Jeff Dewing
Hi, and welcome to Doing the Opposite, Business Disruptors. The podcast where you get to meet people who aren't afraid to stand up and call out bad practice or injustice. People who own their mistakes, thrive off challenges and who ultimately choose only to see the summit and not the mountain. I'm Jeff Dewing. I'm an entrepreneur, the author of bestselling book, Doing the Opposite, and a keynote and masterclass speaker.
Today, you're gonna meet Brendan McGurgan. Brendan is an Executive Coach and he's immersed in the world of scale-ups. And this is following his 16 years in manufacturing for the company called CDE. Whilst he was in the role of Group MD, he steered his business through the financial crisis of 2008 and scaled the business at the same time.
This resulted in him opening offices across six continents and employing almost 700 people. Brendan is an avid spokesman and an advocate of self-leadership through good wellbeing.
Jeff Dewing
So hi, Brendan, thank you so much for joining us today. Obviously we know each other of old and it's great to get you on the show because I really wanna get under the skin of what makes Brendan who he is. So thank you for joining me!
Brendan McGurgan
You're very welcome, delighted to be on the show, Jeff.
Jeff Dewing
So Brendan, let's just set the scene for the audience. Let's just sort of give a quick two minute overview of Brendan, your journey and what's got you to what you do today.
Brendan McGurgan
Okay, the two minutes. So I grew up on Northern Ireland in the 70s and 80s during the Troubles. I am the middle of five, so my siblings always ribbed me that I'm well balanced, have a chip on both shoulders! So I, as it was normal back then, my mother and father aren't educated, and education was seen as the passport out of the Troubles. So myself and all the siblings included were all educated to university degree level and beyond.
I qualified as a chartered accountant, went straight into Coopers and Lybrands purely because when I was growing up, my dad was a bookkeeper. Actually, he left school at 16. He was the oldest in the family. His dad had died. And so he had to go and get a job and he got a job as an admin, kind of an office boy and made his way up to heading up the finance function for a local car dealership. So I used to help him when he brought home the big ledgers and he would call out the numbers, let me use the big calculator. And he says, he would always tell me someday, ‘Son, you'll be a chartered accountant’. I said, ‘whatever dad just call me out more numbers’. So that was, that was the route into becoming a chartered accountant. I had no idea what it was qualified through Coopers. And as soon as I qualified, I used it as a passport to get into business.
So, literally within months of qualifying after three and a half year contract apprenticeship, I came out and went into a software company, headed up the finance function of a software company during the dot com boom. And with every good boom, there's a bust. And I was approached by a recruiter that I had used for the software company said, ‘would you go and have a chat with this guy out in mid-Ulster, he's founded a small engineering company, has great ambition for it, and is keen to have a chat’. I had a chat. At that stage the company was turned over by three or 4 million, had about 15 people. And the founder did indeed have great ambition. He loved the product development, qualified mechanical engineer himself, loved the product development, loved the business development, but didn't like all of the other bits in between. So he didn't really want to manage the company, but wanted to, I suppose, focus on his unique ability. I committed the business as finance director and within a number of years, I became the CEO. And through my tenure, I was in the company for 17 years, through my tenure there, 12 as CEO. We scaled the company from that 15 people to almost 700. We set up offices in six continents. We exported from Ireland to more than 100 countries. And we scaled our revenues to almost 100 million annually. So it was an incredible journey. You can stop me at any stage and dig in as deep as you wish! I left then, retired from the business back in 2020, inspired, and we can get into more of this, but inspired to support SME companies to scale because what I learned on leaving the business was less than 1% of SMEs ever achieve scale! And whenever I was caught in the bubble of CDE and the role that I was in, I thought everybody was doing this! As it turns out, it's actually the stats currently released in the UK. It's much less than 1%. It's actually a half a percent. It's 28,000 companies out of 5.6 million SMEs are actually achieving scale. So inspired to really get under the skin of what's undergirded our own success. What was it that defined our success? What were the patterns in our success? Whenever I came to the CEO role, Jeff, I had no CEO experience. You don't go to CEO scaling school. Scaling actually wasn't even a thing back then. It wasn't in our business lexicon. But we were just innately wired to grow. I became a shareholder of the business. And one of the very first things I did as CEO was actually take the founder and one of the other shareholders into a small country hotel, just local to us. And we spent an afternoon aligning on a respective vision for, for the company in terms of what, what would great look like.
But in that role, there's lots of things that are thrown at you in terms of what you should be doing, having a vision, you know, what's your mission? What's your strategy? What are values? You know, all of these things that you hear and read about, but actually in the context of an SME, what relevance do they have? And I read a lot and I would have tortured anyone who was further down the road than we were in their own journey in terms of their growth journey. And leaned on whatever advice I could get. Having retired from the business, I was inspired along with my co-author to actually define the principles that undergird scaling success to support those SMEs who have a desire to scale. And essentially we created the ScaleX 10 principle framework, which essentially is an integrated roadmap to support SMEs to scale.
Jeff Dewing
Thank you for that. That's really set the scene nicely on your journey.
The thing that I'm curious about is that journey, as good as it is – brilliant! It seems too easy. So let's go back to when you were first asked to join the business with a guy that was very ambitious from a ‘on-the-tools’ environment. He was obviously passionate about his products, his engineering, and he decided there's things I don't like and things I'm not good at. I wanna bring somebody in.
Now typically when you're a small business or a small business man or an entrepreneur that's just starting out or you've never scaled, you've never had a big business, somebody coming in with a load of fluff about purpose and values and they go, ‘look, just get the guys to do the work. If they work 40 hours, then tell them they should be working 42’. Tell me the challenges you had to try and get a typical owner, which is an SME owner with an owner mindset, because they've never experienced this scale process, how did you get them on that journey? Because that couldn't have been easy. There must have been some challenges in aligning thinking.
