081: Mike Maddock - Scaling Up Lessons From the Gazelles and Elephants of Business

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Thanks, Bill. It's a pleasure to be with you.

Yeah. So before we get into the core lessons, why don't we talk a little bit about kind of how you come to be in this world. What gives you the where do you get to be here and tell us about your journey to get to this place.

I think that like most entrepreneurs, I liked having money in my pocket. So I had a lot of jobs as a kid and without thinking about it, I worked for entrepreneurs. So I think my first job I was 14 and I got a first, you know, first I was first row seat at what it looked like to run a small company and I had good Bosses, Bad bosses. I had this incredible boss, Doug Harms, in college, and then right out of school, I took the first job I could get. And my experience wasn't so good. So I had this polarity to look at. Good boss, bad boss, rich dad, poor dad. And that experience made me think, gosh, you know, I. I should just do this myself. So I literally started a marketing communications company about a year and a half after graduating school and grew it. And, you know, our tagline should have been, sure, we can do that too, because we literally took anything we could get. Brochure, website, et cetera.

You did everything. Yes, we do anything. Yes, we do that.

Yeah. And we did pretty well. We grew to. I don't know, at one point, we probably had about 50 people. And I woke up one day and it got harder and harder to sell creativity and working hard, we didn't really have a good positioning. About that time, I had dated a young lady in college who had gone to work for a large agency here in Chicago. And the guy that ran research at this, it was Leo Burnett, had an idea that it would be easier to sell and market that were relevant. So he thought, why don't we try to help our clients? That included Keebler and Proctor and Gamble and names you've heard of relevant new products.

Good. Midwestern.

Yeah. But the people there didn't want to do it. So we got a call and we started working with this company and their major brands. And I just fell in love with the process of doing research to uncover emerging needs, standing up prototypes and launching new products. And I had this thought, why do we want to be the agency of record when we could be the agency of innovation? And so kind of a Jerry Maguire moment with the company, we said, let's do this. We started a company called 321-LAUNCH. We got it to about three and a half million dollars in revenue in a couple years. Then we had another meeting the company and said, we're all in on this. Who's with me? And some people said, woo. And some people said, yeah, not really. And so the not really. We started a different company, a marketing communications company, which is doing great in Chicago. And we went both feet into becoming an innovation consulting firm or an innovation agency. At the time, nobody knew what it was. We acquired a bunch of companies, and it's been great. So, you know, we've worked with 25% of the Fortune 100 on new products, services, and business models. And I just learned an awful lot about research and consumer behavior and fear. Because whenever you're changing anything. People freak out and they go to what makes them feel strong, which is typically the exact opposite of what they should be doing when the world is changing underneath their feet.

You mean the corporate folks you were serving were fear or you were operating in fear?

No, it's actually. It's a good question. It's not just corporates. It's entrepreneurs and corporations both. When things have to change, they go to their strength when they're afraid. For entrepreneurs, we just want to change everything. Let's just blow this shit up. But corporates, they operate, they say, okay, what got us here will certainly get us there. So let's just double down on the recipe that worked yesterday.

Back to basics. Blocking and tackling.

That's right. And what's interesting about that is both are bad formulas because the entrepreneurs are inventing new ideas. New ideas. So they run out of time, Runway and friends and money. Because they never get around to focusing on what one idea that really matters. And I've been quite guilty of that to the tune of losing millions of dollars. So, you know, I'm saying this with humility, I hope.

And then I think we've all done that. If you've been around long enough, if you haven't yet, stay tuned.

Yeah, let's just take a moment.

Okay.

That sucks. But the corporates, they actually accelerate their demise because they're actually doing more of what the future doesn't want from them. Faster. So the lesson that I've learned is that there's this balancing act between the imaginative people in your organization and the people that are really good at measuring and operating and striking. That balance is where the action is. And it's the people that learn how to do that that either survive when they're large companies or grow when they're small companies.

So the balance of the innovation and the. And the execution of the scale and remembering what you got, you here is the. Well, tell it. So can you give us some examples of that?

Sure. So tell some stories. Okay. Stories. I like telling stories. So when we first started with the, with this, this innovation agency idea, one of. I was. One of my hero companies was Procter and Gamble. And the reason P and G is a big. I was a fan was because they had 50 or so brands. And for those brands, they had to put $100 million new product or product on the shelf every year. So think about that. Like, you had to be good. You had to know your consumer and your customer, brick and mortar and consumer well enough to understand what she or he Wanted next year and be so good at it that you could just plop down $100 million product. Now, I'm generalizing, but they really.

You could place a bet.

