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He Helps Executives Go From Good to Great and His First Move Is Radical | Ep. 318 with Steven Lovett Founder/CEO of Principled Consulting Services
00:28:30
Daniel Robbins talks with Steven Lovett about the hidden gap between operational excellence and true strategic thinking. Drawing from the transcript, Steven argues that many leaders are trapped by efficiency, optimization, and legacy systems that keep them focused on today instead of tomorrow. He explains why the first step toward strategic intelligence is often a disruptive one: deconstruct the current model, challenge the calendar, and rebuild how decisions get made.
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Transcript13 lines
- [00:00]
A
Foreign.
- [00:05]
B
So, Stephen, I know you've worked across three continents and you've. You've gotten to really understand what makes a business great, a CEO, an executive, what makes them good to great or great to excellent. And I want to understand if I want to go from operational excellence to strategic thinking or what is that one thing I need to do?
- [00:29]
A
All right, that's a great question. So I'm going to start off just by saying, Dan, that you've, you've already identified the problem. The problem is that gap. How do you go from good to great? How do you go from great to excellent? So you know that there's a gap. That's the 2am problem. That's what keeps you up at night. And then the question, of course, is begged, saying, what do I do about it? I don't know what to do about it. Right. If I knew what to do about it, I'd already be there. I know there's a gap. So what do I do about it? So I work with a lot of different executives. I work with executive teams. I work with boards of directors. We help identify that gap, what that gap looks like, the nuances for their industry, what their specific pain points are. But I'm going to tell you this without almost exception, there's one thing that I'm able to tell any individual that I work with or any team that I work with, that creates an instant deconstruction of the place they're in, which opens them up for reconstruction of where they need to be. And so here's. Here's a suggestion I'm going to make to you if you want to do that. And you'll have to talk to your producer and your whole team afterwards and apologize and say, this is just a test. This is not live that type. So here it is. My guess is that right now you've got your calendar somewhere on your computer. You probably just click on the icon, pop it up, it's Microsoft Outlook, whatever the case is, and it's well populated. I'm an example of that. Today you and I are talking. I'm one of your things to get done for today, right? There's going to be a bunch of other things later on today. There'll be things tomorrow, the rest of the week. You've got next week lined out and so on. What I would like for you to do is open up that calendar. This is a test, and erase everything. And probably what's instantly slamming around in your brain is, how do I get anything done? I literally my business for you Dan, it's going to be podcasting and so forth, talking to individuals like myself. How do I get that done? How do, and here's the problem is what you've done is you've created a model based upon a dependency that has to do with how you allocate time. And what I'm suggesting is blow up the model. I didn't say don't get anything done. I'm saying blow up the model for how you get it done. Then the next question that you might be asking you say, okay, I'm going to accept that premise. I need to blow up the model for how I get things done. Then your question is going to now be a strategic question. So how do I accomplish what I need to accomplish but not do it within the present model? That strategy, that's future focus, that's leaning into tomorrow. So what I didn't say to you is we need to get you a better calendar. You need to have better efficiency, right, with assigning time slots and allocation of time, which is a resource for you. Instead I'm saying don't worry about the optimization. My, my guess is you have that down path, your production team and yourself. You know exactly how to time things out. You know exactly lead in time, exit time, production time, everything else. You guys have optimized that. Best practices your phenomenal podcast. So you guys have got that down pat. What, what's the next iteration? Podcasts, once upon a time didn't exist. What was the precursor to a podcast? Maybe it was an interview at a TV station or a radio station. What did that kind of scheduling look like? What did that kind of timing look like? What was the delivery platforms for those interviews? Something radically different than what you and I are doing today together. So a very simple thing that I offer to an executive that I'm working with in our executive team is let's look at one of those basic tools that constructs your current business model and rip it right out. And I can't say that I'm original author to that. Several years ago, I was working with a phenomenal CEO, one of the best guys I've ever worked with. Just, he just, and I, I think he just, he was cut of a different cloth. He just, he phenomenal at efficiency optimization. But what he was always doing is challenging the present model, Always challenging the present model. And so I, one day he, he came in and paraphrase it, so to speak, sat with a few of us C suite officers and looked at all of us and he said, no more meetings. That's it no more meetings. It's all going