Brendan McGurgan
Yeah, when you come into a business, first off, you've got to prove yourself. I came in as finance director. So the first thing I had to resolve was the overdraft and the fact that we were running out of cash. So ‘purpose’ wasn't in my lexicon then believe me, Jeff, ‘vision’ wasn't in my lexicon. I just was innately wired to grow and, but very practical. So I approached it infact as ‘I'm getting well paid here. I need to tangibly pay for myself and demonstrate how I'm paying for myself very, very quickly’. And there were a number of things that we did accessing grant support, for example, locally to help us develop export markets, help us on product development. So tangibly, he was, he was able to see very quickly that, that I was paying for myself. I remember having a meeting very quickly with the, bank manager as the newly appointed FD. And a week later I was contacting him to say, can we extend our overdraft? He in turn rang the founder and said, ‘who is this guy? He's owning in and already he's extending the overdraft’. I had learned from my experience in the software industry that ultimately ‘sales is vanity, profit's sanity and cash is reality’. And as cliche as that is, I was doing cashflow statements every second day for venture capitalists who were calling me every second day to say, ‘what's our cash headroom? What's our burn rate’? I knew the importance that cash played within a scaling business. Essentially, it's the oxygen by which scaling businesses survive. Once I had agreed on that overdraft, we navigated out of that within three or four months and never in our history went back into it again. In fact, prior to leaving, we acquired a 300,000 square foot factory from Caterpillar, who had located in Belfast and were then leaving Belfast, and built 40,000 square foot of new offices in mid-Ulster. That was largely paid for from cash. We became, through that journey, very cash conscious and cash rich.
The articulation of vision only came a number of years later, whenever I became, when I came into the CEO role and I've always had a desire to understand what the future might look like. I've always, I've always informed what I do by the future that I want to create. And I've got language around that now, of course, having spoken to some of the best brains on the planet, having read a lot over the last 10 years. I've a lot of language around this, but I didn't then, but what I always was inspired by were people who had a sense of what they wanted to create in the future and did that align to the future that I wanted for myself. So that first conversation with the guys about vision was a very a very practical one, very relatable one, simply saying, ‘guys, I would love for us to grow this business. This is what it could look like. I would love us to become number one in our industry. This is what it could look like. Does that align with what you would like for the business’?
So it was a conversation where we were getting alignment in what we wanted the future to look like, independently and collectively.
Jeff Dewing
I remember going through with some of my colleagues, business partners, C-suite, saying, ‘I've got this idea, this vision, you know, this is what I think we should do, what we could do’. And you get responses like, ‘no, don't waste your time on that, let's just maximise profit.
Let's just focus on profit. Let's sell it as hard as we can, buy it as cheap as we can. Let's forget volume, let's forget brand, let's forget all that fluff stuff, let's just make as much profit as we can in the short space of time’. And I said, ‘well, where does that end up’? So the point I was asking you was because for me, it's been very tough. You've got people that don't think in an entrepreneurial way. They're a different mindset. They're a very straightforward… employ people if they don't impress you by day five, sack them or whatever. You know, it's very, very draconian because that was the way we was all wired. That was the way we believed it should be. Command and control was about authority and carrot and stick. And and it was humiliation. It was all these things that we thought got the best out of people that we were clearly getting wrong. So I guess… what experiences, if any, did you have on that journey or was you lucky enough that because you went on that slow journey, you built your own credibility first as FD, which meant you got their attention when you did start saying these things?
Brendan McGurgan
Absolutely. So for a number of years, I was compiling the accounts. I was examining the accounts. I was digging into the accounts. I would hear that margin should have been, you know, let's say 30% on a project. But actually, by the time I'd completed the accounts, the margins looked more like 17%. So that then triggered and was the catalyst for conversations within the business. So all of a sudden you have your head stuck in the middle of what's happening in sales and how projects are priced, for example. And then you start to discern that actually, well, you've only included 80% of the true costs of completing that project. And somebody said, ‘oh, well, I was able to do the project for this and this and this, you know’, and I say, ‘yeah, the difference is that you were you were doing that, you were arriving to the warehouse on a Saturday, putting the tools in the van, going down, installing the plant, commissioning the plant and you're not charging yourself for your own time. We're now at a stage where now we're contracting that in and that needs to be accounted for. The notion that you had a 30% margin three years ago when you were doing a lot of this yourself, it's very different now when we have a team of people that we need to cost into the job’.
So you engage people with the conversation. I remember even hosting a little class, a little workshop to explain the difference to our leadership team or small management team at that stage, the difference between margin and markup. People didn't understand, you know. So getting into the nuts and bolts of how to price a job correctly and accurately. And then seeing it delivered and whenever it was delivered, you come back and say, ‘guys, we had everything accounted for, but actually the margin is now this, it should have been that plus another 7%. So where did we lose it’? So then your head's stuck in operations. And this is the privilege that actually the numbers give you. That having an innate understanding of the numbers, they are a journey and exploration into every corner of the business. And I think it's no accident that a lot of FDs end up in CEO positions, because ultimately if they're curious enough to want to know why things are as they are, then they're going to find themselves in every corner of the business, asking lots of questions.
Making a nuisance of themselves, but trying to support those teams of people to actually achieve better performance. So that was a journey of absolutely gaining credibility initially, Jeff. And then you arrive into a point where you call them one day and the founder says, look, I'd like you to be the CEO of this business.
Jeff Dewing
Which is good because you've already built that confidence and that trust, right? So therefore you're going to get more latitude in your, let's say, elevated thinking, we'll say as an example!
