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

So Steven, I know you've worked across three continents and 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,

what is that one thing I need to do?

All right, that's a great question.

So I'm going to start off just by saying, Dan, that 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 2 a.m. problem, and that's what keeps you up at night.

And then the question, of course, is bagged 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 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 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, what of 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 up 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 individuals like myself.

How do I get that done?

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 is,

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 a 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 guess is you have that down path.

Your production team and yourself,

exactly how to time things out,

exactly lead in time, exit time,

production time, everything else.

You guys have optimized that.

That's practices your phenomenal podcast.

So you guys have got that down patent.

What's the next iteration?

Podcasts once upon a time didn't exist.

All right, what was the precursor to a podcast?

Maybe it was an interview at a TV station or 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 and an executive team is,

let's look at one of those basic tools

that constructs your current business model

and rip it right up.

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 think he just,

he was cut up at 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 one day he came in and a paraphrase, so to speak,

sat with a few of us, see suite officers

and looked at all of us and he said, no more meetings.

That's it, no more meetings.

It's all gonna be drive by.

Yeah, you're gonna see each other in the hallway

and that's how you're gonna get things accomplished.

Zero, I don't wanna 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&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

and you're like, we gotta get this done.

And they asked 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 a blank sheet, right?

And we start to see this actually

in the consulting industry and the reconstruction industry

of how you take a company from good to greater, great to excellent.

They say, let's clean-sheet the organization.

Let's rip it back down to the studs.

Do you actually need a hierarchy that you've got?

You need the layers that you have.

You need the processes that you have.

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 for.

So Steven, when you went from corporate to founder,

did you find that you were falling into a certain trap

that you then knew, okay, this personally,

I went through this.

So now I'm to make sure other people don't.

Oh, completely, Mayacolpa.

So I've done the same thing,

and I largely come from corporate.

The advisory work that I do, the consulting work

that I do right now is fairly new to me,

except that a good colleague of mine,

a little bit over here ago said,

well, you've been doing it your whole career,

you just didn't know it.

That's a good point.

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 gonna do tomorrow?

Well, we're using trailing indicators.

We're using lagging metrics.

What about tomorrow?

What happens when this changes?

There's somebody walks in the door with a new problem

and say, hey, this reg just changed on us.

A lot of industries did a little bit over a year ago.

When we had a new presidential administration

and there was a whole new set of executive works,

everybody said, well, the landscape just changed.

And now we've got a model built for a particular landscape,

whether it's communications, FCC type of thing,

or if it was on higher education

or if it was in finance or if it was in healthcare,

fintech, pick your industry.

The landscape just changed,

even just workforce stability, right?

So now what do we do?

Because the model's based upon that.

Well, I was one of those individuals,

meaning that 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 at 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 step?

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 what's life gonna look like?

And actually, I guess now,

because the Jetsons are old enough to be now,

when we're living into clouds

and you've got flying cars

and you've got a robot taken care of,

what's our Jetson situation?

So we're still gonna 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.

And finance, it's transaction, 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 has to change 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 rise

instead of the near-term output.

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, 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?

That's a great question.

So here's my disclaimer up front days.

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 of 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 to say a lot of things quick.

Effective 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're talking to an individual

about almost anything, what you want to do,

and I learned this a long time ago, practicing lies,

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 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 lawyers sitting with their client.

And the federal magistrate says,

our goal today is that every walks out of here

equally unhappy.

I thought, oh my God, I'm going to have to explain that

to my client.

So sure enough, after a few minutes and she walks out

and they go into their conference room and so forth

and I'm sitting there with my clients and they'd

hang on a second and go, yeah, what's up with it?

I came here to be unhappy.

What she means is she's talking about positional bargaining,

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.

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 approach that concept,

the 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 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 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?

They're injury, it's their bill.

Well, let's both work towards that.

What's the resolution to that?

I mean, we can talk about who's it fault

and ensure 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.

How can we both get those things done together?

So it's not confrontational, it's not adversarial,

it's actually complimentary, it's encouraged.

Communication is the same thing.

When I talk with clients,

what is, let's talk about what really keeps you up to it.

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 a 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 PEA ratio for today.

What's the stop 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've got ceilings, you've got margin compression,

you've got a drop PE ratio,

you've got workforce concerns.

Let's bring in HR people.

Let's pump up the stop price by doing this.

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.

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 eight o'clock in 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 gonna use you Dan for a second,

even though you and I haven't talked about it,

but 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?

It's sad.

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,

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.

Let's 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 a passing conversation?

I don't know, I'm making it up on the fly.

But you grab your phone or whatever else

that 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,

whether 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 podcasts, 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,

don't blame weren't you or you want to recommend.

I appreciate that, and I liked the art of negotiation

before the art 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,

see sweet 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 failed

because the CEO, they're not rowing the same place.

The CEO is very opposite from everyone else.

When you go into a company,

how do you enable them, or what do they do

to enable where everyone really is

rowing the right direction, or together?

That's a great question,

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 gonna find that.

The frontline employees,

they really are only concerned about just today

and just the next paycheck,

and 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 at a little bit further,

yes, they're concerned about current paycheck

and current numbers, but 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 the outcome 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've 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, 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've 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 the conservation of resources,

ultimately the outcome is going to align.

So if you've got a frontline employee

and they said, I've got so many staples

and I've got so many paper clips

and maybe I've got so much time on the calendar

for a particular call with inbound call

from a customer or client,

and 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

with venom and concern.

And then you go all the way up the food chain

to somebody who's got P&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

in developing those capabilities.

So alignment of incentives the same way.

If your decision making process

and your experimentation process

with an organization has your incentives

aligned to re-award that experimentation,

then people, regardless of the level,

are going to be bold enough and courageous enough

to raise their hands 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 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 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 sense of the sun is a little bit off

and a skew 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.

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?

Yeah, thank you so much.

Before I do that, I just wanna compliment you.

I, 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 had 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 on 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 audio book

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, I was 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 greater, that great to excellent

as a strategic asset for their organization

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 a section

you say, here's reflection questions.

Here's a practical tool I can put into place

in real time in my own space and 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 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 brand new

and 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 quiver

on an everyday operational basis.

So really excited about those to the book

as well as the course coming up.

The course will be cyclical.

We'll jump off of the next cohort in June

and so on. Super excited about that.

So some great things happening.

We're really excited.

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 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 100 years ago

that don't even apply anymore.

But I'm going to try it.

I'm going to try it.

I need the strategic IQ mindset.

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 to Van Fondre story.

Thank you so much, Dan.

I appreciate your time and your interest in investment.

I really do.

Thank you.

Thank you.

Thank you.

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.