to be drive by. Yeah. You're going to see each other in the hallway and that's how you're going to get things accomplished. Zero. I don't want to see any more meetings. And he walked out and they had the same sickening feeling that you probably had when I say get rid of your calendar. If you're not the one holding P and L responsibility, you're probably happy about it. If you're the one that says, hey, you know, bang for the buck, it lands on me. Then you're like, we got to get this done, how are we going to. And they ask the same thing. And so there's these series of mental follow up questions that challenge the present model. Right. Well, what are meetings for? Well, who's in the meeting? Well, who's running the meeting? You mean things aren't done? If I'm not in the room, do I need to be in the room? Actually then what does that say about my team? What does that say about the processes and the systems that are in place that are supposed to operationalize activity on a day to day basis? What does that say about how I've set those things up? What does that say about succession planning? So if I'm not in the room, things don't happen. So I don't have a bench. Have I optimized my team? Am I working with a players? And that kind of, it begins to ask a domino series of questions about the current model. That one tool, if you popped open your calendar and said that's it, blank sheet. Right? And we start to see this actually in the consulting industry and the, and in the reconstruction industry of how you take a company from good to great or great to excellent. I say let's clean sheet the organization, let's rip it back down to the studs. Do you actually need the hierarchy that you've got? You need the layers that you have, you have, you need the processes that you have. Do you need the platforms that you have? You clean sheet it. If you were going to do it over again, how would you do it today? So no preservation of legacy, just roll it forward.
- [06:09]
B
So Stephen, when you went from corporate to founder, did you find that you were falling into a certain trap that you then knew, okay, I, this personally, I went through this. So now I'm going to make sure other people don't.
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A
Oh, completely mea culpa. So I, I, I've done the same thing. And, and I largely come from corporate, the, the, the advisory work That I do. The consulting work that I do right now is, is fairly new to me. Except that a good colleague of mine a little bit over a year ago said, well, you've been doing it your whole career. You just didn't know it. That's. That, that's a good point. So. But yeah, I have lived in the corporate world for most of my career. I've been just as guilty of focusing on efficiencies, focusing on optimization of those efficiencies, and then being bugged by the challenge of, well, what are we going to do tomorrow? But, you know, we're using trailing indicators, we're using lagging metrics. What about tomorrow? What happens when this changes? Or somebody walks in the door with a new problem and say, hey, this reg just changed on us. A lot of industries did, you know, a little bit over a year ago, when we had a new presidential administration and there was a whole new set of executive orders, everybody said, well, the landscape just changed. Now we've got a model built for a particular landscape, whether it's communications, FCC type of thing, or if it was in higher education, or if it was in finance, or if it was in health care, Fintech. Pick your industry. The landscape just changed. Even just workforce stability. Right. So now what do we do? Because the model is based upon that. Well, I was one of those individuals, meaning that, you know, I had my calendar, I had my series of tools, I knew how to optimize those, create efficiencies, show my metrics. I was looking at those margins and making sure they're within the black and trying to ignore the fact that they kept compressing all of the time until there was just a little bit of daylight left. What was the next iteration? What was the next stop? And the frustration for me was to sit with other executives and ask that kind of question, what I used to call the Jetson question. So the Jetsons. So, you know, what's life going to look like? And actually, I guess now, because the Jetsons are old enough, it'd be now. But when we're living in the clouds and you got flying cars and you've got a robot taken care of, what's our Jetson situation? So we're still going to be doing some fundamental things, right? So higher education, what's the fundamental thing? It's a transfer of knowledge. Healthcare, what's the fundamental thing? It's the healing arts. It's getting somebody from a bad place to a good place in finance, it's transactional, Right. That has never changed. Go back Thousands of years. The fundamentals to an industry, transportation is getting a person from A to B. What has changed? The models of production, the systems, the gauges for that, the metrics for that, the means for that. It's exactly what you and I are doing this morning. It hasn't changed. People interviewing each other. That's happened for thousands, tens of thousands of years. But look how different it is now. So I had the same problem myself, looking at where I was today and wanting to be to the Jetson tomorrow. And I kept challenging myself and my teammates to say, how do you do that? What are the core elements that begin to shift that mindset? So we're looking at the long term horizon instead of the near term output.
