Ten Questions I Want to Ask You

This is your intervention and David has some tough questions about the important decisions you should be making to manage and grow your creative firm.

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"The Four Types of Employees at Your Firm"

Transcript

Blair Enns: David, I think we're doing an intervention. Are we doing an intervention? I love interventions. Is this an intervention?

David C. Baker: For you or me? Not for me. Dang it. I don't need an intervention from you.

Blair: [laughs] Okay, guys, come on in.

David: Yes.

Blair: I don't know if you've seen John Mulaney's latest special on Netflix. He talks about his stint in rehab. The whole thing's in rehab, which is-- That's not a good advertisement to me. I'm not interested in listening to that story, but he does it so well.

David: I haven't heard that, but I think he's funny.

Blair: Starts out with this intervention. It's hilarious. I am just fascinated by interventions. I have never been involved in one, but you've got--

David: Wait a second. How have you not ever had an-- [laughs]

Blair: I know, right? Come on, friends listening. There are so many things you could intervene on. Nobody has ever tried to sit me in the circle. I'm waiting.

David: Oh, this is a good topic though, I think.

Blair: Yes, you like it. 10 questions I want you to ask yourself. You being the listener and owner of a creative or expertise space business, correct?

David: Yes, this actually started maybe 10 years ago. I had worked with a firm. There were three partners and it was a really great engagement, but then things started to fall apart, not because I'd worked with them. Let me just make that clear.

Blair: No, of course not.

David: Things started to fall apart. There were some real partnership issues that got ugly and they said, "We need--" [chuckles] They didn't say an intervention, but now that you say that, it was kind of like one. They said, "A one-person intervention." I said, "Okay, I can't do the normal stuff here. I really want to get to the heart of this stuff." I have got to find out where these three people are individually with the right questions.

No busy work, just the right questions. That's where this started and I adapted it quite a bit for this, but it's just meant to get you to stop and think. There's so much in our lives. It's just like you spin up a flywheel slowly in your career, and then it just stays there until the metal falls apart and it flies across the room, or somebody says, "Hey, wake up. You've been doing this for 11 years. Wake up." That's the spirit of this.

Blair: Hit by broken pieces of the flywheel. Adding that to the David Baker metaphor list.

David: You need to stop me from embarrassing myself when I'm going off and on like this.

Blair: No, I really don't. This is 10 big questions about the business, maybe your place in the business. It's meant to be a general diagnostic that you want the listener to listen to the questions, spend a little bit of time answering the questions for themselves. At the end, what are you hoping they take away?

David: I don't think they need to hire any outside help to answer these or to even evaluate the answers. I just want them to stop in their tracks and say, "What are we doing here?" It's sort of like a marriage that's just gone on and on. Slowly, you get used to each other. You're not in love anymore, or a friendship or maybe you're working from somewhere. It's like, "Give yourself a dope slap here and stop, and maybe nothing will change," which is totally fine.

We have got to quit accepting things the way they are without just stepping back. What I like about these questions is that you don't need any expert to help you with this. This is just you being honest with yourself. Well, you might need somebody else to read these that really knows you well or knows your answers. Then the other really important point here is that if it's just you running the firm, then you're the only one that answers these. Then you share the answers with people that know you and that hold you accountable.

If there's more than one partner at a firm, the really key point here is that each of you needs to answer these questions completely separately and then compare notes, and I mean in writing, not just in your heads, because then your answers are shaped a little bit by how you're hearing things. You write it out. You send it to each other. Then I promise you, you're going to have one of the best discussions you've ever had.

Blair: Okay, so you're trying to get to the root of some key questions like, what do you really want? Why are you doing what you're doing? Are you perhaps just going through some motions on some things? Is it time to rethink some other things?

David: Yes, exactly right.

Blair: All right. What's the first question you want to hit the audience with?

