The Founder’s Dilemma

Diagnosing the gap between founder and firm

Back to my story: Because I was highly recommended, the founder (Chris) agreed to allow me to evaluate his process and offer a diagnosis. (Never trust anyone who prescribes without proper diagnosis.) Here’s the process I followed:

1. I had Chris model his process to learn how he executes from the founder’s chair.
2. I evaluated the materials and method Chris used to teach and train his advisors on the process.
3. I experienced the process as executed by the most successful junior advisor on the team.
4. I interviewed the team about what I had seen and experienced.

During the interview, this exchange occurred between me and one of the advisors on the team:

• Dan Smaida: How did you learn the process to begin with?
• Financial advisor: We learned it from Chris (the founder).

• DS: How did Chris teach you his process?
• FA: We watched him do it several times.

• DS: If you wanted to refresh on the process, how would you do it?
• FA: I would watch videos of Chris or look at the transcription of the videos.

• DS: In your opinion, what percentage of the things Chris does are replicable?
• FA: (pauses) …I’d say about half.

I’ve seen this literally dozens of times in my career: Founders are not nearly as replicable as they think they are.

Five reasons you’re not replicable

The good news is your process is replicable. However, the way you personally execute it is not, and that’s because you’re not replicable. I don’t mean personality-wise, although that’s true too. Beyond personality, there are at least five other reasons your advisors can’t do what you do.

Positional credibility

The number one blind spot for founders: They don’t know how good it is to be them. They’ve either forgotten or never known the feeling of meeting with clients who would rather be meeting with their boss. They don’t get to see the look on clients’ faces when they realizing they’re not meeting with the founder. It’s like going on a date with someone who wants to date your better-looking friend. It sucks.

It’s also an opportunity – smart advisors use the specter of the founder and the promise of time with the founder as leverage to create movement and access.

The main point is that it’s different when you’re not the founder, but you have the founder as a resource. Founders should want advisors to run a different process!

Challenging clients

I recently spoke to a group of RIA owners (i.e., founders), and I conducted a very unscientific poll. By that, I mean the sample size was 30. I asked them to raise their hands, and I forgot to count exactly how many did so.

Nonetheless, here are my findings:

• Almost all the founders are comfortable with the idea of their advisors “firing” certain types of clients.

• Almost all the founders expected to be consulted prior to said firing.

That seems innocuous – why wouldn’t they be consulted? But this dynamic takes away advisors’ ability to challenge clients, and to deal effectively with challenging clients.

This shows up most when it matters most: Commitment. Many advisors should be challenging clients who keep meeting but never change. But if candor sends the client running to the founder to complain, is it worth it? Or do advisors put up with clients and behavior that diminish productivity and success?

Catalogue of stories

When I conduct seminars (virtually these days), here’s one way to get founders nodding and smiling nostalgically: I ask, “Do you remember that moment in your career when you realized whatever happened, you’d be just fine, because you’ve seen it before?”

Oh, yes! I remember it myself! It’s a glorious feeling! Unfortunately, it takes a while before that feeling kicks in. And until it does, advisors can’t do what the founder does – draw on deep reservoirs of experience to pull out the right example, story, or name.

Behavioral style

There is no one behavior style that leads to success – I’ve worked with hundreds of founders, and they’re all different like CEOs are all different, even though people think they’re alike.

However, all founders adopt and execute a process that suits their style. For example, I’ve found that a founder’s level of extroversion deeply influences the process – more extroverted founders tend to use a process that involves more face time (and FaceTime) and events.

Then, most founders seek a stylistic replica of themselves. Sometimes this is unintentional and normal – similarity bias leads us to connect more with, and hire, people who are more like us. Sometimes, it’s intentional – the founder thinks hiring a “mini-me” is the key. (Mistake! Diverse teams are better!)

Even though they try, founders can’t hire a replica of themselves. Diversity is inevitable. Because of this, trying to replicate an advisory process that’s grown from the founder’s personal style doesn’t work. The advisors the founder hires won’t have the same approach to details, interpersonal touches, speed, deliberation, candor, and a host of other factors. And we haven’t even touched on the difference between auditory, visual, and kinesthetic operators!