- [09:15]
B
And you and I were talking earlier about communication and how important it is. And my wife and I always talk about how many people are just really, really bad at communication. And I thinking back to the corporate time, I mean, I couldn't, there's. I don't have enough fingers and toes to talk around how many times this was the sticking point. Like this was the problem with people getting fired or not, you know, people not moving up or just people unhappy. Like so many reasons was because they just were not effectively communicating. So what is, how do you effectively communicate?
- [09:54]
A
That's a great question. So here's my disclaimer up front. Dan is I'm not a communication expert. I think other people can get paid for that. But I have lived in the trenches like you and I've looked at the consequences of a failure communication and poor communication. And a large part of my career has been based upon my capacity and ability to communicate effectively. Not just communicate. That's what my wife says. I do a lot of times just say a lot of things. But effective is, is does it actually have the outcome that's been intended? Right. And so here's a couple of things that I do when I'm working with my clientele. The very first is, is I really focus on what their concern is, what their pain point is. You know, when you, when you're talking to an individual about almost anything, what you want to do, and I learned this a long time ago practicing law, is you want to get yourself to their side of the table. Because then what you've got is you've got a common combination of effort and, and energy and mental and I'm going to say stability, approaching the problem from the same direction. Which means you're going to use a shared language, you're going to use a shared mindset instead of Things being contradictory or accusatory, they're going to be complimentary, and they're going to be encouraging. So, for instance, where it really hit me was many years ago, I was sitting in a federal mediation, and the federal magistrate walked in, and I was sitting there with my client. The other lawyer was sitting with their client. And the federal magistrate says, our goal today is that everybody walks out of here equally unhappy. I thought, oh, my God, I'm gonna have to explain that to my client. So, sure enough, after a few minutes, she walks out, and they go into their conference room and so forth, and I'm sitting there with my clients, and, hey, hang on a second. He goes, yeah, what's up with it? I came here to be unhappy. What she means is she's talking about positional bargaining, right? Which is most of what happens from a negotiation standpoint. You take a little step, I take a little step, and eventually we find here, which means you're going to be equally unhappy and I'm going to be equally unhappy. That space that you gave up. So I was talking to another litigator a couple of days after that, a fantastic lawyer and so forth, and I said, how do you. How do you approach that concept of positional bargaining so that you're communicating the positive outcome for your client in a way that they can say, I get that. That's. That's the place I want to be. Okay, so this is what I always try to do, is I try to get us all on the same side of the table, which is a weird thing to say, especially for a litigator, because it's adversarial. What does it mean to be on the same side of the table? This is what it means. What's the real problem? What's the real problem? And identify the real problem. And then let's both try and solve for the problem. So if it's a car accident, somebody's been injured, what's the real problem? Their injury. It's their bill. Well, let's both work towards that. Yeah, what's the resolution to that? And we could talk about who's at fault. And sure, that has a place and so forth, but let's try and solve the problem. It's transactional. If it's contractual, what's the real problem? I want to get this done. You want to get that done. Right. How can we both get those things done together? So it's not confrontational, it's not adversarial, it's actually complimentary, it's encouraging communication is the Same thing when I talk with clients. What is. Let's talk about what really keeps you up at 2A. What does that look like? And they're going to talk about ceilings, they're going to talk about margin compression, they're going to talk about customer base issues, they're going to talk about workforce issues, they're now going to talk about AI, they're going to talk about disruptive innovation, they're going to talk about regulatory pressures, they're going to talk about exams if you're in financial industry, that type of thing. They're going to talk about those specific nuances with their industry. And