EP 50: Exploring an Agency's Harmonic Triangle
Kelly: So welcome back to Thrive, your agency resource. This week, my guest is Mike Belasco, founder of the Inflow, which is essentially an e-commerce marketing agency out of Denver, Colorado. Mike and I met a couple years back at SearchCon in Breckenridge and it was actually at this year's conference that we got into a conversation, we reconnected, and he started telling me about this brand new approach that he's taking at his agency that he sort of internally named the Harmonic Triangle. And of course, I was very interested and thought we have got to have them on the show. So Mike thank you so much for making this happen today.
Mike: Thank you Kelly. It's great to be here.
Kelly: So let's kind of start with why you felt like you needed to make a change with the agency, how you looked at where you were going, how you felt about whether you were living your core purpose or not, give me the perfect storm of what created all this in your mind.
Mike: Yes so for a while we were on this trajectory to really high growth agencies. We were on Inc. 5000 list 3 years in a row. We were on the Denver’s fastest growing private company list 5 years in a row. And things generally were going pretty well from a business perspective. As we continue to get better and bigger and bigger they didn't feel right.
We were starting to make hires a lot quicker because we needed staff to fulfill the work that we were selling. We were taking on more and more clients, because we have this really aggressive big very audacious goal that was based only on revenue, and so we were taking on clients that maybe weren’t the best people to work with.
Just our different team members didn't feel great about. I was starting to see like in some of the engagement surveys that we do with their staff every quarter, that people were like, "Seems like we're just growing for growth’s sake. Like we know the goals, X. Y. Z, X amount of dollars, but like why?" Even though we had a core purpose, a strategic vision, quarterly objectives, and all that stuff.
Kelly: Oh your okay hours, yeah?
Mike: Okay hours yeah. It just wasn’t connecting to the team and they were kind of just floating out there without real purpose or vision. And so, I just really started to reassess things personally and think about what I wanted as a business owner, why I had even started this in the first place.
Kelly: Right. So the team was feeling sort of unmotivated, there wasn't a clear direction as to where you are all growing, some of the stuff was stuck in your head, and they also felt like there was no real purpose behind it. Is that kind of encapsulating?
Mike: Yeah and that again even for me personally, I knew where the revenue goal came from like mathematically but at the same time that's not the only reason I created Inflow. I created it because I wanted to have a great place to go to work every day, and I know that sounds cliché.
Kelly: No, it doesn’t.
Mike: No? Ok. Well good. What I've learned over the years is that to create that great place for me, it needs to be a great place for everyone else that works here. I started to try and figure out what my team needed, and again that's kind of the roots of where a lot of these came from.
Kelly: Right. So where did the concept of the Harmonic Triangle actually come from and how does that framework work when it comes to how you restructure or envision the trajectory of Inflow?
Mike: Yes, so where it came from was at first looking at the stakeholders that were represented by our goals and our vision. And again coming from simply a revenue based big, very audacious goal, the only stakeholder that was really being considered was the company or the investors, which is me. And that didn't make a lot of sense when I really started to look at it in hindsight.
Like how can our other, we have three main stakeholders. We have, certainly the company, the investors, and me. We have our team and we have our clients. Those are the three main stakeholders and so those were three points, which of course, it is a triangle so that is where the actual triangle came from. And then it was the concept of like we need to start this team first because if we can make sure that the team is happy then in turn they will get great results and offer great service to our clients.
And in turn, those clients will continue to expand their relationships with us to send us referrals, which of course makes a company and the investors happy to achieve a certain profit margin coz at the end of the day, revenue doesn't matter. I mean it's not money in the bank if you will. And of course then that profit margin and that revenue enables the company to continue taking care of the team in a lot of ways for them to be taken care of. So that's the general flow around. As you see our team is represented at the top and that is conscious and it starts with us taking care of the team and kind of flows around the triangle from there.
