Always Be Anchoring

Blair offers seven mindsets that any seller of expertise needs to master so that they can behave like the expert in the sales cycle.   Links "The Jedi Mindset" by Blair Enns McClelland's Human Motivation Theory, also known as Three Needs Theory, Acquired Needs Theory, Motivational Needs Theory, and Learned Needs Theory   Transcript DAVID C. BAKER: Good morning, Blair. You are in London. I'm in Nashville. BLAIR ENNS: Yeah, it's my afternoon, and it's your seven AM. DAVID: And don't tell me you've gotten a lot more done today already, because that's just a time change thing. Has nothing to do with productivity. Today we're going to talk about the seven masteries of the rainmaker, choke, choke. BLAIR: You're choking on the word rainmaker, are you? DAVID: Well, a little bit. I'm also, it's like seven. How come it's not six or eight? Seven sounds quite biblically, almost like we need to take an offering at the end of this or something. BLAIR: Let's do that. DAVID: I'm more choking on the idea of the rainmaker. Do you hear that term much anymore? I don't really hear it. We know what it means, though. BLAIR: No, but there was a time when you heard it often. In fact, if an agency were running an ad looking for a new business person, probably a health percentage of those ads would have the title rainmaker wanted. DAVID: Yeah. BLAIR: I've never liked the term rainmaker. It's a little bit funny that an agency principal would be looking for an individual who essentially has magical powers, the ability to make it rain. DAVID: Right. It's dry. The crops are going to die. All we can do is just rely on magic. So let's call on the rainmaker. We have no idea how he ... it was always a he back in those days, but we don't know how he or she does it, but this is our last resort. BLAIR: We have no positioning. We have no leads. We have no prospects. We have no formalized new business process. You absolutely need somebody who can make it rain, yeah. So I've kind of used that term tongue in cheek, but the idea of seven masteries, it really stems from the notion of mindset. Because you can master behaviors. You can master all kinds of things. And when I originally wrote about this a few years ago, I had come home to the idea that I was teaching people sales process and people were learning, so they were onboarding and understanding what it is that they knew to do in specific situations, but yet, they still couldn't bring themselves to do it. BLAIR: So I kind of went deep into the subject and realized well, the things that I'm asking them to do, because my approach, the Win Without Pitching approach to selling to new businesses is a little bit contrary to the conventional way it's done in the creative profession. So the things that I was asking them to do were contrary to their overall general pattern of behavior. And then you ask yourself, well, what sets somebody's general pattern of behavior, and the answer is it's really the thoughts in their head, the mindset. BLAIR: So I kind of arrived at this model, this idea of the seven masteries of the rainmaker. These are the seven things that are concepts that an individual needs to master in order to put themselves in the mindset, the mindset of the expert. I sometimes refer to it as the Jedi mindset, so they master those concepts. So they're in the proper mindset. Then they can begin to behave, generally speaking, across the pattern of general behavior, they can begin to behave like the expert, and then they can start to take onboard these very specific things that we teach client does x, you do y. BLAIR: If you learn those specific points of sales process, what to do in the sale, in certain situations, but you're not already operating or behaving like the expert, then they're not going to work. So this whole idea was about getting to somebody's mindset. DAVID: Okay, so we're going to go through the seven, but before we do that, let's assume that I want to embrace this way of thinking. What specifically, almost mechanically, are you suggesting I'm going to do with these seven things? Do I just write them down, and I chant them to myself? No, you're not talking about that. It's more I analyze my behavior against this list. What am I going to do with this after we get through going through the seven? BLAIR: As I walk you through the seven, you'll think about where you are on that spectrum, and in the first mastery, just ask yourself, hey, are you mastering this now, or do you have some homework to do? And then I am going to get you to chant something funnily enough. DAVID: Good luck with that. BLAIR: After we get through four of the ... I think I said to you, this is either going to be really fun, or it's going to be a complete disaster. DAVID: Right, yeah. BLAIR: So we'll just see how it goes. As I explain the mastery, you just ask yourself, well, is this something I have mastered, or do I have some homework to do? And then once we get through four, the first four, which I consider to be the foundational masteries, then I'll actually talk about stringing them all together in a little saying or a mantra that you can say to yourself, and I don't mean to say that you're like Buddhist guru here or something. DAVID: As you laugh and talk about that, right. BLAIR: We're going to get you to say it out loud and then you'll see that when you do this properly, this becomes the conversation that you're having yourself with, and it sets you up to go into a situation where you're behaving properly. And even if you don't remember the specific things I tell you that you should be doing in the situation, it won't really matter, because you'll be thinking the right things. Therefore, your tendency will be to behave appropriately. You will behave like the expert. And then you can forget all of the nuance, and you'll still probably do pretty good. DAVID: Okay. All right. So let's dive in then. The first one is focus, right? So talk about that. BLAIR: Yeah, so mastering focus, it begins with the subject of focus. When you go in and do a total business review with a firm, I don't know this for certain, but I would expect that one of the very first things that you look at is the firm's positioning. Once you do an assessment of where the firm is and how they need to improve, I suspect that's kind of the foundation of where you start, or one of them. It certainly is in my business. DAVID: Yeah. In fact, I'm doing one today, yesterday and today. And as I was driving to where I'm talking with you now, I was just thinking, you know, I love this work. There's so much science and art around positioning, and it sets the stage for everything, right? How can you have all these other conversations without that? And that's what you mean focus, power in the sell comes from deep expertise, which comes out of that focus. DAVID: So when somebody's listening to this first one, and they're thinking, okay, do I still have homework to do, that question is is my firm focused enough to give me power or leverage in that relationship. BLAIR: Yeah, are you focused, or are you the individual benefiting from a focused firm. And the benefit of focus is when the firm narrows its focus in terms of the types of problems it solves or the types of clients it works for, usually a combination of those two, when it narrows its focus, it allows the firm to build a deeper expertise. So if you're an agency principal, and you have a dedicated new business development person, just ask yourself, are you arming this person with the benefit of focus. So we're going to build a four statement mantra. BLAIR: And the first statement is I am the expert. I am the prize. And that comes from this notion, this idea that I see myself as the expert practitioner in the relationship and not a vendor. I have some power in the relationship because of the depth of my expertise. Therefore I have a sense of being in control, but this idea that I am the prize, I am the prize to be won. I and the firm, we are the prize to be won in the relationship. And it's not the client is the prize that I am trying to win. BLAIR: So again, that's a mindset thing. Do you see yourself as this deep expert and representing a firm that has deep expertise that is desirable to the client, and do you see yourself and the firm as the prize to be won in the relationship? DAVID: That is so powerful, even though the words are so simple. It's the opposite of being a supplicant. It's not an arrogance, though. It's more of a quiet confidence that I've seen this before, and I'm eager to help, but we should talk about whether this is a right fit. I don't have to have this. I keep thinking of all these statements that emerge from what you were just talking about on the focus side. Even though we're kind of skipping, we could unpack this notion for weeks. We could talk for weeks, just about what focus means. But that's how it all starts. I love the fact that ... obviously, it has to be on this list, but I love the fact that it's also the first one. DAVID: So I am the expert. I am the prize. So that's focus. Second would be purpose. So talk about what that means, because we're still talking about very foundational things. How does purpose relate to this as a second one? BLAIR: Yeah. So after you master focus, you build deep expertise. The second, master a sense of purpose. And by purpose, I mean kind of a higher mission or calling. So most well-positioned firms can express their positioning in some fairly standard, almost formulaic language, and I don't mean to denigrate the language by calling it formulaic. I think first, you actually have to express your positioning in a formulaic language before you get creative with the language. BLAIR: So most specialized firms can say we're experts at helping this type of client solve this type of problem, or this discipline for this market. And that's just the beginning. Once you have that nailed, you want to go off in search of a higher purpose. Now, what purpose does for you in the sale is it gives you moral authority. It gives you the moral authority because you're driven, not to sell something to the person sitting across the table from you, and you're driven, not to help them sell things to their client. By tapping into purpose, you're tapping into something that's bigger than you, and even bigger than your client. And that gives you some moral authority in the sale. BLAIR: I'll give you an example in my own business. So Win Without Pitching, I can express our positioning as sales training for creative professionals. So the discipline is sales training. Creative professionals is the market. But my mission based positioning is we are on a mission to change the way creative services are bought and sold the world over. So there are different reasons. It starts to get into this Simon Sinek, tapping into your why thing. But there are certain moments when I will say that statement to myself, or if I'm being introduced to give a speech, I'll hand that language to the person who's introducing me, and that helps me get through maybe a slightly anxious moment and tap into something bigger than what I'm trying to accomplish in the moment. BLAIR: And when you're thinking bigger, when you're thinking past the transaction that's in front of you, and you're thinking past even what your client's objective is, to something even bigger than that, that steals you, gives you this moral authority, it contributes to your confidence, and it allows you to kind of ... gives you more ... I don't want to go back to the power word, but more confidence to navigate through the situation, through the sale, acting like the expert. DAVID: Yeah, and what I'm going to say next, I don't want it to take us too much off track, but I couldn't help but thinking of something as you were talking through this. Part of what we're doing at the beginning of a transaction like this or a possible transaction, or relationship, I guess would be a better way to say it, is to gather some control in that relationship, set ourselves up for that, not, though, so that we can misuse the power, but to use it for the benefit of the client, and sometimes it looks like a mistake. It looks like a power trip. It doesn't make sense sometimes from the outside. It's like if you saw somebody holding a child down, and it was through a glass window, and it looked cruel, and then the next thing you saw is that they were giving the child a shot, or they were dressing a wound or something like that. So we're doing something where we're exerting control to help the client, not to abuse the client. And we're reminding ourselves of that during this purpose discussion. DAVID: I love the example of getting up on stage, picture you've traveled a long time, you're tired, maybe something has happened that's shaking your confidence just a little bit. And you say this to yourself that I am on a mission to help. I guess that's the second phrase here that we're talking about. The first one, I am the expert, I am the prize. The second one, around purposes, I am on a mission to help. All of a sudden, it settles everything down. It reminds us why we're here and what we're trying to do. BLAIR: Yeah, well said. DAVID: So the third one is leadership. This is also a foundational statement. These first four are very foundational. So leadership is the third one. BLAIR: Yeah, let me just build where we are so far. So focus, I am the expert, I am the prize. Purpose, I am on a mission to help. And leadership, the line that goes with that is I can only do that if you let me lead. The idea of mastering leadership speaks to the notion that the sale is the sample of the engagement. So for you to do your best work in the engagement, you need to be able to lead. I use the word power, and I tend to overuse it, and as you point out, I don't mean power for the sake of power. I don't mean overusing it, but I mean, the client letting you assume the expert practitioner position and lead them through the engagement, rather than them relegating you to the vendor position and having them drag you through the engagement or dictate to you how the engagement is going to work. BLAIR: You're being hired to help solve a problem or capitalize on an opportunity. And for you to do your best work, you need to be allowed to lead in the engagement. Now, if you're not leading in the sale, then you won't be allowed to lead in the engagement, because the roles in the relationship are established well before the engagement begins. They're established in the sale. That's why you need to behave like the expert. You need to behave appropriately. BLAIR: So this third mastery of leadership is simply recognizing that for you to do your best work in the engagement, you need to be allowed to lead the client. Therefore, it's your job or a requirement that you assume the leadership position in the sale before you're hired. Again, I refer to the battle for leadership or power or control as the polite battle for control. And it should never feel to the client like you're dominating them or lording anything over them. They should feel the way it feels to you when you're hiring an expert practitioner yourself. They're calm, they're collected. They're clearly in control of where things are going or what the appropriate next steps should be. BLAIR: But they're also quite consultative with you, and they make you feel like you have input and you're not being dragged along. So that's the third mastery is leadership. DAVID: I can't help but think about the notion of process as well, because many clients of the folks that are listening to this podcast, those clients are sometimes going to question the process you want to take them through, and it's pretty important to not only have a reason for the process, but to also stick to your process as the expert. Now, if it's not a good process, you don't need to stick to it. I guess that was obvious. BLAIR: It's funny. I was thinking that, too. I'm sure you've seen this, too. There are a lot of agencies out there that kind of manufacture this, I'll call it process, the Canadian version. They manufacture it, and they lead their clients through it, and I come along, or you as a consultant come along and look in and go oh, it feels a little bit hollow and empty, and it's needlessly long, and it's not as fruitful as the client might think. So I think we can laugh about it, but there's actually some fairly hollow processes out there. DAVID: Right. But assuming that it's a good process and it really is a core part of how you're going to lead the client, then this begins to be a part of how you conduct this conversation. It's like you've hired me as an expert. The way I've done this in the past many, many times is to follow this process. I don't mean the hollow process. I mean the good process. It's allowed me to find the truth more reliably and more quickly. And that's a part of leadership. Leadership is not just the advice I'm giving a client. Leadership is also the process that we go through together to arrive at that advice. That's more the point. So focus, purpose, leadership. And the fourth one is detachment.   DAVID: Let me go through and repeat these phrases again. So on focus, we have I am the expert, I am the prize. On purpose, I am on a mission to help. On leadership, I can only do that if you help me lead. And then third is detachment so walk us through that. BLAIR: Yeah. Fourth is detachment, and the line that goes with it is all will not follow, and that's okay. There's really two things you want to master about detachment. First of all, you want to detach from the outcome. So we're talking about the mindset you get into right before you go into the sales interaction. And you layer in all these masteries, focus, purpose, leadership, and this idea of leadership, I'm going into the exchange, and one of the things I'm looking for is I'm looking to take the lead, and I'm looking to see if you will let me take the lead. Do you recognize me as an expert, and are you willing to let me lead in the engagement? If you are, you'll let me lead at least a little bit in the sale. And the fourth mastery here, detachment is letting go of the fact of well, if they don't, that's okay. BLAIR: Your business is bigger than any single one interaction or any single one opportunity. You are this focused expert. The idea is if this person or this client or account doesn't come with you, if they don't let you lead, if they don't hire you, et cetera, that's okay. So you detach from the outcome. That's number one. You focus on the mindset and the behavior, and you detach from the outcome. So again, if you imagine when you hire or work with other professionals in your life, if you end up saying to a lawyer or accountant or solicitor or whoever the most vaunted expert is in your life, if you decide kind of not to go with them, they're not pleading for you to please, please, please give me your business. Because they're this recognized expert who have, you imagine that they have all kinds of opportunities available to them beyond you. BLAIR: And that's essentially what you should be thinking to yourself and then communicating to your client, and just let go of the outcome. So that's the first point on detachment is just generally focus on the mindset, focus on the pattern of behavior, and let go of the outcome. Don't be tied to the fact that this person absolutely must buy from you. BLAIR: There's a lot rolled up in this idea. The idea of not over investing in the sale is tied to it. It's easier to detach when you haven't over invested in the sale. But the second part of detachment is each of us personally tends to have something, and it's usually one recurring thing that we want from the other person in the sale. BLAIR: And I'll go back to this model of motivation known as McClelland's needs theory of motivation or the three needs theory that says people are motivated primarily by one of three different things. It's the need to win versus others, the need to orchestrate others, and the need to connect with others. So if you're a high competitive drive, and you have a high need to win, then you really need to detach from, before you walk through the door, just let go of the need to win this opportunity. If you have high power needs, you have the need for authority and respect, that's probably a good thing, because you and I and have been talking about that. You want to occupy the expert practitioner position, but some people can be in danger of having too high a need for authority and respect. BLAIR: And that's me. So I need to let go of the need to be the absolute authority on something, and other people have high affiliation needs. What they're concerned about in any social interaction, even in a commercial one like this is the need to be liked by others, the need to connect with and be liked by others. So in that situation, they would be telling themselves something like all right, this person doesn't need a friend. They need an expert practitioner. So I will detach from my need to have this deep, personal connection with somebody. There's some more nuance there. You don't want to detach from that completely. But you do want to recognize essentially what a big motivator is and recognize that you tend to go to this too often, and in the situation you want to let go of it. BLAIR: So the idea is that all will not follow speaks to this notion that you don't need to close every deal, and then there's this secondary detachment of what is it that you personally need. Identify it and let go of it. DAVID: Because we should not need constant affirmation that we are an expert in the relationship. We should enter that potential relationship. Every once in a while, it's on a rocky ground, but believing generally that we are the expert, and there's a lot of evidence for that and that many, many clients over many years have paid us a lot. And then after the engagement, we've heard that it made a difference for them, whatever business our listeners are in. DAVID: I love talking about this notion about how much we care or what we care about. I have this theory that has zero scientific underpinnings, just to make that clear. BLAIR: Those are the best theories. Go on. DAVID: All of a sudden, you're interested now. The idea is that we have 200. Now the number might go up or down, obviously, but we have about 200 instances in our souls where we can care a lot more than the client can. And every time we deeply care more than the client does about something, a little part of us dies. And then we have 199 left. So you want to use those very carefully. They're like little tokens that are not going to be replaced. Caring about the wrong things, it just kind of kills you slowly, right? BLAIR: Yeah, you've punched all the holes in your care card. You're out. DAVID: Exactly. Where's my free card? BLAIR: Clearly, you've punched yours years ago. DAVID: I don't even know what a care card looks like anymore. Okay. So what's this mantra that you're going to try and get me ... you say it, and I'll repeat it. And this rolls up the first four. BLAIR: I am the expert. I am the prize. I am on a mission to help. I can only do that if you let me lead. All will not follow, and that's okay. You try it. DAVID: Okay. If I say that is, will you let me lead the next six episodes of the podcast? BLAIR: Yes. DAVID: Okay. BLAIR: You can have whatever you want if you say this. DAVID: Okay. I don't believe that. But I am the expert. I am the prize. I am on a mission to help. I can only do that if you help me lead. BLAIR: If you let me lead. DAVID: If you let me lead. All will not follow, and that's okay. So obviously, I messed it up. I have to practice this some more. Okay. So those are the first four, and you've wrapped them up. The next three masteries are different, though. They're not foundational. They're more specific situation masteries. And we sometimes get these in as well, today. BLAIR: Yeah. DAVID: So what's the first one? Silence. BLAIR: You're looking at the list. You tell me. DAVID: Ah, you were pulling that on me. You just did that to me, and I fell right into it. BLAIR: Yeah. DAVID: Okay, I'm a sucker. BLAIR: The fifth mastery is silence, and I think we've talked about this a little bit before. I think mastering silence is the single biggest little thing that you can do, if that makes sense, and it does make sense, the single biggest little thing you that you can do to become a better sales person. Nature abhors a vacuum, and when a buyer and seller are talking, any time there's a pause in that conversation, there's an impetus on both parts to fill it, and if you're the seller, you tend to fill a pause in a sales conversation with some sort of concession. You don't even have to master silence. You just have to learn to be more comfortable in silence than the other party. Because if you can be more comfortable, then the client is likely to fill the void with a concession or they will give you really valuable information. BLAIR: So we always teach that any time you raise an objection or place kind of a hurdle in front of the client and ask the client to jump over that hurdle, or you ask for a behavioral concession, after the statement or the ask, you just be quiet. So if you put forward your proposal, and it's got a price on it, and you're putting it forward orally, and you say and the price is $200,000, then you just stop and say nothing. And it's hard to do this initially, but it's actually very easy to get good at this. And if you can just kind of not be the person to break the silence, and you let the client fill the void, then you'll get all kinds of information on where the client stands, on how much power you have in the relationship. And you might even get some concessions, whereas sales people like to fill a void in that moment. The price is $200,000, silence, and then the sales person can't stand it, and says, oh but we could do it for less. DAVID: Yeah, and the panic rises so quickly. It's like yeah, maybe they just need to pull out Fortnite and start playing it or check their email. You're not suggesting that. BLAIR: I would say count to 10 under your breath. DAVID: Yeah, okay. All right, so silence is the first of the three after the foundational ones, and the second one is directness, say what you're thinking. We've talked a lot about this one, but it fits in the system, right? So just remind people, if they haven't heard that episode. BLAIR: I was just working with a firm earlier this week, and we were just doing some role play scenarios where I was on the subject of saying what you're thinking. So I was just throwing out some scenarios. And I was saying okay, here's a scenario, you're talking to a prospective client. You're thinking oh, they're probably too small. They probably can't afford you. What do you say? And I was really surprised at how people ... and I've been doing this for years. I continue to be surprised at how people struggle with finding the language to actually politely say what you're thinking, because we are not conditioned to do that in this business. In the creative and marketing firm business, we're taught that we're in the service business. The customer's always right. We're taught to nod and smile yes, even when we think the answer is no. BLAIR: But an expert would never do that. If you've got an opinion that's contrary to one that's been stated by the client, including an opinion on what the next step should be in the path to determining whether or not you're going to work together, you should say it. So be direct. Put it on the table. So I say there's a slight pause. As soon as you get the thought, the contrary thought, you have an obligation to state the thought, and you pause long enough so that you can think of a way to say it with kindness. So we talked about before, the subject goes by the name kind ruthlessness. So you're kind in your language, but you're ruthless in your standards and your behavior. By that I mean, you're being direct, you're saying what you're thinking. If you think the client's assessment of their problem or their opportunity is wrong, then you should say so. BLAIR: If you think there are flaws in the way they're proposing to hire a firm like yours, then you should say so. If you think the client is making a mistake in the engagement, then you should say so. Any expert worth their weight would confront politely with kindness the client with the mistake they think the client is making. And we, almost universally ... it's not universal, but it's almost universal. We don't do that. We need to learn to get better at doing that. So you master this idea of directness of saying what you're thinking. DAVID: I'm picturing somebody taking the oath of office or being sworn in before they give testimony. There needs to be something like that for experts, a commissioning service for experts where they raise their hand and say, I pledge to do it politely but to be honest and to state the truth with the clients who deserve that from me. They deserve that leadership from me. This is very powerful. BLAIR: I love that idea, our equivalent of the Hippocratic oath. DAVID: Right. So silence, directness, and the last one is money. So master your own wonderful relationship with money. That's one of the things we got with another couple or some friends or whatever, and we can talk about sex. We can talk about all kinds of ... we can't talk about how they raise their kids, and we can't talk about money sometimes, and that carries over into how we conduct these early relationships and sales studies as well. We can't really talk about money for some reason. BLAIR: Yeah, and that's why it's the seven and the last mastery. I like the idea that if people were just to read it, you have to master money. Some people would be repulsed by it, the idea. And those are the people that I'm really speaking to here, because we're not mastering the accumulation of money or the spending of money. What I mean by mastering money is mastering our own relationship with money. I believe, and I think we've talked about this before, that most of us have a dysfunctional relationship with money. BLAIR: In my book, Pricing Creativity, the last chapter, I think it's titled the last obstacle is you, and I talk about the mental barriers ... we've done a podcast on this ... the mental barriers to profit. And that's what I'm talking about is not getting hung up on money, and all of the personal emotional things that we were taught or we learned around money, all of the baggage ... baggage isn't fair, because as you pointed out, in social situations, the rules around talking about money are actually quite different than they are in a business situation. You say you've got friends where you can talk about sex, you can talk about politics, you can talk about things. But you can't necessarily talk about money. There's only a small number of people in my kind of personal life, where I have an open relationship without the subject of money, where we've agreed that we're going to talk openly about money, and there's really nothing off limits. DAVID: Yeah. BLAIR: I'm really talking about mastering the subject of the hold that money has over you or the idea that the subject of money is somehow holding you back because you don't feel it's worth it. I got an email two days ago from a client, who said ... he forwarded an exchange that was happening in his firm. He said, oh you're going to love this. He said read down and start from the bottom. So this is a firm that's recently moved to value-based pricing. So they still scoped it based on hours. Somebody internally said, well, it should take this many hours. The client wasn't buying hours, but they sold it for way more hours than it took to deliver. And two people internally were saying this is unethical. We cannot do this. BLAIR: So the principal at the firm and I are kind of laughing back and forth about this, because if you think it's unethical to create extraordinary value quickly, then you have a dysfunctional relationship with money. DAVID: You also have some other issues that are coming around the corner, too. This is such a great topic. I'm not at the point where I'm going to start chanting this. But I do ... I really do like this. So the foundational four, focus, purpose, leadership, detachment, and then the three masteries that are more for specific situations which you might use in certain specific cases would be silence, directness, and money. Blair, this was fantastic. Loved our discussion today. BLAIR: Yeah, thanks. It wasn't nearly as weird as I thought it would be. DAVID: Thank you, Blair. BLAIR: Thanks, David.

