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How to plan strategically as your company grows (part 2)

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Every direct selling company wants to grow fast, but not every company knows how to think ahead and prepare for the inevitable growing pains. Steve Hooper joins us again on this second installment of a two-part episode to talk about the strategic moves you need to make to handle phases of growth and hyper growth. Steve and Kenny talk about how hyper growth affects your infrastructure, your operations, your organization, and your business partners. Specializing in hyper growth management, Steve has worked and consulted with countless companies and is now InfoTrax Systems’ Vice President of Product Management. Listen in for more of the important insights he’s gathered over the years.

Full transcript

Kenny: Welcome to the podcast. I’m your host, Kenny Rawlins. This is part two of our episode on hyper growth with our guest, Steve Hoover. If you haven’t listened to part one yet, go back in your feed and check it out. We’ll now join our conversation in progress.

Let’s keep going through a couple of these. I found number 2 to be pretty interesting because I’ve seen this be both beneficial and also be a hindrance. I want to get your thoughts on it. So commandment number two says “grow your own people.” I think that a lot of people want to work at companies where they have an opportunity for upward advancement. You’re investing in people by employing them and they’re gonna get a perspective that’s unique from hiring outside. But you can also get somebody who has a lack of experience, a lack of exposure to how things are done and there are times where I’ve seen people be very benefitted by bringing in outside expertise. Especially in the context of hyper growth, the company might outgrow people’s ability to grow with them. So I’d like to get your thoughts on that. When as a company should you say “Hey, this person’s been with us for a long time let’s keep them there,” and when do you say, “Okay, we got it, get somebody who’s experienced this before and bring them in”?

Steve: That’s a delicate one because again we’re in a relationship business and so many of our companies…we are family-owned businesses and we’re built on and those relationships. These are employees that helped us get started and we want them to have an opportunity, we want them to grow with us. That human capital… when we think about growth, human capital is as important of a piece of growth as anything else.

One of the groups I was working with, we had a small call center—about 10 people. Had a great manager that was running that team. The business started to pick up pace. We projected that within 90 days, we would be at about 40 to 50 agents in that call center. As we evaluated that call center manager, I met again with the ownership team and said “90 days from now I think we’re gonna need another resource running that team. It’s not a fault of the manager’s. I just I don’t think that we’re going to be able to… she’s not gonna be able to grow that quickly.” Someone who’s good at running a team of five or ten is not necessarily good at running a team of 50. There are different skill sets that are involved there and even though she had institutional knowledge and a relationship there, I said “we need to think through this. We want to find a place where she can be successful here with us.” Well we grew and within 90 days we were at 50 agents and within 90 days that individual had gone through the owners and said “I can’t do this anymore.” They, in that case—I give them a lot of credit—they realized that they did not have the tools there. Now we were able to find an opportunity there. So again, organic growth is great.

One of the growth points within every organization is the call center. Every other department comes and picks off their best people because of their knowledge. They understand the customers. They understand the business processes, the policies, and procedures that a company has a place. They see the transaction in the end. That’s a benefit.

Yeah, we do want to grow our own people. We want them and we should be investing in training and mentoring programs, expanding their understanding of what we’re doing, giving them opportunities to work in other departments. The other one though that you always think about is “do we have the right people on the bus?” A group I was working with, we were growing so fast that if you could walk through the door and not trip on the threshold you got hired. We just needed to be able to put bodies on the phone because the growth was occurring so quickly. We weren’t taking the time to ask the question, “are we getting the right people in the bus?”

So we grow our own people but we need to ensure that we’re hiring the right people and that we’re then instilling a culture within them as to what our vision is, why we’re doing this. We’re not doing this for money. We’re doing this because we have a core purpose. There are companies… you look at a company such as Slack which is a great startup. You like what they do. They’re growing a business but their core purposes is they exist to simplify busy lives. That’s what they do and that’s what they associate with. So, as we sit here talking about growing our people, we’ve got to realize that we’re going to grow. At first we might have a more centralized organization but as we grow we go from centralized down to more specialized teams that can handle tasks. Then there comes a point in time where we have to go outside and we’ve got to bring in industry specific expertise or process specific expertise to head up a team.

Kenny: Yeah that makes sense. I think that that is one of the hardest decisions and hardest things to be objective about because you work with these people. You get to like them or even potentially dislike them and they might be the right person. To be able to set that aside and to be honest with yourself and to help those people be honest with themselves…I liked your example of the woman in the call center who… it didn’t mean she had to go somewhere else, but it meant “Hey, let’s find a place that her strengths align with what the company needs.”

Commandment number three is “be at the cutting edge.” In this one also…like any list like this you think of maybe the exceptions to that. I’m curious what your take is on being at the cutting edge.

