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S3 Ep07: The Strategic Costs of Executive Decisions with Monty Fowler image

S3 Ep07: The Strategic Costs of Executive Decisions with Monty Fowler

S3 E7 · Dial it in
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In this episode of the Dial It In podcast, Monty Fowler, Chief Revenue Officer and author of 'Executive Debt: Confronting the Long-Term Cost of Short-Term Decisions,' discusses the concept of executive debt. Monty explains how short-term decisions made by executives can have long-lasting effects on a business’s culture, strategy, and future success. He outlines four types of executive debt: cultural, strategic, operational, and talent debt, sharing insights into how these can be identified and mitigated. Monty also touches on the use of AI to make informed decisions and how inadequate planning and poor decision-making can lead to substantial costs for organizations. The conversation highlights the importance of foresight and structured systems in leadership to build resilient, debt-free organizations.

Connect with Monty:
LinkedIn
Aspire SIx
Executive Debt

Dial It In Podcast is where we gathered our favorite people together to share their advice on how to drive revenue, through storytelling and without the boring sales jargon. Our primary focus is marketing and sales for manufacturing and B2B service businesses, but we’ll cover topics across the entire spectrum of business. This isn’t a deep, naval-gazing show… we like to have lively chats that are fun, and full of useful insights. Brought to you by BizzyWeb.

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Website: dialitinpodcast.com
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Transcript

Introduction to 'Dial It In' Podcast

00:00:08
Speaker
Welcome to Dial It In, a podcast where we talk with fascinating people about marketing, sales, process improvements, and tricks that they use to grow their businesses. Join me, Dave Meyer, and Trig Bielson of FizzyWeb as we bring you interviews on how the best in their fields are dialing it in for their organizations. Let's ring up another episode.

Guest Introduction: Monty Fowler

00:00:30
Speaker
Welcome to Dial It In. We have a fantastic guest with us today, Monty Fowler. Monty is a chief revenue officer and author of the upcoming book, Executive Debt, Confronting the Long-Term Cost of Short-Term

What is 'Executive Debt'?

00:00:44
Speaker
Decisions. With a rich background in leadership strategy and organizational growth, Monty brings a unique perspective on how short-term executive decisions can create lasting impacts on a business's culture, strategy, and future success.
00:00:58
Speaker
As a leader at Aspire 6, Monty is dedicated to helping executives navigate these challenges with foresight and precision, empowering them to build resilient, debt-free organizations. His work sheds light on the silent killers of growth, providing actionable insights for sustainable, long-term success. Thanks, Monty. Welcome.

Irony Eraser: An AI Tool for Communication

00:01:19
Speaker
The irony eraser. Have you ever felt like your emails sound a little sarcastic?
00:01:26
Speaker
Subject line, looking forward to yet another meeting. Introducing Irony Eraser, the revolutionary AI tool that scrubs out sarcasm, irony, and unintended spice from everything you write. Simply type, hit Irony Erase, and let the AI take over. Turn, oh fantastic, into thank you so much. Irony Eraser, because sometimes people just don't get your dry sense of humor.
00:01:53
Speaker
All right,

Monty's Writing Journey

00:01:54
Speaker
here we go. So I'm super excited to have you with us, Monty. And you're an author. This is this is amazing. And I had a chance to peruse the book and talk through executive debt. I think this is something that a lot of our listeners and friends need to know more about. So tell me about the book and then we'll dig into you and your life and how things are going. Thanks for having me today. I appreciate it. And yes, I am an author. I have to confess, though, this is my first ah business book that I've read.
00:02:23
Speaker
and actually nice six yeah author and So this has been a really interesting journey for me as a writer because typically I'm just creating worlds and creating characters and having fun. This was, hey man, I'm trying to impart you know actionable information that people are going to hopefully use to guide their businesses. And it was a very different feeling as I was writing this book. So it's been quite a journey.

