What Corporate Insight Strategy does for businesses
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Alese Stroud is an Arkansas woman through and through. She was born in Jonesboro and grew up in Pine Bluff. She graduated from the University of Arkansas with a Bachelor of Arts Degree in Commercial Art. As a young mother and single parent she realized she needed more education and earned a Data Processing Diploma. With this new degree, she landed a job with a little startup company called Systematics. By the time she left, her responsibilities included coding, support and project leadership experience with the Systematics applications.
She opened Stroud Consulting Group where she served as a Senior Systems Consultant and Project Manager converting financial systems, installing upgrades and developing and testing software for Signature Bank, Black Diamond Information Technology, Citizen’s Bank, EGA Records Management, Citibank, American Express and Chase Manhattan Bank.
During the nearly two decades of working in operations, she grew to understand that the non-operational side of business was equally important. Acting on this realization, three years ago she opened Corporate Insight Strategy, a company that evaluates and prepares her client’s businesses for a 10 times growth and/or leadership transitions. She uses a fact based model to access the status of these organizations, their operations and their culture.
She is a frequent speaker at Rotary 99 Club, The Venture Center and Little Rock’s Tech Fest and volunteers her time at Wildwood Park for the Performing Arts, The Centers for Youth and Families and Startup Weekend.
Up In Your Business is a Radio Show by FlagandBanner.com
[0:00:03.2] TB: Welcome to Up in Your Business with Kerry McCoy. Be sure to stay tuned till the end of the show to hear how you can get a copy of this program and other helpful documents.
Now, it's time for Kerry McCoy to get all up in your business.
[INTERVIEW]
[0:00:22.6]KM: That’s right. Thank you, Tim. Like Tim said, I’m Kerry McCoy and it’s time for me to get up in your business. Before we start, I want to introduce you to the people at the table. We have Tim Bowen, our technician who you just heard from. He will taking your calls and pushing the buttons. Say hello, Tim.
[0:00:36.6]TB: Hello, Tim.
[0:00:37.4]KM: Recording our show to make a podcast available next week is our technician, Jessie. Thank you, Jessie.
[0:00:42.7]J: No problem.
[0:00:43.9]KM: This show, Up in Your Business with Kerry McCoy began with entrepreneurs in mind, a platform for me, a small business owner and a guest to pay forward our experiential knowledge in a conversational way. As with all endeavors, it has had some unexpected outcomes. Like the show is not just for entrepreneurs and want to be entrepreneurs, but really for everyone.
We are all inspired by every day people’s stories of how they worked hard, took risks and found their voice. Another is that business is creative more than I ever even really thought. Last behind each of my successful guests, I have found the heart of a teacher.
Today, my guest Miss Alese Stroud checks off all those aforementioned boxes. She is founder and CEO of Corporate Insight Strategy. This may sound like upper management business advice and it is, but it is also going to be a conversation about how employees can mitigate risks over the next five years as the baby boomers, our population’s largest sector begins retiring from leadership position and transfer ownership, or possibly closes their small business. This is going to make a paradigm shift in our country’s economy like never before. Whether you’re a boss and owner, or an employee, you will want to hear what Alese has to say.
If you’re just tuning in for the first time, you may be asking yourself, “What’s this lady’s story and why does she have a radio show?” Well, Tim is here to tell you.
[0:02:21.9]TB: Thank you, Kerry. Over 40 years ago and with only $400 Kerry McCoy founded Arkansas Flag and Banner. During the last four decades, this business has grown and changed dramatically from door-to-door sales to telemarketing to mail order and catalog sales. Now Flag and Banner relies heavily on the internet, including our newest feature, live chatting.
Each decade has required a change in sales strategy and procedures. Her business and leadership knowledge grew with time and experience, as well as the confidence to branch out into multimedia marketing that began with our non-profit dreamland ballroom, as well as our in-house publication Brave Magazine, and now this very radio show that you’re listening to.
Each week on this show, you’ll hear candid conversation between her and our guests about real-world experiences on a variety of businesses and topics that we hope you’ll find interesting. Kerry says that many business rules, such as treat your employees well, know your profit margin, and have a succession plan can be applied across just about any industry.
What I find encouraging is her example that hard work pays off. Did you know that for nine years while starting Flag and Banner, she supplemented her income with many part-time jobs? What that just shows is that persistence, perseverance and patience prevail.
Today, Flag and Banner has 10 departments and I have 25 co-workers. It reminds us all that small businesses are the fuel of our country’s economic engine and that they empower people’s lives. If you would like to ask Kerry questions or share your experience or story, you can send an e-mail to questions@upyourbusiness.org.
[0:04:07.4]KM: Thank you, Tim.
[INTERVIEW]
[0:04:08.4]KM: My guest today is Alese Stroud, Founder and CEO of not one, but two complex business consulting firms. Not long after graduating from college with a BA in Commercial Art, Alese found herself a single mother and came to the realization she needed another more lucrative career.
Back in school and during its early years, she studied data processing and programming. This landed her a job with a newly formed little company called Systematics, that went public in 1990 and eventually sold to another little company called ALLTEL. Today, it is part of Fidelity Investments.
Alese’s career at Systematics soared. By the time she had earned the respect as senior system consultant. Now 40-ish, Alese Stroud decided to embark on a career of entrepreneurship. She opened Stroud Consulting Group, a software and project management company that help financial institutions make the leap from the 19th century way of banking to the 20th century digital business banking world.
