Transcript
Speaker: It's a knowledge economy, but how does a company market itself when knowledge is its stock and trade? We'll talk to an expert on expertise on the next episode of The Market That Moves America. Welcome to The Market That Moves America, a podcast from the National Center for the Middle Market, which will educate you about the challenges facing mid -sized companies and help you take advantage of new opportunities.
Speaker: Today's podcast is about selling smarts. In particular, it's about how middle market companies whose stock and trade is expertise look for and find new clients and customers. I'm Tom Stewart, the executive director of the National Center for the Middle Market at the Ohio State University Fisher College of Business.
Speaker: We're the nation's leading research organization studying mid -sized companies, which account for a third of private sector employment and GDP and the lion's share of economic growth. It's the market that moves America. The National Center for the Middle Market is a partnership between Ohio State and SunTrust Bank's Grant Thornton LLP and Cisco Systems.
Speaker: I have a special guest with me today. It's Doug Johnson. Doug is the CEO and Managing Director of Catapult Growth Partners in Denver, Colorado. Doug, welcome to the market that moves America. Hey, Tom, it's a pleasure to be here. Thanks so much for inviting me. Tell us, tell me, tell the world a little bit about Catapult Growth Partners. You work with professional services firms. Tell us about what you do with, for, and to them.
Speaker: You bet. And actually, as we've worked with professional service firms as being law firms, accounting firms, consulting firms, we're now doing more work with business services firms that have a strong services component. But our core is really that professional services section. And in a nutshell, what we really do for them is we help them think about their growth strategy and then help them execute on that, whether it's growing organically by
Speaker: expanding their revenue base and being better positioned and more effective with their sales and marketing, or in some occasions, helping them think about growth through acquisitions. But it's really around setting strategy around growth and then helping them implement that. So it's not just a theoretical approach to strategy, but they result in really moving the meter for them.
Speaker: One of the things that interests me about this group of companies—well, there are a couple of reasons, but one is that an awful lot of these knowledge -based professional services firms fall into the middle market.
Speaker: Only like 30, 31 of them are more than a billion dollars. And so the rest are our middle market companies. And I think the same holds true for a lot of architecture firms, IT services firms, some of the accounting and advisory firms. So as you look at that market, do you see a lot of similarities?
Speaker: Do the accountants learn from the architects and the consultants learn from the lawyers or vice versa? What do they have in common? Yeah, that's a great point. And to your point about the middle market, I think everybody knows, you know, the names of, you know, maybe like in the accounting world, the big four and a couple of large law firms. But really, when you get down past 30 or 40 or 50th largest professional services in any sector, they really drop dramatically into the middle market. So most of these firms are really middle market and serving the middle market community.
Speaker: And what's really interesting is we've shifted to a knowledge economy and an information economy. The way these professional firms have always gone to market is selling their expertise. And I think that's a really transferable lesson for other companies in the middle market. And you're right, amongst the professional services firms, they are learning from one another. I think there's been an evolution. I think the consultants have always been a little bit on the leading edge on the tip of the spear in terms of
Speaker: being more innovative and being creative, they have more latitude to think about solutions and creating some opportunities and then really trying to convince clients that there's a need and an issue there. But I think you look at the accountants and the lawyers and even some of the other firms are definitely learning from that and trying to position themselves more astutely and really trying to differentiate themselves, particularly as we go to a much more
Speaker: global market. It used to be if you hired a professional services firm, you probably only looked in your local geography for a lawyer or accountant or an architect. Now, given the economy we live in, you can search for anybody anywhere in the world. So how do you differentiate? I think that's the lessons that are really valuable here. In a crowded marketplace where things are getting commoditized, how do these firms differentiate? And it really kind of rides to the top. It's interesting. When I think about
Speaker: In the other part of the business world, the nonprofessional services area, we hear a lot about people talking about, we're not just selling products, we're selling solutions. We're not just selling services, we're selling solutions. And it seems to me that when a company or a firm goes to market by saying, hire us because we're really smart, hire us because we really know stuff,
Speaker: They often miss the solutions part. I mean, just because I have a high IQ doesn't mean that I can actually solve your problem or understand your problem. And so how do you make that bridge, I guess, between we've got the smartest lawyers in town to we've got the best lawyers in town for you?
