The Business of Expertise - Part 3, Live from London
Blair revisits David's new book, The Business of Expertise: How Entrepreneurial Experts Convert Insight to Impact + Wealth in front of a live audience in London, who get to ask their own questions.
BLAIR ENNS: We're here live in London launching two books. We just had a conversation about my book, Price and Creativity: A Guide to Profit Beyond the Billable Hour. Now we're going to talk about your latest book, The Business of Expertise: How Entrepreneurial Experts Convert Insight into Impact and Wealth. Now in full disclosure to this audience, we've already done two podcasts on the topic of this book, so I think we'll probably talk for 10 or 15 minutes. I'll ask you the few remaining questions, and there's a couple I wanna go over again too.
DAVID C. BAKER: And you grin as you say that. I'm a little nervous.
BLAIR: Then we'll throw it open to the floor because this is a broad book that covers lots of interesting topics and I think there's gonna be a lot of questions about it. Let me first ask what was the impetus for the book? Why this book now?
DAVID: It started out as a completely different book, honestly. So that was the impetus for that book. I was thinking, I wanna write a big manual, like a reference manual, for expertise and so I had this massive outline and even I was getting dopey tired thinking about it and writing it and so the idea for this book didn't actually come about until I was writing it. I discovered that I felt so much more passionate about portions of the book and so I left out big sections of the outline and decided to write something that was more from my heart rather than something that looked like my previous books, which looked a lot like Wikipedia books. They were just full of reference information. This was something that just inspired me. I think most of all, I want people who read this to feel more committed to courageously pursuing a very specific expertise, whatever it is. I don't care what the expertise is. On the one hand, I'm tired of people making shit up all the time. If you've tasted both expertise and incompetence ... If you've tasted both of those in your professional life, for sure.
BLAIR: Should we ask for a show of hands?
DAVID: And all of you, including us, we've all tasted incompetence. Some of you have tasted expertise as well. The staggering difference between those two changes your life. We all define expertise a little bit differently. The way I define it is speaking to a crowd of 4,000 to 5,000 people, live TV cameras, and this has happened, and there's time for questions. I'm not nervous at all about any question anybody could ask. That to me is how I would define the comfort that comes in ... Really knowing what you're talking about with something. So that was a motivation for the book.
BLAIR: So is this primarily a book on positioning for a creative firm?
DAVID: It ended up being that way because I don't understand how you could be competent without ... The world is too big. You just simply can't understand the whole thing. You have to pick a portion of it in your professional life and that's what positioning is is deciding where you're gonna be competent.
DAVID: Then with the other parts of the world that you exclude in your positioning decision, you can play around in those areas and just not charge clients for it. That's what you do on your own time. But I don't understand how you could be competent without a positioning decision.
BLAIR: Yeah and I think you and I have had this conversation before. I'm reminded of ... He might even be in the audience. There's a firm here in the UK that you and I have both worked with and the principal has seen both of us speak. We used to do an even in Nashville once a year every 10 years called the New Business Summer. He came over and participated in that event and then he seen us both speak on the subject of positioning of the UK. What he said is I could not believe the difference in reaction from the audience. In North America, you're talking about the need to specialize and focus and everybody is in agreement. And in the UK, half the audience is fighting you on that point. You talk about tasting expertise. When you're seen as the expert in that native deep area, you wouldn't dream of going back to this place of being the generalist would you? That's what you're talking about.
DAVID: Exactly. It changes everything. You feel ... There's a certain confidence that comes that feeds your pricing which ties into your new book about pricing creativity. Absolutely, yeah.
BLAIR: So it ended up being a book about positioning. You looped in or somehow conned two fairly famous people to get involved and participate in this book. First of all, you've got a great blurb from Dan Pink. Is there a story there?
DAVID: Well I had invited Dan. I knew Dan. I invited him to speak at a conference I was doing down in Mexico. He came and keynoted the conference, so I had stayed in touch with him a little bit and just sent him a note asking if he would be willing to endorse the book. I'd ask several people, and he was willing. How many of you have read a book that Dan Pink has written? Quite a few of you. Yeah he's a remarkable writer. He's one of those writers that anything you write I'm gonna buy a copy of it. I was very very touched that he was willing to do that.
