Fractional COO Secrets for Scaling Through Change

00;00;02;16 – 00;00;26;17
Speaker 2
Welcome, everyone. To the fractional operator. I am Mike Nelson, and I confess I am also a fractional operator. This podcast, of course, is brought to you by hourglass SaaS. The first, at least to my knowledge, software built for fractional operators by fractional operators. So check it out at HourglassSaaS.com and let’s get the show started here.

00;00;26;17 – 00;00;31;22
Speaker 2
I’m with Bill Tansey from the OpEx Shop. What’s up Bill Tansey.

00;00;31;24 – 00;00;38;03
Speaker 1
Michael Nelson I gotta say, your, your tagline there reminds me of like 1992 Fubu.

00;00;38;03 – 00;01;04;13
Speaker 2
Where I know about Damien. So, well, it’s it’s one of the things about the software. Is it really, it really was built and used and tested for the last six years by not just our company, but by a couple of other fractional companies. So it it really is, not the not the rip off Fubu, but it was created by fractional operators for fractional operators.

00;01;04;13 – 00;01;13;17
Speaker 1
So that’s awesome. I suspect most of your audience probably wasn’t around for the Fubu days anyway. So, you’re right, they wouldn’t have known unless I tipped the and like that.

00;01;13;20 – 00;01;15;06
Speaker 2
Are you saying because we’re so old and.

00;01;15;06 – 00;01;20;27
Speaker 1
They’re so chic? Yeah, I’ve come to that realization. That’s absolutely what I’m saying.

00;01;20;29 – 00;01;21;13
Speaker 2
Yeah.

00;01;21;17 – 00;01;22;11
Speaker 1
Yeah.

00;01;22;13 – 00;01;30;28
Speaker 2
Bill, for our listening audience, once you, go ahead and give us a little idea about, who you are and what the op shop is and does.

00;01;31;00 – 00;02;00;03
Speaker 1
Cool. Yeah, I appreciate that. So yeah. So I’m Bill Tansey and I run and have run now for I think a little over a decade. Right. I’d have to go look at my LinkedIn. The operational excellence shop or the op shop.com. And although when I launched it, I don’t know if the fractional workspace or fractional operator, nomenclature, if you will, was was around.

00;02;00;03 – 00;02;04;29
Speaker 1
I, I didn’t recognize at the time that I was launching a fractional business, like as we say now.

00;02;05;01 – 00;02;07;12
Speaker 2
But I think those terms are newer to the scene for sure.

00;02;07;16 – 00;02;41;29
Speaker 1
Yeah. Yeah, I think so as well. So I, I would describe myself as a, as a chief operating officer for hire kind of thing. And typically companies would engage with me when they’re undergoing or navigating some kind of substantial business change on the operations side of the business. And I would either come in and augment and coach the existing team and methods, or I come in and temporarily kind of sit in a kiosk through that change and then hand off the work I’m doing to my backfill for, for permanent, long term replacement.

00;02;41;29 – 00;03;10;11
Speaker 1
And I found that, prior to even doing this work for years and years and years, what I found is that the folks that are good at showing up and being successful during significant times of change usually aren’t the folks that seem to prosper in that steady state that comes after the change. So, and, and as the years have gone on, it’s become increasingly evident, especially in midsize companies.

00;03;10;11 – 00;03;34;09
Speaker 1
You know, and when I say it’s, again, I need to I need to Google. That’s when I say mid-size. I’m talking like 100 million a year in revenue or under, in the midsize company space. Those businesses, it doesn’t they can’t throw money away like some of the larger businesses. And it just doesn’t make sense to hire a full time, permanent person to lead a change.

00;03;34;11 – 00;04;01;27
Speaker 1
If that person is going to be uninspired or not the right person to lead the steady state afterwards, and then they either have to hire someone else in addition or move somebody out or what have you. So that’s where in the rearview mirror, the, the fractional component for me is become, I think, really valuable to my clients is they don’t need to hire a full time executive chief operating officer, which, is, several hundred thousand dollars a year to do that, plus long term incentive bonus, etc., right?

00;04;01;27 – 00;04;30;03
Speaker 1
Overhead benefits instead, they hire me for a, defined period of time or someone like me for actually operating for a defined period of time and, see them through whatever that challenge is and lead them back to a steady state where they can continuously improve incrementally over that stage state. And I think that’s, that’s been really the, the power of what I do, and I think probably scales across the fractional workforce today I imagine a degree.

00;04;30;06 – 00;04;58;04
Speaker 2
Yeah. Well, that’s it’s funny you say that because when, when I started doing fractional CMO work, it wasn’t called fractional, right. It was CMO for hire or it was outsourced marketing department or something along those lines. Right. It was outsourced. It was for hire. And then I feel like it’s just the last maybe five years that that fractional term has really come into play and, and really probably defines it best because it really is.

00;04;58;09 – 00;05;15;29
Speaker 2
You know, we’re all fractional. We’re probably working with multiple clients, depending on if we have a team or if we’re sole operating, we might be working with a half dozen clients or a dozen clients or more. And, but we’re, a fraction of our time is given to each one of those companies based on whatever the scope of work is.

