model, they could have been in this right, they could have probably been doing close to $4 million. Yeah, with the with a great business model. But the discipline was ramped up, maybe not as high as it could be. But let's say it was an eight out of 10, or nine out of 10. Subsequently, so with a mediocre intelligence, or an A medium intelligence, and in a very good discipline that we're doing really well.
Kevin Lawrence 09:47
Yeah. And I was thinking about your example. And it's a bit of an extreme example, but one of my clients that when I started with them, they're making a couple million of profit and the intelligence was mediocre. Yep. And the discipline was mediocre, and we roll forward 10 years, we have an incredibly high percentage of a players, their bottom line is gone from a couple million to knocking on the door of 100 million, like getting close. Like, it's incredible. And if you look at it, the disciplines that they have in place are incredible. And they have the right people in the right seats doing the right things, and the intelligence that they have, and not I, you know, don't say IQ intelligence, but the intelligence, the understanding of their business, in the market, in their systems in the customer gets incredible. And the amount that they've been able to, it's a machine and it's almost like it's so good. And they've been able to tap into some opportunities during COVID. That gave it a serious bump as well. But it's so good, it has them going. Like can we sustain this? Yeah, because it's such an incredible, incredible machine. But it's boatloads of intelligence, and, and boatloads of discipline by amazing people. So it's, it's really powerful. As we're talking about these stories, Brian, I'm just reminded like, that's why when we go into companies and do the work we do, it's, it's, it's kind of like shooting fish in a barrel, ie in terms of the results you're going to get, because It Ain't Rocket Science, what we do, but because we understand the systems really well to the point where the systems are simple to us, we go in and put these discipline Well, we actually we increase discipline, and we increase intelligence. Yeah, we increase the strategic thinking, and the insight and oversight they have of the business, both at the leadership level and for other key leaders. And then the discipline by having crystal clear KPIs and crystal clear goals, and, you know, talent reviews, and all of these other things, is that it becomes just part of their ecosystem to have more discipline and give people autonomy at the same time. So it doesn't feel like a big bureaucracy. So it's, it's amazing, but it's just enhancing those two very simple but powerful variables.
Brad Giles 12:32
I wasn't an intellectual I, you know, I some people might be listening, thinking, I barely made it through school, you know, school was only there to fill some of
Kevin Lawrence 12:42
some of our top clients didn't didn't make it through school. Yeah, well, they still they did, they found creative ways to make it through school, but it wasn't based on their ability to sit in the classroom and write tests.
Brad Giles 12:54
That's not what we're talking about when we're talking about intelligence, not at all. It is the intelligence of your business model, the intelligence of the way of your strategy, the intelligence of the way that you present, and understand the market and the way they meet the customer needs all of the things around that is what we're talking about.
Kevin Lawrence 13:18
Yes, so let's dig into intelligence itself, not one variable, we know profits and outcome. But the first thing is about business models. And it's just that not all business models are created equally, even in the same industry. And with the same variables around them. I've seen things in the same industry, where someone will be operating at 5%. Net income. Yeah, others will be making 25 or 35. Now, the ones that are making the 35, they're not talking about it. And I've seen many businesses that make you know, I've seen some business that making 35 5060 and even 80% net income, or net profit, whatever you want to call it on notable numbers. Yeah. Like serious numbers, like not not not little startups on substantial businesses that again, they're very quiet about it. But it's because of intelligence is that someone has seen an opportunity, on a way to price something in a way that is quite smart, or they know how to buy something or get a resource at an incredible price. Whatever it happens to be, is and not all business models are focused on profit, some are building valuation, that's a different game. But it's intelligence in knowing how to maximize a model or see opportunities that others can't.
Brad Giles 14:43
Yeah, it's so interesting. You mentioned that I one of the things I do is work with groups. So imagine if you will for leadership teams in a large room, and we're working through doing strategic planning together myself and these four groups. Now we learn from each other through that model. Now there's three, let's say, normal businesses. And I'll say normally in the context of focus, and then there's one a tech startup. And, and so we're talking about revenues, and we're talking about profits as a group. And then I said to them, Look, you do realize why they're focused on their run rate. And that's the main thing, because all of the other businesses in the room are going to perhaps attract a two and a half to a five times multiple of EBITDA of profit effectively. So if you make $100,000 profit, you're going to be valued at 250 to $500,000. Plus, plus, whereas for the tech startup, they're going to be valued at 10 times their revenue, the top line. Yeah. And that was in the end, of course, all the leadership, the other three leadership teams, their jaws dropped. And, you know, they were like, I see what you mean, when you say now that all business models are not created equal?
Kevin Lawrence 16:06
Yep. Because they're also playing a, they're playing the valuation and get bought game versus the generate cash flow and profit for shareholders, right? They're generating value for shareholders based on appreciation of the value of a stock versus the cash flow.
Brad Giles 16:22
Well, it's funny you say that, because that particular team, listen to the growth whispers, and now they've switched to building an enduring great company. Hey, and so they're about building an enduring business. Love it? Yeah.
Kevin Lawrence 16:40
All right. So until the first thing, so business models aren't critical. The second thing is, is that, you know, with the, you know, the intelligence, it's important, but it's taking those ideas and bringing them to life. Because the secret recipe of success is, is good ideas that iterate towards great ideas, no idea starts over. So good. Iterating, towards great, and then execute, executed with discipline over a very long time. And it's the discipline of execution, that gives you the feedback and insights to help to iterate the ideas and make them better, and they're kind of symbiotic they go hand in hand, if you do it really, really, really well.
Brad Giles 17:19
Yeah. Gone,
Kevin Lawrence 17:23
was saying, and then, you know, and others, you know, when it gets into this kind of this space on the, on the ideas, they'll play the me to commodity game and chase easy or accessible revenues and operate at 3%. Net, or lose money on unprofitable clients or services. They're just, they're not spending the time to analyze. And I'm not saying that people aren't capable. In a lot of business, they actually don't have the data. Yeah, they actually don't know that the finance or accounting team is so busy just trying to get invoices out, get the books done and collect the receivables. They don't have time to zoom out and use their intelligence to provide the operators of the business insights on how to run the business better. And that's what's a gap we see in a lot of growing companies. They just, they're doing the best they can they don't have the time to think.
Brad Giles 18:14
Yeah. And often I think that they're they think about themselves as being a part of an industry. So if they were a home builder, they think we're in the home building industry. There's no like we do what the industry does, we build homes, they don't think to they don't use that intelligence to think how can we evolve our business model to be significantly more profitable.
Kevin Lawrence 18:36
And that's why I drives me bonkers when people start talking about industry averages and best practices. Well, industry average is mediocre and best practices is drives your right into that mediocre middle and I hate it. Now you can look at if you look at industry data, you want to look at the best. The highest performing one or two is what you should benchmark not don't benchmark the middle unless you want to be mediocre. And I get crazy passionate about that exists. You know, we look at the best practices really are common practices. I agree. I don't want to be common. I totally agree. Yeah. So So back on the intelligence piece, you know, it's really the idea to seize the great opportunities that have an impact on the client, throw the client and you can generate great profits to that's, that's the idea. It's an ability to see it and see the things that would make you 20 or 30%. Net as an example or dramatically enhance your growth rate or or, or, or even lock up a customer and get incredible loyalty of our customer or a big group of customers, whatever it happens to be. There's many forms of winning but intelligence can see things I mean, we both work so incredibly, incredibly Intelligent CEOs and executives. And you know, I could tell you about 20 of them that just blew me away. And that's where I've learned so much over the years is these amazing people, you know, one of my clients, I'm gonna keep this generic, but he found a way to lock up the top five customers in an industry in a way, where they spent every dollar through him, and contractually could not spend any money on his competitors. With a five year retroactive clause, if they spent $1. Up until the last five years, all of the discounts were owed back and he gave them massive discounts. So it would have been the 10s of millions of dollars, they would retro actively own him. So big teeth in that contract. But because he had those five, who had to give a substantial discount, he got the rest of the industry. And, and actually, I think it was, it was five top clients, I think when I'm sorry, it was a couple of different industries. But he got the top couple of leaders in an industry. And then the rest of the business was there, because this top customers was there. It was incredible. So that is intelligent, basically controlling the market by doing a lucrative contract with a few. And then you get the money. Again, that's, we call those x factors. They're brilliant, it's in on same with the, the husband and wife team in California. They, he, she operates the palm brand of its pomegranate juice, and he has the brand Wonderful Pistachios, both premium brands in their space, they were one of the biggest landowners in the state of California. And if you know anything about California, controversial issue that has been in California, is the water consumes no farming consumes more than 80% of the water in the state of California. And produces notably less than 10% of the GDP. And water is scarce. Well, this couple, a little bit on a smart side, and going back about 10 years, they had secured and own more than a third of the water in the state of California, they own it, yes, they sell water rights in the United States of America, owning water in a farming area, that also happens to be an area that requires irrigation because it doesn't rain enough, is a big component that's damn intelligent, not only to see the opportunity, but to find a way to buy that and continue to control it through the lawsuit. So there's there's endless, endless examples. But you know, it's about thinking about how you have a notable impact on an industry in a way that's good for you. And or your customers.
Brad Giles 22:48
Yeah, customer work, we'd bet 200 million, they would have been GE an eight or nine on discipline, but a one or a two on intelligence. So let's move on to discipline.
Kevin Lawrence 23:04
Yes, and the main thing about discipline is it's, it's learn, it's not human. Right, humans are creative and free thinking. And, you know, by nature, I mean, some people are more discipline than others. Actually, I will say that some there are some very disciplined people in the world. And, you know, the truth of it is without discipline, those ideas are a dime a dozen. They're not brought to life in a consistent way that, you know, that provides insights and you know, can help iterate the ideas and make them better, you know, he need discipline to implement things. And this Collins would say, you know, success is real, relentless execution of the boring base basics that fit in your hedgehog, hedgehog being your simplification of your business model, relentless execution of the boring basics. That's discipline. And as we've talked about in the companies that we work with, we bring in a lot of disciplines. And why do companies want to generally keep working with us long term, is because we keep that discipline engine going on the parts that are hard to have discipline around. It's hard to continually have deep financial reviews, and KPI reviews and goal reviews, and to hold tension in the room to truly look at the accountability and how to be better next time. Yeah, there's 14 Other things to focus on. So discipline is is critical. And it's something we all including myself can always get better at. And that's
Brad Giles 24:33
why the great teams, they understand that an external advisor that what you and I do, the way that we apply things, it's not just about oh, we need I want to learn something new all the time. It's about let's come back and keep us on track. Like get someone who isn't an employee to keep us on track. Understand best practice and we spoke about that earlier, but you understand what is the best practice to keep us on track and Have that external discipline that external focus on what we're doing?
Kevin Lawrence 25:05
Yeah. And it's somebody to run the damn meeting, because running a meeting is one hell of a discipline. And it's not easy. Yeah, you're running a two or three days strategic meeting with 10 1214 people. That is very, very challenging, not for the faint of heart. And to do it, well, you need to do it a lot. Right? Because it's, it's a discipline. That's why you go to a master on that stuff.
Brad Giles 25:28
Yeah. So it's the discipline of not taking on new things, understanding the strategy. The we've spoken about all of this stuff, like it's the weekly meeting, the daily meeting, the quarterly, the annual meeting, all of those components about having the right data and the right metrics, and equally having the right priorities that are structured in a way that you've got three to five priorities and not more for each business department individual, and that you're focused on those things and not getting distracted importantly.
