Why “The Why” is So Essential

In this Market Dominance Guys’ episode, Chris Beall and Corey Frank continue their conversation with Gregory Smith, CEO of G Group Holdings. They’re talking today about talent acquisition and development, which Greg says is about 60–80% of most companies’ expenses — and could be one of the significant reasons why some businesses don’t grow. He believes that a company is only as good as its people and the way its people treat customers. With the goal of inspiring his own team to reach for that high customer-service bar, Greg explains his approach in this way: “I’m a coach, I’m a mentor, and I appropriate the resources my team needs to be rock stars.”

The guys then segue into a conversation about the importance of bringing employees in on the reasoning behind what they are being asked to do. Chris and Corey refer to this explanation as “the why,” and you’ll hear how each of these three experts is a believer in this part of talent development. Here’s Greg’s explanation of how he uses this approach in leading his team: “First, I provide the strategic vision and make sure they understand ‘the why.’ Then, I get the hell out of the way and let them do their job.” Pause for a few moments from your own job to take in all the insights and advice you’ll hear on today’s Market Dominance Guys’ episode, “Why ‘the Why’ Is So Essential.”

Announcer (00:06):
In this Market Dominance Guys episode, Chris Beall and Corey Frank continue their conversation with Gregory Smith, Vice President of strategic accounts and partnerships at SPARXiQ. They’re talking today about talent acquisition and development, which Greg says is about 60% to 80% of most companies expenses, and could be one of the significant reasons why some businesses don’t grow. He believes that a company’s only as good as their people, and the way their people treat customers. With the goal of inspiring his own team to reach for that high customer service bar, Greg explains his approach in this way, “I’m a coach, I’m a mentor and I appropriate the resources my team needs to be rock stars.”
The guys then segue into a conversation about the importance of bringing employees in on the reasoning behind what they’re being asked to do. Chris and Corey referred to this explanation as the why. And you’ll hear how each of these three experts is a believer in this part of talent development. Here’s Greg’s explanation of how he uses this approach in leading his team, “First, I provide the strategic vision and make sure they understand the why. Then I get the hell out of the way and let them do their job.” Pause for a few moments from your own job to take in all the insights and advice you’ll hear on today’s Market Dominance Guys episode. Why the why is so essential?

Corey Frank (02:05):

Let’s talk a little bit about to Greg’s point. I think last episode or the episode before, maybe it was in the after show, we talked about the concept of excellence is exile. And I think that [crosstalk 00:02:16] contributes nicely to Greg, your point about the why. Because entrepreneur is in and of itself… Our identity is that we have this massive irrational belief in our ability to solve a problem that’s out there in the universe. And Chris, as you and I have talked about many times, sometimes we say, “This company is my baby.” I mean, it literally is their baby sometimes in that why. But Chris, this concept of excellence is exile. Greg, let Chris run this by you because this is a new riff that I think we’re onto something here.

Chris Beall (02:51):

Well, I mean the core concept is this, we fear different things, right? And so for instance, the fear of public actually exceeds all other measured fears among modern humans, it is number one. But there is a fear that goes beyond that, that we kind of forget about, but this is the true primal fear, the one that exceeds the fear of wild animals, our fear of encountering that snake under our feet while we’re eating and having it crawl up between our flip flops and feel a little funny. That’s not a great fear. There’s a lot of fears like that out there. But the big fear for human beings is the fear of exile. And the exile was always the traditional punishment in traditional societies that was beyond death. So if we’re going to be nice to you, we kill you. If we’re going to be a little less nice, we torture you a little bit and we kill you.

