IN THIS EPISODE:

One of the key concepts from Jim Collins is that teams must regularly confront the brutal facts. Not the opinions or the hopes or dreams, but the facts.

For many leaders, charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems when people filter the brutal facts from you. You can overcome the liabilities of having charisma, but it does require conscious attention.

It’s important to regularly discuss these brutal facts so we can catch problems early before they turn from small problems into large problems.

In this episode, we talk about how to manage brutal facts in your business and how they can be an incredible thing for you to focus on.

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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  05:04

So today, we are talking about the brutal facts. The brutal facts are things that people are reluctant to talk about in a business. It is one of my favorite topics, every single quarterly workshop and annual workshop. I’m talking about this with teams, what is the brutal facts? What are the things that you’re reluctant to talk about? Bring out your brutal facts, bring them out, and we will put them on the table? What an interesting topic we can talk about today.

Kevin Lawrence  05:35

Yes, I love them too Brad, because what we found is a lot of times when we go into companies, they’ve been dancing around the core issues, and they’re not really talking about with any talk about it. And it takes us a boatload of courage and conviction to do it. It’s not easy for a lot of people if, especially if you don’t have a lot of trust. Yeah. And it’s part of our discipline where we just, it’s almost like we create a safe space, we create an environment where all those tougher issues can come out and get resolved. And I love it. Because you know, when you deal with the ugliest issues, there’s not much that goes wrong with the business. There’s just every day. But when there’s these rotten, stewing things in the middle of the business, we really hurt the business that reminds me when it comes to businesses, you know, and bankruptcies, which is not a nice thing I remember I sat beside this guy, and I should kind of look him up. His name was Russ law, probably 20 years ago. And when you go to those breakfast events, right, like a chamber of commerce, you go to a breakfast event or a workshop, and there’s eight people at the table and Hey, who are you and you meet everyone, I kind of miss doing that. Actually, I didn’t love it. But I would love to do it again. And I sat beside this guy, his name is Russ law, and he was a trustee in bankruptcy and he was the best. And you know, in Canada, where I’m from, you know, we have this the one of the best hockey players, when I grew up was named Wayne Gretzky. He was like legendary hockey player, but he’s kind of like the Wayne Gretzky of bankruptcies. So I’m curious as hell and I’m talking to receive on rust, like, how is it that these companies end up going under? Like, what’s the deal? And he goes, you know, at least half the cases, it was known issues that they ignored. He said he used he used the metaphor of the ostrich putting his head in the sand. They just had an issue. And they didn’t address it. And it took a while to go. Okay, thanks. Thanks for us. Let’s just do some hope. The other half he goes, it depends. You could chalk it up to external factors and other things and then went back 20 years. So you know, for us is listening, I’m paraphrasing a 20 year old conversation here. But he goes, a bunch of those, I think could have been controlled as well.

Brad Giles  07:59

Yeah.

Kevin Lawrence  08:00

Yeah. And so what he really left me thinking is, hmm, the greatest risk to our businesses is internal. It’s us. And in often cases, our willingness to put forth and deal with these brutal facts that can affect us, no different metaphorically, than if you’ve got a tooth that’s sore. And you choose not to go to the dentist, it might get to the point instead of being repaired, it’s got to be replaced, or fully removed, and some, you know, nasty dental work. So anyway, that’s, that’s, that’s why I’m really passionate about this, because it just reminds my whole career is that if you leave these issues fester, they get worse. $1,000 problem turns into a 10,000 or $100,000, or a million dollar problem. And I’ve seen it again and again. Yeah, and versus like, so no, that’s so that’s the way I look abroad, what’s your take on beautiful things called brutal facts,

Brad Giles  09:02

I want to react to what you said, and then move on to that. So there’s an old saying, which is I went broke really, really slowly. And then really, really quickly, it builds up. Now it could be about going broke. But it couldn’t be about the person who sits at the desk on the in the corner that no one wants to talk to who is a toxic a player, it could be a better customer, it could be a better process or system. It could be about any of these things. But unless we can clear up these problems that people are reluctant to talk about. It has a manifestly awful impact on the business, especially when you get a heap of these things of building up. And people. You know, people don’t want to work in that environment. Now, I love that story. And it’s a great extreme example. We know the damage that people are the wrong processes or not executing well. All of the things That could come out of the brutal facts could create. So yeah, it’s interesting. We, I talk about it every quarterly and annual off site, I’m guessing that you’re the same Kevin,

