Episode #28 – Bo Burlingham of Inc Magazine

Bo Burlingham, Inc. Magazine

In this episode number 28 of the InnovaBuzz podcast, Bo Burlingham of Inc Magazine, “editor-at-large”  and the author of Small Giants and Finish Big among others, talks to me about the characteristics that make a great company and the importance of being clear about your purpose and your why.  Listen to the podcast episode to find out the details.

Today’s competition prize has been generously donated by Bo – two people will receive signed copies of Bo’s latest book, Finish Big: How Great Entrepreneurs Exit Their Companies on Top. All commentors will receive a free chapter! Stick around for details on how you can enter the draw to win that competition prize later on in the interview.

Listen to the Podcast

Business is not nearly as complicated as you think. Forget everything you’ve heard about it. Basically business is a game and like any game in order to play it, you have to get it. In order to get it, three conditions have to exist. Number one, you have to know what the rules are. Number two, you have to get enough information so that you can follow the action and keep score. Number three, you have to care about winning or losing.

Bo Burlingham

Show Highlights

Some of the highlights of this episode include:

• Small Giants are companies that choose to be GREAT first, not totally focus on growth.  These companies have six characteristics – clarity of purpose and their why; tight integration with their community; personal connection with their customers; employees first (who provide stellar service to customers); leaders love the company and what they do; sound financial structure.
• Companies like this have what Bo calls “mojo”.  It’s the business equivalent of charisma. When leaders have charisma, you want to follow them. When businesses have mojo, you want to be associated with them.
• The three conditions of a sound financial position of a Small Giant are: Number one, you have to have steady gross margins that you protect; Number two, you need to have a sound business model; Number three, you have to have a healthy balance sheet.
• It’s easy when you’re building a company to get caught up in the idea that the whole process is about getting as big as you can as fast as you can. What Bo advocates is to wait, stop a minute and focus on your core values. If you want to have a great company, think about what you believe it is that makes a company great.
• When you build a business, it’s a journey. Like every journey, it has a beginning, a middle and an end. The end is not when you build a company – that’s the middle. The end is when you leave that company.  Question is, how do you leave that company and what is next for you?
• One of the great things about business is that you really are in service. At the very least, you’re in service to your customers. If you weren’t, you wouldn’t stay in business. Very likely you’re in service to your family. A lot of people are in service to their employees and to their community. What I found was that the happiest entrepreneurs I met afterwards were people who had figured out how to remain in service at a higher level.
  

  One of the great things about business is that you really are in service. At the very least, you’re in service to your customers. If you weren’t, you wouldn’t stay in business.

  Bo Burlingham

  The Buzz – Our Innovation Round

  Here are Bo’s answers to the questions of our Innovation round. Watch the interview to get the full scoop.

  • #1 thing to be more innovative – Be curious, always keep your eyes open and be hungry for new ideas.
  • Best thing for new ideas – Keep my eyes open, pay attention to what I find interesting and speak to a lot of interesting people.
  • Favourite tool for innovation – Since the most important thing for me as a writer is speaking to people – the telephone and a tape recorder.
  • Keep project / client on track – I’m maybe not the best person to ask, but I would say 3 things – discipline, instinct and judgement.
  • Differentiate – Find your passion and be the best at that – follow Jim Collin’s “hedgehog principle”: the intersection of what you are passionate about, what you are or can be the best in the world at and what you can be rewarded for.

    To Be More Innovative and Productive

    Become clear on who you are and what you want and WHY.  With that clarity of purpose, focus with passion.

    Reach Out

    You can reach out and thank Bo at his website.

    Competition Hint

    Today’s competition prize has been generously donated by Bo – two people will receive signed copies of Bo’s latest book, Finish Big: How Great Entrepreneurs Exit Their Companies on Top. All commentors will receive a free chapter! Stick around for details on how you can enter the draw to win that competition prize later on in the interview.

    Leave a comment under this blog post and tell us either – what are you doing to become a great company and/or what companies do you admire as great companies?

    Suggested Guest

    Bo suggested five ! people for me to interview on future InnovaBuzz podcasts – Norm Brodsky (Street Smarts columnist and senior contributing editor to Inc Magazine), Jack Stack (CEO of SRC Holdings), Ari Weinzweig and Paul Saginaw (cofounders of Zingerman’s gourmet food company which has grown to Zingerman’s Community of Businesses), Martin Babinec (Founder of TriNet group).  So…… Norm, Jack, Ari, Paul and Martin – keep your eye on your Inbox for an invitation from me, for the Innovabuzz Podcast, courtesy of Bo Burlingham!

    Links

  • Bo Burlingham’s Website
  • Small Giants Community

    Books

  • Finish Big: How Great Entrepreneurs Exit Their Companies on Top
  • Small Giants: Companies That Choose to Be Great Instead of Big
  • Street Smarts: An All-Purpose Tool Kit for Entrepreneurs
  • The Great Game of Business, Expanded and Updated: The Only Sensible Way to Run a Company

    Full Transcript

    Click to Read…

    Intro:

    Hi, I’m Jürgen Strauss from Innovabiz. Welcome to Episode No 28 of the InnovaBuzz Podcast – designed to help smart businesses with an interest in innovation and the Internet of Things become even more innovative.