00;05;15;29 – 00;05;34;05
Speaker 2
And it’s, yeah, it’s definitely newer term, but it’s still still the same thing as far as I’m concerned. Right? Yeah. The for hire or the fractional however you want to at it. I agree, Bill, just so that, we gotta we gotta put your creds out there because they are, good or better than good.

00;05;34;05 – 00;05;46;28
Speaker 2
They’re great. You had great credentials as far as being, CEO, fractional CEO. So, you want to just give the listening audience just a quick rundown, of what the resume looks like, why you’re qualified to do it.

00;05;47;00 – 00;06;00;10
Speaker 1
So, yeah, I appreciate that. I always feel silly, kind of kind of going back with the bio, it’s the opening slide in a lot of presentations. And I still to this day feel silly doing it. I love when someone else does the opening slide, for me.

00;06;00;12 – 00;06;33;27
Speaker 1
Excuse me, I’m coming off. That respiratory call is terrible. So, yeah. So my career has been split into three sections at this point. So I got out of my undergraduate in engineering in the first third of my career was spent, commercializing new products or bringing new products to market. And, in the time that I was, bringing new products to market, I pivoted away from one of the largest medical device manufacturers in the world into essentially a startup organization, whose whole mission was to bring new products to market.

00;06;33;27 – 00;07;04;20
Speaker 1
And that was also my charge to figure out how to do multiple new products in parallel and put a system in place for the business to do that. At that same time, was fortunate to get hooked in pretty close with the CEO of that business and, wound up kind of moonlighting in a change leadership role that I had never foreseen coming and learning from that, that CEO, his name was Roger, and a bunch of people in his network and starting to build a pretty unique, skill set around change.

00;07;04;20 – 00;07;28;27
Speaker 1
Leadership got recruited away from that startup company. And still in that first third of my career, commercializing new products, was asked to lead the new product, commercialization focus for a Danaher company. And, the challenge there was that operating company hadn’t delivered a new product in two years. So you can imagine the pipeline was dry, no new products.

00;07;28;29 – 00;07;49;23
Speaker 1
So they had to we had to reset the pipeline and then start to launch new products, and recover from this two year drought. So that was my charge coming off of my success with the startup. To come in and do that for the Danaher company, I came in as an executive and, had the privilege of going through the, Danaher executive, champion orientation, what they call eco.

00;07;49;25 – 00;08;08;00
Speaker 1
So any of the executives go through that program and if you will kind of drink in the Kool-Aid or indoctrinated into Danaher Business System, which, as most of you listeners may know, is a derivative of a Toyota production system, otherwise known as lean. Danaher is kind of a Keystone American company for for adoption and success of that.

00;08;08;02 – 00;08;31;01
Speaker 1
During that time, I realized that the work I was doing to turn around the new product delivery function was really a lot more broadly applicable across all operations, not just the operation delivering the products, but any part of an operating company, function out of the Danaher organization, landed in another Fortune 50 company, and my charge there was to fix, broken parts of the company.

00;08;31;01 – 00;08;51;10
Speaker 1
So I got moved around, on a fractional, if you will, or an interim basis inside the company. So the W2 employee, but they moved me to different areas where there was a problem that was already defined. So I said, hey, Bill, there’s a problem over here we don’t like, for example, it takes too long to collect, invoices from customers that we’ve already served.

00;08;51;12 – 00;09;12;15
Speaker 1
Shorten the time from the time we say build a client until the time the money is paid. That was one of them. Another challenge was to take, a US centric and German centric operation and spread it globally to India, India, South America, rest of the world is what we call it, Asia. So the second half of my career was leading change.

00;09;12;17 – 00;09;36;07
Speaker 1
And then the in big companies, and then the third portion of my career, the portion I’m in right now is now doing that on a, coaching or consulting basis is, leading change organizations. I’m hired by organizations typically. I used to say between 6 million and 100 million in revenue. One of my most recent clients is less than 6 million very profitable companies.

00;09;36;07 – 00;09;56;25
Speaker 1
So they have the money to reinvest, and no less than 6 million. But either way, make it easy, say, between 10 million and 100 million in revenue. Those companies reach out to me when they’re, having a problem that is either hard to define or hard to fix. And I get engaged to to again guide and lead them through that process, as you say on a fractional basis.

00;09;56;27 – 00;10;01;12
Speaker 2
I love it. And.

00;10;01;14 – 00;10;11;11
Speaker 2
When you’re explaining how you’re so you kind of touch on it earlier, but explain a little bit more about how your service offering works. So you kind of have two ways that you work with clients, right?

00;10;11;14 – 00;10;28;28
Speaker 1
That’s right. Yeah. So, just like my career kind of move through three phases I met, I did pick up another degree along the way, probably inconsequential. I realized I left that out of the bio, but either way, my career went through, three phases. I’m in the third phase right now. I’m hoping the fourth phase is what I call phishing.