Some of the clients she coached developed, installed and tested software and procedures for were Signature Bank, Citizens Bank, Citibank, American Express and yes, Chase Manhattan Bank. For two decades her company successful worked in operations for some of the most prestigious clients in America. During this time, she grew to understand that the non-financial side of the business was just as equally important as the operational side.
Acting on this realization, more recently she opened her second business aptly named Corporate Insight Strategy, a company that evaluates and prepares its clients and their employees for fast growth, company changes and/or leadership and owner transitions.
As with all my guests on UIYB, Up in Your Business, Alese graciously shares her knowledge. I saw and heard you speak at Rotary Club 99 and knew I had to have her on the show. In addition, she volunteers her time at Wildwood Park for the performing arts, the centers for youth and families, the Little Rock Technology Park and Startup Weekend just to name a few.
It is a pleasure to welcome to the table the intelligent, easy to understand and insightful Alese Stroud.
[0:06:37.1]AS: Thank you, Kerry.
[0:06:38.3]KM: You’re welcome. The intro could frighten off an average listener by having them think the show is going to be all about advise for upper management and that is absolutely not true.
[0:06:47.2]AS: Well, hopefully not. We won’t make it boring.
[0:06:49.6]KM: We’re not going to make it boring, because your data is fascinating. I heard you speak at Rotary and was blown away by the topic. I heard a term that I never heard before, which was called the Silver Tsunami. Can you explain to our listeners what that means?
[0:07:03.3]AS: Absolutely. The Silver Tsunami is a term that was coined actually about 10 years ago, when some economists recognized that we were about to go massive change in wealth and company ownership as all the baby boomers retired. There are like 12.3 million baby boomers who own businesses of various size in the US.
Having all those people retire within a decade of each other has got to have a big impact on the company, or the country rather. That’s what the Silver Tsunami is all about is what are the implications of so many of us baby boomers entering a different life phase at the same time.
[0:07:54.0]KM: We are the biggest population.
[0:07:55.5]AS: We are.
[0:07:56.3]KM: The biggest sector. Let’s back up and let’s learn a little bit about you, so that they’ll all know why you’re here and how you got here. Yet, you got a degree in art, then you got a degree in programming. Then you went to work in programming, but those two getting a degree in art, then getting a degree in programming don’t seem like they come from the same side of the brain. That seems like a right brain, left brain. How did you make that leap? Tell us how that happened.
[0:08:23.7]AS: I don’t know. That just works for me. I guess, I switch back and forth and use both sides of my brain all the time. It seemed a logical connection to me. It’s important when you present data to people on a computer system that it be presented in a way that works for them, that is artistic maybe.
One of the things they teach you in our school is to focus things you want people to see in the image in certain spaces of the image, so that’s where your focus is and that same thing works when you’re designing computer systems. You put the important data in a place of focus and you keep it clean and uncluttered, easy to understand. That worked.
Actually, the connection is so strong that that double degree in art and programming led to a whole industry and people doing game programming, which I missed out on. I wish I caught a sniff of that, because that would’ve been fun. There are lots of people now who do both of those things.
[0:09:39.2]KM: I guess, when you’re designing websites too. You went back to school in the 70s, am I right?
[0:09:48.3]AS: Gosh. Late 70s, early 80s, I forget.
[0:09:51.1]KM: Programming was pretty far out degree.
[0:09:55.6]AS: There weren’t a lot of people doing it then. Certainly not a lot of women.
[0:10:01.4]KM: I’ll bet. When you got out, you got a job at Systematics. Tell us about that.
[0:10:07.2]AS: I joined Systematics when it was still reasonably new. It had I think less than 2,000 employees at the time. It did already finished that early growth phase and was becoming global at that time. It was a fun place to be. You met a lot of really interesting people and got to do very interesting work.
Walter Smiley was one of the best leaders I’ve ever worked with. I’m fond of saying everything good I ever learned about company management I learned from Walter, if not directly, then just by watching how he did things.
[0:10:48.7]KM: A lot of people think that these companies need to be – I read this about Walter that he had a different philosophy from a lot of other people that were starting programming companies and software companies. They were starting these companies with the hopes of selling it. He was starting the company for the long haul, which made him a little bit different.
[0:11:08.1]AS: He was a renegade and I don’t know that he would claim that, but he was. He had a very strong value system about every decision that has to be weighed in terms of being good for the employees, the stakeholders and the customer. If it didn’t do good for all three of those, you didn’t do whatever it was. That was different.
[0:11:32.0]KM: Today, a lot of people feel like their fiduciary responsibility is to the stock holders, more than to the employees, more than to the customer, but put the stockholder first. Walter Hussman was on here a couple weeks ago, and he completely flips that and says the last person you should think about is the stockholders. There is a whole different philosophy in the way people run publicly traded companies today.
[0:11:55.4]AS: Yeah, there is. I think they’ve been forced into that by a lot of very reactionary controlling stakeholders who take them to court and try to control from the cheap seats. It’s hard. I would have to go back to Walter’s possibly though. I really like that balance and I’ve never seen another management philosophy that I thought was better in the long run.
[0:12:23.6]KM: Was there one event that happened? You’re fine. You’re at Systematics, you like it, you got personal growth, you got career growth, but then you decided to go out on your own and start Stroud Consulting Company. Was there some event that happened that made you decide to do that?
[0:12:39.9]AS: Actually there was. I went to a conference where all these bank managers were talking about the high rates they were having to pay consultants. They talked about the work that these people were doing for them, and that was exactly the work I did day in, day out, and they were paying three or four times the hourly rate that I personally was making and so I was going, “Wait. This doesn’t compute. I can go do this.”
