CEO Peer Groups With Tim Fulton

Thomas Green here with Ethical Marketing Service. On the podcast today, we have Tim Fulton. Tim, welcome.

Hey, great to be with you. Thank you, Thomas.

Great to have you. Would you like to take a moment and tell the audience a little bit about yourself and what you do?

Sure, my name is Tim Fulton. My firm is called Small Business Matters. It’s a consulting agency that I’ve had now for about 20 years. My heroes are small business owners and leaders in small business growth minded typically they all share issues with growth either too much or too little and they employ me as a as a coach, is a mentor, as a guide to help them towards healthier growth. Okay, thanks for the introduction. in our messages before the episode, the topic of conversation or at least a proposed one is around CEO peer groups.

I was interested in the topic just because I’ve heard how influential your peer group can be and lots of anecdotes around, you know, you are the in terms of net worth, you are the average of the five people you hang around with. Have you heard that one? Yes. Yes. And I think it can make a big difference. So can you just give me a breakdown or your thoughts on the concept of peer groups? And what does it mean to CEOs? Yeah, so Thomas, I was very fortunate for 16 years. I served as a chair with vintage international vestiges, I believe, the largest CEO membership organisation in the world in the UK. I know they have a pretty good footprint in terms of members CEOs. And so as a chair I hosted a monthly meeting with my groups and the groups are typically 12-16 members. Most of Marie their CEOs or presidents or general managers and these peer groups, what usually attracts members.

My experience is one of several things. One is, I’m sure you’ve heard this from your clients. It’s lonely at the top. Many CEOs do not have someone that they can talk to. Oftentimes they can share the good stuff but it’s sometimes when it’s not so good that they don’t have a group of mentor someone that they can talk to. Someone they can go to for advice someone they can go to help make those tough decisions. And so that’s one thing that I found attracts CEOs to appear group is just the opportunity to talk to piers about things that we can’t talk to our wives or kids or neighbours about. The second thing is the opportunity for growth. Most of my members as I indicated earlier or what would be referred to as growth minded individuals meaning they understand that they know just a little bit about, you know what’s available to know about running a company.

And so they value the opportunity to learn, learn from speakers, learn from other members, learn from reading books and so there their growth minded individuals and they want to be around other growth minded individuals. Um, maybe the third thing that I think brings people to groups like this is the opportunity to share best practices and to learn from other CEOs who are not in the same business, they’re not in the same industry, but oftentimes at that level, they share many of the same issues, issues around healthy growth issues, around finding talent issues, around finding capital to fuel their growth issues around exit strategy. I got into this mess. How do I get out? How do I exit in, in in a good way. And so the opportunity to learn from, from peers, I think they value quite a bit, the challenge for all of my members.

If you surveyed him, would be time. They’re all really busy and initially the thought of carving out a full day once a month to, to join other CEOs and meeting for some seems almost impossible. How could I do that? How could I find a day a month and yet once they get involved, their mindset changes to where I have to do this. This is the one day a month that I get away from my office, I get away from my business. And it’s the old, the old thought the opportunity to work on the business versus working in the business and they find that to be extremely valuable. So, um, I mean, you know, you mentioned a few of the things which come up frequently, what would you say is the, the main one that you always see or you regularly see in terms of issues that you give advice over or is brought up with everyone. And what’s, what’s your answer to some of that? Uh, well, that’s a good question in. I recently wrote a book about it called the meeting and it’s about a one day peer group meeting.

And in the book, I have four different issues that come up that I find to be kind to be very common in in my meetings. One issue was with a bad employee that the term that’s used frequently as a terrorist employee, one who is performing is hitting their numbers but is guilty of bad behaviour, you know, no one wants to work with, nobody wants to be around. And I found with a lot of my members over time at, at any given time, they all had a terrorist that they were dealing with and trying to figure out how to deal with that terrorists because they’re bringing in results. Oftentimes it’s a sales person and they’re hitting their numbers, they’re bringing in new clients, but they’re miserable to be around miserable to work with. And so there is that okay if the fear that if I let this person go, I’m going to lose sales and yet as long as I keep this person on, I’m losing key employees because no one wants to work with this person.

And how do I deal with a terrorist? And the simple answer there is you know, fire the terrorists. That you know that was all you know that was easy for me to say, you know Thomas, you need to fire that person. And yet it was never that simple. Another common issue that I had a number of my members had business partners and I always love to bring in new members with partners because I knew there would never be a shortage of issues because there are always partner issues. It’s always interesting partners, they start and you know sync up when they start the business, right? That’s why they start the business together because they have the same idea the same vision. And yet it doesn’t take long before the partners go in different directions. No one wants to grow and one doesn’t, one wants to add new offices and the other one other one doesn’t, one wants to sell and the other one doesn’t. And so you know we were always dealing with partner issues and when it came to a point where the partners had to split up, you know, how does that happen?

