On this episode Josh speaks with Bill Flynn for Catalyst Growth Advisors. They talk about some of the reasons businesses go out of business, how best to encourage your employees, focus on strength and what neural leadership is.
Bill Flynn has collaborated with Alan Mulally, pitched Steve Jobs, accomplished much, failed often, and learned many useful lessons from thirty years of studying the science of success. He is best described as a pragmatic Simon Sinek; an optimist and an operator.
He has worked for and advised hundreds of companies, including startups, where he has a long track record of success spanning multiple industries. Bill has been a VP of Sales eight times, twice a CMO and once a GM of a division of a $100MM IT services company before he pivoted to becoming a business growth coach in 2015. Prior to, he had five successful outcomes, two IPOs, and seven acquisitions, including a turnaround during the 2008 financial crisis.
In today’s episode you will learn about:
- Why businesses go out of business
- The best way to encourage your employees
- How to focus on strength
- What neuro leadership is
Narrator: Welcome to Cracking the Cash Flow Code where you’ll learn what it takes to create enough cash to fill the four buckets of profit. You’ll learn what it takes to have enough cash for a great lifestyle, have enough cash for when emergency strikes, fully fund a growth program, and fund your retirement program. When you do this, you will have a sale‑ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want, in the way you want.
In Cracking the Cash Flow Code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.
Josh Patrick: Hey, how are you today? This is Josh Patrick and you’re at Cracking the Cash Flow Code. My guest today is Bill Flynn from catalystgrowthadvisors.com. And we are going to be in for a really fun kind of conversation. And the conversation is going to start with why do businesses go out of business? So, let’s bring Bill on. We’ll start off with that question.
Hey, Bill. How are you today?
Bill: Hey, Josh. How are you? Thanks for having me on. I appreciate it. I think it’s going to be fun, the next 20 minutes.
Josh: Yeah. I think so, too. I’m looking forward to it. I love doing this podcast. I always get to talk to really interesting people along the way. So, as youfocus on the people stay in business and not go out of business, and then build a business that somebody else might want to own down the road. Am I correct?
Josh: Okay. So, why do businesses go out of business? The obvious thing is they run out of cash. So, let’s get that off the table.
Bill: Yeah. But I think that’s a consequence of other things, right, usually.
Josh: Yeah. It’s a result. It’s not a purpose.
Bill: Exactly, yeah. So, let’s start with the data. So, there’s two sets of data that I know of, from the Department of Labor Statistics and then the Small Business Administration. And, basically, the data says the same thing that we have about a 50% chance of lasting five years, if you started [inaudible 00:02:21]. And then, you have a 25% chance of lasting 15. And about a 16% chance of lasting 25. So, the longer you’re in business, the less likely you are to stay in business. And, obviously, you want to flip the business or you’re done and tired is one thing but, you know, there are millions of businesses started on a regular basis. I’m sure most of them aren’t looking– seem to last more than of few years but, you know, their goals are.
So, it’s a sad story. And, you know, I like to say that you’d think that, as you did something longer and longer, you’d get better and better at it. So, the curve should be a different slope. You know, you should probably go out of business early but then, eventually, it should flatten out a little bit, but it doesn’t. It sort of has this parabolic look to it.
And what I’ve found, I’ve been studying business success mostly for the last 30 years, really intensely in the last four or five. And I’ve found that there are three main reasons that I’ve come up with that business do go out of business. And one is that there’s a meaningful gap between what science knows and what business does. And we rely too much on conventional wisdom and intuition in our business and we don’t check it.
Josh: Can you explain what you mean by that?
Bill: Yeah, conventional wisdom is stuff like, “Hey, you know what, you have to give feedback to your employees. You should talk to your customers and ask them what they want.” It’s been proven that people don’t like feedback. And feedback is a tool for growth. And the goal is growth. But feedback often creates something called reactance which is the brain’s reaction to being told what to do. And a good example is these days with masks, right? A lot of people don’t wear masks out in public or wherever just because they were told to. And then, they make up reasons after the fact – freedom, CO2, or whatever, you know, etc. So, something like feedback, we’ve been told that you have to give feedback. And what I’ve learned is you don’t actually have to give feedback. What you do is have to find ways to help people grow.
One of the guys I really like is this guy, Jeff Hunter, and he talks about feedback a lot. He talks about feedback as a way to help people understand the standard because there’s a great saying by this guy, Ashley Goodall who wrote a book recently with Marcus Buckingham, and he says, “Feedback is you talking about you in the presence of me.”