26 Sep 201833min

LINKS "The Great Convergence Is Upon Us" by Blair Enns "CRM: The Train Coming At You" by Blair Enns AltGroup.net website "Eight Gauges on Your Agency Dashboard" by David C. Baker The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William Thorndike "Rising From the Ashes: A New Agency Model" by Blair Enns   TRANSCRIPTION DAVID C. BAKER: Blair today we're going to start over. Both you and I are going to start over. We're going to pretend to start over anyway, and the topic is If I Were Starting a Firm Now. In other words this is a firm that you and I work with, and the folks who listen to this podcast generally. If I were starting a firm like that now, what would I do differently? We're going way back in time because I ran a firm ... you worked at multiple firms, and I started and ran a firm for six years. My goodness, I would do so many things differently. If we talked about this 10 years ago, the answers would be different. If we talked about it 10 years from now, the answers would be different. But at this moment in time, what would we do differently if we were going to start a firm now? Are you up for that topic? BLAIR ENNS: I am up for it, and as you've pointed out I have never owned a firm before. I've run a small office, I've been the number two in a larger office, but I've never owned a firm. So I'll try it one, let's do this. DAVID: Okay. We're going to ping pong with some questions here, and I'm going to start by asking for your opinion on something that's really the big umbrella here. The reason I want to ask you is because you recently wrote a lot about this, and it was a provocative article the things that you talked about. I haven't talked with you to see what kind of feedback you got about it, but here is the question; what category of firm would you start? Would it be a digital firm? Or a dev shop? Or a UX shop? Or a PR firm? How would you start a firm from a category standpoint if you were starting over? BLAIR: I think the piece you're referring to is something I wrote called "The Great Convergence Is Upon Us." The convergence I was talking about is the convergence of design, which is often UX design, software engineering, and business consulting. I'm seeing most of the best lucrative, most thriving, most impactful firms that we're working with these days are in that space. I think it's really hard to think of starting a new firm today that doesn't combine those three skills, so I absolutely would combine those three skills because I think that's where the big opportunity is in the market place but that doesn't really narrow things a lot. If I look at what I know the world of selling, and also some of the world of marketing ... what I've been interested in for a bunch of years is this intersection of sales and marketing. I wrote something on this ... oh man, it's probably approaching 10 years ago now. I think it was called "CRM: The Train That's Coming At You." BLAIR: CRM as a customer relationship management software was becoming more prevalent and powerful, it's driven by the internet changing the way people buy, and the way we sell, and the way we use marketing automation. The biggest way sales and marketing has changed in the era of Google is that lead generation has moved from a sales function to a marketing function. When that happens, that changes the nature of what selling is, and it changes the nature a little bit of what marketing is. One of the implications is actually sales and marketing in your client's organizations are getting closer and closer together, and they're overlapping. That article I wrote about CRM was that the CRM application is actually the place in your client's organization ... and I know it's not an application, isn't really a place. But it's the place where sales and marketing are overlapping. BLAIR: Even pre-CRM days when I was working in the agency business, I as somebody who comes from the world of sales, I always felt like in a new business opportunity, if I could get the chief sales officers in the room as a decision maker, and I could convert him or her, if I could win him or her, I would win the account. There's just something about ... this is a long rambling answer, but there's something about where sales and marketing overlap, and the technology that's required, and the way those two different departments work together. I would focus on that space. So where sales and marketing overlap in my client's business, it would be tech heavy. A lot of that tech would be CRM. I would have this converge firm that had high level of business consulting, had technology chops like software engineering, and had really good design UX skills. I would go after sales driven organizations, and I guess the classic label would be a B2B firm. I would specialize in B2B because in a lot of B2B organizations you have this kind of handshake, or overlap in sales and marketing. Did that make sense at all? DAVID: It did. I kept thinking of things I wanted to interject, but I decided just to let you talk because it did make perfect sense. It overlaps with something that we've also seen in this industry for many years, the CMO, the person that we typically would get hired by ... you know these agencies we get hired by the CMO, was losing power for so many years and that's been reversed. About two years ago it was reversed, and really dramatically. The reason it was reversed is because the CMO took over more of the technology spend at large companies, which really dovetails with what you are talking about. The other thing that hit me too as you were talking is that so many of my clients do not understand that world, they don't even use a CRM themselves. It's not as if they need a CRM because they don't have that many clients or prospects to keep track of, but they aren't even using it enough to understand it and to speak that language. DAVID: It feels like the world around these firms that you and I talk to a lot, has changed and these firms haven't really kept up that we need some ... it'd be interesting to talk at some point about maybe the professional education, professional advancement, how do these firms learn and catch up in that space? BLAIR: Yeah. I think if your firm is positioned in any way as B2B, you have to be in the CRM space in some way because you can't be a good B2B firm without having CRM chops. You're going to be operating within your client's CRM application, everything that you do campaign-wise is going to push through that application, and there all kinds of opportunities within that space. As you've pointed out, most firms like the B2C firms if CPG is your focus, you don't need to worry about CRM. But if you're at all into B2B space you need to be using a big robust CRM package, probably sales force just because you're going to need to be able to provide that expertise at some level. You can go as deep into it as you want, but you're going to need to be able to provide that expertise at some level to your clients. DAVID: Yes absolutely. And also sales force is so easy to use, and the interface is so wonderful ... I'm just kidding in case anybody didn't capture that. BLAIR: Let me just put a shout out to ... I've been using HubSpot CRM for a project I'm involved in lately, and I've checked it out every 18 months or so, and it's always been, "Yeah, it's coming along nicely." And we're not into plugging things here, but I was so impressed with the user interface and how easy it is to use. Then I'd go back to my Salesforce instance and I think, "I like the robustness of sales force, but even the new lightning interface is not as good as HubSpot CRM." Okay that's enough plugging things. Let me ask you a question, if you were starting a firm today, size ... is there a target size you would shoot for? Is bigger better? Or would you limit the firm to a certain size? DAVID: I started as one person, just myself. The second person, we didn't have an office at the time, and he was really tall, and he kept ... whenever he stretched ... we worked in our bedroom, and we moved out of our bedroom and that's where we moved the office. Whenever he stretched he'd get his arms caught in the ceiling fan, it just brings back memories. Then we moved into an office, and eventually grew to be 16 people so still really small. I did not understand at the time the implications of size, I thought that having more people meant making more money and that's a pretty tenuous connection there. The way I would answer this question is very different now than it was then for sure too. If you want to be vertically positioned, and hold an AOR place in the client's mind, you can't reliably do that below about 40 people except for really small clients.  DAVID: If I wanted that sort of a relationship I would aim to get bigger, but I also feel like now there is much less stigma around being smaller and if you are not as caught up in doing implementation, and if you're positioning is really really powerful, and it's almost all around strategy, then I probably would aim to be about six people, or I would be over 40 people. I would try not to be in that middle size, that's how I would answer that question. BLAIR: Okay. DAVID: Does that surprise you? BLAIR: The six surprises me. We've had conversations about what's the ideal size of a firm before, and I know that our friends that design business association in the UK has done a little bit of work on this ... and this data is a little bit old, but I remember being told that their research showed that the most profitable firm per capita was 11 people. DAVID: Yep. BLAIR: That fits nicely with your functional model where you say essentially there are 12 roles in the firm, and then once you get past the 12 roles now you're into middle management, right? DAVID: Mm-hmm (affirmative). And you can have very pure roles where nobody has to wear more than one hat at about 22, 23, 24 people, something like that. My own research shows that there is a deepened profitability from about 10-15 and then above that there is another corresponding increase in profitability per employee. But there's so many exceptions to that, it's really hard to say that you would necessarily avoid a particular size. But I think I would be intentionally small, six or so. Or I would be intentionally large if I were starting over. That's just me answering the question, right? BLAIR: Yeah. DAVID: And none of these are like, "This is what you should do." This is just what I would do, that's how we're answering these questions. If you were going to start a firm would you want to have done anything else first? For example, would you want to have worked on the client side first? Or would it be important for you to have worked at another agency first? Or maybe a consulting practice? I want to just get a feel for whether it would make sense if you had a real objective view of things, and you're out of grad school say, and you're faced with these options; to work for a consulting firm, a client, or another agency. Which one of those would you do before you started your firm? BLAIR: This is a real tricky one because you have to try it on for what's best for you. If I remove the question for me, if I think okay I would be ... in that converge model, I would be the consultant, but I don't have the pedigree to bid for boutique consulting firm experience, I have faith in my ability but I don't have that background so I would say somebody like me if I were thinking of a career path which ... if we could hindsight being 2020, and I was pursuing this model, I would do the MBA, and then go work in a consulting company, and then ... I think that would be the most valuable experience, would be consulting company experience. Not necessarily agency or creative firm experience, and I don't think client side experience is actually necessary. In fact a lot of people would disagree with this, but I think we in the creative profession spend too much time listening to client say what they want. I'm not saying we should ignore that completely, but if somebody is on a stage saying, "Here is what I want from you people." BLAIR: I just don't trust that that's actionable advice, to listen to what somebody says they want generally from agency partners, and then build your business around that. That's probably another podcast. But no, I think of those three options whether I had agency experience, client side experience, or consulting experience. For somebody like me, I would see myself as the head of the firm, and I think the head of the firm in this new converge model, you're probably best off with somebody coming from the consulting background. DAVID: That is exactly how I would have answered the question as well because for the same reason you gave about the client side, and because I want to build on my own after I leave the consulting firm as an employee. I want to build a consulting practice working in the areas that you mentioned in the first answer that you gave. I have noticed though that a lot of principals struggle when they have never worked for another good firm before, and the way they get around that is they hire people who have so that they can learn from them. But if the end look of your firm is more of a consulting firm than say a marketing or a design firm, then working for those would be great. I was just thinking to myself as you were answering that, there is no college degree for consulting. That's really odd, isn't it? There's so many things that people are doing, and there's no degree for it. BLAIR: Well isn't that the MBA? Isn't that one of the paths coming out of the marketing focused MBA? Or even a financed focus MBA, is to go on the consulting side? DAVID: Yeah. I mean you learn about business, but you don't learn how to do the craft. They don't teach you that in school, that's pretty interesting. BLAIR: I agree. We're talking about if I were starting over, or if I were starting a firm today, and I'll put the question to you. What you asked about prior experience, I'll ask you about preparation before the launch. Would you raise money? How would you go about getting your first clients? And how would you generate leads if you're starting from the beginning? DAVID: This assumes that I'm doing something else while I'm ramping up, and I'm ramping up probably in the evenings, or on the weekends, or something like that. I would have at least two to three months worth of my living expenses saved up, that would be the most important thing for me if I were starting over. The reason is because I think ... at least for me, that the father of compromise is really financial pressure, and so I would not want to face that pressure so I would have that saved up. The other thing is that whatever I was going to be doing ... well, obviously my positioning would be very nailed down, but whatever I was going to do for lead generation I would have that up and ready to go where all I had to do was flip a switch rather than starting to do that at the beginning. I wouldn't be sitting there with nothing to do, and smiling and dialing looking for work, I would have all of that ramped up partly because I want to be prepared, but partly because I want to test my own resolve. DAVID: How committed am I to this new venture? Am I committed enough to it to do all this disciplined work around lead generation for myself? And am I committed enough to it to put money aside. Because if I fail ... and there is a chance that I will in this new venture, I don't want to lose any more than what I've saved up. I can then say, "That was a good college try, and I lost everything I saved up, but no further damage was done." That would be my perspective on it. BLAIR: Would you consider outside sources of money? DAVID: Only if it was free, in other words somebody thought I'd... BLAIR: So no? The answer is no? DAVID: Not in the real world. The answer is no, that's right. I would definitely not borrow money, and any money I got would have strings attached to it, so I would absolutely not do that. BLAIR: But do you think that's the right universal advice? Or does that speak to your risk profile? Because as you were describing essentially hedging your bet and starting the firm, I was thinking, "Yeah okay, I could see that." But I would probably go the other way, I would probably burn the ships and go all in, and force myself to succeed. I don't know that that's the right way, and I don't know that I would give advice to others to do that. But I feel like that's the way I like to operate, push all the chips in. DAVID: Well, I may take bigger risks than most people on the planet. On the other hand I couple that with a very different perspective about debt, in that I think debt is a very bad instrument for anything except for appreciating assets like a home, or a building, or something like that. Because debt enables you to cover up things that need to be looked at in different ways, it keeps you from having to make the tough decisions, and it forces you to clean up the past if things go bad. I never want to do anything but clean up the future. I'm a huge risk taker, and I take a lot of risks with money. I spend a lot of money, but it's money that I have saved up that I feel comfortable wasting if I need to. BLAIR: How many tractors do you own? DAVID: Let's not go there.   BLAIR: What's next on your list here? DAVID: All right, next this one's for you. This is about web presence. You've given me some hints that your thinking has changed in this area that's why I thought it would be interesting to ask you this question. So you're building a new website for this new venture, how extensive would the website be? Would it be one page? Or 100 pages? How much content? Would that content be gated or not? Would you talk about your service packages? Would you say anything about pricing even in ranges? would you use marketing automation? Just what would the role of your website be in this new venture? BLAIR: I've hinted at this, and I've actually put out there on social media that I'm going to publish some content on this. It's a little bit late, and there's a reason why it's late and I'm not going to day what it is but it's coming. There's been a shift in content marketing, and lots of people have seen it, but some people are oblivious to it. I don't want to give too much away here. DAVID: Oh come on you woos, just say it. BLAIR: Yeah yeah. I do want to say that I still ... I think we've talked about this before, but I think the best marketing agency website out there is altgroup.net and that's the Alt Design Group out of New Zealand where it says ... I mean it's been this way for 10 years, this page intentionally left blank and then an address in the bottom left hand corner. I look at that website and I think that is brilliant, and it's built on the idea that the most powerful thing in marketing is mystery. So I would build some mystery around my marketing. I might publish a book initially, I might put something out there in the world but what I wouldn't do is the way that I started to build the lead generating machine, or the marketing machine for Win Without Pitching back in the early days and we still do it today even though we also do other things like this podcast. I wouldn't focus on building a list, and I wouldn't focus on emailing people, I wouldn't focus on content marketing. BLAIR: There's a shift in the way that people are consuming information, which has implications on our heretofore need to collect all the data on who is interested in us. The shift is more towards audio and primarily video, that's the big shift that's coming. If your target market is of a certain age, the video is coming a little but later. If they're younger, video is more prominent now. As you move to publishing content, instead of thinking of content as typed words, and read words, you think of it as what we're doing here in the podcast, or what you might do in a YouTube channel. If you're pushing content that way, now you actually have to force yourself to let go of all of that data you're used to having of who is interacting? And how or when are they interacting? There's a lot more trust that has to happen, there's a lot more letting go of the data and using these platforms. Other than the people who have reached out to us and said, "Hey, love your podcast." Or, "Hate your podcast, but I listen to it." Whatever. We don't have any data on who's listening to this, right? DAVID: Right. BLAIR: But on who those people are, we get numbers so that's part of the shift. Content consumption is rapidly moving away from reading to watching and listening, and the platforms of watching and listening are increasingly not your platforms. You push it out there on these other platforms, so you have to be comfortable with not having the data. Probably if I were staring today, I would let go of email marketing altogether. Now I say that knowing that maybe there's a 40% chance if I did that I might change my mind really quickly. DAVID: Just kidding right? BLAIR: I have a hard time seeing it going away, email marketing continues to get less effective, interruption marketing. I think you need to put a great valuable content that people are drawn to, and again let go. Then we've got privacy regulations that are catching up with our own personal discomfort around how much data people have on us, so I think if I was starting out today I wouldn't over-invest in the website in any way. I would build mystique mystery, and I would push content out there other than via email, and I would let go of the need to collect all of the data around who is interacting with my content. But I might fail because of it. DAVID: Well, that's okay 'cause you're not pressured to test that idea for sure. Thinking about this podcast for instance, you and I exchanged an email about this of all the things you do and all the things I do, and then we do this together, this takes the least amount of time, it costs the least amount of money, and it is the most effective, and yet we have no idea who's listening. BLAIR: Yeah. It's been a big shift for us. I mean you and I are both readers and writers, right? DAVID: Right. BLAIR: So for ... along with time, and our clients who are our age, or older, even just a little bit younger, they probably still think of content as reading and writing. I'm not going to drop them here, but some of the prediction, some of the stats on the percentage of content that will be consumed in just a couple of years that will be video is far beyond the majority. It's way above 50% of all content consumed will be video, some numbers put it as high as 80% of all content. DAVID: But nobody will be listening to this podcast if you and I hadn't been doing email marketing for 20 years either. BLAIR: Yeah, there's that. Let me ask you about client base. So you're starting a new firm, you're not borrowing any money, and you're thinking you've got this vision of the firm that you're trying to build a certain size. Let's talk about the size of your clients, how many would you have? What would the nature of those relationships be? Would it be AOR longterm relationships? Would it be more project based? And what types of clients? That's a lot of questions. DAVID: That's all right, I'll try to answer these. I would have fewer but larger clients. By larger I mean larger as a percentage of my practice in this field. I would not go after the largest clients though, I think they have so much power, and they push you around and don't need you as much. Nor would I go after the smallest clients that are not as sophisticated, and for which the money they're spending hurts them a little bit more. I would aim solidly at the middle-sized clients, and then I would ensure that each client I got was a fairly large part of my business. So I would probably aim for six or eight clients, something like that. I would aim to have more of a SWAT team approach, where I dropped in and did really amazing work for them that moved a needle and helped change their thinking, and maybe that engagement lasted six months, or two years, or something like that.  DAVID: Then I would not feel any compulsion to do the implementation, in fact I would encourage them to do some of the implementation or I would introduce them to other people without fear that somehow they wouldn't call me back at some point. That would be my thinking in terms of how I would approach this. It's a little bit terrifying because I know a lot of our listeners are not interesting in putting that many eggs in one basket, they really want to spread out their client base and typically they're going to end up with 25 clients which is too much, right? Anyway, that's how I would answer that. BLAIR: I would agree with almost all of that too, I like the small size of the client base. I was thinking 8-10, you said 6-8 short-term projects six months to three years. I wouldn't pursue some sort of longterm relationship like that too. Let's we how we can do here, what's next on the list? DAVID: Okay. How would I earn money, or how would you earn money in this case? Would it be fee for service? Would it be guaranteed results? Variable pay for performance? List solutions? We talked a lot about this in some of the events that we've done, and you've had some time to think about this. How would you structure your arrangements with clients? BLAIR: I love this question, and people who think I would say value based pricing, pricing a value, the real answer is ... and this is a proper answer for anybody who's running a consultative services, I wouldn't have a universal pricing model. I would reserve the right to price the client, not the job and every different client I would price differently. I think Ron Baker, and it might be Tim Williams, and the two of them work closely together on pricing stuff. I've heard one or maybe both of them say that you should think of your client base like your investment portfolio. You have this overall risk profile, and each client represents, in this case an investment. So you would have some high risk investments, or you would have some high risk compensation plans. High risk high reward, and you would have low risk low reward. You would have this range of risk levels in each of the engagements, but together they need to balance out to meet your overall risk profile. BLAIR: I actually think it's a mistake to have a single pricing model where everything is performance pay, or everything is price certainty, we deliver price certainty based on deliverables, or everything is priced on inputs, etcetera. I think you really do need to look at each engagement separately, and the context around the engagement, what's your current financial situation? And decide in that situation how much risk you want to take on. So the short answer is it really needs to be a blend, and it's one engagement at a time. You figure out what the best pricing model is for that engagement. DAVID: That surprises me, I thought you were going to say that they all looked pretty similar, you thought through it very carefully, and then you stuck with the same thing. That's a surprising answer for me. BLAIR: I think we got a couple more questions we can get in here. What are the ratios? You're the ratio guy, if you're flying this new firm like it's a plane, you're looking at your dashboard, what's on the dashboard? DAVID: The most popular article I've ever written on the site is "Eight Gauges on Your Agency Dashboard," but I can narrow that down to three and it would be these; don't pay more than 45% of your fee base to unburden comp ... and if folks are wondering what that means, they can go to the website and read it. But it's essentially without taxes, or benefits, and so on, or bonuses. That's the first one. Second, have three to four months worth of your overhead set aside in cash, not receivables, not line of credit so that you have that cushion to work from if things go south temporarily. The third would be watch the fee billings per full-time equivalent employee, and we've talked about this in a previous podcast. I would aim to always be above 200, and overtime me quite a bit higher than that, that's what I'd be aiming for. BLAIR: Good numbers. DAVID: Okay. The question for you next is how would you focus on creating future value? 'Cause you talk a lot about how that is the primary role of a principal of a firm, recognizing that, an if you believe it then how do you find the time? How do you do the research? Who do you hang around? What to read? This might even be an entire podcast episode at some point, but- BLAIR: Yeah, let's do a podcast on that. I'll give you the short answer, two things. Number one, a strong number two. So strong COO. There's a great book called The Outsiders, and I think it's William Thorndike. It's Warren Buffet's favorite book where he profiles all of these different leaders who have publicly traded companies, who are the most successful in the history of the New York stock exchange. He asses what they have in common, and one of the things they have in common is they ave a really strong operations people to whom they delegate a lot of operational responsibilities. That's number one. Number two is I would travel, that's what I do in my business. I have a strong number two, she's my business partner and my spouse. I've been home for two months over the summer, I'm just itching to get on a plane. I provide the most value to our business when I'm not in the office. I get out there speaking, meeting people, working with some clients, building relationships. Those two things, strong number two, and travel. DAVID: Great. BLAIR: Let me ask you about employees. Employees don't stick around like they used to, how do you think about your employee base in this new firm in this new ... it's not just millennials anymore, but there's a new work environment where people have different ideas of what work should be, how it should be done, and what they should get out of it, or how it should serve them. DAVID: And I would shut the hell up, and quit whining about this. That's the first thing I would do. BLAIR: Amen. We should appreciate that these people are teaching us something. DAVID: Yeah, it's fantastic. At first, I was thinking we've got to fix the culture so that they'll stay around, well that is not going to happen folks because people's career ladder involves inevitably moving to another place. That is how they make more money, that's how they stay interested, and so on. I would develop a model of employees that was excited about this, in other words I would beef up my training so that it wasn't as big a problem. I would force some sort of people going away. Maybe sabbatical is too long a word, but at least a couple of weeks where everybody's email and their contact with the office was completely shut off so that it forced us to have better systems in place. I would have ways for them to capture their first impressions at the firm, I would celebrate their departures, I would encourage them to come back at some point because when they come back their dabble is beneficial to the firm when that happens. I'm writing an article on this. Essentially I would embrace it and be very excited about it. BLAIR: Those are all very exciting progressive ideas. One of my other recent article is "Rising From the Ashes: A New Agency Model" where I talk about the importance of flexible two-way scale. The idea that you need to be able to flex up and down, and you need to recognize the trends that are driving today's modern workforce, and you need to essentially build your agency around that. Hey, let's do two more questions. You're starting a new firm, would you go into this with and end date in mind? Would you have an expiry date? Would you have this idea, "I'm going to get out at X point."? DAVID: I would, yes. It probably be somewhere in the 8-10 year range because I'd hit my stride about a year and a half, or two in. Then I would be maximizing revenue opportunities and taking advantage of all the marketing that I've done, and then I would move on and do something else. So 8-10 years is probably what I would plan on. What about you? BLAIR: You know what? When I started Win Without Pitching originally it was a consulting company, I thought, "I'm going to do this for two or three years. Learn everything I need to learn, basically nail this and then go do something else." It's been over 16 years, and I feel like I'm just scratching the surface, so I would not put an expiry date on it. I would do this until I died, and that's my plan with my current business. I've written about that too about not having an eye on the exit, but I'm not sure that that's ... no, actually I think that's actually universally pretty good advice. DAVID: So would you start a firm? BLAIR: You know I've said for a long time that I wouldn't start a firm, but I used to think of creative firms as an ad agency, a design firm, etcetera. I wouldn't start an ad agency, I wouldn't start a CPG design firm, I wouldn't start a web design firm, I wouldn't start any of those classic marketing or creative firms. But all of these new hybrid firms with a new working models, they excite me greatly. I think I wrote in an article recently that I wouldn't start a firm, what I said is I'd start a really small one and lean on flexible scale. So would I start a firm if I can go back in time and think, "Yeah, I had a little bit of the right experience in the business in the beginning."? Yeah, I think I would. I might change my answer tomorrow, but I wake up this morning and I look around at what's going on in the spaces that we serve, and I think, "There's a lot of really exciting stuff." And then there are people who are stuck, who just haven't seen the trends, who are struggling in their business. BLAIR: It's not those people I'm thinking about. The ones who are really seeing the trends, the ones who are doing things different, these hybrid firms I think they're super exciting. So my answer today is yes I would. How about you? DAVID: I would. But the last half an hour discussion has gotten me more excited about the idea than I would have been at the beginning of this. So yes I would. If for no other reason, then I just want to bury your firm because if we're both starting firms, you are going down okay? 'Cause every piece of advice I've given is bad advice hoping that you'll follow it. BLAIR: You're on. Let's go. Lets' go brother, it's a throwdown, my firm will crush your firm. You heard it here first people. DAVID: This has been a fun discussion, thank you Blair. BLAIR: Yeah, I got to go register a domain name, I'll talk to you later.