00;10;28;28 – 00;10;53;29
Speaker 1
That’s what I call revisions metaphor. There’s a lot of first, it’s a lot to do. But my offering as the OpEx Shop has gone through two phases, if you will. So initially when I engage with clients, they essentially bought a portion of my time, they bought X number of hours of my time. And, depending on how we did the job, it was X number of hours a week or X number of hours a month or something like that.

00;10;54;01 – 00;11;26;18
Speaker 1
And that’s how they purchased, if you will, my time, my expertise, etcetera, to deliver on their behalf. And that work out okay. Initially, there’s just like anything there’s upsides and downsides. The upside to that was it gave me an opportunity to start to service these clients, and build out my system and my processes and, and polish how I deliver because it’s a little bit different doing what I’m doing for these clients versus doing the same type of work internally inside one fortune 50 business.

00;11;26;18 – 00;11;38;23
Speaker 1
Like, I didn’t have to bid my hours. Hell, they didn’t care of my hours where I had a few of these projects a year. I got moved around to to get get completed. And when the one was completed, they moved me on to the next one. They never once gave me a due date for these projects.

00;11;38;23 – 00;12;00;29
Speaker 1
They said, go fix this, so here we’ve got kind of a due date, they’ve got a budget and so many my hours, they, they want to pay for to help solve a problem. So that let me kind of get my systems and my process squared away, helped me understand what was important to these clients in a smaller space, 10 to 100 million in revenue and, kind of polish my craft, some time.

00;12;00;29 – 00;12;21;02
Speaker 1
And I’m not sure exactly when around the Covid timing. You know, I guess Covid was three years for most of us know Q1 2020 to 2023 essentially. So somewhere around there, I didn’t actually keep track of where, I started pivoting away from selling hours of my life, if you will. And I pivoted to fixed bid offerings.

00;12;21;02 – 00;12;41;29
Speaker 1
So now that I had service, a bunch of clients and kind of figured out what it took to succeed, and during that, I was tracking everything I was doing very closely. I had the analytics. I was able to say now going forward, that to service a client, I can offer them a fixed engagement and know that at the end of the day, the client is going to feel like they’ve gotten a tremendous amount of value out of me.

00;12;41;29 – 00;13;02;29
Speaker 1
Most of these clients are paying back the work that I charge them for within months of our completion, weeks or months of my completion. So in a big company, as you may know, you want to pay things back in under two years, right? So that’s the goal is a return on investment under two years. Most of the work I’m doing, these guys are recovering it in weeks to months, not years.

00;13;03;01 – 00;13;34;13
Speaker 1
So at the end of the day, I can offer a fixed bid service that they can feel good about, that they get a tremendous ROI on. And, I’m able to essentially pay myself more per hour than I was able to charge when I when I was selling my hours. And as you can imagine, if you were to go to somebody and say, I’m going to charge you $1,000 an hour, even if that person is making $300,000 a year, leading a business, $1,000 an hour to pay someone else just emotionally feels like a lot.

00;13;34;13 – 00;13;53;14
Speaker 1
And they have a hard time signing up to that. But put them with a fixed bid for $96,000, and they go, wait a minute. I can pay that back in four months once we fix this problem. Right? Pretty easy to sign up to a $96,000 fixed bid knowing the ROI is four months out. And every month after they just recapture that savings from whatever we fixed.

00;13;53;17 – 00;13;59;06
Speaker 1
So I pivoted the business to, to fixed bid offerings, essentially.

00;13;59;09 – 00;14;19;11
Speaker 2
That’s interesting about, that’s I’ve seen this in quite a few professions, and we certainly deal with it somewhat in some of the work that we do. You know, especially when you’re trying to talk to someone that like from a, from the CMO side of things, what we do, like, marketing can be an investment, right?

00;14;19;14 – 00;14;51;04
Speaker 2
And but you have to look at it as an investment, not, just an expense line on, on your budget. I’m curious to hear, how do you help the client identify the ROI, how you help them to quantify it, measure it, and show them in that I assume you’re showing that to them in your sales cycle that like, hey, like, yes, I’m going to cost $96,000, but here’s how you’re going to recoup that money and here’s how we measure it.

00;14;51;04 – 00;14;53;11
Speaker 2
So you know that you are recouping it.

00;14;53;13 – 00;15;17;00
Speaker 1
Yeah. Awesome question. So it happens in two ways. So I’ll use one examples I had a client for a while still talk to him I imagine will probably reengage in the future, but we’ve done three engagements together over the course of two years. So, engage with me and engage me to address one thing. We had enough success that they asked if I’d like to address another concern they had, and I enjoyed working with them enough.

00;15;17;00 – 00;15;39;10
Speaker 1
They said, sure. Yeah, I to come back and address it. So three engagements over two years still talk with the the fellow that runs out regularly and probably engage again. When he first came to me, who was some version of the statement that said, my direct materials cost last year was 30% higher than the year prior, and the company’s sales revenue was 10% lower than the year prior.

