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Apr 22, 2024

The 9 Core Competencies Framework

This week, Mark and Cole dive deep into the 9 Core Competencies crucial for building a successful company — vision, customer focus, goal setting, team dynamics, organizational structure, data management, effective meetings, streamlined processes, and enhancing enterprise value. Their conversation explores the significance of each individual competency and their collective contribution to organizational success. Mark shares what he views as the most challenging of these principles to maintain consistently, as well as which one CEOs make the common mistake of overlooking.

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Cole Abbott (00:00:00 -> 00:00:05)

Nine core competencies. Yeah. Let's get into it. A little overview today. Okay.

Mark Abbott (00:00:05 -> 00:00:07)

Want me to just go, or you wanna start with a question?

Cole Abbott (00:00:08 -> 00:00:10)

I, I know you just want to just go, so I think I just,

Mark Abbott (00:00:11 -> 00:16:43)

Just boom. Yeah. Alright. Well, so, um, you know, the big idea behind the nine core competencies is that, uh, when you think about the art and science of building a company, and obviously getting it to the place where it's a great company, and for me, you know, the, the big idea is ultimately we want to build a company that we call a stage five company, where someone would love to either buy it from you or take it over from you, right? So, so you've got the business to a place where it's not dependent upon you anymore. So what does it take to get from here to there? And, uh, you know, based upon everything I've done over the decades, um, I really think there are nine things you gotta be really great at. Um, I'm gonna summarize 'em at first, and then I'll go and do it a little bit more for each one. But given that we try to do a half an hour, it's probably gonna be, you know, pretty quick on each one. So, like, like I've said in other, uh, podcast, you know, vision first, right? We had to get everybody on the same page and, and stoked about where we're going and who we are and why we do the things we do. Um, and if you don't have the vision in great shape, then it's, I believe it's much more difficult to attract and retain great people. So vision's first, right? And then, you know, it's funny, I think part of the vision thing is now you go from the vision. If you think of it as core, you know, uh, why are we doing the things we do? Where are we going? Uh, you need to have a strong point of view on who your ideal customer is, right? Um, and then you need to have a sense for, um, you know, who your ideal people are to serve those customers. So the core values, um, and then you need to have a product or service that you're selling to that ideal customer. Um, and then, you know, you need to, so that's, so you got vision, and then you got customer, and then you got people, right? And then in the next one down is, you know, you could say, well, how do we organize our people? So that structure, right? And then, you know, what are we going to go for, right? 'cause we all wanna have this sense of, of a, of a goals and, and, and building something bigger and stronger and better as we're moving along. Have a sense of progress. And so, so goals are another one. And then as you're moving all through this, you're, you're not, you gotta stay, uh, connected. And so meetings is another competency as one of the things you want to have and talk about when you're in meetings is data, how are things going versus what we thought they'd be doing. Um, and then you have process, right? So these are all the processes that we need to do all the things we need to do. And ultimately, while I always say you don't make money because you want to make money, you make money because people value what it is you do. One of the ways to measure how you're doing things is enterprise value. So are you creating more and more value? And ultimately the enterprise value. It's not just about, um, you know, just making something, um, making money, um, off the, increasing the value of your shares, but it's also about resiliency, right? So you want to have a strong, a lot of, a lot of value to the company. So you can borrow if you need to. Uh, so you can make acquisitions if you need to. Um, so, so those are the nine core companies. I'll do 'em again. Vision, customer goals, people structure, data meetings, process and e value. And it's funny sometimes, right? I'll sit here and I know the nine core companies, but I'll have a brain fart. So that's one of the reasons why I want to have it here. So vision we've talked a lot about before, right? So the vision is as, as I say, it's all about, um, you know, it's, it's, it, at the core of it, there's a why, right? So why are we doing this? Why are we building this company? How do we make life better? So we call that the purpose, passion, just cause. And, uh, so at the core of the vision is, is a why. And then, okay, so this is how we'd like to make life better. So who are we gonna serve to make that life better? And so that's your ideal customer, right? And, um, and then in terms of the ideal customer, what is it that we're selling? What makes us unique? What makes makes the customer interested in doing business with us? And we call that the unique value proposition. Um, and then of course, now, if we're gonna do all this, you know, and we're gonna build this, and we're gonna serve these people this way, uh, what kind of people do we want to attract and retain? What are our ideal colleagues, ideal team members look like? And so that's where the core values come in. And then, okay, you have these people and you want them to believe that your dreams are big enough to accommodate their dreams. And so that's the, the, the, the good old fashioned, compelling audacious goal. And then you want to have sense that you're progressing towards, um, towards that big, hairy, audacious goal, as Jim Collins would say, is, we would say compelling, audacious goal. And so now you're, you're moving into, okay, where are we gonna be in three years? What are the goals for three years? Where are we gonna be in one year? What's the goal for one year? Uh, where are we gonna be in 90 days? 