BLAIR: I've noticed you've got his blurb on the front of the book and mine on the back of the book, so obviously that was a publishing error.
DAVID: Yeah, and it's actually only on that copy.
BLAIR: The second person who is involved in this project, unbeknownst to him in the beginning is Derek Sivers. I wanna read this forward. Do you mind?
BLAIR: So it says forward with an asterisk. It's a note from Derek Sivers. Hi David. So sorry I have to say no to writing the forward but please don't take it personally because I'm saying no to absolutely everything. I'm years behind in my own project so I've vowed to add nothing new to my life until my already started things are finished. If you're interested in some more thoughts on this, search for my article on saying no to everything else. Also I'm not an entrepreneur anymore, so don't feel qualified to say anything about it. As I wrote recently, you have to keep earning your title or it expires and it's been years since I started the company. I'm honored that you ask though and I wish you the best. Let's stay in touch. Derek Sivers.
Is there a story there David?
DAVID: Well I got it and my first reaction was like oh shoot, I really wanted Derek to write the forward. Then I started thinking about it like Derek, how long did you spend telling me you weren't gonna write the forward? Why didn't you just write the forward? That would've been quicker than giving me this long explanation. So I just wrote him back and was like Derek, can I just make that?
BLAIR: You really appreciated the honesty and directness.
DAVID: Yeah two things. I'm not an entrepreneurial expert anymore and that's what the book is about because he felt like his entrepreneurial expertise card had expired because he hadn't started something within a certain period of time. I admired that. I'm not sure I'm not courageous. The other thing was just saying no. I'm focusing ... This is a guy that used to take questions from people from anywhere and answer their questions for free. It got to the point where he just wasn't getting his projects done and I just think there's such a lesson in there, right? There's very little connection between intelligence and success. Thank goodness Blair.
BLAIR: Oh ...
DAVID: I didn't mean it the way you read that. I meant it another way, but you took it that way. Where there is a strong connection between success and something else, it's really discipline. Give me somebody who is disciplined regardless of how qualified they are, regardless of how courageous they are ... These are the people that are just working away. They're not winning all the awards. They're not the famous people. They're not speaking at all the events that you have, but they're just doing solid work and they're sending out their emails with brilliant content to their prospects and they pay attention to the financial performance of their firm and they manage people well. Those are the people I admire, not necessarily the famous ones. So the idea that we can be disciplined and say no to things ties in so well to positioning, right? Blair, you've taught me so much about that, about positioning, about how positioning is primarily saying no. It's what you say no to. It's an exercise of exclusion more than anything. You're not drawing a circle around as many things that you've done as possible. Right? It's about what are you gonna say no to.
BLAIR: Warren Buffett has this great quote. The difference between successful people and really successful people is really successful people say no to almost everything. I think that forward of Derek's really embodied that. I don't know much about him, but it sounds like he's a little bit scarred from saying yes to too many things. He realized one day he woke up and realized me saying yes to everything has derailed all the projects that I wanna do. Then he graciously allowed you to print that.
DAVID: Yeah he was willing to do it.
BLAIR: I wanna get to questions soon, but there's a couple of things. In the previous podcast where we talked about your book, I don't think we've ever gone into this deep enough. Your first chapter, the role of expertise in a developed society ... Maybe this is a bit of a tangent I wanna go on. When Adam introduced you earlier, he said you had this great ... Your first line of your bio I think it is is David grew up with a tribe of Mayan Indians. We've had conversations about this. You were really shaped as a person and your business is shaped by how you grew up. You have a lot of experience. You talk about in a developed society versus an undeveloped society. Do you wanna just do a couple of minutes on your upbringing and then talk about the difference between how expertise is viewed and communicated in a developed society versus an undeveloped society because it's remarkable how different it is.
