Client Case Study — Scale to Dominate a Region EP167 Video

So this episode is a conversation with one of the other coaches about one of our private coaching client success stories. This is a pretty typical example of what we can do with companies. This company saw an opportunity to dominate their sector in the state and eventually in the whole region that they, that they work in. And they also knew though the challenges in scaling both through organic growth or through acquisition and then the compounding kinds of issues that happen. If you try to do both of these approaches, I'm going to tell you exactly how they did it and how you can fix these same kinds of growth problems in your business. All the steps we took, what we did, and this other coach and I will share back and forth about what you could do and how this works.

Hello and welcome again to the Scaling Up Business Podcast. I'm your host and scaling coach, Bill Gallagher. On the show with me today is a fellow coach, Jennifer Walzer, who joins us from South Florida. What city are you in exactly?

Oh, I'm in Delray beach. Right near Boca Raton.

Delray beach, near Boca. I have family members. We live in Boca. Come and visit us.

I was just going to say it's probably your grandparents, but I trust me, people do.

Yeah. So Jennifer is a coach. She's a former CEO. She's been on the Inc. 5000 list with her last company. She's an all around awesome gal, good dancer. We like to party at the coaches meetings. Anyway, I was sharing with the coaches about one of our client success stories at the coach meeting last. And in talking about it, it seemed like it'd be a great conversation to share with our listeners. Right. What does it actually look like to be a private coaching client in our world? So we want to talk about this particular success story today. I think it's a great little case study. So welcome to show Jennifer. Thanks.

Happy to be here, Bill.

The company, this is a specialty contractor business in the West. They saw an opportunity to dominate their segment in the state first and then eventually the whole region. But they knew that there were some real challenges in scaling up. They knew people, they had people who'd been through the scaling up process before. They had an investor, so they knew the value of it, but also the real challenges in the process. And they knew there's a few ways to grow. So one of them is organic growth. Right. And there's some other ways, and I'll get into those in just a second. But they knew that whether you do organic growth or acquisition or franchise or whatever, there are compounding challenges if you try to do all of those things. And there are challenges in each and every one of them. So I want to tell you, I want to share with our listeners and with you what we did to fix the growth problems. So first of all, there's a few ways to grow, right? Organic growth. You did a bunch of that right in your last company.

Yeah, absolutely. Yeah. We were completely organic in our growth.

And with that, there's all kinds of issues, but they're certainly not limited to right now recruiting people and building an organization. As you grow up, the kinds of things that you need in your accounting department or your systems or the admin or the HR side of things are all significant and unique. And then your operations drive stuff. It's tough, it's expensive to grow such a pain.

The problem is that. But if you were to acquire another company, you don't know what you're getting either from a culture perspective. So. Yeah, but by the organic growth.

Yeah, and in my last CEO role, the organic growth, the more that we were growing, the more challenging it was to keep a profit. And our production and supply side stuff got to be real. So then there's acquisition, right? Acquisition seems pretty cool. Let's just go buy a company. And I've worked with a bunch of companies. In fact, in one company, we rolled up 11 other companies. And God, that was a painful thing, especially because they did the roll up actually before I came in. And now they were trying to deal the chaos of having rolled up a bunch of different companies and a bunch of people sitting around the leadership table who all wanted to be in charge, who all wanted their culture, their vision, all of that kind of thing. When you do acquisition growth, it's really fast, like, boom, we can add stuff, right? We can grow the profit, we can even achieve some scales. And it's easy to think about, like, oh, I'll just keep the administrative side in this company until I get some synergy right away. They won't have hr, legal, payroll, accounting, like all that stuff. We'll centralize that and maybe other kinds of things that you could do. Except you end up with people who might not share your vision, your values, who don't want to work for you, who they wanted to work for themselves. Totally.

Yeah. And how do you get an entrepreneur to all of a sudden to tell them what to do right now?

