Robert Craven - Scale Passion: Executing business growth strategies in small to mid-size entrepreneurial owned organizations

Steve

This is Business Execution Radio, I’m your host, Steve Hunt. This week we spoke with Robert Craven, who’s the founder of Scale Passion, which is an organization focused on helping entrepreneurs grow their organization to the next level. Robert is a former CEO of two natural products organizations, so he’s lived that entrepreneurial growth curve, and he talks about some of the things that entrepreneurs need to do in order to take their company from a small organization to a much larger organization, including some of the really hard choices entrepreneurs need to make at a personal level about, do you want to do what it takes to take your organization to the level beyond where you can personally control it through your own personality and force of will. So a lot of really interesting comments, let’s listen to Robert Craven from Scale Passion.

Hi, this is Steve Hunt with Business Execution Radio. Today we’re talking with Robert Craven, who’s the founder of Scale Passion, which is a company focused on helping entrepreneurs to grow their business, and in a former life Robert was CEO of two very successful entrepreneurial companies in the natural products industry. So Robert, welcome to the show.

Robert

Thanks Steve, great to be here.

Steve

So can you tell us a little bit about what Scale Passion does?

Robert

Sure, in a nutshell it is, I am really very passionate about working with change the world entrepreneurs to change the world. I feel like they lead with passion, they have great ideas, and I believe that business is really the hope for the future, and that being able to come alongside great passion entrepreneurs who have change the world products, ideas, even non-profits, and helping them lay in some very tactical and practical methodology for really scaling their businesses is what Scale Passion is all about. I’m writing a book, I’m launching a forum, I’m doing some executive coaching, and like I said, I’ve kind of lived this myself, being a CEO of two companies that have grown pretty rapidly, and are trying to not only bring my knowledge and experience, but also connect with other people who have been successful, or who have a piece of the puzzle that can really help these entrepreneurs grow, including a great company like SuccessFactors, I think your tools are excellent.

Steve

Well thank you. So “change the world” – that definitely gets the whole concept of execution, which this show’s all about. When you look at a change the world entrepreneur or a change the world company, what makes a company a change the world company?

Robert

I think it all goes back to passion and motive, I come from the natural products industry, I also do a lot of work in the non-profits space, and in the realm of organics or, it’s called “aloha space”, lifestyles of health and sustainability, green, windmills, that kind of technology, alternative energy sources – these are really truly passionate entrepreneurs that are, it’s more than just about money to those types of entrepreneurs, they really do want to make a difference, and there are so many of those entrepreneurs out there that could really use our help, and so that’s what I’m all about.

Steve

When you talk about that, I used to talk with a colleague about save the planet work that would sort of fall into that area. I’m curious – when you look at that, when you’re working in an industry that has that change the world, save the planet type of involvement, does that give leaders tools that they can uniquely use to execute on their strategies?

Robert

Well, I think that the key is that 90% of the business truisms out there apply to any type of company, product, service, non-profit, for profit, big company, small company – really the core truisms to building a business are the same across all those different types of companies. Part of the book that I’m writing right now, it’s called “Scale Your Passion”, it’s about those truisms. The other 10, 15, 20% really applies to the life cycle you’re in as a company, whether it be start up, or small to medium size company, or even a larger company, the type of product you sell or service – it gets more specific, but seriously, there’s basically five truisms that I write about that, if applied well, can help any type of company.

Steve

And what are those five truisms?

Robert

Set you up nicely there, didn’t I, Steve?

Steve

Yeah, you did.

Robert

The first three are really key in on planning, and when you talk about small companies, or small to medium sized companies, I think that’s where the biggest opportunity is. It’s much easier to execute, as I know you know, when you’ve got a good plan and you’re really focused on the right kind of plan, so the first three business truisms are: know thy market, very straightforward, but the market is about not only who your customer is in a deep way, but maybe your customer’s customer? Who is the competition? And what are the major macro trends that really affect your business? So that’s number one, know thy market.

Number two, know thyself – I find a lot of this, especially small businesses, or medium sized businesses that have partners, don’t take the time to truly understand what each of the partners’ or the key stakeholders’ in the business personal objectives are – where do they want to be in three, five, ten years, and I’ve got examples about that one all day long. So know thyself, what are you good at? What are the stakeholders’ core objectives personally? Are you good at sales and marketing, but lousy at engineering? Really identify those things that you’re good at as a company, and places that you need help. So that’s number two, know thyself.

