Why You should Hire a Chief Operating Officer to Manage the Daily Operations of Your Company. – with Kevin Morgan

OWEN: Hi, my name is Owen McGab Enaohwo and welcome to the Process Breakdown. It’s where I bring on successful entrepreneurs and executives to come on here to reveal how they’ve been able to create systems and processes for their businesses that now enable them to run their business literally on autopilot without their constant involvement. And today my guest is Kevin Morgan. He is a COO of Anant Corporation. Kevin, welcome to the show.KEVIN: Thanks for having me it’s good to be here.OWEN: So, I’m excited to have a Chief Operating Officer on here because I want to really get your insight as a Chief Operating Officer.

KEVIN: Sure.

OWEN: And let’s start by talking about what exactly does your company do and what big pain or problem do you solve for your customers?

KEVIN: So, we offer a variety of services. What we are is a boutique internet architecture firm. We help companies and entrepreneurs leverage the power of the internet to run and grow their businesses. The pain point is we offer– our solution is virtual CIO and CTO services. We help companies who want to grow and expand, who may not be able to afford a Chief Technology Officer, or a Chief Information Officer. So, essentially we’re an advisory, consulting company. And companies can hire us on an hourly basis. We work off a retainer basis where time and materials company. And we provide those very high level services and advisory to chief executives, companies at the high level. We also have a development team, so after we architect a solution. We can actually develop and implement as well.

OWEN: Okay. And so, how many– because my listeners always want to know the scale of the company.

KEVIN: Sure.

OWEN: So how many full-time employees do you guys currently have? [Unintelligible 00:01:51]

KEVIN: Yeah. We have 4 full-time employees, and then we have anywhere from 6 to 15 contractors.

OWEN: Okay.

KEVIN: We like to utilize the best talent that we can get per project. And so if you’re familiar, well you are familiar. You are in the IT space. A lot of that can be burst, meeting room. We get large projects, we need to bring on people. We’re a growing company. I guess we were founded about 4 years ago. And so we’ve gone through a cycle of growth and contraction. And now we’re at a point where we’re really steadying out and we can bring on full-time employees.

OWEN: That’s awesome. And so, what was last year’s annual revenue, and what do you guys hope to generate this year?

KEVIN: Sure. So last year’s revenue was around 340,000. Previous year before that we actually lost a significant amount of money. So when I came on and we as a firm sat down together we said, “Hey, what are we doing right, what are we doing wrong, and what changes do we need to make?” So we made some very positive and difficult choices to turn that around and this year I think we’re on target for three quarters of a million dollars.

OWEN: Okay, and you said [Unintelligible 00:03:03] $750,000 [Unintelligible 00:03:05].

KEVIN: Correct.

OWEN: Okay, so, usually I get the CEO, owner of the company on this show. And so today I’m doing some things a little bit different, I’m getting a COO on the show. And I want to know, what exactly is your role at the company? What do you do?

KEVIN: So I’m actually a managing partner, I’m also a part owner of the company. So you do still have an owner if not part of one. My role is– the CEO’s role is to set the division and the strategy in the company and my role is to get it done. That’s essentially what I tell him in our team is that CEO says this is where we want to go. And my job is to make sure we get there. So, I’m in charge of any number of responsibility areas. I’m in-charge of human resources, I’m in charge of operations and infrastructure. The project management office, and also finance and accounting.

OWEN: So basically, the CEO comes with a vision but you manage the details and connect the dots to make that vision happen, right?

KEVIN: Sure. I make sure that on a daily basis we execute and we actually achieve what we say we’re going to do.

OWEN: Okay. So let’s go back to before the business got to where it is now, where you have things a little bit more organized. I’m wondering, what would you say was a lowest point of the business and describe how bad it got.

KEVIN: At any start-up there are highs and lows. I think the most challenging point is when there is a real mismatch between cash flow of revenues and accounts payable, right? We always lead to and want to pay our people on time. And as any businessperson will know, cash flow is really where how you stay in business. And so we were having to juggle a lot of clients, new demands, and we had to learn how to essentially scale up the business. And this is where the conversation comes to processes and how we develop a system that can scale and grow. So this was probably October 2012. We were having a lot more demands, and we were learning that the systems in place weren’t adequate. We needed to organize ourselves so that we can meet the demands of our customer. Not only meet them but with a quality that they’re willing and happy to pay for.

OWEN: One of the things you said during the pre-interview is that you guys would actually be pulled in too many different directions and not being able to focus on the high value strategic test. Shed some light on that.

KEVIN: Sure. So this goes to your question on what books we read, or what has really influenced our thinking. And we do a lot of lean methodology and lean start-up. One of my favorite books is Good to Great. What we were trying to do is too many things at once. We were using different frameworks. We’re mostly an asp.net shop, so C sharp and Microsoft technologies. But we were also doing a lot of smaller projects, and the difficulty with very small projects is there’s a lot of administrative overhead cost for managing. Whereas if we have a much larger project, administrative cost consume a smaller part. But we were trying to be all things to all people. So were doing both internet architecture and internet strategy. And what we found was we couldn’t focus on our core value. We were having to sacrifice quality or knowledge and technical ability to make sure we were able to offer. And so, during that period what we really had to do we say, “Look, what are the services that are core to our identity as a company and which ones aren’t?” And those that aren’t we’re going to have to cut back and no longer offered. And that’s what we did.