The other thing is, what if we did? Of course, there's also franchising that brings a whole other set of franchising, like a business in itself. So you had the original business. Now you have to learn like the business of franchising, which is kind of a separate thing. And so that's a different. We're not going to deal with that one today. That's maybe a show for another day.

It's a beast. I have a friend going through that process right now. It's a beast.

But it can be really cool as well. But let's just take the case for this client who wanted both the organic growth and the acquisition growth. They wanted to do both and they saw this. So they had an idea that by doing business in a different way in their sector and their sort of specialty niche of contracting, they could dominate first the state and then the whole region. And that was a believable story, which is why I came on. But now if we have the problems of organic growth and the problems of acquisition together, there's too many problems, and it's very easy to end up losing money, running out of cash, and being game over.

And then where's the focus? Right. You can only be so many places and so many times. So are you out there acquiring or out there organically growing?

What are you doing? Yeah, it's a big take. And then along the way, I think comes some bad advice. So there's a lot of, like, mediocre stuff out there or things that are appropriate for other kinds of problems, but not what we're dealing with. So here's the thing that I don't like is. And I didn't use as a CEO, always irritated me when I heard people doing it. And when I became a coach, I didn't do it either. And that's like a rigid set of execution habits. You got some company in and they like, you have to do everything in exactly this way and use these words and do this kind of thing in this order. And I think that's. It's really patently wrong because you could end up using a tool at a time when you need to address a different problem, that we're like, okay, you have to do these things in this order and exactly this way with these words. And it has the illusion of freeing you up. But you end up working on things that you maybe don't need to work on right now. So that's the first one. And then the other one is, let's just bring in outside leadership, an integrator executor, an ops manager, a coo. It's one of the key things, especially if you're the founder, the visionary, the creator of the business itself. This COO role is a really critical hire to complement Your leadership style. Most of us are like ball dog, squirrel. We have trouble focusing the sort of people that start companies. But if you bring in an outsider and you don't have a coach and you are just trying to use some of the company to do it, you can end up derailing all of your best work and pulling the team in a different direction. Because that COO comes in and goes, oh, you guys don't have your crap together. I'm going to show you how to do stuff like I know we did at my last company, and you're like, oh, great, help me. And then they come in and they like mess up your culture, they mess up your vision, they have different ideas about your strategic direction. It can go really, really badly to bring in an outsider.

Now, what do you think the best practices for that?

Well, we'll come into that. Right, so let's talk about that. I thought it'd be useful though to highlight a couple of things that, that I think are really bad and that's I think a rigid set of like dogmatic kinds of instructions. And then leaders in outside roles that screw everything up and then you don't fire them fast enough either, Right?

Yep.

And I don't know if you've had other. If you come in after the fact with some clients like that, but I've definitely seen both of these things come in and I've had people like graduate into scaling up work after having done some of these more simplistic things.

Yeah, I mean it's definitely a challenge, no question about it.

So let's talk about what we did here, this private coaching client. In two years of working together, we expanded to three times. There's actually more locations than that, but in two years we, we went out to three counties from the original one and we actually added a number of offices beyond that. I think there were. We went from one location to like six, but three sort of principal operating areas. We went in two years to more than four times the people. That's the second thing that we'll talk about when we did the solution and five times the revenue in that period and we're still growing. Wow. So 2 years, 5x the revenue is still growing. So I want to take you through. How do you get that? How do you go to three times locations, four times the people, five times the revenue, still growing on track for a 12x goal. We'll come back to that. So these are kind of the main steps that we take with almost every client and the way that we apply them can be a Little different, but there are some basic exercises and. And I'll bet you do the same. It'd probably be useful to do that. So the first thing that we do in a session. Right. And we did right at the beginning, after I heard about the client, had a couple phone calls. We started in like, you know, the groundbreaking stuff of like the interviews with the key leadership team, some assessments, looking at their current business plans, documents, their financials, that kind of thing. Then we start with our first session. In the first two days we do the manifesto and the core stuff of strategy and we work on getting the leaders right. So there's often a lot of focus on the strategy and the people. Even if there's some work to do or a main focus area of execution and cash that we're going to do in two days. Because like when I go to work on people, it's dependent on some of the strategic ideas as well. So usually in the beginning we're looking at and listening to what's this leadership team like while we're doing the work of determining their purpose, their values, the big hairy audacious goal, the ten year or better goal from Jim Collins work and the brand promises. And those four elements usually go into a manifesto that our clients create that becomes part of their sort of daily rituals that they reinforce purpose, values. The big hairy audacious goal and the brand promises give us a really great set of tools to begin to build the company culture. To create your own little cult, right? A growth cult.