I put some figures out to find out if I could in fact find work independently. It turns out that was just a matter of raising your hand and saying I’m available. I incorporated my consulting company and jump ship and went and did that. I really liked the level of control that it gave me. I got to make choices about what clients I work with. I got to make choices about what I learned. I am a learning junky.
One of my satisfactions with being a employee of a big corporation is that somebody else gets to choose your new adventures, your new learnings. They get to choose it, because they’re paying for you and they would be paying for the classes that you take and that shaped a lot, because I frequently didn’t get to go take the classes that I wanted, or do the new projects that I wanted to be a part of. That’s a hazard I think a lot of employers run with people who have a high degree of appetite for learning new things. I was just better off doing my own thing.
[0:14:28.0]KM: Were you in competition with Walter?
[0:14:32.0]AS: Well, Walter was then out of the company. He’d already sold it.
[0:14:35.4]KM: He had already gone public with the company, or to public –
[0:14:37.7]AS: Already public and I think they were all tell by the time I left.
[0:14:40.9]KM: Probably the whole culture of the place had changed.
[0:14:43.8]AS: Totally different.
[0:14:45.6]KM: Yeah. Okay. That didn’t play into your decision? Is it the culture change?
[0:14:49.3]AS: No. That played heavily into my decision. When we worked for Walter, he was very clear that each one of us was important. You felt that and the decision-making from day-to-day. By the time I left, the company was very deep and it was very corporate. All of the employees were pretty clear that they were plug and play parts at that point and that we were easily replaceable. That’s hard on your ego, especially when programmers tend to be pretty egotistical on things.
[0:15:23.3]KM: Really? I didn’t know.
[0:15:25.6]AS: Imagine that.
[0:15:26.6]KM: Right.
[0:15:28.5]AS: You don’t tell them that they’re a plug and play part. I talk about culture a lot when I work with clients now. We actually developed a culture test center and pretty placed with. I frequently talk about the difference between the days that we work with Walter and Systematics and then what the company became as it grew.
Not to single out one company to talk about all companies that go through that kind of massive growth are going to lose that hometown personal feel. The culture is going to change.
[0:16:08.1]KM: Especially when you have a strong leader at the top who started the company. Sometimes it really changes when you go through the second generation, even if it didn’t –
[0:16:16.2]AS: Absolutely.
[0:16:17.9]KM: When we come back, we’re going to really talk a lot about that. You’ve got a lot of experience on that. We’re going to find out about the country’s economic future as the baby boomers begin to retire. We’re going to give business owners and employees and this new CEO’s advice on how to make those transitions easier.
[0:16:38.6]TB: You’re listening to Up in Your Business with Kerry McCoy. If you missed any part of this show, a podcast will be made available next week at flagandbanner.com’s website. If you would prefer to listen on iTunes, YouTube or SoundCloud, you’ll find those links there as well. Lots of listening options. We’ll be right back.
[0:17:26.4]KM: Alese and I are rocking to Bruno Mars right now. You’re listening to Up in Your Business with me, Kerry McCoy. I’m speaking today with Alese Stroud, Founder and CEO of Corporate Insight Strategy; exactly that it’s the corporate insight strategies she’s going to walk us through.
Before we went to break, we talked about how she was a programmer at Systematics then, because the culture changed and because she found an opportunity, she started her own company called Stroud Consulting Group, where she helps banks – well, you tell us what Stroud Consulting Group did.
[0:17:58.2]AS: Stroud Consulting did a lot of software integrations and installations and data conversation for banks around the country. It capitalized on all that experience that we all had from our days at Systematics. Filled a niche for people that needed the services that we could provide that they couldn’t get from the software vendor. That was pretty handy.
[0:18:28.5]KM: Did you get stock in Systematics when it sold all to?
[0:18:32.0]AS: Yes.
[0:18:33.2]KM: Is that the money you – I mean, not the private. Is that how you started out in your business? You had a little estate that you could use to start off?
[0:18:40.5]AS: Amazingly, that company didn’t cost me very much at all to start.
[0:18:45.7]KM: Because there’s no inventory.
[0:18:47.2]AS: No. There was no inventories.
[0:18:48.2]KM: It’s just brain power.
[0:18:49.2]AS: It’s all brain power. We had zero advertising budget, because all I had to do was raise my hand and say I was available and people called, which was pretty sweet.
[0:19:01.9]KM: You’re in very niche market. There weren’t very many people that did what you did and have the experience you had.
[0:19:06.0]AS: That’s right.
[0:19:06.7]KM: Talk about a scary thing to do. Just think about this listeners, she’s going in to banks, she’s installing software, she’s moving these huge banks. I mean, some of your customers were Chase Manhattan. You’re putting in software, you’re changing their procedures, you’re training the CEOs, you’re training top or upper management on 21st century banking, digital banking. The security risks, I can’t even imagine how – I mean, these are banks. This is people’s money. You make one mistake, the liability could be –
[0:19:49.2]AS: Well, it takes a village. Don’t think I was ever the only person involved on one of those projects.
[0:19:57.1]KM: But your name’s on the sun.
[0:19:59.2]AS: Well, yeah.
[0:20:00.4]KM: It is Stroud Consulting Service.
[0:20:02.7]AS: Well, that’s true. But rarely were we the only player in a project. Those are such huge banks and the projects that we worked on may have had 50 to a 100 people working on them all at the same time.
[0:20:17.6]KM: That can almost be a detriment though.
