Preserving capital and enhancing value for your company is paramount. That is why there are people like Dr. Stephen Long who exist. In this episode Dr. Long, the Founder and President of Motere Consulting, teaches us how he goes about with his Strategic Execution method for making teams and companies more successful. He introduces and breaks down the two elements that he uses – management assessment and management development components. With these methods, he promotes not only teamwork but also identifies risks. On the side, Dr. Long also talks about potential and shares some of his significant leadership-related experiences in the military.
Our guest is Dr. Stephen Long. He’s the Founder and President of Motere Consulting here in Colorado Springs. Steve, thank you so much for taking the time to come by and be a guest on the show.
It’s my pleasure, Bob. Thanks for having me.
If you could, tell us a bit about your business and who you serve.
I’m the President and Founder of Motere Consulting, which is a performance enhancement firm that helps manage risk, preserve capital and enhance value through management development and management assessment services. I built a predictive model of human performance and leadership while I served as the Head of Performance Psychology in the Human Performance Lab at the Air Force Academy. The model has been successfully applied to business, athletic, academic, military and artistic performance. My business clients average 115% improvement in financial performance on average with a zero-failure rate. Basically, it’s a data company.
For the business owner that’s reading, I could do with the 115% improvement on pretty much anything at any time. If I’m that business customer and I go, “What is it that I should expect if I hire you to come in and evaluate my leadership team and my company?” What should they expect?
You’ve got to learn things about your people that you don’t know about them. Basically, what my behavioral analyses do is it’s a shortcut mechanism. Particularly with the clients I serve, what they find out in two to three weeks would normally take them two to three years to find out. And they usually find out under dire circumstances.
I’m your prospective new client and I’m getting ready to do whatever or I’m trying to hire and you come through the door, what time frame should I expect and what steps do you take to go through and arrive at a conclusion?
There are two elements. There is the management assessment component and the management development component. The management assessment component and what I’m doing there is I measure the behavioral factors of Strategic Execution. Strategic Execution is simply the ability to execute the strategy. There are some strategies that are better than others. There are some managers who execute strategy better than others. When you put a good strategy with a good manager, that’s when you blow the doors off.
You had the visionary versus the operational person?
You can combine the two. I don’t do anything with strategy. All my degrees are in education. That’s what the MBA is to determine as far as what to do. What the research has found is that strategies only deliver 63% of what they promise. Let’s say you got a proposal for $100 million. Lock that 30% or 40% off right from the start because at best they’re only going to get $60 million to $70 million. Then you combine the inability to execute strategy and it goes down significantly. This is where people don’t understand as far as what they should do because it’s what I call the Strategy Execution Paradox. When things go south, how do you know what’s at fault?
If it’s the strategy, how do you know? There are strategies out there that Jack Welch couldn’t execute, but there are people who screw up the best strategy possible. They simply don’t have the execution skills to pull it off. What my behavioral analyses do is basically empower my clients to determine which lever to pull.
We were talking a little bit beforehand about the case studies and maybe some examples, whether it’s an individual who is trying to come in and buy a company or whether it’s a new business owner or an HR department trying to evaluate a company. You had some case studies, maybe talking about a case study would paint a picture in the mind of the audience.
I would think probably one of the better ones is in succession planning. I was engaged to work with a candidate for a CEO position of a $300 million ESOP. The current CEO was charged with identifying three external candidates and three internal candidates. To be honest, because it was an ESOP, chances were they were going to go with an internal candidate. He was highly regarded in the company because he was a candidate. He had a seat on the board, but sometimes having a seat on the board — and a lot of CEOs out there will understand this — if they had some rough waters with their board is that sometimes familiarity breeds contempt.
The board was not interested in him as a candidate. He was third out of three and a distant third out of that. We ran the behavioral analyses, found out the strengths, weaknesses, tendencies and blind spots. We worked on a few issues. Not only did he become a better leader, but he started doing his job a whole lot better. He was offered the job and that’s a good thing but it goes more than that because once he was offered the job, he grew the company from $300 million to $400 million. He expanded the company. He went international and grew it to Europe, Canada and Australia. He grew the company by 25%! They (the board) would’ve never have predicted that. Our service has two different things. One, it helps identify risk factors but also, it provides data to establish a learning plan.
If you want to lead and manage others, you have to first lead and manage yourself.
When you talk about the risk factors, in this instance, what risk factors did you identify?