But if we want to be really, really mean, we send you away and we don’t let you come back. So the question is, well, what is like that in modern society? And it’s something totally counterintuitive that people actually think the opposite of. It’s taking the steps that it takes in personal life, professional life or business as a business to actually be excellent. It’s why Tom Peters is such a cranky old dude, right? In pursuit of excellence is like saying in pursuit of exile. So you want to be an exile, go for it, right? And then he turns them into a total, this sucks, that sucks, the other thing sucks, because I’m tired of being over here alone. So exile is a tough thing to choose. And you’re actually, what you’re really doing, this is a funny thing. You’re going through another chasm, but we described it as a mountain, I think with Jeff Lerner.

You’re climbing this mountain and there’s no one there along the way to be with. I call the Alliance of CEOs that I’m part of, I call it the lonely minds club. Because we have no hearts, that’s clear. And we have to make decisions with our minds. Yes, we have a lot of feelings and we would love to bring our hearts to the game. Greg, you’ve been in situations where you had to let a lot of people go. One day back in 2001, I was part of a team that had to let 300 out of 600 people go in one day. And that is not a heartful thing to do. Unless you feel for the jobs of everybody who is involved and for your customers who depend on you. So your heart is not going to lead you particularly well. As a CEO, as a business leader, it’s going to tell you a few things, but your mind can lead you, but it tends to be lonely. And I think you choose exile in almost a strict sense. And you choose the community of exiles, the ultimate ex-pats are people who are seeking excellence.

Gregory Smith (05:44):

Yep. Tom Peters reference. If there’s anybody younger than 55, that’s listening to this podcast, they have no idea what you’re talking about. I love Tom Peters, back in the seventies and eighties, and he is a cranky old dude, I met him once, he’s a cranky old dude but pretty smart. And so I’ve actually, I took something from him, several things from him, but one I’d like that I use in startups and guide other people to use in startups. And then I reverse it obviously, once you start to build some momentum. And the famous one is, and which I think does work in some instances, right. Which is ready, fire, aim, right? At some point you have to step off the lens, right? You can’t get into analysis paralysis, do your homework, do all these things that we’re talking about today. But at some point you just got to step off the ledge, right. And believe in what you’re doing and go for it.

I’d like that reference that you shared, so thank you for doing that. And I do believe that of all the things we’ve talked about today so far, talent acquisition development, for most companies, it is somewhere around 60% to 80% of your expense, right? And from my perspective could be one of the largest or more significant reasons why companies don’t grow, don’t become market dominance or stagnance. Because a company is only as good as its people, and how well they service their customers. So I’ve got this really simplistic belief as relates to talent. So bear with me, and this really, really is pretty simple. But I think it’s fed me pretty well in which case I’ve had people that have worked for me for 30 years. So as a CEO, I always see my role as simply this, “I’m a coach, I’m a mentor and my job is to appropriate the resources that my team needs to succeed to be rockstars.”

And so I hire the best people that I could find and frankly afford, because when you do startups you can’t miss it for the best. So there’s that intersection between the best and what you can afford. I provide them with the strategic vision. I want to make sure that they understand how they can impact that strategic vision or how they provide the value in the why. Make sure they understand it and drill it down to everybody within the organization, and then provide those resources that I talked about. And frankly, get the hell out of the way and let them do their job. And measure them based on customer satisfaction and feedback and wallet share, and market basket diversity and profitability, all those things. But I’ve never been into micromanaging. I do believe in monthly coaching, that kind of stuff. But talent acquisition development, I think is so important for companies. And frankly it’s what I see a vast majority of them miss the mark. What do you guys see? How do you feel about that?

Corey Frank (09:05):

Chris, you always had a philosophy around this. We’ve spent many beers talking about your hiring philosophy and certainly you build, connect and sell that way. I don’t know if we’ve ever actually publicized or talked about it in any of the podcasts. So I think that’s a great segue into how you hire and what the criteria are for politics and BCC and all the things that you have in your Bealls set of rules there.