12 Sep 201834min

Blair gives David some homework to identify patterns in the principals of creative practices who are successful and have that "je ne sais quoi."   LINKS 2Bobs Episode 28 - "Positioning Cheats" Start With Why by Simon Sinek "Top 10 Podcasts Agency Owners Listen To" by Daniel de la Cruz Crucial Conversations - Tools for Talking When Stakes Are High by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler   TRANSCRIPT DAVID C. BAKER: Blair today, we are going to catch up with the rest of the world. I can't even say that with a straight face. We're only 80 years, 90 years behind. We're going to talk about the X-Factor. Okay. And the first time that phrase was used was in 1930, and we're just now getting ready to talk about it.  BLAIR ENNS: You've actually done homework. That's not fair. DAVID: Well, a little bit.  BLAIR: You went and looked up the first use of the word X-Factor... But hold on - you have to explain who used it. What was the context?  DAVID: Well, it was like in the urban dictionary, so it's totally unreferenced, it's just somebody's idea of when it was first used. I probably shouldn't even brought that up. But the phrase that popped up a lot when I was researching the X-Factor 'cause you really wanted to talk about this and I'm intrigued too. It's the "je ne sais quoi" which means, "I do not know more." Have you heard that phrase? BLAIR: Yeah, "je ne sais quoi." I always thought it just meant ... And I should know because I'm Canadian. It's one of our official languages. I always it meant, I don't know. So it's, I do not know more.  DAVID: I do not know more, it's a French phrase "je ne sais quoi." In other words, there's this X-Factor. I don't know more. There's just something about them. There's this X-Factor about them. It was pretty interesting. We're going to talk about principals that exhibit this X-Factor.  BLAIR: Principles, the people: ...P-A-L-S. DAVID: Yeah, right.  BLAIR: Not ...P-L-E-S. DAVID: I never use the other word anymore 'cause I'm so used to using principals ...A-L-S.  BLAIR: So principals of creative practices who are successful, who have this "je ne sais quoi," this X-Factor of success right? DAVID: Yeah. You really enjoyed saying that with such a great accent didn't you. So you gave me homework.  BLAIR: Yes. DAVID: Here's what you said to me: think of one recent client - this presumes I even have clients, right? But think of one recent client who is very successful, what three things come to mind about that person? So I dutifully answered my questions here just following the script. And then you said, "Now do it for two or three more clients." And so I did that. Now what do you want me to do with this? BLAIR: I want to talk about the patterns. If you've done it for three or four clients, when you think about the attributes of that person, how common are those attributes across those three or four people?  DAVID: They were just surprisingly common, and I hadn't ever really thought about it quite like this. But I almost felt like I was wasting my time as I extrapolated to others, because they all came up about the same. Maybe the order of the three things is different from principal to principle but the same ones kept coming up. Did you do the same thing?  BLAIR: Yeah and I thought of a couple of people and then I just kind of thought of a group of people and made my list even a little bit longer. So I've got six things, but I would say those six things, they all roll up into one word. So if you had to take all of those different attributes that you've identified of these successful agency principals, and you had to put them all under the banner of one word, what would that one word be?  DAVID: So I popped back and forth between these two. But I think the one word would be confident.  BLAIR: Yeah, me too.  DAVID: Really? The same word? OK. BLAIR: Yeah. So the X-Factor is confidence. But I think we'll get into this and maybe a little bit later on, we'll talk about some kind of big picture ideas around confidence and the subject of overconfidence and how important confidence is. Did you write down different manifestations of confidence or different forms of confidence? What's on your list? DAVID: The early form of confidence would be just starting the business, like, "I can do this." That's one. Another where it seems to show up a lot is just in sales or prospect conversations and I've even actually listened to them and then of course, most of the time I haven't, they're just reporting to me what the conversation was. Then that's where it probably strikes me the most is just this confidence, even when they don't have a lot of experience in the promises that they are making to a prospect. You and I have probably done this in our own practices years ago too. BLAIR: Oh yeah.  DAVID: You get on the phone on the way back to the office and you're saying you will not believe what I just promised we could do?  BLAIR: Yeah.  DAVID: That's where it seems to show up.  BLAIR: Well, I think some of the best sales people in the world you cannot tell from the way the salesperson is behaving, what their external conditions or what their financial situation is, from the way they're behaving. So a really good salesperson can be standing in front of you on the brink of bankruptcy and you can't tell because they are not transmitting panic or neediness of any kind. DAVID: Wow. So they must be good poker players I would think. BLAIR: They're confident, but they're also good actors. But isn't that the same thing? I was talking about this last week in another podcast? Yeah, I actually step out on you and do other podcasts from time to time. I was saying the phrase, 'fake it till you make it', somebody on Twitter was saying, "That's just such a horrible saying, it's such bad advice." And I don't think that's true at all. And especially when it comes to confidence. You develop confidence, I believe, in part by faking, being confident, you just pretend you're confident and then you do that long enough, often enough, lo and behold! You become confident. I think good salespeople are able to fake, fake may not be the right word but just act confident even when the circumstances are dire. DAVID: Wow! Because all of us are growing by stepping slightly over our current capabilities. And that includes sales. BLAIR: Yeah.  DAVID: There's just a fine line I mean, that I guess is technically the line but if we never do that we never grow, if we do too much of it then we really are cheating our clients and I think you're going to talk a little bit later about this overconfidence thing. So back up a little bit, what got you thinking about this in the first place? What intrigues you about this concept?  BLAIR: I think when you work with enough people over time you start to make some initial assessments of how likely some people are to succeed and I was thinking some people have it and some don't. And in showbiz, it's not just conference, there's this star quality that really is "je ne sais quoi." I don't know more, other than to say, it's like, they've got it, they've got the X-Factor. That's why I assume the show is called The X-Factor. And it's really hard to nail down what it is but I think in business and in running a creative firm, I think that X-Factor it really is confidence but not going too far and having unchecked overconfidence. Which is actually kind of common in creative professions for reasons we'll get into a little bit later. So I think you've probably seen those patterns too, you talk to somebody and in the very early parts of the conversation, you get a sense of how successful this person is. Is that correct? DAVID: Yes, for sure. And like you were just saying, I couldn't tell you how I'm picking it up. But I do. I don't know if you remember many years ago, probably 15 years ago, I called you up late in the day, maybe even had been in the evening. And we've referenced this in an earlier podcast. BLAIR: You were in a snowstorm.  DAVID: Yeah, exactly. And it hit me for the first time. It's like, "Oh, my goodness!" What I'm in the business of doing is being a substitute for the confidence that people lack. So most of the people that wouldn't hire me have enough confidence and they figure things out. Some people that are in that category would still hire me and then others need the marketplace to replace that lack of confidence they have. So many times I go into a situation and I believe more highly in their skills than they do but it doesn't matter what I believe they just simply are not going to absorb what I believe about how good they are. It will only be the marketplace that does.  I remember talking with you about that, it became such a big light in my mind. So what are the things on your list? So confidence rolls up. But can you get more specific here about what you're saying? BLAIR: Yeah. The first thing you had in your list about like their presence in a sales situation is similar to what I have. I have talking about money. And what I have seen is the successful agency principals over the years and the successful new business development folks, they can have a conversation with a client or prospect about money and the size of the number does not faze them. So they can say $10 million, they can say $10 million, just as easily as they can say, $10,000 and vice versa. The size of the number is essentially meaningless to them from an emotional or a stressor, point of view. So that's, I think, a big one and I don't actually see that strength or skill very often, but when I see it, I know this is somebody worth betting on.  DAVID: They might not even have a fantastic positioning. But this cover some of that. BLAIR: Yeah, we did a really early episode on things that mask poor positioning and I think we talked about that being one, the confidence of the principal.  DAVID: Yeah.  BLAIR: So that's the first one. I had the ability to talk about money. And the second point I had, I wrote down the word entitlement. A sense of entitlement. I also wrote next to it and assumption of success. Entitlement can be a bad word. It can have negative connotations depending on kind of how you use it, or even just how you're thinking about it in the moment. But I actually in this context, I really like it the idea that somebody feels entitled to success and there's just no question about whether they're going to succeed in what they do.  DAVID: So does this show up in bad ways as well? I know you don't mean entitlement in the sense like a political program or something like that, that you're not talking about that. BLAIR: Yeah, or a rich kid or something like that, where the world owes me with a bit of a chip on my shoulder, because I'm not getting what I feel I'm entitled to. I mean, a healthy, positive sort of entitlement, which is that, of course, I'm going to be successful. Of course, there are lots of businesses out there that would see the value in what I do. Of course, the future ahead of me is big. Of course, I'm going to take advantage of most of the opportunities that come my way, of course, everything's going to be okay. All of these things, and I think maybe without being polar opposite of that conflicting idea that's still valid, is the idea of the healthy paranoia of a principle. I don't think that's part of the X-Factor. I think that's a part of kind of general success as an entrepreneur, I think you have to have a healthy paranoia.  But I think these people that really have it the X-Factor, they're not really driven by paranoia. They're not driven by fear. They're driven by almost entirely positive things. I think both of those are valid. But I'm just saying in the X-Factor, these people who have that kind of special X-Factor, there's just no doubt that they're going to succeed.  DAVID: Almost unapologetically, which is not necessarily arrogant. You've talked quite a bit about the fact that one of the mental, I guess, principles of the newer entrepreneur is that it's not a zero sum game. So when there's this entitlement or this assumption, or this confidence, it's not at the cost of the client, it's not like we're taking things from the client. It's like we're both going to succeed here and I'm unapologetic for mine and unapologetic for yours between us we're going to do great things.  So first one was how they talked about money, that's really interesting to me, especially the way you phrase that the other is entitlement or assumption, an unapologetic approach to this What's the next one?  BLAIR: The next one is leadership. They lead their people and their clients. I don't know if they're natural leaders, it's probably fair to say that when we're talking about X-Factor, we're talking about natural leaders. I know some really strong leaders who've had to work to develop their leadership skills, whether it comes naturally or not. I saw this in a couple successful clients and then I was thinking of some other clients that I've worked with, that are still kind of successful, but struggle with this issue. You probably see this too where you're offering guidance to an agency principal and his or her response is "Yeah, I know I should do that. But I'd have a hard time selling that to my people." When I hear that I think, "who's running the show here?"  DAVID: Apparently, "my people" are.  BLAIR: Somebody with that X-Factor is never going to push back on a valid idea by saying, "I'm going to have a hard time selling that to my people." Unless it's something that's really ridiculous. Remember that seminar I did years ago in Bermuda in the beginning of 2009?  DAVID: I do. Yeah.  BLAIR: It was you and me and four other people. We drank $1500 worth of champagne, because I had to hit the food and beverage minimum.  DAVID: Great food. And a lot of it.  BLAIR: I had two different agency principal say to me, "I really want to go to the seminar you're doing in Bermuda, but I just laid off people and I can't justify to my people that I am going on this thing and I think that is perfectly valid. That's not what I'm talking about. I think in both those cases, and probably the other cases that just weren't stated to me, I think that's a perfectly legitimate area where you should be concerned about what your people think. But when it comes to say, the positioning of the firm or how you're going to go about selling these more strategic decisions, those people who have the X-Factor those leaders with supreme confidence, they don't stop and think, "Well, I hope my people are going to go along with me." There's the sense of, they look to me to lead it's my job to lead I'm going to lead, and even if they're unsure in the beginning, they will follow me because they trust me to lead.  BLAIR: So that's one aspect of it is they lead their people, but they also do the same thing with their clients. DAVID: Yeah. Is that the same as directing their relationship? Or is that something different? I've heard you use that phrase. BLAIR: I use what I think is a healthy generalization when I say there are really only two positions you can occupy in your client relationships. You can be the vendor or you can be the expert practitioner, and the expert practitioner leads they don't dominate. It's got to be this kind of servant leadership role where the client willingly lets you lead but they are seen as the expert and they lead. So you should have that relationship with your people and you should have that relationship with your clients. These people who have this X-Factor, they're able to grow these usually large but just always successful and profitable firms. They show up to a client engagement or a new business meeting and they feel like they should be occupying the expert practitioner position, and they feel it's their job to lead in this situation. And they don't comfortably slot into that polite, compliant, rule follower role that is the vendor, where you sit and take notes and nod your head. DAVID: There's some overlap here between what you just explained and the personality theory stuff that we've talked about multiple times. And that's that somebody with the personality profile of a leader like you're describing is typically somebody who sees a situation and says, "This could be improved." That's the opposite from the other half who says, "Oh, this is good enough, we can work within it." So they say, "This can be improved." Then they go on to the second part B and says, "And I'm the person to improve it. Right?  BLAIR: Those are the four dichotomies or quadrants. Right? It's the situation can be improved or not. DAVID: Yeah.  BLAIR: And I'm the one to do it or not. DAVID: Right exactly. BLAIR: And that's essentially the basics of most personality theory.  