Steve: Cutting edge. I love this one because what this says is we have to know our audience. That means we have to know our distributor base. We have to know our customers. What is it that our customers want from us? What that allows us to do is to have a focus, a clarity, and it gives us a strength in our message and in who we are as a business. Knowing who we’re dealing with can’t be negotiable. This is who we are, who we service, and how we do that. So, what does it mean to know your distributors and your customers? We’ve gotta know what they want. I mean, let’s talk about a customer. What do they want from our product? What is the value proposition associated with our product that is a compelling reason for them to purchase that and at what price are they willing to do that? We then look at what is the lifecycle of a customer? How long would we expect them to participate? What can we do to ensure some stickiness in that relationship with them? We then have to know our distributors and talk about what type of people—as we look at those who are going to go out and sell our products and represent this product suite to a customer—what types of distributors do we want?

In terms of being at the cutting edge there’s business intelligence. This goes back to doing our homework before we even get started, really having that plan of a customer base, a plan of a distributor base, looking at products and how products fit within that, and, when new products present themselves, being willing to say no. We can have a great product presentation given to us but does it fit within that vision? We have to be able to say no even though our top distributors come in and say “I’ve got this friend who’s come up with it.” When I talk about cutting edge it’s really who are we dealing with? What do they want? What is the business intelligence associated with it? Do I understand? Any relationship is a learning relationship based on every action or act on the part of a customer or distributor, I as the company should learn about that relationship and I’m trying to learn as much as I can about that relationship. So when I talk about being cutting edge, be there in terms of understanding the wants and needs of a customer base.

Kenny: I’ve got a couple thoughts on that. I, almost, upon hearing what you’ve said and also thinking about this, I almost want to say, “be at the right cutting edge.” Because a couple of things come to mind. First of all, you might be at the cutting edge by virtue of who you’re partnering with. I’ve seen this kill companies as well where they’re in the health and wellness business and now all of a sudden they take over their own IT system and now they’re in the IT business. Do they want to be at the cutting edge of health and wellness? Or that do they need to be at the cutting edge of IT? Knowing your audience and knowing what drives your people…that can be a big mistake. It may be better to be at the cutting edge by virtue of who you’re partnering with. So now I’ve outsourced the responsibility of cutting edge to a partner.

Another example of this, years and years ago I did an interview for, and we were talking to one of the owners or one of the executives that used to work at Meadow Fresh. She talked about it. One of the mistakes that they made was losing sight of this and taking on too much. They at one point bought a printing press so that they could do their own promotional material, own labeling, own everything. And she said “now all of a sudden we’re in the printing press business, that we know nothing about. Now we’ve got to stay on top of that. We’ve got all this equipment, all of this overhead. We would have been a far better off outsourcing.” Because you think “oh we can take this money and do it better ourselves,” but you’re not experts in this new area. That’s my I thought is that you need to pick the right cutting edges to be at internally versus outsourcing. I mean, we’re a software company but we’re not going to create our own messenger or our own version of Slack because Slack exists. it makes more sense to let Slack do what Slack does and we do what we do.

Steve: I absolutely agree and “at the right cutting edge” is probably the best way to say that. Companies need to understand their area of expertise. We’re sales and marketing companies. We’re product focused we create part-time and full-time business opportunities for home-based businesses. That’s where the opportunity exists to be at the cutting edge. These others now come in to aligning yourselves with the right partnerships and deciding where you want to take on some operational expertise but finding others that go out and are leaders within their space just like you want to be.

Kenny: So let’s talk about commandment number six “build relationship equity.” What does that mean?

