Transcript

Jeff McKay: Hi, it’s Jeff, the Pedal part of Rattle and Pedal. Jason Mlicki is not with us today. He is still recovering from his successful profiting from thought leadership conference that he does with Bob Buday at Bloom Group. Today we’re going to mix things up. I have invited a very good friend of mine, former Anderson colleague and wicked smart marketer, Andy Bosman, to talk about one of my favorite topics, and that is the intersection of strategy, leadership and culture and how when an organization gets those right, growth is the result. Welcome, Andy.

Andy Bosman: Thanks, Jeff. How are you today?

Jeff McKay: I am doing well. I know you really well from our Anderson days, but there may be people listening that don’t know the famous Andy Bosman. Introduce yourself.

Andy Bosman: Thanks, Jeff. Yeah, so Andy Bosman. I’m currently the chief marketing officer of RSM, professional service junkie. I had the privilege of working with Jeff at Anderson for many years, went from there to another professional service organization for 11 years where I was chief marketing officer as well as chief administrative officer, and have had the distinct pleasure over the last nearly five years now of working with RSM.

Jeff McKay: You’re a professional services junkie, but this is your default career choice, I’m pretty sure, because you really wanted to be a professional golfer.

Andy Bosman: No, I did, and it didn’t work, it didn’t work. I’ve learned recently Jeff I’m better on the other side of the bag when I’m caddying than when I’m actually swinging the golf clubs. That may be my next career move here.

Jeff McKay: I saw that. Tell me and the listeners a little bit about that. That was really fun to see.

Andy Bosman: Oh, it’s one of the great parts about what we do here at RSM is we’re involved with RSM Classic, which is a PGA tour event the week before Thanksgiving at Sea Island, Georgia. We did that in coordination with the Davis Love Foundation and have an opportunity every year to be associated with Davis Love, Zach Johnson, Chris Marco, Chris Kirk, and Drew Love, Davis’ son. It was great. We were down at Sea Island a couple weeks ago to announce a new charity program tied to the tournament. Part of that did a little Facebook Live event with the PGA tour where we were featuring Davis talking about one of the holes on the seaside. I laughed with him. I said, “Hey, we always talk about the caddy player relationship. I’ve got you covered.” I put on my caddy bib and picked up that incredibly heavy bag and did a little caddying for Davis, which is a lot of fun.

Jeff McKay: I hope you gave him good counsel.

Andy Bosman: I stayed very quiet.

Jeff McKay: Well, I hope maybe he gave you a couple of pointers to take a few strokes off your game.

Andy Bosman: He’s trying. He’s trying.

Jeff McKay: All right, so people may not know who RSM is. Why don’t you give us a quick synopsis of RSM?

Andy Bosman: All right, Jeff. When I think about RSM, from a technical standpoint we’re a global, audit, tax, and consulting firm. Globally we’re in 120 countries, a little over 30,000 employees, a little over $4.5 billion dollars in revenue, but what’s more important when we talk about RSM is we are the first choice advisor to middle market leaders globally. When we think about our organization, it’s less about the technical aspects of what we do and it’s really more about our commitment to the middle market, and being involved with middle market organizations both within countries where we have offices as well as multi-national organizations, and to really help them think about the topics and the issues, whether it’s market, whether it’s industry, whether it’s economic. How is it impacting middle market organizations and how can they be both responding to them as well as proactively looking forward to things like artificial intelligence and machine learning and thinking about how to continue to grow their business, how to continue to move it forward in a way that’s really true to their culture, to their strategy, and to their long-term objective. That’s a little bit about who we are.

Jeff McKay: Excellent. And I want to come back to your focus on the middle market a little bit later, because you know that’s a topic that’s near and dear to my heart. When we met at Anderson, I was the head of their middle market practice and came out of a family business that was middle market as well. It’s near and dear to me and I think a lot of firms have focused on that middle market, don’t get it right. I want to talk about that more in depth, but first I want to get to the higher level topic that we’re talking today and that’s getting the strategy in leadership and culture align in order to produce growth. I’ve written, I guess I should say, multiple white papers on this topic, but most recent one was called the B.S. of P.S., Overcoming Dysfunctional Road Blocks To Growth and Building a Legacy in Professional Services Firms. You’ve worked with some impeccable firms. You’ve seen very different cultures and strategies and approaches, and given their matrix structures, their incentives, partnerships, professional services are really, really hard to align internally and to get an organization pointing in the right direction. I talk quite a bit about that in the B.S. of P.S. and the 20 biggest mistakes that professional services firms make around brand.