    Today’s guest is Bo Burlingham of Inc Magazine, the author of a host of books including Finish Big, Small Giants, A Stake in the Outcome and The Great Game of Business.

    Bo has also been editor in chief of Inc Magazine and now acts as editor-at-large for that magazine. We’ll learn more about what an editor-at-large does in the interview.

    We spoke today about the 6 characteristics that make up the culture and behaviour of great companies, about the importance of a service mindset and how business owners can maintain that mindset after they transition out of the business they’ve founded. This is another fascinating interview, so stay tuned.

    This podcast is sponsored by Innovabiz, where we partner with innovative business owners to transform your online presence into a business generation platform that delivers exceptional results. If you want to learn more, then go to innovabiz.com.au or contact me directly through the contact information there.

    Now, let’s get into the Innovation Hive and get the Buzz from Bo Burlingham.

    Interview

    Jürgen: Hi. I’m Jürgen Strauss from Innovabiz, and I’m very excited to have here with me on today’s episode of the InnovaBuzz Podcast all the way from Oakland in California, Bo Burlingham, who is the author of Small Giants and also Finish Big among other books. Also, he’s an editor-at-large at Inc. Magazine, whatever that means. We’ll learn more about that I hope today. Welcome, Bo. It’s a privilege to have you on the InnovaBuzz Podcast.

    Bo: Well, it’s an honor to be here, Jürgen.

    Jürgen: Now you’re here because John Warrilow suggested we invite you to speak with us, so a big shout out to John.

    Bo: Yes, great.

    Jürgen: Now before we talk about all things business and your experience as an editor with Inc. Magazine, let’s find out a little bit more about you as a person. When you were a child, did you always have ambitions to write or did you have other ideas?

    Bo: No, in fact writing was the last thing that I would’ve thought of doing. My father was a journalist, and actually was a journalist for Fortune Magazine, so my wife tells me it couldn’t have been a coincidence that I wound up being a writer at Inc. Magazine. It was definitely not something I planned on. It was more something that I stumbled on when I found myself about to be the father of my son and needed a real job.

    Jürgen: Okay, so what were you doing before that?

    Bo: I was doing freelance writing. I had actually started out at weekly newspapers in the Boston area, and that’s where I got my start writing.

    Jürgen: Okay. Were you always a business writer?

    Bo: No, actually for the first ten years, I knew nothing about business when I got my introduction to business actually in 1982 when I was hired by Fidelity Investments. They were looking for a writer. I told them that I didn’t know the difference between a stock and a bond. They said that didn’t matter they could teach me that. They wanted somebody who could write. That was really my introduction to business. Prior to that, I’d just done general interest magazine reporting.

    Jürgen: Okay. At some point you then became an editor at Inc. Magazine, which must’ve been a pretty big step.

    Bo: Yes, well, Inc. Magazine is, I think it’s fair to say, the pre-eminent magazine for entrepreneurs in the United States. It was started in 1979 by a guy who actually was an entrepreneur himself. He had never really intended to become an entrepreneur, but he started a newsletter that became a magazine, and suddenly he found himself in business. He looked around to try and see if there was any magazines around to help people like him and there weren’t.

    The big business magazines were writing about, you know, the conflict between U.S. Steel and the steelworkers’ union, which very little relevance to him. He decided he probably wasn’t alone and he started out, started Inc. Magazine in April of 1979.

    I joined in, actually, January of 1983. It was a very, very exciting time in American business because it was really the birth of the entrepreneurial economy. There was a time previously where it wasn’t considered a compliment to call someone an entrepreneur. It was actually an insult. It was like suggesting that they couldn’t get a real job, so they became an entrepreneur. That was beginning to change in the early 1980’s. A lot of it was changing because of the entrepreneurs like Bill Gates and Steve Jobs and many others. I was just fortunate to wind up in a spot where I could get to know them and their companies when they were very young.

    Jürgen: Yes, well, it certainly was a time where there was a lot of transformation going on. One of the things I think in those days probably the magazine was hard copy and being sent out by subscription.

    Bo: It still is actually, believe it or not. It also has a very lively website, Inc.com. We’re going through the same transformation that all business publications, all publications in fact, have to go through these days to adapt to the new order of things, but we’re doing that.

    Jürgen: Right now my understanding is that you can subscribe to premium content online and access that content online.

    Bo: Well, yes, that’s not the model that Inc. is using. I mean, that’s one model. The other model is sort of an aggregation model where you have so much stuff online that whenever people Google anything having to do with starting a business or running a business, they can’t help but find your website. I’m not sure … but it’s been very successful for Inc. because it’s what advertisers are looking for, and basically we live or die on whether or not we can get the advertising we need to survive.

    Jürgen: So it’s a little bit like the Google model. A little bit like the Google model where Google has real estate to sell advertising.

    Bo: Yes, exactly.

    Jürgen: All right. Then at some point you became, I think, what you called an editor-at-large, which gave you more freedom to write books, is that right?

