Transcript of Interview with Scott Ford
Dan: Welcome to another episode of Shoulders of Titans, this is Dan Lok and today I am so excited, I have the privilege of bringing you a New York times best-selling author, CEO and investment advisor serving entrepreneurs, executives and their families. Scott, welcome to the show.
Scott: Thanks Dan, excited to be here.
Dan: Scott, maybe before we dive into some of the concepts and your philosophies, maybe tell us a little bit about your background and how did you get into what you do today?
Scott: Yea, so I will, and really, I’ve always been an entrepreneur as I look back. Actually, started my career in middle school doing magic and was very passionate about that to the point where my parents would take me to drop me off for kid’s birthday parties and I would charge $50. Back then I had rabbits, doves, the whole thing, and would do a 30 to 60-minute birthday party, my folks would stay and take me home. And so I look back, I have always been an entrepreneur and really have been built to serve them from day one. It’s kind of in you DNA, at least that’s my belief.
And then started — I had a small scholarship to go play at University of Liberty, football, and I wasn’t ready for it. And that college was pretty strict and I wasn’t really ready for that at the time. My folks didn’t have really much money, if any money, to be able to afford to send me there and I ended up going straight into insurance and benefits planning for small business owners at the ripe age of 19. And in doing that it just reinforced my passion to want to help business owners, and again, I have always been one. And I saw the need for them to really have a one-stop shop. So they were great at their trades, great at their craft, they would have a tax person doing taxes, an insurance person like me with insurance, an investment person, an attorney, but they were having to quarterback this whole thing.
And my thought was: why keep business owners — even if they have a hundred thousand or a million, versus like the Rockefellers who would have a hundred million and they would have what would be known as a family office, why can’t these business owners have that same type structure and set up? And that’s exactly what led me to found Cornerstone in 1996, was to be that family office type firm, one-stop shop so to speak for business owners.
Dan: So, a lot of entrepreneurs, I find that they sometimes — as you know, when they’re working in the business, they’re building the companies, they’re focusing on the growth, and they just focus on making money but very often they kind of neglect the personal finance side or keeping the money or investing the money. Like, what’s been your experience working with entrepreneurs? What are some of the mistakes that you see that they make?
Scott: You’re speaking to it; and so one of them is really looking at their personal balance sheet and trying to diversify. I am a big believer in reinvesting in your company, that’s worked for me, it’s worked for business owners I work with. That said, I believe it makes sense to try to figure out what’s that financial freedom number for this business owner, and start really chunking some money away on that side of the balance sheet, so that when you get to that financial freedom number, it’s not that you’re going to quit your business, but it can help you be free to really think even more like an entrepreneur, where it’s not just all about the business. You set aside the number you need to be financially free, now you can really contribute and focus in a different way and with a different mindset on the business.
So the first I’d say is: lack of focus on the personal balance sheet. And second, and I’ve lived this, it’s easy to get out of balance, where your life, or I’m sorry your business, becomes your life instead of a tool and part of your life. And so those two things: setting aside a balance sheet on the finances for personal issues and that financial freedom number and second: really balancing out life for the business as just a part of your overall life, that helps serve you and serve others, not that it is your life.
Dan: Well said. I believe business is a vehicle that gets us from point a to point b and can you define what exactly is the financial freedom number?
Scott: So, financial freedom would be the number that you need to hit your life goals and objectives. So, I give an example: for our firm we talk about true wealth and helping business owners live a balanced and fulfilled life on their way to true wealth. Well, what is true wealth? Our definition is: all the things money can’t buy and death can’t take away. So just for — I’ll use myself as an example in this case. Because I have six pillars I live by. So for me I have a value system of true wealth of spiritual; family; health; career; contribution or philanthropy; and finances. So, you can see finances are a piece of an overall six pillar and my career and company are a piece of the overall six pillar. But there’s a lot of other things that are very very important to me, if not more, than those two things. So knowing what my ultimate goal is in those six areas that are most important to me, and once I know that I can then back into: what’s the number? What’s the amount of money that I need to set aside to be able to hit those ultimate goals in those six areas?