[0:20:20.4]AS: Yeah, because it’s a lot of moving parts to manage. It takes tremendous oversight to be sure that that goes down effectively. I’m not sure I’m going to get these numbers right, but you were talking about the massive risk of error. I remember sitting down and taking a look at the converging that I was doing for I think it was Citibank. Half of a percent error rate was hundreds of thousands of accounts in error. Until we had to get it a 100% right. That was the only thing that was acceptable at all.
[0:21:07.4]KM: Humans don’t do that.
[0:21:10.3]AS: You can with appropriate care. You just spend enough time testing.
[0:21:16.0]KM: How long does it take to implement one complete –
[0:21:19.8]AS: Conversions might take anywhere from six months to a year, just to do one software system.
[0:21:26.8]KM: That seems pretty fast to me.
[0:21:29.0]AS: Well, once you have the process down and it becomes a wash and rinse activity, you can get it done pretty quickly. You know what decisions have to be made. You know how to scrub the data and you know what the program is going to look like.
[0:21:47.0]KM: You wrote the software yourself? The original base software that you used was something that you had written, so you knew it pretty well?
[0:21:57.0]AS: Yes, I knew it really well. I was one of a large group of programmers that worked on that software. We each had pieces of it that written that all worked together in this big whole. Frequently I did write the conversion programs.
[0:22:12.9]KM: Then you would take the same software and modify it for each bank a little bit different, but it was basically the same inner works of how it worked?
[0:22:22.6]AS: Yes. That was Systematics’ business model. They developed software that handled all the basics. Clients would want it customized and you could either do that by writing additional code, or you could change options within the software that allowed it to work in different ways.
[0:22:43.1]KM: What was the biggest hurdle? Then we’ll move on to the next topic. What was the biggest hurdle you had to do in that? Do people still need it? Do banks even need conversion anymore?
[0:22:51.5]AS: Yes. Yes, they still do conversions and they’re getting uglier.
[0:22:56.7]KM: What does that mean?
[0:22:58.7]AS: Well, more accounts, which means longer processing time and more complications. Sometimes the size of the files – I’m going to talk techy at you. The size of the files have exceeded what you can put in one VCM file, which means you have to have multiple big files. Then you don’t know where – which one of these big buckets your account is in. That’s a whole another level of complication.
When I was doing conversions, they were mostly mainframe to mainframe. You were just consolidating two banks. Now we’re seeing people go from mainframe to new architecture technology. It’s not apples and apples. It’s not just an easy move. There is more complications to it, so I’m glad to be out of that business right now.
[0:23:56.8]KM: I was going to ask you, are you out of it completely?
[0:23:58.3]AS: Yeah.
[0:23:58.8]KM: How long have you been out?
[0:24:00.1]AS: For three years.
[0:24:01.5]KM: Was there something that happened that made you decide to get out?
[0:24:05.0]AS: Yes. Because I watched all these conversions go down, I saw the fallout. There is a high degree of failure in acquiring another company. Because the ROI tends to not –
[0:24:21.3]KM: Return On Investment.
[0:24:22.7]AS: I’m sorry. Don’t spell.
[0:24:25.0]KM: Acronyms, acronyms.
[0:24:27.2]AS: The return on investment frequently is not what was expected when people cut the deal. Once people start recognizing that there’s a huge push to let people go, make people work 48-hour days, like that’s humanly possible. There were just a lot of tough decisions that had to be made at the executive level once they see that this acquisition is not going to meet their expectations.
I thought, okay you need to know this earlier when you can plan appropriately for it. You need to fund based on reality and not something you made up. Imagine that. I just got tired of seeing the blood on the floor. We thought we could take the information that we had gained over the years, all of our observations and pair that with some research and develop a way of knowing early what those gotchas were going to be.
My then business partner, Bridget Farris and I huddled up over bears and said, “Let’s go do this thing.” We invested a fair amount of money and time and research in to really quantifying that model and putting it down on paper where we could get it out and test it. We used all of that to develop this huge assessment model that allows to take a look at a deep dive into the operational, non-financial realities of a company.
If you do two companies, you can gap them against each other. I can show you the differences between the two companies and you can then plan your integration effort with some knowledge about what trouble you’re going to run into. You can budget appropriately and schedule appropriately. Then theoretically, you don’t have all the blood on the floor.
[0:26:40.5]KM: Wow. What a concept. Nobody really thinks of it like that. But the culture of the company is important.
[0:26:45.9]AS: Culture is huge.
[0:26:47.3]KM: Culture is huge. A lot bigger than people realize.
[0:26:50.7]AS: There is research that shows that 60% of the companies that fail do so because of cultural issues. That’s especially true when you look at the mergers and acquisition space.
[0:27:05.0]KM: Because when they change over leadership, or ownership, the culture changes. Moral goes every time – the moral goes down. Your company goes in, your new company goes in and doesn’t look at the financial piece of it at all.
[0:27:25.1]AS: I don’t care about the numbers.
[0:27:27.3]KM: Do you go in with the guy who is doing the financial part, who is doing the software upgrade and you partner with, like your old company would’ve been who would’ve partnered with? I don’t know why you keep your own old company and use your old company to do the financial part and the software part – do the non-operational part, or the –
[0:27:49.0]AS: Non-financial.
[0:27:50.0]KM: Non-financial to do the operational part. Then you would have like a whole ball of wax right there.
[0:27:57.3]AS: Well, we could. I mean, I never did the finances. I like to partner with CPAs, because that’s a whole other brain and I appreciate the heck out of CPAs and have a great respect for them. I would rather them do what they’re really good at.