    Bo: Yes, basically nobody really knows what an editor-at-large is or does. Basically, I say that’s one of the advantages of it. I highly recommend at-large because you can be anywhere doing anything and no one really cares. I was initially, for most of the 1980’s, I was the executive editor at Inc. during that very exciting decade for entrepreneurship. Then in 1990 or 1991, I decided that I wanted to write a book about the most interesting company that I’d seen in the time that I’d been at Inc., and so I resigned as executive editor and became editor-at-large.

    Jürgen: What was that first book?

    Bo: That book was called The Great Game of Business.

    Jürgen: Okay, yes.

    Bo: I wrote it with Jack Stack, who is the pioneer of what is called, in this country, open book management. He is an entrepreneur himself. He was the manager of a factory in Springfield, Missouri in 1982. The factory was owned by International Harvester and International Harvester got into, you know … was one of the seven … well I think the 17th largest company in the world and then it got into all kinds of problems because they had a bitter strike and they piled up a lot of debt. Then interest rates went through the roof and suddenly International Harvester had to sell off and close down things.

    Jack and the 12 other managers at this company decided, you know, there was very high unemployment at the time- it was a deep recession. They decided that maybe they should, for their own protection, put in a bid for the company, which they did. Much to their surprise, the International Harvester accepted their bid.

    Now these were not wealthy people. They were able to sort of scrounge up about $100,000 between them. They then went out and borrowed $8.9 million. They started their business with an 89:1 debt to equity ratio. You know, banks get nervous when people, when companies have more than a 1.5:1 ratio. They were in a very, very tough situation because if anything went wrong, if they missed a payment, the bank would come in and seize the assets and sell them off, and they’d be out of business.

    They decided that the only way they could avoid this terrible fate was to make sure that everybody knew what was going on in the business. The way that you know what’s going on in a business is through its financial statements, so they went out on the shop floor, and we’re talking about, this is a re-manufacturing, which means that they took in dirty old engines, used engines, took them apart, replaced the parts that needed replacing, fixed the ones that could be fixed, saved the ones that could be saved. It’s basically a huge recycling operation.

    The people who work on the shop floor, people with maybe a high school education, and the managers, Jack in particular, went out and said, look, we’re going to, we want to talk to you about business. Business is not nearly as complicated as you think. Forget everything you’ve heard about it. Basically business is a game and like any game in order to play it, you have to get it. In order to get it, three conditions have to exist. Number one, you have to know what the rules are. Number two, you have to get enough information so that you can follow the action and keep score. Number three, you have to care about winning or losing. You need to have a stake in the outcome, so they basically set the entire company up. They put together a bonus system where they were going to play it for a year and every year they had a complicated set of rules, but they were rules that everybody on the shop floor could understand. It was sort of a way as Jack says of tricking them into learning about business. One year they might have as their goal improving the current ratio. Well, most people who work on a shop floor haven’t the faintest idea what a current ratio is or why it’s important, but they learned it in the course of that.

    Today in their first year, they did $16 million and lost about $400,000- that was in 1983. They have not had an unprofitable quarter since then. They are today about $600,000, but that doesn’t include the company that they sold off which would make them a little shy of $1 billion. They consist of not one but 14 different companies, most of which are run by people who have learned about business in the company by playing the great game of business. You have managing directors of some of these companies that they have who started out as, one person started out as a janitor. Somebody else started out as the secretary. A lot of people started out as customer service representatives and they … essentially what Jack did was to turn the entire company into a school, a school for business, and it’s been fabulously successful.

    That was really, we had written about them when I was executive editor at the magazine and I had been fascinated by this and wanted to know more about it, and so I took a book contract to write about it.

    Jürgen: Yes, it certainly is a fascinating story, and I guess it probably led on to one of your other books that I’m thinking of, Small Giants, where you talk a lot about companies that choose not to follow a path of growth at any cost but instead being the best they can be and focused on quality and focused on caring for their own employees as well. It’s like that International Harvester example where they … the employees, they build a stake in the game for the employees so everybody’s …

    Bo: That’s true.

    Jürgen: On the same page. Yes.

    Bo: Yes, you know, the Small Giants came out about 10 years ago and the subtitle of the book is “Companies that choose to be great instead of big”. It doesn’t mean that the companies aren’t growing; they are growing, but they view their growth and their profitability as a byproduct of other things that they’re doing. These are companies that aim to have absolutely stellar customer service and have very close relationships with their customers. They create what I refer to in the book as cultures of intimacy, which are based on the principles that you build a culture around viewing your employees, not just as employees, but as human beings. In other words, you view the totality of the person. That was actually the philosophy of the co-founder of Southwest Airlines, Herb Kelliher. All these companies practice the same thing.

    In addition, they are very, they’re really bulwarks of their communities in which they do business. There are some similarities between them and the mild stat in Germany. Actually we have people in Germany who, and in France and in other countries in Europe, that identify with the small giants paradigm and have adopted it.

    Jürgen: Yes, that’s right because I think in Europe it’s certainly a little bit more than it is here in Australia. There’s still a lot of family-owned companies that haven’t grown into big conglomerates that are doing very well and are probably following this philosophy.