Kelly: Right. And so, when you look at this triangle, and you look at where the different stakeholders are positioned, it almost seems to me like the only real difference if we break it down really simplistically is we used to have revenue and profit margin at the top, clients were the ones we were servicing and we thought about the team sort of last. So if clients are still in that number two spot if you will, all we're doing is we're essentially replacing or swapping the team. You are focusing on our people who will then take care of the clients and the clients will then feed into revenue and profitability so it's really just kind of swapping number one and number three and client sort of stay number two. Is that fair?
Kelly: And I know there's more to it than that. I am just trying to break it down.
Mike: Like make a specific order. I mean it does take a flow.
Kelly: It is a flow.
Mike: Yeah it's a flow and then you have to look at the interrelationships like what are the things that are going to make the team happy. So if we are putting them at the top of the triangle, let’s just say, one of the things that are gonna make the team happy? Well, certainly they need to get paid well, have good benefits, have a nice place to work and all that kind of stuff, but more importantly you need to have a great team members to work with.
So if we we're rushing through our hiring process or we are kind of waiving some red flags for someone and leading that into our triangle, into our ecosystem, that really affects the day to day lives of a lot of people that work here and their overall happiness. Same thing with clients, we're taking on clients because it represents opportunity for us to increase our revenue, maybe our profit, but we are not really, I guess I mean it's hard with clients obviously because you don't want to prejudge someone just on few conversations in the sales process but…
Kelly: But you are still to qualify them, right?
Mike: You are still to qualify them, specializes you mention e-commerce so a lot of clients are still e-commerce clients and all that, but sometimes like the motives didn't align or we didn’t make sure that for example even though the person that we're talking to was able to make a decision on hiring us or not, there were other stakeholders that we needed to get on board before we all agreed to move forward and work together. And so we weren't taking those steps to making sure that the kind of clients that definitely affect, I don't want anyone dreading coming to work on any given day because they have to work for some client. Unfortunately that was happening, and that doesn't work, that disrupts the entire flow, it doesn't make the team happy and therefore the triangle fall us apart.
Kelly: Alright so you told me, it's not just an order it's the nuances and actually what is in between sort of, if you're looking at that flow, that chart that we're gonna have on screen, it's the connection between what comes first second third or how that all the interdependence or the interrelationship of those things.
Kelly: So you actually have just started implementing this not that long ago and you've been getting some pretty early feedback that’s been positive. Can you share sort of one of those stories or one of the anecdotes from your team?
Mike: Sure. I mean I guess the first thing that comes to mind is just where we had to make some tough decisions and tell clients you know what, this isn't working out. I mean it's not that we just gave up. I mean we did our due diligence. We said look here's what's going on, here's how we see things, here’s what we'll need to do to continue moving forward coz we need this to work not only for you guys but for us as well and either we can get on the same page and move forward and things will be better or we should just part ways. And so we have parted ways with some clients.
Kelly: Has that been amicable?
Mike: It's been amicable. There is no hard feelings or anything like that.
Kelly: Do they understand why, or they just thinking oh these guys don’t want to work with us anymore.
Mike: I mean, it's hard to say. I mean we're not in their heads. I think some of them definitely understand. It really is dependent on the situation. What I can tell you though is that the staff sees it and they say wow, they really mean what they're saying with the leaders of Inflow. They are taking huge risks in some cases that they are having really tough conversations. One of my managers when we were talking about a potential client that we needed to kind of have a little bit of talk with the client to try to work it out.
Kelly: Come to Jesus moment?
Mike: Yeah exactly. I love that you let us do this. I don’t let you do it. I require you to do it. Coz if we don’t do it, the whole thing’s not going to work.
Kelly: Yeah, it's great. So along those lines with the team, how important is the mindset shift, and how do you measure those things? Because those are sort of the things that are the warm and fuzzies and sometimes the more emotional or more, I don't know, just things that are hard to quantify so how do you measure those things?
Mike: Well, I alluded earlier to the fact that we do quarterly engagement surveys. We cover a wide variety of topics in that with our staff, and we have a lot of historical data and results so that is the best way that we can quantify these things. We can really see trends there.
