Are You Solving the Wrong Problem?

If you're looking to waste a lot of time, get incredibly frustrated, and feel like a bunch of work that you were doing was all for naught, well, then just spend your year, your quarter, your month by solving the wrong problem. See, you can invest more money, you can hire more people, you can introduce new technology, you can create more meetings. Certainly, you can launch more initiatives, but if you have incorrectly identified the problem, all that activity may simply help you move faster in the wrong direction. Now, the theme of today's podcast episode is this: the most expensive problem in your agency may not be the problem that you haven't solved; it may be. The problem that you have incorrectly defined. Now, welcome back to the Agent Leader Podcast. My name is Brent Kelly. This podcast is to help you, the agency leader, and your agency team raise the bar, challenge your thinking, and ultimately become a best version possible leader who leads a best version possible agency. Now, just recently I introduced on this podcast— you can just go back to a previous podcast episode, you'll find it— But I introduced a new model for building an exceptional agency. I talked about there being four disciplines that help agencies truly become that best version possible: clarify, align, execute, and optimize. Now, on today's podcast episode, I'm going to focus specifically on this first discipline. But I do want to give an overview of these four areas and. And we're going to unpack these on future episodes. But first, we've got to clarify. We've got to clarify where we are, where we're going, and what's truly standing in the way. Then we align our people. We align them around a common direction, a common language, and common expectations. Next, we execute by focusing our time, our energy, and resources on the actions that create This is important, the greatest impact. And finally, we optimize by measuring, adjusting, and continuously improving. Clarify creates awareness, align creates momentum, execute creates results, and optimize creates continuous improvement. These 4 disciplines in building a best version possible agency, they've got to work together. But it all starts with clarity. You know, one of the most overlooked things that we see with agencies is they skip over this idea, this step, this process, this discipline. Because here's the truth. You can align your people around the wrong priorities. You could flawlessly execute the wrong plan, and you can optimize a system That should not exist in the first place. If you get clarity wrong, the other 3 disciplines may simply help you move faster in the wrong direction. That's why today I want to go deeper into this first discipline, clarify. So let's start just by talking about what does clarify or clarity— what does it actually mean? See, clarity, having clarity doesn't mean that you have every answer. No agency that we work with Even the great ones, the best ones have every answer. It doesn't mean that you wait until you have the perfect information, and it does not require a strategic plan so complicated that no one ever is going to look at it again. Clarity means developing an honest understanding of 3 things, 3 things to understand. Number one, your current reality. See, one thing that a lot of other organizations have gotten really well—they say really well—is this: All progress starts by telling the truth. So first of all, it's your current reality. Secondly, your clear destination. Where is it that you actually want to go? I've mentioned it on this podcast before, but one of the questions I ask agency leaders in some of the initial conversations. And I say it with a wink and a smile, is this: what do you want to be when you grow up? And then the last part is, what is your critical constraint? What is the bottleneck? What is the friction point? What is the thing that above all else is preventing you from getting from where you are to where you want to go? Current reality, clear destination, critical constraint. But for agency leaders, that begins with something even more direct, confronting the brutal facts of your current business model. So on this podcast, I'm going to highlight some principles, some themes that I'm going to go through. And the first one that I want to talk about is this: your model produces your results. I'll say that again. Your model produces your results. One of the foundational principles that we teach at Sitkins is this— say this all the time— your current business model is perfectly designed for you to achieve your current results. And I'll say that again: your current business model is perfectly designed for you to achieve your current results. Now think about that. Your current level of growth is not an accident. Your current profitability It's not an accident. Your producer performance, service capacity, client mix, and employee engagement are— you got it— not accidents. They are the predictable results of the model that you have created, or maybe the model you have accepted and allowed to develop over time. Now, if you're pleased with those results, you might be. Guess what? You got a good model. Continue operating that model. But if you want different results, working harder inside the same model will rarely be enough. You must first clarify what in the model needs to change. Now, that requires looking at the agency as it exists, not as we hope it operates, not as it used to operate, and not as we have explained it or lied sometimes to ourselves about. Effort is not the same as effectiveness. Intentions are not the same as results, and being busy is not the same as creating value. So let's talk about the root cause. This is really the second principle area that I want to talk