Coming back to what you just said there, what was really interesting was that when we were in our very young stage of our business - year one. My business partners and I basically said we will take almost no salary to give this business a fighting chance. And we was in a position that we could do that. At the end of the first year we'd done our accounts, we went, ‘my God, look at how much profit we've made’. And they go, ‘this is great business’. And I stood up - bear in mind, I'm not financially trained in any way, shape or form, but I've obviously learned a lot of stuff on my way. And I went, ‘yeah, but if you included our salaries, we've made a loss’. Right? And they went, ‘yeah, but we haven't’. I said, yeah, ‘but you have to do, because you're not gonna continue doing this for the rest of your life, are you? You've got to put in a salary to actually truly measure what your performance is, what your margins are’.
It took me about three weeks to get them to understand that principle, which was not to attack on them. It was the general belief. It's like when people go to an ATM and they put their card in and they say, ‘I've only got 1500 quid’. So they phone the company and say, you've underpaid me. I don't think we have. I've only got 1500 quid. I should have more than that. Well, how much more? I don't know. Really? In my day, you looked at your pay slip that showed your gross salary, less your tax, less your national insurance, and the net pay was the net pay, and that's what went into your bank account.
But people have just, I don't know what it is, we've lost our way because of, I don't know, a lack of education maybe, I don't know.
Brendan McGurgan
Yeah, it's interesting, funnily enough I was having this conversation with my 20 year old daughter at the weekend about becoming more financially literate. And on one hand as a parent, you want to support your kids in whatever way you can. But on the other hand, it's so critically important that they learn hard lessons about how to budget. I literally sat down with my daughter at the weekend with a budgeting statement.
We sat down and we said, ‘right, okay, she's got a part-time job at university. What's going to be your income now for many hours’? You're going to work over the next four weeks. She's conscious of having money for Christmas. And, uh, so these are the number of hours I'm going to work. I will. What are your expenses in terms of going to work, uh, going to university? What nights you plan to go out? All of that, those good things. And I was conscious that I hadn't done that before. And I think there needs to be an understanding that certainly your kids don't waken up at 18 becoming financially literate if you haven't actually coached them along the way to become that. And similarly with cultures within business, we had to coach financial literacy within the business because there was often a mismatch between what the designers thought, the design engineers thought something cost and what it actually cost. And until you actually sit down and engage them in a conversation to say, ‘guys, did you realize just the lattice frame that you've designed there for that conveyor is X amount versus why is it that way’? ‘Oh, we didn't know that’. And so we embedded this financial literacy into the business, this understanding of margins and the reality - back to something you said earlier - we became incredibly profitable. We became number one in our industry. So the results were supporting, I suppose, the credibility that myself and the leadership team were gaining. So when you get that, then people are more willing to listen because ultimately the results are there to demonstrate that what you're doing must be the right approach.
Jeff Dewing
I'll never forget… again, going back through my days as an engineer and then obviously having a business employed 200 engineers. One of the biggest challenges that was faced and I used to be one of those people, which is why I understand it so well, but, and you might be paid £15 an hour as an engineer, but you know your company's selling you at £40 an hour. And your immediate reaction is ‘look how much money they're making on every hour I work and they're telling me I can’t have a pay rise’. So the first thing we did, because I used to believe that myself because I knew no different, right? We didn't know. So one of the things we did with all of our engineers from the very onsite, we did it every six months, all newcomers got went through it. And we basically drew out the fact that, ‘right, we pay you 15 pound an hour, we sell you at 40 pound an hour. So that would suggest that there is a 25 pound gap that says we're pocketing and I'm going on holiday with it. So I just want to take you through a journey. So you're 15 pound. On top of that, we've got employers national insurance. On top of that, we've got your pension. On top of that, we've got your vehicle, your fuel, your tools, your overhead, your sick days that you take off, your holidays you take off. And we actually take them through a step process with the cost to establish that they actually cost us £37.25 as a business. So although you're getting 15, you're actually costing all your own costs come to 37 quid, which means we are making £2.50 per hour providing you're 100% productive. If you're only 50% productive, we're making a loss on every hour you work.
And what that does is that completely changed the attitude of every single engineer, because it was something they never understood or knew, and they was getting up every day, annoyed, anxious, frustrated, and it was just a lack of knowledge! So no one ever done that to me or us or the people in the community I was in when I was at work. So I went through years of feeling angry. Feeling upset and especially when you come to pay rise time and you've got inflation going on and God knows what. So what that done was that brought a lot of peace to the people that now understood it and a lot of appreciation for the fact that even when they're not 100% productive, we're supporting them.
Brendan McGurgan
That resonates so strongly and perception is everything. So it's really important for you to educate your team.
Something that we did a lot was actually communicate all of the other things that we were providing to our team over and above what was coming into their pay packet. You know, the culture that we created, the social events, the paid leave, the fresh fruit on Tuesdays and Thursdays, the discounted meals in a restaurant, all of these things that unless you communicate to your team, people's expectations rise and that just becomes the norm. What I would say, and we used to say to this to our customers time and again, when the customer said ‘you’re much too expensive’. And I said, ‘look, full disclosure, our accounts are available on Companies House. I said, you know, on a good year, we're making 12, 13%, you know, but it typically ranges somewhere between 8 and 12%. You know, if you take an engineering company today, making somewhere between 8 and 12%, the interest you can earn in a bank deposit account is over 6%. You know, to have a 2, 3, 4% margin for the risk that you're taking every day in running this company, you should be earning that. You shouldn't have to excuse the fact that you're making a margin. It's incumbent on every successful scaling business to ensure that they're profitable. Because ultimately, that profitability allows you to reinvest, it gives you confidence maybe to recruit in some senior hires that maybe previously you wouldn't have had the confidence to do. It gives you psychological freedom to start to think about a more expansive vision. It's all of those things that you should never have to excuse the fact that you're actually leading a profitable business.
Jeff Dewing
And of course you have to be profitable to be sustainable. If you're not profitable, you're not sustainable. You won't last.