I want to get your thoughts on that. You’ve been with Anderson, you’ve been with a couple of other firms. How has that brought you to where you are and where RSM is aligning their strategy, leadership, and culture?

Andy Bosman: I think as you know, Jeff, matrix organizations are incredibly complex and when you add in there that we’re a partnership from an RSM standpoint here in the U.S. we have over 850 owners and when you think about owners and their innovative spirit and their entrepreneurialism and how they focus, you get a lot of chiefs. You get a lot of folks that want to go a lot of different directions all committed to the same end game, hopefully, but you’re pulled in a lot of different directions. I say hopefully, because that really is the credible piece, so I think what is making RSM so successful right now is everything has to start with what you referred to earlier. It’s got to start with a crystal clear strategy, with a strong leadership passion and commitment to that strategy that permeates the firm and then a culture that drives that entrepreneurialism, that supports that innovation, but also has the right level of accountability, so then everyone is driving towards that common vision, because when we’re all making decisions and we’re all doing things that support a common strategy, you move forward with tremendous force.

When you spread that out broadly, you can end up going a lot of different directions and by the end of the year you find out you actually didn’t go forward, you went white. That’s not going to drive success for the long term. Again, particularly in professional service firms, that ability to drive through strategy, leadership, and culture, it’s absolutely vital.

Jeff McKay: It is. I’m amazed that more firms don’t see it. Maybe they do see it, they just don’t know how to execute against it and I think that’s why there’s so often an emphasis on brand and particularly an umbrella brand that appeases all of those chiefs, as you’ve mentioned and gives them air cover to go do whatever it is they want to do. That is not an effective way to align culture and strategy and growth.

Andy Bosman: I think they understand what they need to do, but guys, whether you’re in a public environment where a lot of your decisions are being driven by quarterly earnings and expectations of analysis who are looking at you and three month snapshots, whether it’s your partnerships where … What is your focus? Are you building a legacy? Are you building an organization that is going to be successful 15 to 20 plus years from now and you recognize highs and lows and you’re committed to supporting those, or is it a partnership where your partners are looking out year to year and what is partner income? How is that growing? That’s your ultimate measure of success. When financial metrics are the number one, two, and three drivers, it makes performance and culture around some of these other things a lot more difficult.

Jeff McKay: Talk to me a little bit about how RSM defines those terms: Strategy, leadership, and culture.

Andy Bosman: For us, when we talk about our strategy, we have a very clearly articulated vision, which is to be the first choice advisor of a middle market leaders globally and to demonstrate that through the power being understood and everything we do with our clients, with our colleagues, and in our communities. Our strategy around that has been clearly articulated for almost ten years now with no wavering, and that is really four areas that we have to focus on year over year. One is to make sure that we are delivering on the RSM client experience, which is our brand promise and the power of being understood. Two is that we maintain a strong and passionate commitment to the middle market. In many ways that is a barometer for what we do and what we don’t do. It’s easy not to do the bad ideas, but it’s really hard not to do good ideas, but staying committed to the middle market and what that means to our clients in our organization, it’s about empowering passionate and innovative teams, and how do we do that in a way that ties to points one and two, which is the middle market and delivering on the client experience.

Then, four is making sure that we cultivate RSM promoters, whether they’re our clients, whether they’re our current colleagues, former colleagues, the centers of influence. That we have folks that are promoting us, because of three things that we were noted above: Our client experience, our passionate teams, and our commitment to the middle market. For us, when we talk about strategy, that’s our strategy. What we don’t talk about is our strategy is to achieve X, Y, Z. We talk about our strategy and delivering on those areas. To us, leadership, leadership is … We’ve got a partner in Dallas, actually, who says, “Lead where you are.” Every single employee in our firm is a leader, but you have to lead where you are, whether you’re a new associate, whether you’re a seven to ten year experienced professional, whether you’re a partner in the firm, or a member of our leadership team. Lead where you are. To us, leadership is passionately demonstrating our commitment to those four areas of strategic focus, delivering on our values every day. It’s thinking about the power of being understood. It’s holding ourselves accountable to the right behaviors that drive those strategies, and frankly it’s creating the pathway for all of our employees to move forward with momentum to help meet the goals of our clients as well as our personal goals.