00;15;39;16 – 00;15;49;01
Speaker 1
So basically, he says, the company sold 10% less stuff, but the direct materials costs in the manufacturing facility were 30% above the prior year.

00;15;49;03 – 00;15;49;19
Speaker 2
So something’s.

00;15;49;19 – 00;16;12;15
Speaker 1
Happened. He’s using 30% more materials to make 10% less money. So that’s pretty easy because he can turn that percent into a real dollar amount. Right? So it’s really easy for him to say if if Bill puts a proposal forward and if it sounds good to me, know if I want to bet on Bill. Bill is going to pay this this back in X number of months once we fix this problem.

00;16;12;15 – 00;16;25;02
Speaker 1
Right. So, so in a case like that it’s really pretty easy. They kind of serve it up for you in when they come to you and say, hey, here’s the here’s the challenge at hand. So, they didn’t know.

00;16;25;04 – 00;16;41;00
Speaker 1
What levers to pull or what tools to use or what changes to make to fix it. Not only did they not know what to do, they didn’t know how to do it, how to lead the change, or the people to do better and not knowing what to do or how to lead it. They didn’t even know where to begin or how to coach your team.

00;16;41;00 – 00;16;59;25
Speaker 1
Right. So they can use a here’s the numbers. Right. The numbers aren’t making sense. If you can put the rest of these pieces together and kind of shepherd us through it, that’s that would be really great, you know? And, so they’re a great client to engage with because they kind of did the numbers for me. Now, on the other side of the coin, we have a client that shows up, with their hair on fire.

00;16;59;28 – 00;17;19;26
Speaker 1
Let me come in and doesn’t have, numbers. You can’t tell me that this material costs you up 30%, and and sales revenue was down 10%, like the client I mentioned a moment ago. But we have the other one that shows up. Just hair is on fire. They just feel like they’re working a lot. They’re kind of playing whack a mole, whatever the whatever the thing is, it pops up that got knocked down.

00;17;19;28 – 00;17;35;08
Speaker 1
And with those clients, it’s especially important, although I do it with all my clients. So I start the engagement with something called a problem definition. And, that sounds silly at first to define the problem. But, the problem is, is I can’t deal with my work area. I’m pissed off. Oh, no, that’s that’s not the problem.

00;17;35;10 – 00;17;53;10
Speaker 1
And in order to properly define a problem, there’s a set of criteria we go through. But, just to to shape what this what I’m talking about, one of the criteria is you have to demonstrate a performance gap. So an example of a performance gap in the prior example was he said that his material costs were 30% higher this year than last year.

00;17;53;12 – 00;18;15;07
Speaker 1
That’s a performance gap 30% higher. Right. It was this last year. It’s this this year. And so you have to be able to show a performance gap, you have to be able to quantify the performance gap again, that percentage and then actual dollar amount that quantifies that. And there’s several other steps. And there’s like 5 or 6 off the top of my head, criteria that we use to define a problem.

00;18;15;10 – 00;18;36;08
Speaker 1
The point is, is at the beginning of any initial engagement with a new client, I always start with the problem definition phase. And they compensate me. That’s compensable because once we define the problem, they don’t have to stick with me to fix it, per se. So, we usually set aside the first 30 days to define the problem, 30 plus days, depending on what it is.

00;18;36;11 – 00;18;54;13
Speaker 1
And that also might sound kind of crazy to some people, but, there’s a few things driving that timeline. One of which is the client only has so much time. So whomever the point of contact is at the client that I’m working with to define the problem, that individual only has so much time to spend because they’re still fighting their fires and doing their daily work.

00;18;54;16 – 00;19;13;01
Speaker 1
And as we define the problem, we typically have to expand the team and pull more people into get clarity. And those people are only available at a certain cadence. So what usually governs the time for that problem definition is not my willingness or my capability, but rather the capacity of the organization to start to pivot and allow some time to define the problem.

00;19;13;03 – 00;19;32;05
Speaker 1
Of course, once we define the problem, if they choose to, work with me to solve the problem, then we kind of roll in the face two immediately and and we go after the first major grab of whatever it is to, to get that success. And what I find is that once we define the problem, everybody seems a little bit more excited to then go fix it, because now they can get their arms around it.

00;19;32;08 – 00;19;48;01
Speaker 1
And once we’ve completed phase two and gotten that first win, then people are really excited to work on things for a little while because they’re able to tie their name to a success and, hope that leads to raises or promotion or opportunity or what have you. So so that’s kind of a building of it and how it, how it usually takes off.

00;19;48;03 – 00;19;58;21
Speaker 2
Yeah. I as you’re describing that one question that came to mind is if I heard you correctly, it sounds like.

00;19;58;24 – 00;20;19;27
Speaker 2
Your sales process is also sort of an engagement. Right. So like your your how are you’re getting connected to folks. But realistically you don’t get too deep until you’ve at least come to an agreement that you’re going to come in and help them identify why their hair is on fire and what’s causing that fire. And that’s the first engagement.