Yeah. So we got hired by P and G. Yeah, we were working on oral care, and we were working for their customer, which were professional dentists. So it was a. It was a B2B model. And we did some research. We came up with some needs in the market. And I remember we finally got to the brainstorming, which is where idea monkeys like me like to perform. And so this is a big day, you know, and running around, what about this? What about this? What about this? And I was really excited. And then about lunch time, I went to a couple of their customers who happened to be doctors. And I remember them being very tall and stern, and I asked them how they thought it was going. Isn't this great? All these ideas are awesome. And I remember being just, you know, torn into by this. This dentist. He's like, you know, no, it's not going great. This is going really poorly. In fact, I don't think you've done your homework, kid. You keep talking about ideas that. Do you know what business we're in? I mean, you're talking about whitening teeth. Do you know that's a false proxy? Do you know that you can have white teeth and have gingivitis? I'm a doctor. I'll tell you what. I don't want to hear one more idea about white teeth for the rest of the day. Do you understand me? Not one more idea. And I suggest the next time you come into a room like this, you do your homework. So, Bill, I got to tell you that the afternoon. That afternoon, I was a completely different person. I had my tail between my legs. It was a really humbling moment. And at the end of the day, I went to our client, P and G, and I said, hey, I think we failed. That guy yelled at me. And so did his friend, and so did his other friend. And they said, no, no, no, no, no, no. You know what? Just because they don't see it, just because they don't want to change, doesn't mean that we did good work here. There's a real need in the market. So fast forward today. And basically, they said, in so many words, they didn't say it out loud, but they were thinking, we'll just sell direct if we can't help them. People are going to get this one way or another, and we'll give it to them. So today, at the time it was about a $4 billion opportunity that we identified in the market today. It's an $11 billion category. I'm talking about white whitening, you know, teeth whitening. And what's interesting is that last year in the Carolinas, the association that represents dentists took a case to the Supreme Court saying that only dentists should be allowed to whiten teeth. I was in the room when we tried to get them to even look at the idea, and they rejected it. So that's what happens, you know, that, you know, the business you're in, you know, you know, you know. And the more of an expert you are, the harder it is for you to see possibility. When it's walking right. Right in front of you, you know, you cannot read the label when you're sitting inside the jar. We all have that issue. The longer we're in our business, the more of an expert we become.

You can't read the label when you're sitting inside the jar, Right? Yeah. And I, in the coaching world, I say all the time and on the show, I say that one of my favorite sayings is, we'll never probably know who discovered water, but you can be sure it wasn't a fish.

Correct. Like water to a fish. That actually, I want to give credit. That quote came from, I was out at the Endicott Center 14 years ago, and Todd Murphy, a Southern gentleman from Alabama, I tend to kind of stubborn, and I was being stubborn. And Southern gentlemen from Alabama don't tell you to get your head out of your butt when you're being stubborn. They say cute things like, mike, you cannot read the label when you're sitting inside the jar. You are in the jar, my friend. And I remember going, what did you just say to me? But he was right. And that stuck to my head. And I have said that on stage across the world many times because it's so true.

Yeah. Yeah. There's a. Yeah. And in fact, in the work, like as coaches, as consultants, as advisors, as peer groups, we talk about the different ways to sort of reveal blind spots. Right. You walk, you get yourself all presentable for the day or prettied up or whatever it is for you, and then you walk on out and you stand in line at the post office, the dmv, the passport office, Starbucks, wherever and everyone in the world. But you can see that the whole back of your head is a mess, right?

Yeah.

Something's up. But there's real value in seeing those blind spots because the rest of the world can see that.

Yeah, I like to say, we try to be presentable, and we try to focus on things that people love about us. We try to double down on things that. That people love about us. And what's interesting is I'm writing a book right now. It's called Plan D. It's about disruptors, how to stay three steps ahead, and how disruptors will change the world. I'm focusing on people that blow stuff up. And one of the things I've noticed about these disruptors is that they lean into hate. The cute way I think about it is embrace the hate to innovate. They actually go looking for things that bug them to fix. They don't complain. They're like, this just ticks me off. And after about the second time it happens, they start thinking about reinventing it. So it's like they're not afraid of leaning into this thing that might be troubling other people. And that's a real opportunity. I think entrepreneurs, by and large, are pretty good at that. A friend of mine, Ron Repking, many years ago, went in to complain about a Montessori school in our neighborhood, and he wasn't gethis oldest, was a very small child, of course, and wasn't happy about it, and he went to complain. My son went to the same school. He went to complain again, and at some point he got scolded by the person that ran the school. She said, that's not how it's done. You don't understand. We're doing the best we can. You don't understand education. Great. So the next, you know, two months later, Ron stood up his own Montessori school. It became the school in our district, and our kid transferred there. That's what entrepreneurs do. They complain a little bit and then they do something about it.

