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Excellent Executive Coaching: Growing Your Business and Enhancing Your Craft.
EEC 405: Mastering the Stages of Growth for Sustainable Success, with Matthew Pohl
00:23:23
Mathew Pohl is a former data analytics professional turned small business owner and advocate for organizational growth. He applied the Stages of Growth methodology, achieving a 10x increase in his company's value. What was the driving force behind...
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- [00:05]
A
How do you build a business exponentially when your business is stuck at a certain level? The rewilding roadmap looks at the company's process, profit and people, and adapts to where you are in your growth process. So let's listen to the expert Matt Pohl to see how he helps organization grow exponentially. Welcome to the excellent executive coaching podcast. I'm your host, Dr. Katrina Verus, and today we have Matt Paul. Matt, you're most welcome.
- [00:53]
B
Thanks for having me on today.
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A
So, you know you're an entrepreneur. So what instigated you to start as an entrepreneur?
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B
Well, I grew up with parents that had a small business through my high school years. Unfortunately, they lost their business when I was going into high school, and I. I saw the, you know, the damage that that can do. In particular, my father, I don't think he ever really recovered from losing his business. It was just such a big part of who he was as an. So I had that kind of, I think, growing up, and it became a goal for me to own my own business at some point. So that was kind of the history I grew up in. You know, after college was kind of did the corporate thing for a number of years. Federal Reserve Bank, Arthur Anderson, and then a company called Corporate Express that was here in Colorado. So I was in my mid-30s when I started my first business.
- [01:51]
A
Wow. Okay, so you did your homework, though, working with different in different places. So tell us about the two seasons of your first business and why those were so different.
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B
Yeah, you know, I think I was like most business owners who start their first company. You know, you're just learning so much. You don't really know a whole lot. Right. You kind of know the product maybe or the service you're trying to sell, but there's so much more to it when you're actually running your own business. And so my wife and I actually are business partners. So it's really the two of us managing and founding and operating this business. In the first 12 years, we had built a really solid business. We were winning awards for the services that we provided to the legal community. But the business was really what I would call, you know, a lifestyle business. You know, it was providing a nice income for our family. But in year 12, we had a business broker come and do evaluation on our business. And like most business owners, you know, that first time you have somebody outside look in and say, okay, this is what your business is worth, you're. You're typically shocked. And we were shocked. Right? 12 years and, you know, just under A million dollars. It was like, wow. Seems like we risked a lot to just have that value. But the reality was we really weren't building our business for it to be transferred. It didn't really have a lot of transferable value. It was very dependent on the two of us. So I call that the first season of the business, those first 12 years. And in reality, that business had been stuck for almost 10 years. We had hit this revenue ceiling that we couldn't seem to break through. And so we were faced with a decision, like a lot of entrepreneurs, you know, are you going to embrace change for maybe a brighter future, or do you stay with what you have and just kind of say, well, this is as good as it's going to get. It's not bad. Let's just stick with what we've been doing for the first 12 years. And so we thought, well, we're going to be in this business another 10, 15 years before we hit retirement age. Why don't we change how we're building it so that at some point it's not like my dad, who had to basically one day go to his interior design store and lock the door and walk away from 20 years of blood, sweat, and tears. Right? We didn't want that. We wanted to have something that we could actually transfer to a new owner.
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A
So tell me, what instigated you to have this insight of having somebody come up to your company, evaluate it, because that took some insight.
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B
Well, I would like to say that it was, you know, my brilliance, but the reality is that we had a business broker approach us proactively. And I see, you know, looking back on it, I think it was more of a sales tactic because he came and said, I think I might have somebody interested in your business. So it worked on us. We went through the process, and that really turned out to be the instigator of us rethinking how we were doing things.
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A
So what was the rethinking and what was implemented from that rethinking thinking?
