There's a famous quote from the philosopher Heraclitus that goes, "The only thing that is constant is change." Even though this quote was said over 2000 years before the word "IT" even existed, truer words have never been spoken about the IT channel. MSPs face an ever-changing marketplace, where new technologies are constantly disrupting the way things are done. As a business, it's important to setup an organization that's adaptable and nimble so that you can stay on top of the change and take advantage of the opportunities it presents.
On this week's episode of MSPradio, we speak with James Kernan of Kernan Consulting about how to create an organization that's ready for change and welcomes it. James has over 25 years of experience working in and with IT solution providers, and he gives us practical business strategies that you can leverage in your own business.
Tune in this week and subscribe to our podcast on iTunes.
Nate: Hey folks, welcome back to another episode of MSP Radio! As always I’m your host Nate Teplow. And today we’re going to talk about preparing your company for change and how to build a company culture that’s adaptable and flexible. As you all know, there are many changes within the IT channel and it’s important to build a company that’s adaptable and can make certain changes based on the industry. We’ve got a great guest on the line here today, I think you’ll really enjoy this episode.
Before we get into it, I would just like to remind you to subscribe to our podcast on iTunes. You can get these episodes straight to your iTunes account. We are also available via the Stitcher app for android users. Follow us on Twitter using the handle at follow continuum and you can let us know what you think of the radio show with the #MSP Radio.
So as I mentioned, I will be talking about company culture and how to create a culture that’s adaptable and can lead to business growth.
So today’s guest has over 20 years of experience helping MSPs ,VAR’s, IT companies, transform the leadership and their companies in order to accelerate their growth. He’s got a ton of proven leadership strategies. So I’d like to welcome James Kernan to MSP Radio. James how are you doing today?
James: I’m doing wonderful, thanks for having me!
Nate: Yeah, thanks for joining me. I think this will be a great episode for our listeners and excited to get this going.
Nate: So just to kick things off, tell us a little bit about your experience and how you got into consulting.
James: So I have been in the business for a long time, it’s been almost 25 years; I think I’m running out of fingers and toes to count. But most of that time I was a CEO running my own MSP or technology firm. I did that for about 18 years and then after selling my last company I ended up getting involved in coaching and I have been coaching ever since and that was back in 2006, that’s when I formed Kernan Coaching and I started doing some of the coaching and mentoring programs.
Nate: Great! What kinds of companies have you worked with since starting your consulting practice?
James: So I have worked with a variety. So my consulting practice was really launched through the Robyn Robbins community and I put together a program, a peer group coaching program called the 36 Months Millionaire Program. And a lot of people in that community are starving for sales and marketing support. So most of the clients early on were small MSPs or VAR’s that really needed help on marketing. Some of them were getting ready to go out of business and some were startups but that was kind of the clientele early on and then we’ve kind of grown from there so our sweet spot really is between 1 and $5 million technology consulting firms.
Nate: Cool and that’s why we are tough our partners fitting as well. So yeah, I think this would be a great episode. So what are some of the things you help them do? I know you mentioned marketing. In terms of leadership strategies, what are some of the things you help MSPs do when it comes to evolving and transferring their leadership?
James: Yeah, there’s a lot of things. What normally happens is people come to me with a single issue, maybe a merger, an acquisition opportunity, they are in a lawsuit, maybe they need sales and marketing help and then what people don’t understand is your problems change as you grow your business. So I take a holistic approach to the consulting and I can help in a lot of different areas but it’s interesting, there’s just a wide variety of things but most of them seem to be around leadership, sales and marketing.
Nate: Yeah, cool, cool. So there is a process of change going on in the IT channel and we’ve mentioned if this on the show before, obviously cloud and mobility are big drivers of that change. What other sorts of technologies or market trends have you noticed that are driving change within the IT channel?
