In this week's Rule Breaker Investing podcast, Motley Fool co-founder David Gardner is happy to have in studio an author he has admired for years: Les McKeown, whose first book was Predictable Success. After being involved with dozens of start-ups, McKeown developed a clear picture of what worked and what didn't. More to the point, he started noticing that there were patterns emerging in these businesses' life cycles -- seven universal stages that repeat across nearly every organization that lasts long enough to hit them. But the last two, you want to dodge for as long as possible.
In this segment, he offers his best advice and tips for making a 180-degree course correction and easing away from the cliff edge that is the "treadmill" stage, before it falls into the unrecoverable tailspin that is "the big rut."
A full transcript follows the video.
This video was recorded on March 21, 2018.
David Gardner: Now, we're going to shift. We've just left predictable success. The other direction -- we're on a treadmill. Les McKeown -- consultant, author, fellow Fool -- if we're on treadmill, what do we need to do?
Les McKeown: We need to reverse the echo chamber that's causing the treadmill impact, and I want to go back to our styles for this, because it's a very important element. Going through the growth stages, we've got our visionaries and our operators. We've talked about those. Those are not only all you need. Those are not only what you have during growth stage. They're all you need. Those are the key building blocks of good growth.
To get into scalability, we've already identified we need to, in order to get into predictable success, put systems and processes in place. That means that for the first time in the organization, we start to bring in, at a senior level, a third style, simply called the "processor." That's somebody who will put those systems and processes in place.
What does that look like? It might be somebody in HR. It might be somebody in IT.
McKeown: Legal. Just checking the darn documents that we're signing off on and getting ourselves into all sorts of trouble about. It could be just quality control. Warehouse management. Wherever we were dropping the ball in whitewater, we need to bring processors in who will bring process to bear and will make sure that we can conquer the chaos that was being caused by complexity. So, now we've got three styles. We've got the visionary, the operator, the processor.
What happens is that those three styles, which are all-natural styles, all of us show up typically with one primary style and usually a secondary style. I'm primarily a visionary and secondarily a processor. That's a common consultant profile. What has happened whenever we get into predictable success and find ourselves moving toward treadmill is that the visionary, operator, and processor styles naturally left to their own devices will get into conflict, and the conflict is a binary one. It's actually visionary vs. processor. That's where the conflict is.
Gardner: The operator is just figuring out what he or she needs to do in getting that done, but he or she can't figure out who they should listen to.
McKeown: Correct, and any operator worth their salt doesn't want to be in darn meetings. Doesn't want to sit and have the debate. The operator is just saying, "Hey, bye. I have a job to do. Call me when you're finished and tell me what you want." So, it becomes a battle. And it may be personified. It may just be, in essence, the management team battling between the visionary style -- move the needle, big stuff, high risk, do it fast -- and the processor: hold on, more analysis, more data, take our time, slow this down, less risk.
And what happens when we're moving into treadmill is the processor role is actually winning the argument more and more and more. And in treadmill -- you mentioned the six little items that we talked about in whitewater -- there are six of them in treadmill, as well, and the very first one is "hiring."
And when I'm working with my clients, if they're in treadmill, the reason I work with them in their hiring function first is because in treadmill, what happens is hiring becomes an amplifier. We hire processors. For almost every job, we bring people in who are tech savvy, process savvy, system savvy so they can plug and play, and fit with our systems.
We don't look enough for entrepreneurship. For innovation. For all the visionary side of things.
We've got to work with the processor role, not to squelch it. To get it co-equal. What we need is a co-equality visionary, operator, processor co-equal. The high-quality team-based decisions that we're talking about come from having an equal voice of the visionary, the operator, and the processor and not one dominating the other. To get out of treadmill, we need to equalize the processor role. We need to take its voice down so that it's co-equal with...
Gardner: Are you implying, by the way, Les, that processors will tend to hire more processors?
McKeown: They breed like rabbits.
Gardner: I see.