In the culture is … It’s a culture of accountability. How do we work? How do we work together? How do we collaborate? How do we treat our clients? How do we treat each other? How do we hold ourselves accountable to that? And how do we ensure that that culture creates the right environment for our clients as well as for our employees? By doing all of that, I’m not going to say we don’t have forecasts, we don’t have annual goals, we don’t have aspirations for where we’d like to see the firm grow from a revenue and a profitability standpoint, but that is an outcome of doing those other three things right. Our organization over the last eight years has really been focused on that and I think we’ve seen tremendous results through that whether it was through some of the tougher economic times in 2008, 2009, or whether it’s in the current high growth environment.

Jeff McKay: That is incredibly unique. I think it bears repeating. You have no annual numbers that your practices are tasked with hitting. Their focus is on performance measures associated with the other attributes and your expectation is growth will come, and a healthy amount of growth will come as a result.

Andy Bosman: It is. The way we look at it, Jeff, I don’t want to sound like we’re loosey goosey here. Certainly each of our practices, whether it’s our line of business or our regions, we have forecasts. In my world, in the IMC world I have forecasts, and we have financial calls at leadership team level and we look at how we’re doing relative to forecast, but the two numbers that are really what we focus on is: How are we doing as a firm, one firm on our growth, and how are we doing as one firm on the growth for our profitability? We don’t look at it in admonished regions or line of businesses or industries based on their individual. It’s based on overall firm performance and we invest in some areas and we have other areas that are growing full speed and we continue to leverage that. It’s the right mix and it’s that culture of, “We all grow as the firm grows.” If we stay focused on our strategy, if we make the right investments, if we’re committed as a partnership, when the water rises all boats float, and that’s what we focus on. We’ll go together.

We really don’t. We have all partner calls, we spend very limited time talking about financial results, and it’s usually not, “You didn’t do this, so here’s your punishment.” It’s, “Hey, guys. We’re seeing things a little different from your forecast. What’s going on with the business and how can we help?” It drives a lot of collaboration and support because of that.

Jeff McKay: That’s refreshing. That is really refreshing. As you’re looking at these non-financial dimensions missed with financial, I get that, how do you identify misalignments that may exist where you’re falling short of who you want to be as a legacy firm, and then how do you go about trimming the sales and getting it back on to course?

Andy Bosman: We look at a lot of different things. We look at some things that may be considered more traditional when we do voice of client surveys where we got out and speak to our clients on a regular basis, we do post engagement surveys where we’re consistently evaluating, “How are we delivering on our brand promise? How are we meeting expectations of our clients? Are we spending time with them? Are we helping them think and answering their questions?” For our partners we have a culture dashboard, and that culture dashboard has a series of metrics we look at that, yes, we have pipeline on there. The interesting thing is it’s pipeline. It’s not rear view mirror financial growths. “What does your pipeline look? How was it trending? What is your talent engagement scores? What are you hearing from your employees about their satisfaction? How much are you participating in voice of client surveys?” It’s interesting. We don’t necessarily, we do feed back the results into partner performance, but the dashboard the OMP’s look at, it’s not, “How did you do?” It’s, “Are you doing it? Are you engaging? Are we going out and speaking to our clients and getting that feedback?”

We look at a lot of those metrics and then we begin to stand back and look and see how we’re evolving in each of those. Now, certainly when we get to a point where we look and see that maybe the financial growth isn’t where we want it, or maybe profitability is getting stressed a little bit, because of some additional investments we’re making, frankly gets elevated to leadership. That’s where our leadership team will come together and really talk about, “Okay, here’s where we are. What’s the right balance of offense and defense? What do we need to be doing to focus on it? Oh, by the way, is this okay? Maybe it is a little bit under our expectations, but you know, we’re investing in these three areas that are opportunities that came forward. We’re okay and we’re okay as a firm if we’re a little lighter on profitability this year, because we formally believe those are the right things to drive the growth for the following years, whether it’s technology investment, whether it’s brand investment, whether it’s new performance management or learning a development programs.”