then what I'm going to say is, okay, so what I hear you saying is that where you're currently situated exposes you to something that you're afraid of, that you're worried about. You're worried about the fact that customers aren't going to show up anymore. You're afraid of the fact that AI is going to displace something. You're worried or afraid of the fact that a competitor in your same market segment is going to come up with the next disruptive, innovative thing that's going to leave you in the dust. You're worried about the fact that your board is looking at lagging metrics and they're not assisting you in looking at what the next three to five years look like. They just want to see what's the P ratio for today, what's the stock price for today. That's what you're worried about. Then let's talk about how to solve for that. So now, typically, the solve is going to be operational. Well, you got ceilings, you got margin compression, you got a drop P E ratio, you got workforce concerns, let's bring in HR people, let's pump up the stock price by doing this. You know, let's look at where your margins are too tight and then let's look for efficiencies in those processes or systems that are creating them. We could do that. And in fact, my guess is you already do that. The problem is you can't see how that actually gets you to good for the long term. You just solve for 8 o' clock the next morning and that's it. And then you're recycling the same thing. What if we actually take a look at your model? What if we take a look at your mindset? Let's put something in the sleeve right now that might be experimental, that might be provocative. Let's resource it properly and let's a B test it. Let's actually Reward that risk that's controlled and intentional with your team instead of rewarding stewardship of legacy, process and system. Let's take a look at that modeling. Does that blow things up? So, for instance, I'm going to use you, Dan, for a second, even though you and I haven't talked about it. But, you know, one of your concerns might be, well, I need to squeeze in some extra interviews. We're only hitting so many a week. How can I come up with those two or three more? I get what you're saying. That keeps you up at night. You want the quality, you want the guests and so forth to be great, but you also want to add in extra, right? You want to add in more than you're currently doing. So what kind of model are you using in order to acquire those interviews? This is the model I'm using. Okay, well, the model you're using is the one that brought you to a place where you actually needed more. So let's take a hard look at the model. Let's try something different. For instance, you know, deconstruct your calendar on Thursdays and Fridays entirely, completely. And let's do something a little bit different. Let's do what they're called passing conversations. What's the passing conversation? I don't know. I'm making it up on the fly. But you grab your phone or whatever else you've got as a recording device, and we're going to put you inside of a metro area on a sidewalk, and we're going to put you with a small team of two other people, and they're going to span out from you, and they're going to identify potential people based upon their profile, how they look, where they're going, the. I don't know the place that you're in in that particular city, if you're in that business district and so forth, and you're going to have two or three pocket questions, and you're going to walk up to them and you're going to start a conversation. What do you have in your hand? New podcast, a new interview? It's exciting, it's off the cuff, it's in real time. It's got drama behind it. You can make it long, you can make it short, and if it doesn't work, you can throw it in the trash. Let's test that out for the next three weeks, and let's see if we can actually add to what you're currently shooting, what you're currently producing, and what that actually looks like. I'm completely making things Up, So don't blame me for it. No implied warrant here.
- [16:46]
B
And what I'm recommending, I appreciate that. And I liked the art of negotiation before the art of, of excellent communication. You said sometimes two people are communicating like their needs are opposite. And I imagine when we think about a company structure, C suite down to the employees, there might be like their wants and desires also could be opposite. And I think we've seen many companies as they've failed because the CEO has a total, they're not rowing the same place the CEO is, is very opposite from everyone else. When you go into a company, how do you, how do you enable them or what do they do to enable where everyone really is rowing the right direction or together?
