Maximising Business Value: Systemisation and Team Optimisation Tips from Lloyd Thompson

Welcome to the podcast that’s dedicated to helping business owners prepare their business for exit so they can maximise value and exit like a boss. This is the exit insights podcast presented by Succession Plus I’m Daryl Bates-Brownsword and today I’m joined by Lloyd Thompson. Lloyd is a Virtual DO, as we were describing earlier, or a Director of Operations. So Lloyd, firstly I want to know what is a Virtual or a Fractional Director of Operations? Then what I’d like to do is go, how do you add value, what does the role entail and what does it look like in a business on a day to day basis? And then we’ll dig in from there. And if you want to set the scene of how you arrived at setting up a business to do this, I’m sure the listeners will be a little curious because it’s not something you hear everyday.

Wow, okay, well there’s a few things to answer there, so yeah, thanks for having me, Darryl.

I just wanted to set a bit of an agenda so listeners knew what we were going to be getting into.

Yeah, yeah, let’s go for it. Okay, so, yeah, thanks for having me. In corporate world, I was looking after large remote teams, so that was my background mainly in banking and finance and like many people during the great resignation during the lockdown, I was thinking about what I wanted to do next and I was thinking, I’ve been in corporate world forever. I was thinking about do I want to go back to being a contractor again? I still really enjoy that. Do I want to work for a startup? And then somebody in my surf community actually is a business coach. And we had a conversation in the sea one day and I was asking, well, what can I do with my skills if I was to start a business? My skills are leading people, overseeing projects, driving process improvement. And I had a large global remote team at the time and the thought of going back to a brightly lit office after the lockdown corporate is just not something I wanted to do. And he said to me, well, you sound like an said, it sounds like a technical term. I’m not so familiar with a term integrator in a business sense, this technical term. And he said, look, have a look at this book, it’s called Rocket Fuel written by Gino Wicktman. Have a look at that and tell me what you think. So he directed me to Rocket Fuel and Rocket Fuel talks about the relationship between a visionary and an integrator. They’re like this dynamic duo that run a business. And so the visionary is typically this person that will come up with a strategy, have those relationships, probably more sales focused, come up with all the big ideas and the integrator or the term I would normally think of. For an integrator or as a COO or. In my case, for non-corporates, I say Director of Operations is the person who runs the day to day runs the team. They’re the glue to make sure things run well and make sure we’ve got measurables and feedback loops and all those things that make the thing run. So that’s what an integrator is. And I thought to myself when I read this book, I thought, that’s what I am. I’m an integrator. I’m an Integrator in corporate world, looking after large teams, not so much at the top level. And he said to me, perhaps there’s an opportunity for you to start out as a fractional Integrator. So that was a great idea, and that was planted many months before we did something about it. And then one day he said, look, actually, I’ve got a client of mine who’s a large e-commerce business team of 50 or so, and this guy is running around like a headless chicken, scatter gunning the team with tasks he doesn’t really know. It’s not his background. He’s a creative master of putting products out, running campaigns. Very successful guy. But running team and putting systems in place, that’s not his special power, nor is it his interest. Perhaps you could help him. So I had a conversation with this guy, and I could see a lot of his problems. And I wasn’t an e-commerce expert. My past life was technical, but I could see how I could get him out of scatter gunning the team and put rhythms in place. So that was my start into this game as my first gig, if you like, as an integrator. But I was open with him from the beginning, that I wouldn’t be full time for him, that I was going to be working with other people as well. And so hence, I started out as a Fractional Integrator, and I’ve since just changed that to Director of Operations because I’d spend ten minutes explaining to people what an Integrator is say Director of Operations they get it. That’s what an integrator does. They’re leading the team, overseeing the projects, driving process improvement, and fractional, meaning serving more than one client. And so where I am now, I’ve got to a size where I’m actually no longer the Director of Operations in the business. I now have a team of Director of Operations who are working with multiple clients, and I’m supporting them as if you like a coach to them or an advisor. I’m hiring people who I think are good or as better than I am, but I’m there saying, yeah, I’ve seen this problem, or do we want to talk about the challenge you’re having and work out where we want to go with this? So that’s how this begun.