Here's an interesting thing. So here's the interesting thing where I become disruptive again. So one of the arguments I had one particular occasion with the company that were trying to sell a product that I thought was not of good value, they made the same argument. And I said, ‘yes, I get that. And I understand you've got to make a profit and that's not the issue. I'm not asking you to cut your profit. I'm asking you to cut your overhead. I'm asking you to become more efficient because you're inefficiencies you're asking me to pay for’.
So there's one metric that's missing, right, from our audited accounts. There's one metric that's missing from every communication, internally and externally, and that is ‘what is your efficiency level’? Because you can have a company that's got far too many heads, you can have a company that's paying silly amounts of money for rent and rates and God knows what. You've got companies that are buying software and being completely ripped on the subscription charges or whatever, whatever.
And what you're doing is you're asking me to pay for that because of your poor decision-making. So one metric I think is missing for every business is what is your efficiency scale, your efficiency metric? Because it helps me understand if I'm getting value. Because if you, there are two businesses here and one's got an efficiency metric of 6% and one's got an efficiency metric of 30%, so they're 30% more efficient, well, listen, I'm gonna talk to you because I'm gonna get the best value.
Brendan McGurgan
Yeah, completely. And, you know, in all of this, that speaks to the seventh principle of our ScaleX framework proposition. And you're either solving a problem or you're servicing a need. The customer will discern for themselves whether actually you're bringing value in the context of mitigating the pain that they're currently encountering or a gain over and above what they currently have. And, you know, you live and die by the customer's perception of value and absolutely the customer will never pay for your inefficiencies nor should they, but the customer will ultimately determine that. So the point here is about value and all of the, all of the things that are happening within your business today, until actually the customer interacts with your product or service, it's largely non-value! So you've got to get this balance between ensuring that you continue to over-deliver to the customer with value and eradicate or certainly mitigate the non-value adding activities within your business. And this is why from a scaling perspective, growing is doing more with more, scaling is doing more with leverage. You know, you could say, ‘well, I can add another hundred grand in my top line, but I need to recruit in, you know, two people at 50 grand each’. You go, ‘well, actually you're not adding anything there’. But actually if I invest, you know, 50 grand in a senior hire and that person is able to embed a new process and system. Maybe there's a 10 grand investment in automation. Then we're now leveraging the competence of that new hire plus the new process by virtue enabled by the automation. Now we're getting scaling. And we're actually delivering greater value to the end customer, rather we're reducing the non-value added activities within the business.
Jeff Dewing
Every business has to work their back heels off to try and demonstrate value. ‘Trust me, we're gonna give you a great service. Trust me, you'll be really pleased. Trust me, our cost base is the lowest you'll ever find. Trust me, trust me, trust me, trust me’. And sometimes you'll get that trust. That's how a business makes sales, obviously.
But there's also lots of times where they don't even get the chance to do that. And that's why I'm saying if there was a metric that is missing that you could publish in your process of business development that says, ‘my margin I earn is X, which is sustainable for the long term future, I can invest and improve the services that I'm offering you every single day, every single year. And the reason that you will be confident that you're getting the best value is here is a metric that's not something I'm going to I'm going to ask you to trust me on this, a factual metric that's benchmarked against every other business or any other company you're working with’.
Now that benchmark becomes very, very powerful to anyone buying a product or a service. Then what happens is you create change because now what happens is you've got other businesses, competitors, all the like saying, ‘if we don't get our efficiency level to that, we're going to be losing sales hand over fist because that is an auditable function that says that's their efficiency.’
So then you drive behaviors for people who just focus purely on customer centric scenarios because they've got to drive their efficiency. And that's why I'm saying it's a metric that's missing, that could be relied upon. And it's therefore down to the relationship strength and your ability to convince someone to trust you.
Brendan McGurgan
Yeah, there's a couple of sides to that. So the fifth principle of our Scalex framework is process. And we host a year-long accelerator program to support SMEs, who have a desire to scale. And during that workshop, the process workshop, we actually take them to an exemplar, a wonderful local company here in Northern Ireland. We're so fortunate to have them, a company called Seeding Matters. Seeding Matters are exemplars in ‘lean’ and part of the lean methodology, the lean concept is ‘show, don't tell’. So people can read, and when lean was first introduced to me, I thought you needed to have, you know, four years degree and a PhD and kind of all of this operational expertise. This is over my head. I don't know this, but we'll recruit somebody in who knows lean and they're black belts in this and they're six sigma and that. It’s not that at all. It’s compounding small improvements every single day over the course of a week, a month, a quarter. And we lean heavily on the distillation of the lean methodology by a guy called Paul Akers who wrote a wonderful book called Two Second Lean. And it's about creating a culture, something that you refer to, creating a culture of improvement. The biggest waste in any business is the waste of the unlocked potential within the people that reside within your business. That's the single greatest waste because the culture doesn't support people in actually expanding their potential. People just go in, do what they've always done. And if they're not delivering value, the leadership just get more and more frustrated. The voices get louder and you say, ‘they're rubbish, they're rubbish, they're rubbish. You know, let's get rid of all of them, get more people in.’
The culture that Seeding Matters have created, when you go into their morning meeting, starts at a quarter to eight every morning, 60 people in the company, classic SME, they make orthopedic chairs, distribute those chairs across the globe. When you go into that morning meeting, it's about 20 minutes, and everyone within the company takes the opportunity to chair that meeting. So you could have Betty, who's a machinist, who's standing up, and she starts off with gratitude. And she and she shares with everybody what she's grateful for today. And she's given a little insight into her family. She's maybe grateful for her grandson, who has just come through an operation. And everyone is now aware that Betty is a human being, has a grandson who has just gone through an operation. So there's an emotional bond that's being created just by virtue of the fact that Betty in the course of three minutes has given some small gratitudes.
