Latest / MaxValue Podcast / The Way of the True Leader Ft. Bill Reeb

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The Way of the True Leader Ft. Bill Reeb · MaxValue Podcast

0:00
SPEAKER_01: There's no way that you can make a right decision too late.
0:03
SPEAKER_01: Address you?
0:04
SPEAKER_00: Stop trying to address someone else because no one can fix you.
0:07
SPEAKER_00: Only you can fix you.
0:09
SPEAKER_00: Not really knowing all the answers, but knowing the right question.
0:12
SPEAKER_00: So when you tell me you don't have any talent, I'm telling you you're looking in the wrong place.
0:16
SPEAKER_01: It is a hard thing to deter yourself into getting that introspection, being able to manage yourself and then communicate that to your leaders.
0:25
SPEAKER_00: You have to do it all yourself.
0:27
SPEAKER_00: If all the work's gonna funnel from top to you, if you are the place where it all settles, then guess what?
0:33
SPEAKER_00: You're gonna have a work-life balance, not because the profession did it to you, not because the firm did it to you, but because you do it to yourself.
0:54
SPEAKER_01: Welcome to Max Value, the show for business owners and their trusted advisors who are on a mission to maximize their value with business valuation, exit planning, strategy, and maybe some professional advice.
1:05
SPEAKER_01: I'm your host, Ben Towne.
1:07
SPEAKER_01: Today we are joined by our guest, Bill Reeb, co-founder of Succession Institute LLC.
1:12
SPEAKER_01: Bill has his stellar career in helping professional service firms from mom and pop sized to Fortune 100-sized firms in the areas of strategy, leadership, and change management.
1:24
SPEAKER_01: Bill is an award-winning speaker and internationally published author of several books, including Securing the Future and The Overachiever's Guide to Getting Unstuck.
1:32
SPEAKER_01: From 2019 to 2020, he was the chair of the 400,000-member international organization AI CPA, where he helped set the priorities for this incoming generation of the accounting profession.
1:45
SPEAKER_01: When he's not on the road serving clients in the legal and accounting fields, he's on the slopes as a skier on the link swinging club, or in the dojo as a senior black belt instructor of, let me see if I can get this right, Da Wu Shuanhua.
2:00
SPEAKER_01: Okay, Bill.
2:01
SPEAKER_01: I know you're very, very shy, so I did all that introduction.
2:04
SPEAKER_01: Finally let you talk now.
2:06
SPEAKER_01: Welcome to the show.
2:07
SPEAKER_00: Thanks for having me, Ben.
2:08
SPEAKER_00: It's always a pleasure to see it's always a pleasure to see you.
2:12
SPEAKER_01: Well, thank you.
2:13
SPEAKER_01: Did I miss anything?
2:14
SPEAKER_01: I try to be comprehensive.
2:16
SPEAKER_00: No, you didn't miss anything.
2:18
SPEAKER_00: The last thing I care about is somebody going over my credentials in my past.
2:23
SPEAKER_00: I I will usually irritate someone plenty on my own without any credentials just to start.
2:29
SPEAKER_00: Well, the interesting part is the name of the school, it's been named multiple times, but the name of the school now is uh it's the way of infinite transformation.
2:39
SPEAKER_00: So as a martial artist, it is about transforming yourself every single day and dealing with your weaknesses and improving your strengths and finding a better way to be better than you are.
2:53
SPEAKER_00: So it's fitting of all of the stuff that you and I tend to talk about on a regular basis.
3:00
SPEAKER_01: These days, professional service firms are under a lot of pressure.
3:03
SPEAKER_01: Uh, there really aren't enough new entrants into the pipeline of talent, uh, certainly not enough to satisfy demand uh on the firms.
3:15
SPEAKER_01: And uh it really leaves a firm runner oftentimes in a position where they don't really have much of a succession or exit plan.
3:23
SPEAKER_01: So, what are some of the challenges you're seeing with these types of firms where a key partner is nearing retirement and maybe is looking around but doesn't really see a successor?
3:34
SPEAKER_00: Well, Ben, in that short comment of yours, you introduced like 42 different topics.
3:40
SPEAKER_00: So I will try to go back and address at least one or two that I can remember.
3:46
SPEAKER_00: The first thing is that yes, there is discussion about how we have a pipeline problem.
3:52
SPEAKER_00: Yes.
3:53
SPEAKER_00: We don't.
3:54
SPEAKER_00: Okay, so let me help you with that.
3:56
SPEAKER_00: Okay.
3:56
SPEAKER_00: Um, and I'm not telling you that anybody in the world agrees with me.
4:00
SPEAKER_00: I'm just telling you.
4:01
SPEAKER_00: Nobody does.
4:02
SPEAKER_00: Nobody does.
4:05
SPEAKER_00: But first off, when you start looking at firms that are truly struggling with talent, it's because they're not going global.
4:12
SPEAKER_00: When there's talent, lots of talent, lots of amazing people global.
4:16
SPEAKER_00: So when you tell me you don't have any talent, I'm telling you you're looking in the wrong place.
4:20
SPEAKER_00: So if I've got somebody that's still doing exactly what they did 40 years ago to find talent, yes, they have a talent problem.
4:26
SPEAKER_00: The second thing is, you know, more and more and more our software is getting more self-sufficient, our software is doing more.
4:34
SPEAKER_00: AI is gonna help it do even more in the next three or four years.
4:36
SPEAKER_00: I will tell you that that will also change dramatically the supply-demand chain because we're gonna find that as it does more of the base root stuff, as people are going global, then all of a sudden the pressure on hiring starts going away.
4:50
SPEAKER_00: And that that will evolve to almost the other way.
4:54
SPEAKER_00: It wouldn't surprise me at all four years ago that we had an excess in our profession.
4:59
SPEAKER_00: And it won't be a giant excess, but for the first time in probably 20-something years, I'll have one job and I'll have three people that want it rather than I'll have one job and I have uh no one that wants it.
5:10
SPEAKER_00: So so the point being is that that we don't really have the shortage that we talk about.
5:18
SPEAKER_00: We have the lack of looking at options.
5:22
SPEAKER_00: And we also hold on to bad clients, which creates a shortage, yes, because we should let them go.
5:28
SPEAKER_00: We also don't push work down, which means that we always have a shortage in every firm at the top levels, like partner, senior manager, and manager.
5:39
SPEAKER_00: Yes, they're gonna have a shortage.
5:40
SPEAKER_00: Why?
5:41
SPEAKER_00: Because they're doing all the work, and then when they run out of time, they they hand it down to somebody who they haven't trained and they go, wow, what's the point of handing it down?
5:48
SPEAKER_00: I might as well do it myself.
5:50
SPEAKER_00: That's not a shortage of talent.
5:51
SPEAKER_00: That is a shortage of management, and that's a shortage of holding people accountable to doing the job that they should, which is constantly push work down to the lowest possible levels.
6:02
SPEAKER_00: Over and over and over, we like to blame all of our problems.
6:05
SPEAKER_00: Like, we just have a compressed uh work schedule.
6:09
SPEAKER_00: No, we don't.
6:10
SPEAKER_00: I mean, go into any business.
6:12
SPEAKER_00: I was in retail for many years.
6:13
SPEAKER_00: You don't think they've got a compressed schedule?
6:15
SPEAKER_00: They got to make all their money in like two months.
6:17
SPEAKER_00: We at least can spread it over five or six or seven, whether you're an audit or tax or whatever.
6:22
SPEAKER_00: We don't have problems.
6:24
SPEAKER_00: We make excuses.
6:25
SPEAKER_00: You want to deal with a compressed schedule, then stop telling all your clients you get their tax return out on April 15th, because you can't.
6:34
SPEAKER_00: So just start setting them up to do them all year long.
6:37
SPEAKER_00: You won't have a compressed schedule.
