A Tale of 2 Companies w Cheryl Beth Kuchler

Hello and welcome again to the Scaling of Business podcast. I'm your host and Gazelle's business coach, Bill Gallagher. I have a terrific story today for you, a tale of two companies and two very different trajectories of growth. We're going to learn how one company is going along pretty typically, while the other has added about $10 million in just about a year. So with us today on the show is Cheryl Beth Koechler from New Jersey and Sheryl's longtime Gazelles coach. And she has been coaching Darius Murshazadeh and his company that our listeners will know was recently featured as having just extraordinary growth. So you come with a great deal of listening and expectation already. Sheryl, Beth, welcome to the show.

Thanks for having me, Bill. It's a pleasure.

I think you should just start right in with the story, the tale of two Companies here. Talk to us about what's been going on and who these folks are and what you notice the difference? I think there's a great lesson here for all of us.

Yeah. Well, and that's one of the reasons I thought it would be a good story for your audience. There's literally tens of thousands of companies that, that have used scaling up principles and mastering Rockefeller habits to grow. And some of them do hit it out of the park. And while others of them have success, it's a very, very robust system. These are two companies that I've worked with since 2014. So one that came on board a design company in the Manhattan area that came on board in the summer of 2014. And then another one, an aerospace company, Hawk Aerospace, that does helicopter maintenance and repair and leasing and flight services towards October, probably September, October of that year, very similar size companies, someplace between 15 and 20 million Hawkhead, about 60 or 70 employees, I guess, at the time. And the design company had about 100. Neither had worked with a business coach before, but both wanted to grow. And it was really, I really found it fascinating both the similarities and the different approaches that they took in order to be successful.

So what's what happened?

It's interesting that they had a couple of challenges. You know, Verne talks about the three barriers to growth in both scaling up and mastering the Rockefeller habits. He talks about lack of leadership, lack of systems and processes and market dynamics.

Yes.

And with each company, both of them had struggles in all three of those areas. So this is a design company that was dealing with what is one of the most disruptive issues. Right. That's gone on in the retail space now with, with Amazon taking over everything Going online, really having to. To reposition themselves in order to be successful. There's been a massive amount of companies in that space that have gone out of business in the. In the other arena with Hawk, the oil and gas industry has just gone through one of the most significant recession since the 70s. So they were both facing very significant market dynamics. And I think when you've got that situation going on, it becomes even more imperative that you focus on your leadership and having the right people in the right seats and figuring out those critical seats, as well as really ensuring that your systems and your processes and procedures are nailed.

Yes.

And the one aerospace company, Hawk, you know, he's.

He.

I have to give Joe Hawk, who is the CEO, a lot of credit. He had some very difficult decisions that he had to make about his leadership team right off the bat. In the first six months of working together, he had. He had hired a president to come in and run a significant part of the company who had what looked to be a pretty credible background. But it became pretty apparent, I'd say, within the first six to nine months of our engagement that he wasn't the right person for the job. And there is also another person on the leadership team in the marketing position. And because marketing and BD was such an important part of their plan, trying to. They had to sell in the midst of. Of this downturn. Having the right people in those two positions was critical. And Joe made the decision to get rid of both of them, and he actually stepped into the president role himself in order to lead the team that made all the difference.

And did he then replace the role as well?

Pardon?

And then did he then replace himself? Has he filled that back in again or is he.

Yes. Yeah. Now he's in a place where he's actually replacing the role with somebody internally.

So I think just pause here in the story for a minute because I think that it's worth underscoring again and again. We see companies that have significant people issues and we're slow typically to make those changes. We fire slowly and we hire fast, as opposed to the mantra that we all say and know, which is hire slow and fire fast. But I think time and again, I mean, I have. I can think of one client, two in the last year who didn't make changes they needed to make, and people who resisted, who held off. And you can see the impact in both of their results. One grew anyway, but has real capacity issues and, and team issues now because the lack of leadership in the other didn't grow as fast as they might have with a key change in there. And they both were resistant and not to bag on them because I think any of us who've been in leadership positions can think of people that we hung onto for too long, that we were timid and slow in making the change. So you have one who stayed with it and who didn't make it and one who did.