Kevin Lawrence 26:06
So like the company I shared with you that no, they're getting another ad 100 million of Napa getting pretty damn close. Every quarter for more than 10 years, I get face to face with them, except during COVID. Yeah, and we spend a morning doing a full financial review, full rock review, full KPI review, customer feedback, employee feedback, we do a full talent review of our top performers like and we do everything by division by region, by line, like we split it all up, like we split up and, and dissect the entire thing. And then we do an after action review. Great. What do we do? Well, how do we do better next time, everybody makes no, so how we're going to have a better quarter next time, then we have strategic debates on the important stuff that the discipline to grind through the important things and make those decisions. And then we go and set our goals for the next 90 days at the company level discipline to break down into detailed action plans that we're going to follow, getting feedback from the colleagues in the room, further enhancing the action plans for the quarter. And then everyone sets their individual goals for themselves on their team. Like, and we've done it 4050 times. Yeah. And it's you know, and we're always it's enhancing, it's getting better and better. But we're just, we're grinding it out. It's, it's, it's, it's like running laps in soccer or football practice, you know, just grinding it out getting better and better and better. Awesome. And shockingly, it works. Not shockingly.
Brad Giles 27:42
Yeah. So I think we've, I think we've covered off our main points. Is that right?
Kevin Lawrence 27:46
We have Yes, let's just summarize. profit, or sustainable enduring business that is highly profitable is intelligence multiplied by discipline, right? That that you got to have the good thinking, and then you got to bring it to life relentlessly. And really, under intelligence, we talked about not all business models are created equally, some people will make five points. So the bottom line when others make 35 in the same business, and it's not just about profit, but it's no more profit, you have more options. And we know these ideas are abundant. And it's the discipline to grind things out, that brings that intelligence to life. And really, if you're not careful, and you don't do enough thinking, you can push yourself into a commodity zone, and accept lower returns. And eventually, you know, a business that makes three points in an industry that normally makes 10 or 12. And needs 10 or 12 puts a lot of constraints. And it really can constrict you as you grow the business or even try to grow the business. Right. You want to take over on the intelligence side, Archie, no, that wasn't a one more intelligence is it's really what seems to be opportunities and focusing resources on opportunities that pay for the customers and you and things like X factors and locking up top customers or owning the water in the state. Those are all tiny examples of things that took a taken a lot of thinking and intelligence to bring to life. Anyone did the discipline piece broad.
Brad Giles 29:13
Yeah. So success is relentless execution of the boring basics over a long period of time. And that goes against the human nature, human brains need for creativity. And it's tough. But profit comes from the multiplication of intelligence and discipline, you've got to have that intelligence aspect. If you've only got the intelligence and you don't have the discipline. You know, you won't have the profit that is so important. And then we spoke about the tools, KPIs goals, financial reporting, customer feedback, all of those tools, but in the broad section of execution, which is making sure that we've got the right priorities, making sure that we've got the right Rhythm and making sure that we've got the data and the KPIs. And so when we maintain that discipline, and then we multiply that by the intelligence, that's when we get the profit.
Kevin Lawrence 30:14
Yeah, consistently. Awesome. Well, hey, you know, and the question we can leave you with is, you know, on your company, what do you need to shore up more discipline for intelligence thinking, or getting the critical stuff done? So thanks for listening. This has been the growth whispers podcast with Brad Giles and Kevin Lawrence. For more information on the show, you can go in and check it out or watch the YouTube versions of the show actually@youtube.com Search the growth whispers for Brad evolution. partners.com.au. And for myself, Kevin and myself, Kevin, Lawrence and co.com I was gonna say my email there, Kevin. But by the way, if you have ideas for questions you would like to have Brad and I answer on the show. You can contact Kevin at kevin@lawrenceandco.com or Brad@evolutionpartners.com.au. Email us if you've got specific questions you'd like us to answer and we will do that on a future show.
Podcast Episode 81 - The Dangerous Thing About Focusing on Your Competition
IN THIS EPISODE:
If you're overly focused on your competition, you might not be focusing on your customers.
Many leaders spend way too much time thinking about and talking about their competition. And sometimes this can lead to me-too type reactions, that can lead you to commoditization.
Instead of spending too much time thinking about the competition, leaders should instead think about what their customer needs are, and how to meet those needs in a unique and valuable way.
In this episode, Brad Giles and Kevin Lawrence talk about the challenges with client focus, and why you should spend more time focusing on customers.
SUBSCRIBE TO THE GROWTH WHISPERERS:
EPISODE TRANSCRIPT
Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Kevin Lawrence 00:12
Welcome to the Growth Whisperers Podcast where everything we talk about is building enduring great companies because this is what Brad and I both enjoy doing, seeing companies grow and get better as they get bigger and have a better impact on our world. I'm Kevin Lawrence, joined today as I am for every show with my great partner Brad Giles. Brad, how are you doing?
Brad Giles 00:34
Excellent. Thank you very good today. Very good. Spring in my town. Just starting to warm up so I'm good.
Kevin Lawrence 00:43
And we've got the other way, we're getting a winter. As I drove through the mountains the other night there was a little bit of snow on the road. So the seasons have changed. So what are we going to talk about today?
Brad Giles 01:10
Today we're talking about the dangerous thing about focusing on your competition, there is a dangerous thing. If you're going to focus on your competition. What is it?
Kevin Lawrence 01:19
OK! and so, now your word of the day?
Brad Giles 01:27
The difference between a good boat hull and a bad boat hull and I don't know much about boat hulls, but I know enough to have a go at it. The difference between a good and a bad boat hull is its ability to consistently endure rough seas. And so translating that back into a good business, you can have the best Skipper that you want. But it's the ability to navigate rough seas. That's what's on my mind at the moment, the kind of the parallel between a boat home and a good business. And what about yourself?
Kevin Lawrence 02:12
My phrase is productive paranoia. It's one of my favourites because Jim Collins had me realized that my paranoia made me more capable and not crazy. And as I think it would go back into crossing the mountain passes, because I go back and forth now probably every week, between this place called the Okanagan, you know, like three, four hours from here and Vancouver. And you know, on my vehicle I have it's a truck I used to go up into the mountains for like for snow biking, and winter sports. So it's a truck, it's later in the back. So I've got sandbags in the back, I've got a you know, 24 or 36 Hour Emergency bag, I have the best snow tires you can get. And they're studded with little steel things sticking out. So it'll even have grip on ice. It's like, I'm good, no matter what. And you know, and I know some people that don't think about those things. But it was interesting had a conversation with a couple buddies that were very successful entrepreneurs. And they all operate fairly similarly, they have that similar type of paranoia and productive paranoia is things that you're concerned about. And then you drive into action and do something about it. So it's like, you don't just observe risks, you actively mitigate them all. So you can just get on your way and do what you got to do. So productive the whole of productive paranoia. So why don't we jump right in. So this thing about focusing on new competition can be very dangerous. And I'll tell you it is as you know, as you and I were talking, you know, realized how little energy we actually put into competition that we know is you and I had a conversation we're talking about when you're building out a strategy, you got to be tuned into the market and the competition and what they're doing. But most companies that we work with I work with and we don't have to do, we try not to spend too much time on it because it can be one a waste of time and to dangerous numbers, not saying not to do it. You do need to be aware of them. But the idea is a lot of people start to really stay overly in tune with their competition. And it can get them in a lot of trouble.
Brad Giles 04:37
Yeah, well, when we were talking about preparing for this episode, we were toying with the idea of calling it I you spending too much time thinking about your competition and not enough time thinking about your customers. But that's a bit long for a title
Kevin Lawrence 04:53
and we'll get it but that's kind of the theme that we're weaving into this here. Okay. But it starts with you consume your Thinking time thinking about your competition, there's gonna be nothing left to think of what your darn customers. So the first point here is the distinction between understanding your competition or being aware of which is really analyzing their strengths and their weaknesses. And maybe, you know, opposites do almost like a SWOT on your competition. Versus focusing on and obsessing about. And, and, you know, that's an important distinction, appropriate awareness, versus almost obsessed with and spending your extra discretionary time thinking about them, and or worrying about them.
Brad Giles 05:40
Yeah, your competition should form a part of your strategic analysis. Think about it like this, if you have a quarterly strategic planning day, it should form our agenda and agenda item within that. And then you should be using tools to assess them and what they're doing and what they're not. And, you know, it shouldn't maybe form part of the conversation that you're having with customers, either we spoke about the for cube before for questions in Episode 78. But you know it that there should be a limit on it. Because then, once you understood and have used the tools to understand, let's say, the playing field, or understand where the competition are, and what they're doing, that's when you can shift over to think about the customer's needs.
Kevin Lawrence 06:31
I might even argue that you don't even need to talk about them every quarter. In some cases, every business is different. So I'm not saying if it's working for you keep doing it. But for most of the companies that we work with, we're not even tracking the competition quarterly, we might look at it at an annual and again, it depends, some business models have more sensitivity around it. But the point of it isn't. And that's point number one, that the thing that the second point here is that, you know, the first point is here. So basically, you need to understand them and be aware of them because they're part of the environment. But the second, the real danger is you can if you put too much attention, you start to follow them, and you'll start to become a me too company. And this is how people commoditize their own business and decrease their own gross margin, and decrease their own net income. Because they start to get they get commoditized by following the competition, and oh, the competition's doing it, so we should do it too. And, and that's the danger of paying too much attention to them. And I've seen a lot of companies fall into that they, they give up or destroy their own competitive advantage.
Brad Giles 07:43
Yeah, and that's really the key to the title of this episode, the dangerous thing about focusing on your competition is that you can begin to emulate what they're doing. And then you're always playing catch up, or you haven't carved out your own strategy. And then it's just a horrible race to the bottom. And of course, profits are significantly affected in a commoditized market like that. So it's not that you don't need to not know what they're doing. But you've got to be able to differentiate Are you obsessing? Or are you spending too much time beyond a specific disciplined allocated amount of time that you should in analyzing and understanding them to carve out your own niche?
Kevin Lawrence 08:23
Yes, and that would be the key thing, right? is if you're thinking about them, and then looking at how to differentiate, if we if you're looking at them understand they're going left so that you can go right, that's different, we're talking about you're following them and it would like you know, and this is the danger of as I know, recently teaching my daughter how to drive. If you're in traffic, and you just start to follow the taillights of the car in front of you, you're in danger. Because you don't get time to react you need to be looking 510 cars ahead Yeah, and with the car 10 cars ahead steps on their brakes, you start to slow down. Otherwise if you just get tunnel vision and follow the car in front of you, you're gonna smash right into them because you won't have enough time to respond. And that's what happens and people metaphorically people get that kind of tunnel vision and just start following the taillights of the competitors it's not it's not good you're here to do your own game again, my background racing cars. you're observing those other cars, but I'm looking way past them because I'm running my game. I'm not gonna follow them in theirs. Yeah. Reminds me of a time when, when it's almost like when you go on autopilot. And again, bad strategy is autopilot. And you're supposed to be going somewhere, but then you follow your normal route home, when you're actually supposed to be going to meet friends for dinner somewhere else. That's a whole other story.
Brad Giles 09:41
Yeah, no one will admit to have done the having done that before. That's for sure.