6:39
SPEAKER_00: We do this to ourselves, but we blame it on.
6:42
SPEAKER_00: Well, I just can't find anybody.
6:43
SPEAKER_00: No, you're not looking.
6:45
SPEAKER_00: I well, I'm not gonna look there.
6:47
SPEAKER_00: Okay, then you have a problem, but we don't have a problem.
6:52
SPEAKER_00: And so constantly as we go through this dealing with organizations, we get stuck and we blame everybody else for those problems.
7:02
SPEAKER_00: Now, I don't know that anyone's left on this podcast, but if they are, there is more to share.
7:07
SPEAKER_00: But I will just start that as an opening volley and it won't get any better.
7:11
SPEAKER_01: You know, one of the things that uh you and I have talked about before is exactly this issue.
7:17
SPEAKER_01: And I mean, I guess I'm framing it the wrong way, because I mean I've I've quoted you saying, if you you probably don't even remember this, but I suggest to all of my firm clients that they consider outsourcing, period.
7:30
SPEAKER_01: And the I've put that in my ebook, Smarter Valuation Outsourcing, which I'll link to in the show notes, of course.
7:37
SPEAKER_01: But at the end of the day, it's really about the limitation of vision when people aren't looking at the various real resources that are that people are doing.
7:52
SPEAKER_01: In fact, I'm putting together a webinar for uh one of the valuation platforms uh talking about this.
7:58
SPEAKER_01: And you know, I think it was I think it was Inside Public Accounting uh came out with some stats like 47% of all accounting firms are using some form of offshore labor.
8:10
SPEAKER_01: And you know, the number of them who are talking about it is this much.
8:14
SPEAKER_01: Uh I'm one of them, absolutely.
8:16
SPEAKER_01: I'm kind of the you know, the the biggest proponent, but at the same time, still, I don't know.
8:21
SPEAKER_01: Uh I think I think there's this this uh still a bit of a xenophobia about it, even though everybody's kind of forced to do it maybe by you know and not maybe not doing it right.
8:33
SPEAKER_01: I don't know.
8:34
SPEAKER_00: We've got firms everywhere, and we've got firms in the the heart, the the mid-heart of the United States, which is the most conservative generally, that say our clients won't tolerate it.
8:46
SPEAKER_00: Has never been true.
8:47
SPEAKER_00: Everybody has, again, an excuse for not doing the job.
8:51
SPEAKER_00: So we do find clients tolerate it, and they're quite frankly glad that they can get better service because it gets turned around better and they get better, uh, they they have a better relationship.
9:02
SPEAKER_00: This doesn't hurt us at all.
9:03
SPEAKER_00: And it's really an international workforce because when you say offshore, when you say outsourcing, outsourcing could be, yes, it's off of our shore.
9:12
SPEAKER_00: So, bottom line is I'd like to I call it more and more, and and quite frankly, most of our firms start calling it international workforce, but I've got firms that are five and ten million dollars that they have more people on another continent than in the US.
9:25
SPEAKER_00: So even small firms might have 50 people, 30 of which are offshore and 20 of which are local.
9:34
SPEAKER_00: So it's not just the biggest firms.
9:36
SPEAKER_00: The biggest firms have done it for a long time, especially the big four.
9:39
SPEAKER_00: They've been doing it for 25 years.
9:41
SPEAKER_00: But the point being is as firms start doing that, they take the pressure off their people.
9:46
SPEAKER_00: They take all of a sudden, and by the way, just to tell you, every manager and every firm we've ever worked with says, I don't want to work with offshore.
9:52
SPEAKER_00: I'm just gonna work with my local people and whatever.
9:55
SPEAKER_00: After they do it for four or five months, they're going, I don't know what you were concerned about.
9:58
SPEAKER_00: This works great.
9:59
SPEAKER_00: So I mean, they turn that around.
10:01
SPEAKER_00: It wasn't even their problem at the beginning, but they were the ones saying, not here.
10:04
SPEAKER_00: And they're the first ones that say, Well, my God, my quality of life, my work-life balance is changing.
10:09
SPEAKER_00: Why?
10:10
SPEAKER_00: Because you let it.
10:11
SPEAKER_00: I had a conversation today with one of our firms saying, oh, the work-life balance is over the roof.
10:15
SPEAKER_00: I mean, it's way out of whack.
10:17
SPEAKER_00: That's because the people that are complaining about it won't delegate any work and they won't train anybody.
10:22
SPEAKER_00: Well, guess what that does?
10:23
SPEAKER_00: If you have to do it all yourself and all the work's gonna funnel from top to you, you are the place where it all settles.
10:30
SPEAKER_00: Then guess what?
10:31
SPEAKER_00: You're gonna have a work-life balance, not because the profession did it to you, not because the firm did it to you, but because you do it to yourself.
10:40
SPEAKER_00: Now, I'm gonna give you this story because I think it's such a great story, and you know I always tell stories.
10:45
SPEAKER_00: But anyway, one of our firms, very small firm, several million dollars, they were talking and they said, uh I was in there, we were in there doing a retreat, and one of the people that that managed marketing, she came up to me and she said, Hey, I just wanted to talk to you and get your opinion as to whether I should go part-time or not.
11:01
SPEAKER_00: And I said, Well, what's going on?
11:03
SPEAKER_00: She said, Well, I just can't get all the work done, and I feel overwhelmed all the time.
11:07
SPEAKER_00: And so I said to her, I said, Well, is the managing partner yelling you for not getting the work done?
11:13
SPEAKER_00: Because if he is, it was a he, then I'll go talk to him.
11:17
SPEAKER_00: He said, Oh, she said, No, no, he's really kind.
11:19
SPEAKER_00: He says, There's more than you can do.
11:21
SPEAKER_00: Just do what you can.
11:22
SPEAKER_00: You know, just handle it as it makes sense to you.
11:24
SPEAKER_00: I said, So you're not getting pressure.
11:26
SPEAKER_00: Where's the pressure coming from?
11:27
SPEAKER_00: She said, Me.
11:29
SPEAKER_00: I don't like having stuff in my inbox.
11:31
SPEAKER_00: I said, okay.
11:32
SPEAKER_00: So what is your solution?
11:34
SPEAKER_00: She said, I'm thinking about going part-time.
11:36
SPEAKER_00: I said, Do you think that inbox is getting any smaller if you go part-time?
11:39
SPEAKER_00: As a matter of fact, you only have half the time to work on it.
11:42
SPEAKER_00: It's going to get bigger.
11:43
SPEAKER_00: And she looked at me and she said, You're right.
11:45
SPEAKER_00: I should quit.
11:46
SPEAKER_00: I said, Well, I didn't say that at all.
11:50
SPEAKER_00: I said, Stop, stop right now.
11:53
SPEAKER_00: I said, So tell me about your last job.
11:55
SPEAKER_00: She said, Well, my husband had a really good job and I really didn't need to work, but I wanted to work.
12:01
SPEAKER_00: So I worked with my church and I was doing the bookkeeping and stuff like that.
12:05
SPEAKER_00: And I said, Well, how did I go?
12:06
SPEAKER_00: She said, I loved it.
12:07
SPEAKER_00: I loved it.
12:08
SPEAKER_00: And I said, So what happened?
12:09
SPEAKER_00: She said, Well, they kept giving me more stuff.
12:12
SPEAKER_00: I said, Well, we always give more stuff to people who are good.
12:15
SPEAKER_00: So why is that bad?
12:16
SPEAKER_00: She said, Well, I liked it.
12:18
SPEAKER_00: I like doing more stuff.
12:19
SPEAKER_00: I like having more involvement.
12:21
SPEAKER_00: I said, So where'd that end up?
12:22
SPEAKER_00: She said, Well, I quit.
12:23
SPEAKER_00: It was just too much work.
12:24
SPEAKER_00: I couldn't handle, I couldn't handle the fact that I couldn't do it all.