'cause obviously one of the reasons we're called 90 is we help people march the entire organization, right? Team by team March 90 days at a time, hitting 90% of the things that matter. And so, so then you get down to the, the 90 day goals or rocks as we call 'em. And the last part of, of what we believe is, uh, uh, an excellent element of your vision is what we call long-term issues, which are these things that we just can't, we know we want to get to 'em, but we just can't deal with them in the next quarter. And so we put 'em on the long-term issues list. So that's vision. Um, you know, customer, as I said earlier, uh, obviously we're gonna serve a customer, we're gonna serve them with a unique value proposition. But what do we mean by a customer, right? So that's, uh, getting really clear on, on the demographics and the psychographic and the geographic. And so strengthening that, you know, that, that, that, that key component, fundamentally, it's all about, you know, when someone asks one of your customers why they do business with you, they can explain that, right? Why I, I love 90, because, you know, it's, it's a great all in one platform. I love 'em because the customer service is amazing. I love them because the training and development materials to help us understand, you know, sort of all the concepts and the tools and the disciplines associated with the, that, that, that platform are really exceptional. I, you know, I love them 'cause I can trust them. Um, they're amazing with regard to the, to the security they provide to all of our, our data. And they make it so much easier for us to really see what's working and what's not working. So, so ultimately you want your customers to sort of actually be able to sell you to someone else using your words. So that's customer, right? And ultimately, you know, you'd love to have at least 90% of your customers to be ideal. Uh, why don't you want nine ideal customers? Because because they're non-ideal, they're gonna not be buying what you're selling. Um, maybe they're just people that aren't particularly good to be with, and they're making your customers success people or your client success, people miserable. So, um, that's why, you know, I wish everybody would have a really clear picture of their ideal customer, uh, the psychographics, the geographics and demographics, and ultimately get to the place where, you know, 90% of their customers are ideal. So that's the customer goals. You know, as we said earlier, that's about the, you know, the big hairy audacious goals and the three year, the one year and the 90 day. And it's, it's simply about are you setting good goals? Are you consistently hitting them once again, back to 90, right? 90% of the time we're, we're turning our rocks into done. So that's what the, the goal competency's all about. You know, people, we think about it from the perspective of both the core values. So we obviously, I shouldn't say, obviously, we have six core values here, right? So, so we're the G tribe, right? So the G stands for, you know, get smart stuff done. And the T is for teamwork, and the R is for resilience. And the I is for inquisitive. And the e and the B is for better and better version of the best version of ourselves. And the E is for extra mile. And we lean into helping everybody that is interested in joining us, really understand what each of those six core values are. And obviously I spend a hell of a lot of time talking about that right now. But ultimately, you know, what we try to do is have at least 95% of our people be really good cultural fits. And culture is more than just the core values, obviously. It's, it's, they buy into our mission. Uh, they buy into our agreements based culture, right? So we believe that their agreements are everywhere. In earlier podcasts, I've said that, you know, I see frameworks everywhere. I see agreements everywhere as well. So core values are agreements. Your roles and responsibilities are agreements to-dos are agreements, rockstar agreements, uh, the targets associated with your KPIs, um, that help us make sure that everything's going smooth. Those are agreements, right? So if all of a sudden, you know, we're having issues, we agree that, that that performance there, because the numbers aren't being hit, whether you're inside or outside some range, whatever it is, we agree that that's an issue. We should talk about it. So, um, so agreements are everywhere and, um, and ultimately, you know, we, we, we want to attract, um, uh, people who genuinely exhibit the behaviors that our core values talk about. As I said, I could talk a lot about our core values, but I won't today. But, um, but you know, ultimately, you know, I'd love to have like 95% of the people be great cultural fits, um, structure that really helps us understand how we divide and conquer, right? Um, you know, obviously structure is two dimensional. Um, an org chart, an accountability chart as EOS would call it. Uh, there are the columns that have the centers of excellence or departments, we call them core functions a lot. And then we have a very specific methodology for layering. And the layering methodology really helps us make sure that, um, the people sitting at that, at that, at that layer, we call 'em stratums, uh, that they can handle the objectives associated with that layer, right? Sometimes the objectives are simply day-to-day, week to week. Some objectives are quarterly, some objectives are year to two years. Some objectives are two to five, and some objectives are five to 10. And so, based upon the complexity of the objectives, the