James: Yeah, it’s interesting since I really got out of the business from running my own VAR, I am learning just as much as I am giving. So things have really changed in the last 7, 8 years. I’ve always been a big believer in thinking outside the box and outsourcing partnerships to either friendly competitors or to your vendor partners.
So number 1, I think you really need to take a strong look at your vendor portfolio and who you’re partnered with, your go to market vendors are really important. And then just from a technology standpoint, we’ve been preaching for years the evolving market of business intelligence and analytics. And the magic really happens when we can teach our customers to go into their customers and prospects and take a different approach to selling instead of selling widgets and speeds and feeds and this server is fast, it’s a business conversation not a technology conversation. So we teach our customers to meet with the leadership teams and then understand their goals and objectives for the business and then align the IT department and the IT needs to those goals and is such a different conversation when you’re talking about business challenges instead of technology challenges and that’s what CEOs of your customers are really looking for.
Nate: Yeah, and then you can become almost a virtual member of their executive team and help drive their growth and contribute to their growth rather than just being the guy when they need new technology or need something to be fixed.
James: Exactly. Exactly and that’s where business intelligence, that’s where it really comes into play and a lot of these, I will just say the end-user customers, they’ve got it with people that work for the team just like we do. And business intelligence is simply giving the right information to the right people at the right time so they can make the right decision. And what most people don’t realize is Microsoft offers business intelligence. There is another up and comer that I would strongly recommend you take a look at, it’s called Slpunk.
So Splunk has kind of taken the business intelligence world by storm and it’s a partnership you should take a look at. But Splunk is another business intelligence platform that will help you gather the data and make it usable for your team. And along with that you need servers and you need to manage all of that software to deliver this information to your clients and that plays right back into everybody’s portfolio that they do already today.
Nate: Yeah, interesting. So actually I wanted to go back to the concept of outsourcing that you mentioned earlier.
Nate: And I know it’s a big topic in the industry and I think MSPs and IT solution providers, they don’t like the idea of our sourcing. I think they want to hold onto a lot of things themselves. How are you finding… How receptive are you finding your clients are to the concept of outsourcing and how many are actually taking advantage of it?
James: Well most all of them are taking advantage of it and you are exactly right. I have been in the industry for a long time and I consider myself an old dog and most of us old dogs if you will are very non-trusting. And I just had taken a reverse approach to that where I’m going to trust everybody until they give me a reason not to; I will be a little educated with that but when you have a friendly competitor, if you are protected with a strong written agreement and you meet with their leadership team and set proper goals and expectations up front, those partnerships typically work really well. And in some cases some of the companies that I work for or early in my career and have lots of success stories there and then companies that I have coached, know that they don’t have the horsepower. If you want to do a big business intelligence project for a client, it could be a 1, $2 million opportunity, you just don’t have the skill sets to do that so if you want to the deal you need to think outside the box and outsource the right partner to do that.
And I’ve actually helped… We put together a network called the Halo network which is really a membership community within the Kernan Consulting clientele that there is hundreds of VARs that share engineers and expertise so you can sell outside the box and deliver solutions that you never had the capabilities of doing before. And we keep track of customer service, customer satisfaction ratings, skill sets and then if there is any unethical activity or somebody is trying to steal somebody else’s account, we will kick them out of the program.
So we very much encourage outsourcing and even in some cases not just to fellow VARs and MSPs but also back to the manufacturing partners if that makes sense as well.
Nate: Yeah, that’s interesting. It sounds like a great network you guys have there. I think MSPs should definitely be taking advantage of any sort of peer group or peer network they can leverage.
Nate: What sorts of things are you finding your clients are actually outsourcing? What actual products or what components of their business are they outsourcing?
James: It’s either something simple where they’ve got a client that has a remote office in a different geography and where they have people and they just need hands and feet on site to help do a deployment or replace a hard drive, something simple or it could be complex. So one is just the geographic reach where they don’t have people so that’s one easy one. And then another one where there is a lot of activity where we are helping coordinate a lot of migration projects or kind of high-end kind of level III, level IV type of projects where they don’t have the advanced skill set or certifications to do an implementation and some of these smaller VARs are coming back to the network to get help of delivering these more sophisticated migrations because they just don’t have that skill set.
