After touching on the topic of risk in many other episodes of this podcast, David and Blair finally take a full episode to discuss at length the role of risk in entrepreneurship.   LINKS "Confessions of a Recovering Consultant" by Blair Enns Hyman P. Minsky Archive Twitter exchange with Jonathan Stark on risk Strategic Coach program with Dan Sullivan "A Mission With No Exit" by Blair Enns Peter Drucker   TRANSCRIPT BLAIR ENNS: David, what's the riskiest thing you've ever done? DAVID BAKER: I've always wanted to have a really long pregnant pause right after you start something, because you're always telling me I can regain the power with silence. The biggest risk I've taken was probably telling my wife about the risks I was going to take. BLAIR: Yeah, right. Wow. Hands up, everybody. DAVID: She's only told me there was one thing I could not do and it's so illogical. She says I cannot jump out of an airplane. She doesn't terrify flying, or race, or whatever, but I can't jump out, which seems so illogical. So, as soon as I get some, you know what, I'm going to jump out of an airplane. BLAIR: You've got some high risk hobbies. I'm not sure that you indulge in all of them, but tell us a little bit about your high risk hobbies. List them off, because it's a little bit incredible. Here's the consultant, somebody who types for a living. DAVID: Oh, that is dismissive, types for a living. BLAIR: Well, I refer to myself that way too. DAVID: Yeah. BLAIR: Like I'm a typist, right? I have friends who have calluses, like they're real men. You and I, we type and talk on the phone. DAVID: Okay. So, I taught motorcycle racing. I fly airplanes and helicopters. I travel to very dangerous parts of the country. BLAIR: Yeah. DAVID: I love the shooting sports, not shooting at each other. I'm not so much into those, and I don't hunt, but I like shooting sports. And I do a podcast with you, that's pretty up there too. What are yours? BLAIR: Yeah, right. Okay. I knew I was going to open with this question. For those of you listening, if anybody is listening, this is the risk episode, where we're going to talk about various types of risk, but to answer your question. When I knew I was going to pose this question to you, I started thinking oh, what's the most riskiest thing I've ever done? Other than some things that were driven by kind of alcohol and youth that were just outright stupid when I put my life or the lives of others in danger, other than that, I can't ... The riskiest things I've done in business have been investing in the business. By that I mean spending money, seeing something as an investment but knowing in the short-term, the expense is potentially debilitating to the business. DAVID: Right. BLAIR: But then trusting that it's going to pay off in revenue down the road. DAVID: Oh. The biggest risk you took that I can remember was when you totally changed your business model to a training model from a consulting model. That was a huge risk, to me at least it felt, maybe it didn't feel that way to you as much as it did to me. I was looking, from the outside, in marvel really. I was thinking, "Wow, that is a big risk." BLAIR: You were thinking, "Wow, that is a stupid move." I remember you telling me like a year later, "You know you could still go back to being a consultant," and I couldn't because I wrote that 3,000 word blog post called "Confessions of a Recovering Consultant." DAVID: Right. BLAIR: The reason I did it is I put it out there so that I would not ... That was my version of burning the ships so that I would not go back. DAVID: Right. BLAIR: And here we are. DAVID: But you do take some pretty significant physical risks. They may not seem like it to you because of where you live, but you hike in pretty crazy places and you poke bears, maybe not literally but close to it. BLAIR: I once said to my son, who was 15 at the time, I said, "You know, you're one of the few people in the world who has put your hand into a grizzly bear's mouth," and he responded promptly by saying, "I'm one of the few people in the world who has stuck a thermometer up a grizzly bear's butt." DAVID: Except he didn't use that word, but yes we gathered. BLAIR: He did. DAVID: He did? BLAIR: Okay. Enough about us. So, I sent you a text saying, "Hey, we should do a whole show on risk," because probably like one in three or four episodes, we keep coming back to the subject of risk, like how much risk that the principals of creative firms take. So, where do you want to start here? Do you want to start with your Minsky quote? DAVID: You know, I never used to pay any attention to economists, until you kept quoting different economists to me. So, as I was thinking about risk last night, watching a very boring TV show, I found this quote that just struck me. It's by Hyman Minsky, and it says this. He said, "Stability is destabilizing." And then there was an article on the Wall Street Journal talking about that concept and he also said, "That's because, in other words, stability is destabilizing because long periods of calm induce behavior and innovation that make the next downturn more violent" I was thinking about times in history where all the nobles were safe in the castles and the rest of the people are dismissed, and all of a sudden, they revolt against everybody. You think about all of these cycles that have happened over time, and the apparent stability that just slowly, slowly was like boiling a frog in water, people don't even notice, and all of a sudden it just breaks out. Or you think about some of the terrible diseases that have wiped out millions of people, or you think about some of the financial crises that almost all of us now are not too young to remember, like the Housing Crisis and so on, and yet we think that somehow this isn't going to happen. Then other times, we think it's going to happen. The more I thought about risk, the more confused I got really because I think of myself as quite a risk taker, but I also wonder if I really am. BLAIR: Isn't that interesting? Why do you doubt that? DAVID: Well, because I have one of those personalities that thinks really carefully about the implications of something, and then I just do it. So, I have what's called the DC conflict in a personality, so I tend to overthink things a lot and I'm a bit of a control freak. BLAIR: Yeah. DAVID: Then I think well, after I thought through this this much, it doesn't feel like that much of a risk. That's why it doesn't feel like I'm as much a risk taker I think as maybe other people who've seen my behavior might think that I am, because it's just no, I'm going to do this. But also, you and I have had really interesting conversations usually after a Manhattan or whatever we happen to be drinking. BLAIR: It's a Negroni this year. Let's just be clear, this is the year of the Negroni. DAVID: The year of the Negroni, that's right, yeah. But I have run my business and my life in a way that I'm going to try to make principle decisions and that means that I'm not going to stop short of those because of fear. So, I am willing to picture myself homeless, that is, without a business, without any significant level of asset, and I will still be making decisions based on principle. DAVID: That just seems like such a logical position for me to have, and so in that sense, it doesn't feel all that risky to me because what's the worst that can happen? Oh, homelessness, oh, I'm okay with that. That's why risk is a confusing concept to me. BLAIR: I think that some listening to this might think, oh that's a bit of an exaggeration, but like somebody who knows you and has had many conversations with you, in which you have brought up that scenario, you have very vividly painted this scenario of you being homeless, you usually had a dog. DAVID: Right. BLAIR: You've lived in this future state where you've imagined it quite a bit, and so you've tried it on and thought, "Yeah, I'm okay with that, as long as I can live with myself and the decisions that I've made." DAVID: Right. I believe that I am a few stupid mistakes, let's say I'm struggling with some emotional or mental issue and I make a bad decision, and then it's compounded by another one out of 10, so two decisions. BLAIR: Yeah. DAVID: Do you think you are a couple of decisions away from a very altered lifestyle? BLAIR: Wow, you know, you're probably asking me at exactly, I won't get into the details, but we're considering a big move in the business, financial move. So, I have thought okay, if this goes wrong, I'm really vulnerable. If this goes wrong and something else goes wrong, I might be starting over. But like you, being bankrupt and starting over doesn't worry me. It worries me because it would terrify my wife and my obligation to my marital partner. My kids will be fine. I'm okay with starting over. When you get these compounded variables, it's like okay, I'm going to take a big risk. DAVID: Yeah. BLAIR: And you take a big risk and it doesn't work out. Usually, we're not betting the entire firm or our entire lifestyle on it. But if something else happens at the same time, then possibly we're wiped out. That's how populations go extinct, this combination of a steady pressure and then an incident. I forget, there's a name for it, it will come to me in a second. So, the steady pressure might be economic decline. So, we're in a period of recession and then something goes wrong, so when you get those two variables together, that's when everybody is really vulnerable. BLAIR: I was really interested in this topic because a friend of mine, Jonathan Stark, on Twitter he's a developer and teaches developers about value-based pricing, and he was tweeting about an episode of one of his podcasts recently, and I haven't listened to it yet. But he was ... just the subject of risk, I forget what his question was, but I tweeted that ... and I was really thinking through this as I was forming the tweet that's, "I've come to the conclusion that the state of entrepreneurship is that you are all in all the time. You're always making ... You always have a bet on the line." BLAIR: His reply was, "Yeah, but you're not always betting the business. It's a series of small bets." I tweeted back, "Yeah, I agree with that," but I don't fully agree with that. I want to come back to that Hyman Minsky quote in a minute, but I think there's something about the state of entrepreneurship where you are always walking some sort of line and when I read Minsky's quote, let's just reread it again. BLAIR: So, "Stability is destabilizing, that's because long periods of calm induce behavior and innovation that make the next downturn more violent." I read that quote, I think of our listeners, our clients, and the ones who are like they get comfortable. They build a comfortable business. They're not constantly reassessing their business model. Then along comes change and they're just caught flatfooted. It's like your friend who says, "Yeah, my wife left me and I ..." DAVID: It was a surprise. BLAIR: We didn't even have any trouble. We never argued, and you think you idiot. A married person needs to be just slightly paranoid about the state of their marriage, the way an entrepreneur needs to be slightly paranoid about the state of the market. Something could come along, the karate instructor or whoever it is. DAVID: I just love how you just lay your whole life out in front of thousands of people. BLAIR: Well, I've learned my wife doesn't listen to this podcast, so I'm okay. DAVID: Oh, that's given you a lot of freedom, yeah. BLAIR: When you read the Minsky quote, were you thinking about yourself or were you thinking about those clients that you've had who it's like good stable business, and they're playing golf or they're so comfortable, they don't change anything, and all of a sudden, the condition are slowly, slowly changing like the boiling frog. BLAIR: And then bang, they wake up one day and everything is different and they kind of blame the market or they don't understand what's happened to them. What's happened to them is they got comfortable. They weren't sufficiently paranoid to the point that they weren't constantly reinventing things, constantly taking risk. That's what I see in that quote. What do you see? DAVID: I see the same thing, and your description of these entrepreneurs, these principals that are listening is exactly right. They wake up in the morning and if they're not worried, they're worried. They're worried about nothing to worry about. They're always paranoid about something, even if they have to make up something that they're paranoid about. They envision that maybe an employee is plotting with a client to take the business, or they read something that isn't even there in a comment that a client made about oh, their client is going to leave. Or they read something in the news about how this entire industry is changing. So, yeah, that's exactly right, but I feel conflicted because on the one hand, I look at firms who just toil under the radar, they're not firms that anybody is trying to emulate. They're not winning all kinds of awards. They're not the cool places that all the young folks want to go work at. They just do good solid work. They've got solid financial fundamentals as well. They've got decent principles about how to manage people, and year after year, they make money. Then you have the other ones who are innovating at the frontline and creating new service offerings and saying, "Hey, you know what? Nobody is going to be developing websites in three years. So, in one year, I'm going to stop doing that and reinvent myself." What's the better model, because I just don't see too many firms who have much of a balance between those two things. It seems like it's one or the other, and I want ... Maybe this is my personality coming through here, but I want a little bit more balance and I hate the fact that they're constantly paranoid, but I love the fact that they're constantly paranoid. Does that make sense even? BLAIR: So, you're saying at one end of the spectrum, there's an unhealthy paranoia. DAVID: Right. BLAIR: Right, just because you're paranoid doesn't mean they're not out to get you. DAVID: Right. BLAIR: At the other end of the spectrum, there's this complacency. DAVID: Right. BLAIR: And you're saying you would like to see more firms in the middle that have where the principal has a healthy level of paranoia. Is that what you're saying? DAVID: Yes, I am. I wish there was some way to figure out where principals were on that spectrum. Here's an example, this may not be the answer, but it illustrates what I'm thinking of. Maybe you need to be making your employees a little bit nervous most of the time, but not flat terrifying them, right? BLAIR: I agree with that completely. I really identify with that. DAVID: Okay. BLAIR: Yeah. DAVID: Or another would be you need to run a culture where people really want to stay and work for you, but some of them should still leave for the right reason. We don't want to read too much into people, or read the wrong things into people leaving. We want them to leave for the right reasons, and so on. I'm just inventing these on the fly. I don't know exactly what the answers are here. Then there's also this whole notion of an efficient marketplace. Here's an example of that. An efficient marketplace says that there are very few unexplored arbitrage opportunities in that a market will usually fill in those low spots on the road or knock off those high spots on the road within a couple of days. Okay, but entrepreneurs principals or folks listening, our clients, your clients, they're always seeing like oh my God, there's an unmet need that I can fill, but they don't think about those opportunities very objectively. The same sort of objectivity they bring to solving problems for their clients, they don't bring that same level of objectivity to solving problems for themselves in terms of evaluating the soundness of an opportunity. This is why, as we were thinking about this topic, I'm thinking you know, you're always saying that the sample of the work you do for the client is the sale. You say it differently, but that's the idea. BLAIR: The sale is the sample. DAVID: Sale is the sample, yeah. And here, the fact that we are bouncing all over the place, this is the risk thing and we're taking a huge risk even talking about all this stuff without really knowing. We're flailing around here. We're just kind of getting inside each other's heads a little bit.   BLAIR: Okay, we're talking about risk. This is the risk episode. Do you remember, David, a couple of years ago I asked you to translate something into Latin for me? Do you remember what the phrase was that I said this is my personal motto? DAVID: No, I don't. I don't remember that. BLAIR: So, looking up on the wall, I'm still seeing your handwriting of the various ways to translate this into Latin. But it's unpredictable, but dependable. To me, just looking at this it's still tacked to my wall, I'm thinking when you were mentioning how your employees should maybe be a little bit nervous about what you're going to do next. DAVID: Yeah. BLAIR: I was thinking about I really enjoy in relationship with my wife, who's not only my life partner, but my business partner, I enjoy the role of disruptor. I enjoy the role of being the person who shows up and says, "Okay, we're going to take a whole bunch of risk," and then she and the other calm people around me kind of have this little meltdown and I enjoy seeing them go into meltdown mode. BLAIR: So, it's really important for me as my personal identity, and I really wonder the people listening out there, all the entrepreneurs, I wonder if you identify with this as well, to be seen as unpredictable, but not unstable. I would like to be known as somebody not just in business, but in life who is seen as you never know what Blair is going to do next, but I know I can always depend on him. DAVID: Yes, buttressed with the fact that you have scared them before. BLAIR: Yes, and they have survived. DAVID: And they've survived, and they've also seen, they followed your lead, and you led them through the Red Sea and nobody, or not too many people drowned. BLAIR: I didn't lose many. DAVID: You didn't lose many, right. So, the idea is that okay I've had crazy ideas in the past, some of them have not worked out, but enough of them have that we should at least have a really good discussion about this. In the end, I'm going to listen to everybody says, but I'm going to make a decision on my own kind of. Maybe not on my own, that's a little bit ... That doesn't sound good, but it's not going to be democratized. BLAIR: Yeah, yeah, with the input of others. DAVID: Right. BLAIR: So, I wonder if that shouldn't be the motto of all entrepreneurs and not just me. While we're skipping across risk related topics here, another thing I really wanted to talk about is this idea of no exit. A few years ago, I had a revelation about my own business from a couple of different sources. One was the Strategic Coach program and Dan Sullivan, and another entrepreneur who had said something publicly. I'd had this revelation and this epiphany that I was never going to sell my business and I was never going to retire. So I wrote a lengthy blog post about it called "No Exit", and I've since done a bunch of exercises around this when I'm speaking to a room full of agency principals. The first time I did this was at Revenue 2.0, that's an event you and I did together twice about alternative business models, and I do this talk that I have called The Five Constraints, but the first constraint is this idea of no exit. So, if you're listening to this, if you're the owner of a business of any kind of, whether it's a creative marketing business or some other kind, I want you to try on this constraint. The constraint is that you can never sell your business and you can never retire, and then I'll just stop there while you think about that for a second. Then I'll ask you if that's the constraint you had to live by, what are the changes that you would make in your business right now? Make a list of the changes that need to be made in your business, and then what are the changes that need to be made in your life. So, I give people a couple of minutes to make some notes, and then I ask the audience, "All right, what did you write down?" People say, "Well, I've got to change my role. I've got to quit sacrificing today for tomorrow. It's important that I show up to do a job that I love, so I've got to change my role. I've got to delegate. I've got to take more vacation." DAVID: Right. BLAIR: So many people say, "I need to start working out." I'm not exactly sure how that's connected, but it's a really interesting constraint. The real source of it, I was inspired by a couple of different people, but the real source of it is I noticed this pattern in my clients' businesses. When the principal gets to a certain age, and the age is just a few years shy of where I am. I'm 52 at this recording, so I start to see it around 55, late 50s, so definitely in the early 60s, when somebody gets to that age, when they can tell me when they're going to retire, I know it's over. It's over because as soon as they have one eye on the exit, they quit taking risk. Have you see this too? DAVID: I have, but I'd never seen it expressed quite like that. Immediately I say, "Oh, that's something I could study." BLAIR: Yeah. DAVID: Because as soon as they have a date three years, now what does their decision making look like when they know that it's only going to be three years or five years or two years or whatever it is? BLAIR: I'll tell you this anecdotally, if somebody says they've got an eye on a retirement date that's within five years, they will not make a difficult decision around positioning. DAVID: I was just going to ask, positioning would seem to be the likely one. BLAIR: Yeah. DAVID: What are some of the other topics they would avoid decisions around? BLAIR: They won't make difficult staffing decisions. I might not be right about this, but I'll say it anyway because it never stopped me before. DAVID: Wait, is this the same Blair? Who took your mic? BLAIR: They kind of cede control of the culture. That's not necessarily a bad thing, but if you think about like a vibrant firm, at the helm of the firm is a truly inspired leader whose primary job is to keep an eye on the horizon and say, "We're going this way," and to make decisions about things that are going to happen in the future, spotting things in the market, spotting trends in technology, et cetera, et cetera. So, that vision is at least five years out, and as soon as that vision gets to a five years, four years, three years, they're not really thinking about the health of the firm long-term. That has a significant impact on the culture of the firm. The energy is different. As I'm talking about this, I'm hoping that you can imagine firms or just recall firms that you've walked into where you realize, oh yeah, this is not a vibrant young place, and it's not so much to do with the chronological age of the people, although that is a factor. But the energy of a place where the principal is thinking about retirement is completely different. As soon as the principal starts thinking about retirement, they lose, I don't know if it's moral authority, but they become less of a guiding force. So, where does the guiding force come from? Maybe it doesn't come from anywhere. Maybe there's a power battle. DAVID: Nature fills a vacuum, right? So, if they're not leading, then somebody is going to step up. I think I can illustrate what happens along this same line. What I have seen is that you will be more tolerant of talented assholes as employees. You do that, not just because you don't want to rock the boat, but because this talented asshole is somebody that has taken something away from you and you don't want to step back in. You don't want to find somebody else to do this for you. That is making a huge ethical compromise honestly. BLAIR: Yeah. That's part of the problem I have with it. I do see some of these compromises as ethical compromises. You avoid the big fights. You're absolutely quick taking risk in the marketplace, and that's another element of risk. My favorite Peter Drucker quote, there are so many great Peter Drucker quotes, is, "In business, all profit comes from risk," and I like to add, in life, all profit comes from risk. So, you imagine that okay, if that's the nature of profit and risk in business, so you imagine that your client decides that they're going to go out into the marketplace and take some risk in the market as a way of earning profit. So, first of all, your client decides I'm going to take some risk, and then they hire you and in part, what they're hiring you to do is to make some of that risk go away. In every price that you charge, put forward to your client or charge your client, there's some sort of risk level built into the price. There's just risk all around. When somebody in the middle of the equation that is the principal of the firm quits taking risk, then everything kind of doesn't grind to a halt, but everything kind of slows down, gets less interesting, less value is created. DAVID: And clients start to run things more as well. You don't push back. BLAIR: Yeah. There's another tough decision that you're not going to make. You're not going to push back on this client. You're thinking ah, three more years. DAVID: Yeah. BLAIR: Three more years. DAVID: Don't want to upset the applecart. BLAIR: I've some friends who are cops and once they get 20 years of service in, they always say three bad days. If I have three bad days in a row, I can just quit and I've got pension. I feel like that's what happens to agency principals when they have one eye on the exit. I just want to clarify here, I'm not saying you can never retire. I am saying you obviously want to build a business. You want to create your wealth, so at any moment you can stop, you can shut it down. But the idea that an entrepreneur is going to, in five years from now, I'm going to keep sacrificing and then in five years or whatever the time period is, I'm going to like shut it all down or go do something else and start my new life. I think if that's what's driving you, if that's kind of your vision, maybe you've just inherited it from the previous generation where we were taught, for whatever, that that's how things are done. We just need to unlearn this old practice of retirement. We should just get away from this practice of retirement, or you've just built your business in a way that it's just ongoing sacrifice, sacrifice, sacrifice. So, what I'm advocating is your business should serve you, right? Structure your business in a way that it serves you, in a way that you love showing up to work, and you're energized by work, and you're making good money, and you're getting all of your needs met, and you get to this place where your business is so good at serving you that the idea of retirement becomes ridiculous. DAVID: Right. Now, if you catch this early enough, let's say ... And I get this, because I get calls from people who want me to help sell their business, and if it's early enough in the process, I can probe and say, "Oh, you know what? This isn't the problem. The problem is that you're just not as interested in it anymore, but we're catching this quick enough. You could reinvent yourself and you wouldn't want to sell your business." Sometimes that's quite possible, right? But if you're past that tipping point, there's very little that can happen. I'm hoping that as people listen to this, they're inspired to be honest with themselves about this, and to live with some of the discomfort and the paranoia and to let that make them feel alive and to embrace the risk taking, and also to picture themselves homeless or whatever that looks like for them. Maybe it's just not enough money for a latte tomorrow or whatever. But picture themselves and embrace that fear and then make better decisions that follow some deeply held principles that you have and not be dragged along by the marketplace. My goodness, that's what I hope people hear here. BLAIR: Yeah, and again, back to this point I was trying to make earlier is at some point, things change, your partner, like health problems, whatever, everything changes, and you do want to be in a position where you can shut your business down or sell it if there's a willing buyer. I'm not saying you can never sell your business and you can never retire, because there are times for lots of people when it's going to make sense to do one or the other. What I'm saying is you should operate your business with this idea that you're going to die with your boots on, so that you never quit taking risk, you never quit facing the difficult business decisions. I want to close by, I'll give you the last word here, but I want to close my part here by recalling a tweet that I saw last week on the subject. I'm not sure who it was from. I think it was a financial advisor. He was saying the pattern in life when it comes to retirement is you've got a job, and at some point, you get to a certain age you realize, at this rate, I'm not going to have enough money to retire in the style that I want to retire. That situation, that realization forces you into entrepreneurship. So, you begin to take risk and you start a business, and then what this guy says is the inevitable is you make the money that will allow you to retire, but you're having so much fun now that you completely ... You discard the idea of retirement and this guy is saying this is a pattern that he sees over and over again. That really resonated with me. I think there are certain jobs that you absolutely have to retire from. There are certain businesses that it might make sense to retire from. But when you're already an entrepreneur, you're already taking risk, we're not coal miners. You're not wearing out your body. I think you structure your business today so that it remains fascinating to you and the requirement of that is that you keep taking risk. When you do that, and you don't have one eye on the horizon, you're going to focus on living a long healthy life. You're going to focus on shaping your role in your business so that it serves you, and the idea of ever retiring is going to be absurd. So, that's my last word on this. What do you want to finish on? DAVID: I can't top that. We'll leave it at that. I think that's a very apt way to end this thing, and it's been fun to talk about this risk. There's just such a brotherhood out there, of risk takers and almost like a secret handshake, you meet somebody that you hardly know but they're an entrepreneur and you immediately know that there's something you share with them. It's this risk taking thing. All of a sudden, you understand their world, even when you don't even know it yet. It's just an amazing thing. BLAIR: That is so profound. Like I got goosebumpy when you were talking about it, because I'm remembering there was no room I would rather be in than a room full of entrepreneurs. DAVID: Yeah. BLAIR: A room full of people taking risk, and then you drop the person in who's like got his eye on the retirement and it's like, yeah, you're in the wrong room, dude. DAVID: Yeah. This has been great. BLAIR: Yeah. DAVID: This has been a fantastic discussion. Thank you, Blair. BLAIR: Thanks, David. Talk to you next time.