time span associated with the con uh, objectives, you know, we have a whole structuring methodology or a could say a framework, right? So that structure, I mean data is has, you know, <laugh>, we've been saying for a long, long time that we want to help our clients turn data into a superpower. We're seven plus years in. And, um, I think we're finally starting to do some really good stuff with data on our own side. And we're, we've got a, a great head of data now, full-time, our first full-time head of data, um, in, in the company. And, uh, you know, we're working on doing a lot of things around advancing not only our own data competency, but also, uh, giving our clients the ability to have, uh, amazing access to data. We're doing things in, uh, in the engineering pods to, to start to expand our integration. So that data's right, right then and there, and it, it flows right into the system. And ultimately, you know, what we want to do is help clients take the data that's everywhere, right? Just like frameworks are everywhere, agreements are everywhere, data's everywhere. Um, and be able to give them access to data so that they have not only really good hindsight, like, okay, what the heck has been going on in this area for this period of time. But then to give them the insights associated with it. Like, Hey, by the way, you got these, these things going on. And so it's likely that you know, that there's another issue and it could be over, over here. And then ultimately, um, not to to be minority report ish, but I think, I think with the advancement of AI and the technology and the data that we have here, someday we're gonna be able to give them a little bit of foresight that they could not possibly have had without the, the power of the, of the platform. So that's data. Obviously, you know, I shouldn't say obviously, but I say it too often. But, you know, we're always in meetings and, you know, there are various types of meetings. Actually, I think, um, on the drawing board is, uh, uh, guide that I've been wanting to write for a long time on sort of like the 21 types of meetings, right? And so obviously there's weekly meetings and there's quarterly meetings and there's annual meetings, there are feedback meetings. Those are pretty straightforward, right? But, you know, there's also the state of the company meeting. Uh, there are also, uh, you know, we have tiger team meetings, right? Um, I'm trying to think through a bunch of different meetings, but there are a lot of different meetings that ultimately, uh, okay, there's monthly financial review meetings or board meetings. I could keep going. That's 21, 21, right? Um, and, and, and ultimately, yeah, there's, you know, there's, there, there's a bunch of different meeting types. And, and once again, back to frameworks that we talked about in another podcast, or we will talk about, can't remember the order of these things anymore, but, you know, good meetings have a structure, right? Um, so they have, you know, they, the good meetings start on time, the end on time, the same day of the week if they're a recurring meeting. Um, and, uh, and, and, you know, and so they have an agenda, right? And there's just a structure to it. You become really good at, at running those meetings. And so you're not reinventing things all the time. And so, you know, we help clients think about and measure the mastery of their meeting competency. Um, the other two competencies, you know, to, to go on, obviously you think about the rows and the columns, right? The columns being the various, uh, um, um, areas of centers of excellence, core functions, departments, whatever people want to call them, um, they all, you know, tend to work with one another. You know, they're there for a reason. And so, you know, if you look at our company right now, we have 11 going on 12, um, departments or core functions. You know, you start with branding, right? And then you move into marketing, and then you move into creative, which supports marketing and branding. Um, and then we move into, um, education, right? And in theory, you could say content, right? So we have content, we have education, um, and then we move into, you know, customer service. We move into partnerships, we move into, into data, we move into engineering, we move into people, and then we move into finance, right? And so we have, um, uh, that's either 10 or 11 departments. And as you well know, I mean, man, right? Every single day we're crossing 3, 4, 5 departments. Oh, yeah. And we're crossing like back that I said earlier, like a stage five company has 10, 10 tends 10, five layers associated with it. I mean, we have people going from, uh, stratum one to me, me in meetings almost every day, probably, right? If you think about almost every day. And, uh, and then, uh, so, so you're going up and down, you're going across, and that's just, that's a heck of a lot. And so some of that stuff is, is repeating, and those are processes, and some of that stuff's ad hoc. And some of that stuff is, is in between those two things, right? So you, you have tiger teams coming together and, you know, to work on a rock, um, or some large project, uh, that's not rockish, but for all practical purposes is an ongoing project. And, um, and so, you know, specifically with regard to things that we're doing on a repeatable basis, that's, those are the processes, right? And every single department leader now has process mastery, one of their, um, roles, accountabilities and responsibilities. And, uh, and we measure that, right? And so, you know, we document the processes, we train everybody up on them, um, and then we wanna make sure people follow through the processes. And then, because we, I think we've talked about this before, right? Because we have this idea that everything in a company, most everything's inside a company is in tropic, right? And so, and there's a little anti entropy right? Going on in there.