DAVID: Yeah exactly.   BLAIR: So those are the first three things I have three other things. You said the first one on your list was how they sell, what do you have after that? DAVID: I have risk taker and I'm cheating a little bit because I did a research project on that. So they are risk taker, they don't always take the right risks, but they do take risks.  BLAIR: Yep.  DAVID: And then the third one is that they - and I haven't heard you talk about this, it's interesting that it's on my list and not yours - it's that they soak up all kinds of knowledge and then they ruthlessly choose just a small part of it to follow.  BLAIR: Oh yeah.  DAVID: Some people read voraciously and other people don't read at all. Then other people latch on to some expert or somebody else, and they have their favorite ones, and so on. But they're always just soaking up knowledge but they don't try to incorporate all of it. They make a quick snap decision like, "Yeah, there is something there. I'm going to follow them." Or, "No, that's really interesting. But no, I think I'm going to go over here to this other expert." That's one thing I see everywhere. BLAIR: That's a keen observation because those are the two categories of people who don't read it all. You see that not a lot, but you see it, it's a pattern. But the other pattern is actually fairly common, isn't it? Creative people are naturally curious. It's kind of in their nature to gather information from all sorts of different places. But there are these trends, we won't name names. But there's like the TED Talk du jour or the business book du jour and that comes out and it peaks. And for the next two and a half years, every third agency principal you talk about is building some sort of proprietary methodology around one point that came up in a TED talk or came up in a book and it's like, "Oh, man, you too.?" Yeah. How proprietary, is it if ... Yeah, I probably, yeah, I'm not going to name names, but...  DAVID: I will. I'll name names. The thing is that there's some really good truth in these movements, right? BLAIR: I agree.  DAVID: Michael Gerber was one for sure.  BLAIR: Work on the business... DAVID: Not in it. Yeah. Exactly. That is brilliant principle. But then there have been three or four since then. And currently it's traction. That's what everybody is doing.  BLAIR: So the one that comes up for me all the time is Simon Sinek's Start With Why. DAVID: Oh yeah, right. BLAIR: "What's your why?" And I'm a huge fan of that. But you see people trying to work it into something that they think is a meaningfully differentiated offering to their clients. Well, first, we start with your why? Well, everybody is starting with their why now. That's not to pick on Simon Sinek. I quote him too. He's got some great stuff. It's just for whatever reason. It's just a sign of his success. But then so many of these creative firm principals glom onto that and try to make it something that's theirs, that helps to differentiate them. DAVID: Which is separate than traction, traction is more of a management system. It's interesting. We kind of grow through these things. Who's the guy that occupies the number one podcast position above us?  BLAIR: Tom Ferriss.  DAVID: Oh, Tim Ferriss. Let's not talk about that...  BLAIR: Yeah, we better say - somebody did a poll recently, he polled a thousand agency principals on what podcasts they listened to, and we came up number two. We're right behind ... We're probably really far away behind the Tim Ferriss and I joke to you on Twitter, "well, let's find out who this Tom Ferriss guy is. DAVID: We'll take him out." I'm just kidding.  BLAIR: What's next on your list?  DAVID: Okay, next on my list then is that they are visionary/persuasive. I think there's a lot of overlap between this and your leadership idea. So they not only have a vision for the future, which is not all that useful unless you can successfully bring other people around you into that same excitement. So the two things together, visionary and persuasive, that's one. Another is that they make really quick decisions, so quick that it drives people nuts. And I'm not saying it's bad. I'm just saying that this is almost a universal characteristic of these people with the X-Factor, is that they do not deliberate a long time before they make a decision. They tend to make quick ones. That's another one I've seen.  BLAIR: Do you think that's maybe too broad to be in the category of X-Factor? Do you think like all agency principals and entrepreneurs are like that?  DAVID: I don't know, you might be right.  BLAIR: I usually am.  DAVID: Well, I'm just going to skip right past that too.  BLAIR: Can I back up to what you said earlier about visionary and persuasive? So I had they lead their people and their clients. Then the next item I had was eyes on the horizon. So that's your visionary part. DAVID: Yeah. BLAIR: Visionary and persuasive, that really is leadership, right? When I think of these people who are the most successful agency principals that I know that have the kind of it thing, they see things so much earlier than their people do, and they see things in their business so much earlier than I do. In fact, I think of a friend of mine, he's, one of the most successful friends I have.  DAVID: You can mention my name, it's okay.  BLAIR: You're very successful David. But by almost every professional measure, he is even more successful. He's one of these people where we don't speak very often, but we're talking he tells me what he's thinking, and I hang up the phone, I think you're straddling the line between genius and insane because that conversation didn't really make sense. Then I swear to God, it's a really long time later, it's like three, four years later, I'm seeing everywhere that thing that he mentioned to me years ago, and now that conversation made sense. He is so far out ahead of anybody else I know and it really shown up in his business success. The stuff that he sees and thinks about and acts on, before it's even on my radar is just mind blowing. So I characterize that as eyes on the horizon, they don't have their eyes down on the minutiae of their business. They're not dealing with all the kind of ankle-biter issues for whatever reason, or whatever mechanisms they've used, just good delegation or great team members, or whatever it is, they're able to focus on the horizon and not just focus on the horizon, see further out than other people. Then this kind of speaks to what you were talking about before, the ability to act on it, the courage and the decisiveness to act on it. So these people act on trends that are way further out than most of us are even capable of seeing let alone seeing and making a decision to act on. DAVID: Yeah, and for them to be able to do that, it presupposes so many things about how they're running their business. You alluded to some of them, they can't be down in the minutiae. They had to be inventing, or however you say, inventing future value, creating future value as you talk about. Absolutely. But I'll bet you that a lot of his near certain ease about the future do not come true. But that doesn't dissuade him. So he throws things at the wall and then he sees fairly early on whether or not it's actually going to be true and if it isn't, then he moves on. What I like about that is he's looking up and he's making quick decisions.  BLAIR: Yeah, agreed. Anything else on your list?  DAVID: I have a burning question. I have to ask you at some point, when we're done with this list here. But I've found that they are not generally conflict averse. And I mean, with employees or with clients...  BLAIR: That's so funny 'cause I wrote down crucial conversations. That's the next thing on my list. DAVID: Yeah, same thing, exact, same thing.  BLAIR: The ability to have those crucial conversations and not avoid conflict.  DAVID: Right, exactly. The ones who avoid conflict tend to not really thrive except I know some exceptions to that where they do even though they're conflict averse, but generally yeah, they have to be willing to have those ... And conflict averse is not as good a way to say it as you did, those conversations are. That's a better way to say it, 'cause we're not really trying to butt heads with people. We're just having the tough conversations. BLAIR: There's the great book called Crucial Conversations and it's written by five people (if five people can write a book). So it's written essentially by a consulting company. In the introduction, they're talking about following an executive team around for a while to figure out what the traits of the best leaders were. They talk about this meeting where the CEO is saying there's an invitation to be challenged on all the key issues. But in the meeting, he steamrolls over top of his executive team, and the executive team just kind of sits there quietly and takes it. Then one VP speaks up and challenges the CEO very politely and said, "Okay, you just kind of ramrodded us here. Can we back up and have that conversation again." So the CEO, apologizes and then he opens up the floor and a real discussion happens. As they're leaving the room, somebody says to the consultant, "Do you see what that guy just did? If you can figure out what that is, that is the key to his success." And that's where the book Crucial Conversations came from. I read that book and I remember I wanted to have a crucial conversation with my wife, who's also my business partner. She was driving me to the airport, I was driving and she's in the passenger seat. We're going to the airport and I've read the book and I still myself to have the conversation. I don't even remember what it was about. And I say what I have to say, and I've got my eyes on the road and I'm thinking, "Oh my god! This book works great. I feel fantastic." And I look over at her and she's crying.  DAVID: I thought you were going to say she was asleep. And that's why it went over so well.  BLAIR: Then I thought, "Okay, there's probably other chapters of the book I need to go back and read." So I'm not great at those crucial conversations but that is absolutely a trait that I see in the most successful agency principals, is that they don't steer away from conflict. But they head right into it and when it's done, it doesn't feel a conflict, it feels like a big step forward for everybody. DAVID: Yeah, absolutely. I've learned so much just from you on a personal basis about not being afraid of the truth. So if you swallow that, if you can get to the point where you're not afraid of the truth, then the second thing I've learned just listening to you talk about this stuff is like, "Okay, if you're not afraid of the truth, then let's find the truth as soon as possible." I'm not talking about just in a sale setting, which is where you talk about a lot I'm also talking about it like in relationships. As you were telling that story about the leader who backtracked successfully you know what was even just as significant is the key manager who was capable of stopping that conversation without embarrassing the leader. That is an amazing skill too. That person probably went on to be a fantastic leader in his or her own right as well. BLAIR: That's who the feedback was on the team member said, "Okay got you." That vice president if you can figure out what he just did that's his key to success the ability to basically confront the CEO in a polite way to challenge, to have that conversation that everybody wanted to have and nobody else could bring themselves to have. So that is the key.  DAVID: Yeah, without embarrassing him. So both of those are good.  BLAIR: Well, I appreciate the credit you've given me for your successful marriage for all these years 'Cause I will take credit for that. You're welcome.  DAVID: Yeah, 38 years now. Okay. So here's the big question. I have of you, it's this. When you come across a situation and you've discovered you've said already you've admitted that confidence is a really significant, maybe the most significant factor and you come across somebody who struggles with that. What do you do?  BLAIR: That is a good question. I've heard you talk about this. It's really hard to build up somebody's confidence. I was in Strategic Coach for a few years founder Dan Sullivan is a brilliant, brilliant man. One of the brilliant things I heard him say is the most valuable asset that an entrepreneur has is his or her confidence. When I heard that I just almost screamed, "Yes." Then all of these crazy things that I do that I'm somewhat embarrassed about to build my own confidence all started to make so much sense to me. Then I went home and explained to my wife like, "These things that I do that drive you crazy and I'm a little bit embarrassed, like some of the things or things that I spend money on." If I want to feel like a million dollars if I want to feel my most confident I pay somebody to ... You cannot put a monetary value for me. I cannot put a monetary value on having shined shoes because it's the world of difference.  BLAIR: I've heard people say that underwear does that for them. I've never experienced that where you go out in the world thinking, "This underwear feels great. If anybody could see me without these clothes on, they would be super impressed. I feel like I could walk on water." I've never experienced that. But I've heard women say that a few times and I'll just take their word for it. But for me, it's having my shoes shined.  DAVID: And the flip side of this too is, since we're in a little bit of the confidence business, you can see how an undermined confidence just can wreak havoc in your mind. Whether you're in a consulting world, or whether you're in the marketing world or design world, whatever it is. Because part of what makes you work is this confidence and if you've struggled with some mental health issues, depression issues, I've struggled with depression issues. It just messes with you and it takes this internal fortification that you have to just hold on to while you get through that tough stretch, because this innate confidence is so central to your own success.  BLAIR: I'm so glad you brought that up. I think that's entirely valid in my entrepreneurial career I've never really had that moment where my confidence has disappeared on me. But it happened when I was an employee for a really large ad agency. I worked for somebody who was very good at eroding the confidence of the people who worked for her. I felt like I was in an abusive relationship and I doubted my ability to do anything. If I've felt this way, for any extended period of time, in my own business, I don't know how the business would survive it. I used to think you could take my entire business away from me, as long as I had my list my opt in subscriber list, I would be fine. Then I thought you could take my list away from me, as long as I had my reputation, I would be fine. Then I realized you can tarnish my reputation. But if you just took it away, and I was unknown to anybody, I would still succeed. In fact, I think I could probably even build a better business as long as I had my confidence. But if you took my confidence away from me, I'm done.  DAVID: Wow! BLAIR: I'm done. I think once that was pointed out to me by Strategic Coach and Dan Sullivan, I realized all these crazy things that I do and that others do, we need to keep doing them. And the people around us need to understand that in the agency, the most valuable asset in the firm is the confidence of the principal. There are no categories for this, whatever anybody else in the firm is doing, if it is eroding the confidence of the principal, it is counter productive.  DAVID: We should probably just end on that, it's such a great thought. I'm thinking too, about putting employees in places that erodes their confidence promoting them when they shouldn't have been promoted or whatever and they're swimming around feeling very uncomfortable or sentencing them to something rather than blessing them with something. All of this works in so many different areas. This is such an interesting that makes me wish that we were on a like a live town hall, where we could answer questions from people and get some of their thoughts on this stuff. Too bad it's a two way conversation here.  BLAIR: Yeah. DAVID: Fantastic. This is really interesting. Thank you for bringing this idea. Say the French thing one more time for me. Say it really well.  BLAIR: Eh, je ne sais quoi David. DAVID: Okay. Bye Blair.  BLAIR: Apologies to all my French friends. Francois if you're listening I'm sorry.