Number three is know thy purpose, and that’s where you start getting into things like mission statements, vision statements for small/growing companies, or even medium-sized companies, I like to key on a three year vivid description of where we’re going, and then break that back down into a three year road map – year one, year two, year three, so it becomes very real, what we should be focusing on, which leads to step four – execute thy purpose, so without doing steps one through to three, know thy market, know thyself, know thy purpose in a clear way with a vivid description of a three year road map, it makes it very difficult to do step four, which is execute thy purpose, and we could talk about ways to execute, but the core message that I would say is, if you do steps one through to three right, and in a deep way, step four, execution, becomes that much easier, and the last one is establish a rhythm – I’m a big believer that, even with the right execution plan on top of a great business plan, especially for high growth companies, it’s all about establishing a rhythm – when do we meet? How do we communicate? – externally, internally? How often do we communicate? And you’ve got to establish that rhythm, and it allows for all the key stakeholders, especially your employees, to really get comfortable with the growth of the company, and when they’re comfortable and they understand the rhythm, it’s much easier to take the company to new heights.

Steve

I like that framework, I’m curious, when you look at those five things, are there any one of those five that really stands out, that cause companies the biggest problems, when you look at organizations that are struggling to make the leap to the next level, of those five is there any one that really most frequently rises to the surface as the issue?

Robert

Well, I think there is, but I think you have to cut that and filter that in terms of the type of, well, not the type of company, but really the life cycle that the company’s in, so a start up, for example, has a different type of issue than a company that’s growing from 10 to 50 million, or 20 million to 30 million, or over 50 million’s going to have a different issue. I think that in general, what I find from the companies that I’m dealing with, they’re typically more focused on execution and less on planning, and could really use some help when it comes to either knowing their market in a deeper way, or knowing themselves in a deeper way, and really taking a full assessment and account of what they’re good at, what they’re not so good at. I see a lot of conflict in smaller organizations at the top – one partner might want to grow it to sell it, the other partner might want to grow it to give to their kids, that kind of conflict can be extremely difficult for a company that’s trying to execute, obviously, because one wants to save money and put it in and leave it there, the other wants to invest in infrastructure. So I think it just depends on the type of entrepreneur, and the situation of each company.

Steve

Well, you mentioned this one, the “know thyself”, you’ve mentioned a couple of times, is often something that’s overlooked but causes a lot of problems, especially maybe in smaller companies where they haven’t established the rhythm that you talk about. Can you expand a little bit on what you do with companies to know thyself, because I agree with you, I think very often leadership of organizations doesn’t fully understand why the people working for them are actually working for them.

Robert

Right, and that’s core and key, I think the best entrepreneurs, or the best CEOs, that I’ve ever met are intent on figuring out what is the passion and purpose, and what fires up each and every employee, and making sure that they’re in a position that allows them to really excel, and the way that I did that as CEO of both of the companies that I’ve run, very high growth, is I made the time to sit down with each and every employee and find out what it is that gets them out of bed in the morning. A lot of times if you ask questions like, what would make you get out of bed at 4.30 in the morning with a smile on your face? Or what makes you laugh, what makes you cry, as it relates to why you’re on this earth, or what your purpose is, or why you come to work, you can very quickly get to the heart of what each and every employee, what fires them up, and I can tell you, the best employees are in positions where you have matched up purpose, passion, skill set and position, and if you make all those things match, then you’re going to have an A+ employee, and the goal of every CEO should be to have A+ employees in every single position. A great book that I’ll recommend called “Top Grading”, that gives you a framework for doing that in a tactical way, identifying who your employees are, and where they should be in the organization, but I would say that that’s one of the top two things that a CEO or leader can be doing in their organization, is making sure that every employee is in the right position for their skill set and their passion.

Steve

That makes a lot of sense, I have to admit that your example of what brings a smile to the faces of employees at 4.30 in the morning might get you into some different HR problems! But if you look at that, it’s one thing to do that in a smaller organization where you kind of know everyone – can you give examples in a larger organization? Can you give me an example of a large organization you’ve worked with where really they’ve managed to maintain that? – because I think in a small start up, I’ve seen this where people do know each other, they’ve hung out, they kind of are friends, and they come over to each other’s houses, but as you become a larger and larger organization, you lose that, you have to, you lose some of that family feel, so to speak? Can you give an example of larger organizations that have been able to keep that sense of really kind of really knowing what drives employees, even though they’ve become a much larger organization?