David: The first one is, what would the ideal size of this firm be? Don't define that in terms of sales or revenue. Define it in terms of people. What would the ideal number of people be at your firm? Let me just do the second question related to that because it's hard to answer the first one without the second one. Maybe I should have just included these two together. Anyway, the second one is, what are the reasons why that size is important to you?

Is it because you think you'll make more money bigger? Is it because you think new business will be easier if you're bigger or smaller? Is it because you don't like the financial risk? Is it because you think you're more likely to sell it at a certain size? The reasons don't matter. Just be very specific about how big you want your firm to be defined by the number of people. The reason why this question is in here is because it is too easy for all of us, including you and me, to let the marketplace decide how big our firm is going to be.

We have interest from the marketplace. It's flattering. We live, at least I live, in the land of opportunity. It's a crime to say no to opportunity because to be an American means you live in the land of opportunity. You say yes to this. You build out the infrastructure for it. Now, you've got a bigger machine to feed. Now, you've got more financial risk. Now, you're even further separated from all the stuff that you love doing. You hate managing people and having all those difficult conversations.

There's no ethics here at all, except being the size that you don't want to manage. That's the ethical problem. However big you want to be is completely neutral. It just doesn't matter. Just make a decision and then work towards that. All of the little decisions that come along, make sure that they are made in the light of where you're trying to head, right? Don't let the marketplace drag you somewhere. All of a sudden, you wake up and realize, "Wait a second. Who runs this firm again? I'm not sure."

Blair: I can see why some people would reply with a certain size. Maybe it's 10 people. Maybe it's 20, 50 people where they say, "I don't want to be above this number." I think it's usually because they're not comfortable managing a really big, stacked, hierarchical organization. They have a comfort level around the number of people that feels right to them, either management-wise or on the team. For people who are past or can think past that threshold is bigger than we are now like an infinite growth, just always bigger, is that an acceptable answer or do you think there should be an end goal, an end state that people are managing towards in terms of the headcount?

David: I love that question. I've never really thought about that. I think the answer should be that once you get to a certain size that the management structure isn't all that different.

Blair: Right.

David: I'm not sure exactly where that boundary is, but let's say there's three principles and you get to maybe it's 20 people. I'm not sure that kind of firm is all that different than 30, but going from 5 to 10 might be right. I think it'd be a very legitimate answer to give just like, "We just want to keep growing at a manageable pace that we can absorb so that the culture doesn't take a hit so that our systems can catch up, but then let's just see how we can blow this thing up." I think that's an acceptable answer.

Blair: Yes., it strikes me that the management structure at, I don't know, somewhere between 30 and 40 is probably the same at 150, at 250, at 350.

David: Yes. At some point, you add professional managers managing director types. The way you do HR for a 100-person firm is not different than the way you do HR for a 300-person firm.

Blair: Can I ask about what's not on the list? You start with envisioning size, but you don't start with size of revenue. Nowhere on your list of questions do you have a vision of size of revenue. Why is that?

David: Yes, that's partly because I just don't see any real necessary connection. I know we're used to thinking that way. Even I talk about fee billings per full-time equivalent. If I want to be a $1 million firm, then I need half the people that I would require for a $2 million firm. I don't really think that way. If I look across a limited sample size of the clients that I personally worked with and had some influence on, some of them are as low as 130,000, 140,000. Those are the struggling, the growing firms. Then some of them are in the 800,000, 900,000, a million. To me, you could be a $2 million average firm with 13 people or you could be a $2 million firm with two people. To me, what really changes is managing people more than anything, not so much the revenue.

Blair: I think you get to a certain size headcount-wise and built into the model of a highly-leveraged firm with lots of people running around is some restriction on how much you can actually reasonably earn on an FTE basis. When you're under 30 or so, you're not really tied to those numbers.

David: Right. We're so proud of hitting like, "Oh, we hit five million this year." We say that more than, "Oh, we hit 30 people this year." It's just a weird function of how we think, I think.

Blair: Okay, so the first two questions related. What would the ideal size of your firm be expressed as full-time equivalent employees, and then list the several valid reasons why the size seems appropriate to you? What's the third question on your list?