Betty will then chat through some of the improvements that she made yesterday. She'll go around the room, invite any improvements that anyone else has found from yesterday, any issues that anyone needs to log on the improvements board. And they go through this process and then Betty will finish off, take the entire company through some stretches and they give everybody a round of applause and they're off to do their 3Sing: they're sorting, they're sweeping, they're standardizing. And it's a lovely, warm human way of getting the best out of people. Betty could be my mother who I could never envisage standing up amongst a group of 60 people, sharing the background to what makes Betty Betty and hosting this morning meeting, which is a bedrock of a lean mentality. And that's the culture. There's a WhatsApp channel that everybody feeds their improvements into. So it becomes almost this healthy competition of every person trying to improve their existing process. And ultimately as, as people are encouraged to develop themselves, they develop their teams and the organization develops as a whole, you eradicate the non-value, and ultimately what the customer gets is the best value product that they could possibly get.
So we don't have that efficiency metric, but what I encourage people to do is find best practice exemplars to go and see and witness with their own eyes what can be done. And that's why I'm a huge fan of actually bringing people to companies like Seating Matters to witness what best practice looks like in the context of process.
The other side of the argument here was the fact that I have to articulate to my customers that what we do is best value, that our efficiency is the best in the industry, and what they're getting is a competitively priced product or service. What I encourage people to do is stand in the shoes of the customer. None of us really like being sold to, but we will trust others who have experienced your product or service. And this is the power of testimonials. I can talk to brand advocacy, get those who love what you do, those who have experienced that trust, experienced that value and get them to tell others. Get the voice of your customer out there. If you don't already have customer testimonials, I encourage you go and hire a videographer and spend an hour with a customer, ask great questions, and get the customer to tell you in their words where they have experienced value. Often we see, and I've seen this coming from an engineering environment, we have been emotionally involved in the development of this widget that we think is the best widget that's ever been developed and it's galvanized and it vibrates, this hertz and it does this. And I go, ‘well, that's all great. But what does that mean for the customer? Why does that matter’? If you can't articulate the value to your customer, then it's not fair that the customer should have to discern that value for themselves.
So whatever you're doing in terms of the development, always look at it from the lens of your customer and be able to articulate the value that this new widget that you've developed will actually make to the customer by either reducing their pain or bringing again.
Jeff Dewing
One of the guys that I've met recently, this guy called David, he's head of AWS, Amazon Web Services. And he gave me another concept, because we've all heard of MVP, right? Minimum Viable Product. And a minimum viable product could be the wheel of a car. Right, so we're all excited because we've got a wheel. We've got an MVP. Wow, how good is that?
Well, the customer says, ‘well, what am I gonna do with a wheel’? Right, so we're focusing our attention in the wrong place. Right, so Amazon have changed MVP to MLP, Minimum Lovable Product. A product that when you put it in the hands of the customer, immediately fall in love with it because it's usable. And the way he articulates it is he says, ‘if we're trying to make a car and it starts with a wheel, the wheel is no good to anybody. And then the wheels on a chassis is no good to anybody. It's not until the car's done is it any good to anybody. So what we do is we do a skateboard, which is a minimum lovable product. Then we do a scooter, which is a minimum lovable product. Then we do a motorbike, then we do a car, because that minimum lovable product has been of use to the customer through its journey. Whereas a wheel on its own is of no use’.
Brendan McGurgan
I love that. I haven't heard that before. Minimum lovable product. And that's, they've changed the frame there to encourage their designers to think about the product in the hands of the customer.
Jeff Dewing
Exactly. Whereas you just quite rightly said, you know, an engineer that's really excited about his, he's created this widget with ball bearings that go sideways. He's going, this is an engineering fate that no one knows about. Well, it's also an engineering fate that no one cares about.
Brendan McGurgan
And I always use that we read about this in the book, the example of the car. Years ago, people geeked out about what was under the bonnet. And I was one of those people. I enjoyed that. I went through in the last six, seven years, maybe three cars. And I would say I could count on one hand the amount of times that the bonnet was opened on each of those cars. I just don't care now what's going on under the bonnet.
Jeff Dewing
Yeah, no, I know, I know. And I think the reason I've just picked up on that was because when I was an engineer, when I was an engineer in the 80s, we had like Escort vans and new Escort van come out. And I used to adjust the tappits and I used to make sure the rotor arm was clean. And I used to make sure that the gaps were right on the spark plugs because it gave me that little extra quarter of a mile an hour or whatever it was. But I enjoyed the knowledge of an engine, right? And of course in those days, you also had vehicles breaking down quite frequently. My van would break down through various problems with pinking or whatever the case may be. And you used to see broken cars everywhere and the AA everywhere and RAC fixing cars. And at that point you're going, ‘well, that's gonna happen because there's so many moving parts and mechanical things. There's so much to go wrong. It's just inevitable it's going to’. Yet today, cars don't go wrong. There's more mechanical stuff inside them. There's more computerized inside them. There's a million other things that can go wrong, but yet cars today, new cars, are unbelievably reliable. And you're absolutely right.
Where I used to love all that, the moment we brought in electronic control over gearboxes, electronic control over engine management systems, I suddenly lost the desire to lift the bonnet up, even though I was that way inclined. And today, because of my commitment to climate change today when I lift the bonnet up, there's nothing in there anyway because the car's electric. But yes, fascinating. Anyway, listen, Brendan, we're going to move into a wrap up now.
It's been fascinating talk. I want to ask you a couple of questions. So what would you say the one thing is that you are grateful for?
Brendan McGurgan
I'm grateful for books. Every challenge that I've ever encountered, every opportunity that I've wanted to explore, somebody has been there before me, done it and written about it. And I've had the great fortune and the great privilege of reading hundreds and hundreds of books over the last five, six years. I typically read a book, a book a week. There's always three or four books on the go. And they have fundamentally changed my life. They've changed how I think. They change how I interact with people. They have provided inspiration for new ideas. So I would say I'm hugely grateful for books.