Yeah. And you know, I will give, you know, there's always a complicating factor. Right. So in the case of, you know, in the case of the. There's always a conundrum. You know, unfortunately, in the case of the New York company, she had somebody in her operations position who also wasn't the right player, but unfortunately she was pregnant. And so that put a whole nother caveat, you know, that put a whole nother wrinkle in the situation in terms of making the right replacement. So, you know, dealing with human resources laws and the legalities there. And I still think that there could have been, there could have been a workaround. In fact, we, we tried the workaround. But again, it comes down to if you're going to replace somebody, and I think Fern actually talks about this, he says if you're going to replace a key leader, you really want to keep it to one every six months and allow that person to really come up to speed, even if you are trying to grow.

Yes.

And unfortunately the CEO made a mistake in my mind of trying to hire three people at once and then everything.

Chaotic. Everything's up in there. Yep.

Yeah. Within a 60 day period. And you know, she, she ended up recognizing her mistakes. But unfortunately I think some of the damage was, was already done.

Yeah.

You know, the other thing that Joe.

Did that was, was here's the one situation. I don't know if you have experience on the side, slight tangent here, but I so early, like rapid scaling. Startups can hire a bunch of people quickly against a couple of founders, as long as purpose and values are well enshrined. Like everybody's coming together at once to work on some initiative. That's a little different than interjecting key leaders in an existing company that's scaling.

Exactly. Especially when that company also is just adopting core values for the first time.

Right, right, right.

And so you're trying to build a culture, you're trying to bring people on board, you're trying to deal with an economic cycle that's not supportive, just multiple variables that are all going on at once. And I think the other thing that I think is important to point out that Joe did is when he did get resistance, because there was a lot of resistance in his organization for what they were trying to do. And the accountability and having targets and key performance indicators and working on quality was. He held his ground. We had several quarterly meetings where he was very clear that the performance up until that point was unacceptable. That we are not. This is not going away. If you can't get on the boat with us, then, then maybe it's time to find another. Well, in their case, another aircraft, another helicopter. When you're working with helicopter pilots.

This is not your chopper, baby.

Exactly. Might be time to leap and pull the parachute and find something else.

Yes. Yeah, I think that's a really good.

That's a big part of it.

I think there's something about that. I can think of multiple instances where I've had conversations with CEOs and they're like, well, my people don't want to do the huddle or oh, my people don't like the align tool or oh, they don't really want to narrow it down to just a few KPIs. Look, you got to decide what kind of company you want to have. Are you going to put a line in the sand for the kind of company you're building, what your vision is, or are you going to tolerate the same thing that you've had for the last 10, 20 or whatever it is? You know, yeah, things are going to change. It's not comfortable. I got it. They don't see the value in the huddle, but they all complain that we operate in silos. Huh. Do you not see any connection? Right.

The third piece actually has to do with cash. One of my favored decisions because I don't think CEOs manage it very well. But in both cases, these companies had significant cash issues. And not only did Joe bring an expertise in that arena to the table, but he also had a really solid CFO who was able to help them to manage the ebbs. Well, mostly the ebbs of cash over that 18 month period because basically from 15 through most of 2015 and half of 2016, they were juggling Peter to pay Paul. I mean, it was a very, very tough cash situation.

How did they get through it? What did they did use any of that?

Well, they had a really strong, they have a really strong financial manager CFO who, you know, really took it upon himself to make some, you know, to look for cash, basically look for cash in inventory, look for cash in real estate that they had, you know, some pretty creative dealings. And then, you know, on the flip side and the design company, they had put off making the right investment in terms of a technology system. And unfortunately, their technology system was on its last legs and they needed to find a new, what's called a PLM system, a product or pml, product management system for design. And they ended up making a very large investment in the middle of all of this. So again, I think it's a, you know, it's an example.

Cash is tied, it's delayed, and they, they do a big investment.

Exactly.

And did that. How did that go?

Not well. You can imagine. I mean, they got it implemented and it's now giving them data that they, they desperately needed. But again, I think it comes back to what you were saying about, you know, you've got to, you have to pick your battles. You really have to be very deliberate about. You know, we're going to focus on these two or three things for the next six months. And they could have very easily chosen to delay the technology for another six months while they were getting everything else up to speed. But was that we just have to get all these things done now. And quite frankly, that is one of my takeaways from the situation as a coach is knowing what I know now, I would have pushed back harder on the CEO.