Right? So there's some. Yeah, and it solves a problem. It handles something there. When we were getting ready for the show, you talked about the difference, the distinction between ideas and insights. And I'd love for you to, before you speak to that, distinguish the two. What's an idea? What's an insight? How are they different?

Well, in plain English, an insight is a need worthy of your attention. You know, it's something that is causing a problem that you have the ability and right to fix. And it's a big enough problem that when you fix it, you'll be rewarded for it. An idea is just a different way to solve that problem. So if I identify an insight, a need, and I'm good at it, and I can quantify that need, then we can Then and only then, you and I could sit down and come up with a hundred different ways to solve for that need. So we have at Maddock Douglas, we have a formulaic way of creating insights. It's I statement, in fact, because reason to believe, but tension in the market. All of our insights are formed that way. And once we. And we force rank them and quantify them and we have our clients work on just the top two or three things. So the Crest example would be I want whiter teeth because it makes look younger, but brushing alone doesn't get my teeth white enough. That's it. There literally were 4 billion reasons to solve that problem when we quantified it. But Dennis didn't want to. Now you can whiten teeth lots of different ways. But once we understood that was the thing where solving. We had ideas to solve it.

So I. So let's. Can you walk through the thing using the model again? So there's an I. It starts with an I. Right.

I. Because. But I. I want to. I want fast. I want to. I want. I want fast food because I'm always in a hurry. But there are no nutritious options.

Got it. So that's a little bit. This also feels a lot like the milkshake video. What's the job of the milkshake? You probably.

Oh, that's Clayton Christianson. The job to be done. Yeah, I was with Clay. I had a chance to hang out with him a couple months ago. Very clever. Yeah. The job to be done. That's a way to reframe if you're a business, if you're inside the jar, you might say, hey, we need to come up with a better way to make a drill bit. Because we're in the drill bit business. No, you're the put.

We put holes in the hole making business. That's right.

And once you understand that people want to make better holes, there are lots of different ways outside of being a drill bit company to put holes and stuff.

I need a high pressure water jet.

That's right. Lasers.

Lasers. Lasers on sharks. So the insight is a problem statement. It's the noticing a problem or identifying the problem.

Yes. And it's importantly. We throw these big words around like innovation, insight. I think the first step is to understand what everyone in your organization needs means when they say words like innovation. To us, innovation is a need in the market that's big enough. It's a Venn diagram. The first circle is a need in the market big enough for us to care about an insight followed by an Idea, any idea. And we need to be agnostic. It can be a product, service, business model. We don't care as long as it solves that need, followed by an experience that makes people say, oh my gosh, you solve my problem and I'll pay you this much for it. And innovation is right in the center of those three circles. So let's get grounded. It's just amazing to me, Bill, that I'll literally go into a boardroom of a big company that's spending hundreds of millions of dollars on innovation. And they're throwing around words like innovation and insight. And I say, well, so what does that word mean? And everyone around the table's got a different definition. So just getting grounded in. Okay, here's what it should mean. This is how you make money with it. And then the same with insight. This is what an insight is. This is how we're going to formulate it. Everyone's going to do it the same way. And here's how we're going to build these insights, and here's how we're going to test them and force rank them so we together can decide on the biggest problems to solve. And then, yeah.

You probably have met Salima Smail and know the Singularity University and Exponential Organizations.

Yeah, yeah, I've met him. I've also hung out with Peter a bunch.

Peter, yeah. And you know so much about their sort of out looking for the biggest problems and having the people who go through that program think about the very biggest problems they can have handle. And then instead of like, what little bit can I address or what could I do? What would I want to tackle? Right.

Yeah, I do. And again, you're getting right back to the moonshot. It's impossible to make a small idea big, but it's easy to make a big idea small. So when you start with this big reach goal, great things can happen. And that's what entrepreneurs are great at. And corporations are designed to. They're literally engineered to kill those ideas. I mean, and when you. So again, getting back to CEOs or someone with a C in front of his or her name at a large company, when they say we can't innovate, my typical response is, congratulations, you did it. You did it. You created a company that's capable of mitigating risk. Congratulations, you know you did it. So you shouldn't be surprised. You should be proud.

Right?

And then there's all kinds of strategies to move in a different direction.

But if you don't do that, somebody else will come in and displace you. Right. To build a better mousetrap, figure out what you suck at and eat your lunch. Right.