How do we how do we negotiate a separation kind of like marriages and just as you know, 50% of or so of all marriages end up in divorce. That’s true with business partnerships as well. And so you know for me it was usually not a question of if there was going to be a separation, The question was, when will these partners decide to separate? And so that was always a good issue with the group. And another one Thomas that came up was about growth, not unusual that a company would be experiencing nice, healthy growth, sometimes double digit growth and all of a sudden that growth would stop And not intentional, certainly, but all of a sudden it was, I can’t grow this thing anymore. It’s like we hit a like we’ve hit a ceiling and I just can’t get it to the next level. We’re at five million in revenue and I want to get to 10 or I’m at 10 and I want to get to 20 and I just don’t know how to get there. And so that was a common issue that would come to the group is, hey, how do I, I’ve taken this as far as I can, I think, how do I get this business to the next level?

And again, no simple answer for that. Sometimes it was bringing in someone from the outside to as a, as a, as a number two to help stimulate growth. Sometimes bringing on strategic partner, sometimes changing a significant change in the design of the business. And Thomas, what’s interesting is normally the first thing is it’s about people, I need to change seats, I need to move this person or need to remove this person. And what gets overlooked in my experience is the design of the business because the business could easily be designed to be a $10 million company. But it’s not designed to be a $20 million we’re going to have to rip up the design that we’ve had and figure out how to design the business for a different level of growth. And as difficult as personnel issues is sometimes more difficult as a complete reorganisation of the business that can be extraordinarily difficult.

So those are just a couple of the common issues that would come to groups that we would work on. Would you mind giving me an example of changing the design of a business before and after? that’s a good one. So I had one of my members owned a pest control business, residential, mostly residential but somewhat commercial. And he took the business over from his father. The father had had run it for, I’m gonna say 20 years and it was a nice family owned business operating smoothly. nice margins, nice profit. But my member my client the son bought his father out and wanted to take it to the next level and it wasn’t quite sure how to do it. The bottom. The business had been designed when a, when a service person went out to the house for performed service, they sent a bill to the homeowner, they got paid. So it was a transactional business and his decision was if he was going to take the next level was he needed to turn it into a subscription business so that he wasn’t dependent upon each visit to collect revenue.

Instead he would build his clients every month. Whether a service person went out or not and the service people still went out. But instead of depending upon that visit for revenue they were getting. It was a recurring revenue, a subscription business which is you, I’m sure you know, you know the valuation on a subscription business is significantly higher than that of a business that depended on transaction. So over the course of about a year and a half he took that business from a transactional business to a subscription business with solid recurring revenue that, that then he was able to scale much quicker than he would have been able to do before. So that’s one example. just one that I read about. I wish I could take, I wish I could take credit for this. But when I saw that was just recently here in, I’m in Atlanta Georgia here in the States and we have a, it’s a very large chain of gas stations, service stations, they sell gas convenience stores and they’ve been around for quite a while, the business is called QuikTrip, very nice in terms of service stations and one day I was in a different part of Atlanta than I’m used to driving by a strip shopping centre and I saw a quick trip with no gas, no gas pumps.

I thought that’s, that’s weird because most of their revenue I know comes from selling gas. I thought, well that’s interesting. And then not long after that a son article in the paper and it was about this, this store they had opened up, it was a test store that they had opened up and they asked it was a vice president of quick trip what’s with the, the store with no gas. And his response was interesting Thomas. He said we’re not sure how much longer cars are going to need gas. So we’re testing a new model, a store without gas. And so rather than react to that change because sooner or later it could very well happen. They’ve decided to begin to reorganise their business model to plan for a business that didn’t sell gas and I wish more businesses had kind of that foresight to be willing to test with a complete redesign of their business. But I think for many business owners, that’s a very scary thought to completely redesign my business and yet I think it’s almost required.

Um, one of my favorite books I read a number of years ago, it’s a book called bounce and it looked at why some businesses when they hit a very difficult spot in their growth, why some businesses fail and some don’t. And what they found is that the businesses that don’t fail when they hit a covid environment, right? they do it because they have a like what they refer to as a laboratory mindset, they’re always tinkering with the design of their company. And in fact what they found these companies that were highly resilient Every 3-5 years did an almost complete redesign of their own business. Not because they had to, but because they wanted to Highly resilient companies, our willingness to redesign every 3-5 years. That’s highly unusual, at least my experience. Well, if you’re, if you’ve got an outcome in mind, and the best way to do that is with a redesign, then it’s logical to do it right?