Blair gets David to admit that he was kind of wrong about open book management being just a fad when he originally wrote about it almost two decades ago, and David offers ways that it can actually benefit both employees and clients when used appropriately.   Links Financial Management of a Marketing Firm by David C. Baker   TRANSCRIPT BLAIR ENNS: David, today we're going to talk about open book management. How does that sound to you? DAVID C. BAKER: Sounds like you think you're in charge. Why don't you say, "Can we talk about that?" BLAIR: Well, let me assert control. David, would it be okay with you if we talked about open book management? DAVID: Great idea. I like that idea. Let's do that. BLAIR: Okay, fantastic. I just happen to have an article here that you wrote. I've actually just pulled it out of your book, Financial Management of a Marketing Firm. We don't talk about that. We should do some podcasts on that book, because that's a book that every principal of a creative firm should have on their desk or their bookshelf. And the reason I had it out is, I was just on a call with the owner of a small creative firm who wants to raise his level of business acumen, and we don't have the training program that he's looking for. Ours is too specific to business development. So I said, "You need to buy this book." And then, as I was leafing through the book, I saw you had the stuff on open book management. We'd already agreed that we were going to talk about open book management. But I want to read something from this that's in the book. BLAIR: It says, "OBM, open book management, is clearly a fad. That doesn't make it wrong, just suspect!" Exclamation mark. "Open space layouts are also a fad, and time will tell how they catch on. Though there's already strong anecdotal evidence, if that's possible, that people jumped on the bandwagon and only later asked where it was headed." DAVID: So you want me to pull stuff out of here to embarrass you, as well? Or not? BLAIR: "In my opinion, open book management is a fad that will not catch on with the masses." When did you write this? DAVID: Last month. No, the first time I took a stab at writing about open book management was in 2000, so you gotta give me a little bit of slack. I was kind of wrong about that. I'm still going to be right about open plan offices, but it's going to take another decade for the world to figure out that I'm right about that. BLAIR: Really? DAVID: Yeah. BLAIR: Yeah, you think we're going to go back or away from open plan offices? DAVID: You know, one of the key components was that the principal or leader or whatever should be out with all the rest of the folks, and that blew up in everybody's faces, so we've already walked away from one of the key tenets of it, and we've also walked away from other things like, now we have places for people to go off and work if they want to, and we're not making everybody sit in what looks like a call center and be all disturbed by everybody's nonsense. So, yeah, I do think it's going to be another ten years, but we'll figure that out, too. BLAIR: Okay. DAVID: But I was wrong on this one, for sure. BLAIR: Well, let's just pick up from there. What did you think was going to happen, and what's the state of the nation right now when it comes to open book management? DAVID: Well, people are more open to it for sure, and one of the things that occurred to me as I was looking back over my first foray into this is that I wrote it at a particular time in history, so this is right during a difficult economic environment, and that's typically when principals move towards more open book environment. BLAIR: Yeah, "look, I'm not making any money." DAVID: Yeah, right, so quit your whining. It's like, I'm not making any money, why do you keep asking me for more money? That's very common, like people go to open book management when things aren't going all that well, and then they're not quite as enthused about it when things are going great. But, we've matured in so many ways around that, and it think that the current approach to open book management is really good. I'm very much in favor of it, to a certain degree. DAVID: I asked a bunch of principals not too long ago, just a couple months ago, about their perspective on open book management, and you and I talked about this poll. It's really, what did you find interesting about that poll? Tell people about the results of it first. BLAIR: Yeah, so the Twitter poll that you did. You said, "As the principal of a marketing firm, my perspective on open book management is: A, everything is fair game; B, all is open but salaries; C, we share the big picture; D, financials are not shared. And the number one response, 38% people said, everything is fair game. DAVID: Yeah. BLAIR: And then 24% was the next, B, all is open but salaries. So 62% of the people you polled are in favor of open book management at one level or another. DAVID: Right, that surprised me. It surprised you, as well, I think, right? BLAIR: Yeah. I mean, I was shocked at 38% said everything is fair game, because the distinction really is pointed out in the next response, which is all is open but salaries. So people are saying, yeah, what the principal earns, what the highest earners earn, what the lowest, everything, shared, or who gets bonuses on what, commissions, etc. DAVID: Right. And I came across something just last week that I found even more interesting than that, and it kind of pegged those results into a better, more I guess, an anchored context. And this was something that Katherine Vasile had done on CNN.com, and she discovered that the big difference in how we approach open book management is a generational one. So, 30% of workers between 18 and 36 have shared what they make with a colleague. So a third of younger workers tell their colleagues what they make. Compare that with older people, like you, not me, but older people, only 8% of those people share what they make. And then flip that around to what do they share about what they make to family members, and 60% of millennials will tell a family member, whereas only 48% of older folks. So there's something about, maybe it's transparency. I'm not sure I completely understand that, but that's the difference. It seems like it's a little bit generational. DAVID: And since these younger folks are running firms, they're taking their personal perspective to how they want to run the firm. I think it's great. I think it's fantastic. BLAIR: I probably should have done this at the beginning, is the one interviewing you. We should probably define open book management. Do you want to back up and do that? DAVID: Sure. So, it's being more transparent about what is happening in the business, and if we back this train up 20 years, it was pretty common to find agencies who didn't even show employees ... they didn't know what the hourly rate was, really wild, bizarre, and they never got to see the proposals that clients were accepting, which I also found incredibly bizarre. And then, so , what the hourly rate is might be the first step. Next would be seeing proposals, what clients are paying for what they're getting. A deeper step might be, what are the top-line numbers. What are our top-line financials. Not the net, not all of our expenses, but what, like, we're a $4 million firm or something like that. DAVID: Next step down would be looking at more detail in the income statement. So, you subtract all the expenses, what's the net. And then the deepest you could go would probably be sharing what everybody else is making individually. I would stop short of that for a couple of reasons, but that's the progression for open book management. So it's not like you're either open book management or you aren't, it's more a matter of degree, probably. BLAIR: So is it all financial when we're talking about open book, or are we talking about The Books, the accounting books? DAVID: Generally it is, yes. There are some other things that people aren't nervous at all about sharing, like the purpose of the firm, the future of the firm, what the principal's timeline is, what we're thinking about in terms of maybe opening another office, maybe changing our perspective about certain service offerings. I don't see anybody ever thinking about pulling back from that. Universally, people are open about that. So yeah, it really does come down tot he financial side. And when you think about the classic term, open book management, that's always around financial stuff. BLAIR: So, it seems, looking at this article from 17 years ago now ... Wow, I can't believe we've been doing this this long ... to where you are now, you just said you think this is great, the openness, the trend towards openness, so clearly it's not a fad. It's stuck around. It seems to be gaining some traction. You're pointing out that it seems to be a cultural thing, as the younger people live in a more open and transparent society where everything is out there on social media, etc., there's less inclination to hide things. So, your assessment is this is a good thing and we should all be embracing it. Is that correct? DAVID: It is. Up to the salary side. Maybe that'll change too. I don't have a history of predicting this very reliably, so I'm hesitant to do it again. Maybe that'll change, but I do think that we tend to judge people too quickly based on how much money they make. So we tend to assign a human value that's tied to what they make, and I think that's a massive mistake. Because it really is more about, it's really a positioning question, like how easily replaceable is somebody's labor, and it has nothing to do with how valuable they are as a person, and we can't separate those two things in our minds. So I don't think sharing salaries is good. I think sharing the whole bucket of salaries, like this is what everybody makes together, and that should be less than 45% of AGI, that's fine. But I do think it's really good if we stop at that particular point. DAVID: I wish that our transparency just extended to actually with our clients, as well. I would welcome a little bit more transparency about the financials of agencies, so that clients could actually see them too. BLAIR: Well, that's interesting. DAVID: And clients are demanding it, right? You've seen some requests for that. Some of that is just intrusive, asking a lot of those stupid questions. But I think clients do have a right to know whether your agency is financially viable. They don't have a right to know what your people make and all those other intrusive questions. They're asking because they can, as you're famous for saying, but that doesn't mean it's right. Bu I am in favor of more transparency around financials. BLAIR: So, let's come back to clients for a minute. I just want to go back to the idea of sharing salaries, what people on the team make. When I think back to some of the stories around professional sports ... as a Canadian, I'm going to use NHL hockey as an example. And for many years, quite famously, the salaries of players were kept artificially low by the fact that it was either a written agreement or it was some sort of "gentleman's understanding," in quotes, that players wouldn't share with each other what each other was making. And Gordie Howe was this player who was kind of famously responsible for ... He was privately told he was the highest-paid player in the league, and there's a culture in the league of players not talking to each other about what each other was making. And the NHL ownership was famous for being successful on that level. And then at some point, somebody pointed out to Gordie Howe, made this comment in the room, "No, I'm the highest-paid player in the league," and some junior guy said, "No, no, he makes more than you, he makes more than you, he makes ..." BLAIR: And that was the beginning of kind of a slow move towards like full disclosure, and as everybody became aware of what everybody else made, then the salaries just started to go up and up and up. So that's what happens in professional sports, and I can imagine that in the average firm, if, especially as you get larger firms, and I've worked in some large firms where it's a very kind of competitive culture, like not to an unhealthy degree, but when you get into a firm of hundreds of people, you look at some of your colleagues, and you see them as direct competitors for the job that's the next level up. And I cam think of a couple places where I worked where that was rife. And again, not necessarily a bad thing, if you're a competitive person, but just the salaries, I can imagine, in a firm like that, large firm, multiple competing for the next promotion, everybody's measuring themselves against each other. That would have to drive salaries way up, would it not? DAVID: It would, right. And that's why I think it's healthy to publish a salary range, and maybe not publish it on your website, but talk about it when you're hiring somebody, so that somebody knows that you are going to move around within this salary range, and that won't change unless you take on additional responsibility, or the firm grows, in which case, that range for that particular role might rise a little bit, otherwise you're going to end up overpaying people. DAVID: One of the things I've noticed is that the people that tend to get overpaid or paid too much are the ones that have been with you for a long time, or the ones who know what other people are making. So you give a bump in pay to somebody, the only other person who knows about that, besides the person, is the CFO. And so, as all of these little raises are going out, the CFO or the bookkeeper, the accountant, full charge bookkeeper, whoever that happens to be at your firm, knows about this, and you feel duty bound to sort of send them some bumps along the way. Those are the two people that tend to get overpaid. DAVID: But there's a dynamic that's changing out there. LinkedIn did a fascinating study, and this certainly applies to agencies as well. People don't make more money by just staying at one place longer. They make more money by changing jobs, right? And so they pick up that bump in pay at the intersection, when they cross the boundary and go to work for another firm. And so you don't have quite that pressure of paying people a lot, because they stay for a long time. DAVID: The other things that's interesting to me, and there's a pretty strong argument that the unequal pay between male and female has come about largely because of the secrecy around what people make. And so, if I think of one particular factor that might tip this in favor of more transparency, it might be this notion, not notion, it's true, it's real, that females are not getting paid as well as males are for the same work. So that might be enough to tip the balance towards more transparency, so that we can erase some of that wrong in the marketplace.   BLAIR: Are you aware of any information studies that have done, either of yourself or anybody else, that shows the benefits, either financial or in any other form, of moving to open book management? DAVID: Yes, there is an organization, the organization that basically founded the whole ESOP movement, which stands for Employee Stock Ownership Plan. I think it was 40, 35-40 years ago, and this is an organization that is self-interested. In other words, they have a strong incentive to say that open book management really benefits the companies that practice it. And even with that bias, they could not come up with any demonstrable proof beyond about 1-2% gain. So in other words, open book management is not something you do primarily to boost your firm's performance. And that mirrors what I've found in the marketplace. It has virtually an unmeasurable effect on the firm's performance. That is not why you do it. You don't do it to help people self-manage or to say, "Let's align everybody's activities with some goal that will benefit them individually and the group." It just simply doesn't work. That's not why you do it. There are good reasons to do it, but that's not one of them. BLAIR: You mentioned in this article from 2000 that there's a really bad reason to move to open book management. You just touched on it, and you said the bad reason is this idea that open book management will lead to a self-managing culture. DAVID: Right. So it's usually instituted by principals who don't particularly enjoy management, and therefore they're maybe not that great at it, and so they're searching for ways to have employees self-manage the environment. You see this in environments where they have this owner's manual, that's kind of what I say, it's really more of an employee manual, but I think of it as an owner's manual, that's 300 pages long, and no matter what the circumstance, all they have to do is just point to this page, and that's what will fix the situation, or you see them with this very convoluted compensation structure for especially the sales people but also other people as well, so that they don't have to make decisions. DAVID: Principals cannot insulate themselves from making decisions. They are responsible for the profit that the firm turns over. Setting those priorities, having the right people in place. As you talk a lot about thinking about future value, that's their job. And no open book management plan or anything else is going to relieve them of that responsibility. That's why it's really dangerous to put open book management in place if you're doing it for the wrong reasons. It's just simply going to disappoint you. BLAIR: Does the size of the company make a difference on whether or not you should consider open book management or the level to which you should exercise it? DAVID: Well, if you have a three person firm and you're publishing the aggregate salary number, then it's going to be a little bit easier to figure out what somebody else makes, but I don't necessarily see any difference there. You know, here's something interesting. I have a client, about a 40 person firm, and twice a year is they do this employee retreat. Instead of running all the employees through the same sort of disclosure about say the future marketing plan, and about our facility, and about our financial performance, and our clients, and maybe a survey we did. You know, instead of running everybody through that, they set up stations instead. They set up six stations. One of them was financial performance. One was our marketing play. One was our survey with clients, those kinds of things. And they let their employees decide what they wanted to learn about. DAVID: And what they found consistently over the years is that very, very few people actually went to the financial station. Not that many people were interested in it. The ones who were interested were very interested, but it wasn't that interesting to most people. And that also mirrors what I've found. If you're going to talk about financial stuff, then make sure people are interested in it, and I feel like it should always be married with financial literacy. So like, explaining to folks, "what does this really mean?" Because some of your people have run businesses and are very astute, other haven't. They run their own personal finances, but it's different. So, coupling any information with financial literacy training would be useful as well, but I think we overestimate how interested people are in this stuff beyond the top level open book management. BLAIR: Yeah, I wonder, and you probably know the answer to this, how many people in the typical creative firm are actually able to read an income statement or a balance sheet. DAVID: Not many people. Not many principals can, honestly. And when you talk with CFOs and controllers and so on, and they're frustrated because they cannot get their principals to understand the basics of a financial statement. And every principal is very different about how they want to process this information. They want to see I ton one page, they want charts, they don't want the detail. They usually want to see a stack of detail, but they don't want to have to dive into it. They just want to know that somebody has done all the detail work, but they don't really want to look at it themselves. And I think that mirrors what most employees are interested in, as well. They almost want access to it, but as long as they have access to it, they're probably not going to dig all that deeply into it. BLAIR: Yeah, interesting. Anything else you want to add on this before I circle back to the doorway you opened earlier, and that's the idea of more financial transparency with clients. But, anything on the employee front? DAVID: I think I see this changing still over time. I think more and more of this transparency will surface, and I think that's a good thing, as millennials and so on and folks who are more driven by transparency and openness as they take over more and more firms, I think this is going to be a movement that continues contrary to my prediction 17 years ago. BLAIR: And you think that principals should embrace it? DAVID: I do, absolutely, think it's great. BLAIR: Yeah, okay. So again, back to the idea of aversion of open book management or at least financial transparency with clients, there are some kind of well known examples out there in either the design profession or the advertising profession of large clients running arduous, elaborate pitch processes where part of the process is they demand to see profit level and they want to see employee salaries. And I've always been quite vocal on the fact that that is none of their business. But I do identify with what you said, the idea of, you know, a client does have a right, I think, and I think that's what you said, to know that you are financially stable. What's the level of transparency that's appropriate to clients or prospective new clients? DAVID: I agree with you on that front, that that level of disclosure that they're asking for is not only stupid but it's also dangerous, but it does seem to me like we could develop a policy that explains to prospects, and maybe even to employees who seem to be interested in the financial viability of the firms they're beginning to work for, and there's more and more I guess concern on their part about whether the firm is worth taking a flyer on. But, we could develop this policy that talks about what our perspective on business, like the solidness of business. Like, how do we view the role of profit? And how do clients fit into that? And what are our principles about maintaining debt levels below X amount? And where we let our net profitability float between X and X, and how much of our income we reinvest in innovation, which is, as you pointed out several times, is the enemy of profit. How do we make choices there to throw profit away and invest it in innovation? DAVID: So like having a sort of a ten part manifesto around our perspective for money, and make that very visible on our website. I think that would be a very healthy thing to do. I've never seen anybody do that, but I would be very in favor of it. BLAIR: That's an interesting idea. I mean, to publish that, you would have had to have thought through these idea first, right? And how many firms have? DAVID: Right. And that's the biggest advantage, right? BLAIR: Yeah. DAVID: This forces you to think through it before you publish it. BLAIR: So that would be publicly available to clients and to employees, and to prospective employees, to prospective clients? DAVID: Right, yeah. BLAIR: Gee, that's not a bad idea. Where would you put the cap on the profit? DAVID: Well, it's like I would say, maybe ten to 30%, that's probably what I would say, and also explain that the economy is notorious for sneaking up on us, and when that happens, we want to have enough padding that we can still pay our people fairly and still exist for our clients. And so, we recognize that some years are going to be lean, and those will be offset by the better years, and so we have a commitment to that. And if we fell like we're consistently making more than 30% profit, then we're probably overcharging clients or we're underpaying ourselves, and we have to bring that back into balance. That's the level of disclosure I would be in favor of. BLAIR: That's fantastic. Do you have a name for this document of financial disclosure? What do you call this manifesto? DAVID: I don't know. I haven't written it yet, but maybe that's something we should do together. Wouldn't that be interesting? BLAIR: That'd be very cool. Alright, this has been fascinating, David. Thank you so much for this. DAVID: Thank you, Blair. It was a fun discussion.

Blair and David analyze and then look beyond the requests for reassurance potential clients make during the late stage of a sale to address their underlying motivations.   LINKS “Transtheoretical Model” (Prochaska & DiClemente, 1983; Prochaska, DiClemente, & Norcross, 1992)   TRANSCRIPT DAVID C. BAKER: Blair, today I want to ask you about something that I've heard you talk about for many years and it's this notion of alternative forms of reassurance. BLAIR ENNS: Yeah. DAVID: We used to do this event together and we did it for like 10 years running. BLAIR: You mean that one where I carried the both of us. DAVID: Yeah. That's the one, right. Yeah. Yeah, that's definitely the one. I remember listening particularly attentively to this one section that you used to talk about because it was a new concept to me, but I was also really fascinated by it and I thought, mainly I thought the title was just perfect and you called it something like the alternative forms of reassurance and as I recall at a certain point in the sales cycle when an agency is in the process of landing a new client, that prospective client still wants a little bit more information and they might ask for something and this was a way as I recall, where you could kind of redirect the question and provide alternative means of reassurance. You remember those days? BLAIR: Yeah, I remember those days fondly and the way you described it, I think of a judo move. We're talking about late in the sale and I guess I'll back up in a minute and explain why reassurance is important late and it's not important at all early, but we're talking about late in the sale when your job as a salesperson is to reassure this nervous late stage client and they ask you for things. I was counseled to look beyond the request, the specific request and look at the motivation for the request and sometimes the request is the negotiation, the request is to cut price. Maybe you're just negotiating, but maybe there's something else going on here or maybe they're asking for a money back guarantee or maybe they're asking for references or maybe they're asking to do things a little bit differently. DAVID: Right. BLAIR: In a lot of those situations, you have to think about what is the client buying from you. Anytime they hire your firm, they're buying a path to their desired future state, and so when you put forward a proposal in front of them with a price attached and they look at that price, you are essentially pricing their desired future state discounted for uncertainty. In every price, there is an uncertainty discount that's built in or there's some math around an uncertainty discount that the client is doing. Looking beyond the motivation for the request late in the buying cycle, again, it might be to cut price, it might be to offer references or it might be to do the engagement differently. It's not universal, but many times they see a lot of risk in the engagement and they're simply trying to mitigate that risk. They're trying to lower that uncertainty. BLAIR: So if the engagement fails because of what's known as performance risk and that is you're the provider, your questionable ability to do the job, if in the end you don't end up doing what you say you're going to or to the quality that you say you're going to and you affect the outcome, but then the client is on the hook for that and if they think there's a great chance that that's going to happen, then if it's really high, they won't hire you at all. But if it's a little bit lower than that, maybe they'll see the risk and decide, "Well, for the level of risk that I'm taking, I want a lower price." So that's just one example, asking for a lower price where the client's really just trying to mitigate their risk, factor in uncertainty or another way of putting it is they're looking to be reassured that everything's okay and those are all different kind of spins on what is essentially the same topic, a nervous late stage client wondering, "Well, what if this goes wrong?" DAVID: So if you handle this well, can you in effect eliminate that discount a bit from a pricing standpoint? If you handle that reassurance correctly, can you close that gap and leave less money on the table? Is that part of it as well? BLAIR: Oh, yeah. I couldn't sit here and say you're going to eliminate all discounts forever and still close the deal. But the vast majority of them, especially with good clients, like a value buyer who doesn't see themselves as spending on an expense, but investing in a solution or an opportunity, a value buyer who maybe starts negotiating or asking for a discount, you can almost always offer an alternative form of reassurance as long as you're able to look past the request and discern the true motivation and see what's going on underneath. If you don't mind, I wouldn't mind backing up and just talking about why reassurance is important late. DAVID: Yeah, sure. BLAIR: I'm fond of saying that selling isn't about talking people into things. My definition of selling is selling is three steps. It's helping the unaware, inspiring the interested and reassuring the intent, and this is a truncated, bastardized and otherwise manipulated version of a change management model that's called "The Transtheoretical Model" developed by Dr. James Prochaska and some of his colleagues, it often goes by TTM, so it's a model of understanding how people go about change and I would just interject here and say that I believe that buying is changing and therefore selling is change management, so that's a model. It's a way of looking at the world is thinking of buying is changing, therefore selling has change management. Okay, if you believe that, then you can go to the world and grab a number of these great change management models and there's a bunch of them out there. In the last 10 years, there's been some really interesting ones. BLAIR: You can take any of those change management models and you can apply it directly to the world of selling. This woman I worked with years ago, her name was Pauline O'Malley. She's a sales trainer in Vancouver. She dropped Prochaska's model in my lap. Now I don't teach so much to that model anymore other than the idea that you should think about the client going through this arch in the sale and they go from unaware of the fact that they have a problem to aware of the fact that they have a problem or opportunity and interested in solving it. When they're interested, they're kind of gathering information and assessing the pros and cons. Then they move to forming the intent to act. So they go from unaware to aware which we'll call interested and then intent, intent on solving their problem. BLAIR: I mentioned there's three steps, help the unaware, inspire the interested and reassure the intent. So let's just put help the unaware aside for a minute because that's really when you call somebody and say, "Hey, we're in the business of X. Can I be of assistance to you?" and they say, "I don't have any need for X." They don't have a problem. So let's put them aside. In your CRM, they would be a lead, maybe, but you wouldn't create an opportunity because there's no fit there on the subject of need. So that leaves the interested and the intent, an early stage buyer and a late stage buyer. So your job as salesperson is to inspire that early stage buyer who is interested, they're aware of the fact that they have a problem or an opportunity. They're gathering information, assessing the pros and cons and thinking about whether or not they should do something about it. BLAIR: When people are at that interested stage, they overweight in their mind the possible benefits of change. So they're quite prone to inspiration. So they're actively looking for an inspiration. They're looking for, if it's somebody buying design, they might be looking at portfolios. If they're buying advertising, they're looking at an advertising reel, they're looking at examples of best work and they're getting all emotional and inspired by it and they're trying to just move themselves to the next level where they form the intent to act. So somebody who's interested overweights the benefits of change and they underweight the costs or potential consequences of things going wrong. There's a line, when they cross the line and go from interested to intent when they decide, "Okay, I'm going to do this. I'm going to hire a firm like yours to help me achieve X." Just a few hours after they crossed that line, things shift. Now they start to underweight the benefits of change and they start to overweight in their minds all of the things that could go wrong. DAVID: Skeptical essentially. BLAIR: Yeah, skeptical, prove it to me. So your job as salesperson flips. It goes from trying to inspire somebody to trying to reassure them. If you want to create buyer's remorse or feed buyer's remorse then inspire. Try to inspire somebody- DAVID: Who's skeptical. BLAIR: Who doesn't want to be inspired. DAVID: Yeah. BLAIR: Yeah, exactly. DAVID: Yeah. BLAIR: When you're on the buying side, it feels like somebody is trying to manipulate you through emotions. DAVID: Oh, yeah. So these three stages, and I'll just say them again for folks where this language is new, help the unaware, inspire the interested and reassure the intent. These occur and this is chronological and you mentioned early on that there is a point for reassurance and then I introduced this whole idea about the way you used to talk about this of alternative forms of reassurance and then you jumped in and said, "We don't want to offer alternative forms of reassurance too early." So now you've explained why we need to wait. What are some signs that they've crossed away from interested into the intent stage so that we don't offer the wrong things at the wrong time? BLAIR: I remember working for a design firm and presenting our portfolio to a prospective client and he kept banging his hand on the desk going, "Oh, yes,. Oh, that's beautiful work. That's fantastic." He kept crossing his legs and re-crossing his legs and I thought, "Wow, this is a little bit like the fake orgasm scene in the movie When Harry Met Sally." He was getting very, well, the technical word is aroused. He was getting very excited by the work that we were showing him. The firm that I was with at the time had world class creative work and the portfolio was beautifully shot and mounted on these boards, old school, wise. Man, as a new business person, I'd walk into a meeting and I have that portfolio and I think, "Wait till they see our work." It was just a great thing to have. So this guy was reacted so viscerally to the work that we were showing. BLAIR: At some point, we progressed through the sale, that conversation, a couple of others. We uncover a specific opportunity. It's a late stage opportunity at some point and we come back to the table and I bring the president of the firm with me and we come back to present the proposal. Now, we've got all of the decision makers around the table and the president says, "Hey," and he had a habit of doing this and I think a lot of people will identify with this, he said, "Hey, before we present the proposal, there's a few new people in the room, they haven't seen our portfolio, so let me just take a few minutes and just walk through some of our portfolio." So he walked through the same portfolio, nothing. There was no emotional response whatsoever and the guy who could barely contain himself the last time he saw this work sat there stone faced and so did all of his colleagues. BLAIR: There was just absolutely nothing and I thought, "What is going on here?" I kind of put it away and it wasn't until I was taught to view things this way that I realized that we're trying to inspire somebody who is nervous. We're trying to say, "Look how great things could be." DAVID: Yeah. They felt like you were wasting their time almost, like you were manipulating them in a way, like trying to generate the same reaction they had. It's like, "I've already seen this. I've already had this reaction, get to my questions," right? That was what was happening, BLAIR: Yeah. Then your question is what are the signs that they've crossed the line? So that's one. DAVID: Right. BLAIR: Another one is the questions that they ask you late in the buying cycle when they're driven by a fear of making mistake, they're these very specific, almost unimportant questions and they're often dismissed by the firm. It's like the discovery session that you talked about, that would be the first step, "How long does that take and who needs to be involved on our end?" "It is half a day or a day and you would need to be involved and Bob over there and maybe a couple of others." That's the wrong answer to that very specific question. DAVID: What's the right answer? BLAIR: The right answer is, and this is just an example of the right answer, it's the precision with which you answer, "Discovery sessions take six hours. We do them in our office. We expect that certain key people will be present. That will be you, Bob over there and these other three people that you've identified in the sale and the outcomes look like this." So the answer to this seemingly innocuous question is an answer that shows we've done this before. We do it all the time. We have a bulletproof way of doing this. DAVID: Yeah. So that's where the reassurance comes from in this case. It's almost like what's going on in the buyer's mind at this point? Are they pretty close to buying and they're just sort of condensing themselves or are they talking to themselves? I mean, are these really important questions to them? BLAIR: I think these are vitally important questions. One of the alternative forms of reassurance is what I call process frame case studies, and we'll talk about that in a minute, but another alternative form of reassurance is offer to breakup the sale into phases. So instead of the client making like $100,000 commitment to you say, "Why don't we take it one step at a time? First step is a diagnostic and it's $15,000." Then with an out clause. So the out clause would be, "At the end of that first step, when we present our findings and recommendations, if you feel like you don't like the direction this is going, you don't like working with us, whatever it is, we can just call it quits right there." So there's a phased engagement that's reassuring to the client. Okay, I don't have the same financial commitment. The out clause, I can get out after the end of that first phase if this isn't going well. Then you could even layer in one of my favorites, which is a money back guarantee. BLAIR: So you could say at that point in the sale, when you're describing the out, you could say, "At that point, if you decide that we're not the right firm, we're not going in the right direction, or you don't like working with us for whatever reason and you don't want to proceed, then we're just going to give you your money back. Because if we failed that badly, then we owe it to you to give you your money back." So that's an example of string together three different alternative forms of reassurance when the client might be asking for a discount or they might just be sitting there nervously, not asking for anything specifically, but you can tell they're nervous and you're looking for ways to kind of assuage those nerves.   