Dan: And do you find that entrepreneurs, sometimes they think of the numbers — they think the numbers so huge: “Oh do I need ten million, do I need twenty million?” Or from your experience, actually you may not need as much as you may think?
Scott: Yes, you are exactly right. It’s funny you say that, that’s been my experience very much so, especially with business owners and entrepreneurs. They have this enormous number in their head. A hundred million. And to that point, it’s typically not near what you think. But let me throw the reverse of that. So, we had a client retire and sell his business; extremely successful — and we talk about it in the book, you may remember this –sells his business, about 176 million. Shows up at the airport and he’s cussing, he’s miserable. We’re going back to say; how do we invest this money to benefit you? And he was absolutely miserable. And the reason is: married four times, no relationship with his kids, his friends or acquaintances were people that worked for him, so they weren’t necessarily always friends but acquaintances, and he just — he was at the point where he was saying, “I wish I had,” right? Versus, “I’m glad I did.”
And so two things I would say: one: it’s not nearly as much as you think, because his comment was, “You know what? I had enough a long time ago.” And so it’s not normally as big a number as entrepreneurs and business owners get stuck in their head.
Dan: Because I find that, sometimes even with myself in my career, because there was — when I was a little bit younger, I was chasing. Always more: I want more revenue, I want more clients, more employees and more money. And then to hit a point when I got burned out and I realized that, okay, maybe it’s not just about chasing more, it’s about kind of cherishing what you have now. Be grateful with what you have now, but at the same time striving for more. But versus, okay, if I get to that point, if I make x amount of dollars, then I’ll be happy, right?
Dan: It’s more like happily achieve, and that’s been my philosophy at this point.
Scott: I agree. Why did you get into business and why do you think business owners actually get into business?
Dan: Usually they want freedom, or they want to support their family, or they want to be their own boss and do their own thing, or they see something that could be improved in the world: say, “Hey you know what? I can do a better job than that, I can provide a better solution.” Usually it’s motivated by something like that, right?
Scott: Yes. I couldn’t agree more, you’ve said it right at the beginning: freedom. At least my experience, in my opinion anyway, it’s freedom. And freedom from lots of things: freedom in finances; freedom in relationships; freedom in time; and yet if we’re not careful we end up building this business that becomes a cage instead of the actual goal of what we had in mind, which was freedom of all these things. So we have to really pay attention to that.
Dan: Now, Scott, in terms of savings, I’m sure a lot of listeners have heard of the book “The Richest Man in Babylon,” and it talks about, like, put aside 10%, and then invest in that 10%. From your experience, how much should an entrepreneur put aside? Should we put 10% or that’s not enough? What would be your advice?
Scott: Yea, so here’s what I would say. So I do agree with that counsel. I would say 10% at a minimum, and pay yourself first, and make it automatic. And I would also say then, give or start some foundation, do something philanthropic with another 10%. And I know when you hear this — at least when I first was young and heard this I’m cringing, thinking how am I going to do that? Well if you cannot do it when you don’t have much money it’s going to be a lot harder when that number is a lot bigger. And it’s just strange how that mindset works, right? When you pay yourself first, and then you give money away, you’re just creating space for more abundance, that’s my belief in how that works.
And for business owners, I’ll throw a couple more things where you can put a lot more than that away. So I would say business owners with strong cash flow can look into things like captive insurance, where they set up their own private insurance companies to fund their insurance needs. Another thing that business owners can look into that’s unique would be — we’ve all heard of defined contributions, so that’s 401K and IRAs, and they’re good, and Roth IRAs. Defined contribution plans, I’m for them, I think we should have them, but one of the things we overlook as we start becoming more successful — and I say successful with quotation marks, or air quotes: what’s that mean? But let’s just call it financially; we have financial success anyway, and we start having abundance there. There’s other options like defined benefit plans. As an example would be a cash balance plan, where some of these business owners and executives could literally be putting hundreds and hundreds of thousands, if the cash is there, away on a tax deductible basis. So there’s ways to do it and put away a lot more than 10%.