Kevin Lawrence  10:18

for every single quarter, no way without fail. I personally think it is one of the most important points on the agenda, even, even to the point, Brad, where we do surveys in advance to pre ask questions. Yeah. So people can flush it out and do it anonymously. We do it multiple levels in organizations sometimes. Because I want to know, even Brad, in those prep questions. I have a spot where they can submit to me privately, a super brutal fact that they don’t want even to put in a survey. Yeah. Because it’s just it’s, it’s every otherwise we can be wasting our time addressing all these nice little strategies or tactics, when there’s a nuclear bomb over in the left hand corner of the room that we’re not even aware of. So yeah, every quarter, and we dig deep to really excavate them.

Brad Giles  11:19

I mean, I’ve had meetings, full day meetings, where we talk about the elephants or the brutal facts. And that actually changes the whole agenda for pretty much Yes, I’d say 80% of the day, and I’ve spent I’ve gone in and allocated 3045 minutes to this subject, we end up speaking about it for two or three hours. And at the end of the day, people say, look, that was the most valuable item of the day, but you’ve got to clear up these things. Everyone feels better afterwards. And yeah, you’ve got to get these things out the way and what I when people knowing that it’s on the agenda and that it’s coming up, what people would often say is that, you know, they’re really looking forward to the elephants part of the day because they know that we’re going to confront this terrible issue that’s been weighing them down. So correct. such an important agenda item it really

Kevin Lawrence  12:17

it is and I want to touch on elephants. Now I gotta say I got a bias you know, elephants in the room it’s been used for a lot of years and it’s good but I kind of prefer rats and and moose

Brad Giles  12:34

you know, I got a client’s name given my I worked rats and mice No,

Kevin Lawrence  12:38

no rights and moose The thing with the big antlers like you would think of being in Canada, where we are so so there’s a great a great founder CEO down in Texas named Phil miner. He brought me into his company. They bought another company and built an amazing platform to for growth. And he brought me into work with a group and you know Phil used to call it chucking the dead rats on the table. That’s the way they would call it down in Texas, like there’s like a there’s dead rats, we got to check them on the table, we got to deal with them, don’t just leave them and sweep them off into the corner. Yeah, another entrepreneur. up in Canada, Blaine is his first name he would call it Chuck into moose on the table, because he was up in northern Canada neighborhood, they would have moose there. And he’s also a hunter. So he would think in those terms, but Chuck the moose on it. So it doesn’t matter your animal The thing is, the you know, the elephant in the room creates tension. Putting a rat on a table creates internal tension, that’s not a fun thing. chucking a moose on the table, you got to be really damn strong to pick that thing up because they wake up 1000 pounds. But the point is to get that issue there. And it’s almost metaphorically it’s like, you plug your nose and you say the words IE, you don’t want to do it, right. It’s like plugging her nose to jump into the water. It’s just you got to do it. Because otherwise it’s it’s going to be worse. And we’re going to have a fake meeting and, and unfortunately, and this will help us to get into our first point. Some people believe that being a terminally positive is a much better leadership strategy. And talking about problems makes problems bigger. It’s a very common belief like if we don’t talk about it, it’ll get better. Yeah,

Brad Giles  14:31

yeah, we should like pump up the team. We

Kevin Lawrence  14:33

should pump it up and be positive and yes, we can and all this good stuff. Ah, it’s kind of a go back to our tooth metaphor. If you’ve got a cavity, not talking about it and ignoring cavities, especially after a certain point generally they don’t go away. The pains not critical away. There is a self healing ability for tooth interestingly, if it’s a minor one My dentist told me that they actually can self-heal sometimes. But at a certain point, it’s a point of no return. And so with these issues, some people think their job as a leader is to be positive and to inspire people. Problem is, if there’s a frickin elephant in the room and you’re not talking about it, you have zero credibility.