Chris Beall (09:30):

Yeah. That’s a funny one right there. I first look for a negative, and the negative is I want non parasites, and I want very non parasitic, non parasites. And they’re hard to find because often folks develop resumes and great looking resumes. They may have a lot of people who say wonderful things about them [inaudible 00:09:54] , but you know, they went out and asked. You know they did, and they’re good self-promoters and they tell you something, however that tells you that there are parasites, so I won’t hire them. And it’s a simple phrase when somebody says, “I’m a team player,” I know they’re a parasite and I won’t hire them. So that’s a nice, simple test, because no team player ever says, they’re a team player. It’s an idiotic thing to say, if you’re actually a team player, it’s obvious to everybody that you actually join up and do things with people.

And if you have to say it, you aren’t yet, right? The other thing I do, it’s just another kind of strange thing, because all I’m really trying to do is this. If I can keep the organization non parasitic for one more day, that’s a victory. Because organizations always feel like they’re worth more than individuals, because we’re bigger, right? My company is not huge, but if I look at all the people who work for ConnectAndSell, it’s more than 500 people. And so it’s bigger and its customers are bigger, they’re big companies, they get a lot of value. You look at what they get, some of them are making four or $500 million a year off of working with us. And so I go, “Okay, there’s a lot of value that attracts somebody who wants to suck a little bit more of that value out than they give. And then get in a position to suck even more for giving less.”

And these people are out there. I don’t begrudge them their existence, I just don’t want them in my company. Because I don’t have the wherewithal to manage them. I don’t even know how to manage them. If you do that, you’ve solved your number one talent management problem, which is alignment. You don’t have to go around and get an alignment person to tell you how to align, you’re actually pre aligned around one thing which is work together. You use my opening sometimes Corey, which is the opening that I use in discovery calls. I asked this question, “So Greg, where are you on the surface of our blue whirling planet?” And the reason I asked that, exactly like that, is I want that image that we have, that famous image of the earth from the moon, hanging there, blue whirling and we’re together. Because the point of having a meeting is to be together.

And I want to remind the other person I’m coming here to be together with you to work with you, not to do something to you, right? And I think it’s the same within an organization. Partnership is the ultimate trick, two people is a thousand times one person. As an old rock climber Mountaineer, I can tell you, you go out alone, you will eventually be dead. That’s all there is to it. You won’t actually get through your life career and have it match up with your climbing career because your life career will be cut short. You break an ankle after walking in for 30 miles and you’re dead. In the age of the cellphone, maybe not so much, but that just shows you have partnership somewhere else. So one going to two, is the big, big game in business. Because now your number one thing you do as partners is you look out for each other, you watch each other’s back, you cover each other’s weaknesses.

So the other thing is to keep out the politics that’s naturally coming in through various sources, because politics is the enemy of performance for your customers. It means you’re performing for yourself within your organization and you can give it all the lip service you want, but you’re really performing for yourself. And again, I try to do that simply. So the simplest way I know is to take the most political medium ever invented in human history, email and forbid its use for any political purpose whatsoever on pain of immediate firing, exile, you’re gone. And I tell people this in the interview, if you ever BCC somebody internally on an email and I find out about it, you’re fired. I will fire you personally.

And if you ever sent an email that comes across my desk, that I get a look at… And by the way I read them all, just like Sauron. I don’t do it to manage you. I do it just to be aware of the tone of the communication of the culture that’s moving, because I know how corrosive email is for human relationships. And so if you send somebody an email and it’s purpose is other than to provide them with information that helps them do their job, we’re going to have one conversation. And we’re never going to have a second conversation about that.

And it’s kind of shocking. It’s like, “I wouldn’t do that.” Oh yeah. That extra little CC, that putting the boss on, that throwing the person under the bus, that deflection, that it wasn’t me. It was somebody else that, “Oh, this wasn’t the problem.” You know, that stuff is corrosive and email makes it a negatively, emotionally charged situation. Because a neutral email is read cold 100% of the time. Neutral email, if I just say, I love you. And I say it in person, “Corey, brother, I love you.” You hear my voice and you’re good. I write you an email that says, “I love you, Corey,” and you’re going to go, “What the hell is Chris on?-“

Gregory Smith (14:56):

What’s he drinking? He must be in the half a bottle of scotch.