Yeah, absolutely. Because if the team doesn't know, if they're not all aligned with the core strategy, then how the heck are you going to get that 12 times growth?

Yeah. So then we also do things like the three year targets, the strategic moves. What do we want to be and accomplish in three years? What does that look like? The leader might have done some of that work themselves in this first step. And we'll start work on the core customer. Usually that I don't usually get that done in the beginning unless they're all over the map. Right. With that kind of work. And then we look at what do they need particular attention to. So we just started another client on an extraordinary growth trajectory and they're looking at and doing a lot of work in execution. But the first piece was getting all that core strategy manifesto and the people stuff. Right. And then we started to work on the execution. Sometimes we need to tune up the cash stuff. But that's where the prescriptive part of the first step, like laying the foundation comes in. Now the Interesting thing in this company. So we came together, they hired a few new leaders, new head of operations, finance, new head of sales. What else do we have around the table? So some of these key roles were brand new hires, some with limited experience in the industry and others a little bit better. And we knew that some of those people would fail. But it's okay if you use our talent assessment, right? Drawn straight from the work of top grading and quickly. But on your own, without a talent assessment tool, without some support, you might not actually let go of people. In fact, one of the common mistakes we see CEOs make after not looking in the mirror and dealing with themselves in the process is they don't fire people quickly enough. They hang on for far too long, even though they know the phrase. Right. Hire slow, fire fast.

Yeah, it's funny, once I did an assessment exercise of the team, they actually found it cathartic to finally start to assess and figure out where their team really was. And to see it visually, it made them see it to say, you know what, you're right. If we had 10 times our company, we really had to 10 times our team, and these people aren't going to get us there. And seeing it visually through your talent assessment that you're talking about, it's pretty powerful. It works.

So we had about half of this new team of leaders who didn't like it. They were like, yeah, no, we have our own ideas about things. Oh, we don't need to do metrics or dashboards in that way. And I want to do them this way. And we don't like the meeting and everything they had their own idea about. Right. And interestingly enough, there were no results.

Surprise.

Right. So we only go a couple quarters like this. So this is step one of the big steps that we did initially. So the step one is get this core foundation in, deal with a few things that were going on, and then start to inspect, correct all the work in practice. So we say, like, do a daily huddle. And we design your daily huddle or your version of it together. And then you go out and you do whatever you do. And then sometimes. That's not what I think I was telling you to do. So if the coach isn't observing the performance, Right. So if you had a pick any sport, right? What's the sport? You like running, right? Yeah.

Running is all the.

Let's say that you were trying to increase your distance or time. You got a running coach and the coach is like, okay, I want you to improve your gait, more turnover that kind of thing. And let's try to get more of a mid foot strike, right? And instead of mid to forefoot, no heel strike. Like, let's work on that. And then you went out and did what you did. The coach didn't look at it, didn't video it, didn't inspect it, didn't observe it. They couldn't see what you're doing. And in your mind you think you're doing something when in reality you're doing something else. I had a running coach, she took video of me running. She slowed it down. And I'm like, I'm totally four foot. I could feel it, right. I looked at the video, I'm like, I'm completely landing on my heels.

Nice.