00;20;19;27 – 00;20;38;06
Speaker 2
So it’s like a smaller engagement. What? You know, what I would call a monkey’s paw. And then once you get through that now though, essentially you’re going into a second sales conversation and say, okay, we’ve identified the problem and we’ve identified what will fix it. Do you want me to help you fix it?

00;20;38;09 – 00;21;07;25
Speaker 1
Yeah. Yeah, that’s that’s about right. And, there’s some more subtlety around that. The work that I do, there’s a lot of trust building in the sales cycle. So, it’s different than selling other professional services like, I see everything inside the business when I get engaged, and, and it takes time to build the trust of the people that I’m wanting to engage with or that are wanting to engage with me because, externally, these people are a big deal.

00;21;07;25 – 00;21;29;20
Speaker 1
They own a company, it’s a successful company, their image is positive, etc., etc. and very few people see the inner workings of their business the way I will when I get engaged. So there’s an early trust building component. I often tell clients that are courting business that I will meet with them as many times as they want for them to get comfortable to either say yes or no.

00;21;29;20 – 00;21;45;13
Speaker 1
They want to proceed with me. So don’t you know I always have to tell me, don’t be afraid to call. Ask for another one hour call. Ask for me to stop at the facility. Meet with you guys for two hours. Don’t be afraid to do that because I recognize what a divergence hiring someone like me is from what they’re accustomed to.

00;21;45;17 – 00;22;00;21
Speaker 1
And it takes time to to trust. Think about the business owners and how slow they would be to hire, their VP or their second in charge. You know, they’d be scared to death to meet that her would take forever. They probably wind up hire somebody less good at the job, but somebody they know and trust, you know.

00;22;00;21 – 00;22;25;03
Speaker 1
So, here I come. And it’s a similar visibility to the business. So the sales cycle is a lot of trust building. It takes some time. But you’re right. When we when I put things forward, it’s phased in. Phase one is most commonly define the problem. And then phase two is, is fixing the first major thing to fix to show everybody the direction we’re going and kind of give people a taste of success.

00;22;25;05 – 00;22;45;17
Speaker 1
And typically as we go into that first phase of problem definition, I’ve already presented them with a 3 or 4 phase plan of what I think it will turn out to be. So, I don’t it’s kind of an A level plan. So when they get a proposal for me, it typically says phase one, phase two, phase three in all future phases.

00;22;45;17 – 00;23;02;04
Speaker 1
For example, in that phase one, phase two, phase three is sketched out based on what I think it will be. And it’s again, that’s one of those things after doing this work inside big companies, then doing it on my own, nine times out of ten I can see my way to the finish line when I bid the job.

00;23;02;07 – 00;23;20;11
Speaker 1
But, the people I’m talking to and the people I’m convincing to engage with me, they can’t see that road. Right? So I kind of have to show it to them in digestible pieces. But then we’ll see. All the way to the finish line enables me to put this high level kind of story together that says, hey, this is roughly the steps we’re going to follow over the next X number of months.

00;23;20;13 – 00;23;31;29
Speaker 1
You can punch out at any one of these phases and not continue if you want to. But if you choose to continue, here’s the road we’re likely going to go down. And here’s the benefit to the business.

00;23;32;01 – 00;24;09;29
Speaker 2
So how do you as sort of back up. So similarly we as a marketing company years ago we were contract based. So similar thing right where we there was a, a prescribed scope of work and either a project fee or a flat monthly fee that went along with that. And, but what we experienced was so much scope creep that I romanticized the idea of moving to what we then moved to in 2021, which was prepay blocks of time.

00;24;10;02 – 00;24;30;08
Speaker 2
So that way, if there was scope creep, we knew we were getting paid for it, right? And so everything was billable and in theory, profitability would be higher. Although now you’re selling blocks of time into your earlier point, you’re probably saw in most hours of time for a cheaper rate than if you did a project or a subscription based, recurring revenue model.

00;24;30;08 – 00;24;45;25
Speaker 2
So, I’m curious now that you are, on that, not charging our hourly, but doing it by the engagement, how do you deal with scope creep? Like, do you still see? I assume you still see scope creep? I’d love to hear how you deal with that.

00;24;45;28 – 00;25;12;02
Speaker 1
Yeah, that’s a good question. And you’re right. And by the way, scope creep can come from from different players in the project. So I’ve talked to other fractional folks and they use scope creep as a tool to bid up their jobs, which I look down upon personally, I’m not comfortable with that, but I’ve talked to plenty of fractional people that like to bid the job super low, get the job, and then once you’re in start and change fees, it’s, and suddenly it sounds like a, a lousy contractor that you don’t want to hire back.

00;25;12;03 – 00;25;14;28
Speaker 2
I was going to say, I’ve seen that in the contracting world for sure.

00;25;15;05 – 00;25;31;13
Speaker 1
Yeah, yeah. There’s people that’s their business model. They would never say to their prospective clients, but I’ve actually had coffee with them, for two networking connections. And I sit across the table from them and I’m just like that in that that heavily goes against my, my values personally. So just to be clear, scope creep can go both ways.