Cole Abbott (00:16:43 -> 00:16:51)

You try to organize it, right? Build the structures and everything to do what you can against the entropy and Right. The

Mark Abbott (00:16:51 -> 00:16:52)


Cole Abbott (00:16:52 -> 00:16:55)

Chaos of things. Yeah. But you can only do so much,

Mark Abbott (00:16:55 -> 00:21:02)

But you can only do so much, right? And so, um, so you know, the processes are very entropic, you know, unfortunately. So, you know, the business evolves, it grows, things change. And so, you know, in terms of mastering a process, you know, it's a never ending thing. You can't spend, once you get your processes reasonably well documented, you can't, you know, you can't overinvest, you can't underinvest. And what we find is maybe every six to 12 months we go in and take a look and say, Hey, do these still make sense? Right? And, and, and, and stand back and, and, and with a critical eye and, and, and say, do we need to evolve these things? Do we need to change the documentation? Uh, so processes is, is is really the only core competency right now where I believe we're less than 90% strong. I think everything else we're, we're either right at it or above it in terms of the nine core competencies. But process is hard. Um, and most people don't like it. Um, but that's why now we, we, we, we make it very clear that every single department leader owns their processes and should check in on 'em every six months. And then last but not least, right? Back to the, you don't make money 'cause you wanna make money, make money because people value what it is you do. Um, it's, if we are doing all these things well, we should see an improvement in enterprise value, right? And, um, and enterprise value is basically what's the total value of the company. Um, shareholder value is the value of the company minus any outstanding debt. Um, enterprise value is the whole thing. So, you know, some businesses, uh, are a multiple of ebitda, some businesses are not doing particularly well, and it's just basically the liquidation value. Uh, some businesses are a multiple of revenue, especially like SaaS businesses that are growing fast. Um, and that have the ability to generate, uh, a decent amount, uh, decent margins in terms of, uh, in, in terms of ebitda, at some point, we're still big time investing in 90. Um, and so we don't have any ebitda, uh, uh, but, um, so EBITDA measurement doesn't make as much sense, but businesses like ours are, are valued on a multiple basis. And, and the, you know, and the multiples change based upon the bigger the company is, you know, multiple is basically just a, an inverse of a percentage, uh, percent. And the percents are based upon risks. So there's risk reward if you go invest in a, in, in a tbi, I don't even know what it, what you can get a return on it these days. Let's just say it's 2%. Well, obviously to take, uh, invest in something really risky, uh, you need a heck of a lot more. And then as the risk goes down, the interest rate you need, but you, but those interest rates really, if you just inverse 'em, they're multiples, right? And so, you know, some businesses trade at low multiples, some businesses trade at high multiples. And then, as I said, some businesses trade at a multiple of enterprise value, uh, multiple of ebitda. Some businesses traded a multiple of EBITDA minus normalized CapEx. Some businesses traded a multiple of, of, uh, of revenues and some businesses trade based upon liquidation value. So those are the nine core competencies. And, and what we do is we measure ours every, um, every three months when the leadership team gets together, and each of us, uh, does a a nine core competencies, uh, survey. We call it an org, org fit survey. And, um, and it helps us make sure that we're all on the same page in terms of how strong we are. We love getting to 90% strong across all nine of them. And when that happens, what we know having worked with tens and tens and tens of companies, is that the, the company is in a really good position, um, in terms of how well it's being run, in terms of how well everybody's on the same page in terms of how everyone's living up to their, to their agreements, back to agreements based cultures.