DAVID: I was never a fan of the money back guarantee thing. In fact, because we've shared many clients over the years and when you come up and you're not there and I'm just joking with them about how our outlooks are very similar and I used to always say, "He is wrong about a few things, six specifically," I would say. Then of course that always made them curious like, "Well, what are the six?" Rather than just saying, "Yeah, he's wrong about a few things," and I would bring this up about the money back guarantee because I always felt like it would insert this thought in somebody's mind that, "Well, why do you even offer a money back guarantee?" Oh, some people want their money back? It always bothered me. I don't know if you do that anymore. Did you ever have to give somebody's money back? BLAIR: One of the first pieces of business I closed on my consulting practice, somebody, late stage buyer, we're kind of at the end. He's nervous and he's asking for references and I didn't have any references because he was like my third or fourth client and I didn't have any references. So I was kind of stalling and saying, "Yeah, yeah, I'll get you references when it gets to the right point." DAVID: Give me me for years, I'll get back to you. BLAIR: He said, "Forget about references. Give me a guarantee and we're good. We'll do this." I paused and I had already decided that this is going to be a principle of mine in my consulting practice. I paused and said, "Well, everybody gets a money back guarantee. If you're not happy, I'll give you your money back," and he went, "Done." DAVID: You didn't have to give it back though. BLAIR: No, I didn't have to. I'll get to the point when I did once. DAVID: Oh, okay. BLAIR: That discussion proved to me that the guarantee and the references, they're effectively the same thing. If you don't have good references, I had a client recently email and say, "I can't figure out what went wrong. The client said all the right things. It sounded like we were going to be hired. Checked their references and then didn't hire us." I said, "Well you might want to have another look at your references. So instead of handing out those references, you might think about a guarantee." At first I made a point of stating it to everybody and then I would just use it when I felt it was appropriate. Then I had one client where the engagement went poorly. Effectively, I let the client take control. I let him reach over and grab the wheel. It was a positioning engagement that went poorly. BLAIR: Then many months went by and he called, about six months later, and he said, "Hey, yeah, I'm not all that happy with the engagement and the outcome." He said, "We didn't really get anything from it, but I estimate that we're 50% responsible. How do you feel about giving us half of our money back?" I said, with great relief, I said, "That's a small price to pay to get you off of my conscience." DAVID: Because you'd been thinking about it too. BLAIR: I'd been thinking about how poorly I had underperformed. I just regretted, from the moment when he talked me into doing it his way rather than the way that I always did it, I just regretted it and it was on my mind always. I knew I didn't deliver value and I thought it was really big of him to own up to the fact that he had some responsibility in it and if he would've said, "Please give me my money back." I would've given it all back. DAVID: Yeah. BLAIR: We've talked about this before, I just don't care about money. In situations like that, it's not that I don't care about it. There are other things that are far more important to me. So I have given money back. There are probably one or two other times when I've given partial refunds that I can't remember. DAVID: One of the alternative forms of reassurance that you list and talk about is references and I've got my own story to tell on that one. I quit giving references many, many years ago and I explained it on my website. I think I've got four points about why I think they're really not all that useful and this is why I don't do it and so on. Partly folks were just wearing out references. BLAIR: Yeah. DAVID: Asking them for advice when they should have been asking me and my references didn't sign up to give free advice and there's all those reasons. But anyway, about two years ago, I think it was, I got the opportunity to do a really large project and this person, really good person, really great firm, asked for references and I explained that I don't do it and here's why. He just insisted. I decided to violate my own policy and give him references. I said, "How many do you want?" and he said, "Oh, give me eight." Okay, so I gave him eight references. He called every single one and the relationship did not go well and partly it was my fault. I would say 60% of it was my fault and so the majority of it, but it just reinforced to me again, it's like set a policy and then stick with it and follow your instincts a little better. I should have done that. I should have done what you recommend here, when somebody asked me for references, they're not asking for references, they're asking for something else, right? So let's get back on track. What is it they're asking me when they ask me for references? What are they really asking me? BLAIR: They're asking, is everything going to be okay? DAVID: Yeah. BLAIR: With references it's a little bit tricky because they're a completely valid form of reassurance. DAVID: Sure. BLAIR: But timing is everything because I think a nervous late stage prospect, they'll never be closer to hiring you without actually hiring you than they are the moment they hang up the phone from talking to one of your best clients of really good reference. DAVID: Right. BLAIR: Right. So they hang up the phone and then immediately like tick, tick, tick, buyer's remorse seeps back in. So if you're giving out references, maybe you want to give out three references and you'll say, "Okay, how much time do you need to talk to these people? Do you need half a day or do you need the full day?" "Well, I'm going to need the full day." You see how I'm leading by asking an either or question, not how much time, "Oh, a couple of weeks." No. "Do you need half a day or do you need a full day?" "I need a full day." "Okay, I'm going to call you or let's put a call on that calendar for the day after tomorrow, so I'm going to give you 24 hours to check these reference, all day tomorrow to check these references and I'm going to call you the next morning." Even better, call it the end of the day and the last thing you want to do is give references on a Friday and then have the call on a Monday. DAVID: They'd think of all the reasons they might not want to hire you over the weekend. BLAIR: Yeah. So if you're using references, think about momentum is so important so the references mop up that buyer's remorse, but then if the client's allowed to sit there and think for long, then all of the nervousness is going to seep back in. So see if you can't position it so that there's a conversation with you in a short but acceptable timeframe that you've given your perspective client to check your references. DAVID: Yeah. Then of course have the right sort of references. Thinking back to you said earlier. BLAIR: Yeah. DAVID: "Oh, the problem is the references. They don't like you." Yeah, I just want to list because we don't have a lot more time. I want to list some of the alternative forms of reassurance and some of these don't need a whole lot of discussion. There are a couple that are really interesting to me for sure and I think they will be to our listeners. So one of them is references. Another is the guarantee, which you've touched on. The one that interests me the most I think is this idea of case studies and you touched on this because it indicates that you've done this before, which assures the prospect what? What's so beautiful about that? BLAIR: The takeaway is little variability in process equals little variability in outcome. DAVID: Right. BLAIR: Right. So think about a nervous late stage client and then you think of the typical creative firm trying to close a nervous late stage client and case studies are appropriate when they're in the right form for closing. When they're in a more traditional before and after format, they're more a tool of inspiration that you would use early. So we teach our clients how to build process frame case studies that really take, they take your typical before and after case study and they take the proprietary methodology that you claim to have. DAVID: You claim to have. Right, I see some skepticism there. BLAIR: Yeah. We have a whole term that people have to do on building a proprietary methodology, IP development before they're able to do the closing with case studies term. So process frame case studies, you take your IP, you take your typical before and after case study, you cut up your case study and put it back together in a way that tells a story that shows that you A) have a novel point of view and path to solving your client's problems, and B) you use it. DAVID: Right. BLAIR: Because if you think of most creative firm case studies, it's, "All right. Here's the case study. Here's the challenge," and what happens is in presenting the case study, the creative person or the principal of the firm or the salesperson always falls in love with the story. It always happens. The person presenting it falls in love with the story and gives this detail they completely lose track of what's important to the client. DAVID: Yeah. BLAIR: If you're the salesperson in that situation, you're telling a story and the client's thinking, "Okay, I don't care about this story. I don't care about what you did for somebody else. I am interested in your methodology a little bit because what I'm really interested in is how you will solve this type of problem for me." DAVID: Yeah, yeah. BLAIR: Right, so you show one case study. Your journey has to be described by this replicable path and when you show the second case study, that's where the proof is in the pudding. You demonstrate that lo and behold you followed the same path. DAVID: Right. BLAIR: Some of the tools may be different. The outcomes are going to be different. The findings or recommendations are all going to be different and specific to the client but you followed the same path and that path is framed by this intellectual property that falls out of your perspective on how things should be done so all of these things tie together. You show one, two, three case studies, different clients, different situations, different levels of investment, different outcomes for each client, but the same methodology. Nothing reassures old nervous late stage client like a process frame case study because it says we've done this before. We do it all the time. We have a defined way of working. It's a bulletproof way of working. Now, people say that in the sale, but they never prove it and the work that they show almost demonstrates the opposite of what they should be proving in that moment. DAVID: I want to overlay a positioning question here. So you could have a poorly positioned from that would have good references. You could have a poorly positioned firm that offers a money back guarantee. Is there a connection between good positioning and good process frame case studies? BLAIR: Is there a connection between good positioning and a good process frame case studies? There's a starting point. DAVID: Do you need to be a well positioned firm in order to have a powerful process frame case study? BLAIR: Yeah. So if you're a poorly positioned firm, let's just take a full service ad agency and that's just a poorly broadly positioned firm, and then you've got a case study that says, "Here's how we'd go about ad campaigns." Ad campaigns is such a big phrase. It's such a vast territory that could include so many different things. It's just not narrow enough. Plus, there's so many firms in that space. So are you likely to show something novel? You might show something repeatable, that's half of the battle. At least that's something you can build on, right? We'd coach our clients, "Well, start there. Let's just start with a repeatable process and let's build the propriety over time." DAVID: Yeah. BLAIR: Right. So that's another way to look at it. DAVID: We fall into the trap of talking about positioning as if it's all about the clients you serve, but it feels to me like part of positioning is how you serve those clients as well. So there might be a hundred firms that serve the same kind of client, but how you solve problems, which you've put a lot of thought into them, which doesn't vary much, your earlier point about little variability, that's part of the positioning story too. You're not moving away from positioning when you start talking about process. It reinforces your positioning. Not only do you serve the same kinds of clients or the same demographic, it's a horizontal positioning, but you also serve them in the same way, you've done this so much. It sounds like a beautiful part of the story to me. BLAIR: Yeah. Here's a great metaphor that I think fits perfectly. You're going in for surgery next week and you have a meeting today with the surgeon. You're not looking for inspiration. You're nervous. You're worried about things that could go wrong because you're late in the buying cycle, right? DAVID: What would inspiration even look like? BLAIR: Imagine how good life's going to be with your new hip. The inspiration would be I can just imagine being pain free and you're still thinking about having the surgery. Then you decide I'm going to do this, I'm going to get my hip replaced, and then you go into talk to the surgeon a few days before the surgery and you're a nervous late stage prospect. So it's just the kind of an informational meeting and he explains a few things to you, introduces himself and says, "Do you have any questions?" and you say, "Yeah, I have a question. My question is how is this going to work?" "What do you mean?" he says. "Well, can you just walk me through how the surgery goes?" He might misinterpret your question. He might think, "Well, you're questioning my ability to do this?" Right? Or he might say, "You know what? You don't need to know. I'm the expert. Don't worry. Everything is going to be okay." BLAIR: But you do need to know and you're not reassured by that. There's a little bit of reassurance in him saying, "I've done this a lot of times." But the reason why you want him to describe the surgery is not because you have the capacity to judge the effectiveness of his technique, but it's because you want him to prove to you that he knows what he's doing. You want him to prove to you that he does this all the time and he knows what he's doing. His response could be, "Well, surgery is an organic creative process. I'm going to cut you open and then just figure it out once I get inside." DAVID: That's not going to be a reassuring statement, right? BLAIR: No, but that's the answer that creative firms give all the time. DAVID: Because they think that repeatability is death for them. BLAIR: Yeah, so the client asks, "How is this going to work?" What they really want to know is, "Can you describe in detail, thereby proving to me that you've done it before, you do it all the time, you have a bulletproof way of doing it?" and they don't even see the intent behind the question and it's, "Well, creativity. It's good. It's creative." I am overstating it obviously and being a little bit disparaging. We just need to see what the reassurance that the client is looking for in asking the question. What you want the surgeon to say is you want him to pull down a model of the piece of a hip and say, "All right, here's how it's going to work. We go in through here. I resect this, I do this." DAVID: Yeah. BLAIR: You want him to explain it to you in such detail and say, "And here's a video of the entire operation if you want to take it home and watch it." There's no question this person is the expert. DAVID: Yeah. BLAIR: So the answer can be anything, but it has to prove you've done this before. You do it all the time. You've got a bulletproof way of doing this. DAVID: In the middle of this long explanation that the surgeon's obviously given before, the patient may not even need more information and the surgeon shouldn't be so in love with explaining this, that they draw on and on, right? BLAIR: You got it. DAVID: They ought to look for sign that, "Okay, I've done." BLAIR: You, the patient might say, "Okay, no, I got it. That's enough. I don't even understand what you're saying." DAVID: Yeah, you're not going to leave a sponge inside me. Let's move on. BLAIR: Yeah. DAVID: This is very, very good. It reminds me of the days when we used to do this. We need to do it again some time, but this is fascinating, alternative forms of reassurance. I love what you're doing here and I hope you folks listening to this have picked up some good tips. Thank you, Blair. BLAIR: Thanks, David. That was fun.

David disagrees with Blair (sort of) on his model for growing existing accounts in the post-AOR era, and then offers his list of 6 ideas on the topic.   Links The Peter principle The Challenger Sale by Matthew Dixon and Brent Adamson Tony Mikes   Transcript DAVID C. BAKER: Today Blair, we are coming to you live from the ReCourses Woodworking Shop, where so far I have done no woodworking, but a whole lot of podcast recording. Maybe I need to take my saws up to my office or something, but I can wander because I'm on like a corded mic and I can just look at my stuff. If you start to bore me, I just read the manuals for my saws and it's really fun. Is that okay with you? BLAIR ENNS:Yeah. I'll hear the table saw fire up in the background, right? DAVID: You know you need to start to get more interesting at that point. BLAIR: You know you're retreating further and further from civilization and identifying more and more with machinery and animals. DAVID: And the rest of the world thanks me for this. BLAIR: All right. Unabomber, what are we doing? DAVID: Today, we're talking about growing accounts. And as I was thinking about this, why are we so interested in this? I guess one alternative would be that we could just really land big accounts at the beginning but it seems like two things have changed in the world that our listeners occupy. One is that they are tending to start with relationships that begin smaller. That's one thing that I've noticed. So it makes it more critical to grow accounts. The other thing that's changed is that it's much more of a project-based world and so maybe growth isn't necessarily going to solve all of that, but we're talking about a chain of projects. So it's kind of like an AOR relationship disguised as a whole bunch of projects that follow on, which require the skills to grow an account. Why do you want to talk about this? Why is this that important? BLAIR: Yeah. And I think you're right in describing the environment. In this non-AOR environment, the emphasis is greater than it's ever been to go mine the account for the very next project because there aren't the guarantees, to the extent that there were guarantees at all in an AOR relationship. I guess in some of them, there were some form of guarantee. So you really do have to kind of eat what you kill in the modern project-based world.  BLAIR: As somebody who focuses on the new business side of things, I've worked with a lot of firms where they were really good at new business and then you look at how quickly their accounts or clients move on, you think, "Man, if you would just solve that problem, you would be killing it." DAVID: Yeah. And thank goodness they were good at new business because as fast as they landed them, they left, right? BLAIR: Yeah. So you've got a list of things, pointers that we'll review on growing existing accounts. And I have one point. And I don't think you agree with my point. Is this going to be the first podcast where we disagree? DAVID: Publicly, yeah. There's been a lot of ... BLAIR: You're so polite. DAVID: Maybe I read through ... You sent me one paragraph with some ideas when I thought, "I don't know about that one." BLAIR: And a PowerPoint deck.  DAVID: So this will be very interesting so you're going to talk about a concept called the account conference. Sounds very very official. And then we're going to, if you leave me any time at all. BLAIR: I'm not planning to. DAVID: Right. Then I'm going to provide just some very specific pointers, which I'm sure you'll agree with, right?  DAVID: When did you come up with this idea and what was the impetus for the account conference? It sounds like this is something that's been rolling around in your brain for a while. BLAIR: Yeah. Well, I'm looking at this deck, it was from a webinar I did in February of 2014. So it's been around for almost five years. And the idea was I invented the idea of an account conference. Well actually I observed it happening in a hospital. So I was in a hospital with a family member and the surgery was about to happen. And I was watching how not just the surgeons and other doctors, but all the medical practitioners kind of handled it. They had, they called it a conference, maybe it was a patient conference. And I kind of watched from outside of the room. And I asked them questions about it later. In hospitals, you have these hierarchies, where the surgeon is at the very top and then you've got the specialists, doctor and then you've got that nurses et cetera and the other healthcare practitioners. BLAIR: So there's this hierarchy. and in any hierarchy, there's a danger that the people at the top are kind of standing on the iceberg of ignorance. So they have this sense that they know everything because they're the master in that domain. And often there's people below, who are thinking, "Well, I'm not sure that's such a good idea." So the notion of the conference in a hospital setting as I understand it, it's basically stripes down in the military parlance. Everybody takes their hats off and put some stripes down on the table so there is no status, there is no hierarchy and it's an environment where everybody is free to say what they think about the patient, about the surgery that's going to happen. And so it's been developed over many years to change that hierarchical culture in hospitals, where you're not allowed to challenge people at the top, and it takes a while to implement to get everybody to buy in. So I was really impressed with that. So the goal of that in the hospital is to reduce the likelihood of a mistake happening because people are afraid to speak up. BLAIR: And I took this notion of the patient conference, let's call it, in a hospital and I applied it to one of my clients who is having a challenge in growing an existing account. Really the initial challenge wasn't actually growing the existing account, although there were some growth challenges, it was kind of this surreptitious, if that's the right word, or indirect approach to diffuse power from power that had been consolidated among one and individual account person. Does that make sense? DAVID: Yeah. Which is a common problem and one that everybody listening would think. Yeah, I've seen this happened or maybe it's happening right now for them. BLAIR: Yeah. But let's forget about that first instance because ostensibly, the purpose was to help grow the account, enlist others to help grow the account. Now, I've since rolled that out in other firms. And here's the idea, the idea is that not every good account person is necessarily good at growing their account. So if that's the case, why don't we enlist others to help? So the way the account conference works is, I think it should be done roughly twice a year. Some people do it once a year, some people do it once a quarter, which seems a little bit too frequent for me.  BLAIR: So just imagine this, twice a year, you take your entire senior account services team off-site for an account conference. And one at a time, the account lead for any given account presents an overview of their account, "Here's what we've done lately. Here's the progress we've made and here are three key issues affecting the client's business. Not necessarily affecting what we do for the client, but the big strategic issues facing the client. These are the things that as best as the account person can discern or keeping to see you up at night." DAVID: Can I just interject that you hit on something that frames all of this. This is not a self serving event, where we're looking to mine money. I mean that's going to happen naturally, if we do the right thing in the bigger picture. The bigger picture is what is happening at the client level, whether or not it involves an opportunity for us to make more money. It's about leading that account. That's really hidden in what you said. I just want to make sure people don't miss that. BLAIR: Yeah. It's about leading the account, growing the account and it's also about recognizing the fact that the person who is leading that account for the agency is actually quite close to the client and probably has some biases. And they probably have some ideas in what the client should or shouldn't do, but also a basket of ideas of why the client won't do what those in the agency think they should do. DAVID: Right. BLAIR: So in this situation, the senior account person on this account is presenting an overview of the account to the team. And then the rest of the team, they can ask some clarifying questions and once they get those answered, they brainstorm amongst themselves as the account person sits there quietly on what they think the client should be doing, and then they put together some proposals to take back to the client. And they again, with the account lead who's responsible for that account kind of watching silently, they don't really have a vote or say in this beyond asking any questions that are directed to them, the rest of the group decides on the proposal that is going to be taken forward to the client to help grow the client's business and grow the account for the agency. DAVID: So the client knows that this is happening, but is not a part of this discussion until it's distilled by the account person back to them. BLAIR: Yeah. And just think of that point, if you adopt to this account conference approach, it's actually a really interesting new business tool. When you explain late in the sale, when the client's nervous and looking to be calmed down and you're explaining your methodologies, how you work, it's really interesting at that point to the client to say, "Oh and twice a year, we have this account conference where we essentially retreat and brainstorm on your business. We're briefed by your account lead, but they don't really get a say in it. And then the rest of us, as a group, come up with proposals to help you move your business forward and then we come forward and present those proposals to you." BLAIR: Now, one of the most interesting things about putting the proposals forward to the client under this model is, it's not necessarily the account lead who does it, the group decides. The group might decide that, "Okay, the account lead is the right person to put this proposal forward." But they also might decide that for whatever reason this type of selling to and growing the account is not in this person's wheelhouse or strength so they assign somebody else to do it.  DAVID: So the client knows about the cadence, obviously they may not know the first time, but they're going to know after that. What happens if the client says, "I'd like to be a part of that." What do you say? Is it important that they not be there? BLAIR: I don't think it's important that they not be there. I actually think it's an interesting idea. I haven't talked through this with any of our clients before. I actually like the idea that the client is sitting there quietly and the client too, can be asked some questions, some clarifying questions. It introduces another variable. It gets a little bit risky. It would really depend on the client, your relationship with the client. I think if you're going to adopt this approach, you should try it without the client there first. And then after you do it a couple of times, if it seems to make sense to you to involve the client, then go ahead and try it. DAVID: I want to go back to how you introduced this whole idea where it kind of spring to your mind in a healthcare setting and the motivation for it in that setting was to reduce risk. It's like less people will die if we do this. BLAIR: Yeah.  DAVID: It's easy to dismiss that and say, "Well, that's an interesting model but it's really not about reducing risk." But I would say, it really is about reducing risk because the risk that were trying to mitigate here is that we quit leading. And some of my specific suggestions that we'll get to later, talk about how to make sure we don't quit leading. Because that's how you get an account in the first place and that's how you lose an account when you quit doing that. So the risk that we're mitigating is that we quit leading.  DAVID: It's so interesting. One of the things that I'd love to explore, if somebody wants to do this in a really deep consistent disciplined way, would be how do we overlay this with really great techniques for brainstorming because brainstorming is really misunderstood. And there are a lot of personality profile elements that relate to brainstorming. You have people who simply don't think well on their feet, but who make consistently great contributions, but they just do it 15 minutes after everybody's moved on from that part of the conversation. To make this effective, you'd have to really understand how to effectively brainstorm, how to effectively run a meeting as well. But the main point is just that the risk we're mitigating is that we are not leading the account. I think that's such a fascinating, valuable concept. BLAIR: I think you're right and I also agree that there are elements here like a framework for brainstorming that are missing. Like this is something that I introduced about five years ago and I've come back to it from time to time, but it's not something that we kind of teach on an ongoing basis. When I have a client with an issue around account growth that comes up, I usually introduce the model to them. So I think there is an entire area or adjacent areas of exploration that would make this model better.  BLAIR: I believe strongly in the model. I think one of the reasons why it's valid and we've talked about this previously, it occurred to me that the saying that I and so many other people keep repeating, that it's everybody's job to sell, just isn't true. And if we embrace the fact that it's not everybody's job to sell, that your people and in particular, your senior account people, some of them are very good at growing their accounts and some of them are very good at just kind of responding and keeping them happy. And if we embrace the idea that let's put sales responsibility or account growth responsibility into the hands of those who are good at it, this is a model that really suits that. That last part of deciding who's going to present this to the client. You can say to the account lead, "All right. Here's the proposal. Here's a little bit of coaching on delivering it. You go ahead and do it." Or you just might decide that, "Actually, you're better off and it's more appropriate for some other account person who's really good at growing their own accounts to go have that meeting with the client." So if you're the account lead in that situation, you really do have to let go of this idea of the ownership of the account.  BLAIR: One of the things I was trying to do initially back in that first scenario with this model was transfer the equity in the relationship from individuals to the organizations. So when you build advocacy among your client base, typically you want multiple people in the client organization advocating for your agency. But every once in awhile, you get this concentration of power where you get either one person or multiple people on the client side only advocating for one person on the agency side. And that's a very dangerous thing. And this model, If you're in danger of that happening in your firm, by involving others in growing the account, it helps to transfer that advocacy or the equity in the relationship from individuals to multiple individuals in the firm and hence really the firm itself. DAVID: So the only thing that gives me pause in this is the notion that some account people are good at growing accounts and some aren't. On the face, you can't disagree with that. It's absolutely true. But what I say to my clients is that, if somebody is not good at growing an account then they are not a good account person. In other words, I think that is not an optional part of the job description. DAVID: By growth, maybe we need to define that. I mean it seems like we shouldn't have to define growth. It could obviously mean more volume from the account or it could mean more ongoing projects without necessarily increasing the total volume, or it could mean moving upstream. I find that in about a third of the firms out there, they have the wrong people leading those client relationships. These are people who are really good at the details and they don't mess things up. In fact, many times, they are the ones who have stepped in to rescue an account that you were going to lose because the person who was good at growing the account was not good at managing the details, or were good at the relationship and not the details. The client got very exasperated. You decided to put this person in as an emergency move because they have demonstrated over and over again that they're really good at getting the details right. DAVID: The problem is that, that person's approach is to not lose the account, instead of taking risks. And so my perspective has always been - maybe I need to rethink this - but my perspective has always been, if you can't grow the account, you are not a good account person. You're saying that it's possible to be a good account person as long as other people can help you grow the account. BLAIR: I largely agree with what you're saying. I think what you're talking about is really the Peter principle, where people are promoted beyond their kind of abilities because lower level account people are more server responder types. They're very good at the details. They're very good at taking care of the client, checking things off the list. And so you get a really good junior or mid-level account person who fits that profile, then you promote them to the senior account person. Now, you're actually looking for quite a different personality. You're looking for somebody who will kind of create tension in the sale. A challenger type, if you want to go back to the book, The Challenger Sale. Somebody who's comfortable creating tension in the sale because to lead, often you have to look past what it is the individual client wants to what's good for the client organization.   BLAIR: Okay so we're talking about ideas on how to grow an existing account. I've put forward my model for the account conference and you have a list of key points here that we're going to cover. And your first one on the list is, to do what's best. That seems straightforward. What do you mean by that?  DAVID: I mean that if we're trying to grow the account, let's not hold on to it. It's like let it go and it'll come back to you. Almost like an errant boomerang that hit you in the eye. I don't mean it quite like that. I mean if you really want to grow the account, don't grip it, do what's in the client's best interest, even if that means that you need to direct them somewhere else. Because in the bigger picture, we're really trying to build that bond of confidence and trust, and we need to encourage them to do - very much like this account conference you described, where you talked about how we're trying to brainstorm not in how to build more work for the agency, we're trying to brainstorm on what the client needs. What are the existential threats to that client. The same here, we need to do what's best for the client. And it may hurt us in the short term, but it will really help us in the long term. DAVID: People know this instinctively, but especially in panicky situations, especially in situations where the client is already too big or if the account person has power, any of that little erosion of our own confidence makes us grip things too tightly and then we start to mess up. That's what I meant by do what's best. BLAIR: So you mean you should find yourself trying to sell something into the client that maybe isn't in the client's best interest? DAVID: Yeah. Or maybe they're set up to do it themselves and we should not fight that. BLAIR: Yeah. DAVID: We cannot view the client as the enemy anymore like we used to. You know, 15 years ago, even as as recently as 10 years ago we would say, "Oh my god, they think we're competing against the client and the client department is tired of all this low level shit work they're getting an they want this juicy project but those are the ones that we're really good at." Nowadays, we cannot think like that. It is definitely a partnership and we have to view it that way. Our job is partly overflow work. Mainly, it's external objectivity and training them. And that's okay. We have to get used to that world. BLAIR: Yeah. We could do an entire podcast on that one. DAVID: Yeah. BLAIR: That's a really valid point. All right, so do what's best for the client. Don't grip things in a death grip, if the right move is for the client to go elsewhere for that work or take it in-house, then let it happen or even encourage it. What's next? DAVID: Next is lead with a point of view. The freshest ideas you ever have are the ones you present to the client, where you are on your best behavior, you're doing your best thinking, you're taking a risk. And that's because you don't have the account yet. There's nothing to lose here. You're just out there playing with house money. Nobody expects you to win, you're plus 21, you're going to lose this game like you got nothing to lose. And that's why you take all these risks at the beginning. And then you get the thing and then your whole mentality changes and now you're holding on to it. Meanwhile, there's somebody in the bushes over there. It's going to be nine months from now or 36 months from now who's going to come in and they're going to do the exact same thing that you did to the other firm. And if you are not continually leading with a point of view, you have to be willing to lose this thing at any point.  DAVID: You talk a lot about how not needing to get something is one of the most powerful perspectives you have in new business. Not needing to keep something is one of most powerful perspective you can have in client service as well. Having a point of view, I don't mean being an ass, I just mean really being an expert and not being afraid to have that perspective. BLAIR: And so you're talking about bringing fresh ideas to the table the way you would if you were competing for the business, where you're trying to unseat somebody else. DAVID: Yeah. BLAIR: It seems to me, this speaks to this you know the death grip that we just talked about because you win the business and then a loss aversion bias kicks in, where we essentially value the potential of losing something about twice as much as we value gaining something. So we get racked with fear over losing the account. DAVID: Yeah. BLAIR: And you're saying, let's let go of that fear. Keep bringing strong point of view, keep challenging the existing thinking and conventions, even if the existing thinking that you're challenging is thinking that you brought to the table initially. DAVID: Yeah. Exactly. Like, "You know what? Uh - we were kind of wrong there." BLAIR: "I know you paid us $2.5 million to implement that wrong idea, but it was a mistake." DAVID: Yeah. We need to be a little more reckless here and it's okay. That's what I mean by that point. And you know your clients are always asking you to do zero-based budgeting, which simply means don't add 3% to what you did last year, start over. Like re-justify everything you're doing from a budget standpoint. Well, we need zero-based ideas as well. Are we really going to do the same thing we did last year? And your clients that are protecting a position are nervous about change. The ones who are not protecting a position, they've got less to lose. That's the perspective you got to have I think. BLAIR: Okay. So one on your list is do what's best. Two is lead with a point of view. I've already written down zero-based ideas. I'm going to tell people I wrote that. I've already tweeted it. Now we're getting to the provocative stuff. What's next? DAVID: Offer a resignation whenever there's a CMO transition. BLAIR: Boom!  