And what they can do is they can subcontract the network, they are still invoicing the client, they are still project managing it, they are still coordinating things with the client, they are just leveraging other companies’ engineering expertise to help deliver the project.
Nate: Yeah, it’s a very interesting concept, it is something that we have talked about here on MSP Radio and actually over the span of 2 episodes we played a key note from our user conference this past fall, navigate 2014. It was a keynote from our CEO who talked about this concept of outsourcing and he actually labeled it smart sourcing which is intelligently allocating your assets. It’s not completely shipping of some portion of your business to one outside vendor or country or company or whatnot but it’s just allocating assets effectively in order to grow and expand as a business.
James: Right, absolutely.
Nate: Yeah, cool. So we actually got to take a quick commercial break here on MSP Radio. Coming up next we will continue talking with James about this concept of outsourcing and what some people like to call smart sourcing but how to create an organization that’s receptive to this concept and how to really leverage it and get by in throughout your organization to grow your business and fuel that growth through outsourcing. So taking a quick commercial break here and we will see you all in a few minutes.
Nate: All right folks welcome back from our commercial break. You are here on MSP Radio. I’m your host Nate Teplow and we are talking with James Kernan of Kernan Consulting. He’s got a ton of experience working, first off, managing his own MSP business and working with MSPs, VARs, IT solution providers, helping them change their organizations in order to drive growth.
So James we were just talking about this idea of outsourcing and how it can really lead to business success. Could you tell us a little bit about some of the leadership strategies you’ve helped implement at some of your clients’ and how it has helped them grow their business?
James: Yeah, so one of the key things that we do in our assessment process when we talk with clients and prospects is really there is a lot of discussion around culture, how do I change the culture of our business and how do we adapt to change and how do we find evolving partners. And some people just point blank ask, “How do I become a better leader?” And the reality is it starts from the top down. And we do a lot of different things that work specifically with the leadership team at the companies that we work with. We do one-on-one coaching, we have a peer group coaching program. We have training webinars on a regular basis. We are not only the CEOs of the leadership team but a lot of them have salespeople or technical people that join in as well. So there is live training webinars that we do. And a lot of these we do role-playing where we talk about scenarios and could be adapting to change or dealing with difficult scenarios. So the role-playing is very effective as well. So those are some examples of things that we can implement.
Nate: Yeah, cool, that’s interesting. So what are some of the keys you found to… I think management consulting can be tough because I think about office space actually and obviously we’ve see the management consultants come in at all the employees get scared. So how do you and how do you coach your clients to deal with your employees when they see a consultant come in? How do you actually work to get buy-in from those employees and those technicians when it comes to changing an organization?
James: We actually like involving the employees in our assessment process. So we come in and the things that I typically say to our customers and their employees are, “Hey, we are here to make things better. It’s not necessarily to change things or make it difficult or different for you. Now I’m going to take everybody’s feedback so a lot of our on-site assessments, and remote assessments as well, involve the employees. And they can speak candidly about what they like or dislike about the company culture or leadership and then we take that to heart and come back with an action plan where we can implement that.
But normally, I tell you the key thing is when you involve your employees in the final decision-making of what things look like, that’s when things become very different, that’s not a dictatorship. Now I have made that mistake in running some of my own companies before where I just get busy and I want to implement something and I don’t have time to implement it correctly and involve people and I just roll it out saying, “This is what we’re going to do, this is my way or the highway,” and your employees will fight you tooth and nail when that happens. So the key advice I would just say is you’ve got to involve your employees in the very beginning with that type of thing, get their feedback because they will sculpt the concept and make it better than what you were maybe thinking of originally and they will be much more accepting to that change when we do roll it out.
Nate: Yeah, absolutely. I think employee feedback is obviously an important thing to incorporate into your business.