12:27
SPEAKER_00: I said, so what you're telling me is no matter where you go, you're going to be good.
12:33
SPEAKER_00: People are going to give you more work.
12:35
SPEAKER_00: You're going to quit because you can't manage looking at your workload and learn how to live with the fact that you can only do so much.
12:45
SPEAKER_00: Do the best you can.
12:46
SPEAKER_00: Go home, forget about it.
12:47
SPEAKER_00: You're telling me that the person you're running from is you.
12:51
SPEAKER_00: Am I correct on that?
12:52
SPEAKER_00: And she said, Yeah, you kind of are.
12:54
SPEAKER_00: So my point is we we're good at blaming everyone else for every problem we have.
12:59
SPEAKER_00: When in fact, when you really dig down, it's because I didn't train somebody and I don't want to.
13:05
SPEAKER_00: I didn't hand them the work because it was easier to do it myself.
13:08
SPEAKER_00: And then we blame something else for whatever problem we're having.
13:12
SPEAKER_01: Well, and that person, you know, that person actually has the traditional, you know, what's your, you know, my my biggest strength is my greatest weakness type interview answer, right?
13:23
SPEAKER_01: Because really, conscientious as hell, dedicated, all the things, wonderful learner, wonderful performer, until she blows herself out.
13:32
SPEAKER_01: Right.
13:32
SPEAKER_01: I mean, she just absolutely and and by the way, I think that applies to a heck of a lot of us uh CPAs and and professional service providers, where yes, of course, we always say yes because we want to be helpful and we're you know servants to our to our clients, I mean, in the best way.
13:50
SPEAKER_01: And it's it's it is a hard thing to to uh mature yourself into getting that you know introspection and getting to you know being able to manage yourself and then communicate that to your leaders, uh, who you I mean, sounds like in this case she liked and trusted the person.
14:08
SPEAKER_01: So maybe she could have just uh talked about it and talked it through and had had instead of having to I'm glad she did have the discussion with you, but instead of having to have the discussion with somebody outside, maybe start with the discussion inside the firm first, so we don't just say I'm gonna quit.
14:26
SPEAKER_00: But she did have it with him, and she did say, This work is overwhelming.
14:31
SPEAKER_00: And his response was look, there's always gonna be stuff in your inbox.
14:35
SPEAKER_00: Don't worry about it, just do what you can.
14:37
SPEAKER_00: Prioritize it, pick what you want.
14:39
SPEAKER_00: You're getting no pressure from me.
14:41
SPEAKER_00: So the point is, the pressure was never from him, it was always from her.
14:46
SPEAKER_00: And again, over and over, we find the pressure that we're struggling with.
14:52
SPEAKER_00: We want to blame it on some uncontrollable universe that we live in, that this is just the plight I have to face.
15:00
SPEAKER_00: And we always play a role in wherever we are.
15:04
SPEAKER_00: I can tell you, as a workaholic, I've been a workaholic all my life, but I've at least gotten to the point where I recognize I do it because I want to.
15:12
SPEAKER_00: Because when I decide I've had enough, I simply stop and and I go do something for a week or two, and then I come back and I'm I miss it.
15:21
SPEAKER_00: I want to come back to work.
15:23
SPEAKER_00: But blaming something else doesn't ever let you face the reality that this is you.
15:31
SPEAKER_00: And if you want to get happier, then address you.
15:35
SPEAKER_00: Stop trying to address someone else because no one can fix you.
15:39
SPEAKER_00: Only you can fix you.
15:42
SPEAKER_00: Right.
15:42
SPEAKER_00: If you recognize that it's something you want to fix.
15:45
SPEAKER_00: Absolutely.
15:45
SPEAKER_00: If you want to fix it.
15:47
SPEAKER_00: There are lots of people that love working and they'll work 3,000 hours every year.
15:50
SPEAKER_00: I we had a we had a client that said to us once, uh, called him, had an interview on the phone, and I was talking to him and I was asking a bunch of questions, and he said, Yeah, we need your help.
16:01
SPEAKER_00: I said, So what's the problem?
16:02
SPEAKER_00: He said, Well, we've got all these issues.
16:03
SPEAKER_00: I said, fine.
16:04
SPEAKER_00: All right.
16:05
SPEAKER_00: So as I went through all the questions, he I finally just summarized and said, I don't see where you have a problem.
16:10
SPEAKER_00: I said, You're making good money.
16:12
SPEAKER_00: It sounds like you really do a good job of of managing the workload, all that kind of stuff.
16:18
SPEAKER_00: He said, Yeah.
16:19
SPEAKER_00: And it dawned on me because he said, but I'm working too hard.
16:22
SPEAKER_00: And I said, Okay, so when you say that, what do you mean?
16:25
SPEAKER_00: He said, Well, last year I I worked 3,500 hours.
16:31
SPEAKER_00: And I said, That's a problem.
16:33
SPEAKER_00: You should have led with that one, okay.
16:35
SPEAKER_00: You led with all this other stuff about financials and all the stuff and the number of people, etc.
16:40
SPEAKER_00: But that's one that you got to stop.
16:41
SPEAKER_00: He said, but not everybody does that.
16:43
SPEAKER_00: He said, My partner, he doesn't work nearly as much as me.
16:45
SPEAKER_00: I said, So how much does he work?
16:47
SPEAKER_00: And he said, Well, last year was 3,200.
16:49
SPEAKER_00: And I said, You're both sick, okay?
16:52
SPEAKER_00: Just to put it in perspective, you're both sick.
16:54
SPEAKER_00: But here's the problem: 3,500 isn't enough.
16:56
SPEAKER_00: He said, No, I said that wrong.
16:58
SPEAKER_00: I didn't work 3,500.
16:59
SPEAKER_00: I build 3,500.
17:01
SPEAKER_00: I actually worked more.
17:02
SPEAKER_00: I said, okay.
17:04
SPEAKER_00: So if you want to do the job of three partners, then you are gonna have a problem because you need three partners, and you're doing it as one, and you will burn yourself out.
17:15
SPEAKER_00: But that's you.
17:16
SPEAKER_00: You're not letting go, you're not pushing work down, you're not hiring enough people, you're not training them.
17:21
SPEAKER_00: The answers are always there.
17:24
SPEAKER_00: It's just as we look at them, we don't want it to be us.
17:28
SPEAKER_00: We want it to be somebody else.
17:32
SPEAKER_01: Lots lots of things are rattling around in my mind.
17:34
SPEAKER_01: But I I bet one of the one of the problems that that pair of partners had was looking around and seeing that there isn't that natural successor and seeing that there isn't a an exit plan that they can really sink their teeth into for probably for some very good reasons, I'd imagine.
17:53
SPEAKER_00: Yeah, not really.
17:55
SPEAKER_00: So, you know, people say to me all the time, they say, you know, the problem is I've got these young people and they're not leaders.
18:02
SPEAKER_00: And I said, So who is the leader?
18:04
SPEAKER_00: Well, I am.
18:06
SPEAKER_00: What have you done to develop them?
18:08
SPEAKER_00: Well, nothing.
18:09
SPEAKER_00: They need to just develop themselves like I did.
18:11
SPEAKER_00: I said, okay.
18:13
SPEAKER_00: So again, the reason why we have a problem is because of you.
18:18
SPEAKER_00: You're not developing people to replace you.
18:20
SPEAKER_00: You're developing people to be your assistant and to be your gopher.
18:26
SPEAKER_00: But I said, you're not developing anybody because what they want is they want to squeeze all the money out to pay themselves.
18:33
SPEAKER_00: The fact is that it costs more money to actually train and develop people and then put them in positions where they have a chance to fail and then teach them what they fail.
18:41
SPEAKER_00: That costs money.
18:43
SPEAKER_00: But we have so many people that sit there and say, Well, I have a 45% margin.