It was impulse control. He would spout off in a board meeting about whatever came into his head. I gave him a tool and he brought the tool into the board meetings. He would have it on a piece of paper. He went by it. He transformed himself right in front of their eyes. He became a different person. He became a different leader and the board started seeing him in a different way.
For him, if it’s from here to there, the impulse on your commentary, what was the transformation in him when he started using the tool and the recognition factor that he had that it made a difference?
When I give a keynote, I say I have a magic trick.
Did you bring it?
I improve performance simply by talking to people and I talk to business leaders all the time. You talk about the cost as far as whether it’s IT or cultural transformation. The investment they have to make and see what comes on the backside of that. I talk to people. No chairs have to be moved. No desks have to be moved. You don’t have to get IT involved. Performance improves by me talking to them and by talking to me they change how they think about things. They change how they perceive the situation and they see the situation with greater reality.
That must be an interesting conversational technique to go into a disparate group of skill sets in a company, in different past agendas to be able to go in. Do you interview them in a group setting or do you interview these people individually?
What’s a typical time frame for an interview like that?
It’s not an interview. Once they supply the data, I aggregate it and generate the behavioral analyses. I then share the behavioral analyses with them, show them what they’re good at, what they’re bad at. From that point on, it’s up to them. They have full control. They dictate the pace. They dictate the direction. If they want to start out with strengths, okay. If they want to start out with weaknesses, okay, but if they want me to take the wheel, then I take the wheel. I say, “This is where we’re going to start.” They’re in control. The model that I’d built consists primarily of two things. It’s the assessments and the development aspect. The assessment component are comprised of psychological inventories and behavioral analyses.
It’s important to understand this — particularly for the audience — is that the biggest problem I have in my business is following people who don’t know what they’re talking about. There’s a lot of them in my business. When it comes to psychological inventories, the first thing that I ask about, “Is it valid? Is it reliable?” If it’s not, those tests aren’t worth anything. I’m sure you’ve heard of Myers-Briggs. They fail to meet the scientific standards for validity or reliability, but it’s the most popular and most widely used psychological instrument in the world. That’s the problem that I face. I only use valid and reliable instruments so that the data I get back is valid and reliable. When I share the behavioral analyses with them, they say, “That’s accurate. I didn’t know that about me.” I said, “All the behavioral analyses are a mirror.” I’m holding up a mirror. That’s all they are.
Whether you want to see it or not.
When it comes to M&A advisory in private equity firms and succession planning and things like that, there’s a certain degree of risk with a manager or management team. In an M&A private equity situation, what are you buying?
Intellectual properties are an enormous part of that?
You have the business. Every private equity firm has these smart guys. The fact is the guy down the street with his private equity firm can add just as well as this guy. What do you know about the management team? That becomes the stumbling block. What are you buying? If you don’t know what you’re buying, are you really serving your investors? I’m basically able to tell them what the risk factor is with this management team.
Behavioral Analysis Method: When you put a good strategy with a good manager, that’s when you blow the doors off.
It’s interesting when you talk about the risk factor. One of the key tenets when you’re looking is how do you de-risk business from a buyer’s eyes? You go through and you say, “Here’s the balance sheet. Here are the contracts. Here are all the standard items, balance sheet and so on.” He’d go, “Do you have a CEO? Is the business transferrable? Is the owner of the business or not?” You’re going in and go, “Pass that point on the surface. You have a CEO. You can transition. You have all the C-suite filled out. I can look at all the other parts, but you’re doing a qualitative analysis.
No, it’s quantitative.
Quantitative analysis of the leadership team, looking for gaps and trying to de-risk that.
We identify what the risks are. There are always risks. Depending on what the market is and how valuable the product or services, how tight the market is. These are all things that the buyer or seller has a complete understanding of that I don’t know.
The M&A guys are pretty good at looking at that. There’s something in specific niches. They know it well. I think about the a-ha moment when somebody goes through and says, “I got all that. It looks like everything else.” You go, “I’ve got this management team. Is it a blue one, a red one or a green one?” What shade of that do I have and where’s the gap? If you have a gap in the leadership team when you look at a highly quantitative analyzed team versus maybe a mid-level team, what do you think the multiple differences on by price between the two?
That’s hard to tell. Within that 63%, I can get it closer to 100% but it has a lot to do with the quality of the product or service, the intensity of the competition within the marketplace and the talent of the manager and management teams themselves. You can’t make chicken salad out of chicken crap. If they’re garbage, I’ll make them better. It still may not be enough to handle the multiples that you bought this by because they’re all paying ten to fifteen times above EBITDA. They’re under extreme pressure to get the returns for their investors.