Well, first thing is thanks for confirming the Aussie stereotype of decisions being made on the surf and real things are done. And unlike the golf course you’ve done, Australia a service there and I’m sure Gino Wickman’s pretty thrilled as well. The fact that you’ve created a sub-industry in helping business owners achieve, because a lot of them are already what does he call visionaries, or what the rest of the world calls entrepreneurs who are brilliant at big ideas and they’re typically good at startups and they’ll get a business to about a mil in revenue. But after that they have trouble with the span of control because they don’t know how to build and create a structure. So is that where you step in once the visionary sort of got the business up over the startup phase, over a million people sort of over probably more than ten people possibly getting on close to 20, they’re starting to feel the stresses of the business growing and the growing pains. And some of those businesses contract after that because the founders are unable to create a structure and maintain control and delegate and keep everything under control because they just haven’t got a structure and their span of control runs out and it gets out of control. So they just dial it back to less numbers. Is that where you come in and say, right, well we need an operating structure, we need some sort of tool to communicate what everyone’s role and responsibility is. We need some sort of process.

Yeah. Where we find ourselves is around about ten when they’ve got about a team of ten plus, which will naturally dictate that they’re going to be doing seven figures easily at that point. So what I’ve found through starting when I started this business is less than five members of staff. They might as well do it themselves. They’re still pretty much involved. Five to ten members of staff. They’re starting to really feel the pain, but they’re still doing it themselves. Ten people or above, it’s absolutely clear cut. So we operate in the sweet spot for us is between ten and 30 staff. That’s where someone engage us as a Fractional Director of Operations. And beyond that, they’re starting to get to a size where they think, we definitely want a full timer in this place and that’s okay because we can come in minimum time, we’d really be involved. Or the smallest we’ve ever done really is three months, but typically six to eight plus come in, get everything running smooth. Like we identify all of the where the problem, what we’d see the problems are, and set a course to resolve, put rhythms in place like how we’re going to plan, how are we going to have feedback loops for campaigns or how we’re going to measure performance and run that. And if the business owner gets to a point where they’re like, okay, we actually want to get a full timer in here, we want to bring someone new in, or we want to bring someone from our own team in. And this has happened to me. One of our early clients said, hey, one of the team members says he can see how this is done now and he wants to do this. We said no problem, we’ll hand over the reins, we’ll train them up and we’ll support them. And what we really want out of this is a referral to keep us going because that’s 80% of where I’m getting my leads for is referral based. So that’s how it’s a win win for us.

Right. And I’d never really thought about this before. I’ve worked with part time or fractional CFOs, and that’s normally the first one to get the headlines and the attention because we got to get our finances under control and it’s really easy, tangible and easy to fix and identify the issue of my finances are out of control. And someone similar to you in the finance world from a corporate sense, brings their finance skills, applies it to four or five SMEs. That’s great. It’s a great use of their time, they’re getting great satisfaction and four or five businesses at a time are benefiting from all that experience because it’d just be overkill for one business. So I’ve seen that with CFOs, I’ve seen it with HR professionals, I’ve seen it with Legals having a crack. I haven’t seen Legals really nail it yet. So it makes sense for an operational director to come in and do a similar role. And I really love what you’re doing is you’re taking the work from Gino Wickman, that attraction stuff and everyone’s familiar with that. So you’ve almost got a blueprint or a playbook that you can use and you can roll out and you can go, right? So how different are you to, I guess, the average consultant out there who is a EOS consultant? Is it the same thing you’re doing or are you doing things differently to those people?

We’re not strictly EOS, and I’ve got to give full credit to Gino Wickman because obviously the idea was birthed from reading Rocket Fuel and I’ve taken inspiration from traction. But a lot of the frameworks I use are not just out of say, traction or rocket fuel. Also I take things from corporate world like aspects where I’ve used Agile with teams and I don’t have to use a full blown framework that might work on a big corporate team quite often. Like I said, ten to 30 staff is quite a bit smaller. So I’ve taken the very best of the elements that I see have worked that are going to give us the biggest bang for buck. So I’m not strictly following EOS. Some people have come to us and said, hey, we’ve already got EOS in place, can we do that? And so we say, okay, fine, we run the rhythms that you’re running there. But we’ve taken inspiration from the very best frameworks and a few of them out there would be Agile scaling up and elements from corporate world. And obviously the very big difference is that we’re fractional. And I’ve started to see a bit more in this bit more people now going in the direction of fractional and literally, maybe was it one or two weeks ago, I saw the author of Second in Command, Cameron Harold. He was also talking about looking for people who are fractional coos. And I thought, wow, okay, so this is going somewhere. This is now being recognised. And that was a great nod because I’ve taken a lot of inspiration from his material.

So you’re riding the wave not to mix.

I want to see three more metaphors in this podcast related to surfing please

See what we can do. So, Lloyd, I guess the first thing is if a business owner is out there and they’re listening to this podcast and they’re going, look, I want to start thinking about my business. I need to scale it up. I want to grow it. I’m thinking about how do I make the mindset shift from revenue or profit growth to asset growth? I want to build the valuation of my business so that I can eventually I want to maximise the value so I can exit. How and when should I start looking at someone like yourself, a Virtual Operations Director? You mentioned number of employees. What about industries? What about other considerations where you can really make a difference?