[0:28:15.3]KM: Then you bring in the software and you implement what the CPAs say. Now, you’ve quit doing all of that and you are now doing the operational part and the culture part and the training part. You got ways of measuring that. It doesn’t seem like there’d be a way to measure that, because there’s no numbers that go with that.
[0:28:36.7]AS: Well, that’s what people said to us early on. They’re going, “This is too squishy. You can’t measure it.” I said, “Hide and watch.” We came up with a way to convert those squishy elements of a company into something that’s scoreable. That’s a good part of the IP that we’re currently patenting. Is our process for turning all the soft aspects of the company into something that you can quantify, put numbers to and use that to compare one company to the next.
[0:29:12.4]KM: Are you going to tell us what those are in a minute?
[0:29:14.5]AS: There is a ton of them, but yeah.
[0:29:16.6]KM: You’re going to hit the best ones. All right, the name of your new company is Corporate Insight Strategy.
[0:29:21.6]AS: Right. Because insight is your best strategy.
[0:29:25.7]KM: Yeah. I like it. At first when I read that I thought, “What a huge broad name. It could mean almost anything.” But the more you read about it and you explain it, you’re like it makes total sense. It’s the insight, which makes a great – which I’m all about it. It’s the squishy part.
All right, it’s time for us to take another break. We’ll come right back and continue our conversation with Alese Stroud, Founder and CEO of Corporate Insight Strategy. She will give this advice to retiring business owners and leaders on how to successfully onboard the next CEO and talk to the employee about how to mitigate their job risk during these transitions. It’s free advice and insight from the expert.
[0:30:07.5]TB: You’re listening to Up in Your Business with Kerry McCoy. If you missed any part of this show, a podcast will be made available next week at flagandbanner.com’s website. If you prefer to listen on iTunes, YouTube or SoundCloud, you’ll find those links there. Lots of listening options. We’ll be right back.
[0:30:23.9]AM: Arkansas Flag and Banner is proud to underwrite Up in Your Business with Kerry McCoy. McCoy began this broadcast a year and a half ago with the intention of offering a mentoring platform for those with an entrepreneurial spirit. Their candid conversation and interesting interviews with business and community-minded Arkansans, listeners gained insight into starting and running a business, the ups and downs of risk taking and the commonalities of successful people.
Kerry McCoy, Founder and President of Arkansas Flag and Banner believes in paying knowledge and experience forward and developed this radio show as a means of doing so. The biographies, life experiences and wisdom of her guests would likely go unheard if not for this venue.
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[0:31:50.1]KM: Thank you, Adrienne. You’re listening to Up in Your Business with me, Kerry McCoy. I’m speaking today with Alese Stroud, founder and CEO of Corporate Insight Strategy. For those just tuning in, the first company Alese started was Stroud Consulting Firm, where she helped banks transition into the digital banking area. She did that for 20 years.
Now she started yet another company called Corporate Insight Strategy, where on your website you described your company as one that coaches client organizations to prepare for growth and leadership transition by using face-based models to assess the status of the organization, operations and culture. You just told us what that means, so give us a little – We’ve already got a phone call.
Hello, you’re listening to Up in Your Business with Kerry McCoy. Have you got a question for Alese?
[0:32:38.8]Caller: Well, thank you for taking my call.
[0:32:40.4]KM: No problem.
[0:32:41.6]Caller: I’m very interested in the whole issue of corporate culture. Basically, what are the metrics that you use in assessing a corporate culture? I mean, for example is the culture nurturing? Is it rewarding? Is it a demanding culture? Those kinds of things. Thank you much. I’ll listen offline.
[0:33:08.3]KM: All right. Thanks for your call. Perfect question. We’re just about to talk about that. Perfect.
[0:33:12.6]AS: Thank you. I just love to talk about corporate culture, because I personally think it’s so very interesting. There are a lot of really useful views out in the world about what culture is and how you measure it and what you do about it. We chose a model that we use thought leadership from a gentleman, a professor Gert Hofstede, who wrote the book on Corporations and Culture. If you need something to put you to sleep at night, I highly recommend that book.
[0:33:46.0]KM: What’s it called?
[0:33:47.0]AS:Corporations and Culture. It’s very academic. He was a PhD. It’s very useful information to think about the different styles of interaction that are components of culture within a company. It’s all about how you work together to do business. Culture is either the grease that makes things work well, or it’s a glue that gums it up and makes it not work at all.
[0:34:20.8]KM: How do you measure?
[0:34:23.3]AS: Our process is to take you to one of these styles and identify observable behaviors.
[0:34:31.7]KM: What styles? Meaning?
[0:34:33.4]AS: A style. We grade 28 of them.
[0:34:38.0]KM: There’s 28 styles.
[0:34:39.1]AS: Right. There will be things like negotiation process. It’s like, how do you negotiate toward decisions within your company? On one end of that, it might be that there’s absolutely no negotiation. The boss gets to decide period. On the other end of the spectrum, it might be highly collaborative, where facts are gathered from all parties.
[0:35:08.2]KM: It’s a democratic approach.
[0:35:09.0] AS: It’s very democratic.
[0:35:10.9]KM: All right, what’s the next – what’s another one?
[0:35:12.1]AS: Another one might be the degree of voice that the customer has.
[0:35:15.5]KM: Customer’s voice.
[0:35:16.4]AS: Customer’s voice. At one end of the spectrum, the customer may have absolutely no voice. We’re going to do what we’re going to do, period. Hope to goodness that you buy our product, but we’re not listening to you.
[0:35:29.1]KM: The other end is the customer is always right.
[0:35:31.3]AS: Right.