Dan: And of course, there are always tax advantages — do you find that with them, if they have a habit of doing it then it’s not so hard of, “Oh, it’s 10% of my money’s gone.” But if you do it automatically, you don’t’ think about it too much and at the same time you don’t overspend. Because entrepreneurs sometimes we do that too right?
Scott: That’s exactly right. It’s kind of like if you give something space, or that gap is going to be filled, the same premise as far as putting money away. So if you don’t do it and the money hits your bank account, it seems like it always has a place to go. Yet if you have it automatically deducted and automatically put it away, it’s like you never miss it. You figure out how to make do on what you have. So absolutely, put — I heard a quote, I think it was from Jim Rome years ago, and it’s: “We all must pay one or two disciplines; you’re going to pay the pain of discipline, or you’re going to have the pain and have to take that payment of regret.
The difference is discipline weighs ounces and regret weighs a tonne.” So an example would be: I started early in my career, in my 20s, right? If I put the 10% away, that’s not that much money back then, that would be a pain of discipline. But the benefit of that is that little pain of discipline is going to be a pain because it’s going to cost me a little bit, is a heck of a lot better than if I wait until I’m 65 I want to retire at 70. or let’s say 60, want to retire at 65, and I’ve not paid that pain of discipline, now I’ve got to be putting hundreds of thousands away to try to have a chance. That’s way too heavy and that’s the pain of regret.
Dan: And Scott, sometimes entrepreneurs they get pitched by these different types of, like investment opportunities. Sometimes they will say — maybe a friend will say, “Oh hey, here’s a hot tip on some stocks so you should do this.” Or someone might say, “Oh, you should invest or some companies.” Or sometimes they would say, “You should invest in real estate.” Now, when you work with clients, besides insurance, what other investment vehicles do you recommend?
Scott: So, we fight this every day Dan, and that is not only hearing a tip from someone, or a real estate example what you should get into, but just — Wall Street is a machine, and from my experience, a lot of the products and things that are brought to market, are ended up being brought for the benefit of Wall Street the machine, or some insurance company and how they make money. And you get all these hidden fees and it’s very non-transparent. And the end consumer ends up being the one paying the price for that.
So that said, I’m a huge — this is a little self-serving because I am a fiduciary — but I believe in being a fiduciary, because I think it’s the right thing; is working with a fiduciary that’s not selling products, that’s literally sitting on the same side of the table as you, is certainly a starting point. If someone’s doing it themselves, which is great, those that do it themselves, go with the low index — so like the SMP 500 index as an example. You’re going to get broad market exposure which you can get it at very low cost, and in a very transparent manner, versus some product someone’s trying to sell you or pitch you that has all these hidden fees, typically lacks liquidity, clearly lacks transparency.
So, for me, fan of index funds or low cost ways of doing it for do it yourself-ers. The risk that people run with that is that we underestimate our emotions and what we’re going to do at the wrong time. Right? So if we get into a meltdown of the market, or a meltdown, or a correction or a fair market: it’s down 20%, can you stomach that million dollars showing on your statement at 800,000? And if the answer is no, well you may need to relook that index fund and your other options. If the answer is yes, and you can hang in there, long term you’re going to be just fine. You just need to keep your emotions in check and yea, low cost index funds are not a bad way to go for a do it yourself-er.
Dan: And knowing that it’s a long game, we’re not looking at six months or a year you’re going to put the 10% aside. You’re going to have insurance, you’re going to protect yourself, you’re going to save some taxes, at the same time invest in index funds so you don’t think about it. At the same time, you’re still striving and growing your companies and see if you can bring in more cash flow, right?
Scott: Absolutely. And yea, that’s not — so like SMP500 vanguard index fund, for someone that’s a do it yourself-er, that’s going to be a piece of the wealth in there. You know, Warren Buffet says that, right? That that’s what’s going to happen to a portion is a — stick it in there and let it ride long term, you’re going to be fine as long as you can long-term let it there and not let your emotions override.