So, for me, obviously, we’re virtual, so we’re really looking at online businesses only. So that’s the scope of what we do. But thinking just about what would business owners do to prepare themselves in terms of systems and team for an exit. I think the first thing I’d think about before I even think about whether it’s a Virtual Director Operations or not is, is this business dependent on the business owner? Like, if this business is dependent on the adrenaline of the business owner, as I’ve seen many times to survive, I think they know they’ve got a problem right there. And certainly that client I talked about earlier at a team of 50 staff who was just scatter gunning them every day knows that not only is there a problem there that he’s doing 16 hours days, but also the fact that how would a buyer get confidence to take the reins from that person if the business depends on the business owner rather than the team? And so I think they should be moving towards having a team run business rather than a business owner run business. So I think that’s a signal. How dependent is it on business owner? I think another one would be related to that not just being team run, but a common frame of reference for all the members of the team is to have operational procedures now, operational procedures and systemisation, huge fan of that. But most importantly, it’s just having that common reference for people in the team that say, right, well, rather than just pass the knowledge on from team member to team member to team member it’s, to document it, so that if there was only one team member that had the knowledge and then suddenly they left, well, guess what? We’re not going back to the business owner again who might still have a shred of that knowledge from long ago to have to retrain people in the team. So that’s another element, it’s not just team run, but it’s also the systemisation aspect of it.

Yeah, and my background is engineering, so that’s near and dear to my heart. Dave Jennings on the podcast a few months back. Have you met Dave?

Him too.

Yeah. Right. So I was going to say he’s got a fantastic systemology approach where he basically just builds a platform for you to be able to do what you’re talking about there and systemise and document the business. And we’re big fans at Succession Plus we’re big fans of the business being able to transform so that they’re dependent upon the move away or shift dependence from key people to key processes. And if our business becomes known for our process and our system and our brand is associated with that system and we train everyone to use that system and process, that means we don’t need to get brilliant people because the sheer level of high level brilliant people are really hard to find. We can just get everyday people who are smart people and train them in our system and process and then we can have in every business I’m talking not just our business, you can really create value in the business by demonstrating that people are following the process rather than just following, tapping into their knowledge and experience.

And I’m so glad you brought that up because when we talked about know are you following EOS? Is that the pattern? Well, actually systemology is another one where we’ve taken inspiration from David Jennings and he’s also been largely very much influenced by say, the E-myth as well. So all of these things play into it. You said a really interesting thing there for me, which was you’re not necessarily looking to get as such the a player or the expert, but the team players, if you like, who can follow the pattern. And that’s something I really agree with because we’re really focused in my business much more on the team side of things. We are employing systems, but we want to make sure there are systems. But what we’re making sure of is that we’ve got team are working together well and performing well and that people are buying into these processes. And so quite often when we go in somewhere, we’ll find there might be low performance. It’s not as a result of the system that’s been put in, it’s as a result of the players they’ve got in there and how they’re performing. And so that’s something we really want to take a look at. I highly favor hiring people who have got good values, good collaborators and who are going to work together well rather than someone who I guess I’m wary of the term a player at the moment because I hear that one a lot. And in my mind, when someone says a player, they’re thinking the very best at a particular unique slice or skill, but actually, quite often it comes at the expense of being a team player. So, yeah, just really agree.

I perhaps like you grew up in Australia playing Aussie rules or playing, let’s just say, footy, just so we removed the state-based bias, basketball and cricket growing up. And it was amazing, the consistency with the coaches drilling into us, that a champion team will always be the team of champions. And one of my coaches was so strong, where we had this kid who was a superstar player, and he was he was leagues ahead, but his ego matched his talent, and he just tried to hog the ball all the time, and it was always about him getting the ball and scoring the goal, and everyone just resented it. And he eventually got kicked off the team and then the rest of the team rose. The ability and the skill and the comradeship of everyone that teamwork, the whole team performed better and won more games. There was no one person scoring all the points, but the whole team raised. And it just really brought home to me, when I look back, the value of a team working coherently for a common objective. And that just fits so well in business. If we’ve got everyone aligned to the same goal and they know how their role or their position on the field contributes to the end goal of the team or the business, they’ll perform better because they know what’s expected of them. They practice every day, they work together. They know exactly how my role, what the scope of my role is, using the metaphor, what the scope of my role is, and how that role is extended to the business achieving its goals overall. And I think that’s what you’re doing. You’re creating the rulebook and the guidelines for the team to go, here’s your role here, and here’s your role here, and you take your role this far, and then you hand it over to this person. And if your role gets to this size, you need to get help from this person, or you need approval, or you need to get a sub off the bench or whatever it is to play with the metaphor. But when you get the team all running in the same direction, it is just a better outcome for everyone and a better experience. Everyone enjoys the game more, as opposed to just one person enjoying the game.