Speaker: Yeah. And that's such a great point because I think every kind of business these days is getting more attuned to the fact that they offer more than just a product. There's services or customer experience wrapped around that, even if you're selling a tangible product. And so I think more and more companies are realizing that it's about that customer experience, it's about the knowledge and expertise we bring. And I think the professional services firms have begun to realize that they can no longer be generalists. They have to be really focused
Speaker: and really experts in certain areas so they can truly demonstrate to a potential client. If you're hiring a lawyer for a certain thing, not only do I understand your industry, but I understand the size of the company you're in. I understand the dynamics, the market place. And by the way, I've worked with 10 companies very similar to yours, so I really understand those issues. That's what makes me unique as opposed to just being a smart lawyer or accountant or consultant. And I think we're seeing this across the board with people that, as Eunice said,
Speaker: Trunking companies and now logistics companies, how do you wrap services around what was used to be a commoditized product and really differentiate it? And I think a lot of it is really understanding that specific client base and really drilling down and getting more and more focus. It's always counterintuitive that the more narrow you get focus, more expertise you have, you actually grow more rapidly and you actually are probably much more profitable. I think people tend to
Speaker: want to believe if you throw a wide net out there and cast a wide net, you'll catch all those fish. But usually, particularly in today's economy, people want to know what are you really, really good at? What are you better than anybody else at? And how do you defend that?
Speaker: You know, that's interesting. I mean, you're bringing up something that seems almost paradoxical, because when I talk to a lot of people in professional services firms, they may say, I really know—let's use a lawyer. Stay with lawyers for a minute. I really know tax law as it applies to hospitals in Nebraska, right? I mean, getting very specific. But at the same time, the firm often says, and not only that, I can bring you the whole firm.
Speaker: we should say, not just my Nebraska healthcare tax law expertise, but I can bring you expertise from many partners across the country and across the world, which seems sort of like a bit of a mixed message. Yeah, it is. And I think what we're seeing firms doing is they differentiate themselves on the shoulders of maybe someone that's truly a guru in their area of expertise. And then they bridge that gap and say, there's other things that maybe are a little bit more
Speaker: I hate to use the word commoditized and maybe more run -of -the -mill, but because of my relationship and my knowledge, you're still going to use those for those other services. But I think customers and clients are getting so much more sophisticated these days on any kind of buying purchase. I think about myself when I got to buy a car or anything. I've done so much research. By the time I show up at a dealership, I probably know more about what I'm buying and the pricing and all the options and the salesperson does.
Speaker: affecting almost every business out there, the consumer is so much better educated and is entering into the sales funnel at different points in the past. And so I think we have to be smarter and be able to sort of understand those issues and differentiate ourselves by really narrowing our focus and trying not to be and resisting that urge to be all things, all people. I think that's just getting more and more difficult to be a generalist in any category anymore.
Speaker: You made me think of something here which was interesting when you were talking about customer experience a second ago, Doug.
Speaker: When I was doing some research on customer experience and services, I ran across a woman whose name is Lynn Shostak. I'm not sure if she's still alive, but back when, she was the chief marketing officer for what was then Citibank before it became Citicorp. And she talked about how when you're selling products,
Speaker: There are ways of judging quality. You can slam the car door, you can kick the tires, you can go to consumer reports and whatever it is. But selling services, it's harder to provide that evidence. And she talked about the importance of creating tangible evidence. And some of that might be the diploma on the wall, but a lot of these companies that sell smarts try to create tangible evidence with.
Speaker: white papers and research studies. And we do a lot of that at the National Center for the Middle Market. What makes those work or not work? Sort of the thought leadership marketing. Yeah, and my disposition, I'll let you know, is I'm a very strong advocate of focus and thought leadership. But the downside, though, is it's so easy today to publish, to do podcasts like we're doing,
Speaker: to do webinars, put information out that a lot of the material, a lot of the content that's being put out there is really mediocre. And it doesn't differentiate stuff from the noise out there. I think it's raised the bar that those are great avenues to kind of help make a service tangible by helping people understand the experience of what it would be like to work with you or how do you think about certain things or what's your experience. So I think they can be very valuable. But again,
Speaker: It takes a lot of energy and effort now that everybody's a publisher, everybody's a producer to make your material stand out and be relevant. And again, I think it goes back to my earlier premise that the more narrow cast and more focused you are, the more relevant you can be. It's like you go to a doctor, if you've got an ailment these days, you don't want just a generalist, you want someone that knows that issue better than anybody else. And I think that's the challenge is how do we really drill down and understand what markets are our unique area that we have the right to win and be different in.