    Bo: That’s right. Yes. We also actually have small giants. You may know that we have an affiliate in Australia that is actually an investment company and borrowed the name Small Giants. We’ve been in touch with them; I’ve met them. We had a summit, a Small Giants summit, in Germany and they came to it, but we have done some, have a very friendly relationship with them.

    Jürgen: Well, okay. I’ll have to look them up.

    Bo: When I say we, I should note that after Small Giants came out, there were a number of companies that came to me saying that they wanted to be in touch with other companies like them but it was hard to find those companies. I said well, you know, if you want to put together something, I’ll support you on it, and they did. They created something called the Small Giants Community, which can be found online at smallgiants.org. You know, there are in fact people from all over the world who are part of it.

    Jürgen: Okay, well we’ll put a link to that underneath the show notes and people can check that out. That’s great. Yes, I heard one of the talks that is on YouTube that you’d given where you talk about Small Giants and you talk about a business with charisma, so talk us through some of the characteristics you are referring to there.

    Bo: Well, I refer to this quality … this actually goes back to when I was first working at Inc. in the early 1980’s, and I had contact with all of these really extraordinary young companies. The best of them, I noticed, had something very special going on with them. It was like you could feel it when you talked to their employees or their customers or when you visited them. It was like they were cool. I didn’t really have a word for it back then.

    In the course of writing Small Giants I came up with a word and I call it mojo. It’s the business equivalent really of charisma. When leaders have charisma, you want to follow them. When businesses have mojo, you want to be associated with them. You want to buy from them and you want to sell to them. You want to wear their t-shirts and caps. If there are articles or books written about them … it’s sort of what you feel when you’re in the presence of greatness in business. That was really a quality that I was looking for when I went out to choose the companies I was going to write about in Small Giants. It’s a little hard to define. It’s sort of like what a Supreme Court Justice once defined pornography as being very hard to define but you know it when you see it. The same thing is true of mojo, which is it’s hard to define, but you know it when you see it.

    Jürgen: Yes.

    Bo: All the companies that I chose, I went to visit them and I talked to their employees, I talked to their customers; I talked to their leaders and they all had this sort of power of attraction. The question I had was where did it come from and how were they able to hold on to it. I decided to answer that question by looking at the qualities that they had in common and they things that they did that were similar. I came up with six.

    The first was that these were all companies that were led by people who had a very clear understanding of who they were, what they wanted and why. They couldn’t have made the decisions that they made if they had that knowledge, that self knowledge, because usually the decisions that they were making everybody was telling them that they were crazy, you know. People would say you’ve got a tremendous business opportunity here or you’ve got this tremendous offer on the table from a big company to acquire you and you’re crazy if you don’t take it. They would say no, this is not what I want to do. They would actually turn away from the opportunity if it didn’t fit in with their personal goals, the reason why they were in business.

    The second quality really had to do with those communities in which they did business. What was remarkable was that it wasn’t just they gave back a lot to these communities, although they did give back a lot to the communities. It was also that the communities sort of molded the personalities of the business to the point where it was very hard to imagine them being any place else.

    An example is the company that really started the whole craft beer revolution in the United States, which is Anchor Brewing. Before Anchorstein beer came out in the mid-1970’s, I should say the re-invented Anchorstein beer, there really were no craft brews in the United States. Now of course there are thousands and thousands. Anchor Brewing is still going strong, has new ownership, but it’s still going strong. It’s a fixture, it’s sort of … if you ever come to San Francisco, anybody comes to San Francisco, they should go and take a tour of Anchor Brewing because it’s a company that was started during the gold rush. It’s been through all the fires and earthquakes and everything. It’s a part of San Francisco history. You can have great craft breweries elsewhere, but there’s only one Anchor Brewing, and that’s in San Francisco. It’s part of San Francisco, and that’s something that I found with all of these companies that I wrote about.

    The third characteristic had to do with their relationship with their customers. What struck me was how personal they were. Even if they had thousands and thousands of companies, they went out of their way to establish personal connections with those customers in terms of the kinds of events that they sponsored, the kinds of ways that they dealt with their customers.

    One of the companies that I wrote about was a record label in Buffalo, New York that was started by a singer/songwriter named Ani DiFranco. She has hundreds of thousands of fans all over the world. A lot of them would write into her company, Righteous Babe Records. Every single person who wrote to Righteous Babe Records would get a handwritten reply back, not from DiFranco of course, but from people they hired. That was because they wanted to make sure that they had this close, intimate contact, personal contact, with their customers.

    Given that, the fourth characteristic is a little surprising. Namely, that for most of these companies the customers came second. It was the employees that came first. You know, when you think about it, it makes sense because after a company gets above a certain size, it’s no longer the person at the top who is interacting with customers and suppliers every day. It’s the employees. If you really want to provide great service to your customers, it’s important that those employees share the passion for the business that you have. The only way that’s going to happen is if they feel that they are really intimately a part of that business. That’s what I was talking about before in terms of these cultures of intimacy that I write about in Small Giants.