David: The third is about positioning. How do you feel about the current positioning of your firm? Here, I'm giving you permission to be very private about this. I'm not asking you to reply in a public LinkedIn post about what you think about your positioning. Just what do you really think about it. If you could wave a magic wand and change it somehow regardless of what employees or clients or partners would think, what would your positioning be?

I just want you to be honest, at least with yourself here, about your positioning and what you think it should be. Even if you've answered this question to your own satisfaction in the past, you need to keep asking yourself this question because the world we're living in is changing so quickly. You and I just had a conversation a few minutes ago with a friend about one thing that's changing the world roiling our industry very quickly.

You have to keep asking yourself, "Does my positioning need to be adjusted or not?" Particularly, I'm thinking of the firm that is not as tightly positioned as it probably should be. What do you really think it should be? If we could strip away the fear that you might have or the obstacles of what other people think, what would it be? I'm just trying to get you to be really, really candid with yourself in a courageous way.

Then you might say, "You know what? I ain't going to do that," or you might say, "Now, it's time. I need to do that," right? I guess, here, I'm editing myself as I go. The third and fourth ones are together, right? If there is a mismatch between what your positioning is and what you think it really should be, what is holding you back? This is my very strange way of thinking. I always ask myself, "What's the worst that could happen?" I'm taking a curve really fast on a motorcycle. What's the worst that could happen?

[laughter]

David: If I think I can live through that, then I'm just going to do it, right? That's not always a smart way to think, especially when you're riding motorcycles. If there's a mismatch between what you think it should be and what it is, are these obstacles real or do you just need to get some courage? God, I love this field. These people are so fun. They're so smart. They're so funny.

They're so courageous. Every once in a while, somebody's not courageous. It just pops up because you think, "Wait a second. You're one of the most courageous people I've seen. You're making shit up on your feet in front of a client all the time. You're hiring people you cannot afford. You're going home at night and assuring your spouse that everything is great. Now, you step back-

[crosstalk]

[laughter]

David: So sorry, I'm messing up the outline here, but that's the third and fourth. It's all about your positioning.

Blair: The third question is, how do you feel about your current positioning? You put it without regard to the current employees or clients or partners. What would your positioning be? Then the second part, question four. If your current positioning doesn't match what you have in mind as the ideal one, what will hold you back and how can those obstacles be overcome?

You allude to some of those obstacles in the earlier question when you say without regard to current employees or clients or partners like employees or partners. Employees in particular, I think there are a lot of more broadly positioned firms out there, thus creating sales and marketing and margin and problems for themselves than some of these firm owners would like.

Some of these firm owners would like to take some more risk as they see it to narrow their focus and try to evolve the firm that way. They're worried about what employees in particular think, and sometimes clients. I think you and I both feel that that's an overstated fear. You as the owner, those positioning decisions, those are your domain. You need to make the decisions based on what's right for you.

David: Yes, and even referral sources too, that occurred to me as you were talking. We're afraid of switching things because we don't have a great marketing plan. We've got two people that send us work all the time. Is that going to dry up if we change? Yes, we can come up with all kinds of fears. [chuckles]

Blair: Yes.

Blair: All right, so it's the David Baker intervention, 10 questions I want you to ask yourself. We've covered the first four around the size of your firm and the positioning of your firm. What's number five?

David: This is my attempt to try to, I guess, encapsulate your understanding of your role at the firm and your influence on the world. I had a very interesting discussion with a client. We were wrapping up an engagement. The subject of the call was future-proofing and I said, "Due to principles, you're really focusing on clients. Your sights with the rifle you're looking through, they're all on the clients."

Employees, they're not being mistreated. They like working there, even though it's quite chaotic, but the employees exist to serve the clients. On the surface, that's what a business is. I understand that. That's it, but that's not necessarily your job. The business's job is to serve clients, but your job as the principal is not to serve clients. Your job is to serve the team and it's the team's job to serve clients.