Brad Giles  15:19

Yeah.

Kevin Lawrence  15:20

Because people look at you, because it’s like, they know the elephant exists. It’s not it’s not surprising. Yeah, every week, most people know about these issues. They just see that the leadership’s too chickenshit to talk about it. Pardon my language, you know, yeah, the Leafs, the leader is just like, they know, why aren’t you addressing Frank, who’s been here for 24 years? And doesn’t do it? or, or, or, you know, Julie, who’s toxic or whatever, I’m just making up names. So it’s, it’s it’s people, a lot of people tried to be eternally optimistic, but those are amateur leaders. You do need to be optimistic. But you also need to be realistic to have faith and credibility and to make the right decisions. You cannot only make the right decisions based so the summarize a brand that I want to say. But it’s it’s the negatives only being positive. You know, that is that maybe, maybe, you know, and even sales people, sales, people who are only positive, don’t sell as well as sales people who also will tell the truth in some cases and point to a weaknesses in Robert Robert shell, Dini in his books has a great piece on that, which will we can get into another time. But go ahead read.

Brad Giles  16:38

There’s a time for being positive. But it’s not all the time. And talking about the brutal facts is not being the opposite of positive, which is negative. Talking about the brutal facts, is simply confronting the issues at hand, which if you do not confront the issues, in dealing with facts, and not opinions, very important distinction, what are the brutal facts, not your opinion. If you don’t do that, and you’re only positive all the time, you’re never going to address these underlying issues, then people will become disengaged. But there is a time for being positive. And that is, we have identified that this is brutal Fact number one and two, and three, perhaps if you were doing an announcement to the leadership team, or the broader team, these are the brutal facts. And based on that this is our plan moving forward. So you can certainly be positive about the plan and the outcomes, but not addressing the brutal facts is a fundamental flaw that can create real dysfunction in an organization.

Kevin Lawrence  17:58

Yes, and then simple thinking, is this because, you know, $100 problems become $100,000 problems. Yeah, you know, one toxic person can cause you to lose five great people. One angry customer, so I’ll give you an example. And this is an organization that inadvertently did it was called into a company to do some work. 2005 when I was 15, more than 15 years ago, awesome company had had 50% growth for many years. They’re running about 15 million in revenue at that point, but their growth stopped. Yeah, so they called me and we’re doing some strategy sessions. And we’re digging around and, you know, around the time the economy was booming, and there’s a Yeah, well, you know, the economy’s a little soft. I’m like, No, it’s not. So we start digging around the business. And what was interesting is, is, you know, asked about a lot of things, what about your customers, our customers are happy, you know, our customers are like a top. When we want more, we just turn it on. direct quote. We want more business, we just turn on the top. So Oh, wow, that’s impressive nursing that for? So I said, Well, what about customer feedback? Oh, yeah, we’ve got an amazing system for blah, blah, blah, blah, blah. Okay. And have you looked at a receipt? No, we haven’t. But you know, we know what’s really good. Okay, great. Can I get a copy of that? I said, and I swear Brad like you know, the cartoons really see the steam coming out of the cartoon characters ears when they’re angry. Yep. So on my way back I was reading and they gave me you know, a report printed back and I did they printed more stuff, you know, 20 pages 30 or probably 30 lines a page of Excel with a comments. I just got to page two the customers were screaming in my ears. There were three issues in a premium branded company that was highly regarded three issues about three products that were driving the customers crazy. The executives did not have clue. Yeah, they wrote a touch because they’re pissin their customers off, and a couple of the products were not good, and not up to their standard. And and and that feedback actually wasn’t getting to the table. So it wasn’t even a case of that people knew it and weren’t saying it. People didn’t know it, because they weren’t actually even looking. They didn’t have the right data showing up in the meeting, to have that. And that’s why To this day, I always want to see customer data and employee data, in addition to financial data in our meetings, because it’s not that the people need to declare the brutal facts, sometimes the facts set that the report will tell us the brutal facts, the point of it is, is that it’s it’s insanely powerful, mandatory. And and it creates, so that company was growing, you know, 50% a year, they hit about 50 million, it took three years to really get the growth going growing again, they killed the growth engine. Yeah, they didn’t shrink, but they didn’t grow.