Dan: And I think what we’re talking about is getting educated. Talk to advisors, talk to the people who are in the know, they don’t have an agenda of selling you one of their products, they just want to help you, someone with experience. I’ve a client of mine who’s a very successful real estate investor, and I ask him, “Should people invest in real estate?” He said, “Well, invest in what you like and what you understand, right? If you don’t like real estate then don’t invest in real estate, right?”
Scott: That’s good counsel. You do it, you know it, like he does, hey, makes sense.
Dan: Yea but he said that’s also a full-time business on its own. It’s not so passive, right?
Scott: That’s exactly right, nor liquid, right? So, it’s got it’s pros and cons like everything does. You said it though, find a fiduciary, find some third party that you can pay a fee for, for advice that is a fiduciary that’s going to give you pure advice. So it’s like that — you’ve probably heard of the butcher analogy, versus the dietitian. If you’re wanting to lose weight and you go to see a butcher, what do you think they’re going to recommend for dinner, even though you’re saying you’re starting a new diet program. Probably going to be some really nice steak that they just had delivered. And though that might be fitting for a piece, they have an agenda, that’s a broker. A fiduciary as a dietitian can look objectively. You pay a fee to this dietitian, they don’t care if they’re going to recommend a salad, chicken, salmon, steak, whatever, it’s going to be what they truly believe is in your best interest.
Dan: Now, when working with an advisor like that, do you recommend — what are some of the things they should watch out for, besides that they have no agenda? What else should they look for?
Scott: Several things, and actually we have an infographic of ten things to ask an advisor. So I can give you just a few of them that would come from memory. But certainly, are they a fiduciary? Do they get paid to sell product? Some questions that most miss would be: how many clients do they work with and serve? And what you’re looking for here is capacity.
What does a typical client look like, that you work with? Does it match who you are? Are you going to be a small fish in this really big pond? Or are you going to be too big a fish for the advisor that they’re used to working with? So I like seeing folks — it’s why we specialise working with business owners and entrepreneurs. Number one, that’s who I am and who I feel to serve, but also you get to know — like I mentioned, the captive insurance and the cash balance plans and these different things that fit that space because you get to know that area really, really well.
Dan: Makes sense. And I know Scott and I, we have something in common: I’m a martial artist, and Scott is also into Brazilian Jiu Jitsu. And actually Scott you wrote a book on it called “Financial Jiu Jitsu.” Tell us a little bit about that.
Scott: Yea, I did. I actually — so I’ve been practicing — so I won’t go too far back, but I found out about Brazilian Jiu Jitsu right back with the UFC when Gracie brought this to the table. And I see this 170 pound Brazilian just went in and lined these big guys up and I’m like, what’s he doing? And so I’m about 175 pounds and I had wrestled growing up and I’m thinking, what’s he doing? So it intrigued me. I looked into it, did find a gym in Baltimore in like ’96, ’97 but it was too far for me to drive. But ended up finding a school in Frederick in 2006 and have been training since.
And so, love the martial art, it’s a wonderful martial art. And I saw correlations between Brazilian Jiu Jitsu, and candidly any martial art, and really any sport, and the financial world. And the correlations I would draw from Brazilian Jiu Jitsu was: balance, leverage and timing. And I’m not sure what you practice, but it would be applicable there. If you look at any other sport — think of golf, right? Where do you start: you’ve got to have a base and a balance. Then you need leverage, and then timing brings it all together. Same thing in Brazilian Jiu Jitsu.
It’s the same in the financial world. So my analogy here is balance and base. Let’s start with those: what’s most important and what’s true wealth to you, right? That’s the base of everything, let’s start with that plan. Leverage in the financial world is working with a fiduciary who then meets with and does the due diligence for you with the attorney. And if you do it yourself, great, but with the attorney, with your tax professional, with the insurance professional. All of these people working together from the same playbook brings leverage. And then timing is having some sort of investment strategy that can navigate the spring and summers of the market as well as the fall and winters. Heading towards and keeping you to that financial freedom number I mentioned earlier on; what’s that number, and what’s the rate of return? So, we would call it the family index number, so in your case the Lok family index. What’s that rate of return that we need to hit all those goals? That’s timing. So balance, leverage and timing are the three takeaways in the financial world.