Josh: I actually agree with that 100%. I hate performance reviews. They’re the most useless thing that you could possibly do in a business. And years ago, we came up with a thing we call performance coaching because, if I’m coaching you, I’m looking out in the future. But if I’m reviewing you, I’m looking at what happened in the past and who cares about the past, really?
Bill: And it can be instructive. But, yes, you shouldn’t spend a lot of time on it.
Josh: Well, that’s not where you’re going to get your– I mean, it’s sort of like– are you familiar with appreciative inquiry?
Bill: Yes. A friend of mine is very deep in that.
Josh: Yeah. Well, I mean, appreciative inquiry essentially says build on your strengths. Very simple.
Josh: Not hard.
Josh: Well, if I’m reviewing you, I’m not building on your strengths. I’m just looking at what we did in the past which really doesn’t really count a whole lot.
Josh: It might be a little bit intuitive, but if we’re going out in the future and I’m coaching, big difference.
Bill: Exactly, yeah.
And you hit the nail on the head which is, if you want people to grow, you know, strengths is the most important. We get better when we get better at the things that we’re good at.
Bill: And fixing is only helping people not to fail, but not necessarily to excel.
Bill: So, I think, what a lot of feedback is about– I’ll tell a quick Jeff Hunter story, then get back to you in a second. So, basically, Jeff Hunter says, if you want people to get better, the first thing you have to do is, if you see something that they’re not reaching the standard, then take them aside and remind them of the standard. “Do you know what the standard is? Do you know what the standard is for running a meeting in this organization?” “Oh, yes. It’s this, this, this and this.” “Okay. How do you think we did?” Because this person ran the meeting. “Well, you know, we almost met it.” “Okay, where didn’t we meet it?” “Here, here, and here.” “Great. Okay. What would you do differently next time so you get closer or meeting the standard?” “Oh, I’d probably do this and this.” “Great. Do that next time.”
I gave no feedback, at all, to that person. They worked it through themselves. But we understood the standard, right? You have to set the standard. You mentioned earlier, it’s simple but not easy. Figuring out the standards for things is hard because you really have to think, and reflect and, as I said, sort of look at the science and say, “What is the best way to do this? And let’s make sure we put that for our folks.”
Josh: You bring up a really interesting point. I’m on this soapbox which is really a marketing soapbox but is applicable to here which is the features, benefits, or what problems are you solving is that, when we give feedback, we’re often talking about the stuff, not about what we want for an outcome. So, I might ask people to write a description, which I also hate. I say, don’t write down all the stuff you want people to do. Write down three to five things which are success factors to this job. If these things happen, you’re successful at your job. Do you really care what of the 150 little things that get you there matter that much?
Bill: Everyone creates their own path, right? One of my favorite questions is, “What’s the ideal outcome?”
Bill: Okay. Describe for me the ideal outcomes. Imagine everything goes as wonderfully as possible. What is that? Write that down? Tell me what that is. Then, let’s figure out how to do that. What would we need to do? We’re leveraging strengths and assets, etc. to do that. That’s a lot easier than saying, “I need to do X, Y, and Z. And with the implied outcome is this.” Who knows, right? And I might not know them very well.
Josh: You also brought something else up which I think is really important. I just want to make sure our audience gets this because it’s a really big deal. I think we realize if you knew, you did this. You just described what I call the Socratic method of management. And a Socratic method of management, very simply, is tell – ask.
And you did a beautiful job of explaining how a great manager is helping someone become much better in coaching them because they’re a thinking partner or asking questions. You’re not sitting there telling somebody what to do. So, I don’t know if you realized you were doing that but it’s an incredibly important factor if you want to build a good business.
Bill: Yeah, but you have to dig the well before they’re thirsty, right? You have to do that work ahead of time to understand the standards so you can ask the right questions, as opposed to having to tell people what to do. It’s just easier.
We like telling. We love giving advice. It’s a human trait. It makes us feel good. It makes us feel good about ourselves. It makes us feel like we’re helping other people but it isn’t always– and it’s actually rarely the first thing you should be doing.
There are times when you have to tell people what to do, right? The building’s on fire. It’s a critical situation. You’ve just got to say, you know, “Run that way.” Absolutely. But that’s usually the rare occasion. Especially, running a business. There’s a very few existential things going on in a business on a daily basis. So, I think those are examples of conventional wisdom, right? Conventional wisdom is that, “Oh, this is what everybody does so it must be true.”