Nate: But just thinking about it, I mean I feel like there is a line, you want to be able to… There is a fine line. You want to be able to incorporate employee feedback but you also want people to make decisions because if you are just making for everyone to vote and give their feedback on something, you are wasting time and obviously just making your organization slower. So how do you tread that line of encouraging employee feedback and their participation but also allowing people to make quick decisions on important issues?
James: Yes, so that’s a great question. The line is a little bit of a moving target based on if it involves financial data or the severity of the issue. But just some general rules of thumb, I typically would keep the financial data away from employees. They don’t need to know how much money you are taking home or how much profit to the bottom line. I was never a big fan in the open book accounting policy with employees. And one company I worked for years and years ago, quick side story, I remember my boss got up and said, “Oh, we had a record month and we made a gazillion dollars and everything is great.” And I remember going back to my office after the meeting and there were 10 people standing in line pounding on his door asking for a raise. And so you can set goals, maybe revenue goals or performance goals and share that data with the team but it’s kind of a fine line of what you share with people from a financial data standpoint. You can motivate people again with performance types of goals. So I think that’s important. So hopefully that answered the question.
Nate: Yeah, absolutely, those were some great, great tips there. So going back to this concept of outsourcing that we talked about in the first part of our show…
Nate: … I think as an employee that’s another thing that can be a bit threatening is that idea of are sourcing and well if they are outsourcing these projects and jobs, well isn’t my job basically going to be cut next? So what are some of the ways you help your clients encourage this idea of outsourcing to their employees and actually get them to accept it and leverage it versus feeling threatened by it?
James: Okay, yet another great question. So our whole concept of outsourcing or out tasking is not really taking away from what your team is already doing, It’s adding on top. So it’s most of what we’re trying to do with our client is typically it’s a growth strategy. So it’s how can we sell more? How can we make more money? How can we do projects that we did not have the capability of doing yesterday?
So it’s really adding talent around them to add on top of what they are already doing well. And then as you work with some of these outsourcing partners, we can help teach maybe the lead engineers on how to do things themselves in order to become a better project manager, we can teach project management skills so they can run the projects and we don’t have to do that for them and charge them for it. So they kind of work along but it’s typically all in the attitude and the approach that is typically, it’s a growth strategy.
Nate: Yeah, I mean who doesn’t want to be a manager right? If you can tell your techs that, “Hey, you’re becoming a project manager rather than somebody was getting in the weeds here,” I think that is a good thing.
James: Yeah. And we help teach our clients… It’s all billable time whether you are subcontracting the network for billable time or you are subcontracting your team, it’s all billable time that you could be billing your client for and providing a valuable service. So it’s a learning experience as well. I think that’s important that they see that.
Nate: Yeah, absolutely. So how do you typically recommend your clients handle employees who are resistant to change because I know there is obviously these strategies work but there’s always the exception to the rule and you don’t necessarily want to fire someone because I know hiring is a key issue for a lot of MSPs, they have trouble finding the right talent. So what do you do with an employee who just doesn’t buy in to these concepts?
James: Yeah, again that’s another tough one and I have run into that countless times in my career. And like I was saying before, you do your best of coaching through positive reinforcement, you involve them in the decision-making but sometimes there are people that just keep fighting you. And when it gets to that point in order to be decisive and adapt to what’s happening, you potentially need to get rid of these employees. And I wish I had a silver bullet to help explain these magical techniques but if it will get to a point in time where you will see people still fighting you and if they continually fight you, you just need to get rid of the bad apples.
And it’s a real challenge. It’s something they don’t teach you in business school, especially when you grow the business and you are having growing pains and some people are resistant to that growth and the change that comes along with its. I’m also very hesitant about involving hiring family members or people that you have personal relationships with; you’ve got to be careful with that because it makes it very difficult to hold them accountable. So be cautious with that as well but unfortunately sometimes you just need to make an employee change if you can’t get them on the bandwagon.
