Transcript
Speaker: The company's finances, the company's customers, and the company's employees, that's the tripod on which all good strategy must stand. We'll learn more about it 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 -size companies and help you take advantage of new opportunities.
Speaker: When does a startup grow up? Maybe it's the moment when its leaders sit down to learn what they do best and to build a strategy around it. In a few seconds, we'll talk to a CEO who's led a company through that change and through a series of years of 40 % plus growth.
Speaker: I'm Tom Stewart, the Executive Director of the National Center for the Middle Market at the Ohio State University Fisher College of Business. We're the nation's leading research team studying mid -sized companies, which account for a third of private sector employment and GDP, and the lion's share of economic growth.
Speaker: It is the market that moves America. The National Center for the Middle Market is a partnership between Ohio State and SunTrust Banks, Grant Thornton LLP, and Cisco Systems. I've got a special guest with me today. Sam Folletta is the Chief Executive Officer of Incept, based in Canton, Ohio. Incept provides contact center services to business customers.
Speaker: Sam has been the CEO of Incept since 2012, but he also grew up with the company, which he joined just out of business school. Sam, welcome to The Market That Moves America. Thanks so much, Tom. I appreciate you having me. Tell us a little bit about the company, what you do, how it started. What's Incept? Yeah, absolutely. So at our core, we
Speaker: strengthen the relationship between our clients and their customers at every interaction. So we're a contact center that uses voice and email and increasingly more chat and social media.
Speaker: to basically connect our clients and their customers proactively and reactively to help improve customer retention and growth. So it's a helpline, it's telephone operators, it's the customer service people that I call when something's going right or something's going wrong. Exactly, all of the above. In some cases it's service -oriented, in some cases it's marketing and account management.
Speaker: We support a variety of customers, generally big brands who are very particular about that brand reputation and cause -based organizations who are really focused on being sure that their position is being communicated to their donors or customers the way they really want it to be.
Speaker: You've got a lot of focus, now you mentioned cause -based organizations, but when the company started, as I understand it, you basically were a startup company which would go for whatever customer rang the doorbell. Is that right? Yeah, exactly. So it's probably a lot of companies at a small size. I started the organization when we were about five people, had a few stable customers, and then pretty quickly
Speaker: Ended up starting work working with some of the biggest companies in the world. So we were working with Microsoft or Ford or Honda through a series of different introductions and referrals and
Speaker: at that time we were small enough that when somebody said they were interested we automatically concluded that our answer to that needed to be yes and that we should take them on to the customer. We would figure everything else out later so we were kind of going where the the fish were as opposed to finding the spot where they were the most concentrated. So yeah we were pretty reactive in our approach that if somebody came to us or if
Speaker: We were referred somewhere. We thought that automatically concluded that there was a fit. That must have been both exhilarating but also a little bit terrifying to manage. Yeah, absolutely. The analogy we used quite a bit was that it looked like a five -year -old soccer team where the ball goes in one direction and all the kids end up running after the ball and then it gets kicked and all the kids
Speaker: run back after it where it goes to the next spot. So yeah, it was an incredible learning experience, but we also concluded pretty quickly that it just wasn't a sustainable way to run the business or organizations like that. How did you start making that transition from a five -year -old's play in soccer to Manchester United? Yeah, great analogy. So some of it was I think the process
Speaker: was that we started asking ourselves the question more frequently. So a lot of companies, you know, what, where are we going and why? And I think a lot of times we saw companies who felt like the strategy question got asked in the fourth quarter and then planned for the following year. And what we realized was that things were just moving way too quickly and we needed to stop each time a significant event occurred.
Speaker: and then reassess both what did a yes mean, what does a no mean, how does it change some of the previous decisions we made. So the first part of kind of identifying that was just changing our frequency of that discussion. I don't know that we got smarter about the way we analyzed it first, we just did it more often. And then as we did it more often, we would carry some of the unanswered questions to start the next version of it.
Speaker: which allowed us over time to focus a little better on, okay, the last time we asked this question and we said yes, what happened? Maybe we should start saying no when those kind of questions occur in the future. Do you sort of remember a turning point? I remember, I think at one point I've heard you say, one day we woke up and we realized we were doing strategy.