Understanding Executive Debt

00:02:51
Speaker
It might be helpful to start with kind of how the idea of executive debt came to be.
00:02:57
Speaker
Yes. So in our business, Aspire Six, I have a couple of partners and one of my partners, Mark Dolmeyer, who is kind of the author of a lot of our intellectual property and a lot of our frameworks and strategies that we use in our business to help our clients.
00:03:12
Speaker
We were having a conversation one day about technical debt, right? And technical debt is a well-known topic, especially across the technology landscape. If you work for a software company or a services company, everybody in leadership has kind of encountered and had to wrestle with technical debt. The idea that, hey, we're going to make a short-term decision today about a particular feature of our product or a tool that we're going to use or a system we're going to deploy. And we're kind of taking a shortcut and we know it's a shortcut, but for a lot of reasons, we have to do it this way right now. And that obviously has lots of ramifications and implications for a company down the line. So we're having this conversation about technical debt and Mark made the comment.
00:03:58
Speaker
You know, we spend so much time talking about technical debt, but there's so much other debt in the organization, like all the executive debt from decision making and blah, blah. And then my brain kind of switched into a different gri gear and I didn't hear the rest of what he said for a couple of minutes because it was one of those moments where fireworks were going off in my brain. And one of those times around like, am I having a stroke or is this like really a really good idea?
00:04:22
Speaker
And from that conversation, I went away for a few days and I did some research because I immediately understood what he meant by executive debt. It's the long-term cost of all those short-term decisions that we make for short-term benefit in business. If you're in a modern, especially technology company,
00:04:42
Speaker
That's kind of like the order of the day many times, especially early in the company's existence, but it persists as you go on. So I started doing some research because I was like, surely somebody has written on this topic before, right? They they've picked this apart and there's 15 books out there and whatnot. And I was absolutely stunned that nobody had written on this topic before. Nobody had coined the term. And it was interesting because as I started talking about this with some of my friends and colleagues and and people I really value their opinion in the industry, they immediately got it. they meet As soon as I said the word executive debt, they were like, oh, yeah, I know exactly what you mean. So that made us realize that, hey, we're kind of onto something here. And the notion that a company of our size
00:05:29
Speaker
in 2024 could find a new area of thought leadership to write about and more importantly to help the market figure out how to deal with is really extraordinary. So we're thrilled to be able to be talking to the marketplace about this topic because we really think it's an area where if we can convince leaders that this is something they should care about,
00:05:54
Speaker
We could actually have a real impact on how companies make decisions and how they think about the long-term consequences of those decisions. For sure. So for executive debt, and I know that there's four types and would love to chat through all of those, but first, as we're looking at executive debt and the kinds of decisions that lead to incurring that debt, do you think it's mostly the focus on short-term shareholder value that's leading to a lot of these executive debt decisions? So it depends on what part of the organization we're talking about.
00:06:28
Speaker
But I would say writ large, sure because of the market dynamics, because of the and persisting uncertainty at the macroeconomic level, and because of the dynamism and competitiveness of the markets that so many companies play in.
00:06:45
Speaker
there is this belief, and I'll call it a belief because I don't think it's necessarily backed up by data, but there's this belief that we have to go fast. Fast is great when you're trying to find product market fit or trying to find your ideal customer profile and all of that, but it really can be an albatross around your neck if that is your core motion.
00:07:09
Speaker
in leadership, especially when it comes to strategic decision-making. There's a lot of decisions at the departmental level, even at the you know team level, that you know I'm looking at data, I have a goal, I need to make a decision.
00:07:24
Speaker
If we break it, it's not the end of the world. We can go in another direction. Jeff Bezos talks about the one-way door and the two-way door decisions, right? And the one-way door decisions are the ones that we really, really have to care about because they're really hard to unwind once we make them, you know? So think about things like moving into a new market, right?
00:07:46
Speaker
or a software company based in the US. Now all of a sudden we want to crack the European market. So we're going to put an office in Paris and one in London and we're going to hire a bunch of people and we're going to do a bunch of stuff. We're going to have a big marketing budget. That's a one way door decision because to undo that decision, should it turn out to have been a bad one,
00:08:06
Speaker
affects a lot of people, affects big chunks of the organization, and it will burn probably twice as much cash as you spent setting it up, trying to unwind it, especially in a place like EMEA, where you know labor laws are very unfriendly to to companies. So those types of decisions require special care. you know Two-way door decisions, not so much. right They're the ones that it's easy to go back and course correct.
00:08:31
Speaker
if we feel like we've made a bad decision. So our focus in the book is on really those big, heavy, strategic decisions that impact big chunks of the organization or your customers or your employees, right?

Cultural Debt in Organizations

00:08:46
Speaker
Got it. And so I think that's a ah great tie-in to the four types of executive debt. So let's start first with cultural debt. And what what does that mean? What's the impact of that? So imagine, and I think everybody's had this experience at some point or another in their career, work in an organization, there's lots of different people from lots of different places, you know, we all have a story. But occasionally there's that leader who is just toxic, right?
00:09:13
Speaker
They're just a toxic person to be hard to manage and hard to understand. Their input often comes with a lot of snark or extra stuff attached to it and it just makes people feel bad. When organizations, especially senior leaders,
00:09:31
Speaker
allow that type of a person to persist in an organization. That's a great example of cultural debt. And we do that for a lot of reasons. I've been guilty of it myself. I had a top performing sales rep at a company where I ran sales years ago. And he was amazing. I mean, the guy like crushed it. We could give him any quota and he would absolutely three, four exit every single year. But when it came time to this guy to be a team player,
00:09:58
Speaker
Like, use the CRM, do the daily stuff, your coach and your peers and whatnot. He was the worst. Just straight up refused, like sat face to face with me and said, yeah, no, I'm not going to do any of that stuff. And I was like, okay. I had to, you know, obviously weigh the benefit of this person in the organization, driving tons of revenue, truly delighting our customers.
00:10:22
Speaker
versus the impact he was having on the team. And as long as he kept to himself, he was fine. But when we started having some initiatives that required accountability and buy-in from people, he would be on the back bench squawking about this or that and and really turning people against something was that was designed to help them, right? And I couldn't have that. So I sat down and I said, they you know,
00:10:46
Speaker
I need to have you on on the team here, bro. I need you to really kind of lean in. and And if you can't be a cheerleader, at least don't be a heckler, right? And he was like, no, because I agree with the stuff that you guys are doing. I had to invite him to leave.
00:11:00
Speaker
It was a right stunning development for my CEO, for the rest of the team. They were like, why are you crazy? And I explained, I'm like, look, this person is toxic. He is literally holding us back. So I don't care how much revenue he brings in. If he's turning the minds of every new person we bring into the organization against leadership,
00:11:21
Speaker
We can't have that, right? So cultural debt is the type of debt that accrues when you make decisions about people, about their positions, and you ignore the signs that tell you clearly that this person is either not a good cultural fit or they're causing real damage to people and processes and even customers if they stay. And unfortunately,
00:11:46
Speaker
Some of the movements in HR and some of the attitudes that come with leaders of a certain generation allow those attitudes and those people to persist in organizations because they either are uncomfortable making the hard choice or they've established an unrealistic culture where, hey, we're a family and we don't fire anybody and you know you got a job for life kind of a thing.
00:12:16
Speaker
that That's a lie because every organization crossed Rubicon at some point in their development and says, hey, we've got to let some people go.
00:12:26
Speaker
Well,