Yeah, there's always, there's lessons for all of us, always in the whole mix of things. I think that I see that a lot in particular in the tech sector where we talk about priorities and they put up some product development wish list as their corporate priorities. And there's a list of 37 things there. And I'm like, okay. There's also other business and team issues and things like that. So what are the six big things that we're going to focus on for the year? What are the five things this quarter? And they just like picking a few metrics. They just can't or they struggle with it. Right. If we're successful, we get them to realize that at the end of the day and at the end of our lives, like, right, each of us, our lives will come to an end at some point. So far as we know, nobody's getting out alive. And when we die, we will still have things to do. It's not getting done right. Your spouse will still be upset with you for what you didn't get done.

When you pass, there will always be, honey, do lists.

Right? Whether it's tomorrow or 30 years from now, that point, like will arrive and there'll still be stuff. So what are you gonna get done? Right? What you get done is Whatever you get done. So that fundamental thing of choosing your battles, picking priorities, figuring out what to focus on because you can't do everything. And I think that's. I just, I did a video recently on the balance between strategy and tactics and, you know, and understanding the relationship between the two and how much easier the tactical execution in the next year gets when you've got clear set of things. So we've got clear purpose, clear values, a clear bhag. Even just those three things, if I add core customer and brand promises in the decisions that I make for the next year are really, really clear and much easier to make than if I haven't aligned on those kinds of things.

Right, right. Well, and probably as equally important to having that strong financial person in place for Joe was having a very strong human resources person in place. I mean, Deb was, has been, is. Will be, has just been amazing. She spearheaded the core values work. She got. She. They completely redid the performance and the compensation system as a part of the initiative over the last two years. And she actually launched TinyPulse as well as five dysfunctions work which have really dramatically changed.

So they do five dysfunctions through the whole company or just at the leadership level?

It's just for now at the leadership team. But they're starting to pull it down into the company and they just, they did tiny, they launched TinyPulse sometime in 2016.

TinyPulse is probably company wide. Yeah.

Yes, yes. And that's been really helpful.

So tinyplus for our listeners, it's great we can add a link to that, but is a little bit like net promoter scoring for employees where you're getting a regular touch point on how your people are doing. So if you're driving employee productivity, you want to also look at employee satisfaction as a counterbalance to that thing. Otherwise you can end up driving people so hard and raising that and then people start to hate you. Right.

Yes. Yeah. Well, and it's allowed. It's given the maintenance folks on the floor an opportunity to speak and feel like they're being heard.

Yeah. So we got two companies. We've got this helicopter company and we've got a design company. The helicopter company manages its cash well, but attacks the people issues at the top and then starts to deal with people issues through the whole the dynamic. TinyPulse makes the key replacements that they need to, acts with conviction, defends the process of implementing the rock habits, holds firm on that whole thing. Anything else?

Well, and the last piece was they really got on board with Their sales and their business development. You know, that. That was along with managing cash, right? Managing. Making sure that the boat, you know, the helicopter stayed flying and that had enough fuel that they had to actually focus on getting business, because that was in their industry. The sales cycle time is easily 18 months, oftentimes two and three years. And they had, they had implement. They had, they had implemented Salesforce, but they hadn't really fully utilized it. So that was actually Joe's initiative. That's what he drove as the CEO. He had a key person that was on board with that, his sort of number, number two sales guy. And they enlisted a whole group of people for the sales initiative, reaching out to law enforcement, reaching out to key customers that they'd done business with in the past. They had some issues there. They ended up bringing in one person who didn't end up panning out.

But we see this again and again. You've got companies that have key systems in place. We had one last year and they were talking about how things were inefficient and their processes were a little clunky, but they had a brilliant system. They just weren't actually using it.

Yeah, exactly.

Instead of replacing it or reinventing it, they just brought in some key training and they all got a lot better at the very fine system they had in place and started to work on and take on the development. That tends to live with us in the world of process accountability, where we look at the top processes that span departmental areas in a company and then. And then work on tweaking them until we get them. Right.