Now what I will tell you is again we're about 35 people or so, so going purely based on the numbers and the metrics can kind of be tough. Like we’ve seen trends where if you just look at the overall average score if you will, like it honestly hasn't changed that much over the lifetime of doing these engagement surveys no matter what we do, which is fine coz it is a good score, but at the same time it's not helpful feedback. There is no actionable feedback there.
So the best thing that we have is the comments that come in as part of the survey so rather than the numbers looking into what people really writing in their pre-formed answers, that's one way that we can do this like collectively across the whole company. But you have to understand, we also have a lot of other things to facilitate good communication and feedback, which is a core value of ours.
So for example, we do weekly one on ones with every team member every week. We use fifteen-five and every team member submits and has a fifteen-five report reviewed every week. We are very big on open honest frequent communication so that we can all continue to work together to improve and that's something that's really important. So if you can't get on board with that, or be a good communicator like you are calling that a good fit at Inflow
Kelly: So the last time that we talked we started going into authenticity and vulnerability and all of these things right? As an agency owner, it takes a lot of courage to be this authentic and to say even though we're hitting our financial goals something doesn't feel right. Those are the words that you used earlier on the show.
So to say like something is broken and it doesn't feel right and it has to do with my people and the way that they feel even though I'm meeting my performance goals and my own revenue, all of those things as a private company. There's a lot of uncertainty and there's a lot of risk and emotional exposure in kind of going down this path. So I'm curious to know what were some of the results or some of the outcomes of you showing your own vulnerability in this?
Mike: Well, I mean number one for me it felt good. It just feels good to connect, to really live. What I feel is the right thing to do for the right reasons and to continue to improve my own personal environment with again the clients that we have here and the staff that we have here. As you mentioned, it is still really early for specific results like growth or even more culture surveys and things like that. That's all still developing.
But what I can tell you is again through those conversations, through the communication, through the feedback I'm getting that my managers are getting, our team members are giving, it seems to be catching on and going well. And it makes sense. When you study the stuff, for example, the book, Culture Code, it’s a really big influence and is an important read, that says look you got to have this purpose, you got to have this safety; otherwise you are never going to achieve that good positive culture that you want to get.
So I think the thing that I've also kept in mind is the obstacle is the way. And so, while some things maybe tough, and some things maybe uncomfortable or put me in vulnerable situation, those difficulties will lead to better things down the road. And so it's just part of the journey. And I believe in it and so I am very confident that we will see results in terms of, number one, just our general happiness at our jobs in Inflow, which again I think will influence everything else from profit margins to client results to pretty much anything else out there you can think of.
Kelly: Right. Well, I'll definitely put a link to Culture Code in the show notes for sure. And as we are starting to wrap up what would you say is your biggest takeaway from a growth perspective up until this point?
Mike: Well, number one high growth is not for everyone. I mean I think like folks start up a business and it's like grow, grow, grow, grow, grow. And then all of a sudden, you're just kind of looking at dollar signs and that to me, that's just not for me. Maybe for something else but it is not for me. So I think it's to really understand what you want and what's going to make you happy as an individual agency owner, business owner, and then try to craft your vision mission for that agency around that.
I suppose if it's really high growth and you’re just, that's something you are really passionate about that's great, but understand that there are costs to that. And there are compromises, I think, that sometimes need to be made that, some people may be totally fine with but others are just aren’t. My mission is really to achieve harmony among these three stakeholders at Inflow.
And I'm really looking forward to seeing what the results of those are but I would say to an aspiring business owner or agency owner, you really have to look at that spectrum of high growth lifestyle, really understand it and not just kind of brush it off like, "Oh yeah, it is hard to scale or you have to hire quick and all that kind of stuff." I think you really have to think hard and fast about it. Because again you have to be very, very careful on the clients and employees that you let in the door because ultimately those are the main influencers.
Kelly: That’s the agency.
Mike: Yeah, that’s the agency.
Kelly: Well I think achieving harmony amongst clients and your team and your bottom line, that sounds like a pretty worthwhile mission, so congratulations on everything you're doing with Inflow and I'm just super excited that you're able to join me today, so thanks again Mike.
Mike: Hey, I'm just glad someone's interested in hearing about this, thank you.
Kelly: Very, very interested.