29 Aug 201832min

Blair interviews David on what each of the three levels of success in running a creative firm looks like.   Links 2Bobs Episode 39 - "Replacing Presentations With Conversations" The Win Without Pitching Manifesto, by Blair Enns The Business of Expertise: How Entrepreneurial Experts Convert Insight to Impact + Wealth, by David C. Baker Built to Sell: Creating a Business That Can Thrive Without You,by John Warrillow Pricing Creativity: A Guide to Profit Beyond the Billable Hour, by Blair Enns 2Bobs Episode 31 - "Mastering the Value Conversation"   TRANSCRIPT BLAIR ENNS: David, it's been a while. DAVID C. BAKER: Has it? I haven't missed you all that much. Have you missed me? BLAIR: Since we've last recorded a podcast, I was listening to one that aired recently and it was talking about my first book is in its fourth printing. It's now going into its fifth printing and I realized that it just aired and we recorded that over a year ago. So if Marcus is digging into a backlog that far, that means we haven't been together for a while. DAVID: Yeah. And it's scary too because imagine how much our thinking has changed in a year? 'Cause you were wrong about so many things. BLAIR: That's an old joke, you need new material. DAVID: Okay, sorry. BLAIR: So since we've last recorded a podcast, I know they keep airing because we've got all this in the can, but you and I did an event in London and then we came home and then you and your wife came up to Kaslo and we celebrated. I was just looking yesterday at a photo of your wife and my wife in a bear den together on her birthday. DAVID: Right, I didn't want to go in it, it's why I took the picture. BLAIR: You're too smart. I took it from inside the bear den, you were outside. DAVID: Right. BLAIR: And then you went to Chile on vacation and then you've probably been in some other places. DAVID: Yes, I have. I'm kind of off the road right now. I head back out of the country on Friday but I've been back trying to get our 61 acre farm livable. So just a few minutes ago, if you'd seen a picture of me, I would have been covered in white from head to toe because I am still trying to figure out how to use a paint sprayer and I realized I have a lot of expertise to develop yet. BLAIR: That's why on a hike I was carrying the bear spray. Okay, so it's been a while since we talked. Today we're going to talk, I want to call it good, better, best but it's really the three levels of success in running a creative firm and I think you've broken it down into the categories of starting, existing and thriving. And you sent me an entire spreadsheet to help navigate this conversation. Things like utilization, positioning, financial, marketing, etc. All of these different things that should be true or should be happening or you should be aiming for at these three different levels of success. Do you want to just take a minute and talk about those three levels of success? Are there lines that delineate between starting and existing and existing and thriving? Well, I think there are. We'll find out I guess, right? But I tend to think in triads. And so as I'm getting a question from a client, I'll sometimes just play this mental game, are they starting out or are they existing or are they thriving? And there seem to be these three different categories. And then you can expand that and say, "Okay, what about financial performance? What about how they think about service offerings or how they think about positioning and how they think about management?" And so I think it's useful to think in these categories because it's not as if a single firm is all in the existing, the middle category. They might spread across different ones and just gives us an eye opening into what our world looks like from the outside. DAVID: I think it'll be kind of interesting to talk about. But you're probably going to let me know how interesting this is or not. If you rush me through these, that'll be a sign that it's not that interesting. BLAIR: Well, let's just see. Let's start with utilization which is the first thing on your list. DAVID: Right. 'Cause such an exciting word, right? Utilization. BLAIR: Yeah. So I'll just have a little nap here while you talk about utilization. DAVID: Like I said to you one day, I'm pre-interested. Okay, so starting would be subsidizing clients and the typical firm in a developed country is charging and getting paid for 42% of their time and they should be getting paid for 60% of their time. So most firms are in this starting category and they never really get out of it. It's more of a typical category. So there's some significant degree of underpricing and/or overservicing. And that's the first one, subsidizing clients. And then hopefully, we get to the point where we get paid for everything we're doing, that's the middle category of existing. And then thriving is package pricing where we're applying what you would call value pricing. Where there's very little corelation between what we're getting paid and the amount of time we're putting in. It's really more about outputs and accomplishments and so on. The thing that interests me about this and I'm curious to hear your thoughts on this as well, is that most firms want to skip the middle step. So they're not getting paid for all their time and they want to jump right to value pricing without going through the middle step of getting paid for all the time that they're working. And some of this is influenced by this hatred that everybody has for timekeeping, but it's also driven by this sense that people have of they're being cheated. It's like, "My clients are not paying me what I'm worth and I feel rotten about that, I feel anxious, I feel resentful and I want to jump right past that and go straight to getting paid for more than the time I'm spending." So that's the first one, utilization. BLAIR: Well, I wonder if that leap isn't because they're not really thinking about value-based pricing in terms of getting paid for the value that they create but they see it as kind of a packaged way of actually getting paid for what they do. Does that make sense? DAVID: It does. So they're using a very advanced way of sort of eliminating this subsidization without ... Yeah, it kind of does. I feel like people, they have this resentment level about not getting paid for what they're doing but they don't really know how to solve it and they jump into different plans to solve it without really understanding all of them. This is what you've spent so much of your professional life doing in the last couple of years, is helping them think through. Like we did a podcast recently about the value conversation and all of those things. And in London when you and I were talking, I was listening when you were talking about practicing the value conversation. And it was so interesting for people, the light came on on their eyes. And I don't know exactly why but I feel like they need to at least go through this second phase first because it's like learning to walk before you can run and run before you can whatever the next thing is, leap I guess. BLAIR: Yeah. And I wonder about that. I kind of think if I were giving somebody who's starting out right now some advice, my advice would be to skip over that middle section of getting paid for what you do. But if I may, I want to back up a little bit and just talk about these three categories of starting, existing and thriving and let's just put some description around them. I think we can agree that in the starting phase, essentially you have a hypothesis and your hypothesis is that you have something of value that the market values and that maybe there's a business there. So you open your doors and you're essentially exploring your hypothesis. You don't know whether you validated or not. There's all kinds of fear and there's all kinds of experimentation and there's all kinds of hard work and you're trying different things and you're seeking validation.  And I would say in the existing stage, you have validation, there's a business here. You're not going to go out of business tomorrow but probably you're earning like what you would in a job, maybe a little bit more. So it's okay, I have validation from the marketplace and then the next step is essentially optimization or getting ... Another way to look at it would be the third category which is thriving. Beyond existing, beyond earning what you would in a job. And I know I'm probably jumping ahead and maybe screwing up some of your things that you want to talk about here but we all have a sense of what thriving is and we all have a sense of what starting is. Starting is you were working with a hypothesis. Existing in the middle is I validated it. There's something here, now we need to take it to the next level. And thriving is the next level. Are those good enough descriptions for the three categories we're talking about?  DAVID: Yes. BLAIR: Or would you change them? DAVID: No, I think they are good enough. What's interesting to me though, is that some businesses that have been around for 10 years are still in the starting category and they don't ever get to that other one. And those are the ones where I might go in and say, "Hey, just an idea here, but have you considered that maybe you shouldn't be running a firm? You could be making a lot more money working for somebody else, you'd be working fewer hours and you'd have no financial risk." BLAIR: And you'd be sleeping better at night. DAVID: Right, exactly. All those things. Most folks just sort of look at me and grin and say, "Yeah, I know all that but I'm willing to invest that much just so that I don't have a boss." You don't automatically go from starting to existing after you cross, say a two year threshold or something like that. There is some mentality that has to change on your part. BLAIR: Yeah. Okay, so you talked about the first point of how utilization is different in these three categories of starting, existing and thriving. You go from essentially subsidizing your clients to getting paid for what you do to charging based on the value that you create or package pricing. The next thing that you want to explore under these three categories is positioning. So how does positioning change? DAVID: And this is a little bit different than we would have talked about it probably 10 years ago maybe. You and I both noticed that that's changed in the marketplace. So in the beginning, you're usually an undifferentiated firm. So there are many viable substitutes for what you do. And most firms make this transition for sure, they go into the existing category. And in this phase, and I delineate this scientifically in the book, The Business of Expertise, you need between 10 and 200 competitors and then we can talk about what that means in terms of your prospects set and so on. How many prospects you need. But most firms don't go into that third phase there where there are no competitors essentially because of some process they have or some proprietary IP or some black box. That's where you see firms thriving and they're making so much money. It's not wrong at all, it's just that they really control their marketplace. And so, most people in this category are probably in this existing, the middle phase, and very few are at the undifferentiated and very few are at the proprietary IP side. I'm not sure what that number is, I'd be interested to see what you think. I would guess that maybe 10% of firms are in that high level, less than that maybe. BLAIR: I'm going to recap what you said here. So positioning-wise, when you're starting out, you're saying the firm begins as fully undifferentiated. You're basically saying yes to everything and taking whatever you can. And then when you get to the existing phase where you kind of validated your hypothesis, you typically have 10 to 200 competitors. And then in the thriving phase or stage, you say you essentially have no direct competitors because you have proprietary intellectual property. Is that right? DAVID: Right, a black box. Something that they just simply cannot get somewhere else. And that's built on the second phase for sure. You start at the 10 to 200 competitor phase but then you figure out some magic and you bring it to the marketplace. And that's where just the light comes on and everything just falls in place for you. BLAIR: I want to suggest the slightly different way to think about this. And that is at the very beginning, you starting out, when you have one client, your firm is highly specialized. DAVID: Specialized in what? BLAIR: You're specialized in the discipline for market, you're doing x for why, you have one client. And then I'll suggest to you that your second client is a lot like your first client. And it's often because that first client maybe you took that client with you from another firm or whatever. He was attracted to you for whatever reason. Your second client is a lot like your first client so you're a highly specialized entity. And then you think, "Oh my god, I have to mitigate my risk. I don't want to put all of my eggs in one basket. I don't want to pigeonholed." And then you broaden out.  DAVID: And then you mess up your positioning with all these other clients. BLAIR: Yeah.  DAVID: That's interesting, I never thought about that. That is really interesting. So the secret is to never have more than one or two clients and then your ... That's Blair's advice for the day. BLAIR: Okay. Now let's move on to the category or employees. How does your employee base change as you go from starting to existing to thriving? DAVID: This one is really fun to me because I think everybody will identify with this. In the first phase, you're hiring what you can afford. It's just like, "What? I can't pay more than this and I know the kind of expertise I would like, I just cannot afford it. So the primary thing is this is what I can afford and I'm just going to get the most capable person I can with this amount of money." That's the first phase. BLAIR: Yeah. We can all identify with that. DAVID: Yeah. And none of those people are still working for you but you still remember those days. BLAIR: Yeah. DAVID: And the second phase is existing. And here there's this flip that occurs in your mind and you begin to hire for what you need even if it stretches you financially and you grow into it. So it's not what you can afford, it's what you need and you've built this new assumption on the fact that you're tired of training people, these blank slates that come to you and infusing them with everything you know. But the firm never grows beyond that because who's smarter than you is getting hired because you can't afford them. So the second phase, what do I need even if it costs more than I really I'm comfortable spending at this point? The third phase is a really fun one. And that's where you are on the lookout for amazing once in a lifetime hires. And even if you don't need that person at this point, you go ahead and snug them because you're running your firm so well that it's not going to put you under to have an extra and actually a highly paid extra person on staff. And this is that third phase where you make the once in a lifetime hire every once in a while even when you don't quite need them yet. BLAIR: I immediately recall a number of conversations I've had with my most successful clients and I'm sure you do too. You've had the same conversations where you asked about a particular team member and they said, "Oh, that person came to me, I didn't have a job for them but I just couldn't believe there skillset. So I hired them and I created a job for them." DAVID: Right, exactly. That's exactly what we're talking about. And it's so fun to be at that point in your businesses' history where you can do that. It's such a luxury. BLAIR: Yeah. Let's talk about financial. You've got some financial numbers and I want to know where the hell they came from. First, why don't you walk us through them. When you're staring out, you should be earning what? DAVID: So this financial thing is about how much money you're making. And in the first phase, it seems like principals are making 160 to 200 in U.S. dollars and there's not much more beyond that. That's pretty much what they get. They may not even get every pay check, they may catch up sometimes or they may not, but they're making 160 or 200. If they stop and thought about it, they would say "You know, I could make more money somewhere else." That's the first phase starting. Existing, they may make the same amount of money. 