Yeah, right. Right. Well, and I like to, when I work with companies, from a priority standpoint, I always talk about a one, two punch, which sort of goes with the critical number and then the counterbalance number. I mean, in their case, obviously, sales was number one. They had to drive sales, otherwise they weren't going to be in business.

Right.

But at the same time, if they didn't manage cash, they were going to fall out of the sky immediately. So it was that one, two punch of managing, of driving sales, rather using Salesforce, using the technology that they had but hadn't fully implemented, and then managing cash and then having the weekly tacticals, the weekly tactical meetings in order to keep everything on track.

All of these things to balance. Right. Lot of different things. Four big decisions. Lots of things. Look, it's not an easy thing to grow and scale a company, but if you think about it now, I don't know about you, but I've run out of gas in my car more than once.

Only once when I was 16.

I've done it more than once. Right. Which tells you something about me. Not that many times, but a couple times I've been engrossed in something, a conversation or whatever, and then just driven myself. But if you run out of gas in your car, for the most part, you just pull over to the side of the road and you call AAA or you get some help. Unless you're like in some Siberia or Antarctica or whatever where there's not an active AAA service, but you'll fuel it. But I'm also a pilot, right. And I will never run out of gas in the air, in a plane. And as a business owner, I've been very tight on cash, but I've never run out of cash. Because you run out of cash in a business, look, you don't make one payroll and you're an early stage company, you might survive it, you might get people to come back. You might learn that lesson quickly. You don't make payroll twice. You're pretty much out of business. Before you do that, though, sometimes you might be tempted to push a supplier or whatever out on something. But that kind of stuff, you don't run through your cash very well and then you miss orders. You end up with all kinds of problems that are just not worth having. So I think there's a really great lesson. The oxygen for your business, the thing that keeps you operating is the cash. And it is like the fuel in your aircraft. You don't want to do a power off landing in that thing and then try to get going again.

Right, right, exactly.

So, well, tell us a little bit about the other company. Right. So the other company avoids making the, the changes, does this, Avoids making the.

People when they do try to add leadership. When they do try and add leadership, unfortunately they don't do a very, you know, again, they were using top grading a little bit, but not using a really robust method of interviewing. I think, as I said, they added too quickly and, you know, so they stalled, right? I mean, literally stalled.

Using some but not all, you know. So I first was introduced to the Rock Habits and vern in about 2002. Right. And I used some of the things with great effect. But if I look at all of the key failures that I had along the way, I'm like, oh, well, I was using that but not that. Right. I was managing sales and my sales funnel, but I wasn't looking at my purchasing and production. I can think of many different problems that I had along the way and see the error of that, using something incomplete. So I wasn't using all of the habits and I wasn't then knocking and adding in the next thing. When I think about my mistakes and failures, which fortunately, others can benefit from now. Right?

Yes, exactly. There you go, Bill.

So there's not using and not implementing things, spending money maybe on the wrong priorities at the wrong time and showing typical or average results, while the other one has added $10 million in a pretty short period of time.

Yes, yes, absolutely. And not only that, they actually. The other really wonderful thing that Hawk was able to do was they were actually able to figure out their. Their strategic positioning in that time. So they've created a whole new brand promise that's going to give them access to a whole bunch of different new markets that they didn't have before, that I'm not at liberty to talk about because it's going to be their secret sauce.

I think that's a good thing to point out. So you've been working with the company for a couple of years now and you're starting to get some secret sauce developed. But a lot of people are like, they want to get right to the X factor, but we haven't implemented values yet. They want to get right to whatever, but we don't have a BHAG yet. There are some things to do along the way. It doesn't happen overnight.

You got to crawl before you walk and you got to walk before you run and. Yeah, I mean, there's a reason for that. Right.

I think a good question for all of us is to reflect on also, as I hear in your story, is there are lots of things we know. There's lots of things we know. We know that having a why centered business makes a difference, having purpose. We know that having values makes it easier to scale up and to add people and to manage things. We know that having a BHAG inspires everyone to greatness and changes the way you think about things. And yet how many of you have a well articulated purpose? How many of us have values that are clear, that are at the tip of everyone's tongue, that everybody in the company knows what the values are for the company? How many of us. The BHAG is in action, in motion. People are actively working on that. Those kinds of things are not well understood and they're fundamental. How many of us are actively using all the aspects of top grading and really bringing on quality people and taking the time to get it right? Oh, yeah, we know about that. Great. Are you actually doing this right?