DAVID: Yeah. I really believe in this one. And it's not my idea. Tony Mikes had this many years ago. My first time I heard it, I was like, "What? Tony, what are you smoking or drinking? This is crazy." So you've got this account, you won this account a while ago, you've been doing work for this client and then there's a change at the CMO. So the boss person that you're going to be answering to ultimately is new. And you go in to keep it mode. Like everything we need to do. And I'm saying no, go on the other way because you've got new CMO. She wants to put a stamp on the agency here. And the former CMO was fired for a reason. And if the head coach was fired then it's possible that the assistant coaches need to be fired too and the trainer. And so there's suspicion about this relationship you have and they're not sure they really want to inherit that. And everybody knows that, but nobody necessarily wants to say it.  DAVID: So what you do, a few days later, you write a letter. I really mean this. A real letter and you hand deliver it and say, "Here's our resignation letter. It's not that we don't want to work for you. We really do want to work for you. In fact, we think that, from what we know so far, the perspective that we're hearing from you, we might actually be able to do better work. These are some of the things that we wanted to do and we were held back from them. And here are some of the mistakes we made, here's what we did really well. But we do not want you to feel like you've inherited this relationship. If you would like to keep working with us, please let's do it, but we just want to make this easier for you." You hand them that letter and then walk out. What have you got to lose?  BLAIR: Yeah. This happens at high levels of government and even some corporations where it's, "You're hired, now give me your undated resignation letter." DAVID: Yeah. BLAIR: I think it's a fantastic, really provocative idea. I tend to stop short of actually like handing over a letter and just having the direct ... So you're one-upping me here. DAVID: This is the first time I've been more ... These are the kind of silly ideas you come up with all the time and I cringe and here I've come up with one that makes you cringe. This is a first. BLAIR: Well, clearly you're wrong then. Clearly you've overstepped. Yeah. But I think the spirit of it, absolutely, I fully agree. I think you don't go into a defense mode, you say to the new CMO, "Listen, we'd love the account. There's things we weren't able to do. There are mistakes we've made. Part of us is really excited about the opportunity to do these things we could never do with you, but I understand you might want to bring your own people in. If that's the case, just let us know. No hard feelings, it's just business." DAVID: "And we'll provide a very smooth transition for you, no hard feelings." I think that's an important part of this too. BLAIR: Yeah. What's next on your list? DAVID: Next is to speak, blog and podcast together, whatever the things are that you do. For one thing, if you're having trouble getting speaking engagements, it's a lot easier to get them if you kind of co-speak with a client because this association putting on this event thinks you're going to stand up there and just sell your services. But the person paying the dues is your client and the client is well-known and there might be a great story to tell. You, recognizing that business is personal, a lot of personal elements here, I think it's really useful to build a relationship that way. So do what you can to not just help the company itself, but to help this person's career, whether that's introducing them to be on somebody else's podcast or speak at some event, but just the personal bonding at a high-level. This isn't about the lower implementation kinds of stuff you've done, but talk about how you've approached things very differently. And I don't mean in a gratuitous way, a silly sort of way, I mean genuine. DAVID: If your client is an idiot, don't do this, but if your client is intelligent and they have something to say and you wouldn't be embarrassed being on the stage with them, then I think this is a fantastic way to build that bond.  BLAIR: Now, when you said podcast together, I imagined a client and agency principal actually launching an ongoing podcast together. And now, wouldn't that be interesting? Because at some point, that relationship's going to end. So I would listen just for the inevitable train wreck. DAVID: I had not thought about that.  BLAIR: Like this one, right? DAVID: I hear the train coming. That's a really interesting idea. Yeah, that's not what I envisioned but wow. Yeah, that's even riskier than handing a resignation letter. BLAIR: Yeah. That could be horrible. It could be incredible too though, right? DAVID: Yeah. It could.  BLAIR: Breaking up on air. All right. You got a couple more things on your list. I think we've got time to do both. What's next? DAVID: So an annual off-site planning with their team. This overlaps a little bit with what you talked about. I just think there's something to be said for and it needs to be off site, if possible. I've got clients who charter a plane and go to a place in Montana and they have this for a day and a half. So there's a a mix of social bonding, but also really serious planning and obviously this bonds both parties together, but it also gives you a clue to everything they're planning, even if it doesn't necessarily involve you. It gives you a chance to see you where you can worm your way in. It gives you an idea of what services you might beef up overtime and so on. So that's the fifth idea. BLAIR: What about an annual event called, If We Were Pitching Your Account. You know back to an earlier idea about leading with a point of view and the need to keep bringing fresh ideas. DAVID: Yeah. BLAIR: There's an interesting concept there. You could have another team in the agency, if your firm is large enough, come in and try to dislodge the current thinking. You could have fun with that. DAVID: Oh, you could. And something else that would work really well here is - presuming that you are focused and your clients share some similar characteristics - gathering your clients together on an invitation-only basis once a year too is a fantastic experience. They're going to stay around and talk about that forever. Like a round table.  BLAIR: We should do a podcast on using events to drive leads. DAVID: Yeah. Once we figure that out. BLAIR: Well, we've got some clients who have figured that out so maybe we could take credit for their work. All right. So we're talking about core ideas to grow an existing account. You've got one more thing on your list. DAVID: Yeah. And we've kind of touched on this, operate to win and not from a fear to lose. I feel like, and you've talked about this a lot, the fact that the relationship is going to go downhill is inevitable. It's just a matter of time. That's the only variable here. So we've probably beat this one to death, but just don't fear losing the account. You know where you see this happen the most is when somebody slowly develops a client concentration problem. So the client becomes too big. And inevitably, I've never seen this not happen, when you have a client that gets too big, you end up with a client concentration problem because you're afraid of losing them and you quit leading and that's exactly what you shouldn't be doing. So enough of that. BLAIR: So we're talking about ideas to grow an existing account. I led with the idea of the account conference and then I'm just going to read off your list: Do what's best for the client. So don't grip everything so tightly. If it makes sense to send work somewhere else, send it somewhere else, including in-house. Lead with a point of view. So bring that strong point of view to the relationship, throughout the relationship - the one that you brought right at the beginning when you're trying to win the business. The most provocative thing on your list I think is to offer a resignation at every CMO transition. Then speak, blog and podcast together. Create content together and essentially get the client's endorsement of your work. Consider an annual off-site planning with the clients team. And then operate to win and not from a fear of losing. And that last one is really kind of a recurring theme throughout. That's really the death grip that you talked about at the top, isn't it? DAVID: Yeah. Absolutely. And it kind of wound its way through everything we talked about. This has been really fun. BLAIR: Yeah. It has been fun. As you pointed out at the top, it really is a new era from what it was 10 years or so ago. Those skills of growing existing accounts are even more important now in the non-AOR era than they ever were. So I think this is a really valuable topic and hopefully we've given the listeners some ideas. DAVID: Yep. See you in Australia I guess, huh? BLAIR: Oh yeah. Right. I'll see you in a week or two. That will be fun. Looking forward to it. DAVID: Safe travels. BLAIR: Likewise.  

Blair remembers what it was like when he was an account person himself, and David shares five ways firms can treat their account people better.   LINKS “How to Drive Your Employees Bat Sh*t Crazy” 2Bobs episode   TRANSCRIPT BLAIR ENNS: David, we're talking today about how to disrespect people. This is your topic idea. DAVID C. BAKER: Yeah, I get so many requests from people that want help with this, and they naturally ask me. Right? BLAIR: Yeah. Of course they do. DAVID: "Who'd be really an expert at this? Ah, David, yeah, he could help us with this." BLAIR: Yeah. The topic is, best ways to disrespect account people. Why this topic? DAVID: I see so many firms disrespecting account people. I mean, they're obviously not doing it intentionally, but when you look at how they're treated, and how they're brought into workflow and all this stuff, it's pretty obvious that they could do things a little bit better, and so when I talk through it with them, their eyes light up, and they see, "Oh, there's another way to do this." That's the topic. I thought it might be interesting, because it just will save me time, right, in consulting, because then I won't have to answer this question every time, right? BLAIR: You just said in this podcast, "I'm just thinking." I was an account person for many years, and I was going to say, "I don't recall ever being disrespected," but it just took me about five seconds to think longer, and now these emotions have all come flooding back. There are times when, as the account person, you're on top of the world. Right? I remember some of those moments early in my career. DAVID: Just this morning, like an hour ago, I don't know, maybe it was the topic, it brought me back to this moment where I was just thinking, "I should have quit in that moment," back working for a large, multinational agency where I was disrespected. I thought, "I should have just quit right then." BLAIR: Okay. Let's get into this, so you've got a bunch of ways in which account people are disrespected. We're going to unpack these. Right? The first one on your list here is this idea of recognizing or not recognizing how difficult the role is. DAVID: Yeah. BLAIR: Hot potato. Over to you. DAVID: Imagine working for a president, don't think of a specific one, just imagine working for this anonymous president of a country, and you are the ambassador, and you are asked to represent your country, but also speak for the country where you are planted, basically. I believe strongly that the most difficult role, not the most important role, but the most difficult role in a firm is this account person, because you have one foot firmly planted on both sides of the fence. You're supposed to speak for the client, but you're also supposed to not give away the shop. I think it's so critical. It's why it's so important to find the right ones. They're just so important, and when you think about the degree, you talk a lot about this, to what degree does a creative firm lead or direct their clients, and then you go down the list? So much of it depends on how good the account people are, for sure. BLAIR: Yeah. They're at the front lines, making the strategy real or blowing up the strategy, if there is a strategy. I love that metaphor of the ambassador. You're saying something that you think is the party line, and all of a sudden, then the president says something completely different or even throws you under the bus. DAVID: Right. Right. BLAIR: So you're saying the first way to disrespect the account people is to not recognize how difficult their role is. DAVID: Right, how difficult their role ... These are the people who are better than anybody else in the world at sending a client to hell and helping them enjoy the trip, and not even realizing that they're going to hell, like pushing back, getting more money out of them, getting the information out that they've been reticent to share. It just goes on and on about how important they are. BLAIR: Yeah. Great. Okay. Next on your list is something about hovering over their shoulders. Is that what you mean by this? DAVID: Well, yeah, and I see this phrase. It just sneaks out, I guess, and there aren't any evil intentions around it, but you can see this happening in the early stages of closing a new account, where the principal, who has made some appearance, because it is important that they make some appearance. Maybe not physical, but at least be a part of that closing process, they'll reassure them on the flip side of saying, "I'm not going to be your day-to-day account person," and then the flip side of that is to reassure them that, "But if anything goes wrong, or if there's any time you need me, just let me know," almost planting the seed is just so disrespectful, I think, the idea that, "If you don't get your way, come to me. Bypass your account person and climb a step higher on that ladder." DAVID: I really, honestly, do not believe that principals, or even salespeople who aren't principals, intend to mean anything bad by that, but I think it just sets the wrong tone, and I would like to not insert or plant that seed at the very beginning of a relationship. BLAIR: The specific point of disrespect here is implying to the client, this, the principal implies to the client that, "Listen, I'm always going to be here. You're in good hands with this account person, but just in case you're not, I'm on just a phone call away." Is that what you mean by this? DAVID: Yeah, exactly. BLAIR: So you're sowing the seeds of doubt with the client, as if they need to be checked on. DAVID: Yeah. Right. BLAIR: Okay, so not recognize ways to disrespect account people, not recognize that their role is the most difficult, to imply to the client that you're always there over the account person's shoulder, just in case the account person screws up. Next, you have swooping in and out of client relationships. DAVID: Did we talk about this? I think we did, right, and we kind of had a ... We had a good time with this one about just not being involved on a daily basis, and then right before a big presentation is made to a client, you, as the principal, step in and clear the table, and rescue or save the day. It's just not respectful to the people who have been working so hard along the way. It's not to say that you don't have the right to step in. You certainly do. It's not to say that your feedback at this point isn't helpful, because it, in many cases, is quite helpful. It's just disrespecting the process. We talked about this in that episode, about “How to Drive Your Employees Bat Sh*t Crazy.” It wasn't just in the context of account people, but I feel so strongly that you need to set a certain cadence, and then you need to respect people. DAVID: This shows up in big and little ways, and usually a firm has mastered this, or they have consistently not mastered it. Everybody knows whether they have or not, and I just feel like we need to be more careful about respecting the process, which means respecting the people. There is a connection between that. If we're talking about respecting the people, then we do need to respect the process that we have all agreed on as well, and stepping in at the last minute, clearing the table, and saying, "Okay, what are we doing here," and, "Are you sure that's what we should be presenting?" Meanwhile, that's what we've agreed on for six days, right, of- BLAIR: Endless nights. DAVID: Yeah. BLAIR: Yeah. Do you think there's something peculiar about creative firm principles that makes them susceptible to this, or is there something peculiar about account people that invites it? DAVID: Oh, I think it's the former, for sure, because nobody went to school to be a principal. Many of them went to school to be a creative of some type, and they moved away from that role, as they've discovered that there are other things that are more important for them to do, and they've had folks sort of back fill in behind them who are better at it, but they still long for that rush of stepping in and rescuing things. They just cannot resist it, so I definitely do not think it's the account people. Now, account people and principals both do one thing really well, and that's to fill vacuums, so if there is a lack of leadership, somebody is going to step in, so if the account person is not leading the account appropriately, then we can expect, and maybe it's a good thing, for the principal to step in, but let's fix the underlying problem, which may be the account person, but let's not just keep being disruptive at every stage. BLAIR: If the principal is a creative person, a creative personality, maybe there's also a vacuum or a void in what he or she sees as really good ideas. I'm saying this thinking of lots of scenarios I've been involved in, and I think I'm guilty of it now with my team is, they're working on something, and I come in and go, "Well, let's do it this way," kind of somewhat cognizant of how disruptive that is. DAVID: It is right, but who gets to decide what the right idea is, and should we set up a system so that we identify that it's not the right idea a little bit earlier in the process? That's sort of what I'm headed for. BLAIR: Yeah, and I think we've touched on this at least indirectly many times, this idea that creative firm principals are not all that systematic. Right? DAVID: Yeah. No kidding. There's the understatement of the month. BLAIR: Your line is, "You people like to dive off the diving board and invent the water on the way down." DAVID: Right. Yeah. BLAIR: It's like, "Ah, I'll figure it out when I get in there." It's like a surgeon, a creative surgeon. "Ah, I'll just cut you open. I'll figure it out once I get in there." The firms of our listeners don't tend to be all that organized around processes and systems to begin with, so in an environment like that, it's kind of natural for people, and the more senior people, to swoop in and out from time to time. DAVID: Yeah, and in that same surgery scenario, you would hear the principal saying, muttering under her breath, "Well, if that's not the kidney, then what was that other thing we just took out," or, "I thought everybody had two of those. I can't find the other one." BLAIR: Yeah. Exactly. I like to quote Dr. Spaceman from 30 Rock. His line is, "Well, we don't actually know where the heart is in the human body. Medicine is more of an art than a science." Okay, let's move to the next item on your list of best ways to disrespect account people. This one really strikes a chord with me. Switch them out frequently for specific clients, so first, let's just talk about that a little bit. Then we'll talk about how we might smooth that process out. DAVID: We've been talking about the account person, and principals, and the agency and so on, but if we flip this around and look at it from the client standpoint, oh, my goodness, nothing quite sets them off more than having their account contacts swapped out frequently. Sometimes, you swoop in too early, you pull the quarterback that's struggling a little bit too early, and you put somebody else in their place, which can be disrespectful. Not always, obviously. Sometimes, you're trying to listen to the client too carefully, who wants a particular style, instead of expecting your account people to be able to adapt to clients, but it's so disruptive on so many levels, like even for the agency. It's even worse for the client, I think. What came to your mind as soon as we started talking about this? BLAIR: Well, the very first piece of new business that I won early in my agency career, I was 22 years old, I was handed new business responsibility. The first piece of business I won was a professional sports team. The way I won it is, I had heard from like a printing rep or a media rep that the agency had just switched the account person on the client for the second time in six months, and I thought, "Oh, she's going to be so pissed off." I called and left a very polite voicemail message saying, "Hey, I know you've got an agency you're working with. I'm sure they're very good, but if you ever, you're interested in making a change for whatever reason, I'd be happy to have a conversation with you." 30 minutes later, my phone rang, and she said, "Yeah, your timing's kind of coincidental, because we've just lost our account person again, and I'm a little frustrated by it." BLAIR: Within a couple weeks later, we had that account, so had there not been that vulnerable moment, there's just no way we would have won that piece of business, and as somebody who's in new business, that's something I had always looked for, that vulnerability between the client and agency relationship. Also, I had been the account person a few times, not that early in my career, but later in my career, where I was dropped in later after a really good account person, or somebody the client really liked, had moved on, or, again, the biggest vulnerability is, "Okay, I'm the third account person in a short period of time," and you're fighting an uphill battle in that moment. DAVID: Right. It does seem like that is when accounts are most vulnerable. One of the ways to solve this that I've discovered by accident and then had lots of clients try is, so there are legitimate reasons why you have to switch, so like maybe your account person is leaving, under good or bad circumstances doesn't matter. "They're leaving. We need to have a new one." The best way I found to handle that is to ask the client to meet with who you are proposing as their new account person and ask them to give you feedback on that option. That, on the surface, is a scary thing to do, because what happens if the client says, "No, I don't want to work with them"? The thing is, the way this works is that you are handing power from yourself to the client, and that's enough to smooth it over. DAVID: I have never heard of a client say, "No, I do not want to work with them." What a client reacts to, more than that, is somebody being foisted on them without a choice, so if they have some option, they are generally going to warm up to the idea. If we take this even further, if you are hiring a new account person, this is somebody, a new employee for your firm, I strongly believe that you should let one of your better clients interview them for you, and they should, that account person that you may be hiring should be there on their own. You would never do that with somebody whose skills don't include that ability, but an account person should be able to step into any situation and shine, and so just giving the client some choice in the matter seems to solve most of this. BLAIR: This is one of those areas where it's so easy to be a consultant, where you can suggest something to your clients, because this idea terrifies me. DAVID: It terrifies you. It's been a long time since I've heard you be terrified. Yeah, it terrifies me a little bit, too, but every time I've tested it, it's worked well, so I'm sure at some point, now that I've said this publicly, it's not, but every time I've tested it, it's worked well. BLAIR: The next thing on your list of how to disrespect account people is to saddle them with new business responsibility. Clearly, you have a point of view on this that that's not a good thing to do. Is that correct, and why? DAVID: It is correct. I know it surprises you that I have a point of view on this. BLAIR: It's so rare that I have points of view. I never tire of hearing your points of view, so- DAVID: Yeah. The odd thing is that the skills of a new business person, the skills of account person, are almost identical. That's not the reason why we might separate these two roles. A primary reason why we separate them is because if an account person is responsible for new business, they're not going to usually shine at the new business side, because it's just not as urgent, and so it can be put off, and then they're going to fail, and that's really not fair to them. The other thing is, I just don't think it's fair to them. DAVID: I think they should be charged with growing the accounts that you hand to them, and that is such an important role at the firm that we don't need to minimize that role by also asking them to sell for the firm. It's not a massive issue, but it's a big enough issue. I don't see it happen quite as often as it used to, but I really want to see the new business function be separate, and we'll talk later about when there's some overlap, but I'd like it to be separate. You're more in the new business side than I am. I'm interested to hear your perspective on this. BLAIR: I agree, absolutely. I think in the smallest firms, where you just don't have enough people to separate those roles, it makes sense where an account person might have some new business responsibilities, but you were saying you don't see it, much of it anymore. I still, to this day, remain surprised at the large firms that I see where people are managing accounts and are in charge of new business. I agree with you. It isn't as popular as it used to be, but I still see it far, far too often. You're right, it's not like new business is less important or even less fun. Many would argue it's more fun because you get to kind of push the boundaries a little bit, but it's less urgent, so it always, always, always suffers. BLAIR: If new business isn't suffering because of the account person's focus on the current accounts, then that person's priorities aren't in the right place, so it's not inconceivable, but it's just, like the idea that you're going to have somebody manage accounts half the time and grow the business the other half of the time by pursuing new accounts, you're just setting up this conflict that's just never really going to be resolved. DAVID: Right. Yeah. There's no way they're going to do both well, and so we're not really respecting them by giving them something that they can do, well, both ways.   BLAIR: Okay. We are talking about the best ways to disrespect account people, and there's really one item left on the list, David, but I think it's going to take us home through the entire second half of this podcast. It's kind of related to the one we were just talking about, which is saddling account people with new business responsibilities. It's really the hand-off from the new business team to the account people, and you're saying that your big beef here is, it often happens too late. Is that correct? DAVID: Yes. I think it should happen as early as humanly possible. We see some overlap, roll this time clock back, and we think about a prospect that knows nothing about your firm, they find out about your firm, they might hang around awhile, they may read stuff on your website, then they sign up for your emails or whatever it is that they're doing. They may hear you speak. Eventually, they raise their hand and they say, "Okay, you can sell to me. I'm interested enough in that." The new business person's role at that point often switches to just determining to what degree this new opportunity is a fit for our firm. DAVID: As soon as it looks like it's going to be a fit, that is when I would bring the account person in, who would then take over the primary role of closing that first account, as opposed to what normally happens, and that's the new business team, whoever's on that, closing the initial relationship, which usually means the first project, and then introducing the account person. There are so many things wrong with that model, and we can pull that apart in detail here, that I just really wish we would involve account people so much earlier in this process. BLAIR: Okay. I see your point, but I also understand why it's done the way you just described it, where typically, on the new business team, especially in larger firms, you've got like the planner or the strategy director, or what I like to say are the big brains of the firm. It doesn't mean there aren't other big brains in the firm, but the people responsible for the more strategic offering. That's because at the beginning of any new engagement, you're always beginning with the upfront strategy stuff. If we think of transitions, the first transition from the sale to the account is essentially the salespeople, or the new business people, to the senior strategists, and then once the strategic direction, and probably creative direction, is set, then it gets handed over to the people who are implementing, but you're right. It does raise this issue of, "Okay, now we're this far into the account, and here's your account people." What's the problem there? DAVID: Well, part of it is that we don't want to be doing much strategy until the account is actually officially on board, and about half of the strategists in the countries that are listening to this podcast are really good at closing that initial part of the relationship, and the other half are not. You would not typically be comfortable having those strategists who are more from a research background close the Relationship, with a capital R. Also, this idea of closing accounts should be wrapped around the notion that we're not closing that many a year. It's probably one every three or four months or so, and so we can take our time doing it, but what I don't want is an account person to be inheriting the promises that somebody else has made on their behalf. That's what happens, and then they're handed these promises somebody else has made, and they're said, "All right, it's your job to manage this relationship so that it's profitable," and they had virtually nothing to do with the pricing of the account or the promises that were made. BLAIR: As we're talking through this, I'm thinking of something you mentioned earlier about the principal kind of swooping in. This is a related topic, but I think it makes sense to cover it here. I have a beef about how the strategist or planner roles are set up in firms, especially ad agencies. They're almost always billable positions where they see themselves, and they're set up, they're hired this way, or the expectations are lined up this way, that their job is to essentially drive the strategic direction of the account, or the strategy that the agency is going to bring to the client. I think that's a misunderstanding of that role. BLAIR: I don't think the strategy role, if there is a senior strategy person, often called the planner, I don't think they should be billable. I don't think their focus should be swooping in and doing the high-level strategic work for the client, sucking up all the fun stuff and the higher-margin stuff. I think in creative and marketing firms out there, if you have a strategy role, that person should be charged with building the strategic models, the intellectual property, on how the firm thinks about and goes about solving the client's problems, and then their job should be to train the senior account people. Do you have any thoughts on that? DAVID: I agree that they should be focusing on the higher-level stuff, but I do think there are many situations where their work should absolutely be billable. The target billableness for them, if that's a word, for me, is about 60%, so it's much lower than an account person would be, which is at 80%, but I do think it should be billable, but it's about the kinds of questions that they are answering. An account person's job is to ask brilliant questions to pull out as much of the strategy as possible that sort of resides within the client, and the client doesn't even know what it is or what it could be. The strategist sees the questions, and sees the answers, and provides slightly better answers than the client provided the account person, so I still think it should be very billable. DAVID: You and I see a strong connection between business development and the planning function, because we're trying to lead with unapplied insight, and then when the client hires us, we apply the insight and start charging a lot of money. I do think there is a split role there. There are so many things we could talk about here, right? I mean, we don't want to see the strategist as rescuing the ineptitude of the account person. That's not it at all, but the account person needs to be so close to the relationship that sometimes, they can't be as highly respected as the strategist role is, because the strategist bounces in and out and doesn't ever create that familiarity of being in touch so frequently and so closely with the client. BLAIR: That kind of makes sense to me, but I think you're saying part of the issue here is, when you start with the strategist and do the high-level strategy work, then you're handed off to the account person, there's the sense of, "Well, where did that smart person go?" DAVID: Yeah, right. BLAIR: "How come they're not on my account?" It feels a bit like a bait and switch, doesn't it? DAVID: A little bit, except that if you have the right account person, I don't think your clients are saying that, because account people are so well-spoken, and they think so well on their feet, and they are so smart not just with all the answers, but with most of the questions, that I don't think clients feel that way. If there is a bait and switch happening here under this umbrella, I think the bait and switch is, "What happens to the person who sold my account and that I bonded with, and now I am with this account person that I've not had any chance to talk to?" If the account person is the one who leads the closing of the account, then they don't feel that bait and switch, because ... Now, I think the strategy person should be a part of this conversation at the very beginning, but the person leading the closing of the account is the account person who's very, very qualified. BLAIR: Are you making a case for your senior account people to be part strategist and part new business person? DAVID: Yes, if we assume that being involved in closing the account is new business, yes, but what I don't want to see them responsible for is spooning up those leads. Once the leads are brought in, then they should help close them, not spoon those leads up. BLAIR: Yeah, so, "Hey, Mr. Account Director, we're working on closing this significant new piece of business. You're going to own this account when it's closed, so we're bringing you in for the closing conversation, or at some point in the sale." That's how you're viewing it. Is that right? DAVID: Yeah. Right. Exactly. BLAIR: That phrase, "bait and switch," my thoughts on that, back when I was a young agency pup, we used to use that term derisively towards our competitors, and we would be defensive about the fact that we don't bait and switch, and now I think it's one of most misused, overused, misunderstood phrases out there. Does it conjure up similar kind of emotional response to you? DAVID: I think clients are very sensitive to bait and switch, but when I hear that phrase used, almost always it's referring to falling in love with somebody in the new business process and then having somebody else introduce that's going to lead the account, and now all the smart fun people are off closing something else, and that's when we really caring about an account, but once we've landed it, we just give them to these boring account people. I do think that may not be the best phrase, but I do hear that a lot, and I think it's still quite prevalent. DAVID: Part of what I'm trying to solve here is to eliminate that feeling that a prospect has of a bait and switch by having them bond with an account person at the very beginning. That frees the salesperson to go out, kill something else, drag it back to the cave, which you know I talk a lot about. It keeps the account person from having to inherit promises that somebody else made. It's such a better flow, and I'm just arguing, really, for them to be introduced much earlier and to take, not take notes in the meeting. By God, let's not have them do that. They should be leading the discussion at the very outset. BLAIR: Yeah, so we're not talking about baiting and switching, like the entire senior team. I think where that phrase, "bait and switch," is valid, is when you get large ad agencies where the senior creative team and many of the big brands in the firm, they're focused on getting the clients that they don't currently have, and a lot of these firms, more than half of what they do is pitching new accounts, and then once the accounts are won, they're handed off to other teams entirely. I think there's some validity there, but on this point, you're really talking about healthy transitions, and I think you're talking about getting the account person in on the transition in the sale before the account begins. BLAIR: One of the tricks that I learned years ago is that when you're transitioning, and a closing meeting is a point of transition where the new business person is transitioning out, and the strategy, and potentially account person or transitioning in, or if you're doing it the way that you're kind of advocating against, then once we get into the strategic part of the account, the strategist is transitioning out, and the account person is transitioning in. BLAIR: My tip for transitioning is, if you are a person transitioning out in a conversation, then write nothing down, because you'll see in a meeting that the client's focus, as you're talking about next steps, the client's focus will turn to the person who is taking notes, so it's just a subtle little trick to signify that you're transitioning out by you no longer writing things down, and the person who is taking up the mantle begins to take notes. DAVID: Now, as long as that person who's taking notes is also leading the meeting, if that person is silent, taking notes, then they tend to be disrespected by the client, so leading the meeting and taking notes, very, very powerful combination. BLAIR: Good point. Otherwise, you're just a stenographer. DAVID: Right. BLAIR: Okay, so the topic today was, best ways to disrespect account people. I can't wait till we get to the ones about disrespecting creative people, disrespecting the accountants. The key points we covered, not recognizing that the account person role is the most difficult in the shop, the principal implying that they'll always be there if the account person messes up, so, "You're in good hands with this person, but I'm always here, just in case you're not," swooping in and out of client relationships and kind of clearing the table and starting over, switching account people out frequently for specific clients, saddling account people with new business responsibilities, and then turning new clients over to them too late. This is great. There was a lot on here I hadn't previously thought of before, David. Thank you very much. DAVID: You're welcome. We need to talk next about what account people, good account people, should do, and we really owe our audience a lot about how to grow accounts, too. We have to pick that up at some point. BLAIR: I think you do owe our audience a lot on that, so I look forward to talking about that a couple of podcasts from now. DAVID: Thank you, Blair. BLAIR: Thanks, David.