160 to 200,000 U.S. dollar equivalent, but there's significant profit at the end of the year. And this builds up starting at their fiscal year and they may take out some quarterly or when they're getting ready to buy a boat or another house or whatever, but there is some profit. And then in the thriving, the final one, the third one, they're making 400,000. Now, we have to index this if there's more than one principal but there's 400,000 plus a bunch of profit. And there are not many ... Again, they're probably on a 10 to 20% of firms in this third category with all the things that we're talking about and especially here, 400,000 plus profit. That's where firms are really thriving. BLAIR: So I'm imagining the principal of a firm who's in the starting phase, they've been at this like 15 months, they're into their second year. They're still starting, they're still figuring it out and they're thinking, "Whoa, I should be making 160 to 200? When does that happen?" DAVID: Yeah. Where somebody who's making 400 says, "I can't remember when I only made that amount of money." People's expectations are so different based on what they bring to the table. BLAIR: Yeah. DAVID: But what principal could not make that and more as a key leader at another firm? It kind of gets crazy when you think about it. BLAIR: But are you saying if you're at the starting phase, let's say you're a year in and you're not at 160, what does that tell you? DAVID: Well, I think we need to make allowance for the fact that we're going to invest in our businesses. But if somebody's starting out and they don't have employees, it's hard for me to foul them. Anybody making less than 160,000 equivalent U.S. dollars, I have to search a long time before I find somebody making less than that. So it tells me that either you're really starting out and haven't figured out some things or your expectations around money are very different than mine are. Or you're really making some huge investments in the business and you'll grow out of that at some point. But it should signal that something's wrong if you're not regularly making that amount of money very quickly out of the gate. BLAIR: Yeah, okay. And we could do some math on that around utilization rates and hourly rates etcetera, to come up with something, but we won't. Let's keep moving.   BLAIR: So the next category you have here is marketing. And when you're first starting out, how do you about getting new leads that ultimately turn into clients? DAVID: Yeah, most people don't do anything because they usually don't start with the blank slate. They usually start because some client has said on the Q.T., "Hey I want to work with you." And so they start with some promise of work. Or they're kind of the new kid in town and for the first, and I find that it's about three and a half years, that's about how long it last, they have enough referrals or just word of mouth kind of stuff happening. And then if things slow down a little bit, they'll do some cold-calling. That's what usually happens at this first phase and it kind of creates these bad habits for folks in the early days because it lasts for three, three and a half years and then it starts to tail off. Then we go into the second phase of existing where most firms rely on email marketing these days. Now you have some outliers who are doing different things but that seems to be the basic recommendation, email marketing. And it's still very effective and some firms are getting very wealthy doing that as their primary lead generation tool. But not many firms are really in the thriving category who are relying primarily on email marketing. They're doing something else, they have some notorious thought leadership and there are many things that fall in this category.  They could have written a great book or they could be a great speaker who gets invited to different keynote conference opportunities or maybe they have a podcast or something like that, but it's moving beyond the email marketing. And so cold-calling, referrals at the beginning, email marketing and then they leave that behind and they have this luxury of moving to more of a notorious thought leadership platform. BLAIR: I love your choice of an adjective there, notorious. What do you mean by that? DAVID: Notorious as in hated? No, that's not what I ... What I mean is well-known I guess is what I mean. So it wouldn't count to have a podcast that nobody listens to or a book that nobody buys. I'm talking about well-known type of thought leadership. And like you talk about often, it's probably something that's singular. Like it might be a conference that you do or it might be a book or it could be a podcast. It's usually not a combination of a lot of things. You've just fallen into a groove, a pattern that fits your personality and your particular focus in the marketplace and everything is working well. And as long as you're disciplined and you still take risks with your thought leadership, then you don't ever have to go back to just doing email marketing like you used to. BLAIR: Yeah. And so you've got referrals along with cold-calling in the starting category, but I think when done properly, referrals follow you at every level. And at the thriving level, I would suggest referrals really do come back. But I think your point is that like in the very beginning, it really is just about referrals. The first client is referred to you or they were a client at the firm that you worked at, you took with you. And you said there's a three to three and a half year cycle for referrals.  I don't know if it's referral-based but I've talked about this before. And one of the first patterns that I saw as a consultant is there's a seven year window. There's a point at which where roughly seven years where organic growth just stops. And you explained to me, your hypothesis was that's when you thought natural referrals quit working. And then there's school of thought around how you actually worked to cultivate referrals, that's an entirely different level. But I think we should probably do a podcast on referrals at some point because that's a topic in of itself. And I agree with you, it's vital early and then most people kind of let it go. But some of those firms that are really thriving, they have formalized how they get their existing advocate, loyal clients to refer other clients to them. DAVID: Yes, exactly. They're intentional about it. And the difference seems to me is that they bring their referral sources along with them. So as their capabilities change, they are providing the correct language to those referrals in an active way, so that the referral sources are given them even better business than they did in the past. That is something we should talk more about. BLAIR: Okay. Let's talk about fee billings per FTE. This is one of my favorite numbers that we often refer to it as AGI per FTE, which is ... Do you want to explain that acronym? DAVID: Sure. So AGI stands for Agency Gross Income. The rest of the world would say adjusted growth income but that's a very different meaning than what we mean by AGI in this industry, and it's basically your fee billing. And then if we define FTE equivalence, if there are nine full-timers and two halftimers, then that's 10 full-time equivalent. So the starting phase is less than $150,000 per full-time equivalent. So we have a 10 person firm, that means that their AGI is less than 1.5 million. There's some sort of a transition here that firms struggle to get beyond and they don't exactly know how to break out of that. It's a combination of all kinds of marketing and positioning and lead generation and confidence and all those things that we talk about quite a bit. But in this first phase, they're somewhere below this. The second phase is a really narrow band. It's really interesting. I can almost say on the phone, I can say to somebody, a prospect that I might be talking with, I can say, "Let me take a guess, you don't have to tell me if I'm right or not, but I'll bet your fee billings per full-time equivalent ..." And then I'll give them a number between 150 and 160. And this very narrow band is the second place they get stuck. And most firms, the vast majority, never get above 160. And the ones who thrive in this third category get above 160, and I've got clients that are even above a million, many of them above 450, 500. Now, you can't get there without value pricing obviously and packaging the work that you're doing with expected service offerings and so on. So those are the three, less than 150, 150 to 160, the big stuck point, and then above 160. BLAIR: So, again, I'm going to give you another way to think about this because when you say starting, that first phase or stage that we're talking about, I'm thinking about a solopreneur. And a solopreneur, if you're making 200, you're clearly billing more than 200. If you think of the solo creative person who goes out on his or her own, they're subsidizing the clients so they're not billing for all of the time that they're actually spending as you pointed out at the beginning. So they run into this maximum of how much they can based on the fact that they're subsidizing their clients. And it's probably around ... What do you think it is? Like what do you think somebody's earning, just say in kind of gross sales, before they have to hire that first person? DAVID: They probably should never hire anybody until they're at the quarter of a million dollar range, so about 250 I would think. When you hire somebody before that, you're really restarting the clock and now all of a sudden you're spreading this income that you've generated across more and more people. I don't see much connection between billings per full-time equivalent and the size of the firm. In other words, some of the most profitable firms are smaller but not always. So when I say starting, I don't necessarily mean the business is young, I mean they're starting on this path of entrepreneurial experience and success. So many firms could be 20 years old and they've never broken that 160 category per employee. So it's just something about like how do I get over this hump? And it may take people two years or it might take them 20 years or they may never get over that hump at all. BLAIR: Yeah. So you have these three categories of you're below 150 in AGI per FTE and then the middle category, where I see a lot of it too, you're stuck at 150 to 160. And I would say it might even be a little bit lower than that, 140 to 160. I don't know where the line is, you're drawing at 150 to 160. And then beyond that 160, once you tend to break free of that 160, then you kind of gain momentum again and it's easier to get out into the 200s and even 300s and that's almost always because you're moving to a value-based pricing. Is that right? DAVID: Right. Or you're very, very confident. But usually, yes. It's about value-based pricing. BLAIR: Yeah. All right, the next category is succession. So in a starting firm, it seems a little bit ironic that a firm that's in the starting category would think of succession. Because if you're just starting out and you're thinking of getting out, then something's not working therefore you don't have anything to sell, do you? DAVID: Well, again, I'm not talking just about chronology, I'm also talking about how successful they've walked this road of entrepreneurial success. And so many firms really are ... You have a 20 year firm and really they don't have 20 years of expertise under their belt, they have 20, one year periods under their belt. They don't operate like a 20 year firm, they just had the same one year 20 times, that's what I mean by starting. BLAIR: It's Groundhog Day 20 days in a row. DAVID: Exactly, right. And these are the firms where they're not just remarkable per financial performance and therefore nobody on the outside is going to be all that intrigued with buying the firm and yet the principal is tired. They're tired in part because of the lack of financial performance. If that wasn't the case, they probably wouldn't be that tired so they have to settle for either just closing the firm or getting almost nothing for it by selling to employees. That's that first starting phase of entrepreneurial success.  DAVID: And then in the second one, in this existing phase, they sell or merge within the industry. And you and I have seen huge changes here. There aren't many firms who are selling to the holding companies because the holding companies don't have all that much extra money and those purchases are so typical and the principal is not that interested in it but that's what happens in this existing phase. And then in the thriving phase, they get rich by selling in a very nontraditional sale. So it might be a consulting firm that buys them or it might be a huge digital firm that buys them. Or they could sell themselves to a client or maybe a roll-up in some rare circumstances. So it's just interesting to think about these three different categories that firms tend to think about from a succession standpoint. I put this on the list 'cause I do so much succession work and I see people strange expectations about what the firm will be worth. And they have this very glorious ideas about what somebody else will be pay for the firm and I have to have an awkward conversation. It's like, "You know, this has been more of a lifestyle business for you. You haven't made a lot of money, you've not made a lot of profit, there's not much to sell after you leave." But that's fortunately not true of every firm. A lot of firms are very, very saleable these days which is great news for them. BLAIR: And it reminds me of John Warrillow's book, Built to Sell. It's a business novel and the owner of a design firm is fed up and he goes to his business advisor or his accountant and says, "Okay, I want to sell the firm." And the guy laughs at him and says, "You've got nothing to sell." DAVID: Yeah, a great day in his life to find himself. BLAIR: So he helps him navigate to building a business that is built to sell. It's actually a great book and well worth reading. DAVID: Yeah. All right, so I am going to do something here. Are you ready? BLAIR: I'm always ready David. What are you going to do? DAVID: Well, I'm going to flip this on you and I want you to come up with three categories around pricing. BLAIR: Oh yeah, that's easy. DAVID: Okay, well you should have some thoughts about this, you just wrote a book. So what are the three categories for pricing that you see out here? BLAIR: Essentially, you have three things that you can sell and I think the three categories really mirror perfectly your categories of starting, existing and thriving. In the beginning, you are selling time, you are selling the inputs of time and materials. And then when you get to the next level which you're calling existing, and I'll just say it's the next level in pricing, is that's when you're selling outputs of deliverables. So instead of charging based on the time, you're charging based on, I'll put in air quotes, the market value of something. And you're still counting your inputs of time and materials but you're essentially pricing based on what the market will bear and you're probably commanding a premium.  The client is getting price certainty. So instead of saying it's going to be $200 an hour and we'll finish when we'll finish, you're making an estimation of the number or hours, probably a range, and then you're pricing it in the higher range and the incentives are for you to come in a bit below that. So your AGI per FTE is going to go up. You're trading a price premium for price certainty because you're selling the deliverables, the campaign, whatever the output is.  And then the third level is when you let go of both of those things and you're selling based on the value that you help create. So you're pricing based not on the inputs of time and materials, not on the market value of what you think the market value is, that service or that output, but based on the revenue gains or cost reductions or other emotional forms of value that your solution will help to deliver. And very often when you do it properly, it's really almost fully untethered from the inputs of time and materials. So those are the three levels of pricing. First you're selling inputs, then you're selling outputs then you're selling outcomes or value. DAVID: So if somebody's in the first category of selling inputs, can they skip the second step and go right to value? BLAIR: Oh yeah, absolutely. DAVID: Okay. Oh, that's interesting. BLAIR: Yeah, and so we talked about the value conversation before and if somebody hasn't listened to that, they might want to go back and listen to that episode. Really, the big shift that happens when you learn to conduct a good value conversation is you completely let go of the solutions and if you're letting go of solutions, you're letting go of cost. So you're actually setting price before you even think ... And this is the trick that you've got to learn to do. Before you even think about what it is that you would do for the client. And when you're able to do that, when you're able to set price before you think about your solutions, let alone your cost, then you have made that transition to the next level. DAVID: I hope people will go back there and listen to that one. It's called "Mastering the Value Conversation," April 4th. That was a really interesting one. Allright, this was fun. BLAIR: Hey, I'm driving here, this was fun David. DAVID: No, I'll tell you if it's fun. If it's ... We should do one like: what's starting, existing and thriving to do a podcast together? What are those three categories? I don't think we want to do that. BLAIR: Oh god, yeah. Yeah, we're still starting. Hey, when we reconvene (we're going to record again in a few days) we're going to talk about the X factor. Now, I'm going to send you some homework on this, I'm going to ask you to think about your most successful clients and what did they have in common. And then we're going to talk about that in the next podcast. DAVID: Okay.