OWEN: Okay. So, we want to jump into details of what exactly you did to solve the problems you had at the lowest point. And I want to get specifics of maybe what was the very first thing you did. That way the listener can–

KEVIN: Sure. So, again, it’s very fundamental. Your revenues have to be greater than your cost. It’s very fundamental business. So we had to take stock and say where we’ll be spending our money and where are we making our money. Any mismatch there we had to identify how could we reduce cost. The way to make more profit is to reduce your cost and increase your revenue, and make sure you’re not overspending. So that’s what we did. And we had to choose product lines, we had to decide what resources both personnel and physical assets. We’re the most productive and we’re helping us to get closer to our targets, and which one’s weren’t either good fits or didn’t quite help us get where we wanted to go. And so that’s a very gentle way of saying in certain areas we had to downsize, and others is where we reallocated our resources.

OWEN: So I get the overview and kind of like the concept of what you guys did. But can you give us some specifics and even with some example on one part of the business. What did you guys did to resolve that problem at that time?

KEVIN: Sure. We have a core office. Our headquarters are here in Washington, D.C. We also had a satellite office in New York, and a satellite office in Taiwan. And the goal with the Taiwan office was to identify very good highly skilled labor that we could then leverage or arbitrage the difference in exchange rates. And really that was a distraction. Very good people we learned a lot, but it wasn’t in our core business and we didn’t have the resources and the size to really justify several offices. So we ended up closing our New York office and we ended closing the Taipei office. We still have a presence in New York through one of our partners, but we really cut cost, we reduced the size of our office. What we tried to do was reduce our fixed cost. So anything that we could do, there were times when we were tempted to expand, to take on a new office. So everybody gets excited about shiny things, but we had to make really tough decisions. And in other areas when we closed our internet strategy offering, those people that were focused solely on internet strategy, we actually try to help them find new jobs and new positions with companies because we just not longer we’re going to offer that service.

OWEN: So basically, the main framework behind that was that when you guys said to make a change you said, okay, 80-20, what is the 20% that bring in the most revenue into the business, let’s zero out what those are. And when if you know what they are and then so we can focus on only that. And then everything else that is time wasting and wasting our money let’s just get rid of them. And then that’s how you guys started, and then you started putting the pieces into play.

KEVIN: Yeah, exactly.

OWEN: Let’s talk about what specific systems now are you having a business that enables it to run predictably. And I think during the pre-interview you said that the company broken down into 5 clearly distinguished parts or areas. So let’s talk about the 5 areas in the business?

KEVIN: Right. So those are what we call responsibility areas, and our CEO and our team we’ve identified these are really the key units that make or break any business. And they go through sales and marketing, finance and accounting, operations infrastructure, through those whole areas. And actually we used to call it human resources, now it’s leadership and management where we try to sharpen the saws. Steven Covey says to keep us going in the right direction. I don’t want to say bifurcating, but by really segmenting we can develop key skills and excellent skills in each area, and know clearly– as a business as you know systems and processes, everything leads together and it’s a whole system. But by focusing on these areas, assigning clear responsibilities to individuals we’re able to keep track separate goals and also integrate those into the holistic kind of strategy for the company.

OWEN: So the listeners know the 5 different areas, let me just repeat them as finance and accounting, operations and infrastructure, sales and marketing, products and services, then leadership and management.

KEVIN: Correct.

OWEN: So I want to talk about, if you can just jump into each of those 5 areas and talk about the systems you have in place. You don’t have to go into the full details just yet so that you get a snippet of what’s happening in each of them.

KEVIN: Okay sure. So, sales and marketing we have our lead harvesting, we have our qualification and proposal inclosing processes. Is that enough a detail I kind of go through with these?

OWEN: Yeah.

KEVIN: Okay. Operations and infrastructure, actually our project management office, since we are a time and materials company and we treat our work as projects. We go through the on-boarding process. We have 4 phases of any project which is our planning and discovery process where we take stock, understand what currently exist, our design architecture process where we identify and envision, and then map out or architect the future state, the solution development and deliver where we actually do the development and the creation work, and launch a maintenance where we go live with the product. And then maintain it indefinitely over time. So that takes care of operations and infrastructure, finance and accounting we have our accounts receivable process where we send invoices where we make sure that the clients we get their payments in a timely basis is always incredibly important for a business. So we have accounts payable and the budgeting process is kind of our 3 key processes that we focus on. And then products and services is where we develop our new products. So we have our research and development processes, we have our implementation processes. And then we use a lot of feedback loops of what you might call monitoring, controlling from a project management perspective. But here is we take stock, we get validation from clients and customers, and then improve, continuous improvement. And then leadership and management is where we do human capital development. It’s where focus and set goals for individuals in a company, and make sure that all those process– what we call it as a Phoenix, and it bridges all of these different areas. But the core of it is leadership and management. And that’s kind of somewhere to Google’s okay, our objectives and key results. So as a company we set our objectives and our targets. We focus on what are the key results we want to have throughout the year. And then we break those down to the individuals so that each individual has their own goals and objectives. And ultimately I call it a roll up and roll down, the individual’s goals and objectives for each quarter, month, year, should roll up and support the overall vision of the company. So hopefully that gives you an idea of the main processes.

OWEN: So we get the 5 different areas, but then you took it to the next level where you say, this is during the pre-interview, each area of the business you guys have identified critical processes that must get done. Can you explain that?

KEVIN: Sure. So, in a company each areas again, having these areas help us to focus and identify kind of groupings of key processes. So we look at each of the responsibility areas and we say– Of all the things that we do, and it’s not unlike the Pareto rule that you said, the 80-20 rule, which of these processes, if they were to break, would be considered a single point of failure or a critical point of failure for the company. Which would bring the company to a halt? And that’s essentially, in each area we don’t want to go crazy, we don’t want to overcomplicate this, but how do we identify 3-5 processes that must get done.