00;25;31;13 – 00;26;00;14
Speaker 1
And who’s ever engaged in the in the fractional engagement needs to be conscious of that too. Excuse me, the scope creep you’re talking about though. That’s a problem for sure. And, two things with that one, working in a fractional space, I think you have to be a really good facilitator to be successful. So you not only have to be good at whatever your trade is, whatever you deliver, but you also have to be a good facilitator.

00;26;00;14 – 00;26;28;08
Speaker 1
You have to facilitate groups of people to to a common understanding. And so scope creep, I think I manage it in two components. The first component is in my service unit. I do a pretty diligent job of calling out scope number one. And then number two, because my area strength is leading change that requires me to be good at facilitating groups of people to common ideas.

00;26;28;10 – 00;26;56;01
Speaker 1
So, I’m fortunate in that sense that what it takes then to manage scope creep when it comes up, is an area that, is already required for me to have proficiency in, in the work that I do. And at the end of the day, when I did the job, I also put a what I call a factor of safety on my bid, before sending it to the prospective client based on my assessed complexity of the client.

00;26;56;07 – 00;27;17;25
Speaker 1
So if the client, only deals in data, there’s a clear thinker is even more of a clear speaker. Like not afraid to speak truth and numbers and not worried about feelings. Those people are really easy to work with. Less scope creep, less worry. Right? So that factor of safety might be 5%, on the bid price.

00;27;17;25 – 00;27;42;15
Speaker 1
Once I run it through my model, I had a 5% factor safety there. And then, if I’m bidding a job with, the proverbial client that doesn’t want to say anything bad about anybody, that type of mentality. They’re not capable of thinking critically or objectively. I’m going to have a lot of a lot of, stuff that’s going to emerge that I’m going to learn during this engagement because they’re not willing to be transparent.

00;27;42;15 – 00;28;01;19
Speaker 1
Right. So, for a client like that, I may add a 20% factor of safety to to whatever my model says to dio them for. So, so I do just a little bit of front based on assess risk process complexity of the client. And then, really, really clear about the scope of my service agreements.

00;28;01;19 – 00;28;19;02
Speaker 1
I use basic in scope, out of scope, if you’ve ever played that game or use that technique. So I use that in my service agreements. I’m very clear about what is in scope and if appropriate, what is out of scope that could be confused for in scope and then facilitate them around common understanding through the engagement.

00;28;19;05 – 00;28;36;24
Speaker 1
I also track for myself, the work that I do, and I know how true I’m sticking to my model, which is what I use to bid the job. So, and, some jobs, you make a thousand bucks an hour, other jobs you make, 200 bucks an hour. Well, that’s that’s the way the cookie crumbles kind of thing at the end of the year.

00;28;36;24 – 00;28;54;02
Speaker 1
As long as that averages out at whatever you need it to average out at, you’re you’re winning. And I think that’s the big thing. So, do you charge them for scope creep or not? You have to let them know that there’s some scope creep there and let them know that you’re comping them that or you’re charging them.

00;28;54;02 – 00;29;07;22
Speaker 1
You can’t ignore it when it does come up. Right. So you have to either have to agree it’s not scope creep or hey, is scope creep. But don’t worry about it. We got it. We can go handle that. Hey, this is beyond the scope of the survey. Scream it beyond the scope of what we plan for.

00;29;07;24 – 00;29;13;18
Speaker 1
And then, unfortunately, negotiate a change order to the, to the service. You.

00;29;13;20 – 00;29;36;19
Speaker 2
Yeah. It’s funny that you mentioned that you want to make sure to communicate it, because for years, tasks would get requested by clients, and my team would be like, hey, like, they’re asking for this design project, but design works. Not really in the scope of work. And and I’m always like, I just do it. And but I never got any brownie points with the client for it, right.

00;29;36;21 – 00;29;54;09
Speaker 2
So not to not to shamelessly plug hourglass, but that was something we built. An hourglass was we have a pro bono now so that when we’re there entering time on those things, they entered it in pro bono so that the client sees it, because I was like, we need to get some sort of recognition for the free work that we’re doing.

00;29;54;11 – 00;30;09;11
Speaker 2
And whether that’s through a piece of software or just communicating, that was always something I should have done better to be like, hey, we’re going to do that project for free. Normally we would have charged you X for that project, but I was always really bad at that.

00;30;09;14 – 00;30;23;18
Speaker 1
Yeah, you’re right, that’s critically important. If you’re if you’re comping something or, doing work that wasn’t initially scoped, you got to let the client know and, and you have to know in the right way at the right time, but that you have. No, no. Absolutely. Yeah.

00;30;23;19 – 00;30;25;21
Speaker 2
Don’t just blurted out, I’m eating. Right.

00;30;25;24 – 00;31;02;15
Speaker 1
Yeah. And don’t ask me anything. Like you said, don’t just suck it up and do it and not say anything, and that’s all part of facilitating people to, a common perspective, right. So, yeah, that managing the client relationship, is critically important in fractional work. And that’s actually something that in my, my first gig, working on my own body after leaving a large company, setting up my own, I learned a lot about managing the the client relationship, especially in my role, I can quickly become intimidating to the present.