Speaker: Is there actually a moment that you can recall or was it just sort of this slowly dawning realization that, golly, we're actually being a little more planful and thoughtful and it's a little less reactive? Great question. There were definitely some incremental changes along the way, but really about 2005,
Speaker: Our industry was changing pretty dramatically. So there was legislation around do not call when a bunch of contact center regulation that was coming in. There was also, that really was the start of the international outsourcing movement where people were starting this place working to move work to India and the Philippines. And because primarily our largest customers were the type of organizations
Speaker: they were making those decisions, we had to really think about what that meant, not just for tomorrow, but for 10 years from now. So we had had two outside shocks, one a regulatory, a legislative shock, and the other a globalization shock that sort of made you think, whoa, wait a minute, what are we doing? Yeah, exactly. So the combination of those two at the time, eliminated about 30 %
Speaker: of the total contact center industry in our kind of community nationwide ended up being a pretty dramatic shift. So we had to both intentionally recognize that as a risk and also as an opportunity and say, okay, there are going to be some changes. How do we take advantage of those? So that the biggest one really was changing the market that we focused on.
Speaker: So we had worked with a handful of customers that did regional blood donor recruitment. We came through an initial local referral and then we found that the industry had some opportunity for us and it had some different regulations that weren't quite as at risk and it wasn't quite as prone to international outsourcing. So as simple as that summary sounds today,
Speaker: That really was our first iteration through the process to identify more for that industry than the ones that we came from. We all had some emotional connection to working with big brands. We all had the excitement that came from working with big brands and that shift at the time felt very controversial internally, but ultimately has led to a huge portion of our success sense.
Speaker: It's interesting, because one of the things I think about when I think about contact centers is I think that many times—and as a consumer, I really notice this—many times people manage them for cost. And a contact center is a cost center, and let's go for the lowest cost provider. But you said, we're going to lose that game.
Speaker: or we're really in danger with losing that game. So let's find market niches where value is not just expressed in cost, but you're still also serving some big brands. How do you sort of play that value versus cost? How does that roll out in your strategy? Yeah, it definitely is one of the more complex pieces today. And what we've learned is that
Speaker: We just have to move that question or gain that understanding much earlier in the introductory process with new potential customers. Um, so there's some hints, you know, generally if you see, uh, somebody on a leadership page that has a customer orientation title, you know, maybe not just sales or finance, but a chief customer officer or a VP of customer care or something like that, that, that gives you a hint to the way a customer perceives those relationships.
Speaker: But we really asked the question up front. Sometimes just as direct as if you're looking for the lowest cost that likely will not be us. If you're looking for the best lifetime value of a customer, we think that we can offer it and we'll even align our pricing to prove that so that if we don't, you have less risk. But we really realized that to run the business that we were going to be proud of internally with the way we would
Speaker: compensate and motivate our people and the investment we wanted to make in training. Um, we, we had to start with customers who were willing to believe that was valuable enough to compensate for it. Otherwise it just would have broken down. So, uh, we, we've just learned the simplest way to do it is just ask that question up front. And some people will be very direct about it. No, we think it's cost center and that's our intention. And other people will say,
Speaker: our customer base is the most critical part of our business and we want to not lose any of them because we know exactly what they're worth and as long as we get the best value, we're thrilled and it's the latter that really ended up being a good fit for us. The customer is always right only if it's the right customer for you. How many employees have you got right now?
Speaker: So you're still a relatively small organization. How does the strategy process work at Incept? Sometimes when I think of strategic planning, I think when people think of strategic planning, they sometimes think of armies of consultants and black binders full of PowerPoint slides and windowless cube farms of people crunching numbers. And when middle market companies, you don't want to
Speaker: put that kind of burden on them. How do you do your, how's your process work? Yeah, it's great. And we've fallen into the trap historically of some of those versions where we spend a ton of time to create a binder that becomes, you know, irrelevant by January 10. So we really use almost an agile development software approach to our strategic planning process.
Speaker: So we do it really frequently, formally, we update it once a quarter. So the two key inputs to that are we have three key metrics, one we tie to customers, one we tie to the market share of the key markets that we plan, and the third is employee engagement, because that really is what drives kind of our satisfaction and growth. So we have three key metrics.
Speaker: And then we have three key themes that basically are the how to the what. So an example of a theme would be we would go into a year and say leverage technology is going to be a key theme across these three things, whether it's customer or market share or employees. And then that essentially creates a nine by nine grid that then has key projects
Speaker: that get voted on and prioritized within that grid to decide essentially what initially the annual plan is, but then that gets refreshed every 90 days to add some, remove some, evaluate the ones that were just put in place. So it's really a 90 -day process with kind of an annual
Speaker: And this three by three, where you're looking at three big themes and to take technology, this is obviously we're in a world where everything is digitalizing. We need to make sure we are doing that.