Dan: I love it, I love it, it’s very, very powerful. Now Scott, as I just shared with you, I just recently finished reading your book, “The Sustainable Edge,” and personally I’ve read a lot of books on productivity, work/life balance and peak performance for every entrepreneur. That’s what we’re about. How can we get just a little bit better, right? To get the cutting edge. But I found some new, interesting ideas from your book, so definitely I want to dive into that. Talk to us, first of all, maybe give us a quick overview: what exactly is the sustainable edge?
Scott: Yea. The Sustainable Edge is really about how balance leads to growth and growth leads to balance, and it’s this virtuous cycle that feeds off of each other. And I have lived both, my partner that wrote the book with me, Ron Carson, has lived both. And we’re truly living what we call, The Sustainable Edge: where balance is leading to growth, our firms are growing faster than ever before, and yet we are having more time off, more fun, living a balanced type life — and I say that word ‘balanced’ and I know some cringe, because I get it, you’re never truly in balance. The point is, knowing where you’re out so that you can focus on that a little bit. And don’t live life — get to the end of your life saying, “I wish I had,” like the guy that — so many people we work with have. It’s about living in the moment: what’s today? How can I focus on, in my case, my six pillars that are most important to me today? And I can.
Dan: Maybe, Scott give us some examples. Like, as an entrepreneur, if someone’s listening to this, “Okay Scott, what can I do — what are maybe two or three things I could do today or this week to have more a fulfilled or balanced life?”
Scott: Okay, so I’ll give you one for simplicity and then I’ll back into it. Let me just start with one. Number one is: we develop the IQ grower process. So all your listeners could go to our site which is: thesustainableedge.com — on there, there’s a downloadable pdf document called IQ grower. That IQ grower, what most thinks would be intellectual or intelligence quotient is really implementation quotient. At the end of the day, after everything is said and done, there’s almost always a lot more said than is done, and we wanted to help with: how do you actually implement?
So what this does is, quarterly you can get clear on what are the six most — I shared my six — so you get clear on what are the six most important things you value most? And then break that down to daily on the left-hand side and say, “What do I need to focus on today?” Which leads to the six most important things you want to accomplish tomorrow. So, if there was one take-away that I would ask your listeners to do — and I have implemented this going the whole way back to 2001 — every day before I leave the office and on days I’m not at the office, days off, I will list six most important things for me to accomplish in order of priority for the following day. And when you lead with the values — because even though I did that in 2001, that’s a phenomenal productivity tool, right? Because your subconscious goes to work on those things, for what do you need to do the next day.
What’s just as powerful is getting clear on the six things you value most, because though I was doing the six most important — and by the way, if you only end up with three things for the following day, that’s fine. Six isn’t the magic number. The key is giving your subcon something to work on and prioritizing it in order of priority. That’s key.
Dan: So, let me see if I understand this correctly. So basically, let’s say if one of my values is health, and every day I want to do something, even something small, working towards that. Versus maybe, “Oh I’m too busy, I’m working on a deal, I’m talking with a client, yea I know I’m supposed to exercise but I don’t have time, maybe tomorrow.” And then tomorrow again and, “Oh maybe next day.” What you’re saying is: to have that clear picture and making sure we’re not — cos it’s so easy to get distracted and so easy to get pulled in all kinds of directions: by people, by things, by incidents, right?
Scott: Yes. You nailed it. And so I lived it, so I would look at my calendar — because this is it, Dan. Your priorities are what make it on your calendar, no matter what we tell ourselves. So I can say my priorities are these six things, but if I look back at my calendar in the early 2000’s, I was completely lying to myself. Because work was filling everything, so that was my priority.
Now I can look at my calendar, and by starting each week where I literally have listed all six areas that are valuable and important to me, and then things I can do that week I’ve listed, then that funnels down to my calendar. So it doesn’t have to be something every day, but certainly every week I have something from each one of the six that I’m focused on for that week, so that I truly am living that value system that’s most important to me.