DAVID: Yeah so my parents were medical missionaries, so from when I was four, we moved to this town in the Highlands of Guatemala, no electricity, no plumbing, no roads to speak of, no stores to speak of, and lived there for 13 years, I did. I didn't come to the US really until I was 18. It was a very different upbringing. I didn't know that it was all that different at the time until I came to the US. I don't regret any of that upbringing. I don't feel like I missed anything honestly. But it gave me a chance in all my thinking to compare expertise in a developed world versus an undeveloped world. I go back there every year just to connect with the people there and not much has changed.
One of the things that's really different is in a developed world, like the society we live in here, experts are inaccessible. When experts have to mix with the unwashed masses, the rest of us, they either have guards or they're in special cars, or they wear uniforms to set them apart like pilots at an airport or maybe someone in the service or a police officer, something like that. We confuse this a lot because we think we are in the service business and so we try to be as accessible as possible to our clients, not understanding that we can be too accessible and we can lose some of that notion of expertise. Some people in our firms need to be very accessible, but the folks who have the more expert practitioner role don't need to be that accessible, as opposed to an undeveloped culture, the experts are the people who are the most accessible people. That's the ... The village elder was always a male back then. The village elder was sitting in the middle of the marketplace and could be approached by anybody that they wanted to. It's sort of an interesting perspective between the two.
BLAIR: There's an idea here called the scarcity heuristic that if you're readily available, you can't be all that valuable. That's what's being applied in the developed world. I notice in our businesses we've moved from a consulting practice to a training company and I became more and more removed from the clients. My status in their eyes seems to go up, so it just prompted me to remove myself even further. It's interesting. I've seen that play out in my own business.
DAVID: You bounce in and out of that relationship and they listen in a different way than they would have if you were the day to day person.
BLAIR: Yeah somebody fills out a form on our website that they're interesting in training. If I pick up the phone or somebody sets up a call and it's me on the call, they're really quite surprised and honored and I'm really flattered that they're honored. I think well that's just because I'm just ... I'm otherwise unavailable. If I were like Derek Sivers used to be out there answering all these emails, that would be different.
Before we get to questions, you write in the book ... You've got a chapter on connecting expertise to personal fulfillment and the idea of ... You talk a little bit how I think you're essentially making the case that experts are more happy in their personal lives. Is that the case?
DAVID: If we think of an expert as having a very very deep expertise, a narrow, but very very deep expertise, what keeps their expertise relevant? How do they not become somebody who knows something completely but isn't aware of what else is happening in the world, which is a very significant danger? What I think we should be doing with that dilemma is to be really narrow deep experts at work but we should have personal lives that are really interesting, so interesting that we get mad when our work lives impinge on our ability to have our personal lives right. But the way creatives historically have approached this is that they have melded the two together and in doing so, that is the personal in the business lives. But in doing so, they have brought the expectations they've had from their personal lives into their work life. That's impacted their positioning. So while it might make sense to have a narrow positioning from a business argument standpoint, it sounds boring to them. Because most of what they get from life comes from the business, they are reticent to make a decision that will harm their overall life.
There's something else that's going on as well. That's the idea of getting bored with expertise. It just kinda floors me honestly because I find expertise really fascinating. But I also find the rest of life very very fascinating so I wanna get my job done in a limited number of hours and I wanna make so much money in my job that I can fund these other hobbies that I have and keeping these two lives as separate as possible.
BLAIR: I remember one of the first times I heard you speak, you were doing the closing key note at a conference for owners of design firms. You were admonishing the audience from the podium. I really admired and went out of my way to copy that style from that day. You were talking about this topic of this blending of the personal life and professional life. You said ... You pointed at the audience and said some of you don't even have friends who aren't clients. In that moment I thought oh ... I immediately thought of some of my own clients, owners of creative businesses who had blended their personal lives and their professional lives so deeply that everything that they did, even recreationally, personally, was somehow tied to business. I didn't recognize that pattern before. I've seen it a lot since. I think maybe we see it a little bit less now hopefully.
DAVID: Yeah. I think our industry as a whole has matured and people come to this field nowadays with different expectations. It's not a sentence for life like it used to be. They have other interests that are very important to them, which I think is really healthy.
BLAIR: Alright this has been great. I've asked you some questions and I think we'll hand it over to Adam who will take the microphone out into the audience and see if you have any questions for David.