All I do. And it was hilarious to look at, right? So the next thing that we start to do is inspect and correct the work in practice, right? And that could be a person with an on site visit or video dialing in like this to one of your meetings, that kind of thing. Seeing what does it look like in reality in your world and putting in a little correction. Oh, your meetings are a downer because you dive right into the issues and you're not celebrating wins or who knows what. That's one that we had with this company in particular. And then some of those leaders failed. Now in a couple months we got rid of those people. When we brought that, made those changes, a couple of things were really clear. One was that to the rest of the team, not playing along is not okay. Especially when you see cuts and changes at leadership level and then you get in people who want to be part of it who are hiring into that environment. So there were some people at GO in the leadership team. There was some people risen up, there were some others brought in and there were some rapid changes then in the people because now with the foundation and we, we were getting the people right and starting to get the culture right. All right, so step two, now we've got a working strategy. So the premise of doing business in this way is starting to win. People are starting, they're starting to land business, the culture's working and we're starting to really like do big hiring. In second year, we brought in more than 100 people to that business. Wow. Right. But 100 people brought into a company with actively practiced and attended to values with this manifesto stuff being used on a regular basis.

Must have been a good onboarding program.

Right? So we deal with the hiring and all the WHO tools around that job, scorecards, one on one sessions, onboarding Process, We've got a whole range of that. There's now a work on training and all of that piece. So now we start to look for acquisitions. Step two, we started to look for acquisitions and we're looking for businesses that we could buy in the same sector where we could bring our special sauce, our culture, our management tools, our vision, all of that stuff to it. And so we started to bring in a few businesses and even some satellite locations this way. And now we're cutting people out. So we buy these businesses and identify the targets, negotiate and bring them on. And some of the people don't work out, some of the people don't want to play even though they knew what they were doing. Those people get cycled out really rapidly. Now we've started to build organic growth. Now we're layering on the acquisition, but with the good foundation of the Rockefeller habits, the scaling up tool framework, their great strategy stuff, that's where we begin the third stage of things. I think that's an interesting one. Not everybody does the acquisition route as part of it. Sometimes it's all organic growth that they're going for. But we can really accelerate some things and go quickly into new territory by buying some existing businesses who aren't being run well with people who want to exit. Right. We've done this quite a few times with other companies. Now we have to deal with. And getting into the third thing is like bringing it all together and making sure that we're now connecting the dots to all that. So that's where it comes in. We start using our tracking software and other tools to connect and cascade this whole thing, push it all the way down into. So now we've got a few hundred people working in an organization. We want to make sure that that stuff that's happening at the leadership level, going all the way down through the acquisition, not only the core company, but the acquisition, the new teams like that, getting all of that stuff working well together. Right. So that's kind of the third step is integrating all the different pieces of it across the units.

Okay.