[0:35:31.8]KM: Then give me another one. I know there’s 28. We’re not going to do them all, but I wan the top –
[0:35:34.8]AS: Okay. Because I would be hard pressed to name all 28, that cheat sheet.
[0:35:38.1]KM: Just give us the top ones. Employees have a voice, customers have a voice. Then what would be another one?
[0:35:46.2]AS: Well let’s talk about employee identification. We love to tell stories about Systematics, so one end of that spectrum is where employees are very much defined by the company they work for. We take very much pride in working there. If I meet you at a party I’m going to tell you, I work at –
[0:36:07.8]KM: Flagandbanner.com.
[0:36:09.1]AS: Absolutely. Yes. That’s a source of pride for me. On the other end of the spectrum, I don’t identify with company at all and I won’t tell you unless you force me to. I take no personal –
[0:36:23.2]TB: McDonald’s.
[0:36:24.4]KM: That is so – What did you say?
[0:36:25.2]TB: McDonald’s.
[0:36:27.1]KM: McDonald’s. Come on, you can think of one more.
[0:36:30.7]AS: Power structures are another one. We’ve seen very dictatorial autocratic companies. You read about them in the news all the time. That’s one end of the spectrum. The other end is where there is totally collaborative decision-making processes. It’s separate from negotiations.
[0:36:52.5]KM: It is?
[0:37:01.3]AS: Was it Volkswagen in Germany that got into so much trouble? They are very autocratic dictatorial company. Even though there were whistleblowers up and down, they were shutdown. The guy at the top said, “Get this thing done.” They did it.
[0:37:16.3]KM: We had a lady come on here who told us what our culture was. We never could figure it out. Chelsea Blakefield. She came on here about a month or two ago and she said that personnel archetypes are not just in humans, but there are archetypes for businesses too.
[0:37:29.1]AS: That’s true.
[0:37:30.5]KM: She said that the archetype of Arkansas Flag and Banner was rebels. Everybody there was a rebel.
[0:37:37.0]AS: I can totally see that.
[0:37:38.4]KM: That’s what she said.
[0:37:41.3]AS: That makes a lot of sense. We don’t work in terms of archetypes. I work in terms of those things that have to do what you do in your business day in and day out. It’s developed in a way that I can score you on all these 28 components. Then I can compare you to a compare that you’re looking to buy and show you those places where you’re different and where you’re going to have to plan some internal marketing strategies to merge those two different cultures. You’re going to have to make some decisions about what you want to be together.
[0:38:21.0]KM: Internal marketing. Talk about internal marketing. I’ve never thought about marketing internally.
[0:38:29.5]AS: If I as the CEO say I want us to be rebels, let’s use your example. I have to model that behavior. I have to tell it in some fashion to my employees, so they know that’s what I value. You’re marketing this concept to your staff. You’re telling them, “This is what you want the company to be.” That’s one thing if you have a small company, but if you’re doing like hundreds of thousands of people, that becomes a much bigger marketing campaign, because those people don’t interact with you every day at that point. You’ve got to have at least seven touches to get the message out. Just to let marketing to the public at large.
[0:39:17.8]KM: You got a really big company. You got to talk to get your feeling out, because you can’t walk around like I do every morning and say hi to everybody and share the love. You’ve got to have a way to reach them seven times, which would be an e-mail?
[0:39:32.6]AS: (Affirmative) Mm-hmm. That’s one place. It might be you have some big meeting, or you do a video. There are lots of different ways to contact people and to reach out and touch them, but you’ve got to do that in order to provide this consistent message. Then you have to keep that going over time to keep reinforcing it. It’s very easy to break. If you say we’re X and your employee see you out in public doing Y, there went your credibility. It’s gone. Then you have to start all over again.
[0:40:09.8]KM: People do not understand how important credibility is. It is huge.
[0:40:12.7]AS: No. Credibility, ethics are everything.
[0:40:15.7]KM: It’s everything.
[0:40:17.1]AS: It is. Being real is critical to being an effective leader.
[0:40:23.6]KM: It certainly is. I hope everybody heard that and I hope someone is tweeting it. Let’s talk about the tsunami. All of us baby boomers are retiring, and we own 12.3 million businesses that are going to change hands, or close in the next five to six years. We can talk about the retiring business owner, what’s the right thing for them to do, what’s the wrong thing for them to do. We can talk about the new CEO or leader. What’s the right thing for them to do? What’s the wrong thing for them to do?
We can talk about the employee, what’s the right thing for them to do and what’s the wrong? Because this tsunami change, or silver tsunami changeover is going to affect the business owner retiring. I mean, it’s his portfolio.
[0:41:12.2]AS: That’s right.
[0:41:14.0]KM: This retirement portfolio is going to affect the new leader coming in. It’s his career and it’s going to affect the employees. It’s their job.
[0:41:24.6]AS: What lifestyle, it depends on that –
[0:41:27.3]KM: Where do you want to start? 15 minutes.
[0:41:30.3]AS: Gracious, and I could talk about that topic for hours. You just described a Venn diagram that we use to talk about the balance of readiness that has to be created in order for a company to transition effectively. One circle is the exiting owner, the CEO who has hit it off to the sunset or Tahiti, whichever. Then another circle is the successors, who are coming in to prove their worth in this new adventure. Then the third circle in this Venn diagram is the company itself.
All three of those circles have to be ready for this new leadership. That’s a hard circus trick to pull off sometimes. Let’s talk about the company itself being ready. This is the biggest area where my company can help make a difference.