OWEN: Okay, so you said in each area you have the roles there and the responsibilities they’re outlined. And then you also create diagrams for the processes. And then on top of that you now have step-by-step instruction procedures or instruction manuals for each of them. Let’s talk about these three things that I just mentioned to the audience.

KEVIN: So this goes from my kind of training and background in ISO 9001 quality management processes and also CMMI certification when I worked at another technology project management firm. We really try to use a framework that policies, processes and procedures are kind of the hierarchy. You have the overlying policy which is invoices must be submitted in a timely fashion, or here’s our time tracking policy. And then from there you have procedures or the process which is the flow, the inputs, what does it create to actually go through the process, and then what is generated or created out of this process. And then we have procedures which are this very detailed, step-by-step instructions for each step of that process. We do diagram. A diagram helps to give– I’m a big fan of graphs and charts because it helps me digest a lot of information where we use a diagram in swim lanes. Meaning HR is responsible for this part of the process and then finance and accounting is responsible for this process. And use a whole arrows and flow diagrams. It really helps us to understand from an organizational point of view what we’re trying to do, who’s responsible, what information, or data, systems must be used as inputs to create some output.

OWEN: Yeah, so basically, I want to give a summary to the listeners so that you guys have everything based on this 3 key framework. Policy, procedure, and process, the policy being the rules. Like the rules you think of you driving on the road but then there’s some rules you have to follow, those are the policies, right? And then you think of you using a GPS with this step-by-step instruction, turn right, turn left. That is the procedure. But then, if you have a map, it’s like the overview, like the 30,000 foot view of where did their action of you’re going, but it’s an overview. That is the process.

KEVIN: Right. So the roll down of that is the policy sets the big picture, the process shows you the pieces you need to go through and then exactly what you said, the procedures or the turn-by-turn instructions.

OWEN: And I’m curious, what tools are you using for each of this ones?

KEVIN: So we kind of take out our medicines so to speak. We have entrepreneurs use free and open source software is a service solutions to run their business, A, most efficiently, and B, the least cost for every stage of their growth. And so we take advantage of Google Apps for our business. We use that for years and we do the process flow diagramming using the Google Diagramming or Google Draw solution. We have a project management application you call the Activecollab where I did an evaluation of 5 to 8 different online services. We identified this one as being really, really good for us and we use milestones and task and subtask to help us march through each of the steps or the procedures. Those are really the two– maybe this is understood by people. We use Google docs to actually write out the policies right? So it’s really easy to share across the institutional process or organization, everybody, because they have the Google app email account for– we use Google for domain, for business. Everybody has access and can control who sees what, whether to view access or edit access. That’s a little into the nitty gritty, but I think that answers the question.

OWEN: And so, you mentioned during the pre-interview that you have a, and only good for an example of a time tracking process. That way we’ve shown the listeners the framework you’re using but you want to make that framework more concrete by using an example which is a time tracking process that you created for the company. So, let’s talk about that.

KEVIN: Right. So we’re a tie and materials company which means we bill the quarter hour. So we have to track our time. Without tracking our time we wouldn’t have any idea of what we should be billing the client and how much and what rate. So, at the heart of our company identifying one of those key, critical processes was time tracking. I created the policy with the input of our team that time must be submitted daily, time must be accurate, and time must be tracked against both internal and external projects. Internal being for Anant the corporation, and then external being for our clients. And every time [Unintelligible 00:20:18] must be tracked against an actual task. And what that allows us to do with that information we could begin to see really granular trends of where we’re spending our time, where we’re making money, where we’re not. It’s just an incredible tool for us. And so that’s an example of a policy that it must be done timely, accurately, and in this system. The process then is work on a task, input your task into Delta, and then the next step is–

OWEN: What is Delta?

KEVIN: I’m sorry, Delta is our Activecollab, it’s our project management, it’s our codename. We got to feel somewhat cool, we are techie so we can get pretty nerdy and we got to have some fun with it.

OWEN: Okay, go ahead.

KEVIN: I’m glad you asked that question. And so the process goes, a task is assigned, and then the task is performed, and then the time is recorded in Delta then the time is, and submitted. And then there’s a review process which I am in-charge of. At the end of each day and each week I review all the time entries to make sure there’s a clear understanding of where our efforts have been. And then part of that time tracking process is our contractors. And even internally we then submit invoices and that’s how we get paid. So that whole process runs through the task assignment, reporting the time once the task is completed, a review step, and then invoice submission step, invoice review and approval, and then invoice payment. And that’s really the whole process. It’s how we do the work and it’s how we get paid.

OWEN: One of the things you’ve mentioned too is that you guys make use of short instructional videos. Explain that too. What kind of information do you put on there?

KEVIN: So, for instance, when we do the invoicing, what we like to do is not reinvent the wheel. You learn that the hard way. One, we have a feeling that most things are not new under the sun. They’ve already been invented or their ideas had been out there. What’s really different is the execution. So we try to take advantage of when we do invoicing we use a specific system. However, that system, we use fresh books. They have a lot of good documentation of how to use their system. But the detail that we use in videos is when there are specific steps in our process that are unique to us. And then what we do is anybody will create a two– we try to keep it like 60 seconds to 90 seconds at the most instruction video on how to submit an invoice, how to track your time in Delta on a task. Because again, sometimes people can read the instructions but often times seeing people, seeing them go through the process on a short video is really worth the effort. Because what we don’t want to do is spend a lot of effort in training and retraining. By having it on video, it’s captured, it’s something somebody can review. And we only have to do it once, and hopefully we don’t have to go back and spend that effort. So it’s a way of starting here. We’ve created the video. Next time we start at zero we’re here. And you just keep building on the– it’s institutional knowledge essentially.