Dan: This also reminds me little bit of the Japanese Kaizen concept, that continuous improvement, that every single day we want to do something that just moves us a little bit closer to our goals. And just a little bit of improvement every single day, even if it’s just 10%, 1%, doesn’t matter. But little by little, little by little, right?
Scott: Yes, and I love the Kaizen methodology very much, so yes, you’re exactly right.
Dan: And also, I love how you talk about the — having a passion, because — let me rephrase that another way. Because a lot of people they talk about, “Oh I want to find my purpose, and I want to find what I’m here for.” But you also talk about having a passion that pays, it’s important to achieving a balanced and fulfilled life. Talk to us about that.
Scott: Yea, so when I look at it, I don’t really look at work as work and play as play. I think I heard Richard Branson say, “It’s all just living.” And that’s exactly how I look at it. So if I have a speaking engagement, or candidly, so here we are with a podcast interview, I am doing what I want to do. I don’t have to do this, this is something I want to do. So this is just part of my life. Living, not trying, but living a balanced, fulfilled life and helping entrepreneurs and business owners live a balanced fulfilled life. That’s what I’m here for. So this is just part of my overall — this is one of my passions. I have many. I keep bees, I do Brazilian Jiu Jitsu, we do permaculture, woodworking, lots of outside interest and passion, and what the business is, it just happens to be one of them. So it’s just all living to me.
Dan: Now what about, Scott, let’s say someone is maybe is an entrepreneur just starting out. So we all have to go through that period of time where we’re just hustling: we’re trying to pay the pills, we’re just kind of surviving, right? Would you say, because I’m curious of your point of view, is it better to maybe have from the beginning, you know, your values, and you have more balance, or is maybe the first couple of years you kind of have to pay the dues, you got to put in some time in the business. Because I did that myself. I didn’t have the freedom that I have right now. First five years I was killing myself, right? I’m curious what about with you, with your story, what’s that been like?
Scott: I would say two things. First of all, you’re right on, you have to get out of balance to get to balance a lot of times. That’s why I’m like, we’re always just chasing it, it’s never completely in balance, just recognize it. And so in business, you’re going to have to crank, to get ramped up to be able to be successful enough to balance things out. Just be aware of it, number one.
And the second thing I would say to that — so my children are now grown, so now they’re coming to me with like, “Dad, what should I do, how should I get into — what should I get into?” So that’s a different perspective, right? Even than what I went through on my own. And what I talk to them about, I read a book — I’m trying to think of the author, it might have been Daniel Pink, but “it’s so good they can’t ignore you”. It’s about finding some sort of trade or skill set that you can then use for leverage to then potentially find your passion, but you don’t’ really know it until you — or Cal Newport did some work on this as well.
But getting a trade and skill set — so like, for me, it’s not like I got into wealth management day one knowing this is going to be something I’m going to be passionate about the rest of my life. But I got into it, I was interested, and as you said I just worked really hard and developed this skill set and mastered it, so I could use that as leverage then for what I am passionate about. So that’s the advice I’ve given my kids is like, listen, just go find something; you’re young, you can explore, you can try things, and just master something so that you can make a living, pay your bills and that’s going to give you leverage and guess what? You may be really passionate about that or you may want to work for someone, or you may be passionate about being a business owner so you start your own business in that trade, but you’re giving yourself leverage and the ability to do that.
Dan: And also — see cos a lot of entrepreneurs they come to me and sometimes they say they would do something just because someone else is making money doing it, and they say “Yea, so and so’s making a lot of money doing it, I should jump into that too.” Or sometimes they — I think I just find the clarity is very important, because if you just do it for the money, that’s not so good. But if you can somehow integrate it, like you said, into something you’re passionate about, that you love doing, at the same time it pays you very well, and if you don’t know what that thing is, chances are maybe you haven’t tried enough things.
Dan: It’s like, well how do you know if you like Japanese food, you like Indian food, well if you only all your life you had one kind of food, how do you know you don’t like the other types of food, right? But if you try a lot of them, say, “Oh, you know what? Actually raw fish isn’t too bad, right?”