So we want to get all that stuff doing and integrating all the way through the organization and then start to get on to the next piece. Now I want to go back to what doesn't work right. There's tragic results if you do this stuff wrong. They had business that was really flat in a number of years before they started working with us. And they had a vision for something like what the future could look like. But getting from here to the future is not necessarily what they know how to do. They know this and they see that. They envision that they want to go from here to there. That's what many folks want to do in the course. And it could be that you're currently flat and you're not growing, or it could be and you want to get growing again, or it could be that you're really growing well and now things are a mess. And the other thing that you might do is just throw more, hire more bodies, but then you end up making no profits. Right? Correct all of your cash. So the thing that we want to do is get in here and do the right kinds of things at the right time. So not a rigid set of execution habits. There's some common things that predictably you could do, except we're going to do them and apply them in a way that works for you in your company. So every company's huddle is a little bit different. Every company leadership team meeting is a little bit different. Every company's set of SC scorecards are not the same. Scorecards for every company. We're going to design your metrics, your dashboard, all of your tools to suit your company. Right. There's not like one purpose statement out there that works for every company. There's a version for each. Not one set of values or cultural habits. So we want to do that in a way that's your company. Not some level X like meeting and not this stuff done in this sequence kind of thing, but completely adapted with a thoughtful coach who's had a few businesses who's been down the road, who's coached some other companies, who knows what to use at the right time with you in the way that works for you. And we want to be really careful about the out. If we can possibly develop people internally, that's really helpful because they have relationship and experience and they know some of your business. If we bring in outside people, that can also be useful. But we want to make sure we bring them into good culture with some good elements and not bring them in, have them be at odds with it or try to do their own kind of thing. Right? Oh, I'm going to show you how we did it at XYZ Corp. Right. So we want that outside COO to come in you just to hand everything to them and them torpedoing the company. So those are the kinds of things I think that really matter and it's critical that you do that. I think most of us face these kinds of problems and your company will die if you don't manage this. Like you can Run out of cash, you can screw things up. I came this close to death a number of times as a business, right. That is a business and suffered so long through the application, scaling up stuff. And what saved me were the tools from scaling up and led to our growth for that and then more and more of our clients now as a result of that, applying all of these things in a consistent fashion. Right, let's go back over so three steps, right. First one is let's get the core stuff and the leadership right and then begin to build the organization. Getting the right kind of culture built in. So we've got manifesto stuff like purpose values, bhag, brand promises. We also set three year targets and strategic moves. We want to set a picture of that kind of three year future. And we want to begin looking at and focusing on the core customer and then addressing certainly execution and maybe some cash habits. Starting to get good at hiring people, all of those kinds of things, people. Strategy, execution and cash. Except in like the first session, we're often dealing with strategy as we deal with people and then we begin to apply the execution stuff. And sometimes cash doesn't get addressed until later unless you're in a total emergency at the time.

Yeah, I had one client, we started immediately in cash because they were bleeding so badly that if they bleeding right, it would have not lasted six months. It was dire.

So you probably do things like a cash projection three to 12 months out, you start to figure out that you probably do cash conversion cycle. You might start to look at profitable segments of the business. Right. Of things. You might do a power of one and figure out which levers they need to pull on that are more useful. Get the labor force working better with the labor efficiency ratio as a tracking metric.

Yeah, there were a number of things just like that, like you said. And also just even looking at basic metrics too.

Right? Getting the right metrics, just the basics. That's where something like cash dovetails with execution. These things all correlate to each other. Right? So true. And number two, if we've got that fundamental stuff starting to work well, then we look at the sexier things. Acquisitions, X factor, some secret sauce that gives you an accelerant to the business. We can start to do some things like that that might really help you take off. But we don't want to do that stuff before. We've laid in the basics there and addressed your strategy and your people and your execution and made sure your cash is all working. So we want to deal with the four big decision before we really start to ramp things up, then we can start to do that. But we got to do that in a way that is consistent with what we built already, not something that takes it off in a different direction. We want to go consistent with this foundation that we've laid. Third piece is as it scales, we want to make sure that that's integrated all through the business. And then we start to get software and tools and the rhythms well dialed in so that now in the expanded company, and this could be the issue because you ran a 15 person team for a while or a 50 person team is a really common inflection point that we see companies somewhere between 50 and 100, they'll start working with a group like ours in our kind of coaching. And now we go out to multiple locations, sometimes in different time zones, in different countries and continents. And we've got to get all these, this whole framework working across all of those kinds of things. And the job gets complex. We get. But exciting, right?

Very exciting. Because the employees are craving this. Right. And once you start to share that, it's exciting for everyone to know what we're all trying to achieve.

So those are the three steps. It's awful, it's awesome. It's exciting when it happens, you feel it. It's not to say that there aren't profound, real problems, white knuckle moments, all of those.

Yeah, there's always going to be. But yeah, but it is an exciting.

Right. Which is also what's cool as a coach. Right. We have clients who will call us the night before a meeting and say, okay, my CFO just quit. Or we might see in the middle of a meeting that somebody's going off the rails. I had one client where he had a COO start to have a mental break and I could tell in the meeting it was going and I could call the CEO outside and say, okay, I've seen this happen a few times. You've got something going on here. This is happening really fast. Here are your steps, here are the things to work out for. And almost to the letter, what I had predicted from experience did happen to that company, which I think, you know, like there's a certain amount of experience that we bring as a coach with our own CEO background. So majority of us were CEOs. Use the framework. But then that accelerates greatly as we start to work with coaching clients. Yeah.