Jeff Dewing
That's a great answer. I've got a good friend of mine, Jeroen van der Waal. He's the same, he's a fanatic book reader. He's read thousands. And I feel a little bit envious because I can't read a book. I get to page two, my brain slows down, I'm asleep. So I tried audio books and I would walk up and down the garden with my headphones on. I can't keep walking up and down. I'll sit down, then I'll sit down and fall asleep because my brain slowed down. The only thing that keeps me awake is when I'm active.
So then I found this fantastic product that changed my life called Blinkist. And you get to read a book in 12 minutes. And because I again, I love the knowledge in books, but I just, I'm just one of these people that if I'm not energized and pumping like mad, my brain says time to sleep. So I've always struggled to read a book. But there's always a solution. So in my case, Blinkist, if I want to watch and read The Chimp Paradox or something like that, then I can go into Blinkist and get the gist of it - listening or reading and get the whole gist of the book and the principles of the book in 15 minutes as opposed to six or seven hours. So that's how I overcome that challenge.
Brendan McGurgan
Yeah, I'm a huge fan of Blinkist. Yeah, I interviewed actually Holger Simm, who was one of the co-founders of Blinkist, so wonderful guy and a great product.
Jeff Dewing
Yeah, which is brilliant products, brilliant products and a brilliant solution. Right? It was the he only made that for me because he knew I couldn't read. I couldn't read.
Brendan McGurgan
Absolutely. There you go. You know, if I ask you the subscription price of Blinkist, you’d probably struggle to tell me, but you know that it is mitigated a pain that existed in your life prior to you discovering Blinkist, which was your challenge in actually sitting down to read a book.
Jeff Dewing
That's exactly it. Absolutely.
So my next question, the final question, is if there was one message only, just one message, you've only got the opportunity to send out one message, what would your one message be to the audience?
Brendan McGurgan
I'm going to lean on books again. And there's a wonderful little book called The Four Agreements by Don Miguel Ruiz.
Jeff Dewing
I've read that one!
Brendan McGurgan
And the four agreements are essentially be impeccable with your word. Don't take things personal. Don't make assumptions and do your best. And those are values, those are agreements that I try to live by on a daily basis. Take being impeccable with your word. What that means is across every facet of your life. Let's take business leadership. Being impeccable with your word means that you will not tolerate someone who comes into your office and starts to berate another team member. You will not allow that conversation to take hold. If somebody is constantly berating other people you will be very careful not to enter into discussions where you are making judgment on others. You simply won't in terms of being impeccable with your word. In the context of the family, my kids will often start a conversation saying, ‘Dad, I need to tell you about such and such. And, you know, I'm being impeccable with my word. This is just the fact.’ They're trying to get around the fact that they potentially are going to say something here and they know that I won't tolerate it or entertain the conversation. I won't get into the conversation if it's a slight on someone else, unless it's factual. And that slide rule on everything you do in terms of being immpecable with your word, it also means being really kind to yourself in terms of what What's the, what is the tone and content and quality of your inner voice? Are you constantly berating yourself? You know, a lot of people that I will come into contact with, you know, you'll hear them say, ‘I'm stupid’. And you need to be really careful. You know, what follows I am follows you. And would you say what you're saying to yourself to your best friend if they came to you asking for a piece of advice? So being immpecable with your words starts with your own inner voice, examining the quality, tone and content of your inner voice. And also, if you've committed to doing something, then do that, show up and do that.
Jeff Dewing
The bit I loved about that book or the bit that I really drew on from that book, the one thing that pushed a button in my head, which I now push very, very hard with the people around me, is the ability to take nothing personally. And when you learn how to take nothing personally, you become a giant, because now suddenly your ego is disappeared, your ego doesn't exist anymore. You're able to have difficult conversations, you're able to receive feedback without going to bed thinking ‘I'm useless’ or ‘you're stupid’, as you just put it. And you can go, wow, okay. And it just changes your whole mindset on things. And if you can get people around you and people in your organization to genuinely, I mean, it's not easy, you can't flick a switch, you've got to go through a journey and a process, but you've always got that anchor point. And whatever conversation you're having and someone reacts, you go, ‘are you taking it personally’? They go, s’hit, I'm not supposed to do that, am I’? No, you're not, right? So, and it helps people have that anchor point. But for me, it's been really, really powerful.
Brendan McGurgan
I completely agree and we can have a whole podcast in the book alone, but just to add to that, it's never about you. When somebody says something that you infer as a criticism and you, they're simply projecting where they're at in their current stage of evolution on this planet. It's never about you. It's the mental lens by which they're seeing this, by which they're interpreting this, it's being informed by their belief system, by their experiences, by their habits, by who they have relationships with. What you're hearing is channeled through that lens. So it's never about you.
Jeff Dewing
Brendan, fantastic talk with you today. I had a great conversation with you on your podcast a few months ago. It's continued today. We've gone a bit deeper, which is great. It's been great to get your understanding of different areas and different challenges. And I've really, really enjoyed the conversation. So I hope we cross our paths again soon.
Brendan McGurgan
Likewise, Jeff, thank you for having me on the show today. I've really enjoyed the conversation. Thank you.
Jeff Dewing
Well, another great conversation and a big thanks to Brendan for spending time with me today. I hope you agree that he brought lots of insights from his experience and obviously scaling methodology. I enjoyed the principles from his ScaleX framework that he's developed and that Brendan has designed offering any company that genuinely wants to scale a real concise approach with absolute clarity, no ambiguity, creates a real focus. So I urge you to look up the ScaleX framework.