Speaker: That's interesting. You reminded me of something that in one of my previous incarnations when I was working at Boozen Company, we had a partner who noticed something about the thought leadership behavior of a major consulting firm, which I won't mention out of kindness to them.
Speaker: But he would notice that whenever somebody, we or somebody else, came out with a really innovative piece of thought leadership or a really innovative study, this other very well -known firm within—it seemed him three or four weeks—would have a study
Speaker: that was sort of similar. And he sort of said it's sort of like they're saying they're very quickly putting a marker on the board, saying, we do that. We do that. Don't think that they would take somebody else's uniqueness and quickly do a copycat thing. And I think it underscores your point that
Speaker: When people can do that so quickly, thought leadership is going to work powerfully only if it's seriously good. It can't just sort of be me too, we do that, we do that. It's got to be, yeah, I do this and I really know it. Exactly. And thinking of your universe of clients or customers being a couple hundred that we've targeted and we know them so well as opposed to a mass market.
Speaker: And you asked a question earlier, I don't think I answered it completely is, you know, if you're in a services business or particularly in a professional services, how do you make something that's sort of ephemeral, you know, tangible and realistic. And there's a good friend of mine that has a really interesting sort of sales training coming for professional services guy named Paul bundle, but he talks about this concept of give to get if he if you're a professional services provider,
Speaker: Work with a client prior to being engaged so they get a sense for what's it actually like to work with you. Give them a couple hours of free time, do a little bit of research for them, come to their office and spend a half a day brainstorming. So they begin to get a sense for how do you think, how do you work, how accessible you are, how easy are you to work with, things of that nature to make something that's a little intangible, much more tangible. And I think more and more product companies are learning that same thing.
Speaker: I tend to drive a certain brand of car and the way they treat me in that their dealership is a unique differentiator, even though the car itself, I could buy it anywhere. And so I think it's incumbent on all companies, especially middle market companies, to really change the tone in terms of those services and the way that they react. I keep going back to that customer experience, but if you can differentiate with that, I think that's really what you saw in today's economy.
Speaker: So Doug, tell us a little bit from your work at Catapult Growth Partners. I guess it's the two ends of the telescope question. What are some of the things that these expertise -selling firms and companies should learn from Campbell Soup and Procter & Gamble and Lexus and product -selling companies? What are some of the things that
Speaker: smart selling companies should learn from sort of traditional companies. And then I'm going to ask you to flip it again and say what are some of the things that the traditional companies can learn from the intellectual capital selling companies. But start first with what these guys should be learning from Procter & Gamble and Campbell Soup and Colgate and all those other good guys.
Speaker: Yeah, that's a that's an intriguing question because you think about that if you're a professional service for let's say an accounting firm. They don't think much about brand is usually the name of those firms are usually you know a couple partners that strong a name together and then they don't really understand branding whereas you know if you're Campbell super.
Speaker: Dr. Gamble, you understand brand. One example is there's an organic cereal company called Kachi that puts out organic stuff. I think they're owned by General Mills or something like that, but when they were acquired, they were probably a boutique startup. General Mills was smart enough not to change the brand, so people buying that think it's an organic product, but it's really owned by a large
Speaker: company. And same thing, I tend to drive back to it, and I always refer to them as nice Hondas. My daughter said, well, what's the difference? I explained to her how the Japanese car manufacturers had to differentiate the luxury brand, and that brand really does make a difference. So I think if you're in a services business,
Speaker: really beginning to understand that in this day and age, brand does matter. Maybe it didn't matter as much 30 years ago when people were searching for a professional service provider, they would just kind of call people to be new in the community and say, well, who's a good lawyer? Who's a good accountant? But I think now that people search for you across the globe on the internet,
Speaker: That's itself a brand, but it's not as differentiated as the—actually, McKinsey has a great brand, so maybe that's a bad example. But the work that Accenture has done in distinguishing itself with that sort of brand promise is almost something that they might have picked up from a consumer products or other traditional company.
Speaker: You really do have to have strong branding and understand what does that mean and how does that resonate with your customers.
