Achieving high growth can seem appealing to any founder. After all, who doesn’t like the idea of rapidly bringing on more revenue?But the high-growth model is not a one-size-fits-all strategy, and the overall cost of results is deceiving. The pursuit of quick gains in clients and revenue can come with sacrifices that are not always worth it.Mike Belasco is one such founder who tried the high-growth model, only to realize that it did not suit him or his staff. Instead, Mike pivoted to a holistic growth model. His new approach allows for the time and environment needed to practice the values that inspired him to start his own business in the first place.[caption id="attachment_12769" align="alignleft" width="290"]
Mike Belasco, founder of Inflow.[/caption]A Denver-based internet marketing agency founded in 2007, Inflow currently employs 35 people and has worked with hundreds of clients across a broad range of industries (before settling on the eCommerce niche). Throughout Inflow’s 12-year history, Mike took on clients and staff that did not always fit with his company’s culture; today, he willingly turns away clients that appear to be bad matches, or worse, potential fountains of toxicity for his work environment.“What I've realized in later years as I've grown and gotten more employees,” says Mike, “is that in order to create a place that I want to work, it has to be a place that everybody else wants to work, too.”Mike’s story is not about skipping out on revenue-generating opportunities; it’s about establishing priorities that ensure the growth is achieved harmoniously.In our conversation, Mike opened up about his new business-building strategy, which he calls the “Inflow Harmonic Triangle.”The idea is simple: Keep the company’s staff, owners, and clients synced up to a common work culture, and the company will engender an environment that is mutually profitable and pleasurable.Bonus action list: [sg_popup id="230" event="click"]Get our 2-page PDF summary[/sg_popup] of action items you can use to reorient your agency toward holistic growth based on Mike’s advice.
Why Pursuing High Revenue Isn’t Always the Answer
Mike, like many others, believed deeply in the conversation founders have about “goals and growth and revenue and exit plans.”Mike tried the high-growth model, but found that it neglected some serious workplace concerns. Maintaining high growth means you have to onboard a lot of clients — and Inflow couldn’t afford to be choosey about them. That in turn pressured Mike to onboard more people than he could adequately vet.The result was that he often hired good people who were a bad fit for his team. The resulting combination of clients who weren’t a great fit working with team members who didn’t work well together was a recipe for constant frustration.For small and growing companies, it’s easy to turn a blind eye to the disruption caused by big clients that aren’t a good fit — because the revenue they provide is an important step in hitting your next goal. However, this practice disrupts the harmony of the workplace and creates undue anxiety that can spread throughout the staff and ownership.In Mike’s own agency, he observed that account managers who became stuck with these clients would become frustrated if the work relationship continued to flounder.For example, clients who were unable to articulate their goals in a measurable fashion often created friction with staff. Account managers were left guessing as to what a client expected, and since the client never provided any KPIs to begin with, this set up the employee for failure and frustration.These are conditions that can cause valuable employees to lose their motivation or even quit. It’s easy to become discouraged when clients don’t appreciate the results you earned for them via long nights at the office and innumerable cups of coffee.After seeing these events unfold too many times, Mike finally said, “Never again.”
Understanding What Went Wrong
The inherent issue with high-growth companies is that it is easy to overlook staff concerns and unruly clients in the never-ending quest for higher revenues. Building high-growth companies can be advantageous if that’s the founder’s main goal. But Mike discovered the sacrifices involved were just not worth it for him.“The high-growth model wasn't what I really wanted,” Mike recalled. “What I wanted was a place where I wanted to come to work.”As part of his initial vision, Mike had outlined a “Big Hairy Audacious Goal” — a la Jim Collins, whose work is incorporated in Rand Fishkin’s framework — of $10M in revenue to his team. “The goal didn't work because it was just considering the one stakeholder who cared — myself,” he says. “It wasn't really inspiring to anyone because it didn't have anything to do with them.”That’s when he realized that revenue is just a vanity metric. When measured alone, just like countries measuring their GDP, it fails to consider important factors like happiness and well-being. And revenue has no bearing on more grounded metrics such as profitability and client results.So Mike set out to establish a new framework for decision-making in his company, one that was tied in to the goals and well-being of all important stakeholders.
The Inflow Harmonic Triangle: Linking the Needs of Staff, Clients, and Owners
The harmonic triangle model didn’t emerge on day one. To get there, Mike spent a lot of time reading and working with a consultant. He wanted to take the time to get things right after seeing how the high-growth model he originally embraced resulted in an Inflow even he didn’t love to work at.Mike’s reading list during this transition included:
- Start with Why by Simon Sinek
- Traction by Gino Whitman
- The Culture Code by Daniel Coyle
- Radical Candor by Kim Scott
- Turn the Ship Around by David Marquet
- It Doesn’t Have to Be Crazy at Work by Jason Fried
With this ethos guiding his plans, Mike developed the harmonic triangle.Mike began by plotting out a triangle that connected its three points to the three main stakeholders of his business — the clients, the staff, and the ownership — and then asked himself how Inflow would address all of their needs simultaneously. That’s when the big “Ah-ha” moment came.“If the company takes care of the team, then the team will take care of the clients. Of course, that means world-class service and great results, so the clients will take care of the company,” he said. “Unless all of those stakeholders were addressed, there's just no way that we were going to get everybody on the same page and align goals, mission, and everything else,” Mike added.The harmonic triangle model sets out to solve serious issues created by high-growth companies, including:
- Establishing a client-company fit that allows in good clients and turns away unsuitable ones.