18:48
SPEAKER_00: You have a if somebody says that to me, now, if they're really small, that's okay.
18:52
SPEAKER_00: 40%, it could be 60% because they don't have but two or three people.
18:55
SPEAKER_00: But you start talking about margin at 45%.
18:58
SPEAKER_00: What you're telling me is you're taking all the money out yourself and you're not putting it back in the firm.
19:04
SPEAKER_00: And then you're blaming the people for not stepping up when in fact you are misallocating your resources.
19:12
SPEAKER_01: Right.
19:13
SPEAKER_01: Absolutely.
19:13
SPEAKER_01: Well, so it means that last year they had 45%.
19:17
SPEAKER_01: God knows what they're gonna have this next year when everybody quits.
19:20
SPEAKER_01: Uh because they're building in a risk factor, right?
19:24
SPEAKER_01: That's right.
19:25
SPEAKER_00: They're actually creating greater risk every day.
19:27
SPEAKER_00: That's exactly right.
19:28
SPEAKER_00: That then makes them work more hours to make up for it.
19:32
SPEAKER_01: Right.
19:32
SPEAKER_01: And well, and the more hours you work, the worse leader you are.
19:35
SPEAKER_01: I mean, really, because you don't have any time for it.
19:37
SPEAKER_01: Uh, I mean, you've you've used up your time for it.
19:40
SPEAKER_01: I know, I know the no, you know, how how we say it is just as important as what we say.
19:43
SPEAKER_01: Uh, but yeah, they're using the time to pour into billable hours, and some of those hours apparently they can't, they they're not even able to bill instead of pouring those hours or some of them into leadership and management such that they can focus on those right things uh at the right time.
20:02
SPEAKER_00: Well, but who wants to be you as a leader if what you are is somebody nobody wants to be?
20:08
SPEAKER_00: So don't don't sit there and say, you know, nobody wants to be a partner.
20:13
SPEAKER_00: Who's the model?
20:14
SPEAKER_00: Yes, nobody wants to be you.
20:16
SPEAKER_00: That's exactly right.
20:17
SPEAKER_00: Now, sometimes we'll have a partner that really just loves to work.
20:21
SPEAKER_00: Then what we need to do is clarify this is not what it takes to be a partner.
20:25
SPEAKER_00: This is what it takes to be a partner.
20:27
SPEAKER_00: Don't get caught up.
20:28
SPEAKER_00: This is a person that's got no life and they like doing it.
20:31
SPEAKER_00: You don't ever have to be there.
20:33
SPEAKER_00: So we have to allow for those differences and make it clear to people.
20:37
SPEAKER_00: But again, over and over and over, when you look at problems anybody's having, all the success they're having is because of them.
20:46
SPEAKER_00: And all the failures they're having is because of them.
20:50
SPEAKER_00: So it's the same place.
20:51
SPEAKER_00: So whatever you're doing right, congratulations.
20:54
SPEAKER_00: But whatever you're running up against, you didn't hire enough people.
20:58
SPEAKER_00: When you hired them, you didn't train them.
20:59
SPEAKER_00: And by the way, here's one of my favorites.
21:02
SPEAKER_00: I give them the work, they don't know how to do it.
21:04
SPEAKER_00: So then I have to redo it anyway, so I might as well not give it to them.
21:07
SPEAKER_00: Okay.
21:08
SPEAKER_00: Then do that every year for 10 years and tell me what your life will look like then.
21:13
SPEAKER_00: Because if you're working 3,000 hours now, you will be working 4,000 hours then.
21:19
SPEAKER_00: Because that's the only thing you're building, is that you've got to do it yourself.
21:24
SPEAKER_00: I have other people say, but I could hand it down to somebody, it'll take them 45 minutes.
21:30
SPEAKER_00: It'll take me 15 minutes.
21:32
SPEAKER_00: Why would I give it to them?
21:33
SPEAKER_00: I have to spend 15 minutes training.
21:35
SPEAKER_00: Because I'm building a stronger bench so that I can hand them more work so that I can take it off my plate.
21:41
SPEAKER_00: We make the wrong decision.
21:43
SPEAKER_00: My favorite phrase is we worry way too much about efficiency and not enough about effectiveness.
21:50
SPEAKER_00: Effectiveness means I'm investing in the right structure to move us in the direction we want to go.
21:56
SPEAKER_00: Rarely do we have a succession problem.
21:59
SPEAKER_00: When we walk Into most firms, let's say they have five partners and they've got two senior partners getting ready to retire.
22:05
SPEAKER_00: So they got three left.
22:07
SPEAKER_00: They might be a five million dollar firm.
22:09
SPEAKER_00: They don't have a partner problem.
22:11
SPEAKER_00: There's easily three partners should be able to manage a million and a half to two million each.
22:15
SPEAKER_00: So if that's the case, they got plenty of partners to run five or six million dollars.
22:19
SPEAKER_00: What they have is they don't have a leverage problem.
22:22
SPEAKER_00: The people at the top carry too much of the workload.
22:25
SPEAKER_00: So they have to find partners because the partners are the workhorses, which they're not supposed to be.
22:31
SPEAKER_00: They're supposed to be the client relationship people.
22:33
SPEAKER_00: So if you're not going to do your job, again, don't blame someone else for where you're ending up.
22:40
SPEAKER_00: Do your job.
22:43
SPEAKER_01: They're doing somebody else's job, not their job as a partner.
22:46
SPEAKER_01: And I would imagine that it ends up creating a situation where that's not a sellable firm because frankly, they haven't built a firm.
22:54
SPEAKER_01: Let's just say that right off the bat.
22:56
SPEAKER_01: Um and you know, it kind of makes me think of something.
23:02
SPEAKER_01: The when you brought up the example of, you know, kind of a three to one, you know, the it'll take the staff three times as long as it'll take me, and then I have to go you use that one, you know, 15 minutes anyway to train them.
23:13
SPEAKER_01: Like I think we must be doing different math or something, because accountants aren't good at that math.
23:21
SPEAKER_01: Uh, or at least not intrinsically.
23:23
SPEAKER_01: We all have to learn it.
23:24
SPEAKER_01: Uh, because to me, I'm I my reaction was, yeah, that's take that every single day.
23:30
SPEAKER_01: I don't want to do that task ever again.
23:33
SPEAKER_00: I use a phrase all the time.
23:35
SPEAKER_00: As a leader, your first job every day isn't to do the work on your plate.
23:40
SPEAKER_00: Your first job on your day, on your the first job you have every day is to load everyone up with all the work they can do to move projects forward.
23:50
SPEAKER_00: When you start thinking that way, then all of a sudden when somebody needs to come in and ask you a question, you're thinking about, wow, if I can answer the question and get them moving, that means that project's gonna continue to move while I'm doing something else.
24:02
SPEAKER_00: That's how you create leverage.
24:03
SPEAKER_00: But we have so many people who say, oh my God, I'm bothered all day.
24:06
SPEAKER_00: I can't get my work done.
24:07
SPEAKER_00: Your work is not important.
24:09
SPEAKER_00: And what happens as your firm gets bigger and bigger, what you contribute as a worker is not important.
24:16
SPEAKER_00: If you're a million-dollar firm, sure your work is important because you are most of staff and you are most of the heavy lifting.
24:24
SPEAKER_00: But if you're going to get much bigger than that, then you have to start thinking, what do I need to do every day to get other people moving?
24:32
SPEAKER_00: And the average partner, we tell you, should bill about a thousand hours.
24:35
SPEAKER_00: So when I've got partners billing 1,400, 15,000, 1,600 hours, they're working like managers.
24:40
SPEAKER_00: And that means the odds are very high, a bunch of their work is manager or senior or supervisor level work.
24:47
SPEAKER_00: And guess what?
24:48
SPEAKER_00: They're not building anything.
24:49
SPEAKER_00: And when they get ready to sell it, that's a problem.