Strategic Debt and Long-term Planning

00:12:27
Speaker
I've seen this example a bunch of times and I had a great friend actually who had a, they were very high up in the organization and there was a sales manager. I think this is probably one of those spots where ego needs to be big in order to be a great sales performer. But the manager of that sales person was very confrontation averse. So they're just like, oh well, whatever you say Bob or Mary or whoever it was. but The need there to step up and set accountabilities and to try and steer people like exactly like you just said, if the HR department or if the management is afraid to help correct or make hard decisions, you're never going to get past that cultural debt.
00:13:12
Speaker
So is there, for those folks who might find themselves in an area where maybe there's a performer who just doesn't fit the culture, it's the right butt, wrong seat, or or the wrong attitude? that they They keep trying to scare you into a mountain instead of getting you through to the next spot. How do you help people?
00:13:34
Speaker
you know get past their wanting to be nice and actually force accountability and drive something forward. Well, I think you have to weigh the long-term costs of having a toxic person or persons in your organization versus the benefit that you get from them because I found everybody has a certain lane that they swim in and that they're good at and that they add value to an organization. And that's true of kind people and toxic people, right? And I think what happens is many times the toxic people
00:14:09
Speaker
end up persisting in an organization simply because they are really good at what they do, right? And that's a hard trade-off, but you have to ask yourself the tough questions. What if I allow allow this person to continue and they impact morale for their whole team or their department or God forbid the whole company? What happens if people start leaving because of that person?
00:14:34
Speaker
What happens if you know people are reporting on Glassdoor and RepVue that, you know hey, great product, great comp plan, super toxic work environment, and leadership is clueless because they let toxic people continue? That's it that's an absolute killer for an organization, especially today where a lot of this stuff is played out in public.
00:14:58
Speaker
right People are very comfortable putting a lot of really private stuff from inside of companies on LinkedIn or on these other sites that rate you know your your employment. So you need to be careful as an organization because your brand equity is on the line as well. right Not just the day-to-day impact that that person has on culture and all that.
00:15:23
Speaker
Still, cultural debt, wrong person, or negative intonation, probably holding the company back, or, you know, knowing you have cancer, and fusing to do anything about it. Oh, yeah, of course. Keep hitting the coffin at work, right? Yeah, I got this persisting cough, but man, I gotta go to the store and get another pack of smokes.
00:15:44
Speaker
but I just need to keep my sales guy along. In the meantime, he keeps tarring up your team. Got it. Tell us about strategic debt and how that works for an org because it seems like that was probably what popped into my head first when you mentioned executive debt. So what is that strategic debt? Strategic debt is probably the easiest to identify and to see because it shows up in lots of places that end up on spreadsheets.
00:16:10
Speaker
So, strategic debt is the impact of those short-term decisions as they undermine the organization's long-term goals. These are the things that literally take the train off the tracks. So, let me give you an example here. you know Strategic debt is something that you incur when, for example, we have decided as a leadership team to not pay attention to a particular market segment.
00:16:35
Speaker
i so you know Let's just say we're a Series B company, we're starting to go up market, and we're getting a lot of inbound inquiries from enterprises. But we only have sales team members and SDRs that are adept and trained to talk to SMB and mid-market. With anybody to cover an enterprise deal, we're not teed up as ah as an organization to handle you know a protracted sales cycle and dealing with procurement and all the stuff that you get when you go up market to a big enterprise. Organizations like that have two choices. We either adapt and and go where the market's taking us or
00:17:14
Speaker
You know, we stay in the lane that we've assigned to our people and we deal with whatever we get. Well, that's one of those decisions where if you jump the gun and you go up market too quickly, you break everything. You break your sales process. you Break your customer journey because now your salespeople are trying to talk to two or three different constituents that have fundamentally different goals. They have different goals for your technology. They have different things that they're looking for it to do and different benefits and pain points that they're trying to solve for. So in in that world.
00:17:51
Speaker
ah a leader who says we're going to ignore the enterprise side of things, not move in that direction, might be missing the opportunity that's going to take them two or three or four X, right? But on the other side of the coin, if you go too fast or you go too soon, you might break or kill the goose that's laying the the current golden egg. um Sure. Spread yourself too thin and then customers get upset or you're just- I was in an organization a couple of companies ago where we did exactly that. We made a conscious decision to go up market. We sprinkled magic fairy dust on one of our senior reps and and made him a strategic rep. But we didn't teach him, unfortunately.
00:18:30
Speaker