We have a way of taking a look at all the operational processes and procedures within a company and scoring them on a level of maturity that tells us whether you’re getting business down by luck, or the seat of your pants every day, or if you’ve got sustainable well-documented, well-trained, constantly evaluated processes that allow somebody to stepping in and do your job –
[0:43:08.9]KM: And nobody does.
[0:43:10.5]AS: Nobody does. Well, some people do in some areas, but I don’t find anybody that scores really high on that across the board. We take a look at a 166 different organizational elements and grade you on that maturity scale within each of those.
[0:43:28.3]KM: How long does that take to do?
[0:43:29.7]AS: We can get it done in two days.
[0:43:31.7]KM: Really?
[0:43:32.8]AS: Yeah. It’s asking a ton of questions.
[0:43:37.7]KM: I bet it’s repetitive as it can be though.
[0:43:40.0]AS: It’s really not. It will keep you engaged, because you’re going to have to think about all of the elements of how you run your company.
[0:43:50.2]KM: How many of these company owners – we’re talking about the owners that move out. How many of these companies will fail after the owners have sold the business, or change leadership?
[0:44:00.7]AS: That depends on how you do it. Research shows that if you sell your company, whether it’s to an external owner or bigger company, or maybe just to the employees under an [inaudible 0:44:13.8], that the failure rate is somewhere north of 50% within three years. If you’re handing the company off in a generational transfer –
[0:44:30.9]KM: I bet it’s really ugly.
[0:44:32.2]AS: The failure rate is 70% on the first generation. I think 84% if you skip a generation, if you skip two generations, the survival rate is 3%.
[0:44:46.5]KM: Wow. How many years does it take for that to happen?
[0:44:49.3]AS: It usually happens pretty quickly. It’s that same three to five- year failure rate. You mentioned earlier that I was going to talk about CEO onboarding. We’re exploring how that affects this failure rate. I read an article from the Harvard Business Review recently that said that a good third – a new CEO’s watch out within 18 months. I’m going, that’s interesting because that correlates heavily is a contributing factor to these other failure rate numbers.
Harvard suggested that the key element in preventing these washout was the onboarding process that a company use to bring in these new leadership. They talked about the fact that it doesn’t matter that this new CEO has all the skills in the world, all the great degrees, lots of experience, they have to also quickly come to know this new company. They have to understand the culture and the pulse and who are the players and how the company does what it does. If they can come up to speed on that really quick, then they can use all those other skills and abilities to effective and lead that company into the future.
[0:46:17.9]KM: Do you do and usually hire somebody from outside to come in? Or does it work better if you promote somebody from within?
[0:46:25.1]AS: I have not seen research on that. That’s a really interesting question.
[0:46:28.8]KM: It seems like if you had somebody there that you had been training to be your successor and that had been there and already learn the culture and you knew whether they fit or not that their success rate would be better, whether they were part of the family, or not that they had been there long – whether they’re an employee or a family member, they’ve been there long enough, that you could tell these guys are going to follow along.
[0:46:54.5]AS: It makes a ton of sense to me.
[0:46:56.7]KM: It does don’t it?
[0:46:57.5]AS: It does. It seems like that ought to work.
[0:47:00.9]KM: It seems like it would go up better. What do you think the number one thing? Well, I think I already know this. What’s the right thing for a CEO to do would be to get to know the culture?
[0:47:14.5]AS: Are you talking about an incoming new CEO? Yes. They need to get to know the culture, they need to meet people, they need to –
[0:47:24.3]KM: Get out on the floor.
[0:47:24.7]AS: They can’t just sit in their office behind a locked door and a secretary and expect to be effective. They’ve got to get out and meet and greet and hear people in their new company.
[0:47:34.6]KM: Don’t underestimate your social skills.
[0:47:38.3]AS: Amen.
[0:47:39.9]KM: The other one that we haven’t talked about that I think the listeners are probably going to really want to know about is how this affects the employees. You’re the employee who’s powerless, or feels powerless. You want to get up into that leadership role, you want to look for an opportunity, say things are shifting around here, check my ego and make sure everybody knows that I’m here stand out. What would you say to an employee? Or I need to jump ship and I need to do it now. What should an employee be told, how to mitigate the risks?
[0:48:12.9]AS: Well either one of those decisions is best made with information. You as the employee need to really watch what’s going on within your company. Get your head up and look around. If your company gets sold, there is definitely going to be a change in leadership. Think about how that affects you and your position. Are you a strong enough person that you’re going to be recognized as an asset and the acquiring entity will definitely want to keep you? Or are you goofing off and playing with your iPhone and they’re going to let you go because they don’t see the value?
There is a huge domino effect, if we do nothing more than swap out the CEO. There are going to be people who will be vacated out of positions for one reason or another. If the guy above me leaves and I’m the person that gets to move up, how do I make sure that my name’s on that list? Or is the writing on the wall and I don’t like where things are going? I can recognize that the culture is going to be profoundly different. There’s something about this that doesn’t meet my personal goals or needs, and I need to be prepared to jump ship.
[0:49:38.4]KM: If you jump ship, you should start looking for another job, because it’s always easier to get a job if you have a job.
[0:49:44.2]AS: Right.
[0:49:45.2]KM: If you want to change jobs and you want to keep working, start looking for a job while you have a job. Don’t come in to your next job interview and say, “I just got laid off,” because the first thing the interview – that’s the first thing they say is why’d you get laid off? Why were you not valuable? Or there is another thought on that if you’re getting close to retirement age, you might want to say, “I’m just going to ride this out.”
[0:50:06.8]AS: Well, you might. It’s a choice.
[0:50:08.7]KM: Yeah. Say I just want to – Then I’m just going to take unemployment for a few years and then go ahead and retire after that.