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B
Well, obviously at that point, I was trying to figure out what needs to change, right? So that sent me on this journey of discovery, and it led me to a book called Navigating the Growth Curve by James Fisher. And this book kind of laid out in kind of an interesting narrative form, this idea that businesses go through these seven stages of growth and that you have to align with these rules for each of those stages in order to grow. And what was interesting is I discovered that the author, the inventor, lived near me here in Denver, Colorado, and So I was able to connect with him, kind of worked with him for about a year to learn his system. And that really launched the second season of the business.
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A
Oh, I see. So what is your insight from that and what were the major changes you made?
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B
Well, first of all, I provided a road map. And that kind of sounds kind of theoretical, but it was a very, you know, I wouldn't say detailed, it's very precise and concise. So it's something that I could pick up, I could look at, I could learn from. And essentially what it showed me is that I was misaligned with these rules. So at a high level, I just aligned to the rules for that stage of growth. We were in stage one and we started to grow. We got to stage two, which has different rules, and I adjusted to meet those rules. And we continue to grow. In fact, our business that had been stuck for about a decade, in three years we tripled. We tripled, tripled. More than tripled in employees. We went from eight to almost 40 employees by that time. And it was in year 15 that the executives from one of our competitors had left their organization and came and bought our company as a platform company for their new enterprise. And what was interesting is we had this valuation year 12. Again, not due to any intelligence on my side, just it just happened that the broker came and did that for us and we sold the business three years later for 10 times that amount.
- [07:31]
A
Wow. So that is impressive.
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B
Yeah, that was the transformation. And yeah, the planets did align. It was kind of a unique strategic buyer. There was a lot of things that happened, but the reality is, is we had built an exceptional business. And it's an exceptional business that demands a higher, you know, price tag, higher multiple when you go to sell it. So coming out of that, having sold that business and seeing how this roadmap had helped me, I ended up acquiring all the research, the book, the IP that the inventor had come up with so far. And I've turned that into this growth framework that we are now using to help small mid sized businesses around the globe.
- [08:17]
A
I see, so you applied that theory and then of course made three times more when you were going to sell it. And then you started again, from what I hear, where you helped other organizations do that process.
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B
Yeah, I, I was reflecting on my wife and my experience of having worked hard like other small businesses, you know, taken a lot of risk like a lot of small business owners. And we got this large reward out of that when we exited our business. And I contrasted that to my father who 20 years of hard work, lots of risk, and he had nothing. And it was like, why I can't just sit here and not try to help other small business owners to have more of an experience like I did, as opposed to what my father had. So that's really what encouraged me and was the fuel to start the Rewild Group. And so that's, that's what we tell.
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A
Us about the Rewild Group's roadmap. I mean, what is the stages? I know you can't go it in detail, but if you could give us for other entrepreneurs that are listening to us, where could they start and what's the thinking is required?
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B
Yeah, so let me just give a couple principles here about the framework. So it's based on several decades of research of over 1500 small and mid sized businesses. So it's not, it's not an anecdotal framework, it's an empirical research based framework. And what the research was trying to figure out is why do so many small businesses fail? Right. We, we all know the statistics. When you start a business, the likelihood of getting to 10 years is very low. But why is that? And so the inventor had done this research and the research identified a couple key things and I'll share those with you. The first is that businesses go through seven different stages and those stages are defined by the level of complexity. Less complexity in an organization requires less structures, different rules. As you add complexity, you need more structure. The rules of growth change. But one of the key pieces of this is that the stages, because it's driven by complexity, is really identified by the number of employees, because it's really the number of employees that drive complexity of an organization. As you add more people, there's, you know, it's this dynamic ecosystem that you're forming there. And as you put more people in that ecosystem, there's just more complexity. Said simply, as you add more people, businesses, businesses become more complex. We can understand that. But what was powerful about the research is that it identified ranges, employees during which the complexity was stable enough that you could stick to one set of rules. So for example, stage one is called the startup stage. It has one to 10 employees, but stage two starts with 11 employees. So the research showed that there's this transition, clear transition that occurs when you add that 11th employee. You are now into a new stage and that goes up to 19 employees and there's new rules there. When you get to 20 employees, you're at stage three and it continues up through stage seven, which ends at 350 employees. So it's a wide ranging methodology. And one of the strengths of it is it's not a one size fits all. In fact, at its very core of it, it's a very size dependent roadmap.