how to deal with the sales cycle for an enterprise customer. And you know our first handful of deals were train wreck. And they burned a ton of resources on our side, infused the sales team in it, upset our CS team. And there was just a lot of wreckage as a result of it. And we could have handled it so much better. So there's an an example of where a good purposeful decision, hey, we're going to go up market and we thought we had all the tracks laid for it.
00:18:58
Speaker
It turned to crap pretty quick. And then we were left with the long-term consequences of the next time we wanted to promote somebody to enter enterprise to a strategic rep, they were like, I'm not sure I'm ready. I don't really know yet. And they asked a lot of questions about how have we made the process better? And we were on our way to doing it at that point, but it took us a solid two years to figure out how to sell up market for that particular product. And once we figured it out, it was great. sure But because of the missteps that we made at the beginning, the team was very skeptical. And that made it difficult for us to execute internally. It was our own fault. And we owned it. We fixed it. But man, it was a big waste of resources. And it had some lingering impact and damage on the culture in the sense that it made some of our longtime employees doubt certain leaders. Like, sure it didn't ask enough questions. It just kind of boldly forged ahead.
00:19:58
Speaker
And that happens all the time. Right. Of course. Well, and part of an executive's role is to be part visionary and to look and try things. Thank you. Especially where my company is, you know, in marketing, we all fall victim to shiny object syndrome. What's this new cool thing that could be up AI or, you know, insert bad here, right? How do you do the research to make sure that you're giving
00:20:30
Speaker
new ideas, the proper credence without just scrambling all over the place, such sugar. I think what readers will find in the book is you know we don't just talk about types of executive debt and what causes them, give you some practical ideas about how you can fundamentally change your decision-making process, especially for these for the really important one-way door decisions like we talked about before. and you know It's not that difficult.
00:20:59
Speaker
It just requires a little bit of systems thinking, like, hey, this decision we're making, there's a set of possibilities that we need to consider. We call it the what-ifs. Systems thinking, like, hey, this decision we're doing is the big explodey thing that carries people. Right? So, yeah, the big explodey thing that carries people. Right? but So, the stakes are pretty high, right? So, they tend to engage in every state of what-if or scenario planning.
00:21:29
Speaker
It's okay. Let's use the example we used at the top. We're going to open up a new market in EMEA. Great. And we make all the plans. We do all the stuff. Now we've got the plan in front of us. Well, now we've got to ask ourselves, okay, so our revenue goal year one is X. Well, what happens if we only make 50% of that? Almost nobody does that because First of all, the human mind is such that we intuitively know it's like baked into our amygdala. We know that we are finite, time-bound beings. We don't spend a lot of time planning how we're going to craft the future because we know we can't predict the future. We just know that inherently as human beings.
00:22:15
Speaker
So what we do is we engage in optimism. We try to ignore the things that our brain is telling us might happen. And we choose to think about the positive outcomes, because the positive outcomes are really exciting to talk about, to plan for, to create documents around. It's the rare person who can lead a team to say, OK.
00:22:36
Speaker
I love the plan. Plan's great. I believe in the plan. I know you believe in the plan, but me we have a responsibility to the company, to our employees and to our customers to ask, well, what if we don't hit the plan? What if we're not able to hire at the pace that we expect? What if we can't find the right people? hey What if we can't hire a manager that we can trust to lead the team from 4,000 miles away? What happens if all of our marketing fails because we don't understand the European market. What if we crack the code for France and Switzerland and Germany never, we never cracked the code for Germany or Spain or Italy. All of these things have to be weighed and considered. Now, obviously there's a stack ranking in terms of potential impact for a lot of these things.
00:23:24
Speaker
Obviously, the financial impact is one you really need to consider. I would argue that the people side of the coin is something you really need to consider for a decision like that. But then the market dynamics are something too. And we convince ourselves that we've got all the pertinent information in order to make a great one way door decision.
00:23:44
Speaker
But most of the time, if we're being honest, we we really don't. We've cherry picked the stuff that aligns to what we want to do, and we we rely on that to inform the decision. And anything that kind of counters or calls into question our plan, we tend to minimize, fight fault with, you know try to sideline.
00:24:06
Speaker
And that, unfortunately, is just a function of how humans operate typically. But this is where we need to force ourselves. And as teams of leaders, we need to hold each other accountable. That, hey, love that 29 page document you put out. Plan looks solid.
00:24:22
Speaker
You know what I didn't see, though, I didn't see the scenario planning section where you asked the water questions. If we just do that once in a while with our peer leaders, I think we would drive a lot more accountability around this topic, because when it comes to things like strategic debt, this is one of those areas that can literally break a company. It can break a company quickly, depending on the magnitude of the debt that you incur around a ah not well thought out strategic decision. And, you know, strategic drift is something that happens anyway in organizations. You don't need to give it an extra push by not considering, you know, the possible alternative scenarios. um And at the end of the day, what it really does is it weakens your competitive position. Because if your strategy is constantly under the pressure of, oh, gosh, we didn't consider that or, well, that thing happened and we were really surprised.