OWEN: One of these that you mentioned during the pre-interview that I like is that you also make sure that everybody who gets to read the manual and watch the video instructions and how to do things, make sure they actually acknowledge it by signing a document, why is that important?

KEVIN: Right. So, it’s a part of closing the loop, right? I may think that what I’ve written is clear and you may look at it and say, “Okay, yeah, sure, I’ve got it.” But in reality when you actually go to implement it, the other person doesn’t understand. And it’s not necessarily that, that person can understand or that they’re doing something incorrect, it’s simply that my way of communicating doesn’t work for everybody. And so, by signing an acknowledgement what it does is it really puts accountability on the person receiving the instruction to make sure that they really understand. And we found that it’s just a way of holding people accountable in a very positive way. And it avoids a lot of rework and avoids a lot of errors. And one of the things that we’re really proud of is when we transition to this new process, we only have 5 errors. And I think a lot of that is attributable to sending out the policy, asking people to reading. And then getting their signature. When you do that people tend to take a few more minutes to really understand it when they know they’re putting their own name on the bottom line so to speak.

OWEN: And so, this is a question that my listeners they like when I ask is basically I’m just going to ask you to think of your business like a conveyor belt. On one end is potential customer and then the other end is a customer, a lead who’s not yet a customer on the other end. But on this other end now is someone who is a customer who’s paying you and you’ve guys have delivered [Unintelligible 00:25:23] excited. But in order for that transformation to happen you want to understand behind the scenes what systems are working behind the scenes to make that happen?

KEVIN: Sure. So when you say systems are you talking about actual technologies, or are you talking about how we approach–

OWEN: Yeah, technologies, how you approach it, whatever is happening behind the scene, being human input, or machine– getting it done. So that person gets transformed from a lead to a happy customer who that service is delivered.

KEVIN: Right, exactly, and that’s exactly how we view it. It’s the entire life cycle of a potential client or a lead. And really, so it begins through the sales process, the system that we use, one of the application is called Nutshell software is a service to track our leads. We go through a 3-4 step process where we have an initial conversation and then we go through signing an NDA with them. And then we do a letter of intent or a Master Services Agreement. Because really, one of the difficult things in sales is knowing who to invest your time in. And if we were to invest an hour to, half hour, ten hour of every single person we come across, we would end up talking and never closing deals. And so part of the sales process is filtering. Who your cold leads, who are our warm leads, and who are our hot leads. And each one of those, once we determine– and the goal really is to determine as quickly as possible who our hot or warm leads are and focus. Again, you hit it right on the head with the Pareto rule, 80-20. It’s those 20% of the leads, they’re going to lead to 80% of our revenue if you interpret it that way. And so, it’s a lot about conversation where you Docusign to send our documents, and that’s actually how we get people to acknowledge the time tracking process, Docusigns. It’s an excellent service for sending legal documents and getting signatures. So we really avoid a lot of paperwork and we can keep everything digitally. We have folders set-up in Google apps where during the sales process all the notes are shared in there. And then when somebody becomes a client we close it. We then move that folder into the next responsibility area which is products and services. We create a client folder for that, we transfer all the information. Again, because it’s on Google apps everybody has access to it and it’s transparent. So when we close the deal immediately we use line item estimates during the sales process. Or we kind of break it down for client, this is where the hour is– We do our best, it’s an estimate, right? So again, time and materials, we outline it. And then once we agree and are able to close the deal, again, we use Docusign. We send a project charter. Project charter essentially says this is the scope of work. This is what we’re going to create for you, here’s the time frame, and again, here’s what we estimate. And then once a project charter is signed we create the account in our project management application, activecollab or Delta as we call it internally. We set up the client there as a company, we set them up as a project, we create milestones, and we track all our work. We use fresh books for our invoicing where we invoice a client every month based on the previous 30 day or one day left, however many days in the calendar month preceding to the work that we’ve done for them. And then we use quick books for our financial software. That’s really– the only other attributes docusign as well to what we call phase gate. When have a deliverable we get to the client we say this is what we’ve delivered, this is what we’ve promised, this is what we worked on, what we’re able to complete in the time– if there are things that we weren’t able to complete here they are and why. And when we can do them and– that’s just, it’s a good back and forth to hold us accountable for what we do.

OWEN: And so, at this point now they are in the production or product department where someone’s actually servicing them. And trying to deliver the deliverables. Then what else after this? Where’s the next part of the conveyor belt?

KEVIN: Sure. So we have the product delivery and that’s part of our CTO approach is to create some sort of new product. And so there’s a specific beginning and a specific output and ending. So, once that’s completed we then roll over into the maintenance where we maintain the systems. We have internal or weekly meetings for each client. We have that next inbox where we receive all the new request from the client or tickets. Then once we evaluate the inbox, for those items that need to be addressed and worked on we put them in our, it’s called the next milestone, those are the activities that get dealt with next. If something in the inbox is not actionable we put it in the backlog or the someday. And that’s how we go through the– and that’s just a repeating cycle that we go through. As new request, these things are resolved, they’re checked off, they’re signed off. And that’s really the approach we take when it goes to the maintenance. Again, we have regularly scheduled maintenance task so they’re servicing systems. And I think that’s– when somebody either graduates from our system or decides that this isn’t what– they change or this isn’t what they want to do anymore. We have a project close. So sometimes the projects are just about creating a new product and we don’t maintain them. And so, then we go through what we call the close phase where we get a sign-off. We transition all the key information to them.