24:52
SPEAKER_00: Now, let me throw in a comment about selling.
24:54
SPEAKER_00: Part of the problem with all the stuff that's going on with um private equity and the big firms buying bigger firms and all this kind of stuff is that the market for small firms has gotten softer.
25:05
SPEAKER_00: And there are firms out there that are two, three, four million dollars that can't find a buyer.
25:09
SPEAKER_00: So the idea that you simply are building something that somebody's gonna want, if you walked up and said to me on my and all of our firms, and you said, I got a$2 million business.
25:19
SPEAKER_00: And by the way, the two partners that do the bulk of the work, they want to retire.
25:23
SPEAKER_00: I would tell you we have zero interest in that.
25:25
SPEAKER_00: We don't have trouble finding clients.
25:27
SPEAKER_00: We don't have trouble finding work.
25:29
SPEAKER_00: And guess what?
25:29
SPEAKER_00: In our community, we're gonna get those clients anyway, because once you go, they're gonna come to us anyway.
25:34
SPEAKER_00: What we want is a structure and a foundation where people are held accountable, they've been taught, they have different levels of training, so we push work down.
25:42
SPEAKER_00: And and holding on to a bunch of marginal clients, we won't even pay for them anyway, because every deal we do is on retention.
25:49
SPEAKER_00: So if you come in with a bunch of small clients, the first thing we're gonna say is, by the way, it's not a$300 tax bill, it's a$1,000, it's a$1,500 tax bill.
25:57
SPEAKER_00: Well, 80% of those people run off and go into it.
25:59
SPEAKER_00: Fine.
26:00
SPEAKER_00: The point is you were holding on to something because you thought it was valuable.
26:04
SPEAKER_00: Nobody else is gonna see it's valuable.
26:06
SPEAKER_01: You know, it is funny as a valuation guy.
26:09
SPEAKER_01: Unfortunately, we see we see a similar situation all the time.
26:14
SPEAKER_01: And, you know, even more, you know, we'll say, especially with somebody who is doing too much of the work themselves, look, you are very valuable as a human being, as a person, as a producer of work.
26:25
SPEAKER_01: Your company is not valuable, however.
26:28
SPEAKER_01: So maybe the grand total of value at this level is the same, but you take up most of it rather than having this transferable bit that you could actually uh sell to somebody.
26:38
SPEAKER_01: Now, you you had mentioned um you know the the current trends of private equity in particular coming into uh accounting and professional services space.
26:49
SPEAKER_01: Uh do you have any predictions about what this will do to the profession in you know over time?
26:56
SPEAKER_00: I got thousands.
26:58
SPEAKER_00: Uh so I'll throw out a couple, then you can ask me if I got I got I got thousands.
27:02
SPEAKER_00: I predict things all the time.
27:04
SPEAKER_00: And then I if they don't work out, I just keep predicting them because somewhere in the next 30 years they'll happen.
27:09
SPEAKER_00: But anyway, bottom line is I think we go.
27:12
SPEAKER_00: Yeah, I I do have predictions.
27:14
SPEAKER_00: So uh the first thing is private equity hadn't hurt our profession.
27:17
SPEAKER_00: I mean, they've actually created opportunity.
27:19
SPEAKER_00: Everywhere private equity is coming in, firms are buying other firms, that's creating opportunity for some of those firms.
27:25
SPEAKER_00: But then it creates opportunity because now we got a whole bunch of firms in the same market that are getting a bunch of fallout from the people that don't want to be with a billion-dollar firm.
27:33
SPEAKER_00: They'd rather be with a$100 million firm or a$3 million firm.
27:37
SPEAKER_00: In other words, there are there are benefits to every single combination, every single model in our profession.
27:43
SPEAKER_00: So every single level seems to have benefited from private equity.
27:48
SPEAKER_00: The second thing is, I believe that private equity will create the greatest regeneration of small firms in the history of our profession since the baby boomer generation.
27:57
SPEAKER_00: So we've got a bunch of people that can't wait.
28:00
SPEAKER_00: Their clock has started to wait for their two, three, four, five years where they get fully paid out by private equity and they're going to spin out and start their own firm.
28:09
SPEAKER_00: So here's an interesting fact for you because you've seen a lot of combinations in your lifetime.
28:14
SPEAKER_00: And in the 40 years I've been in this profession, we've had about 44,000 firms since I joined.
28:21
SPEAKER_00: And we've had a whole bunch of people retire.
28:23
SPEAKER_00: And we still have 44,000 firms.
28:26
SPEAKER_00: And we've had all kinds of roll-ups.
28:28
SPEAKER_00: Why?
28:28
SPEAKER_00: Because roll-ups create spin-offs, because we have new generations coming in, because all this stuff continues to turn.
28:34
SPEAKER_00: And I think the the uh private equity business is gonna create a different kind of spin-off because a lot of times people spin off that are lower in levels because they don't like that firm or they don't like doing that work, or they're too narrow in what they do and they want to do different kinds of things.
28:53
SPEAKER_00: I think it's gonna create a spin-off at some mid-level kind of talent that say, yeah, I'm out.
28:58
SPEAKER_00: I I've made my money in this thing.
28:59
SPEAKER_00: I want to go do what I want.
29:00
SPEAKER_00: And I think it's gonna create some very nice, small, sophisticated firms.
29:05
SPEAKER_01: So boutique in the in the very real sense, I mean, rather than the sense that I use, which is a I think that's a good thing.
29:13
SPEAKER_00: Again, it's another good thing.
29:15
SPEAKER_00: Um, I think they're making people more aware that uh you need to look at clients as more than one service.
29:24
SPEAKER_00: So if uh if you got if you got almost all your clients, they only buy one thing from you, then I can just tell you from the retail background, I have a retail background because of sores I've had.
29:35
SPEAKER_00: Yes, I know way too much about women's clothing.
29:37
SPEAKER_00: But my point is that we spent a lot of money back doing newspaper.
29:42
SPEAKER_00: Many of your audience don't know what that is.
29:43
SPEAKER_00: It's a piece of paper that you'd open up and it'd have ads in it and stuff.
29:46
SPEAKER_00: Anyway, we spent a lot of money in television.
29:49
SPEAKER_01: My audience knows of newspaper, I think.
29:51
SPEAKER_00: Okay, well, I don't know.
29:52
SPEAKER_00: You're young compared to me.
29:53
SPEAKER_00: So, but but my point is uh back then I spent a lot of money in television and newspaper ads, and our philosophy was all that was to get somebody in the store.
30:04
SPEAKER_00: So they came in to buy something.
30:06
SPEAKER_00: But we didn't make money on something.
30:08
SPEAKER_00: We made money on something plus, something plus, something plus.
30:13
SPEAKER_00: And I heard uh somebody that was a partner of uh a multi-billion dollar firm make the comment, something like for the first service, we get one X.
30:22
SPEAKER_00: For the second service, we get three X.
30:26
SPEAKER_00: For the third service, we might get 10X.
30:29
SPEAKER_00: So the point being is that it is how we add on to those relationships where we make most of our money.
30:36
SPEAKER_00: And the same was true with retail.
30:38
SPEAKER_00: It costs too much to get a client to sell them one service.
30:41
SPEAKER_01: Everybody, I want to take a second here to share something about who we are and why we make this show.
30:46
SPEAKER_01: You're probably here because either you or a client of yours is thinking about buying or selling a business, bringing in investment, or planning an eventual exit.
30:55
SPEAKER_01: And that is why we call this show Max Value.
30:58
SPEAKER_01: We provide you with information and insights about how to maximize the value of your business.
31:02
SPEAKER_01: Our team at Town Advisory guides business owners through the crucial, often once-in-a-lifetime opportunity to exit their business.
31:09
SPEAKER_01: We use our trademarked exit builder program to help business owners prepare early, protect the value they've built, and obtain maximum value through an exit.