[0:50:15.5]AS: No matter what your decision, you’re better prepared to make it if you’ve got more information. You acquire that information by watching what your company is doing and looking around. You can’t make it in a vacuum.
[0:50:32.0]KM: I’m going to tell everybody that they’re listening to Up in Your Business with me, Kerry McCoy. I’m speaking today with Alese Stroud, Founder and CEO of Corporate Insight Strategy. How do people get in touch with you?
[0:50:43.1]AS: You can e-mail me.
[0:50:44.5]KM: Our favorite way.
[0:50:45.9]AS: Yes. Mine as well, at ajs, that stands for Alese Johnston Stroud @cistrategy.com.
[0:50:56.4]KM: CI, Corporate –
[0:50:58.4]AS: Insight.
[0:50:59.9]KM: Strategy. Just CI?
[0:51:01.7]AS: Yeah.
[0:51:02.0]KM: Not CIS?
[0:51:02.6]AS: No.
[0:51:03.2]KM: It’s probably already taken.
[0:51:04.5]AS: Right. Couldn’t get the URL. GoDaddy wouldn’t let me have it.
[0:51:08.9]KM: GoDaddy. I think this is interesting about companies too. I thought I get your take on this real quick before we’ve got to go. We’re about to sign off. Arkansas Flag and Banner lives in a constant state of transition. I’m serious when I say that. I have heard other people say that if you’re not changing, you’re sliding backwards and you decrease market shares. Business is changing at speed of light and you have to run to stay in the forefront.
[0:51:33.8]AS: That is truth.
[0:51:34.8]KM: That’s another thing employees could look at when they’re thinking about their business. How long has their company been doing the exact same thing it has been doing?
[0:51:44.5]AS: Right. We think that examining your operations and asking yourself critical questions about does this process, procedure whatever it is still meet market needs? Is this still best practice? That’s an advanced skill to really take a look at your bellybutton like that. To do something about if it no longer is optimal.
[0:52:14.5]KM: Those are two great things. Is your company still meeting market needs and is your company exercising the best practice?
[0:52:22.2]AS: Right.
[0:52:22.8]KM: Those are great tweetable things also. I hope my people are tweeting that one out. Alese, you’re awesome. I’m not kidding.
[0:52:28.6]AS: Thank you.
[0:52:29.8]KM: You really are. You make me look like a kindergarten, a girl. You are not afraid. She said no. This is for you. It’s a desk set of the US and Arkansas flag. Imagine that. I bet you don’t have one.
[0:52:45.7]AS: Imagine that. Thank you.
[0:52:48.0]KM: I bet you don’t have one of those. Nobody hardly has a desk set of the US and Arkansas flag, or any state flag on their desk.
[0:52:53.9]AS: I do now.
[0:52:54.7]KM: I know, right? It’s a really great gift idea. Tim, who do we have next week?
[0:53:01.0]TB: Next week is going to be Bob Bidewell of the Studio Theatre where I recently saw their rendition of Hedwig and the Angry Inch. It was awesome.
[0:53:09.8]KM: Really?
[0:53:11.1]TB: Studio Theatre is really cool and this is going to be an exciting show, I think for sure.
[0:53:14.7]KM: You never cease to amaze me. What did you see?
[0:53:18.5]TB: Hedwig and the Angry Inch.
[0:53:19.6]KM: I don’t even know what that is.
[0:53:21.1]TB: It’s about a transsexual punk rocker.
[0:53:23.6]KM: I’d love that.
[0:53:24.3]TB: It’s so good.
[0:53:25.6]KM: It sounds great. That is so artsy-fartsy. Isn’t that just like the [inaudible 0:53:30.3]? Yes, it’s the Studio Theatre. He is a fez being around town. Been around for a long time in Little Rock, Arkansas. It’s on the corner of 7th and Spring in downtown Little Rock, and he’s got some great traditional shows coming up. I don’t remember what they were. Did you see him on the website?
[0:53:46.9]TB: No, I didn’t really catch any.
[0:53:48.0]KM: It’s the Studio Theatre, if somebody wants to go on his website and look and see what they are. He’s got real classic – I think The Best Little Whorehouse in Texas maybe.
[0:53:57.7]TB: Yeah. I think that’s on the window.
[0:53:59.2]KM: Do you? Yeah. Alese, thank you. I’ve really enjoyed it.
[0:54:03.1]AS: Thank you, Kerry.
[0:54:03.7]KM: I hope you’ll come back. I can’t wait to hear about your new business and how well it does. I think the advice you gave her by today is priceless. If anybody wants to see it, we’ll have this broadcast available next week at flagandbanner.com.
To my listeners, if you’ve got a great entrepreneurial story you would like to share, I would love hear from you. Send a brief bio and your contact info to questions@upyourbusiness.org and someone will be in touch.
Thank you for spending time with me. If you think this program has been about you, you’re right. It’s also been for me. Thank you for letting me fulfill my destiny. My hope today is that you’ve heard or learned something, I know you have today, that’s been inspiring or enlightening and that it whatever it is will help you up your business, your independence, or your life.
I’m Kerry McCoy and I’ll see you next time on Up in Your Business. Until then, be brave and keep it up.
[END OF INTERVIEW]
[0:55:02.0] TB: You’ve been listening to Up in Your Business with Kerry McCoy. If you like to hear this program again, next week go to flagandbanner.com, click the tab labeled “Radio Show”, and there you’ll find the podcast with links to resources you heard discussed on today’s program. Kerry’s goal: to help you live the American Dream.