The question is, if I watched you on a typical day, would it look like you are taking care of clients or would it look like you were taking care of employees? Who would then take care of clients if you do your job well? An easy way to illustrate this would be to think of an issue that pops up and the team feels like, "Oh, we probably ought to involve her in this. This is a little bit abnormal. There's more at stake. Let's get her involved here. You're the principal."

When you hear this, you'd listen very carefully, empathetically. You wouldn't be afraid to make a decision, but your approach is not to step in and save the client relationship. Your approach is when you hear this, it's, "Oh, this is a great opportunity to ensure that I never have to step into this again. Let me help the staff think through this and they will be better off at it."

The other thing I would say here and I've said this multiple times in various episodes, so I don't have to dwell on it too much, but this is exactly what I told the client yesterday. In 20 years, nobody's going to remember the name of this agency and they're certainly not going to remember the name of any people. They're not going to remember any projects that you did.

20 years from now, every employee that is working for you now is going to remember their experience and how you worked with them shaping their career and so on. These things are not at odds with each other. Your firm definitely exists to help clients, but your role is not to help clients. Your role is to help the people. If I watched you on a typical day, would it look like you're taking care of clients or would it look like you're taking care of employees?

Blair: Great question. Great insight. I love that. I've quoted you on that numerous times. The next question I'll read and you speak to it. This is where we're getting to financial results, but you're not talking about revenue. I like the way you frame this. To what degree on a scale of one to seven, seven being the highest, are you satisfied personally with the financial results that flow back to you from your contribution to the firm, especially given the financial risk, personal investment of your life, and sustainability of the firm without your constant input? To what degree on a scale of one to seven are you satisfied personally with the financial results that flow back to you? Great question. I love the way you framed it. What do you think the average answer is?

David: Oh, that's what I was just going to speak to. I thought you might ask that and I realized, "Oh, you know what? I probably ought to measure that because I have all the data. My guess is that it's somewhere in the four to six range for people, but it depends on whether they're frustrated when you ask them. [chuckles] It also depends on their age, so I think we make some weird assumptions. There's not a lot to say on this one. I think we make some weird assumptions about how much money we can make in this industry. It's an artificial constraint we put on ourselves.

Then some folks struggle understandably so, but it's really not appropriate. They struggle with how much they should make in relation to what other people at the firm were making. If the other people in the firm are making good money, they don't care if you make a lot. They actually are proud of it and they're just clapping for you. Now, if you're an asshole, then, of course, they're going to care a lot about what you make if they find out. If you're a good manager and they're being paid well, nobody cares how much money you make. They want you to make a lot.

Blair: This strikes me as an example where the average is probably more important than any specific number because, as I try on the question, I think, I could two to six, depending on the year, the day, depending on these other variables. If I had to answer that question repeatedly over time, the average would actually be quite meaningful. It might also apply to the next question. To what extent, on a scale of one to seven, again, with seven being the highest, do you think you're a capable and respected manager of people? Man, that is going to change daily, isn't it?

David: [laughs] Yes, it's also going to be different if you ask somebody else to rate you. [laughs] This is where you'd probably need to take your blood pressure every day and then average it out. I hate that I have to ask this question dishonestly because I don't know many people that get excited about managing people on a daily basis. A lot of people find it very satisfying over the long haul when they look back over it.

Hardly any of us. I certainly didn't have any training around this. I'd say I'm a little bit below average in my ability to manage people. I don't know if I'm very good at judging that, but this is what it means to run a firm. This is, I guess, just another way of sneaking up on people and saying, "Listen, if you want a great firm, you're going to have to embrace management." That means setting standards. I always think of that David Meister article you refer to all the time. I can't quit thinking about that.

Blair: Oh yes.

David: It means having hard conversations. It means spending a lot more time and being a lot more careful at bringing people aboard. It means actually shaping people's lives. That's an ugly, messy process, right? I just think this is one of those questions you have got to-- How in the world could you self-assess yourself with all these questions without a question about management?