Kevin Lawrence 09:46
No, no, never. I'm never more than once a year. Yeah. And and you
Brad Giles 09:49
know, another way to think about it is that a wolf doesn't worry about the opinions of sheep. Now that's a bit of a brutal way to look at it. But you know, you've got to understand what the competitors are doing. But if you're building a unique and valuable strategy that is different from your competitors, understand what they're doing, and then come back and relentlessly focused on your customers. So that
Kevin Lawrence 10:12
would be the summary read. If you're paying attention to your customers, it's to get data to improve your strategy and your differentiation. Yeah, if you find that paying attention to your customers is making you replicate what they're doing, unless your strategy is to knock them off and be a cheaper version of them, which normally isn't a good strategy. But if you have if that is your strategy, okay, maybe let them be your r&d, and then you leverage it. But for most people, they want to try and create differentiation, not similar. I was gonna say similar ideation. But that's not a word. commoditize yourself. Cool? Yes. So So the third point is going to Okay, enough attention, enough attention on your customers to give you differentiation and understanding, but then 80% of your energy on your customers understanding their current, and their future needs better than anyone else. And that's really plugged into them. And it goes back to that that four cue card conversation we talked about, as you mentioned in Episode 78, but truly understanding what they need, and what they wish they had that they may not even have told you yet. And you know, it's a quote, the late great Steve Jobs, you know, no one ever said they wanted an iPod. Nobody ever asked for one. But he was able to understand what people were using in their world when it came to music, and potentially not using and triangulate it, and maybe a few special psychedelics mixed together. And he hinted up with his vision of this thing called an iPod. But that's a great place to hang out and spend time and sometimes people just don't do enough. And that is a valuable place to obsess.
Brad Giles 12:00
Yeah, yeah. So what we're saying here is, like many of the concepts, the peredo rule, it just plugs in so nicely. So yeah, if we were forced to put a discipline around this, why don't we say, let's use the peredo rolling thing. Don't spend more than 20% of your time thinking about the competition. If you spending 10, or whatever, that's, that's fine. I
Kevin Lawrence 12:27
would say to Yeah, 20 is great, too. But if you want to stick to the prayer thing, but 20 is way too much. Yeah.
Brad Giles 12:35
But we want to find some kind of discipline, because I can tell you, some people, in some businesses, it would be flipped, they'd be spending 80% of their time, thinking about the competitors, and 20 or less thinking about the customer? I believe
Kevin Lawrence 12:55
you Brad, I think that's just, yeah. Unless there's some unique reason why they need to.
Brad Giles 13:03
And this is all of the time, this is not just the time within an agenda at a strategic offsite meeting. Let's be clear about that. It's also the time where there's informal chats over the water cooler, where we're talking about. It's Yeah, it's all of the stuff in the day to day running.
Kevin Lawrence 13:24
I vote for 2%. Yeah, maximum 2% of time on the customer on No, not on the customer on the competition.
Brad Giles 13:31
Yeah, yeah. And that might be, that might be reasonable. But just think about for our listener, think about how much time in total of all the time that you spend on the subject, how much is spent on the competition, you want to make it as little as possible, after you understand them. Then moving on to number four. Once we, once we have reduced, our time spent thinking about our competition, and we instead spend more time focusing on the customer's needs. Remember that commoditization is what we're trying to avoid here, right? So we understanding the customer's needs, then we can dedicate time to improving our systems to enable better customer experience. So how can we meet those customer needs better than any other organization?
Kevin Lawrence 14:30
Yeah, and with the least amount of friction and or cost in the system, which will also benefit your own efficiency and profitability, it likely has spillover benefits onto your team. And this is where the whole thing about Lean and Six Sigma and process improvement comes from. You stand in the shoes of the customer on the receiving end of the experience and you think about Okay, how do we make this notably easier and or less time consuming less mistakes, less whatever it happens to be, it's the ultimate way to streamline our systems. Unfortunately, as companies grow and get more complex, we get more caught up and looking at it from our own perspective. Because we have people that are crying and screaming and frustrated about things that we have that don't work. And we get caught up in that, versus going back to the customer shoes. And yes, we need to do both. But even if you want to streamline something for your customer service team, it should be done from the perspective of the customer. And then the customer wins, the team wins and the profitability or effectiveness of the company wins to.
Brad Giles 15:40
Yeah, so that's about systems. And also it's about our products and services. Let's go back to that peredur rule, what you know, and maybe think about 80% of our bottom 20% of our products and services. Are they meeting the need as much as they could? Or 80%? Just really thinking about? How, if we understand our customers need? are we selling it just because the competitors were? Or in actual fact, could those products and services, maybe they're not relevant? Or maybe there are parts of them that would be more valuable to more customers?
Kevin Lawrence 16:23
Yeah, for example, we just had our annual retreat with our team. And as the 10 of us went through and worked on our strategy and thinking, Well, we know we produced a report with a number of our clients that we're only doing, providing one of the solutions that we have. Now over the years, we've built a bunch of additional solutions that a lot of the clients probably don't even know about. Yeah. And the pains that growing companies have are similar, no common pains. And we've just realized is that for someone, we need to need to make sure they're aware, hey, if you need help with this, then we can help you. But everyone's so busy doing their job, we often forget to go back and hey, you know, Mr. or Mrs. Customer, here's what's possible. Because people just know, trying to get the existing stuff completed in across the line. So yeah, thinking about the same the existing products and services you have, maybe there's additional products and services, and how can you do that? Because generally, generally, I had it noted in our prep notes here, where did it go?
Brad Giles 17:27
I don't know. But while you're looking for that, the other thing is about our employees. So it may be worth considering, pausing, taking a moment and listening to the types of conversations that our employees are having, and trying to think how much of the time that our teams spend is spent on talking about the competitors, compared to talking about our customers. And that would be interesting thinking about that maybe in the leadership team, maybe in the mid management or other teams, other areas. But if you were just to observe, pause, how much of your team's time is actually spent talking about competitors? or talking about the customers needs? And not?
Kevin Lawrence 18:20
Yes, exactly. Beyond that above, by the way as that as we're tone is a one Yo, I bet you there is some companies who probably do need to pay a little bit more attention to the competitors. But I would imagine most would probably need to pay more attention. I would guess more towards the knee from experience of other clients more on the needle towards customers. Yeah, I guess we do we get caught up in the day to day and instead of zooming out and looking at what are the other needs or things that we could help at a macro level and Michael Dell, I just listened to a great podcast with him. But Michael Dell used to call this read reading the tea leaves, he used to do this in the earlier days of Dell, he would take all the customer feedback and kind of spread it out and try and find patterns. And this is before we had kind of word clouds and all of those things. But he would look for the common patterns of the positives and negatives, the customers were thinking to help him figure out what he needed to do in his business.
Brad Giles 19:15
Yeah, yeah, it's, it's important to understand what's happening with the customer. You know, the customer pays the bills, and sometimes they come second fiddle to politics or to gossip or things that we hear,
Kevin Lawrence 19:36
or even broken systems are flawed processes. At the end of the day, it's easy to get sucked into the drama or obsession with their competitors. It's easy to get sucked into the drama of broken or inefficient systems and processes are issues in the company. And it's always the best choice to try and get back to the customer.
Brad Giles 19:57
You know, I I'm sorry, go No, please do go ahead, I, I was recently setting up a new internet service. And it took two and a half months for me to set it up. From the time, from the time when it was supposed to be set up, let's say there was a, there was a date that was agreed with the carrier that the internet service provider, it took them two and a half months to the point where they could tell me what my account number was where, and it got to the point where I was in the store. In I won't mention the company's name was in store. And I was talking to the customer service person. And he said to me, Look, if our systems are so bad, if we can't get this to work, I'm going to recommend that you go to another provider, you go to one of our competitors. They're just not focused around the customers. In any case, that's a side
Kevin Lawrence 20:57
Yes. And as it but I had another similar story. I am working with a bank on a piece of real estate that I own and refinancing it. Yep. And trying to get it refinanced and trying to get it done. And I wanted a couple of changes that were reasonable based on the situation I when I first bought it, there was no tenant, now there's a tenant. So the the the the the needs for the financing are different, trying to get them to change it, they couldn't do it. Finally, the guy said, Kevin, you're probably better to go to one of our competitors. Yeah. And he gave me a name and I got names and somewhere else. So I go to the competitor. Not only is the interest rates 30 basis points lower. They turned around and I was going back and forth to this other one for about a month, the existing bank that already has my business, the new one, turned the whole thing around in I think seven days. And at a better rate, and better actually better rate and some other terms. And they made the changes that were would be normal to do. So here's the bank, the last chunk of business. And it's just and the guy, the guy actually told me to go somewhere else because he says he his people were just being silly about it because of the changes. Because it's like they like to follow the process. Yep. And it's fascinating. You know, and then people are worried and thinking about it. But at the end of the day, when you're letting customers leave like that, when there's no need for it. No, where's your focus on your customer? And they're all trying their hardest? They are trying but you know, it's challenging sometimes.
Brad Giles 22:41
Okay, so let's move to review. So number one is there is a dangerous thing about focusing on your competition. And that is if you're focused on your competition, you might not be focusing on the customer, A and B the customers needs more importantly, so we got to understand our competition is point number one, we're going to understand, what are the competition doing? What are they good at, and what are they not good at. And that should be allocated in a disciplined manner within your strategic planning process. Number two is, is if you don't do this, you could end up as a commodity, you could just follow and replicate what the competitors are doing. And the risk is that that obsession means that you're just a follow up, and it's just driving the prices down. And then number three is think about the peredur rule. Think about your teams, think about yourself. Think about the leadership team, how much of the time is spent focusing on customers, instead of focusing on competitors. And know that Kevin's advocating for 2% I'm just simply advocating understand the number and think about the pariatur rule What if you flipped it? What if you spent most of your time spoke focusing on the customers and a customer's needs. Kevin, you want to move on to number four?
Kevin Lawrence 24:04
Yeah, and the taking that that extra energy you have on your customer? Or maybe you're already doing this right? But think about how do you better improve your customer experience so that it's easier for customers to transact with you and be thrilled the end? And then number five other products and services that you could be providing to those customers? How can you further help them and make their world better because you have some things that will enhance their business and help them to perform better? Very good, pretty straightforward. But yeah, petition is important, but not that important.
Brad Giles 24:39
And to maintain that as we've already said a few times. Think about the four questions. It's a simple five minute survey that we advocate and again we did that. We discussed that in Episode 78 of the growth whispers so this has been the growth whispers My name is Brad Giles. As always, as always joined by Kevin Lawrence you can find me at evolution partners.com.au and you can find Kevin at Lawrence and koat.com. Don't forget, please do click the subscribe button. And we'd love to have you as a regular listener. And thanks very much for listening. We look forward to chatting again next week.
Podcast Episode 80 - How to Retain Your Top Talent
With a war for talent being experienced worldwide at the moment, employers are not only finding it hard to find new people, it can also be very challenging to retain your existing people.
This week Kevin and Brad dig deep into this challenging issue, and cover 7 key steps you can take to give you the best chance of retaining your A-players.
SUBSCRIBE TO THE GROWTH WHISPERERS:
EPISODE TRANSCRIPT
Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Brad Giles 00:13
Welcome to the growth whispers where everything that we talk about is building enduring great companies, not short companies that last all companies that last a short time, not companies that are mediocre, not companies that people are in love with enduring great companies. Today, as always, I'm joined by my co host, Kevin Lawrence, Kevin. Hello, and how are you doing today?
Kevin Lawrence 00:36
I'm doing great, Brad. Looking forward to recording an episode we haven't recorded over the last couple of weeks. So it's nice to be back at it and have a chance for you and it reconnect
Brad Giles 00:46
Indeed. Yes, we have had a couple of weeks, we actually had a bit of a holiday or went up to a place called Darwin, which you may know from something called the movie with Paul Hogan called Crocodile Dundee. So in the Darwin river the most amazing step from that the in the Darwin by around the city. Last year, they took 343 crocodiles mean eating crocodiles out of the bay, just last year.
Kevin Lawrence 01:18
Wow. Did you run? Did you do any crocodile wrestling while you were there?