Brad Giles  21:06

Yeah, and this is the opportunity. And what’s important is when it’s in a rhythm, so for me, it’s typically about every quarter, I reckon that if you’re having this type of exercise, which is a dedicated, let’s say, half hour or more to what are the brutal facts, let’s say if it was every quarter as a part of your strategic planning and execution framework, it’s a rhythm that these things tend to build up. If it was every day or every week, it wouldn’t be enough. But being every single quarter, it’s enough time that these issues can build up to the point where there’s a little bit of tension that needs to be released through this mechanism for us to kind of free the path that we can continue to grow. That rhythm of releasing that tension, it means that people are able to look forward to it, they’re able to analyze and think about it and think to themselves as leadership team members. You know what, we really need to talk about this at our oxide, we really need to address this issue. So I had an issue recently. One of the elephants in the room was we’re not, we’re not achieving our revenue, bottoming our profit targets. We’re not Jimmy, our profit targets. Okay. Why is that? What’s the facts around that? It’s the first kind of question that we’ve got to get to what are the kind of facts that we know this is real? What’s the real issue here? So we dug into it. And it appears that one of the departments, the divisions, was a longer standing area of the business that there was an emotional attachment to, but they weren’t really making the numbers because the industry had changed, the industry had that component where they sold into or that that part of the industry had changed enough that the margins weren’t viable in this industry. Now, unless you had economies of scale, and no one really wanted to talk about that before that point. Because it was like, if we close our eyes, we love that part of the business so much, maybe we can just get on with it, maybe, you know, we can worry about something else. Or overall, you know, we’re doing okay, we’re doing pretty good. But then, you know, we’ve got to pay out a certain amount for the losses that that part of the business is making. So without that mechanism, it would have taken much longer for us to find that out. And that’s the beauty when it’s in a cyclical rhythm, the elephants that we can keep asking, like, keep crying that tension. Yeah. And

Kevin Lawrence  23:55

when you’re doing it, every quarter, you get into a flow where they’re always kind of on the table. And after, you know, a year or two of doing this, it just naturally happens. And it’s a way to help you recalibrate your plans. I mean, I’m sure some examples, some other ones that have come up that have been massive. We had one that came up that although we were having record profit growth, we weren’t having unit growth. Hmm. So basically, we weren’t growing, but we were making bucket loads more money because one division was killing it like crazy. But the overall business wasn’t. And that’s a concern. Because unit growth, no unit growth, but profit growth is not sustainable. It’s great. Take it while you can. That was one another one that we saw. Just think we I mean, there’s one that a company didn’t deal with was a massive change in the industry. And they didn’t quickly enough change their business model. That’s a long time. And I don’t want to criticize the client. But that was a very painful one to watch, because they wouldn’t make some tough calls around some brutal facts. We had another one as simple. And this gets into, like, you know, in the process, is that the? How do you address them? So we prime people upfront with surveys to ask about the brutal facts so that we, you know, are prepared going in the room, as I mentioned earlier, then in the session, it’s about brutal facts. And then we put the question is, what are the brutal facts that we must address or critical conversations we need to have in this meeting, right, so we open up to both categories. And we, we make a big list of them. And then we sort them out. And then depending on what they are, we use that list as context for the rest of the meeting. Yes. And when we’re reviewing everything, we keep adding to it. And then when we’re deciding the priorities for the next quarter at the company level department level, we then go back and look at those to make sure that we’ve taken into account what we need to take into account. That’s the so that’s, that’s the brutal facts as context. But sometimes there’s something that needs to be debated. And when we rank them, we’ll say, you know what, we need to dig into this one. So we take our number one brutal fact. And you know, Jim Collins taught me this exercise, I love it. And we list all the facts about the brutal fact, because it’s already sensitive enough to put the brutal facts on the table. So I’ll give you an example. This is when the finance team was failing in a company and not giving the company what it needed. It was a serious issue. The CFO at the time, I think was just over his head. And he was a wonderful man. But it was hurting the business. So that’s basically Hey, you know, an executive in our team are doing their job, not a nice conversation to have. So we took, you know, not able to get what we need from finance as the brutal fact, it was number one, we split up into groups, and everyone made a list about the facts about the brutal fact not the opinions, because that’s judgmental. Yep. What are the specific facts, I can’t get my margin report. Um, my inventory report doesn’t correlate with the inventory count, or whatever it is, like specific things or requests are taking seven days to get done. So we mapped them all out, and we created a massive list of the facts about the brutal facts, then, now we can have an intelligent on emotional and judgmental conversation of saying, okay, by that time, the CFO was like, Wow, this is so helpful. And then we went and worked on the two or three things that we thought would ask them add the most value. So list of the brutal facts, prioritize them. What’s that? Number one? And if indeed, you do need to debate it, you think it’s that type of thing that won’t get taken care of by those? What are the major facts about the brutal facts, then have a conversation? So you can you know, you can dig into almost anything with that very nice way to work with it?