DAVID: Lob some easy softballs this way.
ADAM: Just while people are thinking them, I've got a couple that I've been thinking of. One of the prime reasons why a creative led agency, led by a creative entrepreneur, why do they not pursue expertise or stop them?
DAVID: One thing that stops them is that they're afraid that it's gonna be boring. That's part of it. Another comes when they want to democratize the positioning decision and they personally wouldn't have a problem with a narrowed focus, but they're not sure how they're employee base will feel about it. That employee base on average is about 12 to 15 years younger and that gap stays the same as the firm ages. So as the employee base gets older, they begin chasing variety less and expertise more, but that's one of those issues for sure.
How we answer that question is different in different countries. I admire the entrepreneurial pursuit that you folks in the UK have because I think it's much ... Not think, I know it's much more difficult to be successful here than it is in the US. In the US, the work is just falling off the trucks. I mean, if you are not successful in the US, then you are either new to the game and you haven't got the stride yet, you haven't got there. Or you've just had some really bad luck. Or you're just incompetent. Here, it's just not that easy. There's less business to chase here. There are fewer competitors. Your positioning is not gonna be quite as pure as it would be unless you're more of a global firm. So we can't answer the question exactly the same in every country, but the fears are the same everywhere.
ADAM: So everyone is on Sky Scanner now booking their flights to the States.
ADAM: I suppose the main premise around your book is that expertise renders your work less interchangeable. So if you are the expert, clients come to you.
DAVID: Right. And it's built around this notion of distributed control. It's a phrase that I began using a few years ago. Very simply put, it's this. That in the best business relationship, there are two parties. Each party has some control. The control that the client has is pretty obvious. They can delay payment, they can fight you on the price, they can not make themselves available, not give you what you need, and ultimately, they can just fire you. They exercise their control in passive aggressive ways and very overt ways all the time. What control do you have in that relationship? Because unless you have some control in that relationship, it's not a balanced business relationship. Your control though, as the provider of expertise is just a single thing, that's to withhold your expertise.
You don't have to do that. Seldom would you actually have to withhold your expertise. But you have to be willing to do it. Imagining withholding your expertise is what helps you make some of those better positioning and pricing decisions. If you decide to withhold your expertise, then the clock starts. That's how long the prospect or client has to find what they deem to be a suitable substitute for your services. The problem here is that the client gets to decide who is a suitable substitute. You may hear of who they hire and scoff and say oh my God they'll never work as good as we would do and so on. It doesn't matter. What matters is the client gets to decide who's a suitable substitute for you. So however long that stopwatch runs, until they find a suitable substitute, that measures how much power you have in a relationship. If there are a lot of substitutes that your clients think are suitable, then you don't have much power in their relationship. That's the whole concept, very simply put.
AUDIENCE: David thank you for that. I'm Debra from the DBA. I have a particular bugbear about our industry which is that we tend to acquiesce to the demands of clients very quickly. So you'll have a meeting which has been in the diary for weeks and it gets canceled maybe a couple of hours before because a client has phoned the agency you're meeting with and they have to sort out the issue there. How and when is it okay to say no to clients? You spoke about the experts, the [dissenting 00:21:34] of that person, how do we get on top of this dirty little habit that we have of just saying yes to clients, whatever, whenever, and it keeps us at work until midnight.
DAVID: Right. Such a great question. I wrote this article one time saying that prostitutes were better at running their businesses than design firms because there's no scope creep because all the fees are paid in advance. Anyway, I don't remember what the third one was.
BLAIR: Full service rarely means full service.
DAVID: Blair remembered. That gets to the heart of it really. Something that I've thought a lot about ... Actually, Blair introduced this thought to me. If a client is not gonna be a good fit, and you've described the client that's not gonna be a good fit. When do you wanna find out? Do you wanna find out ... Before it was always in my mind oh I don't wanna find out now because I have hope. Like I have hope that this is gonna turn into something. Surely I can ... I mean look at how successful wives turn men into great husbands. That's a joke. They don't right? I've got hope that this is gonna turn into a great relationship. But if it's not gonna be a great relationship, I wanna find out right now. So in my practice, I ask them to initiate the call to me and it's usually not at a normal time. All the fees are prepaid. There are no references. It's like I'm in control. I'm the expert. If you want help, you're gonna play by my rules. I'm very eager to help you, and once you hire me, you're gonna have my full attention. But until then, you're just somebody who might hire me. I don't care all that much.