00:25:18
Speaker
that's going to be a persistent problem that eventually is going to weigh down the organization to the point where you don't have any plays left in your playbook because you don't know how to make these one way door decisions in the most effective manner. sure
00:25:32
Speaker
And I would imagine that, especially on strategic debt, and as you're looking at potential opportunities where your big crazy plan might go sideways, it's also the easiest place to poke those holes is at the beginning instead of when you're already through the door. That's really insightful and you're 100% correct because, you know, I mean, just think about what we know from our own lives, right? You go to a car dealership, you fall in love with that car.
00:26:01
Speaker
Even though, you know, back seats a little too small for my family. Yes, mileage isn't really where it should be for a responsible adult and living in 2024. Gosh, it's sexy. And I love when you buy the car and then first road trip with the family. Everybody's complaining, whining, crying. That's a really hard decision to unwind.
00:26:21
Speaker
you can You can, but man is it going to cost you. You're going to take flack with your wife. She's like, idiot, why'd you buy that car? I told you you shouldn't have bought that car. Your kids are like, dad, this car sucks. I hate this car. And then the next one you bring home, even though you took the $15,000 haircut because you just bought the car six weeks ago. right They're not going to like that one either because now dad's a dummy. Dad doesn't know how to pick up cars. Mom, can you just go pick out the next car?
00:26:46
Speaker
That's what happens in organizations is that we ah you fall in love with the shiny object with the idea of the thing. We don't ask the right questions. We don't have any sense of, well, what if this thing is only 80% successful or 50% success? And we don't make any contingency plans for that. So we left we're left flat footed when things turn to crap or God forbid we're down the hill in flames. And now we're looking around for a fire extinguisher.
00:27:13
Speaker
right and And that's, and you know, in my world and in the lane that I swim in, CROs, that's the number one thing that gets CROs shown in the door. They make, uh, poorly constructed decisions thinking, thinking that they're doing the right thing with all good intentions. And then they turn to crap and you know, the inevitable questions come from the board or the CEO. Well, why didn't you think of this? Why didn't you think of that? Cause hindsight's 2020 and everybody's got a nice set set of glasses when the the stuff, it's the fan. And then, you know, that leader is just like, well, I didn't think of it or I chose not to ask the question. You know, there you go.
00:27:53
Speaker
There are probably a few ways that you can help impact that. One of the things that we just started doing at our company is when we present a proposal for marketing services to a B2B SaaS company, we actually do some analysis with AI to say, okay, what are the holes or what are the risks that are involved in making a decision to move to this new proposed solution. So it helps us to at least have discussions with the executives that we're working with about, okay, if we do this, this might impact these four things. It's kind of hard unless you're a large enough organization that you can afford to bring in the kinds of consultants at the kind of scale that are going to give you all of those different perspectives.
00:28:36
Speaker
But I found that AI can at least give you a alternate sense of reality where you can say, okay, well, I'm rose glasses. I'm rose glasses all day long. One percent of the total addressable market is $17 billion dollars and all we need to do is get one percent, right? So let's go. Then if you type into a robot and it says, you know, there's these other four things and the company and the people might not like this or whatever. So having some sort of a backdrop or a backstop is probably incredibly important. This is where again,
00:29:04
Speaker
Systems thinking comes into play, you know, I'm finding because I work with a lot of early stage and founder led organizations, five to 20, 50 million dollar companies. Sure. And what I found is that the founders now who are adopting structured systems like EOS, for example, to help run their business. right They're doing much better in these areas because one, they don't have to think of all the different things all the time. It's laid out for them right and the system forces them to ask this question or that or to fill in this block or whatever.
00:29:39
Speaker
and it frames the conversation in the right way and it promotes efficiency, right? We gotta talk about X, Y, and Z. We've got 10 minutes for each one of these and our goal is to have a decision made you know by the end of that conversation. That's a great way to at least begin the process of making decisions in a more cohesive way.
00:30:02
Speaker
The other thing I see, though, is that organizations who are built to go fast have the hardest time with these things, because, again, a whole DNA of your organization is we have to go fast to win. And in that mindset or in that cultural movement, they're OK with breaking some glass or denting the car. That's great because empowering, especially second level, third level leaders,
00:30:27
Speaker
to dent the car in the spirit of trying to innovate and find the right thing, that's a good characteristic to have in an organization. But you have to be mindful and of what the potential executive debt risks are associated