Blair: I imagine, you've alluded to this, but over a career, you look back on it. If you're halfway decent at it, there's probably just an overweighted sense of satisfaction. Just considering all the things where you're weighing up your career, there's this greater sense of satisfaction around the managing of others. In the moment, in the trenches, it can feel like it's just conflict after conflict. It's just difficult moment after difficult moment.

David: You can't check a box either. It's not like mowing the lawn where you step back and say, "Dang, that looks great." It's more like pulling weeds, right? You just never stop. It's not as satisfying.

Blair: Then following on from question seven about your assessment of you being a capable and respective manager, question number eight is, where do you feel your leadership skills are not as strong requiring perhaps time, training, or sharing those duties with someone else? Where do you feel like your leadership skills are not as strong?

David: I'm not sure I'm really an expert on this at all, but all I can do here is illustrate where something might not be as strong as it needs to be. Maybe you're not as great a communicator or motivator to people, or maybe people don't get the sense that people are priority number one because you keep putting off something, a regular meeting with them, for instance, or maybe somebody, because they're very capable, is allowed to get away with things that somebody else does. You know that in your heart and you can't do it.

How soon do you step in when you feel danger coming, or as the world is changing, how ahead of things are you when it comes to innovating around service offering design and what the firm can only get from you? How disciplined are you at pushing the new business efforts? I'm just giving you a few illustrations. There's hundreds of these, but leading the firm and your leadership skills is very different than managing people. It ought to be thought of separately and it's very important.

Blair: Good point. I conflated the two, but I'm often making that point, that leadership and management are two different things. Leadership is we're going in this direction and inspiring people to want to follow you. We've got two questions left. We're getting into the difficult areas of hiring and firing. Can I read them and then you speak to them?

David: Yes.

Blair: Question nine, who are the two weakest employee links at your firm? If this is a cultural fit, are you willing to dismiss them? If the issue is contribution, do you see a clear path forward? Who are the two weakest employees at the firm and then is it an issue of cultural fit or is it an issue of performance? Those are the two dimensions. Do you see one as more important than the other?

David: I don't see one as more important than the other, but I would never see any reason to hang on to somebody who's not a cultural fit no matter how much of a contribution they make. I do think there are times when somebody who's a good cultural fit, who just has surprised you at how they have not contributed the way you thought where you can be just too quick to give up on them. Maybe you see something in there. This is an undrafted free agent on a football team.

Well, everybody passed on them, but they missed this one thing. I think if we work on it, we've got a diamond in the rough here that we could work with. They're both important. I don't know how to solve this necessarily. I just want you to be honest with yourself all the time and say, "These are my--" It's easy to say the weakest. I want you to do two. I want you to always have that in mind, not because you're necessarily going to dismiss them but because you want to have a plan for it. Nobody's going to be as responsible for the team as much as you are. That's the point.

Blair: There's a consultant or author out there. I forget who. Maybe there's more than one that has this two-by-two matrix in which you plot all your team members on that spectrum of cultural fit and performance level. The low culture, low performance, those are the easy ones. You get rid of the most difficult ones. This person, whom I forget, says the most dangerous ones are the poor cultural fit and the high performers.

David: I said that. I'm the one that wrote that article. [laughs]

Blair: Long pause.

[laughter]

David: We'll include it in the show notes.

Blair: Others have written the article as well. Maybe it is you. Usually, I'm pretty good at remembering.

David: Well, other people took a stab at it, but it was never as clear until I wrote it.

[laughter]

Blair: Anyway, so these are the ones where it's like, "Oh, you keep them around because of their performance even while they're poisoning the firm."

David: Right.

Blair: I like you asking the question, "Who are the two people?" Then is it an issue of culture or is it an issue of performance? If it's merely performance or a cultural fit, what's the plan to help them improve their performance? Then the 10th question is, assuming you've hired the right person for a significant role at your firm, about how many weeks should pass before that person is contributing at nearly full speed? I love this question. Surely, there can't be an easy answer, but is there?