And if we agree with those stats that I said at the front, then convention wisdom probably isn’t the first thing we should try to figure out. Let’s figure out where a success? How are businesses successful? And let’s try to find out ways to apply that to our own business. What are the principles that we can apply to our business? And then, figure out how to put the methods, and approaches, and processes, and systems into our business so we’re meeting those.
And that’s what I’m focusing the last chapter of my life on. I want to teach as many people that kind of stuff because I think there are so many businesses to go out of business or struggle for completely preventable reasons.
Josh: Yeah. So, the question comes in, how open do you see business owners are to these ideas?
Bill: Oh, not much though.
Josh: So, there lie inthe problem.
So, that’s what I do is I don’t try to convince anybody of anything anymore. I’m a 30‑year sales guy. I don’t sell my services to anyone. I pick my clients and they pick me. I’m looking for a humble learner who is comfortable challenging the status quo. That’s my client.
I don’t care how big you are. I don’t care what industry you’re in. As long as you have those traits, I have a chance to be able to help you. If you think you need to be the Shell answer man or there’s this command and control that you think is really important in your business, I’m probably not the guy for you. I’ve fired or not brought on as many clients as I brought on because of those.
Josh: If you want to be a values‑led business, you’re going to be have a lot more fun, make a lot more money, and your business is going to be much easier than if you try to be all things to all people.
I want to go back to the gap between what science knows and what business does. So, I’m a big fan of behavioral economics. Behavioral economics sort of debunks the leaf of homo economicus that we are rational actors. And we’re not rational actors. So, I’m not even sure why we were thinking that businesses would follow science because that requires a rational actor. So, how do you get around that?
Bill: By the way, I completely agree with you. Do you know who Chris Voss is, the author of Never Split the Difference?
Bill: He’s got this great saying which he says, “All humans should accept that we are crazy, irrational, impulsive, emotionally‑driven animals, where raw intelligence and mathematical logic are a little help in the fraught, shifting interplay between two or more people.” And he was one of the top FBI negotiators in the world. So, he actually applied science to his negotiation style, where other people provided conventional wisdom which is, “Oh, you must engage with them. And you should only get and give,” right? If you want something, you’ve got to get something. And your job was to manipulate them to a certain place. And he said, “That doesn’t work. If you can have people help you to solve your own problem, even though they think they’re against you, they are eager to help you.” And he put them in a position where they would help him get out of the situation they were in.
Bill: So, I call that– it’s something called neuro leadership. So, people are the foundation and the structure of a business. The inside of the business is strategy, execution, and cash, right. And those two things – first two things, drive the third thing.
So, what’s interesting is, even though we are irrational, etc., we are predictably rational. Dan Ariely has written many, many books about how you can predict irrationality with people. That’s science, right? If there’s predictability in it and you can have the same outcome in different ways. So, if you understand that you should lead with the brain in mind as a business, then that’s one way of applying science.
The example I love to give is, let’s say you’re in a meeting. You and I are in a meeting. And you’re running the meeting and I’m your boss. And the meeting ends. And what I do is I say, “Hey, Josh. You know, that was a pretty good meeting, but I’d like you follow me back to my office. I’d like to tell you a few things about it.” Right? So, you follow me and, on the way, you’re saying, “What the hell did I do wrong? What are people going to think about me?” Because, you know, not everybody had left. “All right, if I did something wrong, what could happen? Could I lose my job? If I lost my job, what’s going to happen? I can’t send the kids to school. You know, we’re going to be move to this new place. We’re going to be on vacation.”
So, by the time I get you to my office, which is a status symbol, and I sit behind my desk, which is another status symbol, I’ve put you in threat mode. And no matter what I say, positive or negative, you’re not really listening to me because your body is saying, “Leave. Run.” You might be sweating a little. Your heart rate might be up a little bit because your body’s saying “go“ because it’s job is to protect you. And we don’t really understand the difference between a social threat and a physical threat. Our brain doesn’t very well.
So, here’s what I would teach someone is, I could do the same thing, and I would say, “Josh, here’s the deal.” I could sit next to you and say, “You know what, that was pretty good meeting. What I’d like to do is because, you know, one of our values is Kaizen – continuous improvement, let’s keep getting better. I would like to have you put on our calendars [inaudible 00:13:37] days. And I’d like you to come to that meeting with this, three things that you thought went really, really well in the meeting and we should keep doing it or improve and keep doing more of.”