I can think how that person we talked about earlier, the guy doing the 16 hours days, how different it was for the team before and after. At one point, they’re being scattergun the tasks from the owner, and then later on they’re planning stuff out for every ten days, they feel a lot more calm. The business owner is not doing 16 hours days anymore. Tensions have calmed down a bit, actually. In that particular example, there was one bad apple in the team who we did have to exit. But that’s another aspect of it, actually. We do see that quite often wee go into somewhere and we’ll start with an audit or an assessment, have a look what’s going on. And generally the funny thing I’ve noticed is the business owner and the team know what a lot of the problems are and they’re looking for external validation or what to do about it. And quite often we’ll go in and we’ll see, hang on, there’s some problems. They’ve even told us what they are. They don’t know what to do next. And sometimes it’s a bad apple in the team who I’m going to say fits the they might have been an A player, they might have been really good at something. The business owner has grown some kind of dependence on them and they don’t want to let them go because they’re thinking, I really need this person to get me through the next step in the business. But actually what they’re doing by enabling that person is eroding the culture of the team and creating a dependence on that person. If that person happens to win the lotto or whatever and go, then they’re in so much trouble. And so part of it is listening to the team, identifying these problems and then helping them move forward and getting rid of poor someone who thinks they’re an A player and in fact, in my opinion is a poor performer because of bad culture is definitely one of the things that we resolve.

It’s something that’s good to hear, that you’re resolving it because often business owners are scared to let that person go because they’re such a high performer. If they’re in sales, they get the results in, but they get the results in at the expense of, you know, what’s the cost of getting those results in. And everyone else tends to underperform when that person is toxic or not a cultural.

Why is this person getting away with it? They start seeing that and it’s demotivating for them. So I can completely understand that.

So that results, staff turnover and is.That something that you aim to fit? So it sounds like you’re getting involved into the culture and the HR side of things. Do you get involved in recruitment?

Yeah, the way we work our scope is kind of spongy depending on the size of the business. So if it’s down at sort of ten members of staff, we’re actually going to be more involved in the nitty gritty operations. Whereas if they’ve now got 50 staff, we’re expecting we’d expect a dedicated HR lead. And all of these dedicated, they’re going to have a HR, It, finance director, sales, marketing, so forth. Whereas if they’re ten, they’re probably going to have a very few handful of high level roles and a couple of developers and so forth. So the way we run our engagements is really based on number of meetings per week or per month. And we’ll say, well, you can use us. If it’s this size of business, then we’re going to run this amount and everything else is going to be handled offline. If you want to use us for recruitment, fine. We’re going to recommend our ultimate goal, which we’re going to focus on, is if it’s dependent on us to wear all these hats, there’s a problem. So every time we see there’s a gap in capability, we’re looking to fill that and pass that on to the team and focus on ultimately making ourselves redundant. Which might sound like an OD business move, but if we do that well, then we get set up well for the next

Okay, so, and did you say, Lloyd, that what you do, the way you engage with the client is all virtual, so it’s all online?

Yeah, everything’s mean. Right now I’m in Sydney. All of my customers right now are in the US, Canada and the UK. But actually my team are mostly in the US of a couple of support folks in the Philippines you know, this is the modern, you know, pre COVID. This might have seemed like a radical way to run a business, but this is fine, really. I’m focused on what’s the time zone, what’s the main operating time zone, and as long as we can service that.

So you’re servicing people internationally. How do you charge them, what’s your process for invoicing and what have you?

It’s all in US. Dollars. So the way I charge is I charge a retainer. I transact through stripe on a retainer. I’m going super detailed here, but it’s like a subscription, if you like. It is a subscription. So someone starts off typically with an audit. We run that for a month and if they go, yeah, okay, we do want you to make the changes. You’ve identified some changes and said what you’re actually going to do to fix it. At the end of the audit, that business owner can decide to go and implement our suggestions themselves and say, yeah, okay, these are the blind spots, we’re going to go and take care of ourselves. Or they can say, yeah, okay, virtual doo, fix it. And then from that point on, it’s just a month to month subscription, typically ranging between $6K and $10Kper month. And it’s month to month. They could get to the very last week of the month and say, we’re going to stop here and they cancel a subscription, which would be a little bit brutal if they get to the last day. But generally the security for them is they’re running us on a month to month, but we can handle this because we’re fractional in the sense that we’re serving, each Director of Operations might be serving, let’s say, between one and three clients. So that’s how we’re able to handle it.