OWEN: Okay, so basically sometimes the deliverable might just be the product itself, and then you go to that phase of closing out the account. But on some other cases it might be top of view delivering the product. You now have the contract with them to maintain and just improve the product that you just deliver over time. So it becomes an ongoing thing at that time. And so, I’m curious too because what other challenges that you experience and when you initially try to create the system, and how did you solve them?

KEVIN: It was a lot trial and error, and sometimes a lot of error, which is the best form of feedback. So, we started out with the general idea, we understood the importance of project charters– our sales process is actually really mature to over the last 6-12 months where there’s specific steps in the phase where we do an initial conversation. And then get the NDA, and get the letter of intent as far as sales. What we learned way is that, or maybe what we just took away from some of the challenges. Again, we were spending a lot of time with clients that weren’t turning into customers. So when we started using the letter of intent or the master services agreement after the first too conversations. The master services agreement doesn’t commit them to actually using us. But what it says is, but these are the services we offer, these are the rates we charge. You will not be charged anytime until a project’s charter is issued. But we ask that you sign this letter to signify that you’re serious about using our services. So the pain point was a lot of time spent on potential clients that didn’t turn into real– I guess there are lot of times spent on leads that didn’t turn into clients when we implemented this process. Sometimes people say I’m not going to sign it, I won’t do it, simply because they’re not ready to commit. That’s okay.

OWEN: Yeah. I think by doing that way it makes them really commit because not only are they committing, they’re really knowing in details because it is outlined and in document step-by-step what they’re going to be delivered. And by the act of signing it they’ve committed themselves to the whole thing.

KEVIN: Exactly. It’s the first tangible output of, “Oh my goodness, this isn’t just a conversation, there’s a real work order, or there’s a real product associated with this.” And it lets them see we try to be and we continue to be, and we’re improving. We’re a serious company. And one of the books I read recently and I wish I remember the name, but it said– and this actually was focused on an HR side that there are enough people or enough potential employees or contractors that are willing to do business your way that you don’t need to spend a lot of time on those that won’t. Well, we’ve applied that to the sales approach. There are enough clients out there that are willing to do our process that we don’t need to focus on those that won’t. We try to meet quality ourselves. Again, it’s always something we’re improving. But we also want quality clients, that’s really important that we have very professional clients. And a lot of times we say no. We say this is not a good fit for us. And it kind of take people back that are used to the mentality I want to get as many sales as possible. We don’t ascribe to that approach. We want to get as many quality sales as possible. And that sometimes means saying no, risking not getting a lucrative contract, because you look at the cost, you got to look at the whole life cycle. As you said, the whole conveyor belt, what are the cost associated with high maintenance, or clients that require a lot of time, versus the revenue you get? There is an equation, you have to take a very systematic approach to it.

OWEN: One of the challenges you mentioned during the pre-interview with the whole thing, creating a system for the business is that you guys had a challenge keeping the processes very focused and small. I was trying to get you to explain what you mean by that.

KEVIN: So, it’s easy when you’re trying to be thorough to take a simple what you think could be an hour task to document the process. You can get so in the weeds of “then do this, and then next, choose option A.” What we had to do is what we call time boxing. Say, “Okay, if I’m going to document this process, the very first time I do it I’m only going to allow myself 15 minutes to do it.

OWEN: Okay.

KEVIN: It’s not going to be perfect but it’s going to be started. And then we go back and iterate, and say, “Okay. So I’ve gotten this done, I stepped away from it. Now, let me take 30 minutes and I’ll outline some of the sub steps. Because what initially was happening was, okay, go outline the time tracking process. I could easily spend 5, 10 hours on that because it’s so detailed. And so what I had to do and our CEO has beaten me over, beating this into my head, don’t get it perfect. Action trumps planning at times, You got to be really careful with that, right? It’s not universally applicable. But sometimes just getting an output out there that you can later refine is the greatest way to break procrastination and break the inability to get things done.

OWEN: Let me see if I can even help the listeners to clarify that point you just made because it’s a very great point. Because what I’m getting from that is the first time you’re about to write a procedure for something, Don’t worry so much about the details. They focus on trying to– how do you say, you’re doing the task for the first time, or you’re about to document it for the first time. Just focus on writing out all the steps. Step 1, this is what step 1 is. Step 2, this is what step 2 is. And then possibly the next time when you’re doing a task, now you can go in and focus on, okay, let me come into myself to documenting the details with only one of the steps out of the 10. And gradually, as you continue doing the task, the goal is to go back in and fill in the next details for the next step. And before you know it, over a period of maybe a week or two, you would have it completed as oppose to if you had tried to finish the entire thing plus the details from the onset. That can easily lead to [Unintelligible 00:37:42].

KEVIN: That’s exactly right. That brings me to two points, one it takes me back to the whole benefit of taking a policy process procedure approach. The policy’s the big picture. Let me sit down and write down on a paragraph what I want to happen and why I want this to happen and leave at that. And then go back and say what’s the process? Well, here’s a general, we’ve got to do the time entry process, we have to do the time review process, the time approval, and the he payment. Leave at that. And then we go back and say, “Okay, I’ve got the time injury process, what are the initial steps?” And here’s what I equate it to. I can’t run a marathon, and God bless those people that do. I have so much respect for them. This is not something I want to do, but I can do this. I can run 1 mile every day for 26 days. And I’ve done a marathon. I guess I got to do the 22nd day at ,2 but that really is the approach, is me personally, I need to extricate myself from trying to run a marathon all in one sitting, and do this a little, by little, over a period of time. And it gets done, it just gets done. And for me personally it’s a lot less stressful.