Robert

Sure, when I was at Garden of Life, CEO, we grew from 16 million to 60 million in two years, and at one point we were hiring 10, 20 employees a month, we grew from 50 employees to 200 in a couple of years, so we met 200 employees, and that might be a large division in a larger company, like a department or division. There are things you can do to make sure that you are staying in line with these principles, I think that making sure that your direct line of reports understands very clearly what you expect, and how you treat them gets forwarded, gets pushed down to the people that might report to them, is important. I also talk about the four walls of building culture, and any organization, no matter what size they are, if the leader of that organization can focus on these four walls, I think that all will be well, but the reason the wall analogy is so good is because you had to build each wall brick by brick, and just real quickly, the first wall is vision and mission – really understanding where we’re going as an organization, whether it be a large or small organization, and what we do and why we do it, which I think is what makes a good mission statement. Most mission statements fall down on explaining why we’re doing it, which really gets to the essence of the passion and the emotion behind the mission, so mission vision is the first wall.

The second wall is core values, and the best of the best companies, especially any size company, but it’s, like a Johnson & Johnson is a great example, they’ve had their credo, which is really an outline of how they do business, and their core values, for many many years, and any company should be able to spit out what their core values are, right them down. So that’s the second wall, and the core values really tell all your employees how you’re expected to act, and what’s acceptable and what’s not. The third wall is a specific individual’s role and responsibility, so that ties in to clear roles, clear responsibilities, and also performance reviews, bonuses, how do you motivate that employee?

So that’s the third wall, and then the last wall is, what I’ll call SOPs, or standard operating procedures, and those operating procedures tell individuals how to interact with each other, so Steve, you’re going to do x, and then at step four, you’re going to hand it off to Jason, and he’s going to do steps five to eight, so having those SOPs in place is the fourth wall.

So you’ve got a vision mission, wall one; you’ve got core values, wall two; specific roles and responsibilities, wall three; and then the last wall is SOPs, or procedures, that, once you build those walls brick by brick, whether it’s a department, large company, small company – whatever, the higher those walls are, the more comfortable employees are in the organization, they understand the culture, they’re able to make decisions, you’re able to delegate down into the organization in a deeper way. Does that make sense, Steve?

Steve

It does, and I’m assuming that these four walls are largely built in that four step, the execute thy purpose step? – is that where you start building those four walls?

Robert

Sure, I mean a part of establishing the rhythm, all the steps are important, but a part of the establishing the rhythm is how you communicate as a CEO or a leader, how your organization communicates, so you can naturally see where communicating the vision and mission monthly, or in your bi-weekly newsletter, or in your, every six weeks you stand up and do a town hall meeting with all your employees, and you call out examples of employees who are really living the mission, and you reiterate the vision, and you reiterate the core values in every single communication. So part of establishing a rhythm is the whole concept of when and how we communicate, but in terms of building up all those four walls, for example, core value, vision and mission, are really built in kind of step three, know thy purpose – where are we going? Why are we doing it? Those big questions, and that step three, know thy purpose, is really built on the foundation of, know ourselves and know thy market, right?

So they’re all kind of interrelated and connected, but you’re right to think that the stronger the walls are, the easier it is to execute, because one of the biggest problems I see with entrepreneurs who are trying to grow is, a typical entrepreneur organization (??? 14:39) from zero to five million or ten million in sales, is really commanding control, it’s really about the entrepreneur making every decision and surrounding him or herself with people that will do what they say, and that doesn’t scale, it scales to a certain level, and it’s absolutely critical to get a company from like zero to five or ten million, and sometimes you have 20 or 30 million, depending on the entrepreneur, but at some point the entrepreneur just can’t scale that decision making any more. So they’ve almost got to do all the things that got them to that point are now negative, and they’ve got to almost turn that around, and start to do things in a much different way, which means delegation, and so that’s where those four walls really come into play, and whether you’re leading a team within a big company or leading a small company that’s growing, the four walls can apply.