His book, Scalex, will also bring lots of incredible nuggets to all walks of business, not just scaling up, including leadership, of course. His podcast is also very popular, hosting some incredible guests. So I'd urge you to try his podcast. All the details and references will be in the show notes below. And of course, from my podcast perspective, there are so many other episodes that you can enjoy. There are some real gems from treating autism with breakthrough medicine and medical solutions to diversity in the workplace. My podcast website has recently had a refresh and I'd love you to take a look and give me some feedback when you get the chance.
You can listen to all episodes for free on your favourite podcast platform. Just head to jeffdewing.co.uk and click on podcast. And of course, you can now also watch all these episodes too in video format. You'll find the link to my YouTube channel in the show notes.
Once again, a huge thanks to Nichola and Gabriella at Cloudfm, to my PR team at Thinking Hat, and to my production team, Sam Walker and Michael Blades at What Goes On Media. Thanks for listening.
Jeff Dewing
Hi, and welcome to Doing the Opposite, Business Disruptors. The podcast where you get to meet people who aren't afraid to stand up and call out bad practice or injustice. People who own their mistakes, thrive off challenges and who ultimately choose only to see the summit and not the mountain. I'm Jeff Dewing. I'm an entrepreneur, the author of bestselling book, Doing the Opposite, and a keynote and masterclass speaker.
Today, you're gonna meet Brendan McGurgan. Brendan is an Executive Coach and he's immersed in the world of scale-ups. And this is following his 16 years in manufacturing for the company called CDE. Whilst he was in the role of Group MD, he steered his business through the financial crisis of 2008 and scaled the business at the same time.
This resulted in him opening offices across six continents and employing almost 700 people. Brendan is an avid spokesman and an advocate of self-leadership through good wellbeing.
Jeff Dewing
So hi, Brendan, thank you so much for joining us today. Obviously we know each other of old and it's great to get you on the show because I really wanna get under the skin of what makes Brendan who he is. So thank you for joining me!
Brendan McGurgan
You're very welcome, delighted to be on the show, Jeff.
Jeff Dewing
So Brendan, let's just set the scene for the audience. Let's just sort of give a quick two minute overview of Brendan, your journey and what's got you to what you do today.
Brendan McGurgan
Okay, the two minutes. So I grew up on Northern Ireland in the 70s and 80s during the Troubles. I am the middle of five, so my siblings always ribbed me that I'm well balanced, have a chip on both shoulders! So I, as it was normal back then, my mother and father aren't educated, and education was seen as the passport out of the Troubles. So myself and all the siblings included were all educated to university degree level and beyond.
I qualified as a chartered accountant, went straight into Coopers and Lybrands purely because when I was growing up, my dad was a bookkeeper. Actually, he left school at 16. He was the oldest in the family. His dad had died. And so he had to go and get a job and he got a job as an admin, kind of an office boy and made his way up to heading up the finance function for a local car dealership. So I used to help him when he brought home the big ledgers and he would call out the numbers, let me use the big calculator. And he says, he would always tell me someday, ‘Son, you'll be a chartered accountant’. I said, ‘whatever dad just call me out more numbers’. So that was, that was the route into becoming a chartered accountant. I had no idea what it was qualified through Coopers. And as soon as I qualified, I used it as a passport to get into business.
So, literally within months of qualifying after three and a half year contract apprenticeship, I came out and went into a software company, headed up the finance function of a software company during the dot com boom. And with every good boom, there's a bust. And I was approached by a recruiter that I had used for the software company said, ‘would you go and have a chat with this guy out in mid-Ulster, he's founded a small engineering company, has great ambition for it, and is keen to have a chat’. I had a chat. At that stage the company was turned over by three or 4 million, had about 15 people. And the founder did indeed have great ambition. He loved the product development, qualified mechanical engineer himself, loved the product development, loved the business development, but didn't like all of the other bits in between. So he didn't really want to manage the company, but wanted to, I suppose, focus on his unique ability. I committed the business as finance director and within a number of years, I became the CEO. And through my tenure, I was in the company for 17 years, through my tenure there, 12 as CEO. We scaled the company from that 15 people to almost 700. We set up offices in six continents. We exported from Ireland to more than 100 countries. And we scaled our revenues to almost 100 million annually. So it was an incredible journey. You can stop me at any stage and dig in as deep as you wish! I left then, retired from the business back in 2020, inspired, and we can get into more of this, but inspired to support SME companies to scale because what I learned on leaving the business was less than 1% of SMEs ever achieve scale! And whenever I was caught in the bubble of CDE and the role that I was in, I thought everybody was doing this! As it turns out, it's actually the stats currently released in the UK. It's much less than 1%. It's actually a half a percent. It's 28,000 companies out of 5.6 million SMEs are actually achieving scale. So inspired to really get under the skin of what's undergirded our own success. What was it that defined our success? What were the patterns in our success? Whenever I came to the CEO role, Jeff, I had no CEO experience. You don't go to CEO scaling school. Scaling actually wasn't even a thing back then. It wasn't in our business lexicon. But we were just innately wired to grow. I became a shareholder of the business. And one of the very first things I did as CEO was actually take the founder and one of the other shareholders into a small country hotel, just local to us. And we spent an afternoon aligning on a respective vision for, for the company in terms of what, what would great look like.
But in that role, there's lots of things that are thrown at you in terms of what you should be doing, having a vision, you know, what's your mission? What's your strategy? What are values? You know, all of these things that you hear and read about, but actually in the context of an SME, what relevance do they have? And I read a lot and I would have tortured anyone who was further down the road than we were in their own journey in terms of their growth journey. And leaned on whatever advice I could get. Having retired from the business, I was inspired along with my co-author to actually define the principles that undergird scaling success to support those SMEs who have a desire to scale. And essentially we created the ScaleX 10 principle framework, which essentially is an integrated roadmap to support SMEs to scale.
