06: Why Serving Your Clients is a Disservice

Why serving your clients is a disservice. Steve Preda provide real-world examples of how business owners brought success by learning to delegate, and share key tips for building a self-sustaining business.

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Why Serving Your Clients is a Disservice

Today’s episode is titled, Why Serving Your Clients is a Disservice. And this topic is really important, I believe, for leaders of professional service businesses because we tend to fall into the trap where we feel that because we are the face of the company, because we have the most knowledge in our field, in the company, which often happens especially for fledgling organizations, we get into the habit of selling ourselves else and not trying to sell our colleagues.

And then over time, we feel that the reason clients come to us is because of us, because we are personally responsible for delivering the service to them. They are hiring us personally rather than our business. And over time, that becomes a really difficult trap to get out of, especially as we start to build the organization, there are other people, there’s overhead, and we feel like we cannot take a risk of upsetting a client because then it could hurt our brand and so on.

Becoming the face of your business is a common trap for leaders; we must shift from selling ourselves to selling the collective strength of our team. Click To Tweet

So I like to dig into this concept because early in my career, I did make that mistake of building the business around myself and at the time I felt good about it. It felt like an amplification of my knowledge through my people, and I thought it was a great thing. I was the face of the business. My face was on the newsletter of the business, and I was kind of proud of being sought out by our clients, and they were looking to talk to me, and I felt good about it personally, but really for the business, it wasn’t such a great thing.

So what happens to us, and I believe to many of you who are running a professional service firm, is as you grow the firm, you kind of wear all the hats. So you are promoting the business. You are closing business for your company. You are managing the process. You’re managing the people and the projects. You are quality controlling the projects. You are the person who is in charge of making sure no mistakes get through. You are doing all the firefighting when something goes wrong, then you jump in and you do it yourself to make sure everything is okay.

Often you execute the project because you’re the one who has the most knowledge and the client both, you know, the brains, your brains essentially and you feel compelled to give the client the best possible quality of product or service and then you can deliver it yourself. And then you administer all that stuff. So you’re wearing all these hats, 1, 2, 3, 4, 5, 6, 7, 7 hats you may be wearing as a business owner or founder. And I’m here to tell you that this is not the way to live.

This is not going to be a major ceiling for you that’s going to prevent you from growing your business. So what I have found when I was growing my own investment banking advisory business, that it was really difficult to let go of some of these tasks. And the easiest to let go was the administration of the business, but even that was pretty difficult because I was very particular about things. I wanted to make sure that we have all our ducks in a row and we were communicating well to clients who called the office.

We had to be on top of our cash flow, so it took me some time to find a really good administrative assistant who would take that stuff off my shoulders. Actually, I counted. I think I went through six administrative assistants until I found the one that then stuck around for many years with me, who could really handle me, I guess, and all the demands of the business. So that was still the easiest to delegate. Then the second one was executing transactions. That was the second most difficult to delegate.

Basically, it required me to grow people who I could trust to be able to deliver the documentation for investment banking ideas, financial modeling, and writing info memos and what we call books. So that took me some time to find the right people and then to grow them, to teach them our way of doing business and then to grow into the role, but that happened relatively quickly. So within the first two years, I already had three or four people that I could delegate parts of the business to.

Letting go of tasks is challenging, especially for founders, but it's crucial for scalability; even the smallest hat, administration, needs to be passed on. Click To Tweet

Then the third one, the big barrier, was actually quality control. Because I was always fretting that our financial model, we made a mistake, and then the valuation of the company is going to be all wrong. So I was always focused on, okay, making sure that everything is right. So whenever an info memo was done, I went through line by line, made millions of corrections and gave it back to my colleagues. And then the next draft, same thing happened. It was terribly tedious and frustrating work.

And with financial modeling, it was even worse because at least when you read a document, you see what’s wrong with it, but with a financial model you have to really dig into Excel and figure out what’s going on and that was very, very stressful. And as a result of me doing the quality control, it kind of gave my people permission to not do the quality control because they knew that I was going to find some faults with it anyway, so they might as well not do the hard work of doing the final 5% of the work, which we all know is the most difficult. So I just ended up with that stuff. And the way I got rid of that, first of all, I did some process.