Brad Giles 01:24
No. People don't often survive that. And so No, no, we saw quite a few of them. But definitely, definitely do not want to be involved in crop at home listening. Yeah, so as always, we like to talk about a word of the day. So Kevin, tell me what is your word of the day or phrase,
Kevin Lawrence 01:44
my mind is recovery. And, you know, it's very interesting that I've had, it's been very, very busy the first part of the season since the summer or since our summer, you know, September going into October, and it's been incredibly busy, but a very, very busy time. And I'm just in that period where I'm kind of catching my breath. You know, I kind of think of myself in the work we do. Like, like, I'm an elite athlete. I'm not an either elite athlete, like I'm not a marathon runner or something. But that we work really in Sprint's we work really hard during periods of time. And then we get a recovery period. So following my own advice from my book, your oxygen mask, first, know my resilience rituals and a bit of a recovery period over the next couple of weeks still working, but just not as intensely. So recovery time is is is my theme or my word of today.
Brad Giles 02:35
Awesome, awesome. You, mine is reset, not too dissimilar. Because I have had a few days Well, a week and a half off. So yeah, it's good to reset. And, you know, everybody needs to do that. We know that globally, in the business world, this challenges around mental health at the moment because of the pandemic. So it's really just around reset, and the good that it can do. So we all have that. What are we talking about today?
Kevin Lawrence 03:05
Or we're making sure that we don't have to recover for resetting too many key people in key positions. Like, oh, we have that one together, right? That's magic. It was magic off the cuff. But basically, we're talking about how do you make sure you retain your key people, and don't have to go through the pain of replacing them, and resetting the whole process in your company. And that's, that's not fun. You know, it's something that we've been talking about with a lot of CEOs and execs over the last while there's this talk about the greater resignation. You know, and, you know, it kind of reminds me of y2k, when there was all this hype about all the computers in the world are going to shut down and I don't know whether it's true or not, I know there's people that held on to their jobs during COVID that might be thinking about moving now. And it might be some deferred movement. But whether there is other isn't, who knows. I don't want to play into you know, Facebook news and, and hype. But what we know is it's a tight job market no matter what, yes. And replacing people no matter what is as challenging as it gets. Yeah. Or we're aware of that it gets. And so the other piece that you know, they're really passionate about is you'll losing an A player or a high performing employee is a is the cinnabar sins is one of the worst things that can happen as a manager, losing your great people, especially if you weren't aware of it, or proactively doing things to help it so yeah, today we're talking about retaining your top talent. Yeah,
Brad Giles 04:43
look, absolutely. It makes for a great headline that people might click to talk about that kind of resignation stuff. But the reality is, is that this skills shortages is a real challenge for everybody around the world. And that means that Competitors or people who want to hire people may want to pay more or offer more or do different things. So yeah, it is yes, for that reason alone, it's an important subject for us to talk about. So yeah, today we're talking about how to retain your top talent, what you can, here's
Kevin Lawrence 05:19
some of the things that we're hearing around the world and like yourself, I work with people around the world in Australia, and India and Middle East and US and Canada and other Asia. And the same thing we're hearing we're hearing people offering higher wages, we're hearing about, you know, signing bonuses or things like that, we're hearing about more active recruitment, I don't know if it actually is more active, but, you know, more active recruitment, and there's just a lot of talk about it, and we're hearing that this market, the rent, it could be tight for quite a while. Before, it's, you know, so it's, it's always hard, it just seems to be a little bit harder. So now we're really wanting to stay with their attention, just in case, you don't believe how important you know, it is, you know, from just an income statement point of view, nevermind a knowledge loss or stuff, you know, the costs of replacing keep you it's expensive, yeah, you don't want when you're when you do the energy to get, find, recruit the right person. And, and, and, and make sure you do proper selecting, when we, when we use top grading with most of our clients all the time, you know, and the energy and the time and the organizational energy and then getting them on board and everything else, it's a lot. And if you look at the calculators of what it cost to replace someone, you know, it can be astronomical, much more than you would normally think off the top of your head,
Brad Giles 06:48
oh, and look at what really is in this, there's two different parts to the cost. The first is the direct cost. And then there's the kind of all inclusive cost. And so the direct costs could be just simply the cost to hire, it could be, oh, we need to put an ad out or we need to pay a recruiter. But then there's this the full the fully included cost. And that's what the real kind of the real cost is, and obviously significantly higher. And like you, you know, I'm an advocate for top grading and the huge body of evidence that that has been created there around that. And, and they're saying that depending on the role, it kind of goes from one to 1.5 times the person's salary up to 15 times the person's salary for an executive.
Kevin Lawrence 07:44
And you see, sometimes when you have the wrong person, the cost, the actual dollar cost of the errors, or sometimes it's a fraud, sometimes it's losing other good people. And then you see the positive impact of the right person. Yeah, and now they reduce costs, and they retain good people and make better decisions. So the swing is massive, I have seen examples where we can count $10 million, for the wrong person in a roll easily. It's harder to count the upside when they improve it unless they're maybe a CEO, but whatever it is, it's massive. And that, you know, we just don't want to commit that cardinal sin of losing your absolute best people. So you know, if you haven't had time to think of what you're not sure, and I know this is probably preaching to the choir, as we would call it. It's massively expensive. And if you want to watch me in meetings get fired up. When I hear that players have left, I want to know what's going on. Right? I even have my team or my client will hire someone on my team to go do the exit interview. Because I want the truth. I don't want what they're going to tell HR because sometimes HR can get the old goods. Yeah, sometimes they're afraid to tell someone in the company the full good, I want to know, because if we're going to just a burned, losing a good person, and somewhere between a couple 100 and a couple, a couple 100 grand and a couple million dollars, I want to get our money's worth from it. So let's, we're trying to prevent you from that painful experience and in the work that we do have spent a lot of time and energy on retaining key people in companies. And it's not that hard. You just got to put the time and energy into it. And that is our first point today. You have to put the same time and energy to retaining your top people as you do is to retaining the revenue of your top customers. We have account management systems and things that we do to to keep our top customers happy and do to expand the business or keep the business or keep the competition out of the business. We don't do that with people almost everywhere. Even HR departments are so busy hiring and making sure everyone's doing their damn performance. reviews and dealing with employees employee problems, that they often don't have the time to do it, they're there, they're not another wouldn't want to, they just don't have the time or the energy to. So we've got to make sure that the organization is dedicating the energy to retaining and keeping our employees engaged.
Brad Giles 10:17
Yeah. Because the cost of losing an A player employer a, it could be, it could be if you can't replace them, if they're difficult to replace, it could be so much more than a key account. We look at key accounts as if it's everything, but in actual fact, when you look at the p&l, and you think about the impact that the top performer could have, yeah, it's, it's absolutely worth the effort to put in to try to retain these people. So So are you putting any effort into the actual retention relative to sales, or at all effect?
Kevin Lawrence 10:59
And that's you the CEO, or the executive or the manager, not you, the head of HR, head of HR HR person as well, but you the actual manager of those people? Or have your peoples people, you know, like, like, yeah, so so once you've committed that, you're going to put the time and energy into it, we got a whole bunch of good ideas that we have seen, that will make a difference
Brad Giles 11:27
a couple of months ago. So there are a couple of months ago, I had an owner of a business call me up because his CEO had resigned, and he went to work for or he taken a job with a competitor, but was still working out his time. And he said, I don't know what to do. And this person was clearly an AI player. He was you know, running the business, essentially by himself. And he says I don't want to do it's going to be so hard to find someone like it's going to damage the culture and all of that and I said, Well, have you tried to get him back? Have you tried to keep the person and he said yeah, I tried really, really hard? And I said, Well, what have you done? Oh, look, I spoke to him for like several hours and the guy paid him he wouldn't tell me exactly how much but it was, you know, a shocking amount of money and I was like, Okay, I said so what's going to be the cost to this business and it's not about only the money and you and I've spoken about this before they don't people don't leave for money but their leaders think that they do and so I said well how about this? What about if you go back and say look, I've thought about it and you're such a valuable person to this organization. And just give him a blank contract like a physical paper blank contract, and just say, I want you to fill in the blanks with what you need to stay here and continue to perform in the way that you are. And that the physicality of that document made a huge difference in the mindset of that person. And even though this person had he'd signed another contract and he didn't want to go back in His Word with this other company he did he turned around he put in there what he wanted and he stayed and now this guy because it's been a few months is actually performing better than he has before is felt honored and
Kevin Lawrence 13:21
important to that stuff. Yeah, the only thing I would say about that story is two things. One, they were dealing with it way too late to that's a very dangerous strategy because then word gets out and you got a lineup of people at your door asking for 30 or 40 grand more so it does work to save but there's a downside of it that you can get yourself in some companies have policies that once a person they will not bid up to keep and instead they put the energy early in the process because you can create a big problem even though I understand it you can create a big problem of everyone in the word getting out you just have to quit and then then they'll give you more money
Brad Giles 14:06
but and you are correct them but still try still like think about what else he can do Don't try
Kevin Lawrence 14:14
and try ideally to do it without cash yes unless their salary was way off market and everything else because then you start creating the word that people will like some of my clients if that happens they're like thank you and you're out because it's they don't want to create that culture Have you got a you know, bend us over a barrel to get more money to stay? Yeah, for sure. And it does work because they tried so ideally you do it later and sometimes if it's an absolute critical role, sometimes you might not have a choice. Yeah. And you just got to do what you do at least for a short period of time. So we talked about the same energy. The second thing is about really know your people and know what's going on which would tie into earlier in the process. Power things Going with their work, how are things going with their life and their wife or their husband and their kids like, no, a good leader will be very close to their people and know where they're at. So they can help them navigate the stresses outside of work as well as inside work. And if you really know where your people are at in their life, and what's going on with their work, and helping them to find ways through it, you know, you can, you can know, you will know in advance the things that are driving them crazy. And as we know, from, you know, the book, seven hidden reasons employees leave and that was back in what episode was that? Brad,
Brad Giles 15:35
I think I was 56.
Kevin Lawrence 15:39
Seven hidden reasons employee leave, and they talk about the Yo, mo 88% of managers are roughly 80 to 90% of managers believe employees leave for more money. The truth is, from the exit interviews, that only about 11 or 12%, lead for more money. And in many of those cases, there were other factors beyond money that made them want to leave. And they're all mostly emotional factors. And leadership is managing people's emotions and finding a way to make things work for them. And if you know your people and know where they're at, you have a much better chance of doing it.
Brad Giles 16:17
And that, I mean, that simply means connecting with them looking for subtle cues that are occurring, finding the opportunity through meetings, you know, to touch base, and it could be as simple as we're gonna do a one word opener for our daily huddle, or our weekly meeting or whatever, little things like that. And then the one word, there are little flags and signals that you can pick up on that can give you the opportunity to dig deeper. Yeah,
Kevin Lawrence 16:47
and we'll do a check in on a scale of zero to 10. Sometimes we do it in in terms of work self and life splitting it out for the different areas. Yeah, some companies, we talk about what's going well at work for yourself and in life and what's not like, just, you know, knowing people, then you have the best position to know where they're at and what they need. The that's the third is an actual formal process called state interviews. Right, instead of an exit interview, do that after they've quit, do a stay interview to prevent them from quitting. Yeah. And it's just really, Hey, how's it going? Here? You know, how you feeling about your role? How you feeling about working with me, your manager? You know, what's your enjoyment of your role? What can we do to make this better for you? So how old are you need? You need a new printer? Good.
Brad Giles 17:45
How's that different to a performance review?