Blair offers seven mindsets that any seller of expertise needs to master so that they can behave like the expert in the sales cycle.   Links "The Jedi Mindset" by Blair Enns McClelland's Human Motivation Theory, also known as Three Needs Theory, Acquired Needs Theory, Motivational Needs Theory, and Learned Needs Theory   Transcript DAVID C. BAKER: Good morning, Blair. You are in London. I'm in Nashville. BLAIR ENNS: Yeah, it's my afternoon, and it's your seven AM. DAVID: And don't tell me you've gotten a lot more done today already, because that's just a time change thing. Has nothing to do with productivity. Today we're going to talk about the seven masteries of the rainmaker, choke, choke. BLAIR: You're choking on the word rainmaker, are you? DAVID: Well, a little bit. I'm also, it's like seven. How come it's not six or eight? Seven sounds quite biblically, almost like we need to take an offering at the end of this or something. BLAIR: Let's do that. DAVID: I'm more choking on the idea of the rainmaker. Do you hear that term much anymore? I don't really hear it. We know what it means, though. BLAIR: No, but there was a time when you heard it often. In fact, if an agency were running an ad looking for a new business person, probably a health percentage of those ads would have the title rainmaker wanted. DAVID: Yeah. BLAIR: I've never liked the term rainmaker. It's a little bit funny that an agency principal would be looking for an individual who essentially has magical powers, the ability to make it rain. DAVID: Right. It's dry. The crops are going to die. All we can do is just rely on magic. So let's call on the rainmaker. We have no idea how he ... it was always a he back in those days, but we don't know how he or she does it, but this is our last resort. BLAIR: We have no positioning. We have no leads. We have no prospects. We have no formalized new business process. You absolutely need somebody who can make it rain, yeah. So I've kind of used that term tongue in cheek, but the idea of seven masteries, it really stems from the notion of mindset. Because you can master behaviors. You can master all kinds of things. And when I originally wrote about this a few years ago, I had come home to the idea that I was teaching people sales process and people were learning, so they were onboarding and understanding what it is that they knew to do in specific situations, but yet, they still couldn't bring themselves to do it. BLAIR: So I kind of went deep into the subject and realized well, the things that I'm asking them to do, because my approach, the Win Without Pitching approach to selling to new businesses is a little bit contrary to the conventional way it's done in the creative profession. So the things that I was asking them to do were contrary to their overall general pattern of behavior. And then you ask yourself, well, what sets somebody's general pattern of behavior, and the answer is it's really the thoughts in their head, the mindset. BLAIR: So I kind of arrived at this model, this idea of the seven masteries of the rainmaker. These are the seven things that are concepts that an individual needs to master in order to put themselves in the mindset, the mindset of the expert. I sometimes refer to it as the Jedi mindset, so they master those concepts. So they're in the proper mindset. Then they can begin to behave, generally speaking, across the pattern of general behavior, they can begin to behave like the expert, and then they can start to take onboard these very specific things that we teach client does x, you do y. BLAIR: If you learn those specific points of sales process, what to do in the sale, in certain situations, but you're not already operating or behaving like the expert, then they're not going to work. So this whole idea was about getting to somebody's mindset. DAVID: Okay, so we're going to go through the seven, but before we do that, let's assume that I want to embrace this way of thinking. What specifically, almost mechanically, are you suggesting I'm going to do with these seven things? Do I just write them down, and I chant them to myself? No, you're not talking about that. It's more I analyze my behavior against this list. What am I going to do with this after we get through going through the seven? BLAIR: As I walk you through the seven, you'll think about where you are on that spectrum, and in the first mastery, just ask yourself, hey, are you mastering this now, or do you have some homework to do? And then I am going to get you to chant something funnily enough. DAVID: Good luck with that. BLAIR: After we get through four of the ... I think I said to you, this is either going to be really fun, or it's going to be a complete disaster. DAVID: Right, yeah. BLAIR: So we'll just see how it goes. As I explain the mastery, you just ask yourself, well, is this something I have mastered, or do I have some homework to do? And then once we get through four, the first four, which I consider to be the foundational masteries, then I'll actually talk about stringing them all together in a little saying or a mantra that you can say to yourself, and I don't mean to say that you're like Buddhist guru here or something. DAVID: As you laugh and talk about that, right. BLAIR: We're going to get you to say it out loud and then you'll see that when you do this properly, this becomes the conversation that you're having yourself with, and it sets you up to go into a situation where you're behaving properly. And even if you don't remember the specific things I tell you that you should be doing in the situation, it won't really matter, because you'll be thinking the right things. Therefore, your tendency will be to behave appropriately. You will behave like the expert. And then you can forget all of the nuance, and you'll still probably do pretty good. DAVID: Okay. All right. So let's dive in then. The first one is focus, right? So talk about that. BLAIR: Yeah, so mastering focus, it begins with the subject of focus. When you go in and do a total business review with a firm, I don't know this for certain, but I would expect that one of the very first things that you look at is the firm's positioning. Once you do an assessment of where the firm is and how they need to improve, I suspect that's kind of the foundation of where you start, or one of them. It certainly is in my business. DAVID: Yeah. In fact, I'm doing one today, yesterday and today. And as I was driving to where I'm talking with you now, I was just thinking, you know, I love this work. There's so much science and art around positioning, and it sets the stage for everything, right? How can you have all these other conversations without that? And that's what you mean focus, power in the sell comes from deep expertise, which comes out of that focus. DAVID: So when somebody's listening to this first one, and they're thinking, okay, do I still have homework to do, that question is is my firm focused enough to give me power or leverage in that relationship. BLAIR: Yeah, are you focused, or are you the individual benefiting from a focused firm. And the benefit of focus is when the firm narrows its focus in terms of the types of problems it solves or the types of clients it works for, usually a combination of those two, when it narrows its focus, it allows the firm to build a deeper expertise. So if you're an agency principal, and you have a dedicated new business development person, just ask yourself, are you arming this person with the benefit of focus. So we're going to build a four statement mantra. BLAIR: And the first statement is I am the expert. I am the prize. And that comes from this notion, this idea that I see myself as the expert practitioner in the relationship and not a vendor. I have some power in the relationship because of the depth of my expertise. Therefore I have a sense of being in control, but this idea that I am the prize, I am the prize to be won. I and the firm, we are the prize to be won in the relationship. And it's not the client is the prize that I am trying to win. BLAIR: So again, that's a mindset thing. Do you see yourself as this deep expert and representing a firm that has deep expertise that is desirable to the client, and do you see yourself and the firm as the prize to be won in the relationship? DAVID: That is so powerful, even though the words are so simple. It's the opposite of being a supplicant. It's not an arrogance, though. It's more of a quiet confidence that I've seen this before, and I'm eager to help, but we should talk about whether this is a right fit. I don't have to have this. I keep thinking of all these statements that emerge from what you were just talking about on the focus side. Even though we're kind of skipping, we could unpack this notion for weeks. We could talk for weeks, just about what focus means. But that's how it all starts. I love the fact that ... obviously, it has to be on this list, but I love the fact that it's also the first one. DAVID: So I am the expert. I am the prize. So that's focus. Second would be purpose. So talk about what that means, because we're still talking about very foundational things. How does purpose relate to this as a second one? BLAIR: Yeah. So after you master focus, you build deep expertise. The second, master a sense of purpose. And by purpose, I mean kind of a higher mission or calling. So most well-positioned firms can express their positioning in some fairly standard, almost formulaic language, and I don't mean to denigrate the language by calling it formulaic. I think first, you actually have to express your positioning in a formulaic language before you get creative with the language. BLAIR: So most specialized firms can say we're experts at helping this type of client solve this type of problem, or this discipline for this market. And that's just the beginning. Once you have that nailed, you want to go off in search of a higher purpose. Now, what purpose does for you in the sale is it gives you moral authority. It gives you the moral authority because you're driven, not to sell something to the person sitting across the table from you, and you're driven, not to help them sell things to their client. By tapping into purpose, you're tapping into something that's bigger than you, and even bigger than your client. And that gives you some moral authority in the sale. BLAIR: I'll give you an example in my own business. So Win Without Pitching, I can express our positioning as sales training for creative professionals. So the discipline is sales training. Creative professionals is the market. But my mission based positioning is we are on a mission to change the way creative services are bought and sold the world over. So there are different reasons. It starts to get into this Simon Sinek, tapping into your why thing. But there are certain moments when I will say that statement to myself, or if I'm being introduced to give a speech, I'll hand that language to the person who's introducing me, and that helps me get through maybe a slightly anxious moment and tap into something bigger than what I'm trying to accomplish in the moment. BLAIR: And when you're thinking bigger, when you're thinking past the transaction that's in front of you, and you're thinking past even what your client's objective is, to something even bigger than that, that steals you, gives you this moral authority, it contributes to your confidence, and it allows you to kind of ... gives you more ... I don't want to go back to the power word, but more confidence to navigate through the situation, through the sale, acting like the expert. DAVID: Yeah, and what I'm going to say next, I don't want it to take us too much off track, but I couldn't help but thinking of something as you were talking through this. Part of what we're doing at the beginning of a transaction like this or a possible transaction, or relationship, I guess would be a better way to say it, is to gather some control in that relationship, set ourselves up for that, not, though, so that we can misuse the power, but to use it for the benefit of the client, and sometimes it looks like a mistake. It looks like a power trip. It doesn't make sense sometimes from the outside. It's like if you saw somebody holding a child down, and it was through a glass window, and it looked cruel, and then the next thing you saw is that they were giving the child a shot, or they were dressing a wound or something like that. So we're doing something where we're exerting control to help the client, not to abuse the client. And we're reminding ourselves of that during this purpose discussion. DAVID: I love the example of getting up on stage, picture you've traveled a long time, you're tired, maybe something has happened that's shaking your confidence just a little bit. And you say this to yourself that I am on a mission to help. I guess that's the second phrase here that we're talking about. The first one, I am the expert, I am the prize. The second one, around purposes, I am on a mission to help. All of a sudden, it settles everything down. It reminds us why we're here and what we're trying to do. BLAIR: Yeah, well said. DAVID: So the third one is leadership. This is also a foundational statement. These first four are very foundational. So leadership is the third one. BLAIR: Yeah, let me just build where we are so far. So focus, I am the expert, I am the prize. Purpose, I am on a mission to help. And leadership, the line that goes with that is I can only do that if you let me lead. The idea of mastering leadership speaks to the notion that the sale is the sample of the engagement. So for you to do your best work in the engagement, you need to be able to lead. I use the word power, and I tend to overuse it, and as you point out, I don't mean power for the sake of power. I don't mean overusing it, but I mean, the client letting you assume the expert practitioner position and lead them through the engagement, rather than them relegating you to the vendor position and having them drag you through the engagement or dictate to you how the engagement is going to work. BLAIR: You're being hired to help solve a problem or capitalize on an opportunity. And for you to do your best work, you need to be allowed to lead in the engagement. Now, if you're not leading in the sale, then you won't be allowed to lead in the engagement, because the roles in the relationship are established well before the engagement begins. They're established in the sale. That's why you need to behave like the expert. You need to behave appropriately. BLAIR: So this third mastery of leadership is simply recognizing that for you to do your best work in the engagement, you need to be allowed to lead the client. Therefore, it's your job or a requirement that you assume the leadership position in the sale before you're hired. Again, I refer to the battle for leadership or power or control as the polite battle for control. And it should never feel to the client like you're dominating them or lording anything over them. They should feel the way it feels to you when you're hiring an expert practitioner yourself. They're calm, they're collected. They're clearly in control of where things are going or what the appropriate next steps should be. BLAIR: But they're also quite consultative with you, and they make you feel like you have input and you're not being dragged along. So that's the third mastery is leadership. DAVID: I can't help but think about the notion of process as well, because many clients of the folks that are listening to this podcast, those clients are sometimes going to question the process you want to take them through, and it's pretty important to not only have a reason for the process, but to also stick to your process as the expert. Now, if it's not a good process, you don't need to stick to it. I guess that was obvious. BLAIR: It's funny. I was thinking that, too. I'm sure you've seen this, too. There are a lot of agencies out there that kind of manufacture this, I'll call it process, the Canadian version. They manufacture it, and they lead their clients through it, and I come along, or you as a consultant come along and look in and go oh, it feels a little bit hollow and empty, and it's needlessly long, and it's not as fruitful as the client might think. So I think we can laugh about it, but there's actually some fairly hollow processes out there. DAVID: Right. But assuming that it's a good process and it really is a core part of how you're going to lead the client, then this begins to be a part of how you conduct this conversation. It's like you've hired me as an expert. The way I've done this in the past many, many times is to follow this process. I don't mean the hollow process. I mean the good process. It's allowed me to find the truth more reliably and more quickly. And that's a part of leadership. Leadership is not just the advice I'm giving a client. Leadership is also the process that we go through together to arrive at that advice. That's more the point. So focus, purpose, leadership. And the fourth one is detachment.   DAVID: Let me go through and repeat these phrases again. So on focus, we have I am the expert, I am the prize. On purpose, I am on a mission to help. On leadership, I can only do that if you help me lead. And then third is detachment so walk us through that. BLAIR: Yeah. Fourth is detachment, and the line that goes with it is all will not follow, and that's okay. There's really two things you want to master about detachment. First of all, you want to detach from the outcome. So we're talking about the mindset you get into right before you go into the sales interaction. And you layer in all these masteries, focus, purpose, leadership, and this idea of leadership, I'm going into the exchange, and one of the things I'm looking for is I'm looking to take the lead, and I'm looking to see if you will let me take the lead. Do you recognize me as an expert, and are you willing to let me lead in the engagement? If you are, you'll let me lead at least a little bit in the sale. And the fourth mastery here, detachment is letting go of the fact of well, if they don't, that's okay. BLAIR: Your business is bigger than any single one interaction or any single one opportunity. You are this focused expert. The idea is if this person or this client or account doesn't come with you, if they don't let you lead, if they don't hire you, et cetera, that's okay. So you detach from the outcome. That's number one. You focus on the mindset and the behavior, and you detach from the outcome. So again, if you imagine when you hire or work with other professionals in your life, if you end up saying to a lawyer or accountant or solicitor or whoever the most vaunted expert is in your life, if you decide kind of not to go with them, they're not pleading for you to please, please, please give me your business. Because they're this recognized expert who have, you imagine that they have all kinds of opportunities available to them beyond you. BLAIR: And that's essentially what you should be thinking to yourself and then communicating to your client, and just let go of the outcome. So that's the first point on detachment is just generally focus on the mindset, focus on the pattern of behavior, and let go of the outcome. Don't be tied to the fact that this person absolutely must buy from you. BLAIR: There's a lot rolled up in this idea. The idea of not over investing in the sale is tied to it. It's easier to detach when you haven't over invested in the sale. But the second part of detachment is each of us personally tends to have something, and it's usually one recurring thing that we want from the other person in the sale. BLAIR: And I'll go back to this model of motivation known as McClelland's needs theory of motivation or the three needs theory that says people are motivated primarily by one of three different things. It's the need to win versus others, the need to orchestrate others, and the need to connect with others. So if you're a high competitive drive, and you have a high need to win, then you really need to detach from, before you walk through the door, just let go of the need to win this opportunity. If you have high power needs, you have the need for authority and respect, that's probably a good thing, because you and I and have been talking about that. You want to occupy the expert practitioner position, but some people can be in danger of having too high a need for authority and respect. BLAIR: And that's me. So I need to let go of the need to be the absolute authority on something, and other people have high affiliation needs. What they're concerned about in any social interaction, even in a commercial one like this is the need to be liked by others, the need to connect with and be liked by others. So in that situation, they would be telling themselves something like all right, this person doesn't need a friend. They need an expert practitioner. So I will detach from my need to have this deep, personal connection with somebody. There's some more nuance there. You don't want to detach from that completely. But you do want to recognize essentially what a big motivator is and recognize that you tend to go to this too often, and in the situation you want to let go of it. BLAIR: So the idea is that all will not follow speaks to this notion that you don't need to close every deal, and then there's this secondary detachment of what is it that you personally need. Identify it and let go of it. DAVID: Because we should not need constant affirmation that we are an expert in the relationship. We should enter that potential relationship. Every once in a while, it's on a rocky ground, but believing generally that we are the expert, and there's a lot of evidence for that and that many, many clients over many years have paid us a lot. And then after the engagement, we've heard that it made a difference for them, whatever business our listeners are in. DAVID: I love talking about this notion about how much we care or what we care about. I have this theory that has zero scientific underpinnings, just to make that clear. BLAIR: Those are the best theories. Go on. DAVID: All of a sudden, you're interested now. The idea is that we have 200. Now the number might go up or down, obviously, but we have about 200 instances in our souls where we can care a lot more than the client can. And every time we deeply care more than the client does about something, a little part of us dies. And then we have 199 left. So you want to use those very carefully. They're like little tokens that are not going to be replaced. Caring about the wrong things, it just kind of kills you slowly, right? BLAIR: Yeah, you've punched all the holes in your care card. You're out. DAVID: Exactly. Where's my free card? BLAIR: Clearly, you've punched yours years ago. DAVID: I don't even know what a care card looks like anymore. Okay. So what's this mantra that you're going to try and get me ... you say it, and I'll repeat it. And this rolls up the first four. BLAIR: I am the expert. I am the prize. I am on a mission to help. I can only do that if you let me lead. All will not follow, and that's okay. You try it. DAVID: Okay. If I say that is, will you let me lead the next six episodes of the podcast? BLAIR: Yes. DAVID: Okay. BLAIR: You can have whatever you want if you say this. DAVID: Okay. I don't believe that. But I am the expert. I am the prize. I am on a mission to help. I can only do that if you help me lead. BLAIR: If you let me lead. DAVID: If you let me lead. All will not follow, and that's okay. So obviously, I messed it up. I have to practice this some more. Okay. So those are the first four, and you've wrapped them up. The next three masteries are different, though. They're not foundational. They're more specific situation masteries. And we sometimes get these in as well, today. BLAIR: Yeah. DAVID: So what's the first one? Silence. BLAIR: You're looking at the list. You tell me. DAVID: Ah, you were pulling that on me. You just did that to me, and I fell right into it. BLAIR: Yeah. DAVID: Okay, I'm a sucker. BLAIR: The fifth mastery is silence, and I think we've talked about this a little bit before. I think mastering silence is the single biggest little thing that you can do, if that makes sense, and it does make sense, the single biggest little thing you that you can do to become a better sales person. Nature abhors a vacuum, and when a buyer and seller are talking, any time there's a pause in that conversation, there's an impetus on both parts to fill it, and if you're the seller, you tend to fill a pause in a sales conversation with some sort of concession. You don't even have to master silence. You just have to learn to be more comfortable in silence than the other party. Because if you can be more comfortable, then the client is likely to fill the void with a concession or they will give you really valuable information. BLAIR: So we always teach that any time you raise an objection or place kind of a hurdle in front of the client and ask the client to jump over that hurdle, or you ask for a behavioral concession, after the statement or the ask, you just be quiet. So if you put forward your proposal, and it's got a price on it, and you're putting it forward orally, and you say and the price is $200,000, then you just stop and say nothing. And it's hard to do this initially, but it's actually very easy to get good at this. And if you can just kind of not be the person to break the silence, and you let the client fill the void, then you'll get all kinds of information on where the client stands, on how much power you have in the relationship. And you might even get some concessions, whereas sales people like to fill a void in that moment. The price is $200,000, silence, and then the sales person can't stand it, and says, oh but we could do it for less. DAVID: Yeah, and the panic rises so quickly. It's like yeah, maybe they just need to pull out Fortnite and start playing it or check their email. You're not suggesting that. BLAIR: I would say count to 10 under your breath. DAVID: Yeah, okay. All right, so silence is the first of the three after the foundational ones, and the second one is directness, say what you're thinking. We've talked a lot about this one, but it fits in the system, right? So just remind people, if they haven't heard that episode. BLAIR: I was just working with a firm earlier this week, and we were just doing some role play scenarios where I was on the subject of saying what you're thinking. So I was just throwing out some scenarios. And I was saying okay, here's a scenario, you're talking to a prospective client. You're thinking oh, they're probably too small. They probably can't afford you. What do you say? And I was really surprised at how people ... and I've been doing this for years. I continue to be surprised at how people struggle with finding the language to actually politely say what you're thinking, because we are not conditioned to do that in this business. In the creative and marketing firm business, we're taught that we're in the service business. The customer's always right. We're taught to nod and smile yes, even when we think the answer is no. BLAIR: But an expert would never do that. If you've got an opinion that's contrary to one that's been stated by the client, including an opinion on what the next step should be in the path to determining whether or not you're going to work together, you should say it. So be direct. Put it on the table. So I say there's a slight pause. As soon as you get the thought, the contrary thought, you have an obligation to state the thought, and you pause long enough so that you can think of a way to say it with kindness. So we talked about before, the subject goes by the name kind ruthlessness. So you're kind in your language, but you're ruthless in your standards and your behavior. By that I mean, you're being direct, you're saying what you're thinking. If you think the client's assessment of their problem or their opportunity is wrong, then you should say so. BLAIR: If you think there are flaws in the way they're proposing to hire a firm like yours, then you should say so. If you think the client is making a mistake in the engagement, then you should say so. Any expert worth their weight would confront politely with kindness the client with the mistake they think the client is making. And we, almost universally ... it's not universal, but it's almost universal. We don't do that. We need to learn to get better at doing that. So you master this idea of directness of saying what you're thinking. DAVID: I'm picturing somebody taking the oath of office or being sworn in before they give testimony. There needs to be something like that for experts, a commissioning service for experts where they raise their hand and say, I pledge to do it politely but to be honest and to state the truth with the clients who deserve that from me. They deserve that leadership from me. This is very powerful. BLAIR: I love that idea, our equivalent of the Hippocratic oath. DAVID: Right. So silence, directness, and the last one is money. So master your own wonderful relationship with money. That's one of the things we got with another couple or some friends or whatever, and we can talk about sex. We can talk about all kinds of ... we can't talk about how they raise their kids, and we can't talk about money sometimes, and that carries over into how we conduct these early relationships and sales studies as well. We can't really talk about money for some reason. BLAIR: Yeah, and that's why it's the seven and the last mastery. I like the idea that if people were just to read it, you have to master money. Some people would be repulsed by it, the idea. And those are the people that I'm really speaking to here, because we're not mastering the accumulation of money or the spending of money. What I mean by mastering money is mastering our own relationship with money. I believe, and I think we've talked about this before, that most of us have a dysfunctional relationship with money. BLAIR: In my book, Pricing Creativity, the last chapter, I think it's titled the last obstacle is you, and I talk about the mental barriers ... we've done a podcast on this ... the mental barriers to profit. And that's what I'm talking about is not getting hung up on money, and all of the personal emotional things that we were taught or we learned around money, all of the baggage ... baggage isn't fair, because as you pointed out, in social situations, the rules around talking about money are actually quite different than they are in a business situation. You say you've got friends where you can talk about sex, you can talk about politics, you can talk about things. But you can't necessarily talk about money. There's only a small number of people in my kind of personal life, where I have an open relationship without the subject of money, where we've agreed that we're going to talk openly about money, and there's really nothing off limits. DAVID: Yeah. BLAIR: I'm really talking about mastering the subject of the hold that money has over you or the idea that the subject of money is somehow holding you back because you don't feel it's worth it. I got an email two days ago from a client, who said ... he forwarded an exchange that was happening in his firm. He said, oh you're going to love this. He said read down and start from the bottom. So this is a firm that's recently moved to value-based pricing. So they still scoped it based on hours. Somebody internally said, well, it should take this many hours. The client wasn't buying hours, but they sold it for way more hours than it took to deliver. And two people internally were saying this is unethical. We cannot do this. BLAIR: So the principal at the firm and I are kind of laughing back and forth about this, because if you think it's unethical to create extraordinary value quickly, then you have a dysfunctional relationship with money. DAVID: You also have some other issues that are coming around the corner, too. This is such a great topic. I'm not at the point where I'm going to start chanting this. But I do ... I really do like this. So the foundational four, focus, purpose, leadership, detachment, and then the three masteries that are more for specific situations which you might use in certain specific cases would be silence, directness, and money. Blair, this was fantastic. Loved our discussion today. BLAIR: Yeah, thanks. It wasn't nearly as weird as I thought it would be. DAVID: Thank you, Blair. BLAIR: Thanks, David.