Intuition

In his book Outliers, Malcolm Gladwell popularized the “10,000 hours rule.” To summarize, researchers have found that singular talents (think Bill Gates or the Beatles) are not just talented, but also the products of considerably more hours of practice than their less-notable peers. Bill Gates benefited from access to computing almost unheard of at the time. The Beatles spent a couple of years in Hamburg performing eight hours per day (perhaps even eight days a week). My own Hamburg period was the five years I spent as a management consultant, traveling the globe delivering seminars five days a week.

It's this experience that leads to intuition – the sense of what’s going on, and what will work in a given situation. Founders have it, and their advisors often haven’t yet acquired this intuition. Therefore, their ability to adapt the process to clients and situations often doesn’t match the founder’s ability – they can’t use the process intuitively.

Solution: Procreation, not replication

Frankly, I’ve been waiting most my professional life to use the term “procreation” in a business article where it makes sense… and the time has come.

• Replicate: To make an exact copy of something.
• Procreate: To produce offspring.

Instead of trying to replicate your process through their advisors, founders should be working with their advisors to create (dare I say, sire?) a new, advisor-friendly process.

Why procreate? Why create an offspring process? For the same reason any species procreates – to ensure not only the survival, but the health of the species.

At its best, creating a new process combines what is transferable from the founder with what is effective for advisors who lack founder status. And because it’s not all transferable, the process founders create with their team should by definition be different than the process that got the founder to this point.

What should look different:

• Commitments
  • More achievable for advisors (smarter)
  • Sequenced to accommodate different positional credibility
  • Using the founder as leverage
• Language
  • Advisor-friendly, not founder-dependent
  • Authentic stories and examples advisors can use
• Materials
  • Built for advisors to operate
  • More turnkey for more complex materials
  • Built so advisors can add value and build credibility

Better process starts with better process

Back to my story: The issue Chris was having with replicating his process did not just stem from the process itself, but also from how he attempted to replicate his success.

Hopefully, by this point, we’ve established that this doesn’t work, because the founder’s process is only half replicable. But what about the part that is replicable? Chris wasn’t seeing the success he desired partly because of the way he was trying to transfer it to his advisors.

Through demonstrating, leading calls, and recording his performance for the archives, Chris used only one of three development methods available: Modeling. That’s what most founders do – they create a model and try to hire advisors who can do it the same way.

Unfortunately, when it comes to complex skills like advising, modeling is the least effective way to transfer skills. Even the master painter Bob Ross was unable to positively impact my oil painting skills, despite his joyous and encouraging modeling.

When I work with firms to create advisor-friendly, client-centric process, here’s the process I use:

1. Rebuild the process from the ground up – using advisors as the builders.**
2. Create a model based on the rebuild – turn it into a flowchart and a map.
3. Train to the model, using real scenarios and clients as the basis for training.
4. Coach advisors using both meeting rehearsal and “game tape” from actual meetings.
5. Refine the process based on data and feedback from both advisors and clients.

**The first step is key – Advisors own what they build and feel motivated to make it work.

Summary: Stop trying to replicate, and focus on procreation

For Chris, the realization that his advisors couldn’t replicate his process proved to be a catalyst. Within the span of eight weeks, we had reengineered the process with his advisors, created a new model, and run several rounds of training and coaching to the model.

The results were immediate on two levels: Client meetings got better, and advisors were able to drive more of the right client commitments sooner. Advisors reported feeling better about the process and more confident in their ability to execute.

Confidence breeds competence, and vice versa. This created a virtuous cycle of development that continues to this day. Chris and his team plan to revisit the process again mid-year to continue the growth – not just firm growth, but the growth of his people.

And that’s the opportunity – reengineering your process makes it better, makes your people better, and makes the culture of the firm better.

Founders, stop trying to replicate yourself – you can’t! Instead, focus on helping your advisors execute the very best process they can.

Dan Smaida is a management consultant who works with founders and business leaders to accelerate firm growth. Dan can be reached at [email protected]

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