So when people were writing a document, there were a checklist that they had to follow to make sure that the sentences are written the same way, that there are no repeating words, that there are synonyms used, that we have direct sentences, that we are not using exaggerating adjectives. We had a list of, a writing list, and they had to go through the checklist to make sure that they gave me a document that was as good as they could get. The second thing I did was, the second big milestone for me was when I could let go of the financial modeling. And basically I got to a point where I said, I think you can do this, and I’m going to put you on the spot.

So this time I’m not going to review your financial model. We’re going to present it to the company on Wednesday and you’re going to bring it and you’re going to present it. If there’s a mistake, we got to figure out how to save the situation. I’m going to jump in to save the situation, but it’s going to be your face on the line with the client. And when that happened, that suddenly there was a tectonic shift. My colleague was Laszlo, his name was Laszlo, and before, you know, he was sending me a model, maybe 8 p.m., and then I was staying up half the night to make sure everything was right.

As soon as I pulled the plug and decided to not look at it, then he stayed in until 1 or 2 a.m. in the morning to make sure everything was right because suddenly he was where the buck stopped. And from then on, I had no issues with the financial models. It went great. So that was the next step. And then to manage people. So that’s another milestone. How do you delegate management of people? So as we grew the firm and we had hired some analysts, and my colleagues who were analysts before, they got promoted to project manager and then I started delegating management and that was an awesome step for me to step back but there was still one big piece missing which was actually selling, selling the services.

I was very afraid when we got a good lead I felt like I had to do everything myself to make sure we don’t lose that good lead and be converted with a high chance. And I felt like if I delegate that, then maybe we drop the ball or maybe, you know, my colleagues who don’t have as much experience, they’re not going to be as compelling. And the way we overcame that was that we sliced up the sale process. Initially, I was doing the whole presentation and the closing, and then over time, my colleagues started doing more and more of the presentation, and over time, I just withdrew and was present at the meeting and maybe opened the meeting and then helped with the closing and eventually I removed myself from the sales situation and they could close deals.

And the reason it worked was because I realized that at some point, and I think that happens to us, when something becomes routine, we kind of start to wing it and we start to rely on our routine or experience of delivering that piece of the service or the consulting or be it the selling itself and we no longer stress about it, which means we no longer are using our paranoia to drive our zeal of getting every piece of information and getting into the mind of the client and emphasizing the client and mirroring and doing everything that needs to be done for a good sale to close.

So what happened was when I started removing myself, yes, I took away some of the experience, some of the intuition that I had, but my colleagues who were growing into the role, they were super excited to succeed. They were laser-focused on doing things right. As a result, actually we closed more sales because our prospects felt our excitement, and it’s the excitement that actually is the most compelling about selling. So when they felt that we were really excited about helping them and my colleagues were more excited at this stage than I was because for them it was a big growing opportunity.

Then we started closing actually more sales by me being out of the process. And the final piece is promoting the business. I think that’s the last one that you want to give up because that’s really where most of the creativity and experience, that’s where this is the highest ability, the unique ability that most business owners have is to be able to promote the business because you need the vision, you need the experience, you need the intuition, you need to do the communication skills, you need the passion, all that thing goes into promoting the business. But then you can start to delegate that as well. That’s the real thing.

That’s when your business really comes into its own and becomes an entity independent of yourself. That’s when it becomes a self-managing business. You can do this by creating verticals inside the business and having people specialize on these individual verticals. So it could be around industry groups. So in my business, we had an engineering industry group and we had a services, a business services in this industry group and a healthcare group. So you get people to invest into that specialty and then they become actually bigger expert in their niche than you are in the general area.

And that’s when they can start to communicate, write blogs, and kind of become the face of those areas. And then essentially the whole business just transitions and your brand is going to carry the load from there on. So where does this lead us? How can you create that structure in an actually in a purposeful and strategic way? And this is where Traction, which is also the name of this podcast, comes in. Traction or EOS, the Entrepreneurial Operating System, it’s a really good process to follow. And basically, one of the first things that you do when you start EOS is you start creating a structure and you start to define the major functions in the business that the business depends on.

And in every business, you have a sales and marketing function, you have an operating function, and you have a finance slash administration function, and many businesses have multiple functions. And then you define the major roles for each of these functions, and then you figure out, okay, who is the right person for that function who can actually execute on each of those five roles. So that’s what I did in my firm, we had a project management function, and which we call execution, essentially project delivery. We had a marketing function, we had an administration function, we had a sales function.