Kevin Lawrence 17:49
It's the other way around. You're doing a review of the organization and yourself and how you're doing and how you, you know, how they're feeling about it. It's like, how are we doing at serving your needs? versus talking about how you're serving the organization needs? Yeah, it's the other side of the coin. Yeah, yeah, the point of it, and most managers are so busy dealing with managing work, they don't take time for the people. That's why HR departments have to mandate performance reviews, and hunt people down and beat them with the stick to get it done. Because managers are busy. Yeah, and or they don't prioritize taking care of their people, whatever it is, we're not here to judge that. It's just consciously taking the time to basically deeply understand their level of engagement, and what's going to help them to to be able to thrive in their work, and you'll always find stuff.
Brad Giles 18:45
And that, you know, we've spoken before about the manager as a coach, the importance of having the perspective that a manager isn't there just to manage the work as you just said, in actual fact, the manager is there to coach the people is their primary role. And coaching is about asking the right questions. So if you're asking the right questions, are you going to know your people and be it's going to help through these stay interviews, situations?
Kevin Lawrence 19:11
Yeah, I used to do with one of my clients, I did a lot of coaching of their executives of the whole executive team. Every single one was critical to the business, very hard to recruit, you know, high impact roles. And during the period that because no one left, people were thinking about it, but because because because we could identify their frustrations, many ways. My coaching conversations had an element of a state conversation in it. Yeah. And when there were frustrations, I would work with them to get them resolved, whether it was with a co worker, a supplier or the CEO. And then we would have a plan at the end of it of what we were going to do in some of these people. I would make sure I talked to them every month, purely to keep them engaged and help them deal with it was it was a little A lot of stuff going on in this company, we have another situation where one of my team did it where they coached a dozen or 15 people, I think, because the, the VP running a huge division of the company that he was trying to turn around, and that division was messy for a lot of reasons. He was let go. And so now they had a very critical part of the business that was just trying to get its feet under it, and just come together as a team, and now their leader was gone, and other executives stepping in, but we knew that was a big Valley to bridge. And so one of our team members who had been working with that team on some stuff, coached every single one of them weekly for 12 weeks. Yep. And then went down to every two weeks and went down to every once a month, as as a bridge for retention. And again, last nobody. And again, if you know if you're going to go and invest 100 grand in, in, in retention, it really, it's incredibly good value, compared to the cost of losing just one of those people replacing just one of those people is in the hundreds of 1000s of dollars of cost to the business. Yeah, potentially. And to spend a bunch of money with a coach who already had a relationship to really help them through these challenging times. Because that's why people leave they lose hope. And they lose faith that things are possible and good coaching and, and stay interviews can help them along the way.
Brad Giles 21:36
Indeed, indeed. And so moving on to the next one, career paths, belief and pride in their career path. So where are you at in terms of your career as an employee? Where a you hoping to go? And how does that align with the ambitions of the business? One of the really interesting evaluations that I've done with leadership teams is drawing an S curve in drawing an S curve. So you've, you know what an S curve looks like. And then plotting an individual against that S curve, knowing that people don't really know too much at the bottom, and they achieved mastery at the top. But in terms of their engagement through the middle, that's the sweet spot. And what we want to do is to have individuals spend as much time as possible in that sweet spot. Because when you achieve mastery, it's fantastic. But there can be a little bit of complacency, and their engagement can kind of drop back. So yes, being able to think where are the people in terms of their engagement and their career path?
Kevin Lawrence 22:51
Yeah, and one of the ways that we often keep a players engaged, is making sure they have their next challenges. Yeah. Now, whether it's a challenging project, or changing of the role challenges really critical for some of these people, and who would think give the people more really tough work, and they'll be happier. But for some people, that's the case, it's, it's, again, these things aren't rocket science, you got to put the time to and again, career path as part of that, whether it's promotion, types of projects, maybe it's a new location, maybe they changed parts of the business, it doesn't matter, just, you know, keeping people so that they feel belief and engagement and where they're going.
Brad Giles 23:35
Yeah, and there was years and years ago, I worked with a construction company and they had a saying that the best way to keep your project managers who were really the glue in the business was to keep them busy. So as you say, as soon as they're not busy, they start thinking about other jobs, when they've got a big job to do, or they've got a series of big jobs to work on. They're engaged, and they're kind of happy for that. Yep.
Kevin Lawrence 24:05
Perfect. The next thing you can do, again, assuming you're gonna put the energy into this, and I recommend most you know, get all of your managers should be putting energy into this normally, but you know, up the ante now is just look to remove the frustrations and the frictions in the system. Again, it's not rocket science. But one of the things that drive people crazy. If the coffee is no good, replace it, if people are complaining, because, you know, I don't know that they have to pay for the coffee. And if it's costing a $500 a year to pay for the coffee, who cares now, if it's $50,000, maybe it's something different. You know, if people are complaining about the air conditioning, or which in many facilities, whether it's industrial facilities or offices, the heating and air conditioning seems to be a big point of contention for people. You Do what you can to fix it or buy people portable space heaters if they're too. Too cold. You know, if people are complaining about something with the computer systems, what can you do to help fix it, maybe it's training, maybe it's a system, maybe it's their computer. But when people have frustrations with the basics of doing their jobs, in many ways, they feel disrespected. Sometimes as well, when they have those frustrations, it's opportunities for massive amounts of waste. But trying to listen to those people. That's why we do surveys, regularity, asking people about the things that are driving them crazy that we should stop or the brutal facts that we should address. Or maybe it's just that toxic jerk you have in the company who drives everything cool, everyone crazy.
Brad Giles 25:45
Two of the three examples you got there were about company perks, the coffee, or the air conditioning, let's say. But in my experience, I've done a lot of these particular interviews, asking teams, what prevents you doing your job better. And almost all of the time, it's things that reduce company efficiency. Almost all of the time, it's systems or processes that are not working as they should, or teen
Kevin Lawrence 26:19
signatures, bureaucratic, super slow to long, whatever it happens to rework
Brad Giles 26:24
all of that kind of stuff. So the irony is, is that by focusing a little bit of time in here to remove their frustrations, you actually improve the efficiency and effectiveness of the business significantly.
Kevin Lawrence 26:37
Yep. And, and, and sometimes it's stuff where people often just need education, like sometimes processes. The process as it's defined is good. But the way that people are doing it isn't Yeah, and then sometimes it can be but it's, again, we're so busy running the as his business that we don't deal with some of these things that drives people crazy. Number six is something your Brad you talk about in your book made to thrive, but the ambassador role. We also talk about it in Episode 66, I believe, yes. But it's basically reselling and resetting the vision, and ensuring people are still proud of the company and the product. Now, one of our companies that want we interesting, I've done quite a few vision resets for companies, we had our retreat and Whistler recently, and we were working on ours as a firm as well. And now that we have 10 people in the core team is born. I know it's even more important. But you know, another company worked with the neuron 25 years, and the divisions there. But it's kind of gotten a little blah. And they got a real bring life back into it. Because the company is a great company. Yeah, but you got to remind people about the greatness and sometimes you got to do a few things to spice up or, or brighten up the greatness so that people can get reconnected and re excited about it again. Yeah, that's why restaurants do renovations, why brands come up with new logos and identities and slogans to keep it fresh and relevant?
Brad Giles 28:13
Yeah, then what do people have to be proud about? Or have to be proud about in your firm? Not your firm, Kevin, but in the listeners firm? Are they proud of their product? Are they proud of their manager? Are they proud of the team? And what's working against that because, you know, if you work for a cigarette manufacturer, let's say your poor may not be as proud of the firm as they could be. And that's going to be working against, you know, the retention efforts within the business. Now, that's an extreme example, clearly an unusual example. But when you scale it back to think about, what is it that your firm does that makes people proud? Or could make people proud? And what is it that you aren't doing to make people proud? Some of those things can actually really negatively impact your retention efforts in other areas.
Kevin Lawrence 29:11
Yeah, 100%. Yeah, it's not these things are not rocket science. We just got to keep the energy in it. And the final thing is to keep the culture and funnel live, right? And again, especially during COVID, a lot of companies being virtual or dispersed or not together as much. No, it's easy. I mean, virtual meetings are incredibly efficient. No two ways. If you run if you know how to run them. Our virtual strap planning sessions are more effective than the in person node for the time, the value for time, can't beat them cannot, especially with bigger groups. Now. You don't get the fun. You don't get the conversations over cocktails or you know, at our team retreat in Whistler, we had a Jenga challenge between two different we broke up into two teams. One game of Jenga was Like an hour and a half. And believe it or not, we actually we believe that might have been one of the reasons we got a noise complaint for where we were. Because we're having literally an hour and a half one game of Jenga, but you get 10, hyper competitive people. And you don't get to do that you don't get to have an in person, you know, one of those big Jenga games, you don't get to do that. You know, in person, you can't, you know, do a bunch of other fun things, which builds memories and creates a lot of fun. So even if you're virtual, how do you keep the culture and fun alive in a company, it's not hard, we do a lot of things. Like, we have fun teams on most of our meetings, but they do energizers on the breaks. It can be trivia, dance competitions, like you name it exercises, we have key questions, jokes, we have so many different, it's 90 seconds. But it is bringing some fun and energy to a meeting that's you know, you're staring at a camera the whole time. So there's tons of things you can do. It's just easily neglected. And you know, and fun. And laughter is the best analgesic, there is analgesic being something that takes away pain. Laughter fun is insanely
Brad Giles 31:11
powerful. And sometimes there are people who are more fun, or let's say, fun scenes within an organization, they're just fun people. And so letting them thrive, letting them you know, take charge of some of these things can make a big difference. Because they, you know, they love doing it. They and you know, they're there. They're the fun that they create, through some of these things can resonate through other people and through other teams.
Kevin Lawrence 31:38
Yep, absolutely. So it's not right, it's not rocket science again, but it makes a difference. So let's kind of run through our list. So remembering that there's a lot of expense to losing key people. And that really, you got to put the same energy into retaining your best clients as you do your best people. And you can do that by deeply knowing your people like really connecting with them and knowing what's going on in their world and their work. Stay interviews to actually understand where they're at, and what needs to happen for them to want to stay. The output that often might be number for a career path, where, where you make sure that they're crystal clear, and it's in writing, because some people can't see it otherwise, where they're gonna go, Brad, you want to take the next couple there,
Brad Giles 32:22
sure. And then removing the frustrations for them. Sometimes the frustrations can be if the effectiveness or efficiency in your business making that improves significantly. So getting rid of those frustrations, that could be enough to help impact your retention rate, then thinking about the ambassador role, so your role is a leader, either the CEO or a leader of a department. And that Ambassador role being the ambassador. So as we mentioned, we'd spoken about this role in Episode 66. But what we're talking about here relative to this is resetting and reselling the vision ensuring that people are proud of their team, their manager, their product and their company, so that they're able to, to experience that pride overall and not let that get in the way. And then of course, the last one, keeping the culture and the fun alive within the organization trying to make sure that it's an active part of what you do find at work or having you know, fun friends at work can make a huge difference.
Kevin Lawrence 33:31
It does. Excellent good chat about retention. We know we love our people, we say they're our biggest asset and let's just make sure we treat them that way. All right, well, thanks for listening. This has been the growth whispers podcast with Brad Giles and myself Kevin Lawrence. By the way, if you haven't subscribed, go subscribe wherever you listen to your podcasts. For the video version, go to YouTube and search the growth whispers and for Brad evolution partners.com.au and for myself and my firm Lawrence and co.com. Have an awesome week.
Podcast Episode 79 - Eliminate Your Emotionally Taxing Issues: Lick Your Toads
IN THIS EPISODE:
This week Brad Giles and Kevin Lawrence are talking about tackling the small, non-strategic things that can weigh you down and create mental clutter.
If you aren't able to eliminate these issues, you can't do your best work and be clear in your thinking.
They detail the rule of 5 D's - the five habits to help you declutter, and the concept of "lick your toads", in order to become the most present and productive person you can be.