You know, I always say that, you know, I have such empathy for my CEO clients because like you, like, you know, we've been there on the other side. We know what it feels like. And I've hired my own Gazelles coach, scaling up coach many years ago, that helped me get my success. So I get it. And it can be so exciting too, especially once everything starts to come together exactly like you say it works.

Yeah. So I worked with this company for two years, right? Just over two years. And then they were like, okay, we got this. But in that time, right, more than three times the locations, four times the people, five times the revenue, still growing, profitable, got the cash working well now, and they're well on track now and continuing to trend on a 12x goal. So within a couple of years now, they're going to hit this 12x goal. And it's a bit of a prediction, but it looks to me like in 5 years they will hit a 12x kind of goal. Right. That's a huge kind of growth. And I think that's the premise of the opportunity. That's the thing that we look for, for and that I'm always looking for with the clients. And the first thing is, do we have a big interesting goal to begin with? If you just want to double the business, you probably shouldn't be working with us. But if you have a 10x or global domination kind of mindset, for whatever reason, you want to build a better mousetrap, whatever, right? My purpose is helping leaders build a better world. That's because Those leaders, the CEOs out there, you have some vision for why your company ought to exist, why it ought to grow. And the kinds of people that I work with feel like they like the work they do is valuable, like it would make things better. And that's a lot of fun to help that kind of business grow.

It also makes it exciting for hiring too. You know, those employees that are looking for a new opportunity, you know, do you want to go work for a company that just wants to hang out and do nothing, or do you want to work for somebody that wants to, you know, rule, dominate? Like you say, it makes it so much easier across the board if that's really, truly what you want.

When you have a company that's done something like develop one of these manifestos, and the manifesto is real. It's not just fluffy stuff an outside firm did. Right. They didn't have a consultant come in and do it for them. They did it themselves with the coach's help, right? With our help. They developed their purpose, their values, their bhag, their brand promises. And it was like their creation. They owned it. They felt it in their bones. And it was completely Compelling. That's really cool. And then they, as you say, hiring recruiting, which has been like the top problem for a couple years now for people, getting enough of the right people gets so much easier because in your ads it comes out right.

I remember when we went through that whole process many years ago. What I found extraordinary is while the number of applicants went down, that the quality of it quality, just incredible. Where years ago we used to struggle with, oh my God, just one quality candidate, we then used saying, oh my God, we have five amazing candidates. Which ones do we choose for this one particular, you know, specifically looking to fill at that moment. So it just changed everything.

Depending on your competition and the competitive landscape, the environment that you work in, you might get more people or you might get more quality people. But when you start to bring these elements into your recruiting efforts and you look like a company, you stand out. Even if you're small, you stand out as being up to something. And people are like, oh, I want to get on board. That kind of business. Well, thanks so much for coming on and sharing a little bit of the story and some of the steps we took. I hope that our listeners found it valuable and we'll talk to everybody again next week. So we can only work with about.

Eight to 10 companies at a time for team coaching like this, and I can only take on another one or, or two, maybe in this whole year. But we do have a big network of coaches. So if you'd like to know more about this private coaching client kind of work, go to scalingcoach.com coaching scalingcoach.com coaching and ask you a few questions there to determine if you are a fit for this kind of coaching or which.

Coach would be most appropriate for you.

Now, as I said, I can only work with one or two companies like.

More like this this year.

But if I can't help you and if I'm not a fit for you, I may be able to suggest another coach from our group of coaches around the world that feels like they might.

Be a fit for you.

So go to scalingcoach.com coaching, answer a few questions. We'll see if we think actually help you if this will be a fit for you and then which coach might be most appropriate and we'll get back.

To you right away.