Cole Abbott (00:21:03 -> 00:21:25)

Yeah, I mean, that was a very good spark notes of nine chapters Yeah. Of a thing. Yeah. Right. That we'll go and do a little overview. Um, so now that we have time for a couple questions. Yeah. I think in, right, in your experience, where do companies, which of the nine is usually the weakest or the most over overthought, right?

Mark Abbott (00:21:25 -> 00:26:53)

Well, it's, those are two separate very big, uh, different questions. Yeah. So, as I said earlier, I think almost universally process is the last one, uh, to get over 90%, and it's the easiest one to fluctuate above 90 and below 90. Um, and there's a whole host of reasons for that, but, um, I'll give a couple. So number one, um, as a business evolves into a company and then a stage five company, and as it gets more and more expert, you go from a very simple business that has like sales, marketing and client success being one thing, and operations being one thing, and, uh, finance being one thing, right? So you just have three departments, and then as the, and, and then what ha what a lot of people will do, uh, is, um, they'll build layers under those three departments that go beyond the department heads. So, so what I, what I mean by that is, uh, I wanna say that differently. I believe, and this is Elliot Jack's model framework, right? That the first layer, uh, which we call stratum in the organization has objectives that are anywhere from one day to three months. And the second layer has objectives from three months to one year. And the third layer is one year to two years. And tho that's where I believe you need department heads. And so what a lot of people will do is they'll actually create more layers than that, than that below the department heads. But that creates almost shadow organizations. And you have people leading people where you're, I, I don't know if you're really that much better than I am in terms of being able to problem solve and deal with, you know, sort of complicated problems as an example. It's the classic middle management, you know, um, quote unquote, um, uh, tagging that sort of gets a, some people like pejoratively talk about. Um, it's, it's the, it's that layer, if you have a layer, if you have more than two layers underneath the department heads, it's that layer that tends to get walled if there's a, uh, right, if there's needs to be layoffs, which is why we really, really focus hard on never having that layer. 'cause we never wanna have anybody laid off as everybody in our company knows. Um, and so what you need to do is, instead of adding layers, you want to just get more and more experts, right? And so, so now all of a sudden you split sales, marketing, and customer service, and now you've gone from three to five, um, in operations. Let's talk about a software company, right? We obviously have engineering. We have, um, you know, and, and, and, and then we have product, and then we have data. You know, all of that could be considered under operations, right? Um, and then when you go over to marketing, right? We've, we've split ours out now to, we've got brand and creative and traditional marketing, and we have education. And really, you could even say we have content. So you could say there's five areas that marketing turns into. Um, we don't have sales. Uh, we like to say we, we, we, we, we don't sell, we serve, but we do have the partnership organization that has relationships with the coaches. And so, you know, what's happened with us is, as I've said earlier, we've gone from, you know, the sort of the simple three department heads to 11. Um, and because that 11 got to be a relatively large, um, what's the term I want to use span and control for, for, for years, truly, you know, we, we are now on the final stages of putting in a c-suite at the fourth LE layer, right? And so we have a CFO, we have A-C-T-P-O, we have a, uh, a Chief revenue officer, and then ultimately we're in the market for A CMO. Um, and so I will go from being le I've gone from being at that level four position, kind of playing the integrator and the visionary to now being, um, being fully up at the, at the level five, where I can focus on the five to 10, 10 years out. And I've got great people coming in or already in underneath me, focusing on the two to five, overseeing those 11 different departments. And you could ultimately see those departments even getting, um, having more, right? Because we have, we're splitting product into, um, sort of core product. And then, then there's a product team, um, and potentially another product team focused on some new stuff we got going on, won't talk about that. So, um, so if you think about that, every single time you split things up, now you gotta rethink through your processes. So, uh, so, so yeah. So the process stuff is, you know, it's always changing, um, but you can't focus on it all the time. So once again, it's like every three months or six months, and really it's based upon the nine core competencies review, right? If all of a sudden everybody's like, Hey, we got process problems, we're now down at 80%, we'll, we'll stick in there. So that was the, that process is the hardest one. What was the other question?