It is, but it almost, you’re right, but it almost makes too much sense for companies that have been operating the same way for decades at a time to make a significant change and yet you’re right, if you want a different outcome, you’ve got to be willing to look at a different way of doing business. Do you highlight any benefits around the peer group in terms of self-imposed limitations and setting higher goals and that sort of thing or is it very much strategy, the strategy, but I think there are other benefits and you identified a couple. One is, you know, these are success at least in my case these were successful CEOs growth minded companies are growing and so it almost set an expectation for the members of the growth of the group to set I think higher goals than they might have otherwise because every month there reporting back to the group about their KPIs, their key performance indicators and so there’s almost some intrinsic responsibility to grow your business and maybe a little faster than you would have done otherwise.

I think another one that comes to mind Thomas – and I’m sure you see this with your clients – is that, you know, we all have blind spots, we all have areas within our business that we don’t have quite the visibility or the clarity to that we’d like to have. And so I think my members would say that they have fewer blind spots as a result of being in a in a peer group like this because when they hear another member talking about something and they say, wow, I hadn’t thought of that, I hadn’t thought of, you know, documenting all my processes, I hadn’t thought about working on my exit strategy. I hadn’t thought about what happens when my number one salesperson gets ill due to covid and how do I replace that person. And so it’s recognising some of those blind spots before we get run over. You know, like a train, you know, by that blind spots. So recognising and beginning to take action on those on those blind spots.

Um those are just a couple that come to mind. Well the first couple that you mentioned are around problem employees and then also potential business partner issues. And it sort of reminds me of this sort of relationship issues in a way. So it’s just people within the business and it’s I suppose tricky in the sense that although the owner may know the right thing to do is there’s just an area of conflict there. And I suppose having that space to talk it through and get different perspective is beneficial. Yeah, I always saw part of my role as a chair of the group was to create that safe spot. for CEOs where they felt comfortable bringing their most difficult issues and Thomas they weren’t always business issues. It was not unusual that we would get personal issues coming to the group. And what we recognise over time is there’s really no separation between the two between business issues and personal issues.

They’re all intertwined together. And you know, personal issues just a matter of time before personal issue shows up within the business, whether it’s a health issue, it’s a relationship issue. It’s a money issue sooner or later, that personal issue will almost always show up in the business so hard to separate those two. And so you know, again not unusual that members would bring those personal issues that they just felt like, you know, I’ve got no one else to talk to about this to, to bring it to the group where they felt like it was a safe spot. And I can’t say non-judgmental because human beings were all, we’re wired to be judgmental, but as much as possible, you know, avoiding judgment, you know, as much as possible upon the other members just knowing that hey, one day I’m going to be the one bringing this issue to the group and I would hope that people would reserve as much judgment as possible from a selfish perspective. Do you find yourself learning an awful lot by being in that environment?

Absolutely. That’s why I’ve always felt that I was so fortunate because you know, we would have speakers, each meeting come speak to group experts on different topics. We would read books and, and just learning from my members was invaluable. I think maybe the greatest learning experience that I could have ever had. Yeah. And have you got any because of recent issues like you said with Covid, is there anything that you’ve picked up from that where you think is applicable for the audience? I guess a couple of things that I’ve seen over the past year. One is the, the, the idea, you know, and I wish I could remember his, the author’s name, I want to say to lead, wrote a book called black swan. And the idea is that there are these events that happened that are totally outside of our control and as much as possible, we want to be prepared for those these black swan events. And certainly Covid was a black swan event that that impacted everyone.

And so the question for the CEO is, you know, to what degree of my prepared for this when it happens. The second thing that comes to mind is the need for communication. And this is something that I really worked on my CEOs with it. I didn’t think particularly, you know, starting a year or so ago that it was possible for them to over communicate to their employees, to their clients, to their key stakeholders, communicate about, you know, where are we and what are we doing and what aren’t we doing and how can we help each other? So the need for CEOs and leaders to over communicate, you know, particularly in in difficult times. what else? What else did they learn? The and this came from Jim Collins, the famous author Good to Great. And it’s the most recent book, b two point oh, you know, we talked about the importance of identifying within every business what he calls the brutal fact and the brutal fact is, you know, what’s preventing this business from getting better from getting healthier from getting bigger, identifying every business has a brutal fact.

And so I worked hard last year with my clients getting them early on to identify, you know, what is your brutal fact, particularly around Covid and how you’re responding to Covid. Are you gonna lose key employees? Are you gonna lose key clients? Are you going to run out of cash? Are you going to go out of business? What is the brutal fact of your current reality? And how are you responding to that? And you know, now I know what a lot of my clients are finding today is Thomas is fatigue. People are tired right now. They’re tired of Covid, they’re tired of pandemic. They’re tired of sitting in front of screens, they’re tired of zoom meetings. and so that, you know, that’s the next impact of this whole pandemic. Is, is this now this period of, of exhaustion and fatigue and how do we, how do we get through this? And the second thing that I’m finding with many of my clients now is the difficulty in finding and retaining talent because at least here in our country, it may be true in Europe as well, is the labour market has tightened up considerably, whether it’s because people have decided they don’t want to work or you know, they switch jobs and they don’t want to switch again, but labour market is very tight and Now coming out of the COVID employees, you know, they were, they were reluctant to switch jobs in 2020 because of the circumstances, But they’re not as reluctant now.