One or two things that didn’t go so well in the meeting. And I’ll do the same thing. And I want you and I to meet for as long as it takes until you and I agree that this is the best possible meeting we could have. That’s the same thing but it’s applying science which is, you’re no longer in threat mode because there’s no status issues. There’s certainty. You know what I’m looking for. There’s autonomy. I’m telling you that you’re the one who’s sort of in charge in making this thing happen. I’m not putting you in the out group, which I did earlier. And it seems relatively fair. That’s called SCARF which isa Neuro Leadership Institute thing which allows us to move more towards reward and less to threat. That’s science.
Josh: Can you give us a definition of what neuroleadership is?
Bill: Yeah. Lead with the brain in mind. Make the things that you do as brain‑friendly as possible.
Josh: Does fit in with neuro linguistic programming or is this a whole separate thing altogether?
Bill: Neuro linguistic programming is sort of a grab bag of stuff. It has some things in it which are pretty good. But a lot of it is based upon pseudoscience because I looked into neuro linguistic programming about 10 years ago and it’s not the same. It has some really good stuff. And a lot of my friends are doing it. Perspective taking is something. You know, chunking up and chunking down is something that’s also a neuroscience.
Why I move more towards NeuroLeadership Institute is they’re not trying to sell books like the folks who started NLP are two guys who wanted to sell a bunch of books. They are not neuroscientists.
Josh: They’re actually linguistics guys.
Bill: Yeah. And they observe the interaction between psychologists and other people, and then made extrapolations from there. And some of them are right. And some of them are not right.
Bill: So, I try to steer people away from NLP and move ‘em more towards something NLI which is, how do we make the world that we’re in, in professional world, more brain friendly? What is the science that supports that? So, feedback is one of them. And diversity, equity, and inclusion is another. The SCARF model. How do people learn – like the brain learns, in a different way than we were ever taught? I mean, you and I are generally of the same cohort, so to speak. And we were sat in a classroom and probably told what to learn and spit it back a few weeks later. That’s not how the brain learns. The brain learns in a completelydifferent way. So that’s the kind of stuff that I mean, when I’m talking about science.
Josh: So, one of the things I see a bit– especially blue‑collar business owners, they don’t necessarily want easy but they want simple. And the neuroscience brain stuff sounds not simple. So how do you make it– I mean, and this has been my experience with business owners in all sorts of different businesses, if it’s hard for them to get their arms around, they just don’t even try.
Bill: Of course, yeah.
Josh: So, how do you make this really complicated stuff – it is complicated, simple so they can understand it, and they’ll want to use it?
Bill: Yeah. So, I’ll give you an example. One of the things that I do is I do this thing that I call the 311 exercise which is I do at the beginning of every client interaction. And I have everyone go around. And they have to write three things about everyone else in the room, that they bring to the team, that makes the team better. And they do one thing that detracts from the team. And then one thing that they feel themselves, if they did more of, less of, or whatever would make the team even better. So, it’s the 311. That’s what I call 311.
And about three or four months later– and they all say that out loud to each other. And they actually have to just say, “Thank you.” You have to stand– before the pandemic and people were with each other, physically, they’d write them on stickies. And then, they would hand the stickies to the person. And the person would accept the stickies and say, “Thank you.” That’s all they could say.
And, at the end, they get to pick one of the things that they’re going to work on either more of, less of, or whatever. And then, three or four months later, we check back in. I have everyone go around and say, “Here’s what I picked. And here’s how I think I did.” And then, everyone gets to give them their reaction.
But I give them rules. These are brain‑friendly rules. One is, before you say anything, you have to sincerely acknowledge and appreciate what the person did. If you can’t, then don’t say anything. That’s one. So, why that is? And I explain, I say, because when you do that, you actually send three to four chemicals in their brain – endorphins, dopamine, serotonin, and oxytocin. These are good chemicals. This actually brings you closer together, just by doing that, because you’re acknowledging their effort.