    The fifth characteristic has to do with the way that the leaders of these businesses feel about what their companies do. They are just totally crazy about it- they love it. It’s not just their company they love, it’s what their companies do that they love. One of the companies in the book is a company that was started probably by the best known restaurateur in the United States, a fellow named Danny Meyer. His first two restaurants in New York, Union Square Café and Gramercy Tavern have for the last 15 years been the number one and two most popular restaurants in New York. He promotes something that he calls “enlightened hospitality”. What he means by that is something that goes way beyond customer service. It’s about making somebody who comes to visit you feel as though they are the guests in the home of someone they don’t know very well but who is really, really happy to see them.

    I asked Danny what was this passion of his for hospitality and he said, you know, I’ve thought about that myself and I’ve realized at a certain point that I have this sort of intense, almost neurotic pleasure that I get out of seeing people have a good time. You know, that’s just what turns me on. That’s really the secret to his business.

    There’s a sixth characteristic which unfortunately I didn’t identify until actually the first edition of the book came out. We’ve got a second edition, a 10 year anniversary edition that’s coming out next year. It has to do with the financial structure of the small giant. In order to do all these wonderful things, there’s one condition, and that is you have to be in business. Unfortunately, two of the companies in the book, one of them came very close, literally, during the recession, came very, very close to going out of business. They managed to survive and they’re stronger than every today. Another company, Rhythm and Hues, which is a computer special effects company, did in fact go bankrupt.

    They are a company, if you’ve ever seen the Chronicles of Narnia or you remember the movie Babe. If you saw the Life of Pi, all of those animals … the tiger in Life of Pi is a … it looks totally real, but it’s a computer special effect. Rhythm and Hues created it and won the Academy Award for it in 2013. Unfortunately, that was 13 days after they’d filed for bankruptcy.

    I came up with a rule that said to be a small giant there are three financial conditions. Number one, you have to have steady gross margins that you protect. Number two, you need to have a sound business model. Number three, you have to have a healthy balance sheet. If you have those three conditions, then you can do all these other wonderful things that small giants do. That’s what I concluded their mojo came from, from doing all of those things.

    Jürgen: Okay, that’s certainly pretty comprehensive. Some of the examples you talk about in a couple of presentations that I saw you compare the very early days of an Apple or a Microsoft to those sort of companies. Of course they’ve gone on to become big giants.

    Bo: Right. They have. I don’t mean to imply that in order to be a great company you have to be small. My point with Small Giants, because there are obviously great large companies. My point with Small Giants is that being big and being great are two totally different things.

    Jürgen: That’s right. Yes.

    Bo: They don’t really have much to do with each other. You can be a very large company and huge, multinational and be a terrible business. They have a terrible effect, but you can also be a large business and be a great business. Same is true of small companies. The point is – that it’s important, it’s easy when you’re building a company to get caught up in the idea that the whole process is about getting as big as you can as fast as you can. Basically what I’m urging people is to wait, stop a minute. If you want to have a great company, think about what you believe it is that makes a company great.

    Different people will have different answers to that question, and that’s fine, but it’s very important when you’re building a company to think about what it means to you to have a great company.

    Jürgen: Yes, it’s kind of building the culture of the company around your values and your goals and ambitions and what you like to do, and then bringing people on board rather than growth for the sake of growth.

    Bo: Yes, absolutely.

    Jürgen: If you get the culture right and you can then go on a path of growth, it usually is much more sustainable.

    Bo: Right. That’s true.

    Jürgen: Tell us a little bit about Finish Big then, which I think is your latest book

    Bo: Yes. Finish Big, the subtitle of Finish Big is “How great entrepreneurs exit their companies on top”. It is about leaving your business. In some ways, it’s sort of a sequel to Small Giants.

    Jürgen: That’s right. That’s true. Seems like a logical progression.

    Bo: Well, one thing was when I went out talking about Small giants, I was constantly being asked, well these seem like great companies. It sounds like they’re being led by very charismatic people, what happens when those people left? I thought, well, gee, that’s a very good question.

    The other thing was that I began to … I do a regular column in Inc. Magazine, with actually one of the entrepreneurs who’s in Small Giants, fellow named Norm Bronsky-very successful entrepreneur. He sold his company and we wrote about it on a monthly basis about the whole process that he went through in selling his company. We wrote about it in Inc. It got just a huge response from our readers who sort of couldn’t wait to hear what the next episode was going to bring. I realized through that that there was this great curiosity about what is it like to go through an exit? What is it like to go through this transition? When you think about it, every entrepreneur exits their company. They may exit feet first, but they are going to exit. Every company either gets sold or liquidated. You may sell it to your employees. You may sell it to somebody in your family, but sooner or later, it’s going to be passed on or liquidated.

    I did some research to find out what there was out there about this whole transition process, and I quickly realized that there was almost nothing. Everything … I mean, if you Google starting a business, you get something like, I think it’s like 1.8 billion hits. If you Google exiting a business, you get something like 27 million hits, and almost everything is about how to make sure that you sell your company for the most money. That’s certainly a good thing to sell your company for as much money as you can, if that’s what you want. But in fact, the money part is really not the most important part.

