Episode 25: The Boutique: The Hero Syndrome: A Dirty Little Secret About Professional services Firms
Sean Magennis [00:00:15] Welcome to The Boutique with Capital 54, a podcast for owners of professional services firms. My goal with this show is to help you grow scale and sell your firm at the right time for the right price and on the right terms. I’m Sean Magennis, CEO of Capital 54, and your host. On this episode, I will make the case there is a dirty little secret about owners of boutique professional services firms. This dirty little secret is called the hero syndrome, and if left unchecked, it will prevent you from scaling your firm. I’ll try to prove this theory by interviewing Greg Alexander, Capital 54’s chief investment officer. Greg has some great suggestions on how to deal with this problem. Greg, great to see you, and welcome.
Greg Alexander [00:01:09] Sean, it’s good to be with you. Boy, what a topic we have today. I love that we tackle issues on this show that most shy away from.
Sean Magennis [00:01:18] Exactly, Greg. Excellent. Let’s start with the definition. What what is the hero syndrome?
Greg Alexander [00:01:25] The hero syndrome is when the owner of a professional services firm has his or her identity wrapped up in the firm. The clients and the employees need the owner, and this makes the owner feel like a hero, the hero style owner gets his or her personal validation from owning the firm, and it is appropriate to call it a syndrome as it leads to sickness and eventually death because the owner becomes a severe bottleneck.
Sean Magennis [00:01:57] And Greg, why do our listeners, owners of boutiques, suffer from this?
Greg Alexander [00:02:03] Man, why does the sun rise in the east and set in the west? The hero syndrome is part of human nature, I think. Founders of boutiques are human. This means they want to be part of a tribe, they want to be recognized. They want to feel needed to feel as if they matter. Owners of boutiques like all of us suffer from insecurities. And one way to deal with these insecurities is to build a firm completely dependent on the hero, the owner, our listeners. I mean, it is not a joy entering the battle as a hero and saving the day. I think human nature is why this happens repeatedly.
Sean Magennis [00:02:46] And you call it a dirty little secret. Why is the hero syndrome kept a secret?
Greg Alexander [00:02:54] In my opinion, there are two primary reasons why this is not openly discussed as often as required. First, it takes an above average level of self-awareness to recognize this problem, and in my experience, self-awareness is lacking. And a lot of founders, I think many of our listeners are suffering from the hero syndrome right now. Yet do not know it. Maybe this show can bring some awareness to this issue and the second reason this is kept a secret is no one wants to admit they’re holding their firm back because they like being the hero. I mean, it’s embarrassing. Imagine a staff meeting whereby the owner stands up and says to employees, I have an announcement to make. I’m an egomaniac and I love being the hero. Therefore, I’m unwilling to get out of my own way. And you are just going to have to deal with the consequences and the poor results.
Sean Magennis [00:03:49] Yeah, that would be super embarrassing. I can see why this is a dirty little secret. Let’s give the audience the benefit of the doubt and assume they are aware of the issue. What can they do about it?
Greg Alexander [00:04:04] The answer to this question is the best founders work themselves out of a job, they make themselves obsolete and build firms that can succeed without them. This is when hyperscale kicks in.
Sean Magennis [00:04:16] Aha. Found founders need to go from the hero to the invisible man.
Greg Alexander [00:04:22] That’s well said.
Sean Magennis [00:04:22] And how do you do this, Greg?
Greg Alexander [00:04:24] Boy, I could teach a week long course just on this subject. We only have a few minutes left on this show. So let me let me give you some quick suggestions. Let’s see. There is four things that come to mind. Number one, I would recommend stop being a control freak and try to replicate yourself in your employees. If an employee can do what you can do, 80 percent as well as you can do it. That’s a good thing. Do not feel threatened by this. Number two, it may be faster for you, the founder, to do something yourself, and you know that if you do it, whatever it is, you know, it will be done correctly. However, this is flawed thinking. Yes, it will take time to teach someone how to perform a task. And in the beginning, the employee will screw it up. But eventually you will replicate yourself and others to the point where you are no longer a bottleneck. Third, recognize there is a business case for eliminating you as the hero. Profits will go up when you do this. As the owner, you are the most expensive resource in the company. When you do something, the cost of completing the task is very high. The quickest way to destroy profits in a process of firm is to have senior people doing junior task work. And lastly, number four, the tactical program to launch is an employee certification program. An employee certification program proves to a founder that employee has reached a level of competency. If done correctly, an employee certification program can rapidly scale a boutique. Employee certification is a big topic, and we should reserve a future episode just to discuss it, to get it out here, every employee in the firm would be in a learning path certifying their knowledge. For example, the practical understanding of the subject matter, also certifying their skill, for example, their ability to do something. This approach systematically replicates an owner’s knowledge and skill into every employee in the firm over time and in perpetuity. And obviously, this removes the hero slash founder from being a bottleneck.
Sean Magennis [00:06:48] Excellent, Greg. So stop being a control freak, remove yourself as a bottleneck, and recognize the profit potential of doing so and roll out an employee certification program.
Sean Magennis [00:07:06] And now a word from our sponsor, Collective 54. Collective 54 is a membership organization for owners of professional services firms. Members joined to work with their industry peers to grow scale and someday sell their firms at the right time for the right price and on the right terms. Let us meet one of the collective 54 members.
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Sean Magennis [00:08:33] If you are trying to grow scale or sell your firm and feel you would benefit from being a part of a community of peers, visit the Collective54.com. OK, so this takes us to the end of this episode, and as is customary, we end each show with a tool. We do so because this allows a listener to apply the lessons to his or her firm. Our preferred tool is a checklist and our style of checklist is a yes-no questionnaire. We aim to keep it simple by asking only 10 questions. In this instance, if you answer yes to eight or more of these questions, this strategy is working for you. If you answer no too many times, this strategy is more than likely getting in the way of your attempts to scale.
Sean Magennis [00:09:31] So let’s begin question number one. Do you feel like you must do everything yourself? Question number two, do you feel like you must be in every key meeting? Number three, do clients require you to be directly involved in their projects? Number four, do your employees come to you for help constantly? Number five, do you have to micromanage everyone? Number six, do you have to review everything before it goes out? Number seven, are you working too much? Number eight, is it faster to just do the work yourself? Number nine, do you feel like it will get done correctly only if you do it? And number ten, are you turning over employees?
Greg Alexander [00:10:38] So number ten’s interesting if you have a turnover problem, it’s because people arn’t growing inside your firm. Yep. Nobody wants to be a robot of the founder.
Sean Magennis [00:10:47] Exactly. So, in summary, boutique owners do suffer from the hero syndrome. This is because of human nature and founders seeking emotional validation from their role as hero/owner. This insecurity gets in the way of scaling the firm because owners become a bottleneck. The founders who scale their firms make themselves irrelevant building firms that can succeed without them. If you enjoyed the show and want to learn more, pick up a copy of Greg Alexander’s book titled The Boutique How to Start Scale and Sell a Professional Services Firm. I’m Sean Magennis. Thank you for listening.