So it’s, it’s believed that as many as 50% of all employees over the course of this year are going to be looking for a new job. And so employee retention is probably, I think maybe the toughest issue that many companies are facing today. Yeah, I have heard some people say about the fact that if it’s the case that everyone’s working from home, um, then, you know, it’s, if you’re, if you’re doing a job from home, sitting in front of your computer, you can easily switch and there’s not really much differentiation between one company and another. So yeah, it’s not like, you know, you’re moving cities or your commute is changing. Yeah. You’re just dialling up to a different website every day. Yeah. Is there anything that you think that would be of value regarding the topic of peer groups? CEO peer groups that haven’t asked you about today? Yeah. Um, I think for your listeners, if they’re considering a peer group, I think there are several factors. One is just to determine, hey, is this right for me, because peer groups are, they’re not the, the, the answer for all CEOs.

And I would tell my members that upfront that this group is not for everybody. I think Vintage, we had maybe a 3% 3-5% market share in the different metropolitan areas that we had groups. So that suggests there’s a whole lot of CEOs that that that chose something else. So one, make sure it’s right for you, make sure that you have the time to devote to it because in my case it was a full day meeting once a month and then some other time geared towards reading or getting together with members outside. Um, I think a third factor to consider is one’s willingness to open up as you had referenced earlier. This is a, it’s meant to be a safe place, a place where CEOS can bring their toughest issues and be vulnerable with the group. And so that’s a question that I would ask prospective members is how comfortable are you being uncomfortable?

How comfortable are you being vulnerable? You know, sharing with other CEOs. And then the last thing is the, is having that growth mindset. You know, there’s been a lot of research about growth mindset versus fixed mindset. not everyone has a growth mindset. It’s not, it’s not necessarily a bad thing, but I think to be in a peer group, it does require having a growth mindset and willingness to learn a willingness to fail. A willingness to be wrong. I think all those are really important. What would you say to the individual who has got a terrible peer group with loads of negative people with lots of fixed mindsets. Yeah, get out, get out because your time is way too valuable to be wasting it so to speak in a group that you’re not benefiting from. And it’s unfortunate, you know, vintage isn’t perfect. There are good groups and there are bad groups. Certainly I’m a visited speaker so I get to visit a lot of different vestige groups when I speak and, and I see all sorts of different groups.

But yeah, certainly if someone is in a group that they’re not happy with that they’re not getting value number one, I would address it with the chair first stay. For whatever reason, this is not working for me at the moment. Is there something that could change and if not, I would recommend find a different group or your goals. Well, good question. Well, the immediate goal is over the last five years, I have taken a sabbatical every year. I’ve taken a month off. In two of those years I have walked the El Camino Santiago, which you may be familiar is in Spain, some of your listeners might be familiar with the El Camino essentially. It’s a walk all the way across Spain and I’ve done that twice This year in a couple of weeks. I’m heading to Portugal and I’m gonna do the El Camino. It starts in Lisbon and head straight north up into to Santiago where the cathedral is. So my media goal is to try to get in good enough shape to walk. It’s about 380 miles from Lisbon up to Santiago?

My second goal is probably the next three years. I’m going to transition from what I’m doing now. I semi-retired about three years ago. I’m going to take another step in the terms of that retirement in another three years to just be doing less, which means I’ve got to find something to take up that time and I’m not sure what that is. So just as I tell my, my, my clients in terms of their exit, you know, as much as you’re exiting from something, make sure you have something you’re exiting to. I need to figure out what that what that too is for me, interesting. Well, you know, we’ve, we’ve just spoken today, but you know, the, I often with, with someone who’s got productive maybe who’s got a lot of entrepreneurial stuff going on. Do you ever retire? Do you think? Uh, it’s highly, highly unlikely because I really love what I do. I love working with entrepreneurs and business owners. My senses may be working towards more volunteer work and I do some of that now, working with a couple of organisations here in Atlanta, helping new entrepreneurs, young people wanting to start throwing businesses.

So probably more volunteer work than I’m doing now. But yeah, you’re right. I don’t see that. I would ever get away from it completely a bit more of a mentor than Yes, exactly.

Where’s the best place for people to find you?

Sure. My website is Thomas, I’ve published three books. The most recent is called The Meeting. Those books are available on Amazon if any of your listeners are interested. And my email address is very simple – If I can help any of your guests in any way, I’d be happy to do so.

Okay, well, thank you for all the value today.

Thank you for having me.