OWEN: And so, given the fact that creating a system that you’ve just mentioned. it takes time, it takes commitment. But I’m just curious, how do you stay committed to moving in this new direction, knowing full well it can actually challenging to execute?

KEVIN: So, there’s challenges that are corporate level, how do we stay focused? And then me personally as an individual, I’m a human being just like everybody else. As a company we do that. People can search Google video for OKR, which is objectives, key results. I think it’s an hour and twenty, 25 minute video presentation by one of Google’s key executives. How to set achievable results, how to outline this. And so, we have our goals for the year, we broken it down by quarter, and then by month. And then every morning in the executive team. We hold ourselves accountable for some small delivery. And at the end of the week we have what we call our end of week review, where we say, “Okay, the objectives we set on Sunday or Monday, get those completed by Friday. If not, then they need to done by the following Monday. That’s how we do those check-ins every day. And then individually and personally it’s just– if you read Good to Great, one of the things it mentions is personal discipline. And so, it’s a habit I have to learn, I’m scatterbrained, I have ADD, and it’s hard for me sometimes to stay focused. But just that repetitive cycle or having other people hold you accountable has really been fantastic for me. It’s essentially changed how I do business.

OWEN: I think you actually told about the Phoenix system that you guys have. I was actually saving that for the question where I was going to ask you how do you get to track the results that your employees are actually delivering. But now that you’re talking about it, let’s talk about what you guys mean by Phoenix system?

KEVIN: Sure. So the only credit I can take from the Phoenix system is giving it the Phoenix name. Our CEO really has to be given a lot of the credit. And there’s a lot of complaining on our side because it’s hard, it’s difficult. A Phoenix is centered around what we call ACM’s. A, is a not corporation goals, what are we doing for the company to grow and push the company and become a more professional firm? So we set goals for ourselves as the company. Some of those goals could be doubling revenue in a certain period, or reducing the amount of time it takes to on-board a client. A big one that we have is to change our bill ability ratio, is to make sure that we’re working, our client billable hours are twice as many as our internal Anant focused hours, because that will keep us profitable. So those are Anant goals, the A and ACM of the Phoenix. And then our C goal are client goals. How do we improve the services that we provide to the client? And those might be regularly sending out project status reports in the same way repeated over time. So that becomes a standard in our company. That’s another one. And that’s actually a really good and simple explanation. So it’s how we improve the services that we give to our client. And then the M goal, we’re really big on personal development, leadership. As our CEO says, raise the lid, meaning raise the leadership lid. How do we improve, and it’s in the best companies, it’s about constant improvement. So the M goal is our learning goal. And so every week each of us takes on– this includes our employees and also some of our contractors is set an end goal. So for a lot of us that’s reading a book summary and then writing what we call a knowledge based entry. And then every Friday we have co-working session with everybody in the company. And each of us we present on the summary that we’ve read. What’s the impact, what are our take-aways, how is it applicable for our company? And so at the end of each week on Friday when we do our review of the ACM’s we also do– every single person does some sort of presentation and training. If you can [Unintelligible 00:43:15]. It forces us to learn and I think we’ve seen a real improvement in the services we provide to our clients as a result.

OWEN: And so, now that you have all these systems in place I’m curious, and it allows the business to run to an extent without you. What would you say has been the longest time, as a COO, you’ve been away from the business?

KEVIN: I like that question, it made me smile because today I was talking to someone about taking a break. In the last 24 months, probably the longest I’ve been away from the business is about a week. I still checked in. Me personally, I’ve been trying to develop a team so that I can hand off all the processes. And then I can focus on higher level as a partner in developing sales. So, we’re kind of in the early transformation and institutionalization of systems and processes. We’ve gone from there’s no way any of us could take a break to the CEO could take 2, 3, 4 days now, 5 days and we would be okay. I could do the same thing. And for us that’s really a big transformation. It’s small steps. But again, when you’re running a marathon over a number of days, each small step counts.

OWEN: And so, how you say the company has been transformed as a result of you systematizing the business?

KEVIN: We’re able to really take advantage of the talents that’s out there. And this goes back to the systemization. Not just systemization but the documentation and training in our company is that the on-boarding process for a new contractor, a new employee much smoother. So a big part for me is that we get rid of assumptions, we get rid of expectations. Because when we make assumptions we have expectations that are not clearly defined. There’s often a mismatch between what’s expected and what the outcome is by writing it, documenting it, standardizing, and then replicating it. Again, the key component is training. We’re able to bring people up to speed much quicker. I like to think that we’re a little more hot swappable, meaning we can take a person off of one project, put them on another. And when they go to this new project all the documents are the same, the templates are the same, the processes are the same. So really what they need to focus on is not learning how to do the job, they’re just learning what the job is.

OWEN: Awesome. And that sounds exciting because the reality when I think about it, if you’re thinking it’s time to really systematize the business, your business doesn’t necessarily depend on you having to hire the brightest or smartest person out there. It just really depends on you getting someone that matches the culture of the company but is willing to follow the rules and the systems we have in place to achieve the same results regardless of who the person is.