We’re constantly looking at that, but again, I’ll come back to if a practice is having trouble and they’re struggling, either because the market has changed or maybe we haven’t quite hit it in the right way, the first question is, “How can we help? What’s some of the underlying drivers of that? Could we be learning from other groups that have approached similar challenges and how they’ve addressed it? Do we need to get some resources over to you? Or if your market is softened, do we take some of your existing resources and allocate them to other practices for a little while where we have needs, and as your practice comes back up we’ll shift those resources around.” It’s not the instinctual behavior I’ve seen in a lot of firms, which is, “Oh, gosh, our practice, our market has slowed down. We’ve got to cut people fast to maintain margin.” That is not where our head goes first.

Jeff McKay: That is unique in my experience.

Jeff McKay: I want to take a step back and I want to ask you about the positioning of the firm and the strategy that you’ve chosen. The first one is the focus on the middle … Well, I think these two are linked very closely. The first one is the focus on the middle market. I don’t know how many times I’ve seen strategy reports come out from firms that do nothing but strategy and we know those names. The strategies are always, “Sell more of what you have to the existing client and then move into the untapped, middle market.” The middle market is this nebulous panacea, I think often times to firms that, “Oh, it’s underserved because they don’t buy as much, but we need to go after it, because there’s a growth opportunity there.” Tell me a little bit about how RSM defines the middle market and what that means.

Andy Bosman: Yeah, happy to, Jeff. That, I love that conversation, because someone will immediately go, “So what revenue is our middle market firm?” I go, “Well, gosh, I really don’t care?” Why? If you go back and look at different research and different organizations you typically see the middle market referred to as $50 million to a billion, but the reality is if you go to China what is more that middle market, it’s a very different revenue band, it’s very different in Germany. What we try to do is not necessarily refer to, “Well, organizations that drive this amount of revenue are middle market.” It really has more to do with some core attributes. When we look at what we refer to as middle market firms, they’re typically private, although not always. There are a lot of public, middle market firms, but in many cases they have grown more through the private model. They’re high growth, they’re innovative, they’re extremely entrepreneurial. They’re on the cutting edge of a lot of things that are going on in their business, and the key thing about them, though, is their growth is accelerating faster then their organization is maybe built to manage.

They’re looking for someone to really be an advisor to work with them, to think about the long term elements of their business. Short term, maybe it is IT systems and other infrastructure they need. The longer term, it’s: How do they continue to differentiate? How do they continue to position themselves and the marketplace, so that they can meet their long term objectives and grow? But they need someone to really partner up with to help them do it. They’re not in a position where they’re going to go hire and build the infrastructure internally to do a lot of these things. That is a very consistent definition no matter where in the world we look. It’s interesting, because yes you’ll read a lot that says, “Well, that’s an un-mined area.” It’s not an un-mined area. It’s an underserved area. The biggest thing we see as a an organization … It was interesting, to date … Well, let me talk current, actually. I was going to talk about Affordable Care Act, but let’s talk about unemployment and where we sit with the unemployment rates right now.

Basically, in the U.S., we’re at zero. The number’s fluctuating 1.9, 2.2, in that area, but the reality is you’ve got around 2% of the American public that’s not going to work. They’re either not in the position to work, they don’t want to work, whatever it may be. For all intensive purposes we’re at close to, if not zero percent unemployment. We all see that. The competition for talent is fierce, as that competition for talent increases, as we all know, the cost for that talent also increases. You see a lot of organizations talking about that. “How do you compete for talent? How do you get the right talent in your door? How do you make sure you got the right economic incentive packages in place?” All extremely important. If you’re a Fortune 500, you can react and address a lot of those things from a financial standpoint. Here’s a problem for the middle market. They run tight. They run on tighter margins. They aren’t necessarily sitting on a cash trove, because they’ve been investing in their business. That’s much more of a stressful situation for them. How are they going to deal with that? How are they going to approach it?

By the way, the help they need is very different, but very few, if any, organizations outside of ours talk to the middle market about what these issues mean. “How is it impacting their business? How is it different? How can we help you address it in a way that’s relevant to what you’re trying to do, versus just say, ‘Hey, you’re going to have to go spend more. You’re going to have to put some new talent management systems in place. You’re going to need some new incentive packages. And oh gosh, I’m sorry, that’s going to create 5% additional margin pressure on it. If you don’t do this you’re not going to win.'” Well, no. “How do we help you free up that cash to maintain your profitability and drive it out at the same time?”