Right.

And that is the value of the coach. Right. But we know that the difference in the cash results and the growth rates and the position are so dramatic. If you'll just spend a couple of years working on these things.

Right, right.

So different. There's another quote I like that you'll probably. I've been thinking about it a lot lately. It certainly relates to this conversation. That is. And I should look up who did this. I don't know who discovered water, but I'm pretty sure it wasn't a fish.

I like that.

Right. I think as coaches, we're often effective not because we're so brilliant, although I hope we're smart. Right. We're certainly a smart group of people. But it's not that we're so brilliant or so much better that my business successes are better than the people I coach. It's. It's that we're just not in their water and we're actually able and we're pretty facile with the rock habits and the world of scaling up. So we bring that perspective, that lens to the work and then we're just not swimming in their water and we can go, hey, you know, I'm working with a dozen companies here and you're really struggling with this.

Yep. Yeah. And that's actually one of the reasons that, I mean, at any one time we have, between myself as well as some of my affiliates that I work with, we're working with about 30 CEOs. So we have a really good sized community where we can be sharing information, we can be putting people in touch with each other, talking about best practices. And a big reason, I mean, Darius would tell you this, like one of the big reasons that they appreciate working with me is because I do have all the current group that I'm working with, but I've also seen it at the Fortune 50, Fortune 100 level. So I know what it looks like when it's at the big level. I know what it looks like and I've seen the hits and misses as well as successes at the smaller level. And he said, we don't have that. We're here day in, day out. So it's really helpful to have that perspective.

I think it's great to work with a variety of things and you see that what works in one environment doesn't work in the other. And yet you that those are still people who put their pants on the same way. There's still people with all the human failings of everybody else. But there are different ways of working and focusing at Each step I like to remind folks that we eat the elephant one bite at a time, right?

Yes.

Like you look at the Habits checklist, right. Our Rock Habits checklist. And it's a phenomenal. And you just look at that and you're like, oh, yeah, we should be doing all that stuff. And there's just no way. And it looks overwhelming in the beginning, which it can be, but you're just going to take one piece at a time. You're going to start knocking it off and pretty soon, like training for a marathon or whatever, the first time you run around the block can be a little hard. But before you know it, you're running 26 miles and you're proud of what you've accomplished. And the same thing, whether it's getting to 10 million, 50 million, 100 million or a billion dollars, it's the same. They're all human beings engaged in each stage. But you have to move the company through the stages of that. And the person that's going to run your books is not going to be the CFO as you hit the next step. And the QuickBooks Online that you're using now is not going to be the ERP system that you're using. And each of those things brings unique challenges that you're going to have to graduate. And some of us don't want to be the head of the company out. We want to be head of innovation or we want to run the finance side of things or, you know, we want to be. Or we just always want to be on the marketing end of the business. So figuring out where your eventual home is as the, as the company scales up is a really critical thing. Yeah, it's always so great talking with an experienced coach. I think the story of two different companies with two different trajectories is really great. I appreciate you sharing that insight to them. I hope our listeners have gotten some insight and have had a chance to reflect and think about their own world. Of course, we're going to put a link to your website up in the show notes so people can just look right down there here and click on ceothinktank.com and find Cheryl Beth's info and all of that kind of thing. She's part of our. Of course you'd find her listed in the Gazelle's scaling up websites as well, but we'll have that there and a reminder that you'll find the video versions and the rest of our stuff both on YouTube. YouTube.com billgallagher or scalingupbusiness.com for the podcast. You'll find us wherever you get your podcasts, itunes or like that. Just look for scaling up business and go ahead and subscribe now and you'll get these things. We put out one a week. Of course. Our own website there has a growth kit that you can use to download and get the basics of scaling up and begin to plan your own strategies and get your own team meetings going as well. And at least get started down this. As always, it's been a pleasure to be with you. I'm Bill Gallagher, your host for the show. We'll talk to you next time.