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A
So the flexibility or the structure, the needs for structures really, according to the amount of employees.
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B
Yeah, exactly. And again, we see that dynamic in our own lives, right? I mean, I afford kids, so when we had one child, there was a, a lot more complexity than it was just me and my wife. When we added 2, 3 and 4, each one was adding noticeable complexity to our family. Well, businesses are the same type of thing. As you add more people, the complexity increases to these new levels. And when you hit these kind of new levels or thresholds, that's when the rules change. And businesses what the research shows that businesses fail or get stuck because they don't understand that the rules of growth, how to be healthy in that stage, have changed. They're typically using old rules. And it kind of adds to the, the understanding of, you know, the axiom of what got you here won't get you there. That may be a saying you've heard of. And we really identify why that is the case and what will get you there.
- [13:20]
A
So give us a concrete example of, okay, you've had one to 10 people as employees and what's the shift you gotta make to have 11 to 19?
- [13:34]
B
Yeah, and I'll give you a specific example that impacted my business that had been stuck. So my business over those 12 years, that first season vacillated between stage one and stage two. We'd have eight employees, we'd have 12, we'd go down to six, we'd go back up to 11. And so every few years we'd kind of go through this kind of back and forth. And one of the key things I was misaligned with with these rules is an area called gates of focus. So gates of focus says there's three gates that you can emphasize or focus on in order to have growth. They're people, process and profit. People, process and profit and those things. Every business owner knows those three and they're always important. But in your stage of growth, the prioritization of those three, if you want to grow changes. And if you're misaligned with those three, how you prioritize those, you won't grow or growth will be a lot harder.
- [14:41]
A
So concretely, from 1 to 10 and 11, how does the people change? Okay, the people, there's more people. But can you mention something of what needs to change in the process and the profit.
- [14:55]
B
Yeah. So for example, I'm a data scientist by training, you know, so I'm a kind of a data geek. And as such, process to me is my natural strength. I like process, I'm good at it. So when I had my business in year 12, I was focused on process first. I thought if I could build the best widget, you know, I would get a lot of business. And then for me, people was second. I figure I got to have the best people and profit was third. So that's how I naturally looked at those that prioritization. But in stage one, that's not what the guidelines are. The best practices is that profit needs to be the highest priority because you cannot grow out of stage one without generating profitable revenue. And so profit is first, people are second, processes third. So I had my prioritization totally flipped around and that caused my business to get stuck. I couldn't get sustained into stage two. So what that meant tactically for me is I had to spend more energy bringing in work and putting more of the organization's energy into bringing more work in a very tangible way. We did that. We started doing outbound calling to attorneys across the country. We went from having two proposals a month to 30 proposals a month. And that was part of the tripling of our revenue over those three years. So I had to put profit first. Now in stage two, starting with that 11th employee, up to 19, the prioritization switches, profit is still number one, but process is number two, people is third. So if you want to grow through stage two, you have to focus again on profit first, then process. Because you have double the number of people as in stage one. So you need more process, scalable systems and things like that. And people, they're always important. But in stage two, the least growth oriented focus that you can have. And I should point out that when you get to stage three, which is 20 to 34 employees, the highest priority is people. So this is why businesses get stuck, because they don't see these changes that are occurring underneath of them. The rules have changed. It's like you're playing poker, but the card game has changed to euchre. And you're wondering why you're losing or you're stuck. It's. Well, it's because you're playing the wrong game, you're using the wrong rules.
