The data behind how much better my division performed when I stopped running it
I am a big believer that when I was running the business I founded, that I was a liability to its’ success as it got bigger (and thus more complex). My skills did not align with the skills that an executive needed to run a business of this size. The video below I give my take.
I was the SEO director, I had been doing SEO since 1999, and you’d think that I would be a good match for a director role running an SEO division. I enjoyed my job a LOT, but knew that a team of 44 in the div was too much for me to run. I tend to not be the best manager when I end up with large teams underneath my purview. An SEO like me would be the best person to fill the director role, right?
Wrong. I got someone (Larry Waddell) who on LinkedIn describes himself this way:
Executive strategic thinker with COO, CFO and venture-backed CEO experience. Specialties:Entrepreneurship via acquisition, strategy development, and business development
His Skills in his last job are:
Structured technology sharing and channel partner agreements with Fortune 500 firms aligned with Viridity target market verticals
Develop financial models for the energy, capacity, and ancillaries markets in PJM, NYISO and ISONE
Led due diligence response for successful $16 MM Series B equity financing
Created financial models integrating battery storage and renewables into the wholesale ancillaries markets
To truly keep your company thriving, knowing when to step back and admit you are not the right person with the right skills to take it into the future is a CRITICAL admission. I’ve always been able to give up things I love in work, when I passed my expiration date. Have you ever thought what your expiration date is in your organization?
Lets share some of the numbers since I’ve gotten out of the way.
I attribute this to a few people, not just Larry, but Steve, Crystal who really helped level up our ops skills. Dana, Emily who have worked on client success and people success, and many others … (Crystal is our president, whom I gave up the role of running the company to many many years ago).
In 2013 & 2014 (Wil) vs 2017 & 2018 (Larry):
Client churn as % of revenue — 16.9% vs 11.3%.
Net profit as % of revenue — 12.1% vs 23.4% (yes he’s almost 2x’ed me).
Rev Per Head — increased by almost 40%
Did he do this by working people to the freaking bone?
I got one more metric for you, divisional turnover in my last year, vs Larry’s:
35% (me) vs 19.4% (Larry)
Here are some learnings along the way:
1 — Whose job is it to protect the house? I stop and wondered who on this team is “good at business” vs being “good at the craft”. I figured that in a team of 44 practitioners having 1 person thinking of the business most of their job was a good thing. And having that person being really GOOD at that is perfect. The 44 team members would have each other to ask questions to for how to do the job day to day.
2 — Being too close to the solutions can be blinding! You jump ahead, you make assumptions, you don’t ask questions in client meetings because you know this space so well and at every conference you go to, people remind you how smart you are. A non practitioner coming in has to ask a lot of questions, why are we doing things this way, they ask VERY different questions, why? Because they aren’t practitioners so they don’t often have the skills to dig in on a practitioner problem. Here is an example.
Client asks me as SEO director, why am I not ranking, 90% of the time I’m all up in my tools, Larry couldn’t do that, he had to ask questions like “what would solving this problem do for you”, “what does a successful outcome look like”, “what impact do you expect solving this problem will have on your business”. I’ve gotten to on many occasions watch a non practitioner get to the root of the problem, in ways I glossed over b/c I knew too much.
3 — Your team may grow new leaders. People learned to rely on the practitioner leader to answer their tough practitioner questions. I have an SEO question, let me get Wil. When the leader of a division is NOT a former practitioner, people are like “why go to her” she doesn’t know how to solve y problem. Therein lies the power… a non practitioner gets to deputize others to lead and answer questions, which may spring up some new leaders who weren’t blossoming as much under your leadership.
4 — Your leaders will get better at business. As you scale you want MORE people thinking about the business of the business. Larry was a beast at building frameworks, trainings, and leveling people up on business skills. Which many leaders enjoyed, I never taught my team to read a P&L, so they never learned those skills. I was teaching them the hard skills of SEO. Eventually I would have built a team of leaders who never understood what levers to pull in financial hard times, and good times.
5 — Change management is a skill. Practitioners aren’t always good at the skills of managing change. When we had a month where we lost almost 1 million dollars worth of clients (just as I was handing off the reins of the division), Larry was exactly who we needed, he understood the financial impact, what levers to pull, but more importantly he knew how to shut things down (along with Crystal), focus the div on what mattered, rally the troops and build processes to get us in front of the issues that sprung up to bite us.
As a founder / exec you have to decide if you wanna run the show, or if you want the business to last. It’s not a binary decision, but you have to know which way you are going to lean. For too many execs who were the spark to start something, they can’t get out of their own way to turn that spark into something even greater, they have to make the calls & the final decisions. They can’t admit that what got them to this juncture might not be the skill set to take the team to the next level. My superpower, admitting that has never been a problem, and everyone from my execs, to my team, to my clients are better off because of it.
Larry reports directly into Crystal, so the two of them collaborated. Their backgrounds are different, Crystal was a practitioner (PPC Account Manager, to PPC Dircetor to Company President) who leveled up as the business grew. Crystal is an example of a practitioner that got her MBA, and made the pivot and never looked back. I’ve seen her single handedly double margins in 4 months before to revive a sluggish division. So it is possible to promote for this from within, but it’s hard for most practitioners to keep up.
Here are 2 other videos I’ve created about this topic:
1 — How Charismatic Leaders Can Fail Their Growing Companies
2 — Knowing When Your Company is Outgrowing Your Skillset & What To Do About It.