- Rewriting hiring scripts to ensure that employees are not just capable but also will share similar values and long-term goals.
- A new mindset that creates an environment where owners allow staff to have more direct conversations with clients.
To measure the success of this strategy, Mike established three metrics to replace the single Big Hairy Audacious Goal. He would begin by focusing on his company’s profit margin, not revenue. Plus, a regular client and company culture survey would be conducted and benchmarked.His current goals include:
- Agency profitability of 35%
- Client NPS survey with average score of 9/10 and 85%+ response rate
- Staff engagement survey with average score of 9/10.
For the triangle to work, Mike knew he had to start doing things differently.In order to truly achieve a harmonic triangle, a mindset shift had to be instilled starting with management, who would then begin to permit staff to take on more responsibilities to better regulate client management.
Finding Client-Company Fit
[caption id="attachment_12770" align="aligncenter" width="800"]
Teams at Inflow regularly participate in team-building exercises. This time, they chose axe throwing.[/caption]The response to Mike’s new set of norms was almost instantaneous.Not long ago, one of Inflow’s clients was getting good results but had a habit of cancelling meetings, making requests and then never providing details on them, and eventually, giving Inflow poor feedback. Mike told the manager handling this project to be direct with the client; he condoned having the “necessary conversations” to set things straight.The manager, apparently stunned by a CEO taking such a position, said, “I love that you allow us to have these conversations.” Mike immediately responded, “I don't allow you to have these conversations. I require you to have these conversations.”That simple gesture let his employees know that he was willing to risk losing a client if it meant jeopardizing the wellbeing of his team. “The staff really respect that and understand that this doesn't necessarily happen in every agency,” Mike says.“It will hurt to not work with this client from a financial standpoint,” he reflected, “but my instruction was that we need to get on the same page, because if we're not, this isn't going anywhere and he needs to find a new agency.”Nowadays, Mike turns down a lot of clients that are clearly not going to be a good fit with the company culture he is building. For example, he was recently approached by a prospective client that was previously fired from her last agency — “a big red flag,” he said — and started off the relationship with dramatic demands.“She said, ‘I put my life savings into this company. I also have an investor that is pressuring me. If I don’t get results in four to six months, then I may jump off a building.’ Although it may have been said in dry humor, I knew from that moment that there was just no way we were taking this person as a client. I gave her advice and pointed her in the right direction,” Mike recalled. “But you know, that's very possibly a client that we could have taken three months ago.”
Hiring Team Members (Not Just Good People)
Pursuing fast growth pressures HR to onboard staff that may be capable enough to perform the job, but that doesn’t always mean that person will become a great team member. Without a hiring process that considers the company’s long-term culture, the hire can negatively impact the work environment down the road.“We were hiring good people,” Mike reflected, “but we weren't hiring good team members in all cases.” So instead of focusing on hiring more people, why not slow down the process and refine it to reduce turnover?With that in mind, Mike is now in the midst of rewriting the hiring script for Inflow, primarily by introducing a standardized interview process that includes atypical questions to target a specific profile that would match the company culture.For example, the first question Inflow’s HR interviewers ask is, “Do you have any potential schedule conflicts, such as vacations or other obligations?” This allows Inflow to discern the candidates’ priorities, as well as how desperate they may be for the job.Another non-traditional question Mike introduced is: “Tell me about a boss that inspired you, then tell me about a boss that you really didn't like.” The focus of this question is to uncover any clues that the candidate may be carrying baggage from a previous role that is hard to unteach.“When a team member is really negative about their former employer, you have to think, ‘Well, are they going to come here and get a fresh start or are they really just kind of burned out?’” he explained.Introducing a new HR process is one thing. But none of this would be possible without a dramatic shift in mindset, which must start at the top of any organization.
An Agency Designed for Retention
Mike is now taking the harmonic triangle model he’s established to the next level by implementing culture and client surveys that gauge how well Inflow is doing as a company. The surveys dig into what staff envision as their ultimate career path and how clients are setting their long-term performance expectations.By putting heart into how a company cares for its team members and clients, he and his team are building a positive feedback loop and investing in sustainable growth. By making changes such as only taking clients that demonstrate clear objectives, Mike is slowly building a culture of retention for Inflow. Supported by a staff that share his long-term goals, he’s confident the harmonic triangle model will work.Going forward, it will all come down to retaining what works best. “The linchpin in terms of profitability and growth is retention,” Mike observes.An agency running on a harmonious growth track will live and die by its ability to retain good clients and team members, tirelessly working on optimizing the client-agency fit to achieve better profit margins. After all, anyone who has gone through the effort of creating a harmoniously run company should fight to keep the staff and clients they have worked so hard to vet.