That's right. And yes. So embrace the hate. You have to be really good as an organization at having an ear to the customer, at understanding with empathy what's happening, what they want from you. Today, we do a lot of work in life insurance. Millennials don't want to buy life insurance. Shocker. Their dad and nor health insurance. Coal mine and die. You know, they don't have that life experience where, you know, they're thinking about, how do I pay for college?

Right.

You know, they need insurance. They want to insure stuff. It's just different stuff. So you've got large organizations saying there's this insurance gap. People are underinsured. You know why? Because they're thinking about their kids. It's this. Everyone should have life insurance. So my job is to convince them they should have life insurance. No, your job is to understand what they care, to insure deeply and use your superhero powers of data and risk mitigation to do that. To your point.

Right. So that would be create a life cycle to ensure the concerns of that person over time. So when I'm an apartment dweller early in my career, I have one set of things that I want to ensure. As I get married, I have another. As I buy a house, as I have family, as I have a business, as I have different things like that, I have a different set of things that I want to insure.

Yeah, for sure. If you want to ladder it up one more rung. There are abilities of an insurance company that go well beyond insurance products. I mean, in a lot of ways, they can predict the future. So, you know, they're such. They're so good at crunching numbers and predicting that that, that muscle can be applied in other areas besides, you know, insurance products. And that's where the real opportunity is. So. But it's hard. You know, I wrote an article this week for Forbes that was. I played with Michael Porter's quote, profits eat innovation for breakfast. And it's about General Electric that, you know, we've. We did a bunch of work with General Electric. This is Thomas Edison's company, and they, you know, they have quarterly profit calls. And eventually their. Their investors got tired of waiting. They were trying to work on the future and work on quarterly profit calls at the same time. And they're now slashing and burning and they're getting back to quarterly profits because they're going to deliver those profits. Meanwhile, if you look at what they've caught. Their innovation group is gone. This is Thomas Edison's company, one of the greatest inventors ever. And his company is now being run by really smart people that are worried about next month. So it's a very difficult thing to listen to your investors and deliver monthly against monthly goals. And think about the three year column on your one page plan as well. And what we're talking about here is that three year column.

You know what came to mind as you were talking about that? It was the notion that you could win a basketball game by concentrating on the scoreboard.

Say more about that.

Well, so you're like, so now they're going to focus on profits, right? It's like, okay, I'm going to concentrate really hard on the numbers up there on the board and the other team will just dribble past me and take more baskets. Because I forgot that what got me into the whole world was dribbling and passing and shooting and like that. Right?

Yeah. Well, the good news. Exactly, the good news is that the.

The scoreboard only gives you an indication of how you're playing and what you're doing, but it isn't the focus. So a company focusing only on the results is missing the point.

Yeah, there's the balancing act of, of divergence and convergence, respecting each other and working together in free. The idea monkey. I talked about Walt and Roy Disney. One's an operator. One wants to create the happiest place on earth. How do you be? Listen, we're about to go bankrupt. That's okay. I want to create the happiest place on earth. You can just imagine. I mean, these guys got into such a big fight at some point, they didn't talk to each other. Roy had to bring a peace pipe, literally to his brother. That's not a metaphor. He brought a peace pipe and said, come on, buddy, let's get together on this. And oh, by the way, Walt had to cash in getting back to life insurance, the cash value on his life insurance policy, just to keep them out of bankruptcy. So they were dealing with this tension of creating against the big vision that was pulling Walt in one direction and making payroll every month. Whenever you look at companies that are doing this, well, you see that. You see almost a love affair between the operator and the imagineer at the highest level. And you see that there are these, if you look at design thinking, these convergent and divergent practices that when administered in balance, they keep each other in check. And there's a place for each one of those people to Play. They're working together towards a common goal instead of pushing against each other. But under pressure, they go back to what makes them feel strong and the relationship tends to blow up.

It's interesting. Immediately, I go to, oh, I should do a show on finding and getting along with your partner. As I think about the Disney story and I think about some of our scaling up clients, I can think of examples of where the operator and the visionary founder innovator diverged. They couldn't get along. The tension went away and then. And they didn't replace. And either the company went in crazy directions or it stopped growing because there wasn't that innovation piece. It just sort of. It went towards tuning for performance and not the balance of it. And it's that healthy tension between those two mindsets, those two roles, that produces the best and healthiest, most sustainable growth. I think is what I'm getting.