The second thing is what I want you to do, before you give any feedback, or advice, or whatever, you have to ask clarifying questions. So, you might be like, “Josh, it was something about your phone and you didn’t want to use your phone as much. You know, I might say, you know, “So, I understand that you decided to put it in your drawer. How did that work? Did you turn notifications off? You know, what were the things that you did to make sure that you weren’t distracted by your phone?” As opposed to saying– what we want to do is say, “You know what you could do Josh, you could’ve done this. You could’ve stuck it in a drawer and turned off notifications, etc, etc, etc.” That’s a completely different thing.
And then, lastly, if you must give feedback. So, if you absolutely have to, you have to get verbal permission because, again, verbal permission bypasses the lizard part of our brain which says, “new is bad” and at least it gives the chance that whatever you say next is more likely to be received. That’s just a really simple way to say that’s all brain stuff, that’s all neuroscience, but it’s very practical.
Josh: So, I’ve got a curiosity question because it fits in with a question I ask at the beginning of almost every workshop I ever run myself which is, how many of the people that you do this exercise with choose a negative thing to work on versus how many choose a strength they want to work on?
Bill: So, I’m actually going to be answer a little differently. More than half pick the thing that they chose for themselves. So, if you’re in a group of five or six people, you’re getting 15, 18, or 20 things. And half of them always pick the thing that’s themselves because they came up with it.
Josh: Okay, that’s interesting.
Bill: Most people will fix a weakness.
Josh: Yeah, that’s been– I mean, unless they own the business, centered to fix a strength.
Bill: I can’t go back to the catalogue ofmy memory and tell you yes or no, but [inaudible 00:19:29].
Josh: I’ve asked this question in front of hundreds and hundreds of people in workshops I’ve done and it’s almost universal, if you’re an employee, you’re going to fix weaknesses, and if you’re a business owner, you’re going to fix strengths. You’re going to work on strengths.
Now, I actually have a theory behind this. My theory is business owners control their destiny, so they get to choose what they’re going to work on. Employees don’t, so they think they have to choose what the boss wants them to make better which is the weaknesses the boss always talks about. So, if we, as bosses, talk more about strengths and ask people how they can improve ‘em, we can shift that mindset with our employees, also.
Bill: Agree. I’m a huge strength– I’m a Marcus Buckingham fan, right. Just go with strength first.
Josh: I would rather be world class than mediocre. That’s sort of my way of wise guy saying that.
Bill: Yeah. Yeah, I’d rather succeed than not fail.
Josh: Yes. It’s something that we share.
Bill, unfortunately, we are out of time, believe it or not. It goes by quickly. So, you’re an interesting guy and you have lots of interesting things to say. So, I’m going to be bet the people listening to this podcast will love to find you. So, how would they go about doing that?
Bill: The best is the URL that you have there on the screen, catalystgrowthadvisors.com. All of my contact info is there. My book is on my website. You can actually download it for free, if you want a PDF, or you can go to Amazon or audible and do it there. You can book time with me. I have a calendly link on there. So, that’s the best place to find me.
And I have 120‑some‑odd blog posts I’ve written over the last three or four years. Very simple, practical, actionable things. They’re one‑ to two‑minute reads, basically, and give you something to do. And the book itself is a do‑it‑yourself book. It has a page on the website that has 25 different exercises that you can use as you go through the book itself as well.
And for those who didn’t catch the URL, it’s catalystgrowthadvisors.com.
So, Phil, thanks a lot.
And I have two things I would like you folks to do. The first one is really important and really easy to do. As you’re listening to this podcast, unless you’re watching on YouTube or Facebook, and even there you could go and do this. But go to wherever you listen to the podcast and please, please, please, please, please give us an honest – I mean, honest rating review. If you love it, tell me you love it. If you hate it, tell us you hate it. Either one’s fine as long as you review it.
And the second thing is I put together this thing years and years ago, which is a kind of an interesting little thing I call the periodic table of business elements. You probably remember the periodic table from chemistry when you were in high school or maybe even college. Well, we have a periodic table for if you own a business. And it’s really easy to get. You just go to www.stage2planning.com/periodic. That’s www.stage2planning.com/periodic.
And this is Josh Patrick. You’re with Bill Flynn. We’re at Cracking the Cash Flow Code. Thanks a lot for stopping by. I hope to see you back here really soon.
Narrator: You’ve been listening to Cracking the Cash Flow Code where we ask the question, “What would it take for your business to still be around 100 years from now?”
If you’ve liked what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102, or visit us on our website at www.sustainablebusiness.co, or you can send Josh an email at email@example.com.
Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.