McKeown: You put two processors in a room and leave them for nine months. You come back and there's seven of them, there. I'm a processor. I'm allowed to say that stuff.
And the reason is a logical one and an understandable one. What are those two processors doing? They're building systems and processes, and when they build one, and they want to go on and build another one, who do they hire to manage the one that they just built? Another processor. They're not going to put a visionary or an operator in charge. They're going to hire another processor.
So, yes, they do become rampant if you're not careful, and that's a good sign that an organization is in treadmill, is when you realize, "Hey, we just keep hiring these people who are highly compliant," so we want to fix that.
Here's the problem. Just doing that doesn't fix the problem in the medium or long term, because left on their own, the visionary, operator, and processor will always end up in corners arguing their piece, because their worldviews are fundamentally different.
Here was the magic, final part of the puzzle that took me 25 years to discover. I moved over here from Ireland just about 20 years ago, and the reason I did it -- there were personal reasons, but the business reason I did it was because I knew from my understanding of the predictable success model that there were many organizations who got into predictable success and stayed there in the medium and long term, but I hadn't seen any of those in action. I'd only seen businesses that ticked into predictable success and then fell out again and why they're into whitewater or treadmill.
And so, I'd go help a business in treadmill. Get it back into predictable success. Bring the processor voice back to co-equality. And six months later they'd be back in the same place, again.
When I went and looked at some of the great organizations that I got to observe who back then were in predictable success and had been for quite some time -- organizations like Microsoft, T-Mobile, Harvard University, U.S. Army, Sun Microsystems -- I found something that really took me back, which was that there was a fourth style. It's a style that I've come to call "synergist" style.
And it only emerges in in its full flush in predictable success is the first point. The second point is it's a learned style. A synergist is somebody who has learned that they have to get results through working with teams, not doing it all on their own.
And what a synergist is, that learned style, is essentially the glue that holds the visionary, operator, processor together and in balance. It's the voice on the team that says, "No, no, wait a minute. You're not hearing that right. He's not saying delay this for another six months. He's saying, 'Let's actually read this data and see what it says, rather than depending on anecdote.'"
The synergist is the person who says, "Hey, Mr. Visionary, love that you're just back from a two-week vacation and you've got a notepad full of squirrels that we could chase down, but you know what? What we started to do this quarter we have to finish that first. Let's do that." So, the synergist role is the fourth, vital role. It's the role that gets an organization into predictable success permanently. In the medium or the long term, it keeps the balance right. Absent a synergist, you're either going to fall back into whitewater, again, or forward into treadmill.
Gardner: The Synergist, by the way, is a follow-up book from Les McKeown, so if you enjoy Predictable Success, as I did, you might do what I did and read The Synergist as well. Les, these are people who are typically egoless. They often don't have a lot of ideas. They're basically a great team player. They listen very well, and they can coordinate and make stuff happen, but not by being the operator but really by being the conductor.
McKeown: Correct. And for that reason, there's no place for them in any other stage, really, than in predictable success and early treadmill. You hire a synergist when you're in fun and they're going to leave not long after, because there's nothing for them to synergize. There's no internal conflict or very little. The visionary and operator get along so well together.
It's only whenever you move into predictable success that they really have a role at senior level. And yes, they are typically people who you don't notice individually that much. They're typically wallflowers. They're not always, but usually. What happens is when you get into a team environment that's when their utility becomes really obvious. It's not because they're necessarily overbearing or intrusive.
By the way you can have great visionaries and awful visionaries. You can have great operators and awful operators.
Gardner: Right. Just because somebody is something doesn't mean they're actually good.
McKeown: Correct. And you can have good synergists and pretty crappy synergists. But a good synergist is really like a good referee or umpire in a sports event. The better they are, the less you see them. They're just doing the job. They're making the event go, and when they need to put something back on track, they'll put it back on track. When they need to throw a flag, they'll throw a flag. But a good synergist is somebody who really comes into their own in a team environment.