    What I found that, I went out and when I started working on this, I went out and I interviewed- because I knew very little about it- I went out and interviewed as many people who had been through this. I probably did somewhere between 100-150 interviews with people who had been through this process. What I found was that about half of them were reasonably happy afterwards at the end of the day, and about half of them were totally miserable. They regretted having sold their businesses. They didn’t know who they were anymore. They had no purpose in their lives. They were depressed. When I sat down to write Finish Big, I decided that okay, I’m going to write about what is the difference between the ones who wind up happy and the ones who wind up really so unhappy. One of the things I realized was that the whole process of leaving your business is that the money part of it is certainly important, but that it probably only constitutes about 20-30% of how you’re going to feel afterwards. The other 70-80% is really emotional.

    I came up with seven factors, but there were a lot of things that really sort of forced me, it challenged me to re-think a lot of the ways that I looked at a business. I realized that we have the wrong idea about building a business. We tend to think of it as a project like building a house or building a boat or something like that. I realized that in fact when you build a business, it’s a journey. Like every journey, it has a beginning, a middle and an end. The end is not when you build a company- that’s the middle. The end is when you leave that company.

    When you start to think of a business that way, it changes the way you think about what you’re doing. Another thing that I really discovered was that most of us think of the exit as an event, something that happens at the end of the journey. What I realized was that it’s not an event. It’s a phase of the business. You have this start up phase. You have the growth phase. You have the mature phase and you have an exit phase and that there are in fact four stages to it.

    The first stage is educational. It’s where you find out what’s involved, what the possibilities are, what it takes to make sure that your whole journey is going to be a happy one.

    The second stage is strategic. That’s when you build into your company the kind of qualities that are going to allow you to have the options you want at the end.

    The third stage is the execution stage. That’s when you call up a broker, investment banker and you actually go out and try and find potential buyers, or maybe you decide to sell to an Aesop and you get somebody to help you with that or whatever. Unfortunately, that’s the stage that most people start at, and their chances of having an unhappy exit are much greater, much, much greater if you start there rather than at the first two stages.

    Then there’s the fourth stage, which is the one everybody forgets about, but is in many ways the most important one, which actually comes after the deal. It’s okay, now what? It’s particularly unfortunate for people who have been so focused on getting the best possible deal that they’ve never thought about what’s going to happen afterwards, and they suddenly get there and they’re lost. I found that with lots and lots of people who I talk to.

    It was interesting because, you know, I talked to one person who had sold his company because he was sort of getting bored with it and he felt guilty about urging his employees to be focused on the business when he himself was having a very hard time focusing on it, so he sold the business. He wound up in this situation. It wound up taking him 15 years to really figure out what had happened and how to go on. He just sort of drifted during that time. Finally one of his daughters suggested that he try teaching, and he decided to go back to school and he got his PhD in, I think it was in business. He wrote his dissertation on the experiences of company owners when they leave a business.

    Jürgen: Yes, it’s very personal.

    Bo: Through that he figured out a lot of things about himself, including the fact he wasn’t alone. One of the things that I realized when I looked at the people who were really happy … the people who were unhappy, you think about it you can see what they’re missing. You realize that there are a lot of things that people get out of running a business that they’re not really aware of until they don’t have them anymore. One is their sense of purpose.

    Another is their identity. A lot of people told me that the question they hate most after they’ve sold their business is somebody asked them what they do, and they don’t know how to answer. You have a tribe, the people you show up and spend time with everyday. There’s a sense of accomplishment. One of the things about business is it has this report card on how you’re doing and you can see yourself making progress. A sense of structure- business sort of tells you what you have to do next. When you suddenly wind up in a situation where you have none of these things, it can be extremely disorienting.

    Jürgen: Basically.

    Bo: It’s also true that the people I found who had had the best exits and who really did finish big, many of them, I shouldn’t say they all, many o f them had something in common. It was very interesting. After they had sold their business, they were spending a large amount of time helping young entrepreneurs. They would … some of them were counseling entrepreneurs about how to exit their businesses. Some were counseling entrepreneurs about how to build their businesses. You know, some of them were engaged in, were doing angel investing and were engaged in building local economies.

    I realized that at least for these people what had happened was that when they were in business, the one thing that happens, it doesn’t happen for everybody, but it happens for a lot of people, which is one of the great things about business is that you really are in service. At the very least, you’re in service to your customers. If you weren’t, you wouldn’t stay in business. Very likely you’re in service to your family. A lot of people are in service to their employees and to their community. What I found was that the happiest entrepreneurs I met afterwards were people who had figured out how to remain in service at a higher level. Really when you think about it that way it’s … I think it helps to … what do you mean when people ask you what’s your purpose? They’re really asking you who are you serving. It helps to have an answer to that question.

    Jürgen: That’s right. Well, you talked earlier when we were discussing Small Giants about the characteristics of some of these really strong companies that have that Small Giant kind of attitude. One of the things there was clarity of purpose and why that drove people, and then communicating that to other people. You sell your business and you don’t have what’s the purpose of the next stage that that’s taking away one of those big things, isn’t it? It’s kind of like all of a sudden one of the core needs is not being met unless you figure out a way after making that transition, it’s probably going to be a bit of an unhappy experience.

    Bo: Very true. Absolutely.