- [17:34]
A
That was very clear. Yes. Okay. And so how do you help people to create their roadmap? Obviously you have a research based roadmap, but is it for all companies? At 11, they change and shift or how do you process? You have a new client. What's the kind of questions you ask them to find out where they're at?
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B
Well, the start of it is determine your stage. And we have a calculator on our website that you can go to and use to figure out your stage of growth. That's really the first step, because that gets you slotted into one of these seven stages. And once you know those seven, what stage you're in of those seven, then that now clarifies the rules that you need to align with. When you're misaligned with these rules, it makes growth hard. In Colorado, I like to climb fourteeners. These are mountains that are 14, 000ft or more above the sea.
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A
Impressive.
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B
They're just hiking. I'm not like, climbing, rock climbing kind of thing. I don't do that stuff. But when I get to the trailhead to climb one of these 14ers, I don't kneel down, open up my backpack and shove rocks into it. No, I want my backpack to be light. When you're misaligned with these rules of growth, as a business owner, your backpack is heavy. And what I usually see is that business owners are climbing that mountain, but the backpack is so heavy, at some point they say growth is no longer worth it. It's just too hard to grow. And so they get stuck. They just stop right there. And so what aligning to the rules of growth is like, is. It's opening up that backpack, taking out all those rocks, and making growth easier. That's why my organization went from eight people to almost 40 in three years without really hitting a major roadblock, because I was following these rules. So every time it changed, I was able to adapt to that. I didn't have to use trial and error, which is what most of the time we as entrepreneurs are faced with. That's really what we're left with, right? You just try something until it works.
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A
That's right.
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B
But I did that for a decade. Had I stumbled onto this roadmap years prior, I don't know where the business would have been much more successful than I had gotten it before without the roadmap. So instead of trial and error, and this is really what a framework does, right? It provides you with principles and ideas that have been proven to work in most situations. And so instead of just coming up with your own idea, you can use this research of 1500 other business owners to really share in their wisdom, their mistakes, their successes. And that's really what the framework and this Roadmap captures.
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A
So my last question will be, how does your roadmap of rewilding differ from eos, which is, as you mentioned, entrepreneurs, organizational systems.
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B
Yeah. So EOS is maybe a system that some of your listeners are familiar with. It's a very popular small business operating system. Eos Entrepreneurial Operating system is what the acronym is for. And it's been very successful. It's helped a lot of businesses. I don't want to discount it because it's a very powerful framework. The challenge with it, I would say, are a couple. The first is it's kind of a one size fits all. It doesn't recognize that businesses are in these different stages. And so it has this kind of a simplified solution to really helping businesses move forward. That's its strength, but it's a bit of a weakness as well. And so a lot of businesses that start off on EOS often find that the principles, while they got them going, tend to run out of steam at some point. The business becomes too complex. That know that was helpful when we were in stage one or two, but we're in stage three and above and you know, I just need more than what that system provides. And so organizational rewilding actually is complementary to eos. If you use eos, organizational rewilding can be there to take you even further. But again, it's a good solid system. There's a lot of a number of principles that we kind of share because we're both focused on the fundamentals of a healthy business. But I would just say I think ours is more robust and it's not a one size fits all.
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A
Great. Very, very interesting. So where can people get a hold of you?
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B
You can go to rewildgroup.com so re wild. So rewildgroup.com and there's a contact page you can reach out. You can also find me on LinkedIn at Matthew Poll. And I'm in Colorado. You'll. You'll be able to recognize me there. But either of those mechanisms would work well.
- [22:46]
A
Thank you very much for sharing your experience and your knowledge. Thank you, Matt.
- [22:51]
B
Yeah, my pleasure.
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A
Bye bye.
- [22:54]
B
Thank you for listening to the Excellent Executive Coaching podcast. You can subscribe to all future podcasts atExcellent Executive Coaching.com. join us each Wednesday to learn more about the latest trends in leadership techniques and bring your coaching to the next level. To learn more about Dr. Burris CEO mastermind, use the contact form@excellentexecutivecoaching.com.