The podcast explores the hosts' perspectives on starting a firm and what they would do differently. They discuss the evolving role of the CMO, borrowing money to start a business, the changing role of a website in new ventures, structuring arrangements with clients, and their plans for staying in the industry.

Blair gives David some homework to identify patterns in the principals of creative practices who are successful and have that "je ne sais quoi."   LINKS 2Bobs Episode 28 - "Positioning Cheats" Start With Why by Simon Sinek "Top 10 Podcasts Agency Owners Listen To" by Daniel de la Cruz Crucial Conversations - Tools for Talking When Stakes Are High by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler   TRANSCRIPT DAVID C. BAKER: Blair today, we are going to catch up with the rest of the world. I can't even say that with a straight face. We're only 80 years, 90 years behind. We're going to talk about the X-Factor. Okay. And the first time that phrase was used was in 1930, and we're just now getting ready to talk about it.  BLAIR ENNS: You've actually done homework. That's not fair. DAVID: Well, a little bit.  BLAIR: You went and looked up the first use of the word X-Factor... But hold on - you have to explain who used it. What was the context?  DAVID: Well, it was like in the urban dictionary, so it's totally unreferenced, it's just somebody's idea of when it was first used. I probably shouldn't even brought that up. But the phrase that popped up a lot when I was researching the X-Factor 'cause you really wanted to talk about this and I'm intrigued too. It's the "je ne sais quoi" which means, "I do not know more." Have you heard that phrase? BLAIR: Yeah, "je ne sais quoi." I always thought it just meant ... And I should know because I'm Canadian. It's one of our official languages. I always it meant, I don't know. So it's, I do not know more.  DAVID: I do not know more, it's a French phrase "je ne sais quoi." In other words, there's this X-Factor. I don't know more. There's just something about them. There's this X-Factor about them. It was pretty interesting. We're going to talk about principals that exhibit this X-Factor.  BLAIR: Principles, the people: ...P-A-L-S. DAVID: Yeah, right.  BLAIR: Not ...P-L-E-S. DAVID: I never use the other word anymore 'cause I'm so used to using principals ...A-L-S.  BLAIR: So principals of creative practices who are successful, who have this "je ne sais quoi," this X-Factor of success right? DAVID: Yeah. You really enjoyed saying that with such a great accent didn't you. So you gave me homework.  BLAIR: Yes. DAVID: Here's what you said to me: think of one recent client - this presumes I even have clients, right? But think of one recent client who is very successful, what three things come to mind about that person? So I dutifully answered my questions here just following the script. And then you said, "Now do it for two or three more clients." And so I did that. Now what do you want me to do with this? BLAIR: I want to talk about the patterns. If you've done it for three or four clients, when you think about the attributes of that person, how common are those attributes across those three or four people?  DAVID: They were just surprisingly common, and I hadn't ever really thought about it quite like this. But I almost felt like I was wasting my time as I extrapolated to others, because they all came up about the same. Maybe the order of the three things is different from principal to principle but the same ones kept coming up. Did you do the same thing?  BLAIR: Yeah and I thought of a couple of people and then I just kind of thought of a group of people and made my list even a little bit longer. So I've got six things, but I would say those six things, they all roll up into one word. So if you had to take all of those different attributes that you've identified of these successful agency principals, and you had to put them all under the banner of one word, what would that one word be?  DAVID: So I popped back and forth between these two. But I think the one word would be confident.  BLAIR: Yeah, me too.  DAVID: Really? The same word? OK. BLAIR: Yeah. So the X-Factor is confidence. But I think we'll get into this and maybe a little bit later on, we'll talk about some kind of big picture ideas around confidence and the subject of overconfidence and how important confidence is. Did you write down different manifestations of confidence or different forms of confidence? What's on your list? DAVID: The early form of confidence would be just starting the business, like, "I can do this." That's one. Another where it seems to show up a lot is just in sales or prospect conversations and I've even actually listened to them and then of course, most of the time I haven't, they're just reporting to me what the conversation was. Then that's where it probably strikes me the most is just this confidence, even when they don't have a lot of experience in the promises that they are making to a prospect. You and I have probably done this in our own practices years ago too. BLAIR: Oh yeah.  DAVID: You get on the phone on the way back to the office and you're saying you will not believe what I just promised we could do?  BLAIR: Yeah.  DAVID: That's where it seems to show up.  BLAIR: Well, I think some of the best sales people in the world you cannot tell from the way the salesperson is behaving, what their external conditions or what their financial situation is, from the way they're behaving. So a really good salesperson can be standing in front of you on the brink of bankruptcy and you can't tell because they are not transmitting panic or neediness of any kind. DAVID: Wow. So they must be good poker players I would think. BLAIR: They're confident, but they're also good actors. But isn't that the same thing? I was talking about this last week in another podcast? Yeah, I actually step out on you and do other podcasts from time to time. I was saying the phrase, 'fake it till you make it', somebody on Twitter was saying, "That's just such a horrible saying, it's such bad advice." And I don't think that's true at all. And especially when it comes to confidence. You develop confidence, I believe, in part by faking, being confident, you just pretend you're confident and then you do that long enough, often enough, lo and behold! You become confident. I think good salespeople are able to fake, fake may not be the right word but just act confident even when the circumstances are dire. DAVID: Wow! Because all of us are growing by stepping slightly over our current capabilities. And that includes sales. BLAIR: Yeah.  DAVID: There's just a fine line I mean, that I guess is technically the line but if we never do that we never grow, if we do too much of it then we really are cheating our clients and I think you're going to talk a little bit later about this overconfidence thing. So back up a little bit, what got you thinking about this in the first place? What intrigues you about this concept?  BLAIR: I think when you work with enough people over time you start to make some initial assessments of how likely some people are to succeed and I was thinking some people have it and some don't. And in showbiz, it's not just conference, there's this star quality that really is "je ne sais quoi." I don't know more, other than to say, it's like, they've got it, they've got the X-Factor. That's why I assume the show is called The X-Factor. And it's really hard to nail down what it is but I think in business and in running a creative firm, I think that X-Factor it really is confidence but not going too far and having unchecked overconfidence. Which is actually kind of common in creative professions for reasons we'll get into a little bit later. So I think you've probably seen those patterns too, you talk to somebody and in the very early parts of the conversation, you get a sense of how successful this person is. Is that correct? DAVID: Yes, for sure. And like you were just saying, I couldn't tell you how I'm picking it up. But I do. I don't know if you remember many years ago, probably 15 years ago, I called you up late in the day, maybe even had been in the evening. And we've referenced this in an earlier podcast. BLAIR: You were in a snowstorm.  DAVID: Yeah, exactly. And it hit me for the first time. It's like, "Oh, my goodness!" What I'm in the business of doing is being a substitute for the confidence that people lack. So most of the people that wouldn't hire me have enough confidence and they figure things out. Some people that are in that category would still hire me and then others need the marketplace to replace that lack of confidence they have. So many times I go into a situation and I believe more highly in their skills than they do but it doesn't matter what I believe they just simply are not going to absorb what I believe about how good they are. It will only be the marketplace that does.  I remember talking with you about that, it became such a big light in my mind. So what are the things on your list? So confidence rolls up. But can you get more specific here about what you're saying? BLAIR: Yeah. The first thing you had in your list about like their presence in a sales situation is similar to what I have. I have talking about money. And what I have seen is the successful agency principals over the years and the successful new business development folks, they can have a conversation with a client or prospect about money and the size of the number does not faze them. So they can say $10 million, they can say $10 million, just as easily as they can say, $10,000 and vice versa. The size of the number is essentially meaningless to them from an emotional or a stressor, point of view. So that's, I think, a big one and I don't actually see that strength or skill very often, but when I see it, I know this is somebody worth betting on.  DAVID: They might not even have a fantastic positioning. But this cover some of that. BLAIR: Yeah, we did a really early episode on things that mask poor positioning and I think we talked about that being one, the confidence of the principal.  DAVID: Yeah.  BLAIR: So that's the first one. I had the ability to talk about money. And the second point I had, I wrote down the word entitlement. A sense of entitlement. I also wrote next to it and assumption of success. Entitlement can be a bad word. It can have negative connotations depending on kind of how you use it, or even just how you're thinking about it in the moment. But I actually in this context, I really like it the idea that somebody feels entitled to success and there's just no question about whether they're going to succeed in what they do.  DAVID: So does this show up in bad ways as well? I know you don't mean entitlement in the sense like a political program or something like that, that you're not talking about that. BLAIR: Yeah, or a rich kid or something like that, where the world owes me with a bit of a chip on my shoulder, because I'm not getting what I feel I'm entitled to. I mean, a healthy, positive sort of entitlement, which is that, of course, I'm going to be successful. Of course, there are lots of businesses out there that would see the value in what I do. Of course, the future ahead of me is big. Of course, I'm going to take advantage of most of the opportunities that come my way, of course, everything's going to be okay. All of these things, and I think maybe without being polar opposite of that conflicting idea that's still valid, is the idea of the healthy paranoia of a principle. I don't think that's part of the X-Factor. I think that's a part of kind of general success as an entrepreneur, I think you have to have a healthy paranoia.  But I think these people that really have it the X-Factor, they're not really driven by paranoia. They're not driven by fear. They're driven by almost entirely positive things. I think both of those are valid. But I'm just saying in the X-Factor, these people who have that kind of special X-Factor, there's just no doubt that they're going to succeed.  DAVID: Almost unapologetically, which is not necessarily arrogant. You've talked quite a bit about the fact that one of the mental, I guess, principles of the newer entrepreneur is that it's not a zero sum game. So when there's this entitlement or this assumption, or this confidence, it's not at the cost of the client, it's not like we're taking things from the client. It's like we're both going to succeed here and I'm unapologetic for mine and unapologetic for yours between us we're going to do great things.  So first one was how they talked about money, that's really interesting to me, especially the way you phrase that the other is entitlement or assumption, an unapologetic approach to this What's the next one?  BLAIR: The next one is leadership. They lead their people and their clients. I don't know if they're natural leaders, it's probably fair to say that when we're talking about X-Factor, we're talking about natural leaders. I know some really strong leaders who've had to work to develop their leadership skills, whether it comes naturally or not. I saw this in a couple successful clients and then I was thinking of some other clients that I've worked with, that are still kind of successful, but struggle with this issue. You probably see this too where you're offering guidance to an agency principal and his or her response is "Yeah, I know I should do that. But I'd have a hard time selling that to my people." When I hear that I think, "who's running the show here?"  DAVID: Apparently, "my people" are.  BLAIR: Somebody with that X-Factor is never going to push back on a valid idea by saying, "I'm going to have a hard time selling that to my people." Unless it's something that's really ridiculous. Remember that seminar I did years ago in Bermuda in the beginning of 2009?  DAVID: I do. Yeah.  BLAIR: It was you and me and four other people. We drank $1500 worth of champagne, because I had to hit the food and beverage minimum.  DAVID: Great food. And a lot of it.  BLAIR: I had two different agency principal say to me, "I really want to go to the seminar you're doing in Bermuda, but I just laid off people and I can't justify to my people that I am going on this thing and I think that is perfectly valid. That's not what I'm talking about. I think in both those cases, and probably the other cases that just weren't stated to me, I think that's a perfectly legitimate area where you should be concerned about what your people think. But when it comes to say, the positioning of the firm or how you're going to go about selling these more strategic decisions, those people who have the X-Factor those leaders with supreme confidence, they don't stop and think, "Well, I hope my people are going to go along with me." There's the sense of, they look to me to lead it's my job to lead I'm going to lead, and even if they're unsure in the beginning, they will follow me because they trust me to lead.  BLAIR: So that's one aspect of it is they lead their people, but they also do the same thing with their clients. DAVID: Yeah. Is that the same as directing their relationship? Or is that something different? I've heard you use that phrase. BLAIR: I use what I think is a healthy generalization when I say there are really only two positions you can occupy in your client relationships. You can be the vendor or you can be the expert practitioner, and the expert practitioner leads they don't dominate. It's got to be this kind of servant leadership role where the client willingly lets you lead but they are seen as the expert and they lead. So you should have that relationship with your people and you should have that relationship with your clients. These people who have this X-Factor, they're able to grow these usually large but just always successful and profitable firms. They show up to a client engagement or a new business meeting and they feel like they should be occupying the expert practitioner position, and they feel it's their job to lead in this situation. And they don't comfortably slot into that polite, compliant, rule follower role that is the vendor, where you sit and take notes and nod your head. DAVID: There's some overlap here between what you just explained and the personality theory stuff that we've talked about multiple times. And that's that somebody with the personality profile of a leader like you're describing is typically somebody who sees a situation and says, "This could be improved." That's the opposite from the other half who says, "Oh, this is good enough, we can work within it." So they say, "This can be improved." Then they go on to the second part B and says, "And I'm the person to improve it. Right?  BLAIR: Those are the four dichotomies or quadrants. Right? It's the situation can be improved or not. DAVID: Yeah.  BLAIR: And I'm the one to do it or not. DAVID: Right exactly. BLAIR: And that's essentially the basics of most personality theory.  DAVID: Yeah exactly.   BLAIR: So those are the first three things I have three other things. You said the first one on your list was how they sell, what do you have after that? DAVID: I have risk taker and I'm cheating a little bit because I did a research project on that. So they are risk taker, they don't always take the right risks, but they do take risks.  BLAIR: Yep.  DAVID: And then the third one is that they - and I haven't heard you talk about this, it's interesting that it's on my list and not yours - it's that they soak up all kinds of knowledge and then they ruthlessly choose just a small part of it to follow.  BLAIR: Oh yeah.  DAVID: Some people read voraciously and other people don't read at all. Then other people latch on to some expert or somebody else, and they have their favorite ones, and so on. But they're always just soaking up knowledge but they don't try to incorporate all of it. They make a quick snap decision like, "Yeah, there is something there. I'm going to follow them." Or, "No, that's really interesting. But no, I think I'm going to go over here to this other expert." That's one thing I see everywhere. BLAIR: That's a keen observation because those are the two categories of people who don't read it all. You see that not a lot, but you see it, it's a pattern. But the other pattern is actually fairly common, isn't it? Creative people are naturally curious. It's kind of in their nature to gather information from all sorts of different places. But there are these trends, we won't name names. But there's like the TED Talk du jour or the business book du jour and that comes out and it peaks. And for the next two and a half years, every third agency principal you talk about is building some sort of proprietary methodology around one point that came up in a TED talk or came up in a book and it's like, "Oh, man, you too.?" Yeah. How proprietary, is it if ... Yeah, I probably, yeah, I'm not going to name names, but...  DAVID: I will. I'll name names. The thing is that there's some really good truth in these movements, right? BLAIR: I agree.  DAVID: Michael Gerber was one for sure.  BLAIR: Work on the business... DAVID: Not in it. Yeah. Exactly. That is brilliant principle. But then there have been three or four since then. And currently it's traction. That's what everybody is doing.  BLAIR: So the one that comes up for me all the time is Simon Sinek's Start With Why. DAVID: Oh yeah, right. BLAIR: "What's your why?" And I'm a huge fan of that. But you see people trying to work it into something that they think is a meaningfully differentiated offering to their clients. Well, first, we start with your why? Well, everybody is starting with their why now. That's not to pick on Simon Sinek. I quote him too. He's got some great stuff. It's just for whatever reason. It's just a sign of his success. But then so many of these creative firm principals glom onto that and try to make it something that's theirs, that helps to differentiate them. DAVID: Which is separate than traction, traction is more of a management system. It's interesting. We kind of grow through these things. Who's the guy that occupies the number one podcast position above us?  BLAIR: Tom Ferriss.  DAVID: Oh, Tim Ferriss. Let's not talk about that...  BLAIR: Yeah, we better say - somebody did a poll recently, he polled a thousand agency principals on what podcasts they listened to, and we came up number two. We're right behind ... We're probably really far away behind the Tim Ferriss and I joke to you on Twitter, "well, let's find out who this Tom Ferriss guy is. DAVID: We'll take him out." I'm just kidding.  BLAIR: What's next on your list?  DAVID: Okay, next on my list then is that they are visionary/persuasive. I think there's a lot of overlap between this and your leadership idea. So they not only have a vision for the future, which is not all that useful unless you can successfully bring other people around you into that same excitement. So the two things together, visionary and persuasive, that's one. Another is that they make really quick decisions, so quick that it drives people nuts. And I'm not saying it's bad. I'm just saying that this is almost a universal characteristic of these people with the X-Factor, is that they do not deliberate a long time before they make a decision. They tend to make quick ones. That's another one I've seen.  BLAIR: Do you think that's maybe too broad to be in the category of X-Factor? Do you think like all agency principals and entrepreneurs are like that?  DAVID: I don't know, you might be right.  BLAIR: I usually am.  DAVID: Well, I'm just going to skip right past that too.  BLAIR: Can I back up to what you said earlier about visionary and persuasive? So I had they lead their people and their clients. Then the next item I had was eyes on the horizon. So that's your visionary part. DAVID: Yeah. BLAIR: Visionary and persuasive, that really is leadership, right? When I think of these people who are the most successful agency principals that I know that have the kind of it thing, they see things so much earlier than their people do, and they see things in their business so much earlier than I do. In fact, I think of a friend of mine, he's, one of the most successful friends I have.  DAVID: You can mention my name, it's okay.  BLAIR: You're very successful David. But by almost every professional measure, he is even more successful. He's one of these people where we don't speak very often, but we're talking he tells me what he's thinking, and I hang up the phone, I think you're straddling the line between genius and insane because that conversation didn't really make sense. Then I swear to God, it's a really long time later, it's like three, four years later, I'm seeing everywhere that thing that he mentioned to me years ago, and now that conversation made sense. He is so far out ahead of anybody else I know and it really shown up in his business success. The stuff that he sees and thinks about and acts on, before it's even on my radar is just mind blowing. So I characterize that as eyes on the horizon, they don't have their eyes down on the minutiae of their business. They're not dealing with all the kind of ankle-biter issues for whatever reason, or whatever mechanisms they've used, just good delegation or great team members, or whatever it is, they're able to focus on the horizon and not just focus on the horizon, see further out than other people. Then this kind of speaks to what you were talking about before, the ability to act on it, the courage and the decisiveness to act on it. So these people act on trends that are way further out than most of us are even capable of seeing let alone seeing and making a decision to act on. DAVID: Yeah, and for them to be able to do that, it presupposes so many things about how they're running their business. You alluded to some of them, they can't be down in the minutiae. They had to be inventing, or however you say, inventing future value, creating future value as you talk about. Absolutely. But I'll bet you that a lot of his near certain ease about the future do not come true. But that doesn't dissuade him. So he throws things at the wall and then he sees fairly early on whether or not it's actually going to be true and if it isn't, then he moves on. What I like about that is he's looking up and he's making quick decisions.  BLAIR: Yeah, agreed. Anything else on your list?  DAVID: I have a burning question. I have to ask you at some point, when we're done with this list here. But I've found that they are not generally conflict averse. And I mean, with employees or with clients...  BLAIR: That's so funny 'cause I wrote down crucial conversations. That's the next thing on my list. DAVID: Yeah, same thing, exact, same thing.  BLAIR: The ability to have those crucial conversations and not avoid conflict.  DAVID: Right, exactly. The ones who avoid conflict tend to not really thrive except I know some exceptions to that where they do even though they're conflict averse, but generally yeah, they have to be willing to have those ... And conflict averse is not as good a way to say it as you did, those conversations are. That's a better way to say it, 'cause we're not really trying to butt heads with people. We're just having the tough conversations. BLAIR: There's the great book called Crucial Conversations and it's written by five people (if five people can write a book). So it's written essentially by a consulting company. In the introduction, they're talking about following an executive team around for a while to figure out what the traits of the best leaders were. They talk about this meeting where the CEO is saying there's an invitation to be challenged on all the key issues. But in the meeting, he steamrolls over top of his executive team, and the executive team just kind of sits there quietly and takes it. Then one VP speaks up and challenges the CEO very politely and said, "Okay, you just kind of ramrodded us here. Can we back up and have that conversation again." So the CEO, apologizes and then he opens up the floor and a real discussion happens. As they're leaving the room, somebody says to the consultant, "Do you see what that guy just did? If you can figure out what that is, that is the key to his success." And that's where the book Crucial Conversations came from. I read that book and I remember I wanted to have a crucial conversation with my wife, who's also my business partner. She was driving me to the airport, I was driving and she's in the passenger seat. We're going to the airport and I've read the book and I still myself to have the conversation. I don't even remember what it was about. And I say what I have to say, and I've got my eyes on the road and I'm thinking, "Oh my god! This book works great. I feel fantastic." And I look over at her and she's crying.  DAVID: I thought you were going to say she was asleep. And that's why it went over so well.  BLAIR: Then I thought, "Okay, there's probably other chapters of the book I need to go back and read." So I'm not great at those crucial conversations but that is absolutely a trait that I see in the most successful agency principals, is that they don't steer away from conflict. But they head right into it and when it's done, it doesn't feel a conflict, it feels like a big step forward for everybody. DAVID: Yeah, absolutely. I've learned so much just from you on a personal basis about not being afraid of the truth. So if you swallow that, if you can get to the point where you're not afraid of the truth, then the second thing I've learned just listening to you talk about this stuff is like, "Okay, if you're not afraid of the truth, then let's find the truth as soon as possible." I'm not talking about just in a sale setting, which is where you talk about a lot I'm also talking about it like in relationships. As you were telling that story about the leader who backtracked successfully you know what was even just as significant is the key manager who was capable of stopping that conversation without embarrassing the leader. That is an amazing skill too. That person probably went on to be a fantastic leader in his or her own right as well. BLAIR: That's who the feedback was on the team member said, "Okay got you." That vice president if you can figure out what he just did that's his key to success the ability to basically confront the CEO in a polite way to challenge, to have that conversation that everybody wanted to have and nobody else could bring themselves to have. So that is the key.  DAVID: Yeah, without embarrassing him. So both of those are good.  BLAIR: Well, I appreciate the credit you've given me for your successful marriage for all these years 'Cause I will take credit for that. You're welcome.  DAVID: Yeah, 38 years now. Okay. So here's the big question. I have of you, it's this. When you come across a situation and you've discovered you've said already you've admitted that confidence is a really significant, maybe the most significant factor and you come across somebody who struggles with that. What do you do?  BLAIR: That is a good question. I've heard you talk about this. It's really hard to build up somebody's confidence. I was in Strategic Coach for a few years founder Dan Sullivan is a brilliant, brilliant man. One of the brilliant things I heard him say is the most valuable asset that an entrepreneur has is his or her confidence. When I heard that I just almost screamed, "Yes." Then all of these crazy things that I do that I'm somewhat embarrassed about to build my own confidence all started to make so much sense to me. Then I went home and explained to my wife like, "These things that I do that drive you crazy and I'm a little bit embarrassed, like some of the things or things that I spend money on." If I want to feel like a million dollars if I want to feel my most confident I pay somebody to ... You cannot put a monetary value for me. I cannot put a monetary value on having shined shoes because it's the world of difference.  BLAIR: I've heard people say that underwear does that for them. I've never experienced that where you go out in the world thinking, "This underwear feels great. If anybody could see me without these clothes on, they would be super impressed. I feel like I could walk on water." I've never experienced that. But I've heard women say that a few times and I'll just take their word for it. But for me, it's having my shoes shined.  DAVID: And the flip side of this too is, since we're in a little bit of the confidence business, you can see how an undermined confidence just can wreak havoc in your mind. Whether you're in a consulting world, or whether you're in the marketing world or design world, whatever it is. Because part of what makes you work is this confidence and if you've struggled with some mental health issues, depression issues, I've struggled with depression issues. It just messes with you and it takes this internal fortification that you have to just hold on to while you get through that tough stretch, because this innate confidence is so central to your own success.  BLAIR: I'm so glad you brought that up. I think that's entirely valid in my entrepreneurial career I've never really had that moment where my confidence has disappeared on me. But it happened when I was an employee for a really large ad agency. I worked for somebody who was very good at eroding the confidence of the people who worked for her. I felt like I was in an abusive relationship and I doubted my ability to do anything. If I've felt this way, for any extended period of time, in my own business, I don't know how the business would survive it. I used to think you could take my entire business away from me, as long as I had my list my opt in subscriber list, I would be fine. Then I thought you could take my list away from me, as long as I had my reputation, I would be fine. Then I realized you can tarnish my reputation. But if you just took it away, and I was unknown to anybody, I would still succeed. In fact, I think I could probably even build a better business as long as I had my confidence. But if you took my confidence away from me, I'm done.  DAVID: Wow! BLAIR: I'm done. I think once that was pointed out to me by Strategic Coach and Dan Sullivan, I realized all these crazy things that I do and that others do, we need to keep doing them. And the people around us need to understand that in the agency, the most valuable asset in the firm is the confidence of the principal. There are no categories for this, whatever anybody else in the firm is doing, if it is eroding the confidence of the principal, it is counter productive.  DAVID: We should probably just end on that, it's such a great thought. I'm thinking too, about putting employees in places that erodes their confidence promoting them when they shouldn't have been promoted or whatever and they're swimming around feeling very uncomfortable or sentencing them to something rather than blessing them with something. All of this works in so many different areas. This is such an interesting that makes me wish that we were on a like a live town hall, where we could answer questions from people and get some of their thoughts on this stuff. Too bad it's a two way conversation here.  BLAIR: Yeah. DAVID: Fantastic. This is really interesting. Thank you for bringing this idea. Say the French thing one more time for me. Say it really well.  BLAIR: Eh, je ne sais quoi David. DAVID: Okay. Bye Blair.  BLAIR: Apologies to all my French friends. Francois if you're listening I'm sorry.