Speaker: for our customers, for our market share, I guess for the financial well -being of the company and with the employees and driving that theme across all three, across basically this matrix. Yep, exactly. So an example for this year would be, we really focused on mobile. So as we talk about kind of the dominance as people shift to their phone as their primary communication device,
Speaker: as it related to our individual customers, we thought about how do we take every interaction platform we have today and make sure that you can do the same thing via text. So if somebody were to call with a technical support question, in the past we could handle that with voice or with a chat or with an email. This year we really focused on saying you should functionally be able to do that same thing via text.
Speaker: What are the processes and the technical upgrades and the team changes? How do we make all of that real via? It sounds like a pretty simple. Yeah, it sounds like a pretty simple dashboard. I can imagine putting that up on a whiteboard in an office and just sort of being able to look at it any minute so I can sort of see how am I doing? And I like that. That's pretty simple, pretty simple. And it really aligns the leadership team without requiring
Speaker: the same level of energy to do it every time. So it's exactly what you said. It's a dashboard. The projects that get approved essentially are just managed through green, yellow, and red. If it's red, we essentially check in and say, okay, this is red for a reason. Do we deprioritize it because that reason's good or are we just behind and do we need to catch up on it?
Speaker: And then at the end of each quarter, we kind of evaluate it holistically, but it gives the leadership team a chance at the beginning of each day or each week to come in and say, okay, the biggest things that I have to focus on are, and it's in one sheet and one page color coded in front of everybody.
Speaker: It strikes me that we just did a study on strategic planning in the middle market. And one of the things that is a really strong finding in that study is that good strategy, executives are most satisfied with their strategy and with their execution of the strategy if they engage
Speaker: outside input from the market, from trends, from customers, and so on. If they get that in the formulation of the strategy, and also they get a lot of bottom -up input. They're not just Moses and a handful of people going up to the mountain and saying, we've got the word here, but they really have an inclusive development process, but also then an inclusive execution process.
Speaker: And so this study, which is called Strategic Planning for Growth, sort of connects those two. And it strikes me that this dashboard, as you said, aligns management, but also would align your basic contact center employees well. Yeah, yeah, absolutely. So we really base what goes into those boxes on feedback we're getting from a few different places. And there's probably
Speaker: a variety of different choices on how you do it. We were pretty simplistic when we saw what we felt were the market leaders in terms of net promoter score is largely the way we evaluate customer satisfaction and use that as a really good input and gallop from an employee engagement to the employment there 12 questions. So those two really inform a lot of what we do and earlier
Speaker: we probably got stuck a little bit in trying to over interpret a lot of what came in. So we used maybe too many tools or tried too many different ways to get information and drowned a little bit in it. And more recently have just found, you know, there's two really effective ones. We don't need to overthink that, but we also can't not have something. So we've probably been at both ends of the spectrum, maybe not using enough, then maybe going to trying to use too much
Speaker: And we feel like, at least for now, we're back in the middle where we say, here's some industry -accepted tools that have a bunch of feedback and a bunch of use cases. We're going to use those as the primary resource. And if we don't feel like we have a perfect picture yet, we can go get more. But more and more often, those are the ones that are driving that decision -making.
Speaker: One of the things I think about process and mid -size companies is you want just enough. You don't want too much because then the process drives it and your SG &A gets too high and you're swimming in Jell -O.
Speaker: But you don't want too little because then I guess it's the opposite. The jello is melting and it's running all over the place. I mean, you just don't know where you're going. So you want to grab enough and then you sort of find that by experience. As you've grown, has it become more complex or has it become more simple? It's a really good question.
Speaker: Yeah, I think I've learned to appreciate that a much higher percentage of my job Is to understand the complexity but to output it more simply So I think we are probably considering more factors. I think we're also probably really focused on once we get to those decisions then communicating those with a ton of clarity and a ton of confidence and some of that is
Speaker: the growth of the leadership team, probably the maturity of not just spraying a new idea when we have it, but actually saying, if we have a new idea and we think it's important, then it does have to go through this filter process to make sure that we all agree it's the right idea or that we've quantified it. So I think we've probably taken more complex information, but prevented it from getting more confusing to the rest of the team because we've added a
Speaker: filter layer that only outputs the things that we've agreed are really the priorities. So as we come to the end of this discussion, two questions, one forward -looking and one backward -looking. The forward -looking question, you sort of talked about a quarterly process and an annual review.
Speaker: Do you have a five -year plan? Or do you have a five -year hypothesis? How far ahead do you look? I'm thinking back, you said 10, 15 years ago, the industry dramatically changed on you. Do you have a view of where you might need to be in two or three years, and how do you get that view, if you do?