Steve

I think you raise an interesting point, which is, with the entrepreneur struggling to go from, the smaller company where they control everything in the company, it’s just a reflection of their personality and desires, to creating a process that sort of transcends the individual entrepreneur, and in leadership, very often you know entrepreneurs are unable to run their company past a certain size, I think you have serial entrepreneurs, they start companies, they get to a certain size, and then they either exit, or are asked to leave? So when you look at companies where entrepreneurs are struggling with that, what advice do you really give them to say, look – you’re getting to the size of a company that you can’t manage this company through the sheer force of your own will any more, you have to let go – how do you engage with entrepreneurs? And do think that’s something that some entrepreneurs simply can’t make that transition? Or is it more a lack of understanding how?

Robert

I think there’s a third option in there, and it’s basically that they just have to choose which path they want to go. On my website I actually have a survey called “Are You Ready?”, and it’s all about are you truly ready to try to scale your business? And it asks some tough questions, like, are you prepared to tell your mom she’s not qualified to be CFO? And that’s a funny way to put it, but it’s very real – they hire friends and family in the positions where they might not have had the experience to take the business to another level, and if they’re not ready, that’s OK.

So there’s a great article out of Harvard Business Review, you can actually get access to the executive summary on my website, but it’s called “The Founder’s Dilemma”, and it’s been heavily studied, and the founder’s dilemma is basically the choice between whether you want to be king or rich, and it’s a choice, and it’s not a good or bad choice, not every entrepreneur wants to scale their business to 100 million, some are completely satisfied running a family-run business at 10, 15, 20 million, and I say, hallelujah, that’s fine, but they do need to make the choice, because where they get in trouble is an entrepreneur that wants to remain king, but they go out and raise money, or they hire people with the promise of riches, and so that’s where the conflict comes in, and that’s why many entrepreneurs end up getting run off as soon as they bring in outside capital, because they have to understand that when you bring in outside capital, it takes a completely different skill set to scale a business, and so I spend a lot of time with the entrepreneurs that I coach and counsel, asking them the question, are you truly ready to make this change? – and it can be a non-profit, I’m working with a non-profit right now actually that’s been around for 12 years, and the founder’s really truly ready to take this non-profit to another level, and I’ve spent a lot of time coaching that social entrepreneur, that non-profit entrepreneur, if you will, on what it means to hire people that are going to make more than you are for maybe six months to a year, until you raise more money, or there’s some real differences here, being able to keep married couple in a small organization, a family-run business, is just fine, you have married people playing different roles in a company that’s small and is family run, but as soon as you start scaling that business and putting in systems and processes necessary for scale, that married couple causes such a conflict – are you prepared to tell one of the people that are married in your organization that it’s not just going to work any more in the new environment? So it’s those kinds of conversations you need to have – does that make sense?

Steve

Absolutely, and I think it goes back to that know thyself thing, that you have an organization, and recognizing – at the end of the day, I like that – do you want to be a king, or do you want to be rich? And recognizing what it takes to execute in large companies is different from what it takes to execute within a small company.

Robert

I’ve met a lot of entrepreneurs who have chosen the king path, and that’s great, it’s a nice lifestyle, and it’s really, I’d say, probably 80% of the companies out there in a certain size range are run by entrepreneurs who are kings, and that’s OK, not every company needs to scale or even wants to scale, when the conflict happens is when the person wants to be king, but they try to raise money or they try to bring in people with the promise of riches, and you just get so much conflict if you’re not really clear on what it means to be king versus rich.

Steve

That’s an interesting point. I think the last thing I’d like to touch on gets to what we were talking about earlier, your Scale Passion, this idea of change the world companies. One of the things, as companies get larger, is, they start out with very strong values and passion, and as they get bigger, they start just looking more like the faceless corporation, and you talked about the rhythm, kind of establishing the rhythm. When you look at the organizations that have been able to keep this sense of almost an emotional purpose, what is it that they do? As you’re growing a company, and saying, this is what you have to do, so that as you’re executing, you don’t just turn into a faceless organization, you keep that sense of an emotional tie to your core mission.