David: There isn't an easy answer. No, but isn't this such a weird question because all the other ones said--

Blair: It's 89 days.

[laughter]

David: All the other questions have been philosophical and weighty. Here, I throw in this little, silly question. I'll admit. It almost doesn't fit, but I have had so much fun with this question. Only when I ask it of multiple partners and I make them, I used to do this in every round-table I started. I would have them write down their answer in weeks on a slip of paper. I was blown away at how the answers were so different. One would say, "Oh, two weeks, maybe four." Somebody else would say, "Six months." I'm like, "What?"

Then they would look at each other and say, "We work at the same firm. How could we have this different?" It is an odd question, but I just find it so interesting because it relates to your expectations in hiring and managing people and how patient you are. I've never heard anybody ask this question, but I just find it really fascinating in a firm with multiple partners. Now, if you don't have partners and maybe you want to ask this question of your key executive team too and see what they see, and if nothing else, you're going to have a fantastic discussion at the end of that.

Blair: I can see that number varying widely, depending on when you're hiring somebody from a similar role in another firm and the expectation is they should be able to get up to speed quickly, then maybe the answer is as short as four or six weeks.

David: How would you answer this?

Blair: The way I think about it, I was like 89 days is basically my threshold.

David: [laughs] Then you fire them on day 90 if they haven't come around?

Blair: Day 89.

[laughter]

Blair: I think just from my own experience, your intuition after 30 days is almost always right. Whether this person's going to work out, it's almost always right. I think 30 days might be too soon to act in most cases. I can only speak from my experience and for my business. I don't think that necessarily extrapolates to other people's business. I think the rule of thumb of your intuition is probably right after 30 days. I would probably stand firm on that one.

David: Then the second 30 days would be confirming your instinct or making some quick adjustments.

Blair: Yes, saying, "Hey, we need to work on this. Here's where we are. We need to work on this and let's set these objectives for the next 30 days."

David: Performance improvement plan, which is basically code for, "You're fired. We're just not doing it yet."

Blair: Maybe.

[laughter]

Blair: Got you there, didn't I?

[laughter]

David: Oh, you were talking about me?

Blair: No. Don't take your hiring and firing advice from me. That's your domain, my friend. Okay, 10 questions. I'm not going to recap them all, but you have a bonus question in this intervention of yours. What's the bonus question?

David: Yes, this one's so good and we've all talked about it before. You and I both have, but it's like, all right, you started this firm because you wanted a different environment. You wanted some mix of more freedom, more control, and more money. Now, are those true? Because sometimes they aren't. It's like, "Wait a second. I started this firm because I wanted more control over the kind of clients we would take and how many hours I work. I wanted to make more money. I didn't feel like I was getting paid for all the value I was contributing, and I wanted more freedom. Now, here I am. I've got less of all those things. Congratulations, David, for starting this firm." [laughs]

Blair: Get a job.

David: Yes, get a job, especially if you look and say, "All right, you could go work for somebody else and you could make double and you could go home at a normal time and you would have no financial risk."

Blair: You could sleep well at night.

David: Yes, so tell me again why you're doing this. Congratulations.

Blair: Yes, that's a profound one. I think I've just heard the sound of a few people deciding they're going to shut their business down.

David: We have fewer listeners now.

Blair: All right, 10 questions I want you to ask yourself, an intervention by David C. Baker. Profound questions for you to get a sense of, is this what you had in mind when you started this business? Are you happy with your current state? Are you doing things on autopilot maybe? Just look in the mirror. Question some of the fundamental decisions, maybe even decisions you haven't made, just provoking you to think, "Is this what I really want from this? Am I really getting what I want from this business? Is this business really serving me?"

David: Yes, great summary. Thank you, Blair.

Blair: Thanks, David. That was fun.