    Jürgen: All right. Well, this has been absolutely fascinating, Bo. For the audience listening, I can only recommend that you go and read, get a copy of Small Giants. Get a copy of Finish Big and read those two because they are really fascinating insights into what makes a small company that chooses a path of greatness tick and what are the characteristics that Bo has outlined for us. It tells a lot of stories about different companies and some of the innovative things that they’ve done to bring about that whole culture of greatness. Likewise with Finish Big, there’s a lot of good stories there.

    Bo: That’s great, Jürgen. I will say that if people want to, they can go to my website, which is just boburlingham.com. They can get a free chapter. If they go to boburlingham.com, they can get a free chapter of Finish Big and decide if they really want to read the whole thing.

    Jürgen: Yes, that’s a great idea. We’ll post a link to that under the show notes as well.

    Bo: Great.

    Jürgen: I think it’s time we move on to our Buzz as we call it where our innovation round, which is designed to help our audience. Our audience are primarily innovators and leaders in their field, and we love to give them tips from the experiences of people that we’re interviewing. I’m going to ask you a series of five questions and hopefully, you’re going to have a really insightful answer that’s going to inspire our audience and help them do something awesome.

    Bo: Terrific.

    Jürgen: First one is what’s the number one thing anyone needs to do to be more innovative?

    Bo: The number one thing is to be curious.

    Jürgen: Curious. Yes.

    Bo: To be curious and to have your eyes open, and to be hungry for ideas. Ideas pop up in the most unlikely places, and curious people find out about them.

    Jürgen: Pursue them. That’s right.

    Bo: Of all places.

    Jürgen: Yes, I think that’s one of my favorite answers to that question- be curious. What’s the best thing you’ve done to develop new ideas?

    Bo: Just keep my eyes open and pay attention to what I find interesting. Sometimes I don’t know why I find it interesting, but I just … you know, I’m lucky because I’m in a position where I get to meet and interview a lot of very, very interesting people. They don’t fail, they never fail to spark something in me. That’s what I do.

    Jürgen: Okay. That’s great. Keeping your eyes open. Pay attention to what you find interesting and speaking to lots of interesting people.
    Do you have a favorite tool or system that helps you to be more innovative?

    Bo: Well, I don’t think so. I mean, since it’s mainly people who are helping me to be more innovative, I suppose you could say that a telephone is my favorite tool as well as a tape recorder. I really do look for inspiration outside me because I think that what’s outside me is a hell of a lot more interesting than what’s inside me.

    Jürgen: All right. That’s great. Based on your experience or based on the companies or people you’ve interviewed, what do you think is the best way to keep a project on track?

    Bo: Well, you know, you’re talking to somebody who has spent his entire adult life going from one deadline to another. A lot of times I have to admit that I have not been very good at keeping my projects on track. Finish Big was supposed to take me two years and it wound up taking me five years, so I’m probably not the best person to ask that question. Ultimately it comes down to two things- it comes down to instinct and judgement. Well, I should say three things-discipline, instinct and judgement. There are times after all when a project gets off track, and it’s okay. The trick is to know when it’s okay versus when it isn’t okay. If I had actually tried to write Finish Big in two years, I doubt if I’d be on this show talking to you. I don’t know if that’s helpful to people, but …

    Jürgen: No, it’s good, really I think what you’re saying there is that there might be some quality considerations there that are more important than meeting a deadline.

    Bo: Sometimes. There’s an old saying in the writing business “don’t get it right; get it done.” I’ve never been very good at that although I respect people who are able to follow that dictum. Ultimately when you write a book, that’s the, or when you write an article, frankly, a long article, it’s a question of having the discipline to sit down and do it. You just keep doing it and you make progress as best you can, and sooner or later you get there.

    Jürgen: Okay. What do you think is the number one thing anyone can do to differentiate themselves?

    Bo: Well, you know, people are different. It’s a question of finding something that you are really passionate about and then being the best in the world at it. I’m a big fan of Jim Collins, and you know in Good to Great he has the hedgehog principal where you find something that you’re really interested in and that’s important- something that you can be the best in the world at and something that you can make money at. If you find the intersection of those three things, then you’ve found something very valuable.

    Jürgen: Yes, that’s a great analogy, isn’t it?
    All right, so what’s the future for you then? Is there another book in the wings?

    Bo: There probably is, but actually I should mention that as I think I might have mentioned earlier, is that right now I’m working on a new 10th anniversary edition of Small Giants, which will include some revision of the chapters and two new chapters, including one chapter on the financial structure. It’s basically a chapter about how small giants die. The idea being to help people understand how they can avoid dying. In another chapter, which is about what’s happened to all the companies since then.

    Jürgen: Since the first …

    Bo: Since the book. But, you know, when you write a book and you do a profile of a company or you write about a company, it’s a moment in time.

    Jürgen: That’s right. Yes.

    Bo: You stop and things change and things have changed with all the companies and often in very interesting ways, so that’s what I’ll be writing about.

    Jürgen: Okay, well, we look forward to that. That sounds fascinating. All right. Well, this has been tremendous. Thanks, Bo. What would you say the number one piece of advice you’d give got any business owner that wants to be a leader in their field and a leader in innovation?