AI's Role in Decision-making and Debt Reduction

00:30:43
Speaker
with that. That's why those types of organizations tend to rack up the most egregious kinds of executive debt because two things are happening. One, they're going fast and two, the group they're not looking in the rearview mirror too often.
00:30:57
Speaker
And I agree with you, and I think this is where, and there's a part of the book where we talk about this, where if we were having this conversation 10 years ago, using data to inform our decisions or using our past decisions and outcomes to help inform our current decision set was really, really hard to do unless you had a system set up where you were capturing all of that information and analyzing it on a regular basis.
00:31:22
Speaker
And the good news is today, most organizations, even very early stage, are young. ah relatively immature organizations have good date because the tooling that we use to run these businesses, they're all really good and they all talk to each other and it's really easy to extract the data and analyze it and and make inferences from it. But I think AI adds another layer to that that we need we desperately need to master. and That's, hey, before we're making one of these one-way door decisions, we need to sit back and let AI tell us,
00:31:56
Speaker
What were the outcomes from the last time we made a decision like this? ah So think about this, we're in strategic planning season right now. Most companies that are on account. but your and Lots of those organizations have tons and tons of data and information on everything they've done. The remote organizations, so all their internal calls and conversations are done in Gong or some other platform and got transcripts from teams or whatever. You got trans yeah transcripts. Transcripts are a goldmine. You stop and think about it because it's literally what everybody said in the process of making the decision, analyzing the decision, all of that.
00:32:34
Speaker
The other thing is we've got tremendous data systems that can tell us not only the information we looked at to inform the decision we made last time, but also the outcomes, what changed after we made that decision to implement it and whatever. We're doing ourselves a great disservice as leaders if we are not actively hit we um pushing the people who manage these systems and our RevOps teams to help us extract that knowledge going to help us make better decisions from the data sets that we have currently. And the beautiful thing is that today, that's not a heavy lift for most organizations. I mean, I've done experiments on my own here where I'll take a decision thing and I'll take all the conversation transcripts. I'll take all the data that we use, whatever, and you feed it to chat GPT and you give it a, you know, a well
00:33:26
Speaker
written prompt. And and after a couple of back and forths with it, it'll be like, hey, here's here's what you should do. Or these are the questions that you should ask this time that you didn't ask last time to help you know make sure that this particular outcome doesn't happen again. That's something that is within the reach of every single company right now, and it costs next to nothing to do it. It's just time and being a little bit creative to be able to you know put it in place.
00:33:54
Speaker
Yeah, and and not being afraid to ask the questions and, you know, having A.I. tell me what questions I need to ask in order to be informed is actually important. It's even more impactful when you consider that, you know, A.I. isn't just a another brain, let's call it, that can look at what you're asking it within a discreet bubble and and give you an answer about it. You can also, again, if you're adept with these things, you can say to it, yeah, analyze it.
00:34:23
Speaker
in the context of our company, but then now take that exact same analysis and and run it against companies that look like ours, let look like peers. Now you're bringing in best practices from a lot of other companies and comparing it to what you do and how you've made the decision. So now you have an opportunity to not only make a better decision for your organization, but now you can actually apply some best practice and better align with companies that are doing really, really well that you compete.
00:34:53
Speaker
And and right this is the stuff that I think that as leaders, we need to really start. I don't want to turn this into a big advertisement for using generative AI in your business, but it is the single most
00:35:08
Speaker
impactful change in technology that's happened in my lifetime. I think it's bigger than the internet. I think it's bigger than the microchip and the personal computer because the possibility for impact, both good and bad, is off the charts. We we can't even see the horizon line for what this technology can mean for business.
00:35:32
Speaker
Right. Oh, yeah, agreed. And yeah, everybody's talking about AI all the time. And it's it's worthy identifying and removing or minimalizing strategic debt would be move fast, but make sure you're not going to step on the Legos that are in your path. I like that analogy. It's like, hey, run across this minefield.
00:35:54
Speaker
sorry Sorry, we don't have a map for you, but right? Yeah, you can do it. There's a number of different ways you can approach that problem. I would argue that the more cautious way is probably the best because that frankly is the world that we live in in business today. There's a lot of minds out there. lands yeah and You can unwittingly step on and you can have all the best intentions in the world and still get blown up. Absolutely.
00:36:19
Speaker
Take one way doors, but right? Where it's all yours. Those are the ones that get there. And when you, I think in a future update of the book, I think what I want to do is that we're actually planning to do a, we're running it now, but we want to gather enough data in a big survey because we want to.
00:36:36
Speaker
to an annual executive debt report, similar to some of the other industry works that are out there. Because we want to not only drive this topic, but we want to give people real world knowledge about how is it impacting actual companies? And where are the companies that are tackling it? And what kind of results are they getting and whatnot? I would argue we just got an engine upgrade on all of it right now with AI, right? it like I mean, every tech founder that I'm talking to regularly has one question top of mind. What does AI mean to the future of my business? Both in terms of how do I run my business, but also how do I bake it into my product or my service to to be relevant 18 months from now, right?