31:17
SPEAKER_01: And the secret is our clients define what value means to them.
31:21
SPEAKER_01: Taking the right steps now can make all the difference in creating a successful outcome for yourself, your family, and your work team.
31:27
SPEAKER_01: If you think you're ready for the next step in understanding and increasing the value of your business, make a comment, send me a message on LinkedIn, or send me an email.
31:36
SPEAKER_01: All those links are in the show notes.
31:38
SPEAKER_01: That is really, really interesting.
31:40
SPEAKER_01: And I I love, as a business analyst, love being able to learn lessons from you know just unrelated businesses that can be applied to my own business.
31:54
SPEAKER_01: So for example, you know, we we've we've had a run of uh you know quite a few construction clients that we've done valuations for.
32:01
SPEAKER_01: And over time, you know, I realized that one part of their structuring was really awesome.
32:06
SPEAKER_01: The the idea of a project manager, not just a managerial quote unquote level of person who has kind of a midlayer of technical ability and blah blah blah, like a lot of uh service firms do.
32:18
SPEAKER_01: But no, actually somebody who's in charge of the project, even though there's still you know supervision above that.
32:24
SPEAKER_01: Uh, I thought that was great.
32:26
SPEAKER_01: So that's that's how and why we do uh do that structure, because we learned it from construction, basically.
32:31
SPEAKER_01: And actually thinking about basket size like you were talking about absolutely is a cool idea.
32:36
SPEAKER_01: And I think you're a hundred percent right because those all every client you know has other needs, but you just don't know about them probably because you haven't asked.
32:48
SPEAKER_00: Most people most people start with what do you need that I sell, rather than what do you need and shut up.
32:55
SPEAKER_00: So if they can tell you what they need, you may not sell it, you may not be able to help them yourself.
33:00
SPEAKER_00: But the odds are you can refer somebody that could help them, or you could help them find somebody, even if you both go to the ads and look at it and say, Let's interview this person and see.
33:10
SPEAKER_00: You are a good source of an objective view of what you're hearing.
33:15
SPEAKER_00: And when you start filling that role, then almost any question that comes up becomes something I want you involved in because I can, as the decision maker, CEO of that entity, I now have somebody that's objective on the outside listening and saying, here's what I heard, here's what I heard good, here's what I heard bad.
33:34
SPEAKER_00: It makes the decision easier to make and it makes creating some clarity between my options safer.
33:41
SPEAKER_00: So it is not, and I tell people this all the time when we're talking about how to be a better advisor.
33:47
SPEAKER_00: Everybody wants to never be tripped up with, so how do I do that?
33:51
SPEAKER_00: They're scared to death to get into a conversation about a question that they don't have the answer to.
33:57
SPEAKER_00: When people to solve problems are a dime a dozen, but we have very few people that will take the time to understand the questions.
34:06
SPEAKER_00: And solving problems before you know the questions is a waste of time because I may be solving question number 27 in their priority, and we're missing questions one, two, and three in their priority because we got we got hired and we said, well, that's that's that's what they care about.
34:21
SPEAKER_00: No, they didn't actually care about that, but it was one of the things on their list, so they hired you.
34:25
SPEAKER_01: Gotcha.
34:25
SPEAKER_01: You know, that that's a I was gonna actually tell the story kind of at the end, but but basically that's that's spot on with uh well, really how how I engage with you.
34:35
SPEAKER_01: I mean, it must be about 15 years ago, maybe a little more, that we that you were doing a leadership program for Cal CPA, and I was one of the students, and maybe a little bit on the young side to really get get the maximum value out of it at the time.
34:48
SPEAKER_01: Uh, but I was kind of at a crossroads because I had done tax and audit and was pretty good at them.
34:53
SPEAKER_01: But I didn't love them.
34:55
SPEAKER_01: And so I knew that those weren't my paths forward.
34:57
SPEAKER_01: And it was I was thinking about valuation and consulting and you know, just some, you know, some of the things that you're involved with now.
35:04
SPEAKER_01: And uh but I wasn't really confident at all.
35:09
SPEAKER_01: And you know, I was really inspired by you know some some of the uh your delivery and your subject matter in the in the leadership course.
35:16
SPEAKER_01: And so, you know, I think after one of the sessions I ambushed you and said, hey, you know, I I wanted to, you know, like absorb some of the you know genius from osmosis or something, but you know, I I think I ended up mostly just complaining about how you know little confidence I had in being able to get after consulting.
35:34
SPEAKER_01: And I I'm sure I I couldn't you know quote you verbatim uh to save my life, but what I came away with was almost exactly what you were just saying, so it's probably pretty close.
35:46
SPEAKER_01: You know, basically for the most part, consulting is not really knowing all the answers, but knowing the right questions to ask.
35:52
SPEAKER_01: And well, and I'm like, yeah, I know I know how to ask questions, I can do this.
35:55
SPEAKER_01: And so at the end of the day, you know, it was an um, you know, I'm not gonna credit you with with the you know, my entire career, but honestly, there was a little bit of a spark that, you know, might have, you know, might have lit a fuse uh that that helped push me over.
36:08
SPEAKER_01: So it was kind of the the very rightest thing at the rightest time.
36:12
SPEAKER_01: Um, even though, you know, I I don't even know if you remember that when you there's no reason you should, but it was great for me.
36:18
SPEAKER_01: Thank you.
36:19
SPEAKER_00: Well, you're very kind to say that.
36:20
SPEAKER_00: I can tell you I deserve no credit.
36:22
SPEAKER_00: Everything that people do is because of them, but sometimes what's in their mind gets in their way of what they should do.
36:30
SPEAKER_00: If I had any impact, all I did was help you clean up some of that clutter.
36:34
SPEAKER_00: And it's no different than the conversation we've just been having.
36:37
SPEAKER_00: If you think your work-life balance problem is because you're in the CPA profession, you're missing the boat because it's not.
36:43
SPEAKER_00: If you think your work-life balance problem is because uh there's not enough staff, you're wrong.
36:49
SPEAKER_00: It's you're not using them.
36:51
SPEAKER_00: If you think whatever it is that's in your way, the first place to look is what's up here that's cluttering my ability to see what I can do to change this situation.
37:03
SPEAKER_00: Um, you know, I'm reminded of uh a firm we were teaching in a leadership uh class, and I had two of their young partners in there, and I remember them looking at me, one of them headed tax and one of them headed audit.
37:15
SPEAKER_00: They are now the two senior partners in that firm, managed managing partner and senior partner.
37:20
SPEAKER_00: But and they're a big firm.
37:22
SPEAKER_00: But we were going through a bunch of changes, and they looked at me and said, We don't have the influence to do this.
37:27
SPEAKER_00: You know, it's it's great that you tell us this, but we can't do anything about it.
37:30
SPEAKER_00: I said, Well, I believe you're wrong.
37:33
SPEAKER_00: I said, if you think those partners aren't looking at you to be their replacements, then you don't understand the importance of your role.
37:41
SPEAKER_00: And you need to start fighting for what you need because someday you will be in charge of this firm.
37:48
SPEAKER_00: You better be building something that when you're in charge will work.
37:52
SPEAKER_00: What they have built because you're here works for them.
37:56
SPEAKER_00: But don't say that whatever works for them will work for you.
37:59
SPEAKER_00: You need to start thinking, what do we need to do that I can help build right now below me so that as I elevate, I've got something of value below me?
38:09
SPEAKER_00: And that changed their entire mindset because they were focused on what they couldn't do or what they didn't have permission to do rather than they went back and looked at their managing partner and said, we want to build this.
38:21
SPEAKER_00: What managing partner would say, No, I don't want to build sustainability?
38:25
SPEAKER_00: No, how dare you build a stronger bench?
38:27
SPEAKER_00: No, I can't believe you want to make this firm better.