    Bo: I’ve come to believe that the most important quality in business is that one that I mentioned first when I was talking about the small giants, namely knowing who you are, what you want and why. That’s not something that you figure out that you decide to take a weekend and figure it out. That’s something most of us spend all of our lives doing. It’s the most important quality because it allows you to make good decisions, by which I mean, decisions that you’re going to be happy with while you’re running your company. Whether those decisions have to do with innovations or anything else.

    Jürgen: That’s right. Yes, I mean, if you’ve got clarity of purpose, that’s always core to everything you do, then not only do you make quick decisions because you know immediately if that’s congruent with your purpose and congruent with your values. Also they’re likely to be good decisions, aren’t they?

    Bo: Yes, they are. I would emphasize that the tricky question there is the why question. It’s very easy to sort of kid yourself about who you are and what you want. My friend Norm Brodsky when he was a young entrepreneur, he wanted one thing which was to build a company that did $100 million in sales. If you asked him why he wanted to do that, he couldn’t have told you. He just wanted it. It was going to be cool if he could do it. Today, it’s more like $1 billion in sales, and people don’t know why they want to do it. In order to discipline yourself, you have to ask, well, okay, why do you want to do that?

    Jürgen: That’s right. Yes. And I’m reminded, I’ve just reread Simon Sinek’s book Start With Why which has the very same premise.

    Bo: Yes.

    Jürgen: All right. Well, Bo, this has been absolutely fascinating, so thank you very much for all you’ve shared with us today. Where can people reach out to you and say thank you?

    Bo: Well, the best thing is to go to my website, boburlingham.com, and you can reach me through the website.

    Jürgen: Okay. We’ll post that link on the show notes as well.

    Bo: Very good.

    Jürgen: Finally, who else would you like to see me interview on this podcast and why? That is the why question.

    Bo: I take it that you’ve already interviewed John Warrilow.

    Jürgen: Yes, I have.

    Bo: Who I would otherwise recommend heartily.

    Jürgen: Yes, John was a great guest. Yes.

    Bo: There are some great people out there. There’s my co-author, Norm Brodsky, Jack Stack, who I talked about earlier, who is a pioneer of Open Book Management. Ari Weinzweig or Paul Saginaw at Zingerman’s, which is the company that really started me looking at Small Giants. There’s one of the people I write about in both Small Giants and Finish Big is a fellow named Martin Babinec who built a very successful now public company called Trinet. He has embarked since his transition out of Trinet, he is trying to transform the economy of the entire upstate New York, which is a very large area. He’s doing some extremely innovative things to do that. He’d be a very interesting choice.

    Jürgen: Okay, well, that’s given me a whole list of names here, five I think I’ve noted down. Norm, Jack, Ari, Paul, Martin, we’ll be in touch with you to get you onto the InnovaBuzz Podcast courtesy of Bo Bullingham.

    Bo: Okay, great.

    Jürgen: Bo, thank you so much again for sharing your times and your insights with us today on the InnovaBuzz Podcast. You’ve been very generous, and I’ve enjoyed this immensely. I’ve also learned a lot more about the background of the books, and I’d certainly encourage people to go and check out that free chapter. We’ll post a link to that, and if you like what you read there, buy the book. It’s available on Amazon. It’s available as an e-book. I think I’ve read one of them as an e-book. It’s certainly well worth a read. Bo, I wish you all the best for the future. I look forward to that 10 year anniversary edition of Small Giants, Great Companies. Let’s keep in touch.

    Bo: Very good, Jürgen. Thank you very much.

    Jürgen: Thank you.

    Bo: Bye-bye.

    Jürgen: Bye.

    Outro

    Well I hope you enjoyed meeting Bo as much as I enjoyed interviewing him.  He’s definitely a very interesting person and, as he said on the interview, something that can help us all be more innovative is speaking to and learning from interesting people.  I certainly did that today and I hope you did too!

    All the show notes for this episode will be at innovabiz.com.au/boburlingham, that is B-O-B-U-R-L-I-N-G-H-A-M, all lowercase, all one word, innovabiz.com.au/boburlingham, for all of the links and everything we spoke about in this episode .

    Bo suggested five ! people for me to interview on future InnovaBuzz podcasts – Norm Brodsky (Street Smarts columnist and senior contributing editor to Inc Magazine), Jack Stack (CEO of SRC Holdings), Ari Weinzweig and Paul Saginaw (cofounders of Zingerman’s gourmet food company which has grown to Zingerman’s Community of Businesses), Martin Babinec (Founder of TriNet group).  So…… Norm, Jack, Ari, Paul and Martin – keep your eye on your Inbox for an invitation from me, for the Innovabuzz Podcast, courtesy of Bo Burlingham!

    Thank you for listening to the InnovaBuzz podcast.  We’d love you to review this podcast, because reviews help us get found and your feedback helps us improve.  You can review us at iTunes or Stitcher and while you’re there, please subscribe so you’ll never miss a future episode.

    Until next time, I’m Jürgen Strauss from Innovabiz.

    Remember, if you don’t innovate, you stagnate, so think big, be adventurous and keep innovating!

    Listen to the Podcast