Robert

That’s a great question Steve, and I think that is the core question, I think that building a mission statement that bakes in that emotion and that passion of the entrepreneur typically is step one in maintaining that long term, and I’ll give you some perfect examples: Kashi is a great company from my industry, the natural products industry, and no-one would know that Kashi is owned by Kellogg’s, and Kashi sold to Kellogg’s several years ago, but what Kashi did was they built a brand around their mission, and the value and the culture that they were building as a company; the same thing with Burt’s Bees, Burt’s Bees is another good example, and these are two companies that built a culture that spoke to a certain type of consumer, that really bought into that, and spoke to a certain type of employee that was there to support that, and when they ultimately ended up selling to Kellogg’s and Clorox respectively, Kellogg’s and Clorox was smart enough to know that they didn’t want to mess with that brand, they didn’t want to mess with that culture, you see what I mean? So they built their companies to 50 million, let’s just say, to 100 million, and then they recognized that, to be able to touch more people with this brand, they needed to sell to a Clorox or a Kellogg’s that could take them to another level, but by baking that mission and that culture into everything that the brand stands for, and being out front with the emotion, you’re being out front with the leadership and the founders and the pure emotion and passion that it takes to build that kind of brand, when the companies that bought that brand took them over, they recognized the value in that brand and they chose not to muck it up – does that make sense?

Steve

It does make sense, and I’m curious from an execution standpoint on the Kellogg’s side, does that create some problems that you have, a large organization like Kellogg’s, and suddenly you’ve brought in this … I don’t know if it’s quirky or not, but we always sort of like to think of those companies as somewhat quirky, like Kashi, and bring it in. How are they able to mesh that, those two together?

Robert

Well, if you think about it, the back end of any company, accounting, HR, IT, the backing guts of any company, that’s 100% best practices, OK? So, for example, AR – every company, every best practice company, pays the bills the same way, so when you think about a Clorox coming in to support a Kashi, they recognize that they can support the company on the back end with very little conflict, in fact, most of the people in a Kashi, and I’m not speaking for them, I don’t know them specifically, I’m just guessing and using them as an example; but most of the people in a Kashi are more about the brand and the emotion and the new products and the product launches and things like that. So they built a brand that allows for the most passionate people in their company to continue to do what they do and do it well, and what Clorox has done is chosen to keep them separate as a team, bring in the right kind of employees that can help support those very emotional, passionate entrepreneurs, and then disconnect the back end from Kashi completely, and allow for Clorox to support that, so you’ve driven up the profitability. So if it’s done right, it can be a nice win:win.

Steve

So actually, you mean Kellogg’s, Kellogg’s owns Kashi, and Clorox owns Burt’s Bees, OK.

Robert

Correct.

Steve

Correct, yes, I’m sorry if I was using that, but the point is that the larger companies can provide a level of scale on the back end that the smaller companies just don’t have and don’t really care to have, to be honest, I mean most entrepreneurs of high growth companies do the back end pretty poorly, because that’s not where the passion lies, if you see what I mean?

Robert

No, that’s a good point, I think it’s interesting, as you’re growing an organization. Well Robert, I want to thank you for taking some time on Business Execution Radio, and sharing some of the things, I think some of the insights that you’ve provided, particularly related to entrepreneurs, and that concept of know thyself in particular, as companies are growing, is a very unique one, I think it’s not recognized enough, not just in entrepreneurial companies, but in large companies too. Do you have any final thoughts, or things you’d like to share with our audience, before we sign off?

Steve

Well, I think I would just encourage … I meet a lot of entrepreneurs who feel like it’s not about them, and I think that the last thing I would leave with the entrepreneurs or with the companies that are listening is, it’s OK for it to be about you, it’s OK, as long as your intention is pure, as long as you’re trying to do something bigger and better than just make money, which isn’t a bad thing, but I think that most entrepreneurs out there that start a business start a business for other reasons than just to make money, and if that’s who you are, it’s OK to be up front with that, I mean we’re in a world now of social networking, I think that there’s a real trending towards wanting to know who you do business with, which allows for a small to medium-sized business to kind of run rings around the big guys, because they’re just not that open, so I guess the last piece of advice I would leave is, it’s OK to be yourself, it’s OK to lead with emotion, it’s OK to get out there with how you’re trying to change the world, if that’s who you are, and give yourself permission to lead with that. As long as your intentions are pure, those people that like what you’re saying and like what you’re doing will be very loyal to what you’re doing, and they’ll help you grow.

Robert

I think that’s good advice, and it doesn’t mean you won’t be able to be successful too, Richard Branson seems to have done OK, and he definitely is …!

Steve

That’s a great example!

Robert

Of being himself! Well, thank you so much for appearing on the show, and we’ll put a link to your website on our podcast site, so people can go and check out some of the things that you shared from Scale Passion, and I enjoyed talking with you.

Steve

Appreciate it, Steven – thank you so much.