SUBSCRIBE TO THE GROWTH WHISPERERS:
EPISODE TRANSCRIPT
Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Kevin Lawrence 00:13
Welcome to the growth whispers podcast where everything we talk about is building enduring great companies, or at least about building great companies and helping people to build enduring great companies. And, you know, Brad and I are both very passionate about helping companies to do this. We've spent a huge chunk of our lives helping companies to scale and grow and build enduring great companies. And when things tend to go the opposite way, and not continue to build and not to be enduring or to become mediocre. It's we get a little fired up about it. We're kind of passionate about this. So anyways, welcome to the show. I'm Kevin Lawrence here today with Brad Giles as I am every single week. Brad, how you doing today?
Brad Giles 00:55
Excellent. Very, very good. Thank you. Things are good. Here. We are. Well, I tell you, we're very lucky over here. We still haven't gone into lockdown. The rest of Australia has been in lockdown. Well, Sydney has for 12 weeks at this point of recording. It's Yeah, it's challenging situation. So we're very, very blessed where we are.
Kevin Lawrence 01:20
Yep, awesome. Yep, same here. I was down in the US last week. And, you know, it's interesting seeing, you know, down there, even how serious they are about not locked down, but masks everywhere, being very careful. Obviously, on airplanes there, people are extremely careful. But you know, as this thing, this thing is still kind of nipping at our heels and causing some havoc. Yeah, another guy. I know, I call him a good friend that I saw on Facebook, a picture of him with the old ventilator on and all that other stuff like, you know, so he's fighting for his life, he's getting better, he'll be fine, but it's some serious stuff still happening in the world. Alright, so Brad, what's your word of the day today?
Brad Giles 02:08
supply chain issues. So let me very, very quickly explain that many places that you go to now are talking about we missing this, or we haven't got that we can't get this in time supply chain issues are just everywhere. And that comes back to people just yeah, I mean, there's it's a fascinating dig, when you dig into understand why do we have supply chain issues at the moment. And it really all comes back to the inappropriate implementation of lean. So lean was pioneered by Toyota, the Toyota way with familiar with that kind of stuff. But Toyota are actually one of the few companies that have good supply at the moment because they've done their system the right way. But others have simply tried to cut costs. So that's quite a lot. But yeah, supply chain issues. I did
Kevin Lawrence 03:10
hear Brad, we talked about that before I did hear Toyota actually got hit in the last month themselves. Yeah, that's something that actually their supply chain finally caught up with them. And they had some issues like some of the other automobile manufacturers have. Yeah, interesting. Yeah, over overdoing the lean thing and lean and being lean on the wrong things. So my, my word of the day is demand. And, you know, having a conversation with some people over the weekend, and you know, and looking at managing the supply demand curve, you know, economics is really based on supply demand and a lot of cases. And right now, there's incredible demand for people to work and limited supply for lots of companies in lots rolls, particularly in North America. I hear some in other countries, but I hear a lot of it in North America. And, you know, to be able to manage it, we're having a lot of conversations about you know, how to, you know, deal with this extra demand that the business hubs and limited supply of workers or people who do the work. It's a, it's like a double challenge, which is making it really interesting for a lot of people. Very, very interesting for a lot of people so, so supply chain and demand putting more demands on the supply chain, which is actually kind of what's happening today. So what are we digging into today, Brad? What is our focus?
Brad Giles 04:35
So now with this week, we're talking about a concept from your book, your oxygen mask first, and the issue is eliminating your emotionally taxing issues or put another way, licking your toads. Kevin, tell us, what does it mean to lick your toads? Yeah, and
Kevin Lawrence 04:56
it's not what they're going to do now in your country where you Have some tones that have some psychedelic qualities that it's a great way to have a little party. That's not what we're taught. These aren't party toadss we're talking about it's a, it's a story in your oxygen mask first, and it relates to things that you don't want to do. Often, they're low value, we'll call them loose ends, lingering tasks, just stuff that mentally you see it, but you just don't get to it. And I'll give you an example, I used to work with a guy named art, I used to work in an auto shop as a kid. And art was a mechanic that our good mechanic, and every day at the end of the day art would pull up to the air hose at the shop outside the mechanic shop, and pump up his tire. And one day art I go well, art might Why don't you just fix the tire, obviously, you've got a leak. And you work here in the shop, and you can just bring it in and fix it before work or after work at lunch. He goes. But Kevin, it's only flat on the bottom. Like, what do you do? Anyways, that was his way of being funny. But um, but the thing is, every day, he would put air in his dorm tire. And it's, it just burns up mental bandwidth. And maybe he didn't think about it a lot. Or maybe he did. And so the rule of thumb is there's things that you've thought about doing. And you've thought about it at least three or four times, but it's just doesn't happen. It's almost like it's something that gets procrastinated, and it starts to weigh on you. And before you know it, many people have 100 or 200 of these and it's like a mountain of weight on your shoulders. And they're, they're stupid little things like air in your tire. Or maybe it's getting to the dentist or, you know fixing a scratch on your car or a squeaky door and I've got the door behind me that I need to do some adjustment on a track because if you go too far, it kind of falls off the track, it needs a little pin at the end. So it won't come off a little things that really in the big picture, these aren't going to impact you by a million dollars. They don't have massive strategic value. But they create mental clutter and emotional drain and distraction for you. And we all have them we all do them. But this chapter in the book is then this principle is about staying on top of all that mental clutter and drain so you can stay focused on what matters most. So
Brad Giles 07:29
is it a bit like having a really long to do list?
Kevin Lawrence 07:33
It is but a lot of these things don't even make it on the to do. It's a mental To Do List usually in the back of your brain that haunts you every time you see it makes you feel guilty and burdens you and you know it's interesting. I've seen serious executives getting taken down by their own toads. Yeah, it gets them. It just gets them in terms of just it's a burden. It's almost like that show hoarders, have you ever seen that? Yeah, it's an American show where people's houses just get full of all this stuff, and they can't live anymore, but they can't get rid of the stuff. And it's in a mental or emotional version of the same. You get burdened by these things. And, and it just is also a lot of weight and pressure and slows down your system. And you waste an incredible amount of time thinking about
Brad Giles 08:25
them. Yeah, so in a computer, you've got random access memory and read only memory. So that is like the processor, and then the kind of the memory that you access from so the processing power is about the short term ability to deal with multiple things simultaneously. And so what we're saying is you want to free up your mind or maintain the freedom of your mind is processing power the RAM.
Kevin Lawrence 08:56
Yes, exactly. You want to get the mental clutter out. So there's more space, it's almost like, you take a snowglobe and you see it like a tourist place. It's no global, you shake it up, and there's all these things floating around. When it settles, there's this clarity and a clear picture with these things become is like a snowglobe with all the stuff there and it confuses your thinking drains your energy and it's generally, you know, isn't good. It's like trying to do your job with 14 screaming yelling kids behind you. Yeah, except for the they're quiet, but it has the same poll and we don't notice the sort of the low level stress that it creates. And it can create a ton of stress, especially for things that have a strong emotional component to them. Where that can really affect you. But the general type can just they can burn you down. So you know we've got kind of a checklist in the chapter and some questions I'll just run through that you know, you can think about if this is important for you, but one, no, just this conversation already is making you nervous or uncomfortable because you're starting to think of things flashing through your head that you need to do. Second, it's not unusual for two dues to kick around for a month or more you just can't keep up with it and by the way, this is not about judging you for not getting it done. Often we need a different approach and a different system to keep ahead of these things. Otherwise, if you had a good system I'd already be done. I'm certainly lingering to dues can cause you a lot of frustration anxiety, maybe panic attacks your heart can skip a beat because they stress you out it's almost like you avoid them but they become like a monster chasing you and then finally people repeatedly follow up on you and ask you to do stuff that you said you would do but you don't and your lack of follow through is obvious and because it's not just the one thing there's probably 20 or 30 things so basically people end up chasing you
Brad Giles 10:55
Yeah, yeah. And so what is it that we can do about these things?
Kevin Lawrence 11:02
Well first you got to realize the mental toll that it has that yeah the piece so when we do have do we do workshops just on this we get people to make a list of all those lingering loose ends and we give you know 2530 different prompts and we would go through your car something that's not right on your car or whatever your mode of transport is anything to do with a dentist a doctor you know a chiropractor anything to do with mental medical or physical related things, things that you have borrowed from people and maybe not returned things that maybe others have borrowed from you that you really want back legal things open legal pieces maybe it's a will or something along will the power of attorney maybe it's something to do with your family members or parents in some sort of administration one person you know they they hadn't you know finished and put the headstone on the mother's burial plot things like that filing of taxes are government related things, things to do with conflicts, right things to do with you know when when a relationship is broken down and going and cleaning it up things around your house could be in your yard or your bathroom or your kitchen it could be to do with your computer and something that doesn't work right or your phone and you need to get a better phone case or a mount for your vehicle like you can go on and on and on about just the maybe you need to clean out your garage or your attic or whatever it is this it's all these little you know we have a great busy life and career all these little things so basically people start to brainstorm a list most times people will have 50 100 plus yeah hope these little things so the first thing is to do that second thing is to look at your approach them and then third is ongoing maintenance. And so in the book what we've developed in the workshop we did for years and you know this lick the toes because there's a story you can read about it in the book. But people remember it 20 years ago I had a conversation this week a guy named Mark that I knew from 25 years ago he was one of the first programs we did when I started the firm with a great mentor of mine Moore and Morgan and Mark was he's actually no such an executive that we work with I was on a call with executives that hey I want you to say hi to someone I'd like to talk to mark and what had happened is the executive we work with is talking about licking the toads and he goes lick the toads How do you know about that and they made the connection that they both knew me it was quite funny and that was literally 25 years ago so so we break it down into kind of five different strategies and all these basically are cleaning up procrastination and you know I wouldn't go I'll go through one rotten and go through the others jump in but you know, this is no stuff that I've spent a lot of time talking about. But the basic is just to do it is to decide and these are the ones where there's usually some emotional friction and you just got to get it done. Now it could be making that dentist appointment. It could be you know, talking to your boss or talking to an employee like scheduling, just do that nasty thing we recommend that you do it first thing every morning. Don't leave it till the end because it'll burden you all day. It gives you a burst of energy when you get these things done because it takes a lot of weight off your shoulders. So first thing is and this is the basic one it's not the most powerful one, because these things you don't like to do anyways. But the basic is do it actually just get it done. Get it first thing in the morning so then you can free up the rest of your day.
Brad Giles 15:00
And then the next one, don't do it. Say no to the person who requested it. It's simply not yours to do. So we did an episode maybe three or four weeks ago about the power and importance of saying no. And being able to, to know that no is an option to be aware that no is an option. Sometimes you just don't need to say yes, and this is building up the you know, it's building up the burden on your memory, it's building up the problems.
Kevin Lawrence 15:36
It is and it's and it's a hard one, especially if you've already said yes. Like I've gotten better over the years of not saying yes, in a moment on things and taking time, especially when I know I probably shouldn't. Yeah, but this is what he BB Robbie already said yes is going back and essentially changing your mind and saying no one's You know, I'm not going to be able to do this, or I'm not going to be able to do this for a few months, or I really think you should get someone else, whatever it is. Yeah, because you're they might even forgot that they asked you to do it, but so that get it off your plate. Um, the next one is my favorite. It's to delegate it. And I was having a conversation with a friend today. And we're basically we were, I was helping them pull a boat out of the lake. And so that can get winterized and stored. And all the stuff we're talking about it now I think that was saying is that, you know, I'm fine helping people do that stuff. But I got a guy or a girl to do all of those things. Like I have 50 different people, I can text message and get stuff done. And by nature, pulling a boat in another lake is not like, incredibly hard. But I don't like doing those kinds of things. So I have found a way to delegate almost every single thing in my world, Unless Unless I really enjoy doing it, for example, on the delegating it. You know another good friend of mine found a place up here in the Okanagan, where we are called Aqua. And it's a place you could take your boat, and it's a valet service. You tell them the time you want it, you show up, you jump in, they drop you into the water, little special forklift thing and drop everything, drop it down in the water. And when you come back in, you jump out, they fill it with gas, they clean it, they put the top back on it, they take care of every single thing, including, you know, giving a bag is when you want to go out Yeah, you know and it's so it's looking for ways for the things that you don't want to have to deal with, like maintaining a boat or any of that kind of stuff. Who else would do because basically everything that you don't want to do somebody else loves to do. But people get caught in it and obviously it costs money. But otherwise it costs time.