Cole Abbott (00:26:54 -> 00:27:04)

Uh, which, which one, which is like, which was the hardest and which one's the most overlooked? Like, the people were just sort of, you know, intentionally or not turn a blind eye to

Mark Abbott (00:27:05 -> 00:30:02)

I, so our definition of enterprise value, right? To not our definition. I, I would say that our approach to thinking about enterprise value, um, we believe that ultimately because we're a huge believer in creating a high trust organization, a high trust agreements based culture, right? Um, the whole trust thing for us means a lot of, uh, transparency, right? So that's one of the, one of the factors associated with building a high trust organization. And so, you know, we're very transparent about enterprise value. We are very transparent about how we're doing in terms of, in terms of, um, creating and, and growing enterprise value. Everybody in the company who's been here for at least 90 days has options. Um, or our investors, they've literally bought, you know, bought, bought shares. So we have a bunch of people who own shares in the company. Um, and so, you know, I think there are a lot of founders and CEOs out there who are, I don't wanna say the word afraid, um, but they're, they're very anxious about talking about enterprise value, right? Um, and we're not, and I think that ultimately we believe to be a real master of enterprise value, everybody in the company needs to understand what drives the, the organization's value. They need to understand, you know, um, how strong it is in terms of being prepared for a downturn, right? Uh, in my opinion, we owe them that. Um, but that's just me. So I think, you know, enterprise value is one that, as an example, EOS doesn't have that in its six key components, right? Um, but, but mastering enterprise value, not just in terms of, in terms of like, I understand me, the CEO, I understand if we increase EBITDA DA by this, it's gonna increase the enterprise value by that. You know, we work really hard to make sure everybody in the company has a sense for what increases the value. Because back to an agreements based culture, if you're really clear on the things that matter, and you help everybody in the company understand the things that matter, right? You're explicit with regard to them, they're all coherent and it all resonates, then they've got context that helps them make decisions. And if you know that they have that context, then you don't have to worry about things if they didn't have that context. And so I think enterprise value's probably the one that most people don't focus on at the whole company level. Does that make sense?

Cole Abbott (00:30:02 -> 00:30:20)

Yeah. I think especially at the whole company level Yeah. It's, it's a harder one to stay mindful of, like throughout the organization. Yeah. Whereas every, you know, process, everyone's interacting with those things, everyone sees the goals, everyone. Yeah. Well, a lot of people are interacting with the customer and actualizing the vision and everything, but

Mark Abbott (00:30:20 -> 00:31:09)

Yeah. And, and, and, and the truth is certain people are like more interested in it than other people are, and that's, that's fine, right? But we still talk about it every single quarter. Yeah. Right? Um, and, you know, during the onboarding process, we educate people on it. And then of course when we hand them the options, we, we educate them on the options and how to think about the options. And so, um, you know, it's, that's another never ending journey because, you know, we added, what, 70 people last year, and so that's 70 people now that we're, we're working on helping them understand enterprise value. And like I said earlier, some are gonna care more about it than others, and it's okay. Yeah. Yeah.

Cole Abbott (00:31:10 -> 00:31:21)

Well, I guess a good way to sum everything up. Cool. And, uh, yeah, we'll talk more about the rest of them in a future episode. Look

Mark Abbott (00:31:21 -> 00:31:23)

Forward to it. Thank you. All right.