Blair interviews David on what each of the three levels of success in running a creative firm looks like.   Links 2Bobs Episode 39 - "Replacing Presentations With Conversations" The Win Without Pitching Manifesto, by Blair Enns The Business of Expertise: How Entrepreneurial Experts Convert Insight to Impact + Wealth, by David C. Baker Built to Sell: Creating a Business That Can Thrive Without You,by John Warrillow Pricing Creativity: A Guide to Profit Beyond the Billable Hour, by Blair Enns 2Bobs Episode 31 - "Mastering the Value Conversation"   TRANSCRIPT BLAIR ENNS: David, it's been a while. DAVID C. BAKER: Has it? I haven't missed you all that much. Have you missed me? BLAIR: Since we've last recorded a podcast, I was listening to one that aired recently and it was talking about my first book is in its fourth printing. It's now going into its fifth printing and I realized that it just aired and we recorded that over a year ago. So if Marcus is digging into a backlog that far, that means we haven't been together for a while. DAVID: Yeah. And it's scary too because imagine how much our thinking has changed in a year? 'Cause you were wrong about so many things. BLAIR: That's an old joke, you need new material. DAVID: Okay, sorry. BLAIR: So since we've last recorded a podcast, I know they keep airing because we've got all this in the can, but you and I did an event in London and then we came home and then you and your wife came up to Kaslo and we celebrated. I was just looking yesterday at a photo of your wife and my wife in a bear den together on her birthday. DAVID: Right, I didn't want to go in it, it's why I took the picture. BLAIR: You're too smart. I took it from inside the bear den, you were outside. DAVID: Right. BLAIR: And then you went to Chile on vacation and then you've probably been in some other places. DAVID: Yes, I have. I'm kind of off the road right now. I head back out of the country on Friday but I've been back trying to get our 61 acre farm livable. So just a few minutes ago, if you'd seen a picture of me, I would have been covered in white from head to toe because I am still trying to figure out how to use a paint sprayer and I realized I have a lot of expertise to develop yet. BLAIR: That's why on a hike I was carrying the bear spray. Okay, so it's been a while since we talked. Today we're going to talk, I want to call it good, better, best but it's really the three levels of success in running a creative firm and I think you've broken it down into the categories of starting, existing and thriving. And you sent me an entire spreadsheet to help navigate this conversation. Things like utilization, positioning, financial, marketing, etc. All of these different things that should be true or should be happening or you should be aiming for at these three different levels of success. Do you want to just take a minute and talk about those three levels of success? Are there lines that delineate between starting and existing and existing and thriving? Well, I think there are. We'll find out I guess, right? But I tend to think in triads. And so as I'm getting a question from a client, I'll sometimes just play this mental game, are they starting out or are they existing or are they thriving? And there seem to be these three different categories. And then you can expand that and say, "Okay, what about financial performance? What about how they think about service offerings or how they think about positioning and how they think about management?" And so I think it's useful to think in these categories because it's not as if a single firm is all in the existing, the middle category. They might spread across different ones and just gives us an eye opening into what our world looks like from the outside. DAVID: I think it'll be kind of interesting to talk about. But you're probably going to let me know how interesting this is or not. If you rush me through these, that'll be a sign that it's not that interesting. BLAIR: Well, let's just see. Let's start with utilization which is the first thing on your list. DAVID: Right. 'Cause such an exciting word, right? Utilization. BLAIR: Yeah. So I'll just have a little nap here while you talk about utilization. DAVID: Like I said to you one day, I'm pre-interested. Okay, so starting would be subsidizing clients and the typical firm in a developed country is charging and getting paid for 42% of their time and they should be getting paid for 60% of their time. So most firms are in this starting category and they never really get out of it. It's more of a typical category. So there's some significant degree of underpricing and/or overservicing. And that's the first one, subsidizing clients. And then hopefully, we get to the point where we get paid for everything we're doing, that's the middle category of existing. And then thriving is package pricing where we're applying what you would call value pricing. Where there's very little corelation between what we're getting paid and the amount of time we're putting in. It's really more about outputs and accomplishments and so on. The thing that interests me about this and I'm curious to hear your thoughts on this as well, is that most firms want to skip the middle step. So they're not getting paid for all their time and they want to jump right to value pricing without going through the middle step of getting paid for all the time that they're working. And some of this is influenced by this hatred that everybody has for timekeeping, but it's also driven by this sense that people have of they're being cheated. It's like, "My clients are not paying me what I'm worth and I feel rotten about that, I feel anxious, I feel resentful and I want to jump right past that and go straight to getting paid for more than the time I'm spending." So that's the first one, utilization. BLAIR: Well, I wonder if that leap isn't because they're not really thinking about value-based pricing in terms of getting paid for the value that they create but they see it as kind of a packaged way of actually getting paid for what they do. Does that make sense? DAVID: It does. So they're using a very advanced way of sort of eliminating this subsidization without ... Yeah, it kind of does. I feel like people, they have this resentment level about not getting paid for what they're doing but they don't really know how to solve it and they jump into different plans to solve it without really understanding all of them. This is what you've spent so much of your professional life doing in the last couple of years, is helping them think through. Like we did a podcast recently about the value conversation and all of those things. And in London when you and I were talking, I was listening when you were talking about practicing the value conversation. And it was so interesting for people, the light came on on their eyes. And I don't know exactly why but I feel like they need to at least go through this second phase first because it's like learning to walk before you can run and run before you can whatever the next thing is, leap I guess. BLAIR: Yeah. And I wonder about that. I kind of think if I were giving somebody who's starting out right now some advice, my advice would be to skip over that middle section of getting paid for what you do. But if I may, I want to back up a little bit and just talk about these three categories of starting, existing and thriving and let's just put some description around them. I think we can agree that in the starting phase, essentially you have a hypothesis and your hypothesis is that you have something of value that the market values and that maybe there's a business there. So you open your doors and you're essentially exploring your hypothesis. You don't know whether you validated or not. There's all kinds of fear and there's all kinds of experimentation and there's all kinds of hard work and you're trying different things and you're seeking validation.  And I would say in the existing stage, you have validation, there's a business here. You're not going to go out of business tomorrow but probably you're earning like what you would in a job, maybe a little bit more. So it's okay, I have validation from the marketplace and then the next step is essentially optimization or getting ... Another way to look at it would be the third category which is thriving. Beyond existing, beyond earning what you would in a job. And I know I'm probably jumping ahead and maybe screwing up some of your things that you want to talk about here but we all have a sense of what thriving is and we all have a sense of what starting is. Starting is you were working with a hypothesis. Existing in the middle is I validated it. There's something here, now we need to take it to the next level. And thriving is the next level. Are those good enough descriptions for the three categories we're talking about?  DAVID: Yes. BLAIR: Or would you change them? DAVID: No, I think they are good enough. What's interesting to me though, is that some businesses that have been around for 10 years are still in the starting category and they don't ever get to that other one. And those are the ones where I might go in and say, "Hey, just an idea here, but have you considered that maybe you shouldn't be running a firm? You could be making a lot more money working for somebody else, you'd be working fewer hours and you'd have no financial risk." BLAIR: And you'd be sleeping better at night. DAVID: Right, exactly. All those things. Most folks just sort of look at me and grin and say, "Yeah, I know all that but I'm willing to invest that much just so that I don't have a boss." You don't automatically go from starting to existing after you cross, say a two year threshold or something like that. There is some mentality that has to change on your part. BLAIR: Yeah. Okay, so you talked about the first point of how utilization is different in these three categories of starting, existing and thriving. You go from essentially subsidizing your clients to getting paid for what you do to charging based on the value that you create or package pricing. The next thing that you want to explore under these three categories is positioning. So how does positioning change? DAVID: And this is a little bit different than we would have talked about it probably 10 years ago maybe. You and I both noticed that that's changed in the marketplace. So in the beginning, you're usually an undifferentiated firm. So there are many viable substitutes for what you do. And most firms make this transition for sure, they go into the existing category. And in this phase, and I delineate this scientifically in the book, The Business of Expertise, you need between 10 and 200 competitors and then we can talk about what that means in terms of your prospects set and so on. How many prospects you need. But most firms don't go into that third phase there where there are no competitors essentially because of some process they have or some proprietary IP or some black box. That's where you see firms thriving and they're making so much money. It's not wrong at all, it's just that they really control their marketplace. And so, most people in this category are probably in this existing, the middle phase, and very few are at the undifferentiated and very few are at the proprietary IP side. I'm not sure what that number is, I'd be interested to see what you think. I would guess that maybe 10% of firms are in that high level, less than that maybe. BLAIR: I'm going to recap what you said here. So positioning-wise, when you're starting out, you're saying the firm begins as fully undifferentiated. You're basically saying yes to everything and taking whatever you can. And then when you get to the existing phase where you kind of validated your hypothesis, you typically have 10 to 200 competitors. And then in the thriving phase or stage, you say you essentially have no direct competitors because you have proprietary intellectual property. Is that right? DAVID: Right, a black box. Something that they just simply cannot get somewhere else. And that's built on the second phase for sure. You start at the 10 to 200 competitor phase but then you figure out some magic and you bring it to the marketplace. And that's where just the light comes on and everything just falls in place for you. BLAIR: I want to suggest the slightly different way to think about this. And that is at the very beginning, you starting out, when you have one client, your firm is highly specialized. DAVID: Specialized in what? BLAIR: You're specialized in the discipline for market, you're doing x for why, you have one client. And then I'll suggest to you that your second client is a lot like your first client. And it's often because that first client maybe you took that client with you from another firm or whatever. He was attracted to you for whatever reason. Your second client is a lot like your first client so you're a highly specialized entity. And then you think, "Oh my god, I have to mitigate my risk. I don't want to put all of my eggs in one basket. I don't want to pigeonholed." And then you broaden out.  DAVID: And then you mess up your positioning with all these other clients. BLAIR: Yeah.  DAVID: That's interesting, I never thought about that. That is really interesting. So the secret is to never have more than one or two clients and then your ... That's Blair's advice for the day. BLAIR: Okay. Now let's move on to the category or employees. How does your employee base change as you go from starting to existing to thriving? DAVID: This one is really fun to me because I think everybody will identify with this. In the first phase, you're hiring what you can afford. It's just like, "What? I can't pay more than this and I know the kind of expertise I would like, I just cannot afford it. So the primary thing is this is what I can afford and I'm just going to get the most capable person I can with this amount of money." That's the first phase. BLAIR: Yeah. We can all identify with that. DAVID: Yeah. And none of those people are still working for you but you still remember those days. BLAIR: Yeah. DAVID: And the second phase is existing. And here there's this flip that occurs in your mind and you begin to hire for what you need even if it stretches you financially and you grow into it. So it's not what you can afford, it's what you need and you've built this new assumption on the fact that you're tired of training people, these blank slates that come to you and infusing them with everything you know. But the firm never grows beyond that because who's smarter than you is getting hired because you can't afford them. So the second phase, what do I need even if it costs more than I really I'm comfortable spending at this point? The third phase is a really fun one. And that's where you are on the lookout for amazing once in a lifetime hires. And even if you don't need that person at this point, you go ahead and snug them because you're running your firm so well that it's not going to put you under to have an extra and actually a highly paid extra person on staff. And this is that third phase where you make the once in a lifetime hire every once in a while even when you don't quite need them yet. BLAIR: I immediately recall a number of conversations I've had with my most successful clients and I'm sure you do too. You've had the same conversations where you asked about a particular team member and they said, "Oh, that person came to me, I didn't have a job for them but I just couldn't believe there skillset. So I hired them and I created a job for them." DAVID: Right, exactly. That's exactly what we're talking about. And it's so fun to be at that point in your businesses' history where you can do that. It's such a luxury. BLAIR: Yeah. Let's talk about financial. You've got some financial numbers and I want to know where the hell they came from. First, why don't you walk us through them. When you're staring out, you should be earning what? DAVID: So this financial thing is about how much money you're making. And in the first phase, it seems like principals are making 160 to 200 in U.S. dollars and there's not much more beyond that. That's pretty much what they get. They may not even get every pay check, they may catch up sometimes or they may not, but they're making 160 or 200. If they stop and thought about it, they would say "You know, I could make more money somewhere else." That's the first phase starting. Existing, they may make the same amount of money. 160 to 200,000 U.S. dollar equivalent, but there's significant profit at the end of the year. And this builds up starting at their fiscal year and they may take out some quarterly or when they're getting ready to buy a boat or another house or whatever, but there is some profit. And then in the thriving, the final one, the third one, they're making 400,000. Now, we have to index this if there's more than one principal but there's 400,000 plus a bunch of profit. And there are not many ... Again, they're probably on a 10 to 20% of firms in this third category with all the things that we're talking about and especially here, 400,000 plus profit. That's where firms are really thriving. BLAIR: So I'm imagining the principal of a firm who's in the starting phase, they've been at this like 15 months, they're into their second year. They're still starting, they're still figuring it out and they're thinking, "Whoa, I should be making 160 to 200? When does that happen?" DAVID: Yeah. Where somebody who's making 400 says, "I can't remember when I only made that amount of money." People's expectations are so different based on what they bring to the table. BLAIR: Yeah. DAVID: But what principal could not make that and more as a key leader at another firm? It kind of gets crazy when you think about it. BLAIR: But are you saying if you're at the starting phase, let's say you're a year in and you're not at 160, what does that tell you? DAVID: Well, I think we need to make allowance for the fact that we're going to invest in our businesses. But if somebody's starting out and they don't have employees, it's hard for me to foul them. Anybody making less than 160,000 equivalent U.S. dollars, I have to search a long time before I find somebody making less than that. So it tells me that either you're really starting out and haven't figured out some things or your expectations around money are very different than mine are. Or you're really making some huge investments in the business and you'll grow out of that at some point. But it should signal that something's wrong if you're not regularly making that amount of money very quickly out of the gate. BLAIR: Yeah, okay. And we could do some math on that around utilization rates and hourly rates etcetera, to come up with something, but we won't. Let's keep moving.   BLAIR: So the next category you have here is marketing. And when you're first starting out, how do you about getting new leads that ultimately turn into clients? DAVID: Yeah, most people don't do anything because they usually don't start with the blank slate. They usually start because some client has said on the Q.T., "Hey I want to work with you." And so they start with some promise of work. Or they're kind of the new kid in town and for the first, and I find that it's about three and a half years, that's about how long it last, they have enough referrals or just word of mouth kind of stuff happening. And then if things slow down a little bit, they'll do some cold-calling. That's what usually happens at this first phase and it kind of creates these bad habits for folks in the early days because it lasts for three, three and a half years and then it starts to tail off. Then we go into the second phase of existing where most firms rely on email marketing these days. Now you have some outliers who are doing different things but that seems to be the basic recommendation, email marketing. And it's still very effective and some firms are getting very wealthy doing that as their primary lead generation tool. But not many firms are really in the thriving category who are relying primarily on email marketing. They're doing something else, they have some notorious thought leadership and there are many things that fall in this category.  They could have written a great book or they could be a great speaker who gets invited to different keynote conference opportunities or maybe they have a podcast or something like that, but it's moving beyond the email marketing. And so cold-calling, referrals at the beginning, email marketing and then they leave that behind and they have this luxury of moving to more of a notorious thought leadership platform. BLAIR: I love your choice of an adjective there, notorious. What do you mean by that? DAVID: Notorious as in hated? No, that's not what I ... What I mean is well-known I guess is what I mean. So it wouldn't count to have a podcast that nobody listens to or a book that nobody buys. I'm talking about well-known type of thought leadership. And like you talk about often, it's probably something that's singular. Like it might be a conference that you do or it might be a book or it could be a podcast. It's usually not a combination of a lot of things. You've just fallen into a groove, a pattern that fits your personality and your particular focus in the marketplace and everything is working well. And as long as you're disciplined and you still take risks with your thought leadership, then you don't ever have to go back to just doing email marketing like you used to. BLAIR: Yeah. And so you've got referrals along with cold-calling in the starting category, but I think when done properly, referrals follow you at every level. And at the thriving level, I would suggest referrals really do come back. But I think your point is that like in the very beginning, it really is just about referrals. The first client is referred to you or they were a client at the firm that you worked at, you took with you. And you said there's a three to three and a half year cycle for referrals.  I don't know if it's referral-based but I've talked about this before. And one of the first patterns that I saw as a consultant is there's a seven year window. There's a point at which where roughly seven years where organic growth just stops. And you explained to me, your hypothesis was that's when you thought natural referrals quit working. And then there's school of thought around how you actually worked to cultivate referrals, that's an entirely different level. But I think we should probably do a podcast on referrals at some point because that's a topic in of itself. And I agree with you, it's vital early and then most people kind of let it go. But some of those firms that are really thriving, they have formalized how they get their existing advocate, loyal clients to refer other clients to them. DAVID: Yes, exactly. They're intentional about it. And the difference seems to me is that they bring their referral sources along with them. So as their capabilities change, they are providing the correct language to those referrals in an active way, so that the referral sources are given them even better business than they did in the past. That is something we should talk more about. BLAIR: Okay. Let's talk about fee billings per FTE. This is one of my favorite numbers that we often refer to it as AGI per FTE, which is ... Do you want to explain that acronym? DAVID: Sure. So AGI stands for Agency Gross Income. The rest of the world would say adjusted growth income but that's a very different meaning than what we mean by AGI in this industry, and it's basically your fee billing. And then if we define FTE equivalence, if there are nine full-timers and two halftimers, then that's 10 full-time equivalent. So the starting phase is less than $150,000 per full-time equivalent. So we have a 10 person firm, that means that their AGI is less than 1.5 million. There's some sort of a transition here that firms struggle to get beyond and they don't exactly know how to break out of that. It's a combination of all kinds of marketing and positioning and lead generation and confidence and all those things that we talk about quite a bit. But in this first phase, they're somewhere below this. The second phase is a really narrow band. It's really interesting. I can almost say on the phone, I can say to somebody, a prospect that I might be talking with, I can say, "Let me take a guess, you don't have to tell me if I'm right or not, but I'll bet your fee billings per full-time equivalent ..." And then I'll give them a number between 150 and 160. And this very narrow band is the second place they get stuck. And most firms, the vast majority, never get above 160. And the ones who thrive in this third category get above 160, and I've got clients that are even above a million, many of them above 450, 500. Now, you can't get there without value pricing obviously and packaging the work that you're doing with expected service offerings and so on. So those are the three, less than 150, 150 to 160, the big stuck point, and then above 160. BLAIR: So, again, I'm going to give you another way to think about this because when you say starting, that first phase or stage that we're talking about, I'm thinking about a solopreneur. And a solopreneur, if you're making 200, you're clearly billing more than 200. If you think of the solo creative person who goes out on his or her own, they're subsidizing the clients so they're not billing for all of the time that they're actually spending as you pointed out at the beginning. So they run into this maximum of how much they can based on the fact that they're subsidizing their clients. And it's probably around ... What do you think it is? Like what do you think somebody's earning, just say in kind of gross sales, before they have to hire that first person? DAVID: They probably should never hire anybody until they're at the quarter of a million dollar range, so about 250 I would think. When you hire somebody before that, you're really restarting the clock and now all of a sudden you're spreading this income that you've generated across more and more people. I don't see much connection between billings per full-time equivalent and the size of the firm. In other words, some of the most profitable firms are smaller but not always. So when I say starting, I don't necessarily mean the business is young, I mean they're starting on this path of entrepreneurial experience and success. So many firms could be 20 years old and they've never broken that 160 category per employee. So it's just something about like how do I get over this hump? And it may take people two years or it might take them 20 years or they may never get over that hump at all. BLAIR: Yeah. So you have these three categories of you're below 150 in AGI per FTE and then the middle category, where I see a lot of it too, you're stuck at 150 to 160. And I would say it might even be a little bit lower than that, 140 to 160. I don't know where the line is, you're drawing at 150 to 160. And then beyond that 160, once you tend to break free of that 160, then you kind of gain momentum again and it's easier to get out into the 200s and even 300s and that's almost always because you're moving to a value-based pricing. Is that right? DAVID: Right. Or you're very, very confident. But usually, yes. It's about value-based pricing. BLAIR: Yeah. All right, the next category is succession. So in a starting firm, it seems a little bit ironic that a firm that's in the starting category would think of succession. Because if you're just starting out and you're thinking of getting out, then something's not working therefore you don't have anything to sell, do you? DAVID: Well, again, I'm not talking just about chronology, I'm also talking about how successful they've walked this road of entrepreneurial success. And so many firms really are ... You have a 20 year firm and really they don't have 20 years of expertise under their belt, they have 20, one year periods under their belt. They don't operate like a 20 year firm, they just had the same one year 20 times, that's what I mean by starting. BLAIR: It's Groundhog Day 20 days in a row. DAVID: Exactly, right. And these are the firms where they're not just remarkable per financial performance and therefore nobody on the outside is going to be all that intrigued with buying the firm and yet the principal is tired. They're tired in part because of the lack of financial performance. If that wasn't the case, they probably wouldn't be that tired so they have to settle for either just closing the firm or getting almost nothing for it by selling to employees. That's that first starting phase of entrepreneurial success.  DAVID: And then in the second one, in this existing phase, they sell or merge within the industry. And you and I have seen huge changes here. There aren't many firms who are selling to the holding companies because the holding companies don't have all that much extra money and those purchases are so typical and the principal is not that interested in it but that's what happens in this existing phase. And then in the thriving phase, they get rich by selling in a very nontraditional sale. So it might be a consulting firm that buys them or it might be a huge digital firm that buys them. Or they could sell themselves to a client or maybe a roll-up in some rare circumstances. So it's just interesting to think about these three different categories that firms tend to think about from a succession standpoint. I put this on the list 'cause I do so much succession work and I see people strange expectations about what the firm will be worth. And they have this very glorious ideas about what somebody else will be pay for the firm and I have to have an awkward conversation. It's like, "You know, this has been more of a lifestyle business for you. You haven't made a lot of money, you've not made a lot of profit, there's not much to sell after you leave." But that's fortunately not true of every firm. A lot of firms are very, very saleable these days which is great news for them. BLAIR: And it reminds me of John Warrillow's book, Built to Sell. It's a business novel and the owner of a design firm is fed up and he goes to his business advisor or his accountant and says, "Okay, I want to sell the firm." And the guy laughs at him and says, "You've got nothing to sell." DAVID: Yeah, a great day in his life to find himself. BLAIR: So he helps him navigate to building a business that is built to sell. It's actually a great book and well worth reading. DAVID: Yeah. All right, so I am going to do something here. Are you ready? BLAIR: I'm always ready David. What are you going to do? DAVID: Well, I'm going to flip this on you and I want you to come up with three categories around pricing. BLAIR: Oh yeah, that's easy. DAVID: Okay, well you should have some thoughts about this, you just wrote a book. So what are the three categories for pricing that you see out here? BLAIR: Essentially, you have three things that you can sell and I think the three categories really mirror perfectly your categories of starting, existing and thriving. In the beginning, you are selling time, you are selling the inputs of time and materials. And then when you get to the next level which you're calling existing, and I'll just say it's the next level in pricing, is that's when you're selling outputs of deliverables. So instead of charging based on the time, you're charging based on, I'll put in air quotes, the market value of something. And you're still counting your inputs of time and materials but you're essentially pricing based on what the market will bear and you're probably commanding a premium.  The client is getting price certainty. So instead of saying it's going to be $200 an hour and we'll finish when we'll finish, you're making an estimation of the number or hours, probably a range, and then you're pricing it in the higher range and the incentives are for you to come in a bit below that. So your AGI per FTE is going to go up. You're trading a price premium for price certainty because you're selling the deliverables, the campaign, whatever the output is.  And then the third level is when you let go of both of those things and you're selling based on the value that you help create. So you're pricing based not on the inputs of time and materials, not on the market value of what you think the market value is, that service or that output, but based on the revenue gains or cost reductions or other emotional forms of value that your solution will help to deliver. And very often when you do it properly, it's really almost fully untethered from the inputs of time and materials. So those are the three levels of pricing. First you're selling inputs, then you're selling outputs then you're selling outcomes or value. DAVID: So if somebody's in the first category of selling inputs, can they skip the second step and go right to value? BLAIR: Oh yeah, absolutely. DAVID: Okay. Oh, that's interesting. BLAIR: Yeah, and so we talked about the value conversation before and if somebody hasn't listened to that, they might want to go back and listen to that episode. Really, the big shift that happens when you learn to conduct a good value conversation is you completely let go of the solutions and if you're letting go of solutions, you're letting go of cost. So you're actually setting price before you even think ... And this is the trick that you've got to learn to do. Before you even think about what it is that you would do for the client. And when you're able to do that, when you're able to set price before you think about your solutions, let alone your cost, then you have made that transition to the next level. DAVID: I hope people will go back there and listen to that one. It's called "Mastering the Value Conversation," April 4th. That was a really interesting one. Allright, this was fun. BLAIR: Hey, I'm driving here, this was fun David. DAVID: No, I'll tell you if it's fun. If it's ... We should do one like: what's starting, existing and thriving to do a podcast together? What are those three categories? I don't think we want to do that. BLAIR: Oh god, yeah. Yeah, we're still starting. Hey, when we reconvene (we're going to record again in a few days) we're going to talk about the X factor. Now, I'm going to send you some homework on this, I'm going to ask you to think about your most successful clients and what did they have in common. And then we're going to talk about that in the next podcast. DAVID: Okay.    