When you’re utilized by a private equity M&A firm for the first time and you get done, what’s the typical commentary by the private equity team after you come back and go, “Fellas and ladies?”
We thought we’d take a flyer on you. We had no idea this could be the result. I’ve been in this for a long time. It’s no different than sports. I coached football for a long time. You look for talent. It’s a talent-based business. If you don’t have the horses, you’re not going to win. It comes back to strategy and talent. When you have good talent, you have a sound strategy, many times you still don’t win. What else is it? I go into what people would call the intangibles and I make them tangible. I identify what those qualities are and I put a number next to it. Nobody else is doing it. That’s why they’re intrigued by it but most of them don’t believe it until they get into it. There’s another phenomenon afterwards, they’re like, “No one knows how much impact he had.” There’s a causal relationship there. The relationship is strong because there’s no other intervention being implemented.
If you’re a data guy, being able to go through it and go, “What do you mean you can’t quantify the differential because you brought the data forward?”
I do a pre-test and a post-test. Performance is complex. There’s no cause and effect. There are relationships. All I say is like in sports, there are seven different ways to enhance performance: strategy, technique, weight training, conditioning, injury rehab, nutrition and psychology. The fact is you cannot separate psychology from the strategy. Basically, what I do is I help people put those puzzles together. The client is the person who pays me and that can be anybody. The subject is the person I’m working with. What I’m trying to help them do is become aware of how they work best because most people are either unaware or they “think” they know. They end up pushing a rock up the hill. When they get done with my program, not only are things easier, but they’re performing at a much higher level. It’s one of those things. They would have gotten there at some point, maybe three years, five years, ten years. All I do is expedite it.
I think about special athletes have a team of coaches and they go, “You have a finite period of time in the athletic arena and would you like to accelerate your progress or not?” When you go into an organization, what’s the typical push back from the team that’s in place at the company?
Everything is fine. In my sponsored ad I said, “If you’re satisfied with mediocrity, I’m not your guy. If you want to be great, this is something that people who want to be great check out.” It basically comes down between a growth-oriented mindset and a fixed mindset. Carol Dweck, a psychologist at Stanford wrote a book maybe several years ago called Mindset. She basically explained everything that I’ve been talking about for many years. The only thing that I find as a profile attribute who’s a suitable candidate is people who have a growth-oriented mindset. The people who have a fixed mindset basically say, “I can’t get any better. This is basically what it is.” Those people are going to be stuck in the sand.
People who have a growth mindset, they will continue to grow and then they’ll realize that this is a different approach. It’s a unique approach. Once you exhaust all your other options and you’re still not making your numbers or you’re somewhat dissatisfied or you have that growth-oriented mindset and say, “I wonder if I can still get better.” That’s when people usually give me a chance. For the most part, one guy is going out on a limb and says, “I want to bring him in.” There are two or three others who are looking sideways and go, “If you want to do this, go right ahead.”
I think about doing what you did will get you where you are. It reminds me of the s-curve, you plateau at some point. You go, “If we kept doing it the same way, we’re going to keep getting a similar outcome.”
If you always do what you’ve always done, you’ll always get what you always got.
People who have a fixed mindset are going to be stuck in the sand.
You think about how you take and adjust that mindset. It’s a willingness to go, “I don’t have the answers to all of them.” I’m willing to hear some hard truth. Circling back when you were working with military and so on, using this tool and assessing whether it was cadets or military ops teams or whatever, were you surprised at some of the outcomes that you found when you were doing the assessments?
No, not when I was doing the assessments but as far as the results, when cadets started doing better academically, that was the, “Wait. What?” moment. I’m like, “They improved their GPA by a full letter grade and I never talked to them about academics. They applied what we talked about within their sport. They applied it on their own. The cadets started coming to me when they were about to graduate or after graduation. This is not a middle management program. This is for people who want to be great. These guys want to be commandos in the Special Forces or they wanted to be F-16 pilots. They would call me and say, “Doc, I’m in this program and it seems like I plateaued. What do you got for me?”
We were talking about situations. Before that, I was the director of the Peak Performance Clinic at the University of Kansas. I had some similar results, but I wasn’t there long enough to build a model as I did at the Academy. It was similar in that, not only, academics and athletic performance but also relationships. Things like that were getting better. They were just managing themselves. There’s self-management and there’s relationship management. One of the things I learned was that if you want to lead and manage others, you have first to lead and manage yourself. The cadets, who then became...