KEVIN: Oh, and here’s the secret sauce to this, and here’s why I think it works so incredibly. There are times when we need to get technical experts. However, because we’ve gotten this written down, we got it documented, it exist from one person to the next, we can focus on hiring people with the aptitude, and the attitude, and the personality to people that are hungry and driven. We can teach skills, right? We can train, we can teach processes now that we have this in place. We don’t necessarily need to find the person with 20, 30 years, or the most experienced in processes. A good example of that is one of our enterprise operations analyst who joined us about months ago. She really didn’t have a background in IT. However, she’s got an incredible attitude. She says, “I may not be able to do it but I can learn it.” And so what I can say is, here’s the documentation, here’s the process outline, read and learn this. Instead of me having to spend hours with them training personally. I know that the information’s out there, we have recorded it. KB is another system that we use. It’s the knowledge base, it’s a Google site, so it’s an internal Wikipedia. And every week we’re documenting the processes, we’re adding new information. And so, look man, in all my time doing business and working, and training people, any step of the way I would prefer to have somebody who has the right attitude, the willingness and the desire to learn, over having to complete incorrect technical skills from day one hands down. Sometimes if they don’t know the technical skills it makes it a little bit challenging. But I would much rather overcome those challenges with somebody I enjoy working with and who has the same mindset that we do as a company. For new entrepreneurs, people that are struggling with that I can’t recommend that enough.

OWEN: Let me play devil’s advocate because on one hand it’s great when you have an idea of what needs to get done and you literally map out the systems for the task, and then you bring somebody else to come in. But what if you have a rule that is going to be an ongoing rule or permanent position, but you have no idea how it’s going to be handled? How do you in the past now and facing this kind of situation, being be able to systematize something you have no idea how what’s involved in the [Unintelligible 00:48:33].

KEVIN: So I’m probably the best person to ask because there was no job description for COO, right? When I came on there was a general idea this is how we need to do it. But the road map or the processes were just not in place. And that’s been one of the things that I’ve tried to champion with again the COO, CEO, and the CTO. Do your best. And you’re transparent, and you put it out for feedback, and you got to have thick skin because when we ask for feedback sometimes the feedback kind of hurts our feelings. But really we’ve got to be open and honest and say, “Here’s the first approach at creating this new process.” Give it to the team, get feedback from clients, get feedback from as many people as possible and say what’s working, what’s not working, and what needs to be improved. And then go back and do it again, and make it a little bit better. So it’s an internet approach. I don’t think anybody here expects, especially [Unintelligible 00:49:39], again this is what I’ve learned through my personal experience because nobody expects me to get it right the first time. But the second time we all agree it needs to be just a little bit better.

OWEN: Yeah. I understand your role, the whole thing of a chief operating officer is to really build out the operations for the business.

KEVIN: Right.

OWEN: That comes with the role. But in the case well let’s say the CEO now was hiring. Maybe they didn’t have you at that point. He’s hiring someone else in a different department or a different field where he himself the CEO had no idea how the role is going to be handled. Who’s now in-charge of making sure that, that person’s role is systematized?

KEVIN: So, that’s a good question and a fair one. So there’s two ways to look at this. One is the process of documentation, the process of systemization that is universal. We document the same way, we create processes in the same manner. They’re the same frameworks that we use when we create a process. So one, we could train people that way, The other part is a lot of it is trial and error. When I don’t know how to do a process I do look for those experts, right? And that’s the time when technical skills trumps necessarily the personality, right? I can’t paint in broad brush strokes and I can’t say things are this color, or all that color. It’s just not business, right? There are shades of gray and we have to be flexible. And so I try to be flexible. When we need an expert we go for an expert. And so, I don’t have to be the smartest person in the room. What we need to do is be able to identify where the smartest people are and leverage their talents when we need them.

OWEN: Awesome. And so, how will you see your personal life has been transformed as a result of systematizing this business.

KEVIN: Oh, goodness, for a while my wife didn’t see me for long periods of time. I’m finding that, and I like this question because it’s one I’ve been thinking about the last few days. Particularly is that when I can train up the people that I work with. Train up people to take over more and more of the high level responsibilities because they have been systematized, they have been outlined. I can focus on the higher level things that I do the nobody else can do which is– or a managing partner should be expected to do which is generate revenue, establish strategic relations. I no longer have to do the day-to-day, check the box, execute this transaction. I can be assured that my team, and it’s not my team, us as a team, it’s we. It’s not about I, it’s not about me, it’s about we. We’re all in this together whether somebody has a C title or is brand new in the firm. We all do this together. And so, really the way it makes my life easier and better is that I can trust and understand that when something isn’t mapped out clearly. Here’s the resource, go there. I don’t have to necessarily take the [Unintelligible 00:52:44]. I am available to answer those questions the same for the CEO and the CTO. But usually what happens is our time then becomes more focused on higher level question and answer because the simple stuff has been clearly outlined.

OWEN: So as the COO, now that you have so much free time where do you actually find yourself, focusing your attention on these days and why?

KEVIN: Strategic partnerships, relationships, this is planning seeds. The approach that I personally enjoy is that it’s not necessarily a competition, is that we can raise all boats. And so I like to give back and I find that being genuine in relationship building. I went to a start-up career fair at George Washington University yesterday and met a lot of great people. But it wasn’t necessarily just the applicants that I met. One of the great things about going to career fair is I get to meet other vendors that are either in our space or not. But part of that is just establishing a relationship. And I don’t know that it’s so much about what have you done for me lately, it says, how can I contribute, how can I help out your path as an entrepreneur and your path as a business leader. Because ultimately, and I guess it’s karma. Maybe this is a granola approach. But in my career again those times when I try to make deposits in other people’s success. I’ve really been carried by– business is business but there’s also a lot of humanity. And so, just making that connection to people, helping them on their journey ultimately has resulted in many people putting their hands out when I needed help.

OWEN: So we’re coming to the end of the interview and have a couple more questions. And what would you say is the very next step for the listener who has been listening all the way to this point to take in regards to systematizing their business?

KEVIN: Sorry, it broke up just a little bit. So what’s the key take away from this?

OWEN: What would you say is the very next step that the listener who’s listening to this can take to get started with systematizing their business.