Steve: This is the one that… we’re all independent beings—we want to think that but the reality is that we have complete dependence on other links within our chain. We have to nurture those links. This goes back a little bit to what we talked about earlier. We’ve got to have a strategy on the development and the relationship side of those links. They need to be aware of where we are in our business, what’s impacting our business, what our projections are. The example you gave about one of your clients recently bringing you in… Here’s a summit and we bring in the vendor relationships. I mean that’s a beautiful experience. You want to have that type of a relationship where you can come to the table because you start to see who the other players are but you also start to get a vision of others that might need to be brought to the table too. In a growth-oriented company, again hyper growth, there really isn’t the luxury of a five-year plan. That doesn’t exist. It’s “how do we survive the next 30 to 90 days” and then six months and then a year. So we have to shorten up the decision tree. The relationships become all the more important. So you start thinking about what are the relationships that we need to have? On the finance side, banking is key. We’ve got to understand the risk policies of those that we’re associated with. We get into merchant processing and, given all of the issues associated with merchant processing, we’ve got to make sure that we’re fully compliant. The banking and merchant side is impacted by governmental, regulatory, consumer… there are all types of aspects and we’ve got to ensure that we’re building equity. We look at that value chain. We grow, the whole supply chain grows. Are we investing in that? Are we bringing on secondary and tertiary lines within this? It’s real easy to sit down and go “I’ve got a relationship with one provider,” but if there’s any hiccup in their business, guess what? That link and our chain just broke and we’re impacted by that. It’s making decisions, realizing that the discussions that we’re having are not always comfortable. We’ve got to get in and have realistic dialogue because the purpose of any operations team is to create value and our goal is to make dreams come true. We sit here and we think of that home-based business, that individual, their goal, and ours is to make it come true. We have to have equity in every relationship throughout that entire chain and that means validating, demonstrating success, questioning, and asking the hard questions. Can they handle the growth? Because distributors ask that of any company. They’ll see a little hiccup and go “can they handle the growth? Are they okay?” I’ve been asked that question so many times. Do you think they can handle the growth? And it’s not always the company. It’s somewhere in the chain that one of the links… that’s where we’re looking at the question. There’s a continual assessment and a monitoring that goes on there and then the flexibility and the ability as a company to adapt to a change in environment. Shift happens. We hear that expression. We have to be able to adapt as quickly as the environment changes around us.

Kenny: In interest of time, I think we’re gonna try to go kind of a little bit more rapid-fire through these last four.

Steve: Bring it on, Kenny.

Kenny: Okay so, “have a good time.” This is commandment number seven, “have a good time even when you’re doing serious stuff.” Why would you say that that’s important?

Steve: Growth is a team sport and we have to celebrate wins. When we grow, everybody in the organization grows and we all need to be able to celebrate and participate in the growth and success of a company. There’s an old Quaker maxim that says “you can do well by doing good.”

Kenny: Yeah.

Steve: So any company, if you’re sitting here saying “Have fun. This is serious business but we’re going to enjoy it. We’re going to make sure that people within our team that are closest to our customers, that we celebrate their successes. Growth is, again, it can be as beautiful as we talked about it, but it’s painful. I spent my first year of my marriage with a new startup and I spent more time with vendors than I did with my family. It was to the point that my wife even joked saying “we’re probably going to need to name our firstborn after this one individual that you’ve been spending time with all this past year.” As funny as it was, the growth associated with it was good because we grew that first year. I was given a partnership interest in the company. something I didn’t really expect. But I was given that because of the contribution to it. Was it a lot of fun? There was certainly some fun. It was a lot of work but I sat back, looked at it, and said “I’m part of this growth and it’s not just an executive team or leadership that’s celebrating us. It’s everybody within the organization.”

Kenny: Like you say, growth can be exhausting, it can be ugly, it can be painful, and if you don’t find a way to have a good time in that it’s a recipe for burnout and you’re burning through that capital. Okay so number eight “create passionate and loyal followers.” I think especially within the MLM industry this is something that’s so key. You see this in successful companies when you go to their events and their conventions. You just feel the passion. I don’t think anybody would argue that that is one of the commandments for growth, the question is how do you do it?

Steve: Yeah and I think this one really ties back to our first one: there is a vision. And where there is vision people will attach, people will start to dream and get creative with their life and look to make something better than the environment or circumstances they find themselves in. We’re stewards of those dreams and of that passion. When we talk about creating these passionate, loyal followers… there’s a great book out there called emotion marketing… you look at all the [marketing] stories that are out there today and you’re not just buying a dozen eggs, you’re buying a dozen eggs from hens that get massages on a daily basis, and the hens have a name, and we go out and pick them, and we wear only white cotton…

Again, we sell product but we also market a hope, a dream of someone having a home-based business. In some ways, you could say we’re dream merchants or some of the companies are because they’re showing people what they can do. But that’s where we’ve got to be careful because we have to be good stewards over those dreams. If we’re too casual, if we throw out terms that it’s simple, it’s easy… It’s not easy to make five hundred dollars a month. We can say it is but these are people going out and they’re working in their warm market, they’re out on social media, they’re doing things trying to create this [dream]. So we need to do everything that’s within our power to support them and we need to create loyalty architectures and show them why they’re associated with us as a company.

We’ve got to avoid bureaucracy. In our customer relationship and the interactions that we have, that [bureaucracy] can exist. To be quite frank, we’ve just got to be the best. We’ve got to be the best. Our products need to be the best, they need to be priced at the best price point for someone to go out and buy, they’ve got to be priced at the best price point for someone to be able to sell and represent and have an income opportunity. We’ve got to have the best customer service. You can just go down through [the list]. So those passionate loyal followers, they’re created when we as an enterprise pursue those things that will let our customer base trust in us. We’ve got to be about those types of things. That’s probably about as short as I can put it but this is a this is a great conversation just on its own.