Speaker: Yeah, and it's interesting, a lot of the professional firms are now kind of going to the high end luxury hotel chains like Four Seasons and saying, well, how do you treat your customers? What makes it so unique? And how perhaps could we then emulate that in the way that we treat our customers or client shows up in our office. So I think we begin to realize, yeah, exactly. That's becoming more and more relevant. I think five or 10 years ago, 15 years ago,
Speaker: Professional services from sort of thought well, that's all flop. That doesn't matter. It's all about how smart we are, you know And while that's still very important, that's just table stakes these days You know, I I remembered doug being at a conference that you put together where somebody was talking about work that he had done with a major law firm in which they you know, they did a whole bunch of attributes of great lawyers and they ranged from really great knowledge of the law to
Speaker: really great bedside manner, I guess, and discovered that the client sort of almost took the knowledge of the law for granted. I mean, that what was the differentiator was the quality of the relationship and some of the stuff that the lawyers tended to overemphasize, to think that the clients valued them
Speaker: much more for their skill, technical skill and much less for the experience than it turned out to be the case. Yeah. And then the flip side of that telescope question was, you know, what can products companies learn from professional services? And I think it's, it is that narrow focus and truly specialization and understanding, you know, how do we make our product unique to each and every individual and their sort of mass customization and
Speaker: one -to -one marketing I think is really becoming more resonant. And if you look at a lot of car sites, you can build your dream car on the website and then go have it ordered and have every feature specifically catered to your desires. I think that's more and more the way things are going. So I think they can learn from that. It is a very narrow cast, very focused approach to make us relevant. I had an interesting experience a couple of years ago. There was a private equity fund that
Speaker: hires outside consulting firms that work on their portfolio companies and provide services. And the guy that screens who they work with asked me a question, so what do you guys do really well? And I went through a list of five or six things. He said, no, no, no, stop. What's the one thing you do as a firm that's better than anybody else in the world? And I, to be honest, sort of stumbled around. I didn't have a crisp, clean sort of sentence that this is the one thing we do better than anybody else in the world. And they basically said, conversation's over because I only hire firms that can tell me
Speaker: What do they do that's so unique that makes them special and they're on a roster? I think the more we can think about that, that's probably a smart way to go into the marketplace these days. Doug, I'm going to ask you, you've had a chance now to think about it. What's the one thing you guys do better than anybody else in the world? Thanks for teeing me up on that one. That's an easy question. What we really do is we help firms get ready. We help them increase their value.
Speaker: prepare for an exit whether they're gonna sell or buy another company so really helping them with that process get prepared and think through that and understand how to execute on that that growth to merges and acquisitions really our core competency these days.
Speaker: I want to come back to you. We're out of time on this, but we're about to tee off a study on culture. One of the things that's really critical in culture is what happens when companies get together or come apart. I think it'd be really interesting to come back and have another conversation about M &A culture or firm transition, let's call it, and culture, particularly when you're dealing with
Speaker: organizations like these where the capital, it goes up and down in the elevators every day and so that the individual human embodiment of culture are so very critical. So can we make a date to make a date on that?
Speaker: Absolutely. You got a rain check on that one. I'd love to talk about that topic. It sounds fascinating. Terrific. And with that, I think we are sort of out of time and I want to wrap up a little bit. I think we've been talking, I know we've been talking about some of the issues that
Speaker: Firms that sell expertise, whether they're professional services firms or others that go to market with their intellect, their foreheads leading, how they can do a better job of attracting and retaining customers. And we've talked about the importance of knowing what you're really good at, specializing very deeply, and creating a great customer slash client experience that goes along with that.
Speaker: and then creating tangible, visible evidence of what you do, of why, of the fact that you do those things that you say you do. We've been talking with Doug Johnson, who is the CEO of Catapult Growth Partners. Doug, before we sign off, any last quick thoughts?
Speaker: Well, I appreciate it. And these things are relevant for middle market companies. And I'll just go back to that. One last point is, again, we work with so many clients that it's so counterintuitive that the more focused and more narrow you get, the more opportunities you have. It just doesn't seem to be possible. But more and more, we're seeing that that does make a difference. And trying to be a generalist in today's market is just a really difficult place to be. You're in the middle of the road, and you're probably going to get run over if you're running down that path.
Speaker: So thank you, thank you, Doug. And for more about Catapult Growth Partners and Doug Johnson, you can go to their website, which is catapultgrowth .com. And thank you all for listening to The Market That Moves America. Never miss a new episode. You can subscribe to the podcast on iTunes, Stitcher, Google Play, or wherever fine podcasts can be found. Or you can subscribe and learn more about us at the National Center for the Middle Market at our website, which is middlemarketcenter .org.