KEVIN: Sure. So, for someone who’s never done this, go to website such as yours. And just do little research. What is it mean to systematize, what does it mean to create a process approach. But don’t over think it. There will be time to get in the weeds. The next thing I would say and the very first thing is map out your key responsibility areas, your finance and accounting. Do a mind map, that’s what we do. We use XMind, that’s another too that we use to kind of map out relationships with different responsibility areas. And just write down what you do every day. What are the recurring task or processes in each area. So when you’re doing your collections and your payment, when you’re doing your sales, when you’re doing your HR. So the very first step I would say is just do a mind map, see how it all connects and start to get an understanding that no area exist in isolation of all the others.

OWEN: And I think this is another question. Because you’re a COO, what do you think is very next step if someone, the listener now is considering bringing on a COO? What should they be looking for in the COO that they want to hire?

KEVIN: That’s a good question. I think it’s important that there be a good relationship between the CEO and COO. A COO is a trusted advisor, and it’s a person, individual that could take a vision, can see a big picture, and then understand what the step-by-step approach is to execute. That’s really what my job is. When we sit down and there’s a vision or a strategy presented my mind is always going, “Okay, this is where we want to go. How do we get there, what are the steps we need to take, what is the cost involved, where can we apply resources. Because it always is a question of cost and benefit is how do we pick and choose what activities we undertake to realize this vision and to make sure we’re a success. A key thing is being a trusted advisor, and then being willing to honestly carry the load when it comes to executing. Being a problem solver is a really big thing. Being flexible, being– And for me is being a team player is being a part I think in anything we do in business. Humility is a big part of it. And to note that we as a company can get where we’re going unless we do it all together and kind of help each other along the way.

OWEN: And so, what books will you say have influenced you the most in this way of thinking and why?

KEVIN: So, I like good to great and I like Jim Collin’s follow up book to that. What it does is take some empirical approach between companies that were wildly successful over a period of time. And we’re able to sustain those successes versus other companies maybe had grew faster or more quickly. And he takes an empirical approach, and looks at the data and says there are some key trends. The leaders of these companies are humble, they make tough decisions and they always focus on ensuring the continuity and the growth of the company over their own personal success. And that really rings true to me. And then there’s also, The Tao Te Jing is a–

OWEN: The what?

KEVIN: The Tao Te Jing, this is actually a Taoist, you know, by Lao Tzu. And I like it because what it does is a CEO and as a business owner I can get sucked into the day-to-day ups and downs. I can get frustrated, I can say this isn’t working. I can clench my teeth and try to white knuckle and go through it. But what that book has helped me do is take a step back, just step back. And sometimes the best thing I could do as a COO and a leader of the company is get out of the way. We don’t have to be as sea level executives. We don’t have to be at the forefront of our company. Sometimes we need to step out of the way and let our people do what they can do. And that book has really taught me about being humble, detaching when the situation gets intense. And also understanding that it’s not about personal accolades but it’s allowing our team to enjoy the success, to allow them to really thrive. This is what I believe my most important function of a COO is, is to provide the tools, guidance, information, and resources our team members need to be successful. That is my key goal. Is to empower our team to do their job and be successful. Sometimes I shovel the manure simply so that other people can have what they want. And sometimes it means going to CBS and getting pens or getting toner because we can’t print out a report or we can’t do what we need to do. And you know what, sometimes I got to do that and I’m very willing to do that to see our team succeed.

OWEN: And so, what’s the best way for the listener who’s been listening so far to connect with you and thank you for doing the interview?

KEVIN: Oh, first is thank you for giving me this opportunity and I’m very grateful to the people that would listen to this and might find some value. Pls. send me an email, it’s kevin.morgan, so it’s first name dot last name, @anant.us and I’m more than happy to make myself available. We have a special place in our heart for entrepreneurs and we always try to get some timing and again, give back and contribute to the community. So if anybody has any questions I’m happy to make myself available for that.

OWEN: And so is there a question you wish that I asked you during the interview but for one reason I didn’t ask it. And if so, post that question and answer.

KEVIN: Wow, that’s really good. I think one of the question that sometimes I ask myself is when things get tough why do I continue.

OWEN: Yeah.

KEVIN: Why continue on this path? And really, I’ve always said if there’s any point in time where I’m no longer able to affect positive change, then I’ll know it’s time to step aside. And so, if you were to ask me, “Kevin, why do you do this, why do you continue to do it when things are tough and things are bad? And when things are good, what drives you?” It’s always knowing that I’m able to affect positive change. And again, when I’m no longer able to do that I’ll know it’s my turn to step aside and let somebody else do a better job than I can because you know there are plenty of people who could do a better job than me. And it’s being willing to know when my job is done.

OWEN: And so I’m speaking to you the listener now. If you enjoy this interview so far, please I want you to deliver us a positive review, hopefully a 5-star review on iTunes and to do that go to sweetprocess.com/iTunes. And the reason to live a positive review is because the more reviews we have, the more eyeballs, the more listeners we get. And the more listeners we get the more inspired we are to go and get guest like Kevin to come on here and literally break down their business and give us the process breakdown behind their business. And so, if you also find this interview useful I want you to share with another entrepreneur who you think will benefit from listening to this interview. And finally if you are at that point in your business where you’re tired of being the bottleneck and you want to literally get everything out of your head and document step-by-step how you get stuff done, then sign-up for a free 14-day trial of SweetProcess. Kevin, thanks for doing the interview.

KEVIN: Thank you so much, I really appreciate it. I was honored you asked me on your show.

OWEN: And we’re done.

KEVIN: Alright.