about. Where does this come from? You know, agency leaders and the ones that I talk to, what makes them great is they're problem solvers. When there's a problem, they They take action. That probably sounds like you listening to this podcast. They hire someone. They purchase a new system. They schedule an important meeting. They restructure responsibilities, or they highlight or introduce another initiative. Action feels productive, but activity without clarity can become incredibly expensive. An agency leader, and maybe you've said this, they may say, We need more employees. We need more people. That might be true. Maybe. But the real problem, is it a lack of people? Maybe. Or is it unrealized capacity among the people already there? Are producers spending the majority of their time producing? Are service professionals able to focus on proactive client relationship management? Or are both groups constantly reacting, being interrupted, performing work that belongs somewhere else? And I can't answer that question for you. But these are sometimes questions that agency leaders miss. The wrong question may be, how do we add more people? How do we add more people? That's going to solve the problem. However, the better question might be, how do we accomplish more by fully developing and properly deploying the people We already have. Now, I have mentioned this on the podcast before as an example. This doesn't mean you shouldn't hire more people, but you do need to ask yourself the most important questions first. See, adding people may relieve immediate pressure, but if you add people without addressing the operating model that created the pressure, you may simply increase payroll without improving capacity. See, clarity means refusing to solve the symptom before identifying the root cause. Let's talk about a third principle that I want to mention on the podcast today in terms of clarify. See, we've got to clarify where value is actually being created. Most agency leaders, and we certainly have talked about on this podcast, most agency leaders understand the 80/20 principle or the 80/20 rule or Pareto's principle. Which is a relatively small percentage of clients typically creates a disproportionately large percentage of revenue. Where the 80/20 comes from is 20% of the right input gives you 80% of the desired output. And in this specific example, that typically means 20% of your clients produces 80% of the revenue. Again, I've talked about it on this podcast before, but understanding 80/20 intellectually. Is not the same as building your agency around it. Leaders must clarify which relationships create the greatest value, which clients have the greatest potential, which relationships should the agency round out, have a foolproof retention, or as we teach, continuation process, and which ones should be replicated. And where is the agency investing time, energy, and resources that produce very little return? This is not about treating people poorly. Every client as part of your agency deserves professional service, but not every client requires the same service platform, the same people, or— and this is important— the same investment of resources. Clarity requires leaders to understand the difference. See, most leaders know how much revenue their agency generates. At least the good ones do. Yeah, we're about this size of revenue. Far fewer, though, clearly understand where that revenue comes from, what it costs to support, and where the resources should be reinvested. So let's take one more step here and talk about clarification in terms of how capacity is being used. See, every agency has a finite amount of time, talent, energy, and attention. That's a fact. We only have so much. Those resources are either being invested intentionally or they're being consumed unintentionally. For producers, we describe their highest value activities as the green zone. This has probably been one of the stickiest things that we talk about at Sitkins. It's super simple, yet also very challenging for people to execute. Well, the green zone is about producers staying focused and making new sales, proactively managing relationships, continuing those existing relationships, and consistently building their pipeline. Those are the activities, the actions that producers are uniquely qualified to perform. So an example of clarity means that we need to be asking ourselves a question like this: how much of our producer's time is actually being invested in the green zone? Are they truly functioning as producers, or have they become part-time producers who spend most of their time servicing, reacting, performing work that should be handled differently or by someone else? This is true for service professionals as well. What's their best use of time? Well, in the Sitkins language, we talk about this being the blue zone. Having client relationship management, proactive client service, promise making, more importantly, promise keeping, and having consistent high-performance team meetings that our internal team, sales and service, are intentionally and proactively communicating. Are service professionals operating proactively in the blue zone, or are they constantly being pulled into reactive work? And unnecessary interruptions. In fact, many times what we see is they're working on the urgent that maybe isn't even urgent, but what they think is urgent versus truly identifying the important. Before assuming an agency says, hey, we need more capacity. Hey, I think most people think they need more capacity. Leaders must understand how the current, the existing capacity is being used. Because here's a principle I want you to think about. You, you cannot maximize capacity That you've never actually measured. Think about that. Well, how