Brad Giles  28:08

So yes, that Yeah, that’s right. So what we’re hearing is that it’s not just saying the this is the brutal fact, it’s what you do with it. You can’t just say, there’s a brutal fact our finance department isn’t performing winning to, to then say, Okay, what are the facts about that? Or what’s the real issue he or dig deeper? Because in my experience, it’s that digging deeper, that helps to give us the insight for really what we want to know is at the end, like what do we need to do about it? In the next 90 days, what is the actions that we need to do to begin to address this elephant because it’s all well and good, go and talk about these things. But unless there’s some action, everyone will feel it’s worthless.

Kevin Lawrence  28:58

Yeah, and the thing is, and you don’t always need to take action. Some of the stuff is just, it’s just awareness, right, there will be a couple of things, otherwise, you’re going to put too many things to do. Yeah. And then at the end, we’ll also basically, you make your list, prioritize it, if you’re going to dig into the one, you get all the facts, and you can have that strategic discussion, which are really rich to do with the team, and then drive to a conclusion. With the others. You can just say, is there any action that needs to take here, and I might go into one of the quarterly goals for the company, it might go into a department plant, and there might be one that separately gets actioned or, you know, just like a potential feeling you might need. The dentist says let’s keep an eye on it. And we’ll look at it again in six months, because these things will come up. The key is to be able to know that you’re addressing these major issues that might get in your way, and that people can have trust and have faith that we are going to deal with them and You know, there’s no, there’s one more example I’ll share with you. You know, where there’s, there’s a bit of brutal facts about a Buddha concern about another department or a sensitive issue that probably is not appropriate to really dig into in the room. But that’s what the CEO puts up their hand and says, Hey, I got this one. You know, I’ll have a conversation later. This is not, this is not an appropriate forum for us to dig into this, but I assure you that I will take care of it. So this stuff is is not rocket science. It’s just counter intuitive. And, and who would think that spending 15 or 20 minutes every time we have a quarterly strategy meeting, to address the negatives, in the end can be one of the most positive things that you can do?

Brad Giles  30:43

Yeah, I can remember before I started having this as an agenda item at our meetings compared to after, and it’s transformational, it really does make a huge difference. And most of the delegates would say this is, you know, it really feels like a much more powerful meeting now. And the irony is, is that all we’re doing is applying the filter of let’s not, you know, let’s not be light about this, let’s talk about the really, you know, the really big issues that were reluctant to dog about, which creates a much more meaningful meeting. Yeah, so I guess the, you know, you said there, we don’t always have to act on the Mall. I think at the very least we’ve got to ask, Is there anything worthy of effort? No, is an acceptable answer. But is it anything worthy of effort? Because Well,

Kevin Lawrence  31:42

I changed the question. No, Brad, not on my question is, yeah. Is there anything that we must do?

Brad Giles  31:49

Yeah,

Kevin Lawrence  31:50

yep. Because it’s all worthy of effort. We’re trying to only address stuff that matters in these meetings, which is insanely hard.