Yeah, it's so true. And I've, I've lived it, you know, I mean, this is hard stuff. I've had partners come and go that for exactly that reason. I will tell you that, you know, the Gazelle's program and these operating models, we've used them on and off for many years. And my big aha and learning is that they only function if the people on the team are the right people and are balanced. I like Colby as a way to test the balance of your team. And you've heard just recently in the news, the fish stinks from the head down. A more positive way to say it is a shadow of leader. When you have a really strong personality running a company, which most companies, in order to survive have, that person tends to hire people like them. And we woke up one day after failing to use these operating systems again and again and again. And someone finally said, hey, she's a friend. And a coach said, she wasn't the only one there. About three people who suggested it before we listened. It seems like you guys are a lot alike. Why don't you test each other? And I'll be damned. We were telling each other the story that we were all so different because we had different abilities. You know, I'm good at. You're great at math, so you must be an operator. I was almost an anthropologist, so I must be a vision, you know, those kinds of conversations. But what Colby revealed was, you know, at our best and at our worst, instinctively, we behave the same way. And so expertise aside, the way we behave ran against the operating model. And so back to the point, you're going to be under pressure when you're growing a big company or small company. So best have a balanced team that really recognizes the difference and says quite often you complete me because what you're good at, I suck at. That's a big learning. I have a few companies right now and I can look at the different companies. We have one, for example, that's super profitable, it has been for years, but they're kind of flat because they're an operating company and they need a little bit of vision now.

Well, it's an interesting thing, the tension between those two and setting up good, healthy tension. And you're right. When the people aren't right, we struggle. People tend to engage us for one of two reasons. One is because they're trying to manage growth like it's grown and they're trying to handle it it right. And that's they're hungry for the operating environment, their stretch thin, they're going crazy, they're not sleeping, that kind of thing. And then the other one is they're flat and they want to apply some new approach to get people working together. And that feels like it's a strategy issue that you need to address. And sometimes it is. But very often what complicates the strategy strategy is that the people have dramatically different visions of where things ought to go and even sometimes different values that are in conflict. Then you get back to not having a healthy, aligned leadership team and not respecting the two sides, the innovation side, the operation side, and working them together best for the best thing. At the same time, then we see, as you point out, there's the operating companies that are profitable but flat. Then there's the companies that are growing rapidly, but there's no profit, no cash.

That's right. It's hard. This stuff is really, really hard. And it's why so few people can make it go. I have a lot of. Just as an aside, Bill, I'm sure you've been in this room. I was with a college professor a couple days ago talking about working up a startup function for this, this university. And she asked me what, you know, what I would do and I laid out something for her and she said, yeah, that sounds a lot like a class we have already. I mean, yours might be better because the guy we have teaching the class actually has never run a business. And I said, you know, that just pisses me off. That makes me crazy. You think it would be a little bit better if you had someone that actually had to fire a friend or make payroll or couldn't sleep for two weeks? You Think they might be able to teach this a little. It just. The thing that I look for in great leaders is not only the humility and the ability to share wisdom, but the empathy to understand that. This stuff is really tricky. It takes a certain kind of resilience to make it go.

It is right. I can think of a client, just the last couple of years that we're sitting there and we're chugging along and there's a clear purpose and values for the business, and they've got customers who love them and that kind of thing. There's one person on the team in a senior position who could not care less, who doesn't really want to grow, who's completely comfortable. I'm like, okay, you're not going to grow as long as that person is. But it was very, very difficult. And they took like a year to let the person go because of the friendship, because of the whole thing. And yet you might sit back from an academic standpoint and say, well, it's really clear that person just needs to go. But it's not easy. It's simple. Simple, obvious sometimes, but not easy.

That's right.

We live in hope. We live in hope. Well, maybe I could get that guy to do.

Yeah. I was talking to my. I know we're getting all over the place, but I was talking to my mom about a recent election, and she said, well, don't you think that the person will change now that they're in office? I said, no. My experience has been that under pressure, people become more of who they are, not less. You know, it's like the marriage doesn't get easier after you have kids. It gets harder. You become more of who you are.

In the business environment, I think we see this a lot. You interview someone, you're like, well, they're a little spotty, but they'll get better after they get on board. No, they won't. You got their very best in the interview process. In the interview process, they were doing their very best. Same thing in the courtship, in the campaigning, whatever environment. You're getting the best in that. It's not going to get better under pressure. It's going to get more of the same. People are going to double down. Yeah, that's right. Well, that's a funny place to end the show, but I think it's been provocative and helpful. I think it'll give our listeners a great place to reflect back on their world and their environment, whether they're the operator or the innovator, and think about what they need to embrace and how they need to work better with others in order to grow and and stay profitable. If you want to find out more, Mike Matic is maticdouglas.com and we'll put that link in the show notes as well so you can read about him as well as to his books. I really appreciate having you on the show, so thanks for being with us.

My pleasure Bill. Thanks for having me.

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