15 Aug 201834min

David re-reads the 2nd chapter of Blair’s first book, leading to a discussion about how sales people have to choose between either presenting to clients or being present to them.   TRANSCRIPT DAVID C. BAKER: Blair, we are going to talk today about replacing presentations with conversations.  BLAIR ENNS: The second proclamation. DAVID: Yeah, it's actually the second chapter in your book, which I'm holding right now in my grimy little hands. The book, it's black with red, looks like foil to make it look expensive, so you could charge an extra couple bucks for it probably. It says Win Without Pitching Manifesto, and the second chapter is about replacing presentations with conversations, but I think if you would let me, I'd like to make a public confession before we get into this. BLAIR: Sure. DAVID: Your book actually sells better than mine, and I want you to know that that pisses me off. BLAIR: I read a great quote the other day, maybe it was Gore Vidal who said, "Every time a friend succeeds, a little part of me dies."  DAVID: I don't know if this was the third or fourth printing, but since we published the book, we got these three skids of your books. Not only do I hate the fact that your book has sold better than my last book, but I have to haul these skids of your book like for punishment, to remind me constantly that they're selling. BLAIR: That's what you get for moonlighting as my publisher. DAVID: Yeah, instead of focusing on what I should be doing, yeah. BLAIR: The fourth printing should arrive any day now, it's larger than all the other ones. Can I just keep bragging here? I'm surprised it's been, well I think it's somewhere around seven years, and sales just keep going up, I can't explain it. DAVID: I'm more surprised than anybody, because I've read it and I know you. The idea is replacing presentations with conversations, and actually I read through chapter two again, it was actually fun to read that part of the book again. You talk a lot about avoiding the big reveal, and the first thing I could think of was several episodes of Mad Men where they have the single pitch board on an easel in the conference room and it's covered, and when they say "big reveal", they mean big reveal, they lift this thing up and there's this tension in the room. You talk about the fact that we're addicted to that. I'm not sure that people would admit that they're addicted to that, can you talk more about that first, to start us off? BLAIR: Some people might listen to that and think, "Well, I'm not addicted to that," but I think you and I probably have different definitions of creativity. You might have kind of a broader look at what it means to be creative, and I take my cues from Mihaly Csikszentmihalyi, who wrote the book Flow, and he studies happiness and creativity. He says creativity is the ability to see, the ability to bring kind of a new perspective to a problem. It's not the ability to write or draw, he refers to that as "personal creativity". BLAIR: Creative people who can look at things differently, they just see things differently, that's kind of to me the hallmark of creativity, one of the things that goes hand in hand with being creative is the ability to think on your feet, so these two things, for reasons I don't fully understand, they're tied to each other. When somebody has this really strong ability to kind of bring a fresh perspective to a problem, they also have a really strong ability to go with the flow and deal with whatever kind of objections are thrown at them. If your strength is standing in front of a room, saying something, hearing an objection, and then having to react to it, and then kind of sell in the situation or recover from a situation, then you are going to look for as many situations like that that you can create. BLAIR: I'll give you a great example of a friend and a client from many years ago, creative director at a small design firm, and he was presenting a new identity to a consulting firm. He does the big reveal, and it's very quiet, and then he's a little bit nervous because it's so quiet, and he says, "What do you think?" One of them says, "Well interesting, I notice you've changed our name from XYZ Consulting to XYZ Consultants." It was just a mistake, an error on his part, and he responded immediately. He said, "Exactly, because consulting, that's what you do, consultants, that's who you are." They bought it, so they changed the name because he just responded in the moment. BLAIR: Creative people love being in that situation of presenting, having to deal with an objection, and then coming through it, because the euphoria is profound, it's huge. If that's who you are, if that's your strength, commanding a room, having to dance, having to respond to objections, et cetera, not knowing what's going to happen next, then you will create as many situations as possible where you get to do that, and the whole time you will tell yourself and tell others and tell me and tell you, "No no no, that's the way this business works, or that's the best way to communicate this information to the client," and it's not. It's all about you and your personal need to present as a creative person. DAVID: You would say that that's pretty widespread in the creative field, because most of the creative field has been walking down that path for many years, there's something about that personality. I think of it as diving into an empty pool and inventing water on the way down, that's how I think of it. When I think about public speaking, to me that's sort of what's happened, or when I'm doing consulting where I know that within a few hours, we're going to have to have some at least provisional answer, and we don't yet, and that's terrifying but also thrilling. There's something about the creative feel of creative entrepreneurs that's bringing that. Now, would this equally apply to presentations in a new business setting as it would to presentations as the work is unfolding? BLAIR: There are different types of presentations, and there are different times in the relationship in which we feel like it's appropriate to present. If we start with the idea that we are addicted to the presentation and the presentation does not need to exist, if you come around to my way of thinking on that, then you will look at the presenting that you do in a new business situation, and you'll realize that this is not necessary, I'm doing this for me. You really first have to come to grips and be honest with yourself about your own need to present. What I recommend is, reform yourself when it comes to your existing clients. DAVID: First. BLAIR: Yeah, first. Replace the big reveal with a series of little reveals, and then once you get your head around that, then you will be able to think about your need to present in a new business situation a little bit differently. There are all kinds of creative people outside of the creative professions, so most entrepreneurs I think fit this description of a creative person, because I think you have to be somewhat creative to be ... I test for this in the tests that we do for all of the people who enter the Win Without Pitching program, so I can get an objective measure of how creative in that sense, or how much they crave standing up in front of the room and being forced to dance. BLAIR: There's a rudimentary question that's, and I'll ask the audience right now, and I've asked this in many seminars or workshops I've led. Usually I do it after break, I come back into the room and I say, "Hey," and I'm clearly kind of roleplaying or playing a scenario, I say, "Hey, in the hallway, I just ran into the chairman of the board of your most highly coveted client. Think of the company that you've always wanted to work for. They're having a board meeting in the meeting room right next to ours, and I told them that I was spending the day with you, and they said, 'Oh great, can you send somebody in to do a 15-minute presentation on their firm? Because we're looking to hire a firm like theirs.'" BLAIR: Then I say to the audience, "You have 10 seconds to get over there and present. You have no time to prepare," you get up out of your chair and start walking, and then I say, "Okay, stop. What's your reaction? Everybody just measure what your reaction to that is, I've just told you you have no time to prepare, you have to go to a 15 minute presentation, you have to be there in 10 seconds, what's your reaction?" You look at the audience, and you can see the range of responses in their faces. Some people are grinning, these are the people, they would say, "I'll think of what I'm going to say on the way over there," and they love the stress of that moment because they have this great ability to respond, to think on their feet. BLAIR: These are the people, as you say, who love to dive off the diving board and invent water on the way down. Then you've got the kind of low autonomy people that are very systematic and process-oriented, and these people are horrified, they need vision and clarity of what's going to happen next. They need to know what their steps are, they need to be prepared, it's their worst fears to come off unprepared. They haven't even considered what they might say or the objections that they might encounter, and they need to be able to think through all of those things. BLAIR: If you're in that first category, then I can all but promise you that you have built your business around that strength of yours, and you have driven your cost of sale way up, and probably your closing ratios down. Now obviously, there's some places where it's served you well, but for the most part when it comes to getting new clients, I'll bet you it's hurt you more than it's helped you. DAVID: Do you remember years ago, when some creative firms, especially designers, would take a portfolio book, and there were pages that you'd flip? I remember reading this study, I don't remember where it was, how the pacing was so different if you controlled it as, say, the principal of the firm making this presentation, or let the client control the pace, how much faster the pace was. They were not interested in the presentation, they were much more interested in getting to their issue. I think that plays into what you're talking about, but the question specifically that's coming to my mind right now is, like so you talk a lot about how the expert needs to direct the relationship, how is the expert directing the relationship if they're not talking that much, if the client is doing most of the talking? In other words, if we're letting the client fulfill their needs here, how are we not relinquishing this need to direct the relationship? BLAIR: Well, I think you know the answer, because if you're not talking, what's left? DAVID: Listening, or asking questions. BLAIR: Yeah, if you map out the role of the two parties, buyer and seller, over the length of the sale, you will see that when it's done properly, a proper consultative sale, early in the relationship, the salesperson is talking about 25% of the time, and they're using their 25% to ask questions, and the client is taking 75% of the time, and they're using that time to give their responses. Then at the end of the sale, the close, it's reversed, the client is speaking 25% of the time, and they're asking you, the seller, the questions, and you're taking 75% of the time to respond to their questions. Nowhere in there are you standing at a PowerPoint deck in presentation mode, you're either asking questions or you're responding to the clients' questions. BLAIR: It's interesting, that portfolio book and the amount of time. I had a really interesting conversation just a week or two ago with a principal that I know well, and we were talking about capabilities presentations, and I was saying, "No, the capabilities presentation does not need to exist." We were getting into a very constructive, respectful argument or a discussion where we're each advancing our views on the subject, about capabilities presentations, he was saying, "No, it's valid, you have all this information you want to communicate about your firm." I said to him, "How long does it take you to get through your capabilities presentation?", and he kind of looked a little bit sheepish, and I said, "Is it more than five minutes?", and he kind of looked at his feet, and I said, "Is it more than 30 minutes?" He said, "Well, it's about an hour." DAVID: I'm already bored just listening to that. BLAIR: Yeah, just by answering that question, I think he got the realization that, "Okay, this is all about me," but in fairness, this person is more kind of on the low autonomy process-oriented type person who's more comfortable, and it takes more training, more practice, and never comes completely easy to him to kind of stand up and be responsive. DAVID: Right, so we're going to have different perspectives on this based on who we are as people. BLAIR: Yeah. DAVID: One of the things that you say, and as I read through this I made a note of this phrase because it really intrigued me, you said, "We cannot be transparent if we are withholding information for the presentation." First, I'm not sure I completely understand. My mind first went to, are you talking about like putting the price at the end of the presentation? I don't think you're talking about that necessarily, but what do you mean and why do you say this specifically? BLAIR: I'm talking about in your relationships with existing clients. The big buzzwords of the last, I don't know, decade or so, authenticity is one, we need to do a whole podcast on authenticity. DAVID: God, I'm so tired of that word. BLAIR: My least favorite word on the planet. DAVID: "Storytelling" is close second for me. BLAIR: People talk about authenticity, transparency, and collaboration, these are three of the big buzzwords of our time. Let's just put authenticity aside, and talk about transparency and collaboration. Firms are out there saying, "We work transparently and collaboratively with our clients." Okay, well if that's really true, transparent means the client has a window into what you're doing, what you're thinking, where the project is at any time, you're not withholding. DAVID: Like and they know that you haven't even started it, and you've had it for three weeks and it's due in three days, that's transparency. BLAIR: Yeah, and they know it, that's transparency. Collaboration is where you're working with your client, rather than going away and coming back and presenting, so transparency and collaboration. You think about it, the presentation can only exist in the absence of both, right? The need for presentation is only there if you are withholding information from the client. DAVID: Yeah, if you're delivering new information that you previously had and chose not to give them, you're saving it for the presentation, so that's what you're talking about. BLAIR: Yeah. When I was still a consultant, I had been writing about this and talking about this for years, and then one day I realized, "Oh my God, I still do this." When I'm doing a business development audit, I withhold all of the learning until the end, and then I unveil my genius findings that makes me feel great. DAVID: I'm just going to let that pass, okay? BLAIR: Yeah, but it's like, "I'm going to rock this person's world by letting them know the really insightful things that I've discovered about their business," and my reaction is I want them to go, "Oh my God Blair, you're so smart, I never thought of that before, this changes everything!" That's the reaction I'm looking for, and all of us who go into presentation mode, we need to admit that that's the reaction we're looking for and it's really all about us, because what if I'm wrong? What if I got the name of the company wrong, like my friend, the creative director? There's a renamed company out there because of a slip like that.   BLAIR: I realized I was admonishing my clients for doing this, and I realized I still do it too. What did I start to do? As I'm learning key things, I would share them with the client. I would never get rid of the final reveal, the final share, I knew I was being transparent and collaborative when in that final phone call, when I was delivering my findings and recommendations. I would begin by saying, "Okay, I've already shared with you most of what I'm going to share with you here today, we're just going to put a nice little bow around it." I'm just letting them know, "There is no big reveal, because I've already shared with you." BLAIR: If I would get a hypothesis, I would reach out to my client and say, "You know, I think I'm seeing this pattern," et cetera. That doesn't come naturally, but I felt like I needed to take my own medicine, and I realized that when I was doing this, I was far less likely to make a big mistake or miss something vital altogether. Like how often does that happen in a presentation where you think you've killed it, and the client goes, "Wow, that's great, what about Singapore?", "What do you mean Singapore?", you've forgotten something significant. DAVID: This is an early test along the way, so if you get your hand slapped it's not a big slap. It's not getting hit with a baseball bat, it's like, "Silly man, no, that won't work." I hear people objecting though, because I know that a lot of my clients and your clients are listening to this and saying, "Listen, I have the answer early in the process, and I just withhold it because it makes it seem to easy if I just blurt it out." I'm going to say, "Okay, I really know the answer, but we'll get back to you in about a week or 10 days, and then we'll embellish and clean up and prep the answer and give it to you," because they feel like they're not going to be able to charge the fees they want to if it looks that easy to them. What are you going to say to somebody that's, I guarantee you some people are going to think that when they hear what we just talked about. BLAIR: I completely sympathize, I mean I operated the same way for many years as a consultant. I know you, I'm not going to give away your secret, but when you've modeled out how it works, when you've seen all the patterns, you know the information that you need. When you have true specialized expertise, it's really just small pieces of information that you need. That's the difference between an expert and a generalist, a generalist needs to collect all of this information and then sift through it all, and try to find some sort of relationship and pattern. The specialist comes along and says, "I've done this 1,000 times before. Give me these four things," and then you can deliver, like in your case, it might be 20, 30, $50,000 worth of value probably really quickly, like probably in minutes, but you let things unfold and you reserve the right to, "Well, maybe I'm missing something." BLAIR: I think that's valid, "Maybe I'm missing something, let me just let some ideas kind of gestate, let me think about things a little bit differently," but I see the pattern, I have the hypothesis right away, it's pretty clear to me. I sympathize with that, and I think there's some sort of middle ground here where I think that's valid. I think that some clients, not the best clients, but some clients have a real hard time with the fact that it took you 10 minutes to come up with a solution, and I've just paid you $50,000. DAVID: Yeah, and I think I do ask for more information than I need sometimes to make the process to look more thorough, so that it looks like a better value proposition for the client. That's an immediate sort of recognition on my part. I think just as the recommendations I'm making to my clients are shorter and more on point than they used to be, we should not be giving clients more homework than we need to either. Let's just ask for the things that we really need, they should only be allowed to answer questions, they should not be allowed to talk unless they're answering a specific question. DAVID: We can't be transparent if we're withholding information for the presentation. Another thought that popped up as I was reading through chapter two again is that when you are presenting, you are not listening, you're not being present. In other words, you can't effectively multitask here. Do you want to talk more about that? BLAIR: Yeah. I think I've said this on other podcasts, you can present to somebody or you can be present to them, and you can't do both. You're either transmitting or you're receiving, and another kind of sub-point under this is when you're presenting, you're kind of in violation of some of the principles of value pricing, value pricing where you're getting paid to deliver value. You're not on inputs like time and materials, not on outputs like delivering X or Y logo, et cetera, a campaign, but on the value that create for the client. Ideally, that's the place where we all want to get to or get closer to, where we're commanding fees or remuneration for the value we're creating for the clients. BLAIR: For you to value price, you need to have a really meaningful value conversation, and there's steps to a value conversation. One of the keys to a value conversation is, you need to be focused on uncovering a desired future state of the client, it's this duality of zen mind, beginner mind, like the blank slate of a beginner and the mind of the expert. You need to be expert enough to know the questions to ask, but you need to be beginner enough to kind of move off of the solutions, as Mahan Khalsa would say, and just quit thinking about what you're going to sell to this person. BLAIR: The ideal state of somebody who's selling creative services or marketing services or any consultative services, the ideal state of that salesperson is you are present to the client, you're intently focused on understanding them, learning about their situation, learning about their desired future state, and you are letting go for the moment of how you are going to help them get there. I think in a large enough sale and a long enough sale, you want to uncover the information, and ideally go away, and then start thinking about solutions. That's not always possible, but you want to have this line in the conversation where first it's all about you, Mr. Client, and then I'll start thinking about solutions. When you're presenting, it's not how focused are you on the client, you're up there with a PowerPoint presentation talking about you. DAVID: Or inane things about them that an intern could've gotten with a Google search. BLAIR: Yeah. Here's the section of the deck, "strategy', or, "Here's everything we know about your business that we Googled last night." DAVID: "And that you already know and don't need to hear again." BLAIR: Yeah, "I'm just showing you that I have great search skills." As you can see, I have an opinion on this, it drives me crazy. People are listening to this and thinking, some people are just never coming back. I believe this so strongly, and I believe most of the creative profession gets this entirely wrong. I get, I don't know how often anymore, it's not once a month anymore, but for awhile there was once a month, inquiries saying, "Do you do presentation skills training?" My reply is, "No, I deprogram people of their own need to present." BLAIR: Now, they always go away after, "Okay, thanks, I'm going to go get some presentation skills training." If you are focused on presentation skills training, your mind is in the wrong place, it's all about you. There are some things you can do, some courses, there's a woman out there by the name of Anese Cavanaugh, she has this methodology called IEP: intentional energetic presence. It's basically how to show up, how to show up at work, how to show up physically and emotionally in a meeting, how to deal with situations. DAVID: How to be authentic. BLAIR: I don't know about that. DAVID: See how I slipped that in? BLAIR: You should do IEP training instead of presentation skills training. Presentation skills training is the wrong thing to do. Now, there's a time and a place for the presentation, internal presentations, even the odd client presentation when you're collaborating with your direct client and they need you to present to a larger audience. All of that is valid, public speaking, you want some presentation skills around that, all of that is valid. Looking for presentation skills training to improve your new business development results- DAVID: Like your close rate. BLAIR: It's exactly the wrong thing to do. DAVID: I'm just pausing here just to let that sink in for people. BLAIR: Good, yeah, I'm going to have a cigarette now. DAVID: You're saying, don't look for training to do presentations better, don't do presentations at all, but there's obviously room for training about how to listen, how to ask better questions. You're not dismissing that sort of training. BLAIR: No, not at all. In fact, I think that's what IEP is about, that's what some of the things that we talk, you know the ideas, I forget where this comes from, I've stolen it from somebody who has a book on leadership, the idea of what I call the physiology of leadership. Leadership as a social science, that's a great model for selling. You can study anybody's model of leadership, and you'll become a better salesperson, but I refer to the physiology of leadership as two things: calm presence. You're calm, you're not anxious, and you're present. That should be your demeanor every time you're selling, and there's all kinds of different ways and different methods and models that you can use to improve your calm presence in a situation. BLAIR: You and I have done seminars on IP development where we've used constraint-driven exercises, and we use constraint-driven exercises in the Win Without Pitching program, I use them in speeches and workshops, I've become a huge fan of constraint-driven exercises. Just think of this as a constraint-driven exercise, I'm talking to our audience here. DAVID: We can't present naturally normally. BLAIR: Yeah, what would you do if you were not able to present, how would you go about trying to win this business if you were not able to give a presentation or use a PowerPoint deck of any kind, what would you do? Well, the short answer is you would have a conversation, right? DAVID: Right. BLAIR: Then there's all kinds of things that you need to sort out about, "Well, what questions do I ask? What framework do I use for the questions?", but you will find most of the time that the need for presentation, it's really on your end and it's not really reciprocated by the client. Now, there are some caveats. If you work in packaged goods, CPG or FMCG as it's known in Europe, and you're dealing with brand managers who deal with creative firms all day long, they kind of want to see the dog and pony show sometimes, so you might have to make the odd exception.  BLAIR: Now, I remember a client of mine many years ago, a very strategic firm, but not the best creative in one of the largest markets in America, and they were competing against the hottest creative shop in that market. When we set up the final meeting, so it was down to the two of them, I had them put all of the creative stuff that they wanted to present on a table over in the corner of the room. When they were facilitating the conversation, they made the point that, "The quality of our creative is good, you know that or else we wouldn't be this far. You've already seen it, if you want to see more of it, it's on the table over there, let's get to why we're really here," and so they move onto the more kind of valuable part of the conversation. BLAIR: Of the three people on the client side, there was the president, there was the COO, and there was the brand guy. The brand guy got a little fidgety at this, and at the end of the conversation, the president and CEO of the client business, they didn't need to see the creative again, but at the end of the conversation the brand guy got up and said, "I'm sorry, I just need to have a look through this," and he flipped through some stuff. He came back and he sat down, and he had this sense of relief, "Okay, good, I'm good," and they won the business, they beat the hottest creative shop. BLAIR: If they had stood up and gone into presentation mode to try and match this other firm at their own game, instead they facilitated a conversation. The point I'm trying to make is, the senior people at the client side, they don't want to sit through a presentation. DAVID: Right. BLAIR: You know, we all have websites, right? DAVID: Especially nowadays, you could see maybe that would've made sense 15, 20 years ago, but not so much today, it's boring to people. BLAIR: I'm fond of saying, "Sometimes it's better to be different than it is to be better." If you are going into a competitive situation against three or four other firms, and everybody else is doing the dog and pony show, you have an advantage if you treat the situation differently. If you try to break down the walls and facilitate a conversation, and if you can go first and do that and set the tone, then things will feel really different, first or last I'm a fan of. DAVID: Really not trying to sell things, but I'll do this for you. I really do think if you folks, listeners, if you haven't read The Win Without Pitching Manifesto, I would recommend it, it's $25 list, and there's also an electronic version of it. I think it's one of those books that just has a really long life, because it's perennial, there's some core very human points in the book that you can just read and reread, and it's a great book. It's the second-best book that I know of at the moment, but it's a good book. BLAIR: It's success is due entirely to its publisher. DAVID: Yes, that's right. BLAIR: Thank you very much. DAVID: Thank you Blair. BLAIR: Thanks, David.

1 Aug 201828min

There are seven patterns that almost all principals are guilty of. When David and Blair point them out, it leads their clients to say, “you must have hidden cameras in my office!"

18 Jul 201826min

Blair leads a discussion on how clients tend to take mental shortcuts in making business decisions, and how we can nudge clients without manipulating them to make a decision that is in their best interest.   Links Rory Sutherland Influence: The Psychology of Persuasion and Pre-Suasion: A Revolutionary Way to Influence and Persuade by Robert Cialdini Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler and Cass Sunstein "The Dark Arts of Leveraging Cognitive Biases" by Blair Enns Thinking, Fast and Slow by Daniel Kahneman Predictably Irrational by Dan Ariely Richard Feynman Dunning-Kruger effect Pricing Creativity: A Guide to Profit Beyond the Billable Hour by Blair Enns "Pricing Creativity" 2Bobs episode