Chris Beall (15:02):

So, I mean, I look at it like this, in COVID we’re kind of getting a view of this, right? Your immune system is pretty much the only thing that keeps you alive. Everything else is kind of polony. Food is secondary, sleep is way up there, right? You die without sleep for mysterious reasons that can be countered by antioxidants, but most people don’t know that. So, oh, well, so there’s sleep then there’s food. There’s a few other things, but it’s your immune system that keeps you alive. Turn it off, you’re dead. A hundred percent of the time right now, it’s a continuous war going on, right? I see companies as being so valuable to parasites, this is not a cynical view, I think this is just a mathematical view.

You know me, I’m an old math physics guy, right? The parasites want in rationally, you’re valuable. There’s a lot to eat inside of a company. There’s a lot of safety, there’s a lot of future value. All I have to do is get in this position, right? Get to the top, sit back, take a while to fire me, right? And so if your number one job as a CEO is to be the immune system of the company when it comes to doing the most dangerous thing you ever do, which is hiring a talented person.

Gregory Smith (16:52):

Second to that is having a talented person on staff that is doing all those things. That’s toxic in every way that you just mentioned there, a parasite, they’re all that stuff. But yet, they’re a high in sales on a generator, allowing them to stay and exist within your organization. [crosstalk 00:17:12] I’ve seen that happen way too many times.

Chris Beall (17:15):

Exactly. When I became CEO of ConnectAndSell, in interesting circumstances that really do require drinks to ever discuss and will never be discussed publicly. The first thing I needed to do was to reduce the expense base of the company, by a lot. The company was spending almost $2 million a month on vice-presidents of all makes and sizes. And the first thing I did was to let the top salesperson go.

Gregory Smith (17:41):

That takes guts, kudos to you. I’m assuming it was the absolute right move. And probably for a lot of other reasons.

Chris Beall (17:50):

We’re still here.

Corey Frank (17:51):

So can you get to market dominance if you have maybe that misalignment of personnel, but maybe superior product market fit? Or can you get to market dominance with maybe a smaller, scrappier mission aligned team, Greg, to your point, that maybe take a few more cycles and I’ll get there eventually. I mean math plays itself out here and so I’m sure there’s a number of companies you’ve come in contact with, or consulted with that this person needs to go and they’re successful in spite of themselves mainly, right? Perhaps. But that is a tough conversation to have with the board or the CEO. Chris, you certainly had it and shared it with me. But Greg, in your process, how do you go about doing that, “Hey, we’re doing pretty well here, Greg. And you’re advising us that we’re not necessarily going to hit the promised land, although we’re on that trajectory. When I look at all these metrics and you’re telling me that there’s a Canary here, that isn’t looking too healthy.”

Gregory Smith (18:55):

Yeah. Those are really difficult conversations to have, especially since most of my career has been small to the middle market, private companies, right? And so in most cases, this is the second or third generation ownership that I’m working with. And by the way, there’s a large, vast majority of those in second and third generation that fail for some, perhaps some obvious reasons. But even on the M and a side, and you do your reference to the baby, “This is my baby. This is my company”. With ownership that thinks like that. Number one, they think their company is better than it is. There’s always a divide or chasm between what the CEO believes is happening within their company and what in reality is happening in their company, that’s always the case. It seems to get exacerbated more on small to middle market, privately held companies.