Operational Debt: Inefficiencies in Processes

00:37:21
Speaker
right Okay, so let's talk about operational debt because we're getting where this is fascinating conversation and I love this. so Thank you so much, Monty, for hanging out with us. I think we've had some group glaring and crazy examples where, oh, you know what? The supply chain gone. So for for those companies that don't plan for that, how do you how do you plan for and abdicate operational debt? Operational debt is the debt that accumulates from those inefficiencies and your processes and your infrastructure.
00:37:50
Speaker
that are either tolerated or left unaddressed on purpose because you can't afford it. You don't have the resource. It would break five other things if we tried to change that. This is something I would say operational debt exists in every single company, everywhere, all the time. It's kind of like if you stay in a New York City hotel, you know for sure that there are cockroaches and bedbugs in that hotel. There just are. You just have to know that. So you do certain things or don't do certain things with your stuff. You just know.
00:38:21
Speaker
That's the same thing with operational debt. The problem with operational debt is this is the place where it actually costs the company money. So think about, we'll go back to our top line example, opening up EMEA as a new market.
00:38:38
Speaker
Well, guess what? We just had to implement a new outbounding tool because our current tool that we use isn't as compliant with GDPR and doesn't have all the bells and whistles that, you know, the EU needs. So we have a different tool. Okay. Great. Well, now my enablement team.
00:38:54
Speaker
and my RevOps team have a challenge, because now they've got two tools that do exactly the same thing, and you're using it across two different teams. okay That's a problem. You have to address that with process, documentation, training, all the stuff, and the fact that you're paying twice now for the basically the same functionality.
00:39:13
Speaker
down the road, both of those products are gonna change over time. And now you're left with, I've got to not only update all of the stuff I just mentioned for the one platform, I've got to update it for the other platform too. And I've got to have a bifurcated training track now.
00:39:27
Speaker
You know what I mean? That's just yeah one thing, one system, right? And we make these types of decisions all day, every day in organizations. And it's happening at a record pace right now. These AI tools are grassroots tools. They're coming into organizations from the bottom up, nobody in procurement, nobody in IT, nobody in executive leadership knows who's downloading what, implementing it inside their organization, uploading their IP, their customer information, their documents to it. It's a Wild West.
00:39:57
Speaker
Well, guess what? You're going to pay the piper for that at some point. You absolutely are. So the companies who are ignoring having an AI governance policy are the ones that are going to suffer the consequences down the road. And I would say that's probably 98% of the companies in America, right? And and they're doing it eyes wide open. You ask any CEO, like but are you people using generative AI technology? Oh, yeah.
00:40:23
Speaker
chat GPT, co-pilot, writer, yeah yeah, the list goes on. And i'll I'll ask, so you have a governance policy on it? Well, not really. What does that mean? but yeah That really means none at all. It just means I hear them talking about these tools when I'm out amongst my people, but nobody at the top has ever said, who's buying this stuff? And what are they doing with it? And what benefit are we getting out of it?
00:40:51
Speaker
That's where operational debt really takes root. Just like outdated code in your software or bad hardware in your infrastructure, it's going to cause operational inefficiencies. That's going to slow down your organization. It's going to increase your costs. It's going to reduce your agility. um And it's going to make it really hard or harder to react to those market changes that we all know are going to come.
00:41:16
Speaker
I see this all the time when I get into Series B, Series C companies who got a couple of big piles of money, bought all the tools, yeah hired all the people, and they didn't document stuff. They didn't do the stuff they needed to do on the enablement and the RevOps side of the house to make sure the stuff is fully integrated. Everybody really knows how to use it. There's accountability and a rigor around the use of the tools or putting data in or whatever the task is.
00:41:44
Speaker
and we just kind of keep trucking along. And we see the stuff breaking as it's breaking, and we put a patch on it. where we you know i mean I remember my last company, good golly. It seemed like right after the pandemic hit, all of the primary data source tools like Zoom Info and Apollo, all of the data turned to garbage, like overnight. Why? Because nobody was sitting at their desk anymore. So all of those corporate phone numbers were utterly useless. Oh, and guess what? ye Mobile phone numbers,
00:42:17
Speaker
None of those data services had them, not in 2020 or 2021, right? They do now. yep But even to that, it's like, okay, that part of our outbound sequencing is broken because now that new division that we've got over in EMEA, well, guess what? GDPR says that unless they opted in explicitly and for you to call and text them, you can't. And all that data we just bought, ah we can't use it. So all of this stuff ultimately has a consequence to it. And again, we don't ask the right questions when we make these decisions. yeah You know, when we sat down and we bought Gong at my last company, we were on a different platform prior to that. And we moved over to Gong. Gong was all about and and I love Gong. It was probably one of the sales processes I've been a part of. They're really well trained.
00:43:10
Speaker
But the gong rap was like all about, well, you guys, you you know, you're using something else for forecasting. You got to use our forecasting module too. And I was the one, me and one other person were adamant. We're like, no, we're buying this for call intelligence, conversational intelligence. That's what we need it for right now. yeah I love that it can do forecasting. And yeah, we're interested and we'll get to that. But right now you got to stay laser focused on this because this is why we engage with you guys. Right.
00:43:35
Speaker
But a lot of companies will fall prey to that and they'll be like, oh, you can do forecasting. great Well, now the project to replace ah conversational intelligence just expanded to X, three X, four X, because right now we want to include forecasting. Oh, great. Forecasting involves lots of people and is super consequences of the organization. but Those are the types of things that if we don't get the decision right at the mid level, top level, executive level,
00:44:02
Speaker
You're going to pay for it