Scott: Exactly, that’s exactly right, and I never knew. I can’t get enough of it, love sushi. But the thing is, explore and try. Especially for someone young, starting out, how are you going to know? By getting those at bats and those experiences are the things that life’s about anyway, right? So get out there, get after it and try new things and explore and you’ll find that passion. But in the meantime, you can develop some skills where you can make a living to pay the bills.
Dan: And Scott, just from having this conversation with you, I can see that you’re very much a relationship person. I’m just curious, how do you develop and nurture the professional relationships that you have in your career?
Scott: Yea. It’s all about culture, right? And everyone says that, probably everyone knows that. In business and in life in general, you said professionally, so as an example: having clear core values and knowing what the culture of your firm is, is a critical component for success in any business. And then I re-look at that every year.
So I’ll put four boxes as a quadrant; so one box and then a line horizontally and vertically. And if you think of that, you put values, core values, and culture on the bottom. And on the left-hand side going up going north you put getting stuff done; they get their job done. Well anyone on the left, period, is in my mind someone that needs to let go, because they’re not a culture fit. They’re the hardest ones, the upper left, because they’re killing the workload. They just get crap done, but if they’re not a cultural fit, and they’re not someone you’d want to go out with after the work day is done, and whether have a beer or have something to eat and catch up, that person needs to be taken off the team.
And so, for me, that’s the — relationships are easy if you get people who match your core values and match your culture, it’s fun. And that’s the way it should be. And when it’s not, there’s your sign that, you know what? It’s not fair to you, your team, and it’s not even fair for that person to keep them on the team, because it’s stressful for them and not fun for them either.
Dan: And what about the other quadrants?
Scott: Yea, so sorry. So basically, the upper — so anything on the left, the bottom left, is straight forward, right? Because they’re not getting their job done and they’re a low core value culture, they’ve got to go. Upper left is more difficult. Upper right, I’m glad you mentioned this. So, upper right is someone who’s getting the job done at a high level, they’re a really good culture core value fit, what do you want to do with them? And the answer’s, yea, keep them; it’s called handcuff them. You want to do whatever you can to keep them with you long term.
Dan: They’re your superstars basically.
Scott: That’s it. So is that some potential ownership? Is that some sort of defined benefit or other plan that is designed to try to keep them on your team? And then the bottom right: good culture core value fit, but they’re struggling getting the job done. Well that’s where you may want to consider are they in the right seat? Or should you free them up, right? So we’ll do like Kobe disc profiles to really try to find out is each person in their natural skill set of what they’re naturally good at? And if not, let’s move them into a position where they could be. And that’s typically what you’ll see in the bottom right quadrant.
Dan: It’s kind of the old saying: you hire for attitude and train for skills. Maybe these people, they need a little bit of coaching, need a bit of help to bring them to the next level right.
Scott: Yes, that’s right. Again, core value and culture fit, that’s the most, is that they have that. Let’s just find them a seat on the bus where they can thrive and get the job done. Just likely in the wrong role currently.
Dan: Scott, do you share with your potential employees or team members your culture, like in the beginning during the interview, or before the interview, or after the interview?
Scott: Oh yea, every step of the way. So, we’ve embraced Top Grading and the Who method for hiring years ago. And literally, we’ll make — it’s in the hiring process from every step of the way, from the phone interview all the way down to the three hour in person interview, what they call CIDS, chronological, in-depth and structured top grading process. Absolutely.
Dan: Maybe just for the listeners, just in case they haven’t read the book Top Grading, give us like one/two-minute explanation what that is like.
Scott: Yea so Top Grading, and if they haven’t, you may even want to look at Who, because it’s written by Geoff Smart, that’s the son of Brad Smart. So they wrote Top Grading together. Jeff Smart, the son, wrote Who, which is a little bit of a condensed version. But both do this: the ultimate goal is to hire and retain A players. They’ve done studies and they claim a 90% success rate, which I agree with. Most of us are probably at 25 to 50%, so it’s critical to get right.