much capacity, how much more capacity we need? I don't know, because we don't even know where we are today. Again, this is the power of clarity or clarifying the key things in your agency, which leads me to another principle. We've got to clarify the economics. Now, is it all about the money and economics? No, but here's something that we have learned. Net new revenue doesn't solve all problems, just most of them. Okay, so let's talk about this. Leaders must clarify the economics of the agency, right? Because true revenue doesn't tell the entire story. It's a good part of the story, but doesn't tell the entire story. Neither does total profit. Good part of the story, not the entire story. Those numbers may look at— those numbers may look very strong, But they also might be hiding significant inefficiency underneath. This is often where we see the good results trap. Again, another concept that we've talked about on this podcast. We're doing good enough. And because of that, we miss things that would be critically important for us in the future. Right? The agency might be growing. The agency might be profitable. People are busy doing things. Clients, for the most part, pretty happy. And because the results are pretty good, no one feels an urgent need to examine what's not going well or what could we do better. Because good results can conceal a few things. Oftentimes we see it concealing wasted capacity. We'll see it concealing unprofitable relationships, inconsistent producer performance, And a big one is disengaged employees. The danger is not that the agency is failing. The danger is that it's doing well enough that no one feels compelled to change anything. See, clarity requires leaders to look beyond top-line revenue and ask a few other questions. What is our revenue per relationship? What is our revenue per employee? What is our spread per employee after compensation? Which, by the way, spread per employee is revenue per employee minus the average compensation per employee. To see how much spread or gross profit, so to speak, that we're making. Which parts of the agency truly generate profit? Which parts consume it? And are we creating profitable growth or are we simply adding revenue That's just work, just work. And here's a kicker, complexity at the same time. All right. So we've got to be able to really be able to ask ourselves 3 uncomfortable questions. And by the way, this is in our recent Sitkins Principle white paper, but these 3 questions that every agency leader, every agency has to ask. So let me go through these 3 questions. Number 1, are profitable clients continually subsidizing unprofitable clients? Do we know? Are we asking that question? Number 2, are profitable producers continually subsidizing unprofitable producers? And number 3, are profitable engaged employees continually subsidizing unprofitable Or disengaged employees? Now, these are not questions designed to diminish people or relationships. They're leadership questions. They reveal whether the agency is allocating the time, the talent, resources in a way that supports its stated goals. Current reality, clear destination, critical constraint. Now, once we've examined the business model, and certainly we've talked about that already on the podcast today, we've looked at value creation. We looked at capacity of the agency and we looked at overall economics. We return to the 3 elements of clarity. First, what's our current reality? Are we telling the truth? What do the numbers, behaviors, and results tell us? Here's a key part. Please hear me. I'm gonna say this again. What do the numbers, behaviors, and results tell us without explanations or excuses? That's the key part. Second, what is our clear destination? Where are we truly trying to go? What does better specifically look like? What level of organic growth, operating profit, productivity, client experience, employee performance are we committed to achieving? Those are things that we have to think about because often we'll hear things like, well, what are your goals? Well, we want to, we want to grow the agency. We want to, we want to improve communication. We want to have more accountability. Those are good, but those are aspirations. Those aren't clarity. And then the third part of this is what is our critical constraint? What is the single greatest barrier preventing the agency from moving from its current reality to its desired future? Is it opportunity? Is it talent? Is it role clarity? Maybe it's producer focus. Maybe it's that we don't have enough capacity for our service team. Are we selecting the right clients? Are we missing out on accountability? Maybe we don't even have anything, any accountability in place. Or do we struggle with making difficult decisions? I mean, it could be in those and many, many more. But do not create a list of 20 problems. There's going to be multiple issues and problems with any agency. But you need to clarify the constraint that if addressed, would create the greatest positive impact throughout the agency. Reality without a destination creates frustration. A destination without reality creates a fantasy. And understanding both without identifying the critical constraint creates conversation, but it'll never create change. So here is a test that you can take back to your agency. A simple exercise for your next leadership meeting. You ready? Identify the single best challenge facing your agency right now. Not 5 challenges, not 10 priorities. Start with one. Then complete these 4 statements. Have these written down. You may want to write them down as well. All right. So, after you get down to your one thing, here's 4 statements. We believe the problem is blank. The evidence supporting that belief is blank. What makes that