Talent Debt: Investing in Employees

00:44:04
Speaker
eventually. And the other problem with operational debt is that it lands on people who have nothing to do with the decision that was made that caused it. So if you think about two tooling is a good one, you know, pick the wrong tool and everybody who has to use that tool has to suffer through whatever the consequences are.
00:44:22
Speaker
and all the new people that come in to get trained on that tool have to deal with that. This is a constant conversation that happens in technology firms right now. You hire a new sales rep and they're like, oh, you guys are using Apollo? Well, I used Lucha at my last company. Can I get Lucha? No, you can't. Oh, well now like day two on the job, they're like, this place sucks. They're using the crap tool. and and Right.
00:44:46
Speaker
Gotcha. So we've gone, we've got four types of, about of executive debt. We've talked through cultural, strategic, now operational. Tell me about talent debt. And I think this is probably going to be the easiest one because boy, you know, hire the right people done, right? Right. And it it definitely comes down to, you know,
00:45:05
Speaker
Technical debt most often occurs or most directly is caused by failing to invest adequately and not having a plan to develop your people, have a career progression path laid out for them. And retention is another area of this that really is problematic. Yes. Because yeah every company that I've been a part of, you know, they try to make you feel like, oh, it's a family. It's this. its They try to spin it as something other than what it really is.
00:45:33
Speaker
Which is, right I'm just involved in a social compact here. I'm going to trade my expertise in time or money heard right and I don't need you to treat me like a family member. I don't it need any of that stuff. I just need you to pay me on time and give me good opportunities to earn and give and and outfit me with all the gear that I need to go be successful in the market. yeah But we've turned these organizations into something else. I mean, I was just having a conversation on LinkedIn the other day about how the world has turned a little bit now when it comes to the startup vibe. Nobody's in the office anymore. So all of those perks that used to be associated with working for a tech startup pretty much out the window, or they've they've changed significantly. You know, there's no more free Kombucha and free lunches and a ping pong table and voucher for massages and all that. That's all gone. And I'm kind of glad that it's gone because all of that stuff was a waste of money and it was a distraction. And unfortunately, it taught people that work is something other than work.
00:46:31
Speaker
work as a place to gather, work as a place to have fun, work as a place to great work on self-care. And all of those things are wonderful and important. But when we walk through the doors or when we sit down at our computer to do work, it's about driving revenue for the benefit of our shareholders, the people who work for us, our families, and to deliver great results for our customers. That's what it's about.
00:46:55
Speaker
So talent debt now is the outcome of when you have this warped mentality about what it means to hire people. I've been in organizations where cultural fit is the number one mandate.
00:47:09
Speaker
when looking at talent and that's an important one. I would argue one of the most important ones because culture is one of those things that's really hard for a competitor to replicate because it has nothing to do with systems and code. It has everything to do with human beings and their personalities, their likes, dislikes, capabilities and all of that. So talent that is where um when the company makes decisions and they land in culture and strategy and operations.
00:47:40
Speaker
It's the long-term cumulative effect on the individuals and how they think about the organization they work for and the leaders that are making decisions. And unfortunately, I've seen this time and time again, where companies say one thing, they do something completely different. you know We've got our mission vision values and nice sticky letters in the lobby on the wall.
00:48:05
Speaker
Then I'm in a meeting and I've got a manager who's literally like cussing people out, banging a shoe on the table and stuff. It's like, well, where's that value on the, where's, where's the shoe value come to the wall? right Right? And those are the types of things that make people go, Oh, I've made a horrible choice. And the problem with talent debt is the minute somebody feels the impact of talent debt,
00:48:31
Speaker
their excitement and their commitment to the company has been diminished. And many times that diminishment is permanent. And it's a cumulative affair. At some point when you get to 51% dissatisfied, one of two things is gonna happen. You're either gonna quietly quit and do the absolute bare minimum yeah or less until somebody gives you a pink slip. At least they'll get a waffle package of some flavor. Or,
00:48:58
Speaker
They stop working actively and their full-time job is finding their next gig. Or they just quit. If they're dissatisfied enough, they'll just be like, peace out everybody. i'm sure yeah And the problem with that, as we all know, anybody who's ever hired somebody and then had to let somebody go knows that is one of the most expensive things that you can do in an organization is have to replace people. Especially if they've been there for a while.
00:49:21
Speaker
and they actually know things. To get somebody back in a seat that productive is going to take you 18 months and it's going to cost you probably 2x what that person was making prior. And in the process, if that person's a revenue producer, you're also going to have less, if any, revenue from that person. sure So there's a magnification impact of on the organization when you have talent debt. Totally agree. Wow.

Conclusion and Monty's Book 'Executive Debt'

00:49:50
Speaker
So, Monty, this has been a fascinating conversation and thank you for sharing your insights about executive debt. How do we find you online and where do we keep up with you and where do we buy the book? So, the best place to find me online is on LinkedIn. Just look up my name, Monty Fowler. My company is called Aspire Six.
00:50:06
Speaker
We're a fractional collective and we help mid-market companies and enterprises do better. You can find the book at our website at aspire6.com. We also have a separate site for it called executivedebt.com. You can find the book on Amazon. It's available for pre-order right now. The ebook and the print edition will be up in a couple of weeks for purchase as well.
00:50:29
Speaker
Fantastic. So look for the book, Executive Debt Confronting the Long-Term Cost of Short-Term Decisions by Monty Fowler. And you can see his info and connect up at executivedebt.com. I got that right. x.com as well. Thank you so much for having me here.