And so they’re paying a monthly retainer. As long as you’re performing and you’re adding value, they’re going to keep going with you by the sounds of it. So they’ve got their own performance guarantee just through experience. What does a month engagement look like? You said, a number of meetings. Are you running a weekly team meeting and assigning tasks and duties and people? Do you do stuff yourself or you’re delegating it all out?

So if I just look at, the most sort of basic pattern we’d run is the Director of Operations would have a weekly prioritisation meeting with the founder. And I think EOS would refer to this as like a same page meeting. So they’re going to have a weekly catch up. They’re going to talk about the priorities. Okay, we’ve got these things 1,2,3,4. We’re going to go on those, talk about any issues, work through those and close. And that’s going to be what the Director of Operations is going to focus on for that week. And that’s really important because the classic visionary, as we’re talking about earlier is they’ve got a bazillion ideas or they’re trying to spin 100 plates, but because they’re spinning 100 plates, they’re probably not cooking much, right? So we need to say, right, let’s cook these three, get them done. So that’s that first meeting. The second meeting might be the Director of Operations then runs a team meeting with the leads or heads of, if you like. So like I said, depends on the size of the business. If it’s a really small team, it could be most of the people in the company. If it’s a team of 50, you’re looking at the heads of HR, IT, Finance Operations and all of these different things. And in there, what they’re really looking for is what are the measurables that give us the health of the business? What are those reds and greens? And if there isn’t that capability when we come in, we want to build that. So we want to be able to look at a dashboard and it can start super simple, to be honest. All it needs to be is a spreadsheet with numbers on it where we can say, if it’s above this number, it’s a green. If it’s below this number it’s a red. And in the beginning that might not be super obvious, but once you’ve run that for a few weeks, it becomes obvious where things are running well and things are not running so well. And so based on running, we’ve talked about the same page meeting or prioritisation meeting. We run the team meetings, we look at the reds and greens. The remaining time that that Director of Operations is going to be spent is looking at how do we make those reds are green. So spending time with the folks who. Are in charge of those areas and understanding what do they need? Do they need more spend? Do they need resource? Do they need to automate it? Or is the person in charge of that area the right person? Or do we need to get together and really understand the process and change the process so that’s it at the highest level?

Identifying the key metrics in each of the functional areas of the business, working with the leaders of each of those functional areas so they understand the measures and have some goals to achieve those measures, and then mentoring and guiding them to have the skill sets where the gaps are to be able to fill that. And then you become like the ringleader in the circus. You’re orchestrating and coordinating everything from there on in. Once those routines, those behavioral patterns, those disciplines are embedded in the business, your role as a virtual doo is now complete and the business has hopefully grown to a scale where they can appoint someone full time, maybe from within the business, or maybe an external appointment.

You’ve absolutely got it in one. And that’s the way some of our engagements have run. Or if they’re growing and growing, well, they might say, okay, we’ve put the new person in here and our scope might be reduced to stay in there, not only as a transfer of knowledge, but there’s other areas that need attention. And so we’ll come out of being that top level Director of Operations who’s reporting to the visionary or founder and now looking after a particular problem space until they say, Ok, thanks for coming and see you later with a nice referral.

So that’s it in a nutshell. I love it. Lloyd so we’ve scoped the role, we’ve given people an experience of what they could expect by working with a Virtual Operations Director. Out of everything that you do with a client, what’s the one key thing that you really want them to the listeners to take away from our conversation today? And I guess with an angle of specifically going, hey, this is what you want to do in setting your business up so that it’s more valuable for when it does come time for exiting.

I think I’ll just say two points, actually. One is if you’re doing the same thing again and again and expecting the same results, it’s not going to happen. And there’s an Albert Einstein quote about that being the definition of insanity. So something needs to change. Getting external help is going to move you in that direction. The other thing is, well, if you want to improve at something and then measure and for myself, I went on holiday recently. I put on 5kg. So now that means I’m counting my calories and I’m going to have to lose some weight. Now, the same is true more surfing and less calories in, more calories out. And it’s the same for business. Sunlight is the best disinfectant. Put a spotlight on all of those things where they could be problems, measure those things. And whether it’s human performance, whether it’s numbers coming out of certain areas, put a spotlight on those things. Measure them and you can’t help but take action.

Brilliant. It’s the old principles always stay true. Lloyd Thompson, Virtual DOO. Thanks for sharing your exit insights with us today.

Thank you so much for having me.