We started defining the major ingredients to it, and then I could train my people, but already they were there, so it was more about creating the opening for them, so that they can feel that opening, and then take ownership of each function and then run with the ball. So that’s one of the ingredients. The other ingredient is really giving the direction. And another tool EOS has, we call it the Vision Traction Organizer, which is a very simple way of approaching what your vision is, what your vision and plan is, essentially by answering eight simple questions, you can create alignment across the organization around the vision and the plan where the organization is going long term and how it’s going to get there, and then you break it down to short term milestones as well.

So by answering the eight questions and having everyone understand what the answers to the eight questions are, you are actually creating that clear direction so when people know what the big hairy audacious goal for you, what is the objective where they want to get in three years time, which is equal to three year picture, and then what is your one year plan and your quarterly major themes, your quarterly rocks, and then they have to put their focus, then suddenly you have people who are then going to put all their energies into building a business for you.

So if you are struggling of letting go of functions in your business and you are the person who promotes the business, who sells, who manages, who does the quality control, who does the firefighting, who executes and who administers, or if you do more than one of these, then I recommend you take a look at EOS. You can, you know, the best thing to do is to read Gino Wichmann’s Traction, or you can go on my website and check out tractionactivity.com. You can also sign up for one of my upcoming webinars and I have a webinar every week. It’s a free webinar. Feel free to sign up and visit with us and learn about EOS.

So every week I speak about the tools and EOS and give you an overview of how it works. Or just surf around on my website. There’s plenty of information. I wrote a couple of books about my experiences when I was building my own professional service business. You’re welcome to download those which are free. And I’m working on another book which I’m very excited about that’s going to be coming to the market later this year. I don’t want to speak about it yet because it’s still in the editing phase but I’ll tell you a little bit more later on the show. So that was it for today. I hope you found this discussion useful.

So why serving your clients is a disservice? Well, I left the most important for last. So when you are actually wearing all those hats, you may think that your clients are grateful for you for the personal attention, but actually the opposite is true. Your clients are going to feel concerned that how are you going to sustain serving them when you are serving all the other clients and you’re doing every piece of the business yourself. It’s just not credible that you can do it. They know that that you cannot do it. They are business owners as well and they know how it works. So you actually are going to be much better off if you delegate most of the work and be there for your clients to be pulled in when there is a big idea, a big question, where they really need your expertise.

Delegating tasks frees up mental capacities for addressing critical issues, allowing you to be there for your clients when they truly need your expertise. Click To Tweet

And if you delegate, then you free up your mental capacities to address those issues. And there is a quote that Gino Wichmann likes to say, which is by systemizing the predictable, we can humanize the exceptional. So that’s what you can do. You can humanize the exceptional. You can be there for your client. Many years ago, I was working for a big commercial bank which was in trouble. It was making losses, and the owners brought in a new CEO who was actually a very seasoned CEO chairman of some medium-sized French banks. His name was Bernard Liautaud, and he was in his early 60s, and he started leading the company, and he realized that there were a lot of things that needed to be changed, and he also wanted to seek out the advice of the management partner of McKinsey & Company, who had been advising OTP, which was the biggest bank in the market in Hungary at the time.

So he hired McKinsey, McKinsey did a project, and then he asked the partner on the project to somehow arrange a meeting with the managing partner who was actually the acting partner on that big competitor bank’s business. And they had been using McKinsey for many years at that point, so he had a vast experience. There was a conflict of interest, so that partner, he could not be the partner for my bank, or our bank, but nevertheless he agreed to a meeting to talk in general. And the meeting kind of started off awkwardly because of the conflict, but then somehow Werner managed to break the ice and then he pulled out some cigars and this guy started smoking some cigars and the management partner opened up and he kind of spilled the beans.

By systemizing the predictable, we can humanize the exceptional. Click To Tweet

He shared a lot of details about what worked at this other bank, what were the best practices, and essentially he was there for the real valuable stuff. So we hired McKinsey, we paid them $300,000, but I think the real value actually came from the discussion that was had in this smoke field room with the boss, who actually shared the big experience, but he could not have done that if he had been active on this project himself. So you are, if you are serving your clients directly in the nitty-gritty, you are doing them a disservice, you are doing the greatest service if you build a team around you, they serve your clients, and then you are there for your client to give them those golden nuggets that only you can give them.

So that’s it for today. So that’s it for today. I hope you enjoyed the show and I look forward to talking to you very, very soon.


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