And their theory is going through this very structured process, you’re going to get to know this person. Because, look, resumes are glorified lies — what are they? So one of the things that they’ll have you do is what’s called a score card. So you’re going to set up for a new position, you’re going to set up a score card, which gives very defined metrics so both you and the person that they’ll be answering to, and the candidate is really clear on what’s a win look like. What would an A player look like in this role versus a vague score card of, you know, sales or — that’s very vague. Versus one million of new sales within 12 months.
That could be a part of a score card because it’s quantified, measurable, they can say yes, and then you would actually even list in the score card the core values; listed out and verbalized so they know what that looks like and what they’re going to be able to fit that way as well.
Dan: Yea, and I love both books. I think they are both very — Top Grading is a little bit thick, it takes a little bit of time to go through, but it’s well worthwhile. Well worthwhile.
Scott: I totally agree. If I was going to start with one and was a little scared of the 700-page copy of Top Grading, you maybe want to start with Who, which you could get through probably in an evening. But both; well worth the time invested. And look, my mind shifted in that when I thought, you know, how excited would I be to add a huge A plus client that was a business owner to the firm? Well, really excited, because that’s who I’m born to serve. Yet in some of the interview process I would be like, “Oh we got to add a person, I got to be a part of this interview.” And I shifted on that, thinking, “Wait a minute, this is the person who’s going to serve that A plus client anyway, and I’m going to spend way more time with them anyway. I need to be involved in this and hire for someone that — and get this right.” Which is why I embraced and read that 700-page tome and also Who, is because it’s so critical to get right.
Dan: Awesome. Scott, I always ask every single one of my guests this question, it’s always kind of taking you back into how you got started: so just imagine if you could travel back to your former self, when you were just getting started. And if you could communicate any lessons, or any things that you’ve learned today to your former self, what would you say to yourself?
Scott: Well, one trait I had back then, and we talk about this in the book, is “persidity.” And I think it was Ron’s Dad who summed that up as persistence mixed with stupidity; what you got is persidity, and I think that’s what I had. So it may be an ingredient to success.
What I would say to myself at a younger age would be, enjoy the journey. And I get that now, and I also think I do a much better job at that now. Meditation may be a part of that, there’s probably lots of factors, but if I could go back and have a conversation to my younger self it would be enjoy the journey. Because I was so with that persidity, I was so driven for these goals and the purpose and was just running so fast that it’s easy to miss what it’s really all about, which is the relationships, it’s the journey, and it’s what you’re learning along the way.
Dan: Well said. And I think with myself, if I may share, that I just find that now when I “slow down” I actually accomplish more, that things just happen easier and faster. Kind of like in Jiu Jitsu it’s the same thing. If you try very hard and try to chock the guy, try to take him out, it’s very easy for the other guy to defend you right?
Dan: Block hands and stuff. If you relax and you just watch and observe and boom, one move and that’s done.
Scott: Yes, that’s well said. That’s exactly right, you’re preserving the energy, taking your time. And using technique, which is what Jiu Jitsu is all about is that leverage over brute strength, and that brute strength wears out, tires, and then I don’t care who you are and how big you are, when you lose your lungs and your strength as far as being fatigued, you’re done, right?
Scott: And that’s well said. That’s very similar in business. And you know what? That really ties to the book Sustainable Edge. Someone’s asked, “What would be the one take away that you would want someone to get from the book?” And I always come back to the same thing, and I say space and margin. Having space and margin to think as CEOs and leaders with the world we live in today, I think is the critical component for success, and that’s going to be the difference maker as far as competition goes moving forward.
Dan: Awesome. Scott, if listeners want to get in touch with you, or to get the books — I’m sure they can get them on Amazon, I got it on Amazon — what’s the best way to get in touch with you?
Scott: Yea, I’ll give you two sites. So the company site: is cornerstonewealthgroup.com, and the book site is: thesustainableedge.com.
Dan: Awesome. Definitely go get the books. And Scott, thank you so much for inspiring us today with your amazing story and just profound knowledge and your wisdom, I appreciate it, thank you so much.
Scott: Great to be here, thanks for having me Dan. Good luck to you.