So there’s always that, those are tough conversations to have. I’ve always felt my role was to have those conversations in an appropriate environment and in such a way as to not insult you. I mean, sometimes it feels like you’re telling the owner that his kid is ugly. So you got to work through all that. Those a very difficult conversations to have, but you need to have them and a company needs to hear them. And again, if you deliver it in such a way that it is constructive, most of the time they will listen and they will work to make some corrective action. Because ultimately to the extent that you can increase enterprise value, whether they’re thinking about selling 10 years from now, or thinking about handing it down to another generation. They’re looking to increase that enterprise value. But I also say this, as a gage with a lot of different companies, the number one reason why more companies don’t hit exponential growth in both revenue and profits…

By the way, I haven’t really had a chance to talk about profits and I don’t know if we’re going to have the time, because that’s a whole different conversation, right? But the number one reason why most companies don’t succeed or succeed in spite of themselves to a certain level, is due to lack of leadership. There is a huge void within, and I’ll have to speak for the vertical I’m familiar with, which is in distribution, industrial B2B distribution. I don’t care if it’s plumbing, HVAC, electrical, solar power, doesn’t matter. There’s a huge void of leadership. Now what I mean by leadership is not there… The positions are all filled. The CEO’s there, the VP is there. Maybe this equates back to your story, Chris, about what you had to do when you walked in. You walked into the company, there’s lots of VPs standing around collecting to paychecks, but what were they actually doing?

So, the positions are all there, the layers are there, but every time there’s a hard decision that needs to be made, or there’s leadership that needs to happen, or culture that needs to change, or holding people accountable to do things that the business requires them to do, they’re running right. They’re holding their head down, they’re not the one raising their hand, they’re the ones hiding in the crowd. And I’ve just seen that too much. So if I were to summarize it’s, if you want to get beyond where you’ve gotten, right? So you’ve grown the business or your dad did, and you’re in there and it’s a nice business. But if you want to take it to the next level it requires leadership, it requires tough decisions. It requires data-driven gut decisions and may require culture changes, may require people, changes, may require all of those things.

Corey Frank (22:59):

Greg, what, what makes that endemic? Is that an industry thing? Is it because it’s a familiar business it’s multi-generational and they didn’t necessarily have to prove product market fit and go through this flywheel of cycles. Ask the tough questions. Why do you think that, that segment in your perspective is lacking so much in that regard?

Gregory Smith (23:22):

Yeah, great question, Corey. So, I mean, I think part of it is what you just described. Beyond that, frankly, I really don’t know. Some of these folks that I talked to have the MBA, right? They have the college education, they understand what needs to be done, conceptually. But they’re just not willing to make the sacrifice and do the heavy lifting. I guess it’s easier to do status quo than it is to disrupt.

Corey Frank (23:53):

And you as an advisor and as a board advisor and leadership advisor, you may look at the books and the P and L and day sales outstanding. And you may not necessarily have those type of problems necessarily revealed to you. So it may look on paper they’re pretty healthy, but it takes a couple of conversations to find the dysfunction, the BCCs or the lack of decision-making, et cetera, to maybe have it revealed to you.

Gregory Smith (24:21):

Looking at a P and L I can pretty much tell you, and I’m not bragging anybody that has done this a number of times you can do the same thing, right? I’m not smartest guy in the room by any far stretch of imagination. But looking at a P and L for five-year period, I can pretty much within my vertical tell you what’s going on. What’s working, what’s not working, where they can improve it. But to your point, if you want real answers, I spend a day with the truck driver. I spend an afternoon with the warehouse person. I spend the another afternoon, the morning, whatever, with an inside salesperson. I spent a half a day with an outside salesperson. I don’t spend any time with the executive management team.

You’d be amazed at what we learned. Now, conversely, as a CEO or SVP for a company, I did the exact same thing. I spent at least once a year, I would travel with the truck driver. It’s amazing what you learn. I would encourage any CEO here that has people that has warehouse truck driver inside sales. Once a year, at least put your work clothes on, get into the truck at 5:00 AM and spend the day with your truck driver. You will learn more about your business in terms of what’s working and what’s not working, than you learned in the previous 11 months. I guarantee you, [inaudible 00:25:50] sales do the same thing with your warehouse people. Every division, excluding your senior management team, you’ll learn more than you ever did before.