00;31;02;15 – 00;31;28;10
Speaker 1
The organization, people can look up to me and the president, the organization can fear. That’s in lieu of looking up to them, for example. So, I learned that in my first engagement and, still friends with the with the fella who hired me, and but, as that engagement was coming to a close, I, I can’t say that either of us were probably smiling or happy about how it was coming to a close.

00;31;28;12 – 00;31;50;11
Speaker 1
So big learning experience for me and thankfully didn’t repeat that, took those learnings forward and did a better job with, client relationship management. So I think as a fractional service offering, there’s a bunch of different components to it. And, and tracking that time and understanding where you’re spending your time is critical. So am I spending my time on client relationship management?

00;31;50;13 – 00;32;10;00
Speaker 1
Am I spending it on selling the next gig? Am I spending it on delivering the scope I signed up to? Am I spending the time delivering additional scope that I didn’t sign up to? You know, having those kind of categories, if you will, to track the work you do and be able to come back and use that for decision making on your next bid, is critically important.

00;32;10;02 – 00;32;45;06
Speaker 2
Yeah. One last question, Bill. I know we got a jump, but I as you’re talking, one thing I’m thinking about, especially for people that are newly entering the fractional, arena, let’s call it, the fractional community, but they’re doing fractional work for the first time. You mentioned how you’ve learned, or changes that you’ve made as far as, how your, your client management and relationship management, it was that all just hard knocks, taking your lumps, making mistakes and then figuring it out.

00;32;45;06 – 00;32;49;02
Speaker 2
Or would it would that was there another source of education for you.

00;32;49;04 – 00;33;04;08
Speaker 1
Yeah. You know that’s a great question. So when I was contemplating doing the work I do now, I reach out to a handful of people, my network to try and like learn something like, hey, you dabble in this or you seem to be doing something adjacent to what I’m doing. You’re kind of what can you share with me?

00;33;04;08 – 00;33;25;20
Speaker 1
And I was trying to learn everything through from what was a viable hourly rate at the time or day, running all the way to the stuff we’re talking about, lessons learned. And, and, I’ve had great mentors through my professional career, but however, I was really unable to find a great mentor in advance of doing what I’m doing today.

00;33;25;20 – 00;33;45;05
Speaker 1
So I was able I was unable to find a great mentor who would sit down with me and really had, like, significant wisdom to share, as I headed down this road. So I, I kind of had to take all the work that I did in leadership and, change and business process and all the all that functional work.

00;33;45;08 – 00;34;08;21
Speaker 1
And I had to take as many lessons as I could from navigating the politics of big companies and as quickly as possible figure out how those applied and where they apply to the work I’m doing now. One of them, for example, is I had to change the way I spoke. The way you speak as a successful leader inside a fortune 50 organization is completely different than how you speak as a leader in a business.

00;34;08;21 – 00;34;32;16
Speaker 1
That’s a 20 million revenue a year. Totally different populations, different different language, different approach. It was kind of staggering. And I actually for a little while, I actually fear, like I am getting stupider, but it wasn’t it was just taking the same concepts and communicating them inside a completely different, like archetype, completely different culture.

00;34;32;19 – 00;34;52;09
Speaker 1
And, and that itself was a whole set of learning for me was how to, how to take, fortune 50 best in the world stuff and scale it and communicate it so that the company that does 20 million a year, or whatever it is, can benefit from it and take away positive impact from it.

00;34;52;11 – 00;35;15;27
Speaker 1
So, yeah, the learnings came fast and hard early on. And I, I suspect if, if you’re not ready to take those learnings and pivot immediately with them that that could that could probably eliminate opinions. Probably a bunch of people that tried to could try for actual work for a year or two and take all months and just not have the personality or what have you to, to learn from them.

00;35;15;27 – 00;35;21;02
Speaker 1
And it quickly. Yeah. Yeah. So yeah, he had a lot.

00;35;21;04 – 00;35;28;14
Speaker 2
To learn from it and have the behavioral flexibility to be able to kind of change who they are depending on who they’re in front of.

00;35;28;17 – 00;35;48;21
Speaker 1
You. Completely. Yeah. Yeah, that to be fair, that’s not something I’ve reflected on too much in recent years. It was a lot early years, but plenty, believe me. But now that I’m reflecting on it, you talk about having a mentor, someone to talk to you if you’re thinking ahead and down this road, I don’t know if that’s something that the podcast could do, but you could open up a network of, people that maybe be available to others.

00;35;48;26 – 00;35;57;05
Speaker 2
We’ll see. We’ll flag it. Right. Flag it for later, later consideration for sure.

00;35;57;08 – 00;36;15;16
Speaker 1
Tough one is figuring out what to charge for me. Anyway, that was really tough. So if, I guess if you’re leaving, if you’re leaving a big company where you paid fractional people to do work and, like what the market commands, but I wasn’t paying any fractional resources in my role. You know, it was a big company.