true? Okay. If we solve this problem, this specific result will change blank. How will things be better in the future? And here's the last part. The issue we may be reluctant to confront is blank? This is an important question because oftentimes you'll see with agencies, they kind of know what it is they should do. But at the heart of it, the issue they're willing or unwilling to confront is something that is the reason they haven't done this in the first place. So don't rush through that fourth statement. That might be where your greatest clarity is hiding. Then ask 4 deeper questions. What brutal fact about our current business model do we need to confront? Like, what's there? Where are we confusing a symptom with the root cause? Where are we failing to maximize our existing capacity? And what do we already know needs to change but have not yet had the courage to address? By the way, let me stop for a second. These are hard, challenging questions. Hard, challenging questions that help you and your agency think more critically and certainly get to the bottom of what's really holding you back. Do not immediately defend your current model. Do not explain why something cannot change. And don't just rush into solutions. That's what most agencies do, and then they never get anywhere. I'm asking you with this first discipline, this first process is to start With the truth. Because clarity is not always limited by information. Sometimes it's limited by courage. Now, I want to invite you, the agency leader, the listener, to understand this, that every relationship— a relationship that we have at Sitkins, every relationship at Sitkins begins with understanding before recommendations. We want to understand your current reality, your desired future, your greatest opportunities, and the constraints that may be standing in your way. And when your agency joins us as a private client member, we use the Sitkins Principle Analysis as a lens to really understand the scope of many of these questions. It helps agency leaders see where revenue is actually coming from, where capacity is being consumed, and where hidden drains may be limiting growth, profitability, and opportunity. Because here's the reality: your You're running an agency every single day, and that isn't easy. We get that. We understand that. Our role and our mission is to help you see things differently and help you break through some of the barriers that are holding you back. The goal is not to create another report. You've got enough of those. The goal is to create true awareness, because awareness creates clarity, clarity improves decisions, and better decisions create better results. So if you'd like to begin and start that initial conversation, just go to sitkins.com/bookacall. It's the easiest way to get started. There's no pressure. It's a conversation. We want to determine if your agency might be a fit and you're thinking higher level and want to take that next step in your journey. So again, go to sitkins.com/bookacall. Now, in closing, let me leave you with this. Activity creates movement. That's true. Activity creates movement. In fact, my next podcast or one of the next podcasts is going to be about alignment, and then we're going to get into execution, and then we're going to talk about optimize. But it does start with this today because here's why activity creates movement, but clarity creates direction. Before you introduce the next initiative, solve the next problem, add the next employee, make the next major investment, slow down long enough to determine whether you have correctly defined the challenge. Clarify your current reality, clarify your desired destination, and clarify the critical constraint standing between the two. Because when clarity is missing, alignment becomes really difficult. Execution becomes scattered and optimization becomes nearly impossible. Now, I'm going to talk about all 3 of those areas, but I can't emphasize this point enough. We've got to start with clarity. Exceptional agencies create clarity before they create activity. Now, again, in the next episode in this series, we're going to move from clarity. We're going to talk about alignment. In fact, that's been some of the greatest feedback that we've heard from agencies in our experience and our process and our disciplines is this power of doing things together, common language, common messages, Common themes that we're on the same page. It's incredible what what happens because clarity inside the leader's mind is not just enough; it must be shared clarity throughout the entire organization. Until next time, continue your pursuit of becoming your best version possible. Thanks for listening. I wish you all the best in your success. Take care. Today's episode is brought to you by Rough Notes Magazine. Since 1878, Rough Notes has helped independent insurance. Professionals stay informed, sharpen their leadership, and grow their agencies. From industry trends and technology to marketing and specialty lines, Rough Notes delivers practical insights that you can put to work. They also offer Rough Notes Advantage, giving agencies additional tools and resources to help them compete and grow. Visit them at roughnotes.com. Hey there, agent leader. Brent Kelly here. Want to take just a few seconds to remind you that now is the time to create your true best version possible agency. If you go to sitkins.com/bookacall, sitkins.com/bookacall, we'll get to know more about your agency, conduct an agency assessment, and provide your agency with a customized plan to help you avoid some of the pitfalls, frustrations, challenges, and roadblocks to get your agency to true ultimate freedom and become its best version possible. It all starts by going to sitkins.com/bookacall.