- [17:33]
A
That's a great question. So. So what you can find is we've got a whole bunch of different wants and desires all over the map. And you're right, that's very typical. You look at the different layers, hierarchical within an organization, you're going to find that the frontline employees, they really are only concerned about just today and just the next paycheck. And that doesn't mean that's not demeaning or anything else. That's the space that they're in. And that's understandable. And I've been there. You might look at mid level management, management's looking out a little bit further. Yes, they're concerned about current paycheck and current numbers, but you know, they're challenged for next quarter or the two quarters out or something. You move a little bit further up the pyramid, it pushes out a little bit further. So you've got challenges based upon just time, based upon output, based upon activity, those kinds of things. One of the things that we do fundamentally to help align all of that, we talk a lot about alignment, are operational decision making metrics. And so these are the things that you share from a decision making standpoint, which you're not really focused on necessarily. What's, what's the outcome of that, of that particular decision. You're actually sharing how you make the decision. And if you share how you make a decision, then it naturally aligns the outcome, even when there's still some disparity. So a basic example is any one of us, we might be married, we might have our partner, we might have a roommate, we've got shared financial obligations. And even when you have shared financial obligations, many times your wants and desires and your goals are different. Sometimes you got big macro ones that are the same. My wife and I both want to go on a vacation but even having said that, she might want to go to the Caribbean and I want to go to the mountains or something like that. So. So okay, well, I got two different sets of desires and wants. Even if we share some kind of outcome, overall outcome, or it could be a lot more drastic. It could be that I love to get on Amazon and shop all the time and see boxes show up at the door and she likes to put money in our savings account. We got two different goals altogether. So how do you reconcile those things? Well, the traditional way is to say, well, let's both get on the same page with our goal. And that's. There's something to that, right. When we talk about what are the strategic outcomes, what are we really looking at, what's the picture in the future we're looking at. But fundamentally, how does that translate to an everyday operational activity? It's through your decision making. So when you look at your operational decision making, you say, how are we all making decisions? A basic metric for decision making might be conservation of resources. So if every single layer of an organization is oriented towards making any decision based upon a conservation of resources, ultimately the outcome is going to align. So if you've got a frontline employee and they say, I've got so many staples and I've got so many paperclips and I've got maybe I got so much time on the calendar for a particular call with inbound call from a customer or client, you know, I've got these resources at my disposal, but the way I make decision about those resources, how many paper clips I use, how many staples I use, how much time I spend on the phone is from a conservation standpoint, I recognize that these are finite resources. So I'm going to conserve, I'm still going to utilize them the right way, I'm going to allocate them the right way, but I'm a conserve. And then you go all the way up the food chain to somebody who's got P and L responsibility for an area of operation that involves $50 million in assets or $500 million in assets, how are they going to make decisions? Conservation of resources. When you have the entire organization at every single level conserving the resources that they have under their governance, then all of those decisions are going to begin to align. Now what are you capable of doing? And we look at institutional capabilities and developing those capabilities. So alignment of incentives. The same way if your decision making process and your experimentation process within an organization has your incentives aligned to reward that experimentation, then people, regardless of the level are going to be bold enough and courageous enough to raise their hand and say, I've got an idea. And here's the metrics that are going to show us if it's working, here's our evaluation points, here's expected case, here's downside, and here's upside. And we're going to begin to align a reward system with that type of experimentation that's intentional, that mitigates and manages the risks in it, and that actually adds to the learning and knowledge base of our organization. That alignment of incentives at every single layer then rewards everyone. But it also guides all of that decision making, where ultimately what you have is alignment. So. So if you can imagine you and I, and we're standing out some, I don't know, football field or some massive park, and we're like hundreds of yards away from each other. And what you and I do is we say, well, you want to get, I don't know, a hundred yards further, and I want to get a hundred yards further, we could end up in vastly different places. But if what we said is a decision for every time we took a footstep is, I'm going to walk toward the sun. I've just got this loose direction. I'm not going to actually reach the sun. I'm just going to walk towards where the sun is. And so you're way far away from it, but you orient yourself towards the direction that you see the sun. And I'm way far away from you, and I orient myself towards the direction I see the sun. And every step we take is a decision. And that decision is, well, am I taking a step toward the sun? And you do, eventually. That alignment and decision making helps us to arrive at the same place. There'll still be some nuance to it. Maybe you'll take quick steps, maybe I'll take slow steps. Maybe your, you know, sense of the sun is a little bit off and askew for mine and so forth. But that is going to bring us a lot closer together to resolve whatever that outcome or that problem might be.