Brad Giles 17:54
The hard one here is the trap that so many people fall into being I look it's just easier if I do it, it's just easier if I do it, you know, I've got to fix up the garden or take the boat out of the water or whatever and it requires training and bandwidth and it's just easier if I do it.
Kevin Lawrence 18:15
Yeah and and and it is if you only had to do it once in your life. But the flowerbeds need to be done ongoing forever. Boats need to be put in or out of water and maintained and serviced and cleaned forever. Teeth need to be done by the dentist for ever. Everything that you know, unless it brings joy to your world, why would you burden yourself unless it's critical, or you're doing it as a connection point with other people or teaching your children a lesson of some sort, some sort of thing for them. So basically, everything in the world can be delegated. The rule of thumb is, if you generally put it off, it's an indicator you don't like it, find somebody that does everything, everything, everything and because for me, there's a lot of stuff I don't like to do. You just got to find those reliable people that can do it. So it's basically it's a decision to find someone that will and you always can find you can always find someone no matter what it happens to be including, you know, cleaning up after your dog or taking your dog for a walk or whatever the heck it happens to me You can always find someone that will do anything. So that is one of the most powerful ones is to make it take your pain and make it someone else's joy. And that's the ideal. The other piece of it is is to delete it is and this is stuff that you put on your own to do list like I'm really I'm gonna, you know, repaint my house, or I'm gonna take art lessons or I'm gonna become a yoga Master, whatever it happens to be. Be, it's just to realize you had a moment of inspiration. And get it out of your mind. And this could be at work, or it could be in business. But just some ideas are just for the moment, they aren't meant to be and find ways to, it's to really know, let them go. And I do this regularly because I get a lot of really good ideas. And unfortunately, when you decide you're going to do something, maybe it go the spy the supplies for the project, or the hobby, or whatever it is, and you don't do it and guilt kicks in like crazy. So it's basically just get it out of your system and off your mind and treat it as a little point of inspiration.
Brad Giles 20:41
And, and being okay with that you do not need just because it made its way onto a to do list or even a mental only to do list, you do not need to do it. It's like, I am not, I'm not going to do that. And if it comes up again, in the future is, this is something that I really want to do. And the situation is different than maybe but saying, just letting it go, can be powerful.
Kevin Lawrence 21:07
What are we getting is and finally is data just decide its own? We do this a lot in our strategic planning sessions. It's not for this year, let's put it off to the next let's consider this in 2022, you want to do a renovation at your host just maybe you're not going to put it off and say we're not putting up it's like, consciously decide No, no more thought process. We'll think about it again in June of 2022, or whatever, whatever, you know, timeframe it is, but just push it off. Someone wants you to be on a board and you don't want to do it. Say Not now, but I'll reconsider it in 2023, whatever it happens to be, don't let it drag and slide to a future date actually formally push it to a future date.
Brad Giles 21:54
Yeah, because maybe things will change, but maybe they won't. But that means that it doesn't consume your your your bandwidth that your mental bandwidth. In the meantime, you can say, talk to me again, then I'll worry about it. And we'll have that discussion then rather than now. So what's the key point here that you're trying to make
Kevin Lawrence 22:17
is that all of these little things consume a lot more energy than you think it creates a lot more friction in your system, a lot more distraction and stress, getting them out of the way. And it's very much like that Zen philosophy of keeping your environment clean and clear. Right so that you can focus and your whole system can kind of calm down again versus having you know, 47 screaming children behind you constantly that you don't even realize that they're so this
Brad Giles 22:44
so this is mental clutter. Least mental clutter isn't is preventing you from I guess, enjoying your best life.
Kevin Lawrence 22:54
Exactly. Yep. And being the most present and productive person that you can. Awesome. So that's it. So that's licking your toads.
Brad Giles 23:04
Awesome. Do you want to take us through them again, as a quick review,
Kevin Lawrence 23:07
for sure. The first thing is make a master list of them and stay on them. And the best advice is, you know, lick the nastiest one you have first thing every morning like one it is like a total day keeps the doctor away, right. And so, first of all, is to just do it, like we've talked about, don't do it and just say no to the person like go back and say no and delegate it, which is the best one find people that love doing what you love, delete it. If it's a personal project ain't even didn't commit to someone else. Just decide you're not going to do it and then date it, deal with it in the future. And but not let it drag but consciously push it to a future date. Also, my challenge is to go make your list and just start picking them off one at a time and get them on and as you get going with this, you might find it's a valuable thing to do with your team as well. People have like toads days, right? Like a Tuesday, toads days where people once a month we'll just make a list of them and get cleaned up. Kind of like a little bit of a mental spring cleaning. It's a great thing to do. Again, like most powerful things, not rocket science, but it works. Awesome.
Brad Giles 24:13
Well thank you Kevin. That's a great insight into one of the key concepts in your book, but evidently, from many many years ago as well, that's that served you well. Good to know good to know. So if you'd like to learn more about the toads concept you can read Kevin's book your oxygen mask first. And obviously you can go to Kevin's website, which is Lawrence and co.com. If you'd like to learn more about myself, Brad, you can go to evolution partners.com that a you but I hope that you've enjoyed learning about licking your toads today. And we hope that we can catch up with you next week on the growth whispers Have a great week!
Podcast Episode 78 - Four Questions Leadership Teams Need to Ask Customers
IN THIS EPISODE:
Some of the best intel for leadership team members comes from customers, and some of the best customer data becomes available when leaders talk with customers directly. In fact, if they're not asking the right questions, leaders could be missing out on 70% to 80% of the most valuable information they could have.
Surveys are good, but you can't rely on surveys. You need to have leaders talking to customers.
This week, Brad and Kevin share the simple system of 4 questions that every leadership team should ask. They discuss why it's important, and how to implement this valuable practice in your business.
SUBSCRIBE TO THE GROWTH WHISPERERS:
EPISODE TRANSCRIPT
Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Brad Giles 00:13
Hi there, welcome to the growth whispers where everything that we talk about is building enduring, great companies. My name is Brad Giles. And as always, I'm joined today by my co host, Kevin Lawrence. Hello, Kevin. And how are you doing today?
Kevin Lawrence 00:27
I'm doing great Brad. Actually, I'm set up in a new spot, kind of a new location. So like a new mini studio. So I've been scrambling around today to set up and everything's working. I worked so hard to make sure I had all the things I needed, and I forgot one part. But thankfully, there's a store about 15 minutes away that had the part I needed. And so I'm good. grateful that people stock every electronic gadget you can imagine
Brad Giles 00:53
close by. Okay, too. Hey, are good. Yeah, I'm good. I'm good. I had four days, four days in our Southwest, beautiful part of Australia. and came back last night here for recording today. But yeah, just spring in the southwest of Australia is a very, very special, a special place. So um, yeah. And so to me, we always like to start with our Word of the Day or phrase of the day, what is on your mind?
Kevin Lawrence 01:27
Mine is winding down, are summer is ending. It's getting colder, darker, early, or? Yeah, so it's kind of like winding down. Transitioning from summer to fall. But I don't like the idea of winding down, transition. That's my word.
Brad Giles 01:49
Awesome. Awesome. And mine would be slightly related to today's episode, customer feedback. So the place where I stayed, there's a QR code on the wall. And you can use your smartphone. And it'll take you to a Google form. And it just asks you some simple, some simple questions about your style in a way that I hadn't seen before. So yeah, customer. Yes, customer feedback, is what I'm thinking. So winding down customer feedback is the mash.
Kevin Lawrence 02:27
Interesting. We'll take that. Alright. We actually want to wind up customer feedback, which is actually what we're talking about today, which is a beautiful transition into today's topic, Brad. So why don't you tell us what we're digging into today?
Brad Giles 02:41
Yeah, so we're talking about four Q, or the four questions. And this really is a part of customer feedback. And what if we take a step higher than customer feedback, what we advocate is that leadership, team members have a qualitative and quantitative point of data from both customers and employees. So we've got qualitative and quantitative from customers. And we've got qualitative and quantitative from employees. And that should frame all of the leadership teams thinking because you're getting real and accurate feedback. Now, the quantitative often takes the form of something like a net promoter score, or a customer satisfaction score, some kind of number base that we can work on, whereas the qualitative comes from actual conversations with employees and actual conversations with customers. And so that last point is what we're talking about today. The four questions that we advocate that you as a leadership team member, talk with customers about.
Kevin Lawrence 03:59
Yeah, and this is a serious problem in a lot of companies is that it's wonderful when companies start to get data on employee engagement, and customer satisfaction. The problem is, is one you can get lost in the numbers in two union really got to hear their voices. So you know, the people that created the Net Promoter system for employee and customer satisfaction. You know, they say consistently, it's the system, not the score, mean the system, you got to read the comments and hear the feedback. So I was in a meeting this week in the US. It was nice to be back in the US again. But I remember we were getting some they some of the best data on reporting customer and employee satisfaction where they're at by location, everything was really great data. The challenges is we didn't get any of the comments, or the commentary. So basically, we got the scores, but we didn't get the specific trends of what People were loving and loading or you know, concerned about or gaps. And it's so what happens is, is executives try to fly by number too much, some don't fly enough by numbers, they don't have enough data, but some over rely. And I just finished a really good book this week by the CEO of Best Buy. And he was the CEO who turned Best Buy around, and his name is Herbert jolly, I believe. And the book is called the heart of business. I got both of those things, right? That's awesome. A really good one of things he talked about when he turned around Best Buy, is he went and visited stores. And in stores, he watched and learned because he was new to the business. And he talked to people and talk to the associates. And he learned a ton about what the needs were and understood the business better now. That's great. And some people might do that in the beginning. But some of the best executives and Steve CEOs stay connected, not through data and reports, but directly at the front lines and what they end up doing. And we see this all the time. And this is why for cue was invented, people just play office too much. They're too busy administering the business and working on stuff, which is their job, but there's not enough time directly connected to employees and customers. So today, we're going to talk about directly connecting with customers and what people should do.
Brad Giles 06:31
If you don't connect with customers, you make decisions based on perhaps not a full suite of information. So let's dig in and just clarify, what are the four questions that we're talking about? The first question, how are you doing? So this is really just framing, framing the conversation in the way that the conversation will be completely about the other person? So how are you doing? Now you can as a recipient of that question, say, Oh, well, I'm good. You can make it really, really quick. Or you could immediately jump into, I'm terrible because your systems suck. Or
Kevin Lawrence 07:20
you could find out the other dog just died, or they just got a puppy. Yeah, it's like, it's a human connection point. And this is this for Q is a mini system. So it's a way to just, you're gonna learn all kinds of interesting stuff, you might just connect, or you might get something incredibly relevant that will relate to your conversation.