Kenny: No, I totally agree. I think this is something that we need to circle back on because that is the goal. Especially in a time where people are so frustrated with dealing with huge conglomerations and the lack of personal touch in the world. We’re in a unique place as an industry to be able to create that passion and that loyalty.

Commandment number nine is “share the wealth.” I assume that this is talking about being generous and having some corporate responsibility. Give me your thoughts on sharing the wealth.

Steve: Yeah, yeah. When you talk about sharing the wealth it’s an internal and an external thing. On both sides, we have to recognize the performers. Recognize and reward those people who are responsible and who are participating in the growth. Within the product sales side of a business, a compensation plan should reward specific behaviors and we need to ensure—and that’s why we continue to analyze and assess—that our plan is rewarding the behaviors that we represent and that we want people to perform in order to receive compensation for product sales. Let’s recognize those people that are helping drive product-sales-related activities both on the field side as well as let’s recognize and share that wealth with those that are helping us on an internal basis. I’ve worked with companies where there’s been a profit sharing plan, where there are monthly bonuses if we achieve growth order things, customer satisfaction indexes that we’re hitting, we’ve got call center performance and there are key metrics there. Be willing to reward those individuals that are contributing to the ongoing [growth]—whether it’s organic growth or even hyper growth—within an organization. We’ve got to make sure we understand who it is that’s really responsible for that and it’s not always the person that is recognized up onstage. That’s why you see the acumen and the understanding that it takes within a compensation plan to ensure that those dollars that are allocated… that’s the single largest line-item on the expense side of a P&L, is the commission plan. Within any company. Are those dollars being put to the best possible purpose, again, as a reward for those who are going out and selling product, and those who are developing sales leaders within those teams and training them on how to best go out and to sell and support a customer base?

Kenny: And then the last one—and I’m really grateful for your time, and I think this has been a lot of valuable information—commandment number ten: “have stars and build leaders for the future.”

Steve: Yeah this is a great one because it’s usually there is a star that flings a company into hyper growth. It’s not we’re just all of a sudden there. There’s a star and that star could be a product. We’ve got a product and we’ve got the right timing or the right messaging or the introduction of that product that allows for us to grow. We have stars who are distributors, that are salespeople, that understand what customers want and how to communicate with those customers. We then have stars who are the leaders that work with those salespeople. That star can even be the vision which a company has expressed.

If it’s product, we talk about having a star and building for the future…we have companies in this industry that are weight loss companies. What is the life cycle of a weight loss product? They have a product but there’s also a life cycle associated with that. So, they identify the star and at the same time they’re also starting to plan and try and identify what is the next star?

Take a company as it looks at its distributor base, their metrics… We have leaders today that are identifiable based on, again, product sales activity, but we’re also trying to identify and establish relationships with those up-and-coming leaders. That next wave that’s going to come in. Continue to develop relationships with those. One company in the industry did a study a few years ago and they went out and they looked at, I as a distributor, “whose organization am I going to be more successful in? Kenny’s, organization? Or am I going to be more successful in someone else’s organization?” We’ve got to look at powerful, replicatable strategies that give people a real competitive advantage out in the marketplace.

When we talk about vision… to inspire people there can’t be hurt, there can’t be negativity. We’re not intimidating. These are part-time people. They’re here voluntarily and they can leave voluntarily as well. We need to build for the future. We’ve got to identify those stars. We’ve got to be positive, show people what their opportunities are, realistically what level of effort it takes for them to have success—whatever they define success to be. For some people success is “Guess what, I got my product paid for.” For others it’s “I want to make a few hundred dollars.”

This goes back to, as we grow, sometimes we’re moving so fast that we can lose focus. We can’t afford to lose focus. We can’t lose track of what our vision is. We have to stay focused on that vision. We have to make an assessment really of where we are and even in hyper growth, we’ve got to look for the future because again that’s where we’re going to spend the rest of our time.

Kenny: Yeah that’s perfect. I appreciate that. That really has to be a cultural mentality because you’ve got to have people who aren’t black holes as opposed to stars where they’re just consuming but not willing to let other people step up and make a difference. Well, Steve, I greatly appreciate your time. We’re definitely going to have to have you back on the podcast. This has been a lot of good info. Thank you.

Steve: Thank you, let’s do this again.

Kenny: Alright, so that’s it for this episode of the Podcast. We want to thank Steve again for his time and also thank Adam Holdaway and Jana Bangerter for production support. We hope you enjoyed the episode and we’ll see you next time.

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