4 Jul 201840min

David and Blair compare each other's competitiveness, and then offer some specific ways principals can actually collaborate with their competitors as a part of building beneficial business relationships.   TRANSCRIPT BLAIR: David, today we're going to talk about how to crush your competition, is that right? DAVID: Instantly I got very excited about the concept, that's really not what we're going to talk about, but I love that idea. Oh my God, I'm just too competitive, but that's actually the opposite of what we're going to talk about I think, unless you want to switch it at the last minute. BLAIR: No, I was with a bunch of guys the other night, and had this little men's night retreat thing, and maybe more than half of them were entrepreneurs. One guy was winding down a business, and he was saying, "I'm not sure if I'm competitive enough to be in business." I didn't say anything, but I thought, I suppose that's vital for you to be competitive in your nature to succeed in business, would you agree with that? DAVID: Yes, I would, but there's something wrapped around competitiveness that is just as important to me, and that's risk-taking. BLAIR: Yeah. DAVID: It does seem like the two of those are related, that's why I quit doing a few things outside of work, because I realized I was not as competitive as some of the young fools that were willing to sacrifice their body, and I wasn't. It's not that my body is so precious, it shouldn't be sacrificed, it was more I was allergic to the pain. Yeah, there's something about competitiveness and risk-taking yeah, for sure. I'm competitive, do you think of yourself as competitive? BLAIR: I've measured my competitiveness and your competitiveness, and you're more competitive than I am. I'm as competitive as the average person, but the makeup of that competitiveness is a little bit skewed. You can break down competitiveness into different forms, so I think of myself as average competitiveness. DAVID: Okay, this is more about how do we tame or tamp down some of our competitiveness for our advantage, and for the advantage of the world really. BLAIR: You really want to talk about this idea of collaborating with your competitors, is that correct? DAVID: Right, yeah, and it's something I've learned in my own business life, but I've also tried to coach my clients to do it as well. It's been really interesting, it's a concept that strikes us like, did he really just say you should be more collaborative with your competitors, or did I mishear him? No, that's really what I mean. BLAIR: Okay, so we think of being in business just like my friend said the other night, we think of it as business is highly competitive, and we need to be cutthroat, and we need to always have an eye on our competition. We're trying to best them, I'm fond of saying that positioning is an act of relativity. You position relative to your competition, and in endeavoring to position your firm against your competition, you're trying to kill them. BLAIR: Now that's an overstatement, but that's the prevailing view, right? The competitors are there, people that ... It's your job to beat, it's your job to win against them, and you want to fly in the face of that a little bit, so where did this idea come from? DAVID: Well it's been rooted really in 20 plus years. I did something a little crazy back in the late 90s. I wanted to start an event, and that was obvious to me, I wanted to start an event. Okay, so what kind of an event would it be? Well it needs to be an event that's going to attract a lot of people. How do we do that? Well, the content has to be fantastic, it's like okay, then I just stopped in my tracks, because I'm thinking, well if the content's going to be great, then I've got to invite a lot of my competitors there. DAVID: We don't see eye to eye on everything, but I need to have them there, because they're very smart. People are going to come and want to hear from them as well, like what kind of a stupid conference would it be where I'm the only one speaking? That's not a conference, that's like your own personal platform. I was faced with a decision, do I really want to give my competitors a platform? DAVID: I was nervous about it, other people were a lot more nervous about it than I was, they thought I was crazy to be doing that. I thought, this is a worthwhile experiment, and maybe there's some value in being the person who organizes the conference, and does the programming for it. There turned out to be that value, but it was a wonderful experience. It opened up my eyes entirely to the fact that I don't have to make somebody else lose in order for me to win. DAVID: That I can let my guard down, and it actually translated into the way I run events now. People come to an event for the first time, and they're surprised that within about an hour, an hour and a half of the start of the event, people are starting to share stuff that they would not have thought they'd see themselves sharing at the beginning. They're much more transparent about it, and it's just sort of that style that I like to have, it fits with this notion of competitors. DAVID: Recently what struck me, and then I'll shut up for a minute, because I know I'm taking a long time to answer your question. I was listening to the Dan Patrick daily talk radio sports show, and he was talking about interviewing Kobe Bryant one time. They were talking about how do you get yourself up for a game that doesn't really matter? In other words, maybe you're out of the playoffs already, or you know you're going to beat this team, because they're not good. DAVID: What Kobe Bryant said, was at the end of the game, I want my competitor to question why they even got into the sports game. I want them to question why they even became a basketball player, right? I thought, well that's kind of funny, but it's really not the kind of spirit I want as a collaborator. BLAIR: Even when he's playing in a game that they're almost certain to win in, he's still thinking about crushing the spirit of his competitors. DAVID: Right, yeah, what's the point of that? BLAIR: Do you still have a page on your website that lists your competitors? DAVID: I do, right? I do. BLAIR: Am I on there? DAVID: I don't know, I know you don't want to be, so let's just say you're not. BLAIR: Yeah, I think you had me on there, and I called you out, I said, get me off that list. DAVID: Right. BLAIR: I don't know why that is, okay, so you conceived of this idea, this event, and you had a partner in this event, can we name the event? DAVID: Yeah, it's MYOB, Mind Your Own Business. BLAIR: Yeah. DAVID: The how people, were the financial partners and the marketing partners, and I did the programming. BLAIR: That's where you and I first met in 2003. I reached out to you when I started my business somewhere in 2002, and you invited me to speak at this thing. DAVID: Yeah, and look at how much good has come from that, right? BLAIR: Yeah. DAVID: You and I have become friends, we do a podcast together, we share a lot of clients. Here's the biggest thing, I learned so much by having you there. I mean the very first time I heard you speak, I learned so much. It made me such a better advisor, and the same could be said of the other folks, not everybody, but most of the other folks that I invited. It's like, oh wow, it made me a much better advisor by listening to them in that kind of a setting. BLAIR: Let's walk through how somebody can, once they get their head around this idea, how they can put it into practice. First, I can imagine what the objections are, right? When you're talking to somebody about this idea of be more open to your competitors and collaborative with them, what's the first thing that comes up objection wise? DAVID: Well it comes up a lot too, and it's like, "Oh, that's a good idea, but I can't put that on my website, because what if my competitor's see it?" It may be something like our new focus, that's usually not as big an issue, but things like client criteria, or some unique way we have of going about solving problems for clients, or a case study, or something like that. They envision these competitors in the wee hours of the morning sneaking onto their website and furiously copping things down and grabbing screenshots, and then reinventing their own firm, as if they're really doing that. DAVID: That's the objection, I don't want my competitors to see that. I don't want them to copy me. Do you hear that, or do you see it in other ways? I'm curious if it's just my clients. BLAIR: I'm not sure if I hear it a lot, but I sense it a lot, and I've experienced it myself too. My own experience has been, if you're really carving out a path of leadership in something, it means you're constantly, by the reinventing your business, or coming up with new IP, with new ideas, and by the time somebody's adopted something that you've ... Let's call it stolen, stolen something that you've put on your website and made it their own, you should be somewhere else, right? You should be off into the distance. DAVID: Right, and that's part of your practice, part of my practice, part of what we urge clients to do is to reinvent themselves frequently every couple of years maybe. While this may work beautifully for you now, it's not going to be the thing that you're doing down the road, reinventing. Let's talk about the whole positioning thing, how many competitors does Win Without Pitching have? BLAIR: It really depends on how you frame the question. If you look at sales training for creative professionals, I don't actually know of any other organization that frames their value proposition, the discipline in the market, the combination of discipline in the market that way. That would be ridiculous for me to say there's no direct competitor, so that's at the very narrowest, who else says we just do sales training for creative professionals? DAVID: Right. BLAIR: Our real competition is any new business consultant to the creative professions. DAVID: Right. BLAIR: Anybody who's selling sales training. Most sales trainers aren't specific to a market, so anybody in the sales training business, any new business consultant. DAVID: If somebody popped up, let's say you just heard through a client of yours or something, and they said, "Hey, have you seen [inaudible 00:09:14], it looks a lot like yours?" Pretend that you have this conversation with them, and you look at the website. It is the same positioning, sales training for creative professionals, or creative entrepreneurs, what would your reaction be? BLAIR: My reaction would be, I would gird myself for a fight in the most positive sort of way. I love a challenge, if somebody was using that same language, I would just steel myself and whip my team into a frenzy, and run out into the battlefield. DAVID: I'm picturing this movie scene, yelling to this guy. BLAIR: Yeah, Braveheart. DAVID: Right. BLAIR: Somebody would have to be using very specific language, very specific to me. One of the things that I've seen over the last few years, is when I started my business back in 2002, when I was a new business consultant, there were very few new business consultants. Whoever was out there, the Internet was still a relatively new thing, right? Web browsers were about seven or eight years old in 2002. BLAIR: If there was a lot of competitors out there, I wasn't aware of them, I was really aware of two or three. Nowadays there's rarely a week or a two week period that goes by where I'm not made aware of a new business consultant. I made this conscious decision a couple of years ago to just quit thinking about them as competitors, and just to think about them as my future distribution network. BLAIR: I recently put out a call on LinkedIn saying I want to forge a closer relationship with the world's best new business consultants. I know I met a lot of consultants out there who say, "I give your book, the Win Without Pitching Manifesto to all of my clients." What I said in this post on LinkedIn, I had about 30 inquiries from it, is if you're already preaching the principles, and if you're already teaching the Win Without Pitching way, and you're interested in formalizing the relationship, then reach out to me. BLAIR: I had to see somebody else doing that, and somebody else talk about the benefit of it just the way that you're doing it now. DAVID: Yeah. BLAIR: For me to just have this switch in my mind. You've been very good at this, and you've been a very good role model for me in this, in being a generous competitor, and it hasn't been in my nature. I'm the person who loves a fight, so something has shifted in me in the last couple of years, and I look around at the people I know in business, and some people that you and I both compete with. They are such open, generous, sharing people, even though we are fairly direct competitors. DAVID: Right. BLAIR: I've just decided that these are going to be my role models in that front too. Now, I'm mellowing in my old age or something, because something's definitely changed. DAVID: Yeah, it is really interesting to see. I'm doing an event shortly, and I've invited ... You'll be speaking there, it's really important to me that you speak there to address the whole sales training process. I'm just unqualified to even speak to it, but I feel like the people coming need to hear that. Then, I think four of my competitors will be there. They won't have a platform, but I will introduce them, they're coming for free. DAVID: I invited them, and I plan to put in the work. We're going to split up into groups, and we're going to try to apply these positioning principles to the individual firms. These competitors know what they're doing, and so the evil side of somebody might hear that and say, "Well, wouldn't someone just hire one of these." It's like, well that's fine, because in my mind feeling like you have all these competitors is really misunderstanding the fact that it's not just about what you do, but it's about how you do it. DAVID: I have a very specific style, and whenever I try to cross the line and be somebody that I'm not to a client, like more of a coach or something like that, I am doing a disservice to them, and I'm doing a disservice to me. I find it really wonderful to have these other folks who are very good at what they do, who have a more appropriate style for a certain client. When I think about living in a world where I couldn't recommend other options for my clients, it's a little bit sadder to me, because I do want my clients to get help, even if it's not with me. DAVID: Now what's interesting though, is we have different approaches to this when we're not as busy. BLAIR: Yeah. DAVID: We tend to be a little bit less generous when our businesses aren't run well, when we don't have a steady stream of opportunity. That's just another argument of 100 arguments to run your firm well, so that you're not paralyzed by not enough work, or thinner margins, or something like that.   BLAIR: I was going to play devils advocate here a little bit, and push back and say, well it's easy for you to be magnanimous this way, you're the worldwide leader in your field. You've got all the work you want, I think most people from the outside looking in would see that, so it's easy for you to just say, "Well there's plenty for everyone." If you're running an independent creative firm, you've got a dozen people, you're not seen as meaningfully different, do you think the principle still applies? DAVID: No, I don't, and I think the solution there is to have a positioning where it's so much clearer to you and to your prospects where you're a perfect fit. If you haven't nailed that positioning equation yet for your firm, then I think this is a very dangerous thing to do, right? Now you could still be generous in some other ways, like you could be generous in sharing contractors with other agencies, or even some employees. In terms of clients, I think that would be a dangerous thing to do, if you haven't ... DAVID: Well, a couple of things, not just positioning, but also having this lead generation process in place. You and I have talked quite a bit about this, how we have a simplified plan that's driven by discipline, so if you don't have the positioning and lead generation in place, then it's a pretty dangerous thing to be this magnanimous. The way to fix that is not to be selfish, the way to fix this is to fix your positioning and lead generation. BLAIR: Do you find that your generosity towards your competitors is returned? Are you referred business or other similar invitations from these competitors? DAVID: In some cases I am for sure. I think about Tim Williams for instance who I think does really good work. I've sent work his way, he's sent work my way for sure. I think about Carl Sachs, I think about the folks at Newfangled. I think about Philip at the Consulting Pipeline podcast. I think about Drew McClellan, I hate mentioning names, because there's going to be a bunch of names I've left off, but in general yes, absolutely. DAVID: Even at the beginning where they're taken aback by the generosity, they'll soften up over a few years, and discover that it's real. I'm really trying to help them, I'm not trying to hurt them. That started years ago, like you write a new book, or you have a new program, tell all your competitors about it in a gracious, respectful way. Hey, this is where I'm headed, just want to let you know, and oh by the way, here's a copy of the book, hope you're doing well. DAVID: You see an article that's really helpful that would benefit them, you send it to them. I tell you, a big one is speaking engagements. BLAIR: Yeah. DAVID: If I've been on the platform somewhere, and I talk with the program person, I say, "Listen, this was fantastic, I loved this event. I appreciate you inviting me, do you want a couple of suggestions for people who are also would be a really good fit for this?" That's a perfect opportunity to extend that graciousness to one of your competitors. I find that you're not hurting yourself in any way, you're simply helping everybody in the process. DAVID: I've found that to be very effective, and I've had a lot of my competitors do the same for me, where they've introduced me to a speaking opportunity, and it's been very, very much appreciated. BLAIR: A guy I know who does over a million dollars a year in speaking fees said to me, the number one lead source for speaking engagements is other speakers, right? They get approached and say, "Well, I can't do it, but you might want to think of this other person." He said it's important for you to cultivate relationships with these other speakers, and that means you start referring speaking opportunities to them. DAVID: That's interesting. BLAIR: Two weeks later I was invited to speak in Dubai when I was in another part of the world, and I referred to my new friend. DAVID: Yeah, because you didn't want that long travel, yeah, absolutely. BLAIR: Let's talk about some specific ways agency principals can collaborate with their competitors. I think I've got a list here of some things that you've identified. At the top of the list you've got learn how to run your firm from each other. Do you want to unpack ... Oh, I just said the word unpack, do you want to peal that apart? DAVID: That even sounds more pretentious than unpack. BLAIR: Like an orange. DAVID: Let's just say unpack, okay? BLAIR: Yeah. DAVID: Yeah, what's the possible benefit in not helping another principal run their firm well? Hoping that they'll fail? Well, that seems pretty evil, right? The one area where it seems like there's the most benefit for everybody, is to learn how to run your business well. You've learned some principles about key metrics you want to look at, or how to hire the right person, or how to run a meeting better, or how to have the best relationship with your bank, or there's 100 things we could list there. DAVID: Those are the kinds of things that I would put at the top the list, because nobody enters this field with the business management training that would really benefit them. They're all starting from some other skill path, not a role path, and so they come into the business, and they have to learn everything either from somebody that they worked for, and often that's the best place to learn it. DAVID: A great example of a principal that you worked for before you started off on your own, or they learn it from maybe an advisor, like a paid advisor, or maybe they learn it from another principal. That would be the first area I would suggest collaboration, it could be informal or formal. I find that most principals have three or four people that they're friendly with, they can just shoot them an email, or get on the phone and say, "Hey, I'm facing this noncompete situation, what have you learned? Can you introduce me to a lawyer?" Something like that. BLAIR: Oh, that's great, including on here help find good employees. I was thinking about there's an agency principal in Australia you and I both know him. I've done a bunch of work with him. He's told me some stories of when he's had to fire people, they don't say fire in Australia or UK, they sack them, which always sounds extra harsh to us in North America. He's told me stories of he'd bring somebody in who isn't working out, and says, "You're not working out, I'm letting you go, but I think you've got great skills in these other areas, so I've lined up two interviews for you today." DAVID: Wow. BLAIR: Yeah, so he's ruthless when it comes to correcting hiring decisions, but he's very kind in how he goes about it, and he recognizes that everybody's got strengths, and he's got good relationships with his competitors. He's very clear about why he's letting that person go, and why he thinks his competitors should think about bringing that person on, and usually in a different role. DAVID: Right, yeah I think that's great, like if it's for the right reasons, there could be something about the style of this firm that wouldn't be true of another firm. It's not like they're a bad person, they're just not a good fit for this particular role. BLAIR: Is there a line that there's the danger of crossing? The first word I wrote down when you sent me notes on this was collusion. DAVID: Yeah. BLAIR: At some point can you get too close to your competitors? Does it cause some sort of problem, or the perception of problems maybe among clients, or maybe even regulators? DAVID: Yeah, well in the US that would fall under the jurisdiction of the FTC, Federal Trade Commission. Where collusion is very clear, and you can get your hand slapped pretty quickly would be around pricing. BLAIR: Yeah. DAVID: Not so much which opportunities to pursue, although you could get in trouble there, like hey, if I don't pursue this one, can you not pursue that one, that would be collusion. The main area would be on pricing, like how about what's your price on this? There have been some specific lawsuits, the handbook of pricing and ethical guidelines was one example that had to get rewritten, because of a lawsuit as I understand it. DAVID: That strikes me as evil, and I don't think we're talking about that so much. It's more like here's an example, so let's say you're going to respond to an RFP, okay? I know, don't shriek on me here Blair. You're going to respond to an RFP, and you know that another agency has been through an RFP process with them. You might just call them up and say, "Hey, what was that like? Is this even worth it?" Most of the time it's not going to be worth it, but that would not be collusion, that would just be simply sharing public information. BLAIR: I hadn't heard the story around pricing, I was doing a talk on pricing about 18 months ago to an industry group slightly tangential to the creative professions. There was a lawyer in the room, and he kept warning about collusion, he did not like the idea that the competitors were in the same room talking about pricing. I thought he was being ridiculous. DAVID: I think he was being ridiculous, where it can be collusion, is if we're talking about a specific instance. It's not about for instance, the labor law allows you to band together against a common enemy so to speak, that's not collusion. Collusion would be a specific instance related to pricing usually. BLAIR: Gotcha, all right, so let's say somebody's listening to this, and they're warming up to the idea of being more collaborative with their competitors, but they don't currently have relationships with those competitors. How do they go about it? Where do they find these people? Maybe they're so highly specialized, or poorly specialized, they're just not sure who their competitors are, how do you go about it? DAVID: Yeah, if you're poorly positioned, most of your competitors are the ones in your locale geographically. You know those, because they're there, and you share employees, and so on. If you're well-positioned, your competitors are more known to you, even though they're not close to you geographically. These are the names that keep coming up when you are competing for work and so on. DAVID: That would be one way to identify them, obviously Google's our friend here. Another way to identify them, is going to trade conferences. Trade conferences are almost always vertical, or they could be more demographic oriented conferences, horizontal conferences, where you keep seeing the same people there, not so much exhibiting, but you just see them there, they're speaking and so on. DAVID: You notice that these are the folks whose articles are appearing in the same places that yours are, so just connecting with them through your contacts, within a particular focus would be a good way to connect with them. Another might be a common mentor, I get this question a lot, like do you know of somebody that's doing this that I could talk with and so on? I don't connect people who aren't clients of mine, but if they are clients of mine, then I'll try to find somebody to connect them with. DAVID: I actually put round tables together, which are specific attempts to do this, that's not really the subject of this podcast, but that's an example of what a paid advisor might do. Sometimes a common mentor, so like if you're getting advice from an older woman or gentleman in your town who's coaching you on running a good creative business, because they've been in that field, and they've slowed down a little bit, they usually are going to know somebody else that would be a good fit for you. DAVID: I am talking about cooperating with folks who are definitely otherwise competitors of yours. I'm not talking about people that you might meet in a YEO, or YO kind of a context, I'm talking about people that you'd compete with normally. BLAIR: Okay, are there instances where this can go wrong? Obviously, I wouldn't ask you to name names, but I'm sure there has to be situations where you started being magnanimous towards a competitor, and then at some point realized this is a one-way relationship where this person is taking and not giving, and your idea about them ended up changing. DAVID: For sure, yeah, I can think of an attorney actually in New York that I was referring lots of work too, and it turned out that not only did they never share generously, but they kept asking, kept asking, and it became annoying. I just basically shut them down, they still do good work, so I haven't done anything to hurt them at all. If somebody is actually out to hurt me, then we come into the Kobe Bryant crush them phase, which is actually the evil side of this, and it's kind of fun. DAVID: You have to do that once or twice a year, right? Otherwise, I was just wondering if people are still listening at this point. Otherwise, it just doesn't happen, because who are the people that are going to hear the worst things about me as an advisor? It's going to be my competitors, right? If my competitors hear about me, but their experience in working with me is not at all matching, they're going to pause the conversation and say, even just to themselves, you must not be a good client, because that's not how I've experienced him. There's so many advantages here to make this work well. BLAIR: Yeah, it strikes me as this is going sound a bit corny, it's a bit like love though, right? The more you give, the more you get, and the more open you are, and more gracious you are with your competitors, the more likely you are to get back. Even if it's not a full reciprocation, there's still that feeling of you helping others, of yourself worth, etc., it's got to escalate. DAVID: Yeah, for sure, and there are many times when somebody does great work, and you've sent them lots of work, but they're not sending you work. That's okay, because they might be at a different place on the referral chain. In other words, by the time they hear of a client, they're past their need for you, whatever you happen to do along that chain. DAVID: It can't be a tit-for-tat thing, it's really just about surrounding yourself with people who are generous in life in many ways. I find that, that's a very satisfying experience, almost regardless of the outcome. BLAIR: Well, you've convinced me, I'm going to start thinking about maybe referring a piece of business to you. DAVID: Yeah, it's about damn time honestly. BLAIR: Thanks David, this has been great. DAVID: Bye Blair.

20 Jun 201827min