38:30
SPEAKER_00: Nobody would do that.
38:31
SPEAKER_00: But we get caught up in our own brain about what our role is.
38:35
SPEAKER_00: And I can tell you the managing partner called Tommy and I and basically said, What the hell are you telling our people?
38:42
SPEAKER_00: And it was a great conversation because the bottom line is they absolutely supported backing these guys all the way because they wanted to make a better firm.
38:54
SPEAKER_00: And the conversation wasn't, look what you're doing to us.
38:57
SPEAKER_00: Look how you're mismanaging the situation.
38:59
SPEAKER_00: I said, they're not mismanaging anything.
39:01
SPEAKER_00: Look how successful they are because they put you where you are.
39:04
SPEAKER_00: Now, what you need to tell them is give me a chance to put the same kind of success structure below us that you have been able to do below you.
39:13
SPEAKER_00: And the partners got that like that.
39:16
SPEAKER_00: They're smart people.
39:17
SPEAKER_00: But they didn't go in blaming other people for their situation.
39:21
SPEAKER_00: They went in saying, hey, I think it's great that we are gonna someday be there.
39:27
SPEAKER_00: Let me have something that will help us survive.
39:30
SPEAKER_00: Because their partners were looking down and saying, I see how this works for us.
39:34
SPEAKER_00: I'm not sure that they've got anything that's gonna work for them.
39:37
SPEAKER_00: They saw it too.
39:39
SPEAKER_00: But it wasn't their job to build that.
39:41
SPEAKER_00: It was the job of the people that were running those areas to build that.
39:47
SPEAKER_01: That makes sense.
39:48
SPEAKER_01: Now that that's what I one of the other topics I definitely wanted to get to was how you think of conflict, because obviously, even with that client, you had you know a conflict, and there was a a conflict between the more most senior partners and the the more junior I don't know how junior, but the the uh up-and-coming partners there.
40:10
SPEAKER_01: So talk to me a little bit about conflict and why you why it's necessary.
40:18
SPEAKER_01: I mean, I I know you have different uh maybe a different opinion about conflict than than other people might.
40:23
SPEAKER_00: Well, the first thing is we tend to think conflict means I'm gonna fight with you.
40:29
SPEAKER_00: We're not gonna fight with anybody.
40:30
SPEAKER_00: What conflict is is anybody's got a different opinion.
40:32
SPEAKER_00: And my God, just look at the United States today.
40:35
SPEAKER_00: We have an entire world here in the United States, we have an entire continent of different opinions.
40:40
SPEAKER_00: That's conflict.
40:41
SPEAKER_00: But that doesn't mean it has to go bad, and it doesn't mean we have to come to this.
40:45
SPEAKER_00: It means we have differences of opinion.
40:47
SPEAKER_00: And yet, when you talk to groups, it doesn't take very long for people to say, yes, the when we have diversity, we have a better, we build a better organization.
40:55
SPEAKER_00: Why?
40:56
SPEAKER_00: Because you have conflict.
40:57
SPEAKER_00: Doesn't mean we're doing this, it means we're sharing different perspectives.
41:01
SPEAKER_00: And how many people in those sharings say, I had no idea.
41:04
SPEAKER_00: I didn't know you were doing that, I didn't realize that's what's going on at that level.
41:09
SPEAKER_00: I didn't realize you were struggling with that.
41:11
SPEAKER_00: A lot of the conflict is because people don't know and they don't understand.
41:15
SPEAKER_00: So the first step in conflict is to communicate.
41:19
SPEAKER_00: And then you find out that yes, there's a conflict because we have two different views as to what's happening.
41:24
SPEAKER_00: Once we can get a similar view of both sides, there's almost always an answer.
41:31
SPEAKER_00: And that answer usually isn't that complicated.
41:33
SPEAKER_00: But we're so busy fighting that we won't see the number of solutions in front of us.
41:40
SPEAKER_00: And I I have we had a we had a a class of of three of them were managing partners, eight of them were partners in the in different firms for that we were conducting for our firm, for our clients.
41:54
SPEAKER_00: And we have we use the TKI, which is uh Thomas Kilman index, which talks about your conflict uh comfort.
42:02
SPEAKER_00: And I think it was 10 out of 11 of those people's number one preferred style was avoiding.
42:09
SPEAKER_00: Now I can just tell you, avoiding gets you nothing.
42:12
SPEAKER_00: Uh, you know, it it it it creates the the issue of talking about it, but it doesn't get you to any kind of resolution.
42:21
SPEAKER_00: So I want resolution, and as a matter of fact, when I'm gonna have a conflict with somebody, I know that they're really passionate.
42:26
SPEAKER_00: I can't sleep the night before, my stomach's upset.
42:29
SPEAKER_00: I hate it.
42:29
SPEAKER_00: I mean, my wife thinks it's really funny.
42:31
SPEAKER_00: I make a living in conflict and I hate it that much.
42:35
SPEAKER_00: So I I just can't live with that kind of uh pain of not dealing with it because I don't think conflict, I think conflict gets you to resolution because it is the first step.
42:50
SPEAKER_00: So many misconceptions about conflict, about how it being bad.
42:54
SPEAKER_00: The only bad conflict is when I'm doing this.
42:56
SPEAKER_00: All the other conflicts are helping people communicate and understand, and that's not bad at all, and that's your way to a solution.
43:03
SPEAKER_00: Solutions are what make a difference, and if we can't talk about it, we can't get to it.
43:08
SPEAKER_00: Now, there are a lot of people, you know, we you also know because we've we do assessments like DISC, which is, you know, the D for dominant, the I for intuitive.
43:18
SPEAKER_00: Tommy knows this stuff better than I do, but um uh S for steady and C for uh conscientious.
43:25
SPEAKER_00: And those things mean something.
43:27
SPEAKER_00: But when you get a dominant personality, which a lot of leaders are, because it means they're gonna say their opinion whether they think they're right or not, because we're dominant personalities.
43:37
SPEAKER_00: A dominant personality doesn't mind conflict because they know that if if they're wrong, they'll just change course of direction.
43:44
SPEAKER_00: So it's like, yeah, I made that decision.
43:45
SPEAKER_00: I was wrong, let's go that way.
43:47
SPEAKER_00: Somebody that's an S or a C is gonna want to be right.
43:50
SPEAKER_00: Now, when you want to be right, then you're gonna take a lot more time to get to an answer because you don't want to be wrong.
43:55
SPEAKER_00: The D personality doesn't care if they're wrong.
43:57
SPEAKER_00: I want to make it clear there is no personality.
44:00
SPEAKER_00: Trait that's better than the other.
44:01
SPEAKER_00: We're better together when we have that mix.
44:05
SPEAKER_00: So I call dominant personalities since I know you are and I am.
44:09
SPEAKER_00: I just want to say that we are classified, in my view, as T GO managers.
44:13
SPEAKER_00: We fly in crap on everything and leave.
44:14
SPEAKER_00: So bottom line is that doesn't make us better.
44:17
SPEAKER_00: It means that we address it faster, but it doesn't make the what we address it with right.
44:22
SPEAKER_00: It just means we hate not having momentum.
44:25
SPEAKER_00: And our job is to get better information, not all information.
44:31
SPEAKER_00: I think Colin Powell used to say in his speeches that somewhere between 40 and 60, maybe maybe with 70s, somewhere between 40 and 70% information, you've got all you need.
44:42
SPEAKER_00: The rest of it, you can go to 97%.
44:44
SPEAKER_00: It won't change any of your outcome because at some point you've got to trust your gut and go.
44:49
SPEAKER_00: So trying to get to that point where you know everything will never happen, and the delay will be more costly than making a decision and changing directions.
45:00
SPEAKER_01: The analysis paralysis, which um maybe some of us are a little bit wired to uh to want to do.