David re-reads the 2nd chapter of Blair’s first book, leading to a discussion about how sales people have to choose between either presenting to clients or being present to them.   TRANSCRIPT DAVID C. BAKER: Blair, we are going to talk today about replacing presentations with conversations.  BLAIR ENNS: The second proclamation. DAVID: Yeah, it's actually the second chapter in your book, which I'm holding right now in my grimy little hands. The book, it's black with red, looks like foil to make it look expensive, so you could charge an extra couple bucks for it probably. It says Win Without Pitching Manifesto, and the second chapter is about replacing presentations with conversations, but I think if you would let me, I'd like to make a public confession before we get into this. BLAIR: Sure. DAVID: Your book actually sells better than mine, and I want you to know that that pisses me off. BLAIR: I read a great quote the other day, maybe it was Gore Vidal who said, "Every time a friend succeeds, a little part of me dies."  DAVID: I don't know if this was the third or fourth printing, but since we published the book, we got these three skids of your books. Not only do I hate the fact that your book has sold better than my last book, but I have to haul these skids of your book like for punishment, to remind me constantly that they're selling. BLAIR: That's what you get for moonlighting as my publisher. DAVID: Yeah, instead of focusing on what I should be doing, yeah. BLAIR: The fourth printing should arrive any day now, it's larger than all the other ones. Can I just keep bragging here? I'm surprised it's been, well I think it's somewhere around seven years, and sales just keep going up, I can't explain it. DAVID: I'm more surprised than anybody, because I've read it and I know you. The idea is replacing presentations with conversations, and actually I read through chapter two again, it was actually fun to read that part of the book again. You talk a lot about avoiding the big reveal, and the first thing I could think of was several episodes of Mad Men where they have the single pitch board on an easel in the conference room and it's covered, and when they say "big reveal", they mean big reveal, they lift this thing up and there's this tension in the room. You talk about the fact that we're addicted to that. I'm not sure that people would admit that they're addicted to that, can you talk more about that first, to start us off? BLAIR: Some people might listen to that and think, "Well, I'm not addicted to that," but I think you and I probably have different definitions of creativity. You might have kind of a broader look at what it means to be creative, and I take my cues from Mihaly Csikszentmihalyi, who wrote the book Flow, and he studies happiness and creativity. He says creativity is the ability to see, the ability to bring kind of a new perspective to a problem. It's not the ability to write or draw, he refers to that as "personal creativity". BLAIR: Creative people who can look at things differently, they just see things differently, that's kind of to me the hallmark of creativity, one of the things that goes hand in hand with being creative is the ability to think on your feet, so these two things, for reasons I don't fully understand, they're tied to each other. When somebody has this really strong ability to kind of bring a fresh perspective to a problem, they also have a really strong ability to go with the flow and deal with whatever kind of objections are thrown at them. If your strength is standing in front of a room, saying something, hearing an objection, and then having to react to it, and then kind of sell in the situation or recover from a situation, then you are going to look for as many situations like that that you can create. BLAIR: I'll give you a great example of a friend and a client from many years ago, creative director at a small design firm, and he was presenting a new identity to a consulting firm. He does the big reveal, and it's very quiet, and then he's a little bit nervous because it's so quiet, and he says, "What do you think?" One of them says, "Well interesting, I notice you've changed our name from XYZ Consulting to XYZ Consultants." It was just a mistake, an error on his part, and he responded immediately. He said, "Exactly, because consulting, that's what you do, consultants, that's who you are." They bought it, so they changed the name because he just responded in the moment. BLAIR: Creative people love being in that situation of presenting, having to deal with an objection, and then coming through it, because the euphoria is profound, it's huge. If that's who you are, if that's your strength, commanding a room, having to dance, having to respond to objections, et cetera, not knowing what's going to happen next, then you will create as many situations as possible where you get to do that, and the whole time you will tell yourself and tell others and tell me and tell you, "No no no, that's the way this business works, or that's the best way to communicate this information to the client," and it's not. It's all about you and your personal need to present as a creative person. DAVID: You would say that that's pretty widespread in the creative field, because most of the creative field has been walking down that path for many years, there's something about that personality. I think of it as diving into an empty pool and inventing water on the way down, that's how I think of it. When I think about public speaking, to me that's sort of what's happened, or when I'm doing consulting where I know that within a few hours, we're going to have to have some at least provisional answer, and we don't yet, and that's terrifying but also thrilling. There's something about the creative feel of creative entrepreneurs that's bringing that. Now, would this equally apply to presentations in a new business setting as it would to presentations as the work is unfolding? BLAIR: There are different types of presentations, and there are different times in the relationship in which we feel like it's appropriate to present. If we start with the idea that we are addicted to the presentation and the presentation does not need to exist, if you come around to my way of thinking on that, then you will look at the presenting that you do in a new business situation, and you'll realize that this is not necessary, I'm doing this for me. You really first have to come to grips and be honest with yourself about your own need to present. What I recommend is, reform yourself when it comes to your existing clients. DAVID: First. BLAIR: Yeah, first. Replace the big reveal with a series of little reveals, and then once you get your head around that, then you will be able to think about your need to present in a new business situation a little bit differently. There are all kinds of creative people outside of the creative professions, so most entrepreneurs I think fit this description of a creative person, because I think you have to be somewhat creative to be ... I test for this in the tests that we do for all of the people who enter the Win Without Pitching program, so I can get an objective measure of how creative in that sense, or how much they crave standing up in front of the room and being forced to dance. BLAIR: There's a rudimentary question that's, and I'll ask the audience right now, and I've asked this in many seminars or workshops I've led. Usually I do it after break, I come back into the room and I say, "Hey," and I'm clearly kind of roleplaying or playing a scenario, I say, "Hey, in the hallway, I just ran into the chairman of the board of your most highly coveted client. Think of the company that you've always wanted to work for. They're having a board meeting in the meeting room right next to ours, and I told them that I was spending the day with you, and they said, 'Oh great, can you send somebody in to do a 15-minute presentation on their firm? Because we're looking to hire a firm like theirs.'" BLAIR: Then I say to the audience, "You have 10 seconds to get over there and present. You have no time to prepare," you get up out of your chair and start walking, and then I say, "Okay, stop. What's your reaction? Everybody just measure what your reaction to that is, I've just told you you have no time to prepare, you have to go to a 15 minute presentation, you have to be there in 10 seconds, what's your reaction?" You look at the audience, and you can see the range of responses in their faces. Some people are grinning, these are the people, they would say, "I'll think of what I'm going to say on the way over there," and they love the stress of that moment because they have this great ability to respond, to think on their feet. BLAIR: These are the people, as you say, who love to dive off the diving board and invent water on the way down. Then you've got the kind of low autonomy people that are very systematic and process-oriented, and these people are horrified, they need vision and clarity of what's going to happen next. They need to know what their steps are, they need to be prepared, it's their worst fears to come off unprepared. They haven't even considered what they might say or the objections that they might encounter, and they need to be able to think through all of those things. BLAIR: If you're in that first category, then I can all but promise you that you have built your business around that strength of yours, and you have driven your cost of sale way up, and probably your closing ratios down. Now obviously, there's some places where it's served you well, but for the most part when it comes to getting new clients, I'll bet you it's hurt you more than it's helped you. DAVID: Do you remember years ago, when some creative firms, especially designers, would take a portfolio book, and there were pages that you'd flip? I remember reading this study, I don't remember where it was, how the pacing was so different if you controlled it as, say, the principal of the firm making this presentation, or let the client control the pace, how much faster the pace was. They were not interested in the presentation, they were much more interested in getting to their issue. I think that plays into what you're talking about, but the question specifically that's coming to my mind right now is, like so you talk a lot about how the expert needs to direct the relationship, how is the expert directing the relationship if they're not talking that much, if the client is doing most of the talking? In other words, if we're letting the client fulfill their needs here, how are we not relinquishing this need to direct the relationship? BLAIR: Well, I think you know the answer, because if you're not talking, what's left? DAVID: Listening, or asking questions. BLAIR: Yeah, if you map out the role of the two parties, buyer and seller, over the length of the sale, you will see that when it's done properly, a proper consultative sale, early in the relationship, the salesperson is talking about 25% of the time, and they're using their 25% to ask questions, and the client is taking 75% of the time, and they're using that time to give their responses. Then at the end of the sale, the close, it's reversed, the client is speaking 25% of the time, and they're asking you, the seller, the questions, and you're taking 75% of the time to respond to their questions. Nowhere in there are you standing at a PowerPoint deck in presentation mode, you're either asking questions or you're responding to the clients' questions. BLAIR: It's interesting, that portfolio book and the amount of time. I had a really interesting conversation just a week or two ago with a principal that I know well, and we were talking about capabilities presentations, and I was saying, "No, the capabilities presentation does not need to exist." We were getting into a very constructive, respectful argument or a discussion where we're each advancing our views on the subject, about capabilities presentations, he was saying, "No, it's valid, you have all this information you want to communicate about your firm." I said to him, "How long does it take you to get through your capabilities presentation?", and he kind of looked a little bit sheepish, and I said, "Is it more than five minutes?", and he kind of looked at his feet, and I said, "Is it more than 30 minutes?" He said, "Well, it's about an hour." DAVID: I'm already bored just listening to that. BLAIR: Yeah, just by answering that question, I think he got the realization that, "Okay, this is all about me," but in fairness, this person is more kind of on the low autonomy process-oriented type person who's more comfortable, and it takes more training, more practice, and never comes completely easy to him to kind of stand up and be responsive. DAVID: Right, so we're going to have different perspectives on this based on who we are as people. BLAIR: Yeah. DAVID: One of the things that you say, and as I read through this I made a note of this phrase because it really intrigued me, you said, "We cannot be transparent if we are withholding information for the presentation." First, I'm not sure I completely understand. My mind first went to, are you talking about like putting the price at the end of the presentation? I don't think you're talking about that necessarily, but what do you mean and why do you say this specifically? BLAIR: I'm talking about in your relationships with existing clients. The big buzzwords of the last, I don't know, decade or so, authenticity is one, we need to do a whole podcast on authenticity. DAVID: God, I'm so tired of that word. BLAIR: My least favorite word on the planet. DAVID: "Storytelling" is close second for me. BLAIR: People talk about authenticity, transparency, and collaboration, these are three of the big buzzwords of our time. Let's just put authenticity aside, and talk about transparency and collaboration. Firms are out there saying, "We work transparently and collaboratively with our clients." Okay, well if that's really true, transparent means the client has a window into what you're doing, what you're thinking, where the project is at any time, you're not withholding. DAVID: Like and they know that you haven't even started it, and you've had it for three weeks and it's due in three days, that's transparency. BLAIR: Yeah, and they know it, that's transparency. Collaboration is where you're working with your client, rather than going away and coming back and presenting, so transparency and collaboration. You think about it, the presentation can only exist in the absence of both, right? The need for presentation is only there if you are withholding information from the client. DAVID: Yeah, if you're delivering new information that you previously had and chose not to give them, you're saving it for the presentation, so that's what you're talking about. BLAIR: Yeah. When I was still a consultant, I had been writing about this and talking about this for years, and then one day I realized, "Oh my God, I still do this." When I'm doing a business development audit, I withhold all of the learning until the end, and then I unveil my genius findings that makes me feel great. DAVID: I'm just going to let that pass, okay? BLAIR: Yeah, but it's like, "I'm going to rock this person's world by letting them know the really insightful things that I've discovered about their business," and my reaction is I want them to go, "Oh my God Blair, you're so smart, I never thought of that before, this changes everything!" That's the reaction I'm looking for, and all of us who go into presentation mode, we need to admit that that's the reaction we're looking for and it's really all about us, because what if I'm wrong? What if I got the name of the company wrong, like my friend, the creative director? There's a renamed company out there because of a slip like that.   BLAIR: I realized I was admonishing my clients for doing this, and I realized I still do it too. What did I start to do? As I'm learning key things, I would share them with the client. I would never get rid of the final reveal, the final share, I knew I was being transparent and collaborative when in that final phone call, when I was delivering my findings and recommendations. I would begin by saying, "Okay, I've already shared with you most of what I'm going to share with you here today, we're just going to put a nice little bow around it." I'm just letting them know, "There is no big reveal, because I've already shared with you." BLAIR: If I would get a hypothesis, I would reach out to my client and say, "You know, I think I'm seeing this pattern," et cetera. That doesn't come naturally, but I felt like I needed to take my own medicine, and I realized that when I was doing this, I was far less likely to make a big mistake or miss something vital altogether. Like how often does that happen in a presentation where you think you've killed it, and the client goes, "Wow, that's great, what about Singapore?", "What do you mean Singapore?", you've forgotten something significant. DAVID: This is an early test along the way, so if you get your hand slapped it's not a big slap. It's not getting hit with a baseball bat, it's like, "Silly man, no, that won't work." I hear people objecting though, because I know that a lot of my clients and your clients are listening to this and saying, "Listen, I have the answer early in the process, and I just withhold it because it makes it seem to easy if I just blurt it out." I'm going to say, "Okay, I really know the answer, but we'll get back to you in about a week or 10 days, and then we'll embellish and clean up and prep the answer and give it to you," because they feel like they're not going to be able to charge the fees they want to if it looks that easy to them. What are you going to say to somebody that's, I guarantee you some people are going to think that when they hear what we just talked about. BLAIR: I completely sympathize, I mean I operated the same way for many years as a consultant. I know you, I'm not going to give away your secret, but when you've modeled out how it works, when you've seen all the patterns, you know the information that you need. When you have true specialized expertise, it's really just small pieces of information that you need. That's the difference between an expert and a generalist, a generalist needs to collect all of this information and then sift through it all, and try to find some sort of relationship and pattern. The specialist comes along and says, "I've done this 1,000 times before. Give me these four things," and then you can deliver, like in your case, it might be 20, 30, $50,000 worth of value probably really quickly, like probably in minutes, but you let things unfold and you reserve the right to, "Well, maybe I'm missing something." BLAIR: I think that's valid, "Maybe I'm missing something, let me just let some ideas kind of gestate, let me think about things a little bit differently," but I see the pattern, I have the hypothesis right away, it's pretty clear to me. I sympathize with that, and I think there's some sort of middle ground here where I think that's valid. I think that some clients, not the best clients, but some clients have a real hard time with the fact that it took you 10 minutes to come up with a solution, and I've just paid you $50,000. DAVID: Yeah, and I think I do ask for more information than I need sometimes to make the process to look more thorough, so that it looks like a better value proposition for the client. That's an immediate sort of recognition on my part. I think just as the recommendations I'm making to my clients are shorter and more on point than they used to be, we should not be giving clients more homework than we need to either. Let's just ask for the things that we really need, they should only be allowed to answer questions, they should not be allowed to talk unless they're answering a specific question. DAVID: We can't be transparent if we're withholding information for the presentation. Another thought that popped up as I was reading through chapter two again is that when you are presenting, you are not listening, you're not being present. In other words, you can't effectively multitask here. Do you want to talk more about that? BLAIR: Yeah. I think I've said this on other podcasts, you can present to somebody or you can be present to them, and you can't do both. You're either transmitting or you're receiving, and another kind of sub-point under this is when you're presenting, you're kind of in violation of some of the principles of value pricing, value pricing where you're getting paid to deliver value. You're not on inputs like time and materials, not on outputs like delivering X or Y logo, et cetera, a campaign, but on the value that create for the client. Ideally, that's the place where we all want to get to or get closer to, where we're commanding fees or remuneration for the value we're creating for the clients. BLAIR: For you to value price, you need to have a really meaningful value conversation, and there's steps to a value conversation. One of the keys to a value conversation is, you need to be focused on uncovering a desired future state of the client, it's this duality of zen mind, beginner mind, like the blank slate of a beginner and the mind of the expert. You need to be expert enough to know the questions to ask, but you need to be beginner enough to kind of move off of the solutions, as Mahan Khalsa would say, and just quit thinking about what you're going to sell to this person. BLAIR: The ideal state of somebody who's selling creative services or marketing services or any consultative services, the ideal state of that salesperson is you are present to the client, you're intently focused on understanding them, learning about their situation, learning about their desired future state, and you are letting go for the moment of how you are going to help them get there. I think in a large enough sale and a long enough sale, you want to uncover the information, and ideally go away, and then start thinking about solutions. That's not always possible, but you want to have this line in the conversation where first it's all about you, Mr. Client, and then I'll start thinking about solutions. When you're presenting, it's not how focused are you on the client, you're up there with a PowerPoint presentation talking about you. DAVID: Or inane things about them that an intern could've gotten with a Google search. BLAIR: Yeah. Here's the section of the deck, "strategy', or, "Here's everything we know about your business that we Googled last night." DAVID: "And that you already know and don't need to hear again." BLAIR: Yeah, "I'm just showing you that I have great search skills." As you can see, I have an opinion on this, it drives me crazy. People are listening to this and thinking, some people are just never coming back. I believe this so strongly, and I believe most of the creative profession gets this entirely wrong. I get, I don't know how often anymore, it's not once a month anymore, but for awhile there was once a month, inquiries saying, "Do you do presentation skills training?" My reply is, "No, I deprogram people of their own need to present." BLAIR: Now, they always go away after, "Okay, thanks, I'm going to go get some presentation skills training." If you are focused on presentation skills training, your mind is in the wrong place, it's all about you. There are some things you can do, some courses, there's a woman out there by the name of Anese Cavanaugh, she has this methodology called IEP: intentional energetic presence. It's basically how to show up, how to show up at work, how to show up physically and emotionally in a meeting, how to deal with situations. DAVID: How to be authentic. BLAIR: I don't know about that. DAVID: See how I slipped that in? BLAIR: You should do IEP training instead of presentation skills training. Presentation skills training is the wrong thing to do. Now, there's a time and a place for the presentation, internal presentations, even the odd client presentation when you're collaborating with your direct client and they need you to present to a larger audience. All of that is valid, public speaking, you want some presentation skills around that, all of that is valid. Looking for presentation skills training to improve your new business development results- DAVID: Like your close rate. BLAIR: It's exactly the wrong thing to do. DAVID: I'm just pausing here just to let that sink in for people. BLAIR: Good, yeah, I'm going to have a cigarette now. DAVID: You're saying, don't look for training to do presentations better, don't do presentations at all, but there's obviously room for training about how to listen, how to ask better questions. You're not dismissing that sort of training. BLAIR: No, not at all. In fact, I think that's what IEP is about, that's what some of the things that we talk, you know the ideas, I forget where this comes from, I've stolen it from somebody who has a book on leadership, the idea of what I call the physiology of leadership. Leadership as a social science, that's a great model for selling. You can study anybody's model of leadership, and you'll become a better salesperson, but I refer to the physiology of leadership as two things: calm presence. You're calm, you're not anxious, and you're present. That should be your demeanor every time you're selling, and there's all kinds of different ways and different methods and models that you can use to improve your calm presence in a situation. BLAIR: You and I have done seminars on IP development where we've used constraint-driven exercises, and we use constraint-driven exercises in the Win Without Pitching program, I use them in speeches and workshops, I've become a huge fan of constraint-driven exercises. Just think of this as a constraint-driven exercise, I'm talking to our audience here. DAVID: We can't present naturally normally. BLAIR: Yeah, what would you do if you were not able to present, how would you go about trying to win this business if you were not able to give a presentation or use a PowerPoint deck of any kind, what would you do? Well, the short answer is you would have a conversation, right? DAVID: Right. BLAIR: Then there's all kinds of things that you need to sort out about, "Well, what questions do I ask? What framework do I use for the questions?", but you will find most of the time that the need for presentation, it's really on your end and it's not really reciprocated by the client. Now, there are some caveats. If you work in packaged goods, CPG or FMCG as it's known in Europe, and you're dealing with brand managers who deal with creative firms all day long, they kind of want to see the dog and pony show sometimes, so you might have to make the odd exception.  BLAIR: Now, I remember a client of mine many years ago, a very strategic firm, but not the best creative in one of the largest markets in America, and they were competing against the hottest creative shop in that market. When we set up the final meeting, so it was down to the two of them, I had them put all of the creative stuff that they wanted to present on a table over in the corner of the room. When they were facilitating the conversation, they made the point that, "The quality of our creative is good, you know that or else we wouldn't be this far. You've already seen it, if you want to see more of it, it's on the table over there, let's get to why we're really here," and so they move onto the more kind of valuable part of the conversation. BLAIR: Of the three people on the client side, there was the president, there was the COO, and there was the brand guy. The brand guy got a little fidgety at this, and at the end of the conversation, the president and CEO of the client business, they didn't need to see the creative again, but at the end of the conversation the brand guy got up and said, "I'm sorry, I just need to have a look through this," and he flipped through some stuff. He came back and he sat down, and he had this sense of relief, "Okay, good, I'm good," and they won the business, they beat the hottest creative shop. BLAIR: If they had stood up and gone into presentation mode to try and match this other firm at their own game, instead they facilitated a conversation. The point I'm trying to make is, the senior people at the client side, they don't want to sit through a presentation. DAVID: Right. BLAIR: You know, we all have websites, right? DAVID: Especially nowadays, you could see maybe that would've made sense 15, 20 years ago, but not so much today, it's boring to people. BLAIR: I'm fond of saying, "Sometimes it's better to be different than it is to be better." If you are going into a competitive situation against three or four other firms, and everybody else is doing the dog and pony show, you have an advantage if you treat the situation differently. If you try to break down the walls and facilitate a conversation, and if you can go first and do that and set the tone, then things will feel really different, first or last I'm a fan of. DAVID: Really not trying to sell things, but I'll do this for you. I really do think if you folks, listeners, if you haven't read The Win Without Pitching Manifesto, I would recommend it, it's $25 list, and there's also an electronic version of it. I think it's one of those books that just has a really long life, because it's perennial, there's some core very human points in the book that you can just read and reread, and it's a great book. It's the second-best book that I know of at the moment, but it's a good book. BLAIR: It's success is due entirely to its publisher. DAVID: Yes, that's right. BLAIR: Thank you very much. DAVID: Thank you Blair. BLAIR: Thanks, David.