00;36;15;16 – 00;36;42;18
Speaker 1
All the resources were within the company. I pull from a Connecticut headquarters to the local site and kind of thing, but that wasn’t a billable exchange in a real terms. So that’s pretty challenging to it. This is true that now what I and other stuff I don’t I wonder if I typed, I wonder if I pretended like I was starting the op shop today, and if I used AI to try and figure out what to charge or what to bill, I want to come back and tell me that might be an interesting exercise.

00;36;42;20 – 00;36;45;18
Speaker 1
Yeah. Wonder if it’s accurate, I guess is my point.

00;36;45;20 – 00;37;12;27
Speaker 2
Yeah. That you know how much it changes from market to market and client type to client type. we work so much in the small business space that I, I just there’s no way that we could charge the small business owner what we would charge, a $50 million company, like, they just have completely different perspectives and, and completely different budgets, the.

00;37;12;29 – 00;37;15;14
Speaker 2
So I guess it depends on who your target market is as well.

00;37;15;17 – 00;37;32;07
Speaker 1
100%. Yeah. Yeah. And, and, and that brings up a whole separate discussion. Two on, what capacity they have to learn and adopt and change. And, in my case. Right. So if you’re like a fractional marketing person, perhaps you do the work and hand it to and they say thank you and they just use it.

00;37;32;07 – 00;37;59;17
Speaker 1
Right. But the work I do, they have to kind of learn and be coached and kind of come along. So as I phase out, they can kind of continue on. So not only am I assessing for, economic fit, if you will, but also for, skin in the game kind of appetite, to, because my only mechanism of and that’s a whole separate discussion too, but my only mechanism of outreach or advertising, aside from a few podcasts, are it’s network.

00;37;59;17 – 00;38;19;18
Speaker 1
So it’s people that I work with been successful that happen to mention me to somebody else that owns or runs a business. So, that’s also a factor too, when I, when I court clients, I’m really, really careful if, if I, if I don’t see a, path to great success, I usually find a way to get them to say, hey, Bill, I don’t think this is right.

00;38;19;18 – 00;38;36;09
Speaker 1
And I say, okay, great. Call me if it is later, kind of thing, then them opt out, because the way I’m perceived by them and the, the leaders in their business is how I’m put forward to my potential next, my next customer. So, that’s interesting piece of be a factual as well as is getting the next gig in my case.

00;38;36;12 – 00;38;37;10
Speaker 1
Right.

00;38;37;12 – 00;38;58;02
Speaker 2
No more questions. More questions for the next time you’re on the show. Bell. I listen, I really appreciate you coming on. Spend time with us. As always, the insight that you provide is I think is invaluable. So thank you. If, people want to learn more about the op shop, but the work you do about you, how to find you.

00;38;58;05 – 00;39;19;03
Speaker 1
Yeah, theopshop.com. So the op shop ecom, or old fashion. I guess at this point you can find me on LinkedIn. It’s William and then in parentheses, Bill Tansey Jr on LinkedIn. And either those ways are a sure bet. And then there’s good old fashioned email to bill at theopshop.com.

00;39;19;06 – 00;39;41;21
Speaker 2
Perfect, perfect. And and listen, I, LinkedIn’s had a bit of a resurgence, in my view, and recently, that, long form content shows up and I searches and, thought leadership, it’s a great place for that. Me personally, I think there’s a really big community of fractional people on LinkedIn and, that are posting and active.

00;39;41;21 – 00;39;44;28
Speaker 2
So I think, LinkedIn is a good spot to be right now.

00;39;45;00 – 00;40;05;21
Speaker 1
Yeah. We’ll see, we’ll see. I’ve had a love hate relationship over the years. I adopted it really early because of my failing memory. So anybody I connected with on LinkedIn is like a Rolodex. No. Yeah, I know years, man. It’s changed quite a bit, but I hang in there, use it. It’s, for me, it’s, Like I said, if referral is how I get put forward, then I need to have a referral base or people to pull from and.

00;40;05;23 – 00;40;21;09
Speaker 1
Yeah, then. So yeah, by all means reach out to me on LinkedIn. Tell me you saw the podcast and I’ll accept the, I’ll accept the connection. I only connect with people because of the the podcast has been interesting because I get connections and they’re not people I know. And I, I hesitate like, the minute I connect, are they going to try and sell me something or.

00;40;21;11 – 00;40;32;17
Speaker 1
Yeah, we see the podcast. So if you reach out you want to connect. After seeing the podcast, just leave a note to this as ace are we X, Y, z podcast kind of thing and want to connect and I’ll be sure to accept it.

00;40;32;20 – 00;40;52;21
Speaker 2
Perfect. Bill, thanks again for coming on. Thanks everybody for listening. Of course, you can find us on Apple, Spotify, Rumble, YouTube, and, if you’re looking for episodes, you can find the listing of all the episodes that we’re putting up on. Hourglass, Ask.com. Appreciate you listening. And, you’ll hear from us next week, everybody.