That's the kinda perspective we've got to have. But we're so desperate for this opportunity to slave away for something with a client that we bend over backwards and we're doing all the things that don't position us as an expert.
AUDIENCE: Thanks David. I'm Aria from Make it Clear. I wanted to ask you if the implication of what you're saying is that if agencies or firms are gonna increasingly have a specific expertise, a specific positioning, that there's gonna have to be more collaboration perhaps between firms, between two experts rather than trying to capture as much budget or capture as much of the brief as possible, being comfortable to say I'm an expert in this specific stage, for example. I have a partner here who is an expert in the following stage. Us together are gonna be able to achieve the solution or achieve the value that you're looking for.
DAVID: That's such a great question and I think the lack of precise positioning is what makes so many of the other firms in our geographic area competitors to us when they shouldn't be competitors. If we really positioned well, we have very few competitors. We're also so much more honest about what we're good at and we also are so confident that the right work will come to us consistently that we're not terrified about ... Instead of turning a client into possibly a good client, we say no, listen ... You are not well served by me in this area. This would be ... And we could be a lot more collaborative right? I've often wondered why we don't have more transparency with each other because these answers to the problems that we're facing are here in this room. We're just not talking about them. We're not sharing them with each other because we care too much that we think it's a zero sum game and my success is gonna hurt you.
My own perspective in my business has been to be very open with my competitors. I have very good relationship with almost all of them. I feel like there's so much business for all of us and we can ... I understand what I'm really good at and I understand where my weaknesses are and where somebody else is gonna be a good fit. That's a really good question.
ADAM: Another question from me ... When does a conflict of interest become a specialism. Where's the point where you become an expert?
DAVID: That's one thing that makes firms nervous about vertical positioning is the conflict of interest issue because they have multiple clients who all view the other clients on that roster as a potential conflict. I think that it's really sort of lazy thinking to include too much conflict of interest excuses in our positioning. Clients do fear conflict of interest sometimes. It depends on the industry. But what they fear even more is incompetence. The only way to be competent is to have clients who could be competitors. You'll find that most firms after they've had several of them, then they kinda get over that.
BLAIR: I think the glib answer is it's between two and three and the saying as in maybe it's ... I stole this from you. But two clients in the same space is a conflict and three is a specialism.
DAVID: Alright last question.
AUDIENCE: Hi David. It's Marsh from Invega. Better make it a good question. What's some of the more unique, interesting, good, weird, bad positioning statements that you've seen?
DAVID: Oh my goodness.
BLAIR: You're gonna give away our future book.
DAVID: Yeah both of us are keeping a log and when it doesn't matter when we start spilling all the secrets then we're gonna right it. Really, the honest ones, the ones that make me scratch my head are the ones that aren't a positioning statement at all. I wrote something about it in the blog post. I was in Oxford yesterday and that's where I wrote it. The name of the blog post was more better is not a strategy. The idea is that we all do the same things, but I do them better. You say you listen clients, but I really listen to clients. You say that your work is integrated, but ours is really integrated. We don't have all these layers. Right here, you work directly with the people doing the work. We don't mess with those people who are professional relationship managers. They're just in the way. Or we start with strategy. It's like really? Are you picturing all the other firms who are saying we tried that ... And oh my God it was so much work.
We just ... We don't do that anymore. We tried starting with strategy and it just slowed things down. So we don't do that. But you'll come to the same realization that we did. You can't picture people saying that, right? The right positioning statement is something that not only other people are not saying, they're claiming the opposite of it. We have these gutless positioning statements that they're just funny because I'm not trying to be mean and I know people aren't trying to be obtuse in their statements, but we stop so short of powerful positioning statements and we just pair it with what other people are saying so much.
BLAIR: This has been great. Thank you David.