Brad Giles  31:58

Yeah. Yeah.

Kevin Lawrence  31:59

You know, and that’s, and that’s Sorry, I sorry, I just have stronger language on that for me. Because, you know, it’s just so easy to come up with way too much stuff to

Brad Giles  32:08

1. Oh, for sure. That we want to have action items out of it. You know, if we’re running the exercise, we’ve got to have we’ve got on land with something at the end, we’ve got to land with some kind of resolution, or people have got to feel like we’ve closed the loop. There’s no point just talking about them and then saying, Well, that was good. All right.

Kevin Lawrence  32:31

No, I’ll find that half of them get taken account of the quarterly goals that we set. Yeah. And they become a little pieces in there that we’re going to address, it guides that thinking, I find half of them don’t get addressed. were to say, Okay, you know what, we can let that one go for now. Because, you know, again, we’re it’s about constant prioritization. But yeah, it’s super powerful thing. So the thing that we would leave people thinking about is, what would be the point next, when you would talk about brutal facts? And what is the best way that you think you should approach that? Do you want people to write them on post it notes and put them up on a wall? If you’re, you know, in a face to face meeting? Or if you’re on mural, if you’re a digital platform? Do you want to pre survey people? Do you want people to scrape through data sources and put them together even as a side note, you know, and when we’re doing these surveys, you know, many of the companies will break up into groups. And people will pull out the big highlights from the surveys and their and their experience. And they’ll put their top three for the group so we can share those. But then they will also separately pull out the biggest brutal facts, you know, one of the companies we take about an hour, every quarter, to do the positives, and then an hour for the brutal facts. And they they will have read the surveys and talk to their teams. And they come up with the biggest ones that they think we need to address as a team activity as part of and it’s an hour and a two day meeting. And it’s it’s highly, highly effective.

Brad Giles  34:03

Indeed, indeed, yeah, it’s such an important thing that we need to to address confront the brutal facts. Again, we recommend at least quarterly, we recommend that all of the team prepare and think about it, and that we can close the exercise saying that’s it, there’s nothing else that that we’re reluctant to talk about or issues that are there that we need to kind of cover off. And it gives you great sense of closure for everyone. Well, those those those great a very

Kevin Lawrence  34:35

actually something I just want to add in for remote. And if you’re uncomfortable with doing this, and if you think that some of the issues might be too sensitive, that’s where facilitators come in. Because I don’t a lot of the teams because I’m in the room or you’re in the room or my teams in the room. It makes it safer and it’s easier to have respectful debates about These topics, so you might be a partnership and have a couple partners. And there could be a couple brutal facts, that you’re not comfortable debating as a partner’s, well then get somebody to facilitate that meeting for you. So you can deal with those issues. You know, it’s it’s, it’s it’s okay to get help on these things because sometimes the brutal facts kind of brutal. And and you might need some additional assistance.

Brad Giles  35:24

Yeah, that I it’s funny you said that, because I was actually thinking that as we were going through the episode today that there have been people who’ve said to me, we can’t do it without you in the room. And what I mean by that is, it’s very hard to be absolutely, like, we create that environment where people are completely comfortable. And it’s a controlled environment, which, which really does matter. Well, that was that was a good way to close. So a quick summary, I guess, of where we’ve been, we’ve got to confront the brutal facts on a regular basis, because these things will creep up on you, these things will fester. And then unless you address them on a regular structured basis, you could look around and have all of these festering rats or nooses or elephants, or whatever you call it. These things all around the business that are just problems that are just festering away that aren’t being addressed. You can’t always be positive, our recommendation is once per quarter, and how to address it. We don’t have to act on them all we’ve got to identify what are the big things that we must act on to use Kevin’s must phrase there. And then really digging into the list. if you so desire, you can say what’s the number one what are the actual facts around this? Okay, so with that, let’s move to close. This has been the growth whispers podcast. I’m Brad Giles. You can find me at evolution partners.com dot A you and as always joined today by Kevin Lawrence, who you can find at Lawrence and co.com. I hope you have a great week. We look forward to talk to you again next week about building enduring great companies but for now, have a great week.