Speaker: Yeah, we do, but it's very loose. So we have a target in terms of size and profitability and in a lot of cases, you know, number of headcount and things like that. But we're very fluid in the market and the product mix. And that largely is based on having some understanding of how a market can change, how legislation can change,
Speaker: So we have the dot in the future, but then we just recorrect the direction of the arrow real frequently to make sure that we're still aligned with.
Speaker: Interesting. In our strategy study, we sort of came up with four, and we discovered that companies have sort of four primary focuses, and one is on position. This is my position in the market. One is agility. I will be able to adapt quickly. One is capabilities. This is what my strengths are. And the fourth is execution. And obviously, you want all four, but it sounds like you major in agility.
Speaker: and agility both short term and long term. And that, by the way, is one of that. And the two positional ones are the ones, I think, that show the strongest annual growth rates, which you've certainly seen. Well, we're happy coincidence. The backward -looking question.
Speaker: If you had it to do over again, would you have become strategic earlier? Or do you think your timing was right? If you were talking to a younger CEO, would you say, Joe, Jane, get with the program, read your Jim Collins, read your Mike Porter, you can't live by your wits? Would you have started earlier? Yeah, absolutely. So I think in some cases, the necessity created the invention or creativity was the
Speaker: convention and necessity or however that said, the fact that the market changed so dramatically required it be done at the time that we did it. So if we could do it over, I certainly would have loved to have had the same urgency and to have come to the same conclusions without being required to. I think it probably could have saved everybody some sleep and had the relationships today a little bit stronger through the process, but it absolutely taught us
Speaker: how critical it was and how a few of the right decisions are absolutely more significant than all of the execution that may go into the wrong decisions. The other thing I would do probably way more frequently would be, or I would have done way earlier, is just add that process more frequently. For a small business, one customer can change the entire direction, one or lost, and I think we
Speaker: underestimated the significance of how that would change. Sometimes you get a customer in a new market and you do great work and that can open a whole new market. Sometimes you lose a customer for a reason that maybe means you should be considering that market less than you did. And I think we felt a little bit like we had to be so determined for our product and service to be what we originally thought it was.
Speaker: that we held to it, even when the market was telling us there was opportunities in some other places. So especially for new businesses, don't be afraid to shift a little bit when the opportunity starts pulling you towards it. It doesn't mean you've changed the whole company, but it absolutely does mean that maybe your initial hypothesis was a little bit off of where the market need was. And had we heard that a little differently or maybe digested that a little differently, we could have capitalized a little before.
Speaker: So there's this sort of interesting balance between understanding where the wind is coming from and which way the wind is blowing and responding to that on the one hand, but not just letting yourself get blown around by the wind on the other. And strategy is sort of what helps you mediate between those two. Absolutely. The word we keep using is intentional.
Speaker: So it's okay to intentionally do something that doesn't quite perfectly match what you said six months ago. As long as you have new information, as long as you have some logic behind the bat, for us, our strategy really comes down to just prioritizing how intentional we are about the decisions. And in a lot of cases, how intentional we are about how often to say no, as opposed to yes. I think that's probably
Speaker: The other feedback I wish I would have had earlier, I'd give somebody who's early in this process now is that a ton of strategy seems to be wrapped around what you should do. And maybe what is at least of equal importance, maybe more is spending the same amount of time of how that translates into what you should not do. And I think that's for most new businesses kind of an under discussed area of if you're going to do this, what are you going to stop doing tomorrow?
Speaker: And Sam Felotta, thank you so much. I think what you've just said there about increasing the ratio of intentionality to
Speaker: random in activities and plans and making sure that you say you understand where your yeses come from and where your nos ought to be is a pretty good summary of the kinds of strategic mindset that companies need to have. That study that I mentioned, the strategic planning for growth, shows that
Speaker: And other work that we've done shows that about one out of every $7 of revenue in a middle market company can be attributed to its strategic planning process, which is why it's so important and why it was so great to hear from Sam Folletta, the CEO of Incept in Canton, Ohio, telling the story about how his company developed a strategy and learned to become strategic and used that and its agile capabilities to drive year upon year
Speaker: of sustained and substantial growth. Thank you, Sam, and thank you all for listening to The Market That Moves America. Never miss a new episode. You can find out more about Incept at its website, which is InceptResults .com. You can find out more about the National Center for the Middle Market and our study on strategic planning for middle market growth at our website, MiddleMarketCenter .org.
Speaker: Never miss a new episode of The Market That Moves America. You can find us on iTunes, Stitcher, Google Play, or wherever fine podcasts can be found. Or you can subscribe and learn more about us at our website. Again, that's middlemarketcenter .org.