Nate: Yeah, absolutely. And on the flipside, I think that also holds true for clients as well. If you have a client who is just bugging you all the time, is ultimately just costing you money and doesn’t fit into your business model or your target market, I think MSPs need to… They can’t be afraid of letting go of their clients as well if they are just ultimately unprofitable for them.
James: Right, that’s a great point and it’s… Normally you need to take a look at… We encourage our clients to take a look at things on an annual basis and do reviews on the performance over the past year and setting new goals for the upcoming year. And part of that is really looking at the “squeaky clients” we call it and you will typically find trends where they are some of the clients you make the least amount of money on and they cause the most headaches, you need to fire them. And I was always resistant to that terminology of, “Oh, you’re fired,” Donald Trump but you know, there is a tactful way of doing that. Maybe you raise your fees, considerably to them, there’s other ways of encouraging them to do business with someone else but you are absolutely right and you need to protect, as leaders you need to protect your employees from those clients that are hostile.
And we have a client recently that we were working closely with and they had some clientele that was resistant on their quarterly business reviews and making technology recommendations to the business, everything they were recommending the client saying, “Nope, cost too much, nope, we’re not going to do that.” And it’s like well, “Hey, you’re not following her advice, you’re making it very difficult for us to help steer your company in the right direction; maybe we are not a good fit for you.” So it’s just that conversation that you may need to have and is probably a good one to get rid of these low performing clients.
Nate: Yeah, you can’t be afraid to stand up for yourself.
James: Right, Right.
Nate: So we are coming up towards the end of our show here. I wanted to ask you one last question and if you have some just low hanging fruit for MSPs or VARs to take care of, what is either one or a few things that you think every MSP should be doing today?
James: So just some common sense things, I am a big believer in the power of a positive attitude. So leadership all starts, and your whole culture is built around you the leader and you can decide every morning to be in a good mood or bad mood and regardless if you are dealing with the challenges or issues, try to do it with a smile on your face and encourage your employees to perform up to the next level. So I think the positive attitude and in turn surrounding yourself with people like that is really important.
Number 2, I would encourage you to continue to market yourself. It’s kind of like that old baseball philosophy that the more bats you get, the more hits you are going to get and in marketing it’s being in the right place at the right time so that the client can say, “Yes,” when they have a project and it starts with a consistent marketing plan of you doing things every month to be in the right place at the right time for these clients. So continually market yourself.
And the last thing, its super important is you’ve got to stay connected. Things like this podcast and the communities and the peer groups and the coaching networks and these communities are so powerful and I can’t tell you how many people I meet that are just trying to do this by themselves and they just get buried and you don’t want to be the dinosaur and ultimately go out of business because you are not staying on top of what’s happening in the industry. And this industry is moving so fast, you really need to stay connected and gain knowledge from other people that are out there as well.
Nate: Yeah absolutely, those are some great points James. Well we’ve got to wrap up here. James Kernan thank you so much for joining me here on MSP Radio today.
James: Great, thank you.
Nate: If our listeners want to learn more about you and your practice, where can they go?
James: Best place to go is you can go to Kernanconsulting.com website. We have information about our coaching programs; we have a new book called Leadership: Essentials for successful executives. It’s available on Amazon or up on the website and there is also a free weekly tip subscription that you can sign up for, it’s just some words of encouragement and typically a leadership tip that you can implement in your business. We send that out on a weekly basis as well so I encourage you to sign up there on, it’s right on the homepage of the Kernan Consulting website.
Nate: Great, well thank you again James.
James: Great, thank you.
Nate: And thanks to our listeners for tuning into this week’s episode. Don’t forget to subscribe to this podcast on iTunes, you certainly can search for MSP Radio, subscribe there. Follow us on twitter using the handle at follow continuum and you can let us know what you think of the radio show with the #MSP Radio. So thanks again to James and thank you all for tuning in and we will see you next week on MSP Radio.
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