45:07
SPEAKER_01: Um but yeah, at the same time, you there's there's no way that you can make a right decision too late.
45:15
SPEAKER_00: Right.
45:16
SPEAKER_01: If it's too late, then no matter how right it used to be, it's now not right anymore.
45:21
SPEAKER_00: Yes, enough time and enough things have changed to where it probably won't be very effective.
45:26
SPEAKER_00: There's nothing wrong with making changes and constantly modifying, that's great.
45:31
SPEAKER_00: But but you also have people that are gonna say, wait a second, once we make this, we need to stick with it for nine months.
45:36
SPEAKER_00: Well, no, you don't.
45:36
SPEAKER_00: I mean, we have way too many rules people have set up uh to guide us in life that are again mental things in our way.
45:45
SPEAKER_00: Every personality type is valuable.
45:48
SPEAKER_00: And what we tell everybody when we go through the disk is now that you know how you're wired, stop being you because you, as that wiring, are limited in what you can provide.
46:00
SPEAKER_00: So be yourself all the time, and you are limited in how far you can go, because a good leader is a D, an I, an S, and a C.
46:10
SPEAKER_00: And they will modify, even though it's uncomfortable, to what's necessary for that organization in that moment.
46:20
SPEAKER_01: Absolutely, some flexibility in their leadership style makes makes all the difference.
46:24
SPEAKER_01: Well, and speaking of uh being a firm leader, and how how do you create an environment that would encourage the good kind of conflict and kind of avoiding that you know death spiral dysfunctional uh you know, where people are you know almost dead blows?
46:44
SPEAKER_00: Well, you want to promote an open environment for communication, but you also need to say communicate early, don't wait and hold it in and wait till you blow up is the last draw.
46:55
SPEAKER_00: That's not a way to deal with stuff.
46:57
SPEAKER_00: So sit down and talk to somebody about what's going on.
47:00
SPEAKER_00: Where we get in most of our conflict is that we have rule breakers and rule followers.
47:08
SPEAKER_00: So we sometimes follow the rules, we sometimes don't, we sometimes enforce the rules, we sometimes don't.
47:14
SPEAKER_00: If you take ambiguity out of the situation, then it creates a calm because the rule followers hate it when a rule's been broken and there are no consequences.
47:26
SPEAKER_00: And rule breakers hate it when they break the rules that they they are confident is better for the firm, and that rule is holding the firm back, and yet nobody seems to want to listen that maybe our rules aren't modifying as fast as it can.
47:40
SPEAKER_00: So by creating less ambiguity, you are going to create much more comfort and much more peace between all the fractioning parties because we're not fighting over who's breaking rules or not, we're all looking at the same thing, what's best for the firm.
47:54
SPEAKER_00: And by the way, here's what we're working on right now, here's the framework that we're all working within.
48:00
SPEAKER_00: And we're not tying everything to a rule, but we're tying it to a framework and a value system.
48:06
SPEAKER_00: And as somebody that does valuation, you know better than anybody.
48:09
SPEAKER_00: You you create a hard rule that says this is what a business is worth, you won't ever get it right.
48:14
SPEAKER_00: You have to be able to say, Well, what are the circumstances?
48:17
SPEAKER_00: You just talked about one.
48:18
SPEAKER_00: I got a I got an owner that does everything.
48:20
SPEAKER_00: Well, the business is still worth this, but once you leave, it's worth this.
48:24
SPEAKER_00: I got another business owner that doesn't even show up because this thing runs like a top.
48:28
SPEAKER_00: Well, the business is worth this, and it's worth probably this without them because they're not doing anything anyway.
48:33
SPEAKER_00: So you can't just say, I got a bunch of rules, you have to follow them.
48:37
SPEAKER_00: We create frameworks and we try to get people to work within the system, and you've got to have ways for people to say, we need to change the framework because it's starting to box us in too much, or the framework's too wide, and we've got way too many people going road.
48:50
SPEAKER_00: You're trying to manage something far better through clarity, but creating some kind of framework for people to operate in safely.
48:59
SPEAKER_00: For example, and I know you didn't ask me, but for example, um, if I know that I make a mistake and I'm not in trouble, then I'm gonna be much more comfortable trying something on my own and going to you and saying, Ben, can you take a look at this and tell me what I did wrong?
49:14
SPEAKER_00: Because I don't feel like I have embarrassed myself or let you down because I did something wrong.
49:21
SPEAKER_00: Now, if I'm gonna make the same mistake 10 times in a row, then yes, I'm gonna be in trouble with Ben and I should be, because I'm not caring about what I do.
49:30
SPEAKER_00: I'm just trying to produce something and get it out so it's not on my plate.
49:33
SPEAKER_00: But I don't care if you make a mistake every single day.
49:36
SPEAKER_00: If it's a new mistake and you're pushing your boundaries, I want to support that.
49:40
SPEAKER_00: I want to reward that.
49:42
SPEAKER_00: I don't want to have anyone think, well, if I'm wrong, the punishment will be worse than what I learned.
49:50
SPEAKER_00: I want everybody thinking, push the boundaries every day, because as long as you are, you're in great position with me, even if you're wrong.
49:59
SPEAKER_00: And I can tell you here in our firm, there's a philosophy that's very clear.
50:03
SPEAKER_00: And we're gone because we're gone all the time on the road, you make a decision, it's wrong, it's our fault.
50:09
SPEAKER_00: Because we weren't here to provide information.
50:11
SPEAKER_00: You don't make a decision, it's your fault.
50:14
SPEAKER_00: You do the best you can, and no matter whether it's right or wrong, it's either a teaching opportunity or and a thank you, or it is a thank you.
50:22
SPEAKER_00: You done you did everything we'd have done, you did it better.
50:25
SPEAKER_00: But the point is you don't sit in fear of a bad decision.
50:31
SPEAKER_00: And most of our faults, our family businesses, the reason why they can't succeed to the next generation is because the kids grow up and mom and dad make all the decisions, and now they're running the warehouse, and they got all these brand new ideas on how to run the warehouse, and mom and dad say, No, that's not how we do it.
50:48
SPEAKER_00: And so all those kids say to themselves, that was the best idea we've ever had.
50:51
SPEAKER_00: That would have probably made us a million dollars, and then they get promoted to vice president of a manufacturing, and they've got all these great ideas, and mom and dad won't approve you know half of them.
51:00
SPEAKER_00: They're gone.
51:00
SPEAKER_00: Those are the best ideas we ever had.
51:02
SPEAKER_00: So mom and dad never let them make mistakes in proportion to their position.
51:07
SPEAKER_00: So when that person's running the warehouse and they make a$10,000 mistake, good.
51:12
SPEAKER_00: Because when they make it, they're gonna have to sit in reflection and say, well, maybe every idea I have is not that good, and maybe I should have done a little more research, and maybe I should have thought about the consequences of who I was pissing off when I made those changes.
51:24
SPEAKER_00: Because I didn't.
51:24
SPEAKER_00: I thought about it just from a financial standpoint or just from an operation standpoint.
51:29
SPEAKER_00: I didn't look at it from a holistic standpoint.
51:31
SPEAKER_00: Every mistake they make like that, they constantly are reminding themselves, don't do that again.
51:37
SPEAKER_00: That didn't work out.
51:38
SPEAKER_00: But when you stop people from making mistakes, then when they finally take over, because sometimes mom and dad get tired and they say, you know, we're gonna go vacation now for the next year.
51:47
SPEAKER_00: Those kids are making mistakes at half a million dollars a pop, and the business can't stand it.
51:51
SPEAKER_00: Now, where was the problem?
51:53
SPEAKER_00: The dad and mom will say, our kids just don't know how to make a decision.
51:57
SPEAKER_00: The fact is, dad and mom did not let them make mistakes to learn because they say these words.
52:04
SPEAKER_00: I these you can quote, I don't want them to go through what we're gonna say.