- [23:04]
B
I can really appreciate alignment. I remember corporate, every corporate job I ever had when I was a manager. And as I continued to go up the ladder, I realized how bad many companies do at aligning people's strengths and aligning people, like, what their goals are in their life, their vision for themselves to the job that they're in. Which is why I think so many people get fired because they're not. So I was always a big proponent of, like, let's move them to some, instead of just firing someone on a performance improvement plan, like, let's take a look at where they should be in the organization and where they can add more value. Because right now somebody put them in the wrong position. I know you have, so I appreciate everything you said today. You have a book, you have a book that just came out, Strategic Mindset. I know you have some things coming up. Can you share, I think you have the book with you right there. Can you share about the book quickly and then what you have coming up?
- [24:04]
A
Yeah. Thank you so much. Before I do that, I just want to compliment you. You hit another nail on the head. That's exactly. That's another thing that we do is we look at resources from a capability and capacity standpoint, and that includes human assets, human resources, looking at an individual saying, what are their capacities, what are their capabilities and how do we optimize that? Are they in the right place? Have we positioned them to be radically successful? If not, where is that reposition or where's the graceful offering? Performance improvement plans in my estimation, even as corporate counsel over the years have been they ought to be used few and far between. They're really intended to improve something that can be improved, not to correct something. And I know I'll get a bunch of HR people mad at me for saying that, but kudos to you, Dan. That's actually one of the things that we take a hard look at with our clientele is that concept of capacity and capability and institutional capability at a macro level. Having said that, thank you. Introduction. Got it right here in my hand. I don't know how readable that is, but that's the strategic mindset. It came out published this past week. It's available on all the platforms you might imagine, like Amazon paperback, hardcover, as well as ebook, and we're even working on an audiobook at this time. My production team is so super excited about it. What I kept having was clients coming up to me and saying, can you put this all in a workbook? And I thought, I don't know how to put it in a workbook. I'll work on that. And a little toward the end of last year, I thought, well, how about just a book and try and get it in there. So it's an actual book where we walk through the 11 core elements to adjust a C suite officer or a director on a board, that higher level management toward a strategic mindset, what we call strategic intelligence. And so it's going to move them from that great or from that good to great or that great to excellent as a strategic asset for their organization and why that needs to happen. But it also embedded throughout the book are a bunch of practical examples. So you can get to the end of a chapter or section you say here's reflection questions. Here's a practical tool I can put into place in real time in my own space, in my own corporate environment, in my own industry. It's industry agnostic so it's not oriented towards a particular industry. It's applicable across all industries. Really exciting. I'm proud of the team that helped put this together. I thank them for the time that they gave me in order to write it. It's been, it's been a rodeo as I have often said about other things, but it's been a great rodeo. So we've got that, that just came out. Another exciting offering that we've got that's, that's brand new in the pipeline. March 24th, we're launching a new course. This again is for C suite officers and directors on boards that the apex predator within a corporation. And this is strategic intelligence. This is an executive program for profitability and market dominance. And it's a six week high impact virtual course that a senior level executive can take. They're going to walk away with real deliverables. It maps out the elements that we address in the strategic mindset. But they're going to apply that in real time. I work with them individually. We've got two master classes a week and an optional class on Fridays where they bring their own actual challenges and problems in real time in a cohort style fashion. And we start solving for those. They exit the course with a board ready playbook as well as a number of deliverables that actually add to their, to their quiver on an everyday operational basis. So really excited about those two, the book as well as the course coming up. The course will be cyclical. We'll, we'll jump off for the next cohort in June and so on. Super excited about that. So some great things happening. We're really excited.
- [27:39]
B
A lot happening. Stephen. I learned today, I learned a lot today and I appreciate that. I mean I'm going to go right now and I'm going to wipe my entire calendar clean and I'm going to see, I, I can, I really like to do different things and unique things and it's hard sometimes not to fall into the trap of doing the things from a hundred years ago that don't even apply anymore. But I, I, I'm going to try it. I'm going to try it. I need the strategic IQ mind. I need, I need the strategic intelligence mindset. So I'm going to get the book and then I'm going to take the course and I'm going to wipe out my calendar and then I'm going to see, I'm going to let you know what happens. I feel like if I do it first, then they might do it, too. But, Stephen, this has been great. Thanks for joining us today on Founder Story.
- [28:25]
A
Thank you so much, Dan. I appreciate your time and your interest in investment. I really do. Thank you.