Brad Giles 07:40
Yeah. And then the second question is what's going on in your industry/neighborhood now, that's obviously contextualized, for b2b or business, to business type sales or business to consumer type sales. And there could be something that's happening in your industry, if you're B to B, for example, we've got massive demand, and we're having supply chain issues, or it could be anything at all. But that's another point of data that you can take back to the leadership team equally, in terms of your neighborhood. Yeah, they could be something that's happening in your neighborhood that's relevant. So we're trying to mine for any of the data that we can.
Kevin Lawrence 08:27
And they're experts in their neighborhood and experts in their industry, and they're going to know stuff you would never have a clue about. So you're tapping into their core expertise, and what they spend their days living and breathing that you can get from them in two minutes.
Brad Giles 08:44
Next, is the interesting the third or four questions, what you hear about our competitors? Now, we don't have any other opportunity to ask this. And wouldn't it be interesting to take some of these answers back to our leadership team? Now? I've been running these questions for many years with leadership teams. And sometimes recipients will say, Well, I don't think that's really appropriate for me to answer. Okay, no problem. It's just a survey that I've been asked to ask you,
Kevin Lawrence 09:16
but many will have and many will have lots to share. Yeah,
Brad Giles 09:21
but other times, we've got some amazing, amazing insights. I heard that they're shutting down. They're such and such operations. I heard this starting up this, some people are more than willing to share something about our competitors. That can be fantastic info. And then the fourth, and arguably one of the more important questions is how are we doing? And this is qualitative. So it's not just a number, because that's where we can really begin to get the insights. How are we doing?
Kevin Lawrence 09:56
Yeah, and again, these so basically the four questions How're you doing? What's going on your industry or neighborhood? What do you hear about our competitors? How are we doing? And the challenge is, a lot of people will just go to Hey, how are we doing? Yeah, are we taking good care of you, but you miss all that other scoop that can help you. That other stuff helps you as an executive, more than it probably helps you with that specific customer right there. They're helping you with your Intel. So you know what happens and the challenges because we said earlier on, people are so darn busy, they don't do this. And when they do go and get a chance to talk to someone at one of their clients, doesn't even know what to ask. And these four questions are great. So you could be the CFO, and when you're talking to their CFO about something and whether it's on the way to a meeting or at lunch or on a call. You know, it could be anyone that you're talking to anyone in your organization talking to their organization as a nice little simple check in. And it's a wonderful, wonderful way to do it. Now. Notice I found some points, I want to talk about it. But the first real main reason why this is important, it's you know, is that I call it not playing office or playing office too much. Brad calls it leaving the ivory tower. But the idea is the same is just it, get out there and get the goods get a real pulse of what's going on. Because what happens is people become way too insular. If you stay inside. If you go and talk to a bunch of customers, you can't help but pick up on different things and have different thoughts and ideas.
Brad Giles 11:43
Yeah, absolutely. And these, these questions are framed, as you said, like this for a reason. It's all about them. But the other thing, it hasn't been polluted by other areas, such as marketing, because marketing could want to get ahold of this and say, How about if we change the equations? What about if we asked about something about our new product or something that and then suddenly, it's gone from four questions to 11 questions, and no one wants to answer 11 questions that are about your product, because all of these questions, importantly, are about them. And so when we're talking about leaving the ivory tower, you know, if we've got a CFO, for example, on our leadership team, this person would very rarely get to interact with customers. And so then when we're meeting, as a team, they don't really have that depth of experience in directly communicating and understanding what the customers want. But the important point is that it can be quite uncomfortable for some people to have these types of conversations. So an option around that is to have the CFO at our company, talk to the CFO, at our customers companies. So having them talk to the relevant person in customer companies, which is a little bit hard, admittedly, in a retailer in a b2c area. But we want to get people outside of the ivory tower, we want to get people to be actually communicating with customers, there was a retailer that I worked with, and they hadn't spoken to customers in this sense for, I would say it would have been about 10 to 12 years where the leadership team had actually gotten out. And they made a whole range of assumptions. And so we set a quarterly target where we had to have 13, four q conversations, each leadership team member, at least one per week. And the insights and the way that we change the business was remarkable.
Kevin Lawrence 13:48
Yeah, because you're more in touch with what the customers want. Again, the business exists to take care of a customer. Yeah, which is kind of the third point, which is understanding what's important customers cuz you're gonna hear from them. And whether it's in a retail environment, a business to business environment, doesn't matter whether it's in a boardroom, or the bathroom, or the boiler room doesn't matter where you're picking up stuff. And it's just it keeps you super in touch, because you're listening to them directly versus thinking about yourself. The second one, so the first one is leaving avatar. Second is validate your strategy. This is also a great way to pick up some intel of what customers are thinking about you and thinking about your competitors, you know, understanding their perceptions. And then you could also even once you're in a conversation like this, it's an opportunity to run some other things by them, you might be thinking about, like, Hey, you know, based on what you've said, How would you feel about this, right? Because you know, you're into a, you're into the conversation, you can use them as a sounding board as they are, if they're part of the buying decision, or the one of the users of whatever it is that you have to offer. You can get some additional until it'll help you
Brad Giles 15:00
Yeah, understanding, you know, what is it that matters to our customers, you know, the data that we can pick up through that is, is really, really variable. Obviously, that leads us on to the next one, learn about the industry. Because sometimes people in a leadership team may not have worked for many of our competitors, or the industry may have evolved, and they haven't got some of those insights. So it's easy to think about this as a singular. But I think about another team that I work with, and we've done it for, I would say, four or five years, every single quarter, we've gone out, and we've had at least one or two 4k conversations in preparation for our offside quarterly. And the stuff that we're learning. It's really affected the priorities that we set and the strategy that we said, because we're learning sort of up to the minute Intel about the industry. Yeah.
Kevin Lawrence 16:02
And we don't have enough time to learn all those things. I was in a conversation just over the weekend. And with a with someone who I just met at an event. And I was asking them questions about their industry, that and what's going on out of personal curiosity, the amount of stuff I was learning about some changes and things that were happening was out standing. And I am curious by nature, so with new people, it's natural. It's those existing relationships. And as we do this, I'm just thinking, I had a conversation with one of the CEOs who work last week, and I should have used the darn for cue questions, I was just checking in how things were going, we're talking about things. And I should have asked them and I didn't, I missed the opportunity last week, it wasn't top of my mind. So hopefully, for those of you listening, it's going to be a good prompt for you. This is not rocket science. But when you're next with a customer have a chance, some great questions to answer.
Brad Giles 16:58
say, Oh, it's important about that is it this is structured feedback. So we're forcing leadership team members to talk to people, which is important, but then we're forcing them to listen. So because those four questions are all listening questions about them, and then document them, and then share them on a regular basis with the leadership team, for
Kevin Lawrence 17:19
sure. The next one is learn about competitors. And again, as we've touched on a bit already, but there's no it's sometimes hard to get information on your competitors. And or it's sitting there waiting for you, you just have to ask, like a lot of things. When you meet a human being, you could ask them 1000 different questions. And whenever you pick will set the tone of the conversation. And so so if you miss that opportunity, there's great competitive Intel awaiting you all the time. You just got a prompt it and there's things that your competitors are doing that are good, or not good. And just don't being able to see and hear what's going on is incredibly valuable. Again, not rocket science. It's just it's a great opportunity to dig into it, rather than having it randomly show up occasionally.
Brad Giles 18:06
Yeah, what if? What if we had enough of our four key conversations come back with what you know, what matters to us is on time delivery. And that was all that was in there. If you heard that once, or if you heard that 40 times, that's going to affect your business, because it's real time feedback from a diverse enough group of customers, or anything else. Now that could be coming, because they're saying, What do you hear about our competitors? Well, you know, they are really focused on being on there on being on time delivering having network. Yeah,
Kevin Lawrence 18:46
yeah, or they're doing something around pricing, or they just lost some key people. Or there's, you know, one of our clients, we heard with a competitor, we heard that there was a president, a vice president of a division that was loved by his people and the industry. And we heard that he had left. Well, it became a recruiting opportunity. We don't know where he went. But we know that he left him and we were able to in the end, we couldn't recruit him. But we were able to hunt him down. And then it also gave us a chance to go and directly contact some of his sales people because he was leading the sales team. Because we know when a key leader leaves, people get a little bit loosened up sometimes and some people are more willing to leave, especially when there's a leader they loved. So that little bit Intel that I'll make it up that Frank was leaving the business. Frank was amazing, tried to recruit them, but then we were able to contact some of those people because they would be the most open to hearing from us they ever would have been. Again, just little things like that.
Brad Giles 19:54
Awesome. And then I guess number six is learn about our performance. How are we doing? That it's such an open and vulnerable question that it invokes trust and you have to as a customer, you have to respond to that. You have to say something, it's very hard to say, well, you're doing good, if you've been really, really let down, and you're thinking about going to another competitor, or transferring some revenues. It's great to have accolades, but we don't want the accolades here. What we want is, you're doing really good, but this person named Bobby in sales. He's, he's this, he's got no fans in this firm, I'll tell you that. Yeah, needs to go.
Kevin Lawrence 20:42
And that's the stuff that you need. And you might not always get that in a survey. And it's also the fourth question. So you've already talked about a whole bunch of things, and they're warmed up, and you're more likely to get as long as they're not in a hurry, more likely to get more goods as the conversation goes on, and people settle in. So the main point here is, it's not rocket science, people just, you know, with great intentions, get busy playing office or doing their jobs, and forget to reach out and talk to customers. It's also a little awkward for some people to do it unless they're in sales. But this is a structured way to get and push the team to get back into the market to see what's going on, and understand and get a much better grip. So I'll review the overall so the four key questions. Number one, how are you doing just checking in with the human and how they're doing? And what's going on? Those lots of points of connections that often come out about what's going on in your industry or neighborhood, depending on the situation? What do you hear about our competitors? That's a very juicy question with lots of Intel in it, how are we doing? and not being afraid to dig in and get some more details about specifically what they like or what they don't? And then on those questions, Brad, you want to run through the six kind of different perspectives there? Yeah.
Brad Giles 22:02
So why are they important? Number one is to leave the ivory tower, we want to get the leadership teams out of the ivory tower where they're only talking to one another, we want them to get some actual physical feedback from a customer verbally, not on a survey, not on a survey, or validate your strategies. Number two, so this helps us to understand that our strategy is working or isn't are the things that we're starting to change are actually resonating. Number three, understand what's important to customers. Because if we think that quality is what matters, and all they tell about is on, tell us about is that things have to be on time, then then we should be responding and understanding and digging deeper into that issue. Number four is to learn about the industry. We don't know everything about our industry, we have different perspectives and different experiences. So we will continue to learn about what's happening. And of course, they're not number five, which is learn about competitors. We're understanding what are our competitors doing by asking that question number six, of course, is to learn about our performance, to learn about how we're performing the last question, and what can we do better? Always mining for gold in that area? Good chat today. Good chat. Yeah,
Kevin Lawrence 23:24
it is. It's just a basic discipline that people don't do enough of including auctions. I caught myself not doing it last week when I could have and should have. And like Brad said, the thing that we'll often do with teams is to push them to go and make it a challenge over a quarter to go gather a whole bunch of feedback, particularly leading into a strategy session. And that way, if everyone's do it, it makes it a bit more palatable. And you know, nothing like a little peer pressure.
Brad Giles 23:50
Yeah, isn't it? You know, surveys are good. But we can't rely on surveys we need to have leaders talking to customers. So thank you for listening to the growth whispers I hope that you've gained some value today. As always, we're talking about building enduring great companies. That's what we talk about all the time. You can find the video version of this on YouTube, just by searching the Growth Whispers and of course we're on all the good podcast channels. So thanks for watching and listening today. We hope that you enjoyed it and we will look forward to chatting to you again next week.