Jeff McKay: That is a phenomenal explanation in my years of understanding the middle market. I feel like you’ve nailed it. Most firms look at the middle market as mini-me, Fortune 500 companies and they just aren’t. Firms want to bring in skinny down solutions and plug and play and go. The way you described that really illustrates the second attribute that RSM is positioning around and this power of being understood. Almost every brand study I’ve ever done over my career, clients and prospects always say, “I want my partner, my trusted advisor, my vendors to understand our business, our industry, my role, me, as a person.” You could throw that out as a platitude or a tag line very easily, draw it out of some market research and say, “Oh yeah, we do that.” Your description right there really brings us full circle about how you align strategy and leadership in culture to go after that market. I thought you did a phenomenal job there, Andy. If I asked anybody else at RSM, would I get a very similar answer?

Andy Bosman: Yes. That, I’ll tell you, my great story, Jeff, was when I was interviewing with RSM it was a great process and actually several sessions where I went through group interviews with a number of partners interviewing me, and literally after I walked out of the second one I went, “My god, is this place for real? Is the strategy really this consistently ingrained across the partners, or are they all brainwashed? And they’re reading off a play script and when I get in here I’m going to find out that’s not the case?” I’ve got to tell you, it’s even more the case than I ever expected. Our partners get it. Yes, we, like any organization you’re constantly evolving, you’re constantly educating. As you grow you’re bringing others into your culture and how that works. That commitment to the middle market is not only understood, it’s understood what it means. If you’re going to deliver on that commitment to the middle market, that means you’re going to spend a lot of time with your client. It means you’re going to take a little bit of extra time to understand and to dig deep. That also means you’re also not charging them every single minute you’re having a phone conversation with them.

When you look at it, it puts pressure on your metrics. When you’ve got a culture and a leadership that understands that and when builds performance measurement and metrics and other things in place that allow for that and don’t create this pressure of, “Oh my gosh, I can’t go have lunch and spend time with that client, because I’ve got to make sure we’ve got these billable hours in there or that we’re hitting certain utilization rates.” That’s where that stress and tension comes in. What’s great to me is I wish I could say I was a genius behind the power of being understood. I was not. I inherited it when I came in, but that started with the evolution of our organization when in 2010 our audit, tax, and consulting practices came back together after a few years apart, through some different business strategies, with a strong commitment to the middle market and to working with our clients and to being understood with our employees.

It really drove the strategy of the firm and the leadership’s passion. All we do every day is shine a flashlight on it. I love doing it, because my brand is so true. It’s not something I have to go out there and try to convince anyone as to who we are. We say in client’s bill, “Oh, you’re darn right. And let me give you an example of that. That’s fantastic.” It really does permeate the culture and it permeates really our commitment to everything we do.

Jeff McKay: Yeah. That’s a C change. I think many of the firms that say they serve the middle market do so because it’s a default market position for them, particularly in accounting space. It’s the crumbs of the big four. Firms are willing to serve those clients, but as soon as a Fortune 500 company sends them an RFP, they forget about the middle market and try to go win that bigger account upstream. I think that’s a fatal flaw of those strategies is they don’t stay focused and their clients and prospects can see that. They know that, “Hey, as soon as somebody bigger comes calling, you’re going to forget about me.”

Andy Bosman: I agree. It’s something we’re very focused on, that we have that passion and commitment for our clients and that we deliver all that every day.

Jeff McKay: I can’t think of a better place to stop than right there. Andy, this has been fascinating. All of this hard one knowledge over the year of, at these other firms really is coming to a head here. You say, it’s not just you. This is not a marketing campaign. This is the culture of the firm. It is really, really refreshing to see this. I’m really excited for you and for RSM.

Andy Bosman: No, I appreciate it. You could see why I tell you, “I have fun every day.” I love going to work. I love what we’re focusing on. I love my colleagues. I love the older organizations I’ve worked in as well, but there’s something really special here and I’m honored to have an opportunity to be part of the organization.

Jeff McKay: Plus you get to be a caddy. It’s the best of both worlds.

Andy Bosman: I tell you what, here we go.

Jeff McKay: All right, thanks Andy.

Andy Bosman: All right. Thanks, Jeff. Have a great day.