Jeff Dewing
Thank you for that. That's really set the scene nicely on your journey.
The thing that I'm curious about is that journey, as good as it is – brilliant! It seems too easy. So let's go back to when you were first asked to join the business with a guy that was very ambitious from a ‘on-the-tools’ environment. He was obviously passionate about his products, his engineering, and he decided there's things I don't like and things I'm not good at. I wanna bring somebody in.
Now typically when you're a small business or a small business man or an entrepreneur that's just starting out or you've never scaled, you've never had a big business, somebody coming in with a load of fluff about purpose and values and they go, ‘look, just get the guys to do the work. If they work 40 hours, then tell them they should be working 42’. Tell me the challenges you had to try and get a typical owner, which is an SME owner with an owner mindset, because they've never experienced this scale process, how did you get them on that journey? Because that couldn't have been easy. There must have been some challenges in aligning thinking.
Brendan McGurgan
Yeah, when you come into a business, first off, you've got to prove yourself. I came in as finance director. So the first thing I had to resolve was the overdraft and the fact that we were running out of cash. So ‘purpose’ wasn't in my lexicon then believe me, Jeff, ‘vision’ wasn't in my lexicon. I just was innately wired to grow and, but very practical. So I approached it infact as ‘I'm getting well paid here. I need to tangibly pay for myself and demonstrate how I'm paying for myself very, very quickly’. And there were a number of things that we did accessing grant support, for example, locally to help us develop export markets, help us on product development. So tangibly, he was, he was able to see very quickly that, that I was paying for myself. I remember having a meeting very quickly with the, bank manager as the newly appointed FD. And a week later I was contacting him to say, can we extend our overdraft? He in turn rang the founder and said, ‘who is this guy? He's owning in and already he's extending the overdraft’. I had learned from my experience in the software industry that ultimately ‘sales is vanity, profit's sanity and cash is reality’. And as cliche as that is, I was doing cashflow statements every second day for venture capitalists who were calling me every second day to say, ‘what's our cash headroom? What's our burn rate’? I knew the importance that cash played within a scaling business. Essentially, it's the oxygen by which scaling businesses survive. Once I had agreed on that overdraft, we navigated out of that within three or four months and never in our history went back into it again. In fact, prior to leaving, we acquired a 300,000 square foot factory from Caterpillar, who had located in Belfast and were then leaving Belfast, and built 40,000 square foot of new offices in mid-Ulster. That was largely paid for from cash. We became, through that journey, very cash conscious and cash rich.
The articulation of vision only came a number of years later, whenever I became, when I came into the CEO role and I've always had a desire to understand what the future might look like. I've always, I've always informed what I do by the future that I want to create. And I've got language around that now, of course, having spoken to some of the best brains on the planet, having read a lot over the last 10 years. I've a lot of language around this, but I didn't then, but what I always was inspired by were people who had a sense of what they wanted to create in the future and did that align to the future that I wanted for myself. So that first conversation with the guys about vision was a very a very practical one, very relatable one, simply saying, ‘guys, I would love for us to grow this business. This is what it could look like. I would love us to become number one in our industry. This is what it could look like. Does that align with what you would like for the business’?
So it was a conversation where we were getting alignment in what we wanted the future to look like, independently and collectively.
Jeff Dewing
I remember going through with some of my colleagues, business partners, C-suite, saying, ‘I've got this idea, this vision, you know, this is what I think we should do, what we could do’. And you get responses like, ‘no, don't waste your time on that, let's just maximise profit.
Let's just focus on profit. Let's sell it as hard as we can, buy it as cheap as we can. Let's forget volume, let's forget brand, let's forget all that fluff stuff, let's just make as much profit as we can in the short space of time’. And I said, ‘well, where does that end up’? So the point I was asking you was because for me, it's been very tough. You've got people that don't think in an entrepreneurial way. They're a different mindset. They're a very straightforward… employ people if they don't impress you by day five, sack them or whatever. You know, it's very, very draconian because that was the way we was all wired. That was the way we believed it should be. Command and control was about authority and carrot and stick. And and it was humiliation. It was all these things that we thought got the best out of people that we were clearly getting wrong. So I guess… what experiences, if any, did you have on that journey or was you lucky enough that because you went on that slow journey, you built your own credibility first as FD, which meant you got their attention when you did start saying these things?
Brendan McGurgan
Absolutely. So for a number of years, I was compiling the accounts. I was examining the accounts. I was digging into the accounts. I would hear that margin should have been, you know, let's say 30% on a project. But actually, by the time I'd completed the accounts, the margins looked more like 17%. So that then triggered and was the catalyst for conversations within the business. So all of a sudden you have your head stuck in the middle of what's happening in sales and how projects are priced, for example. And then you start to discern that actually, well, you've only included 80% of the true costs of completing that project. And somebody said, ‘oh, well, I was able to do the project for this and this and this, you know’, and I say, ‘yeah, the difference is that you were you were doing that, you were arriving to the warehouse on a Saturday, putting the tools in the van, going down, installing the plant, commissioning the plant and you're not charging yourself for your own time. We're now at a stage where now we're contracting that in and that needs to be accounted for. The notion that you had a 30% margin three years ago when you were doing a lot of this yourself, it's very different now when we have a team of people that we need to cost into the job’.
So you engage people with the conversation. I remember even hosting a little class, a little workshop to explain the difference to our leadership team or small management team at that stage, the difference between margin and markup. People didn't understand, you know. So getting into the nuts and bolts of how to price a job correctly and accurately. And then seeing it delivered and whenever it was delivered, you come back and say, ‘guys, we had everything accounted for, but actually the margin is now this, it should have been that plus another 7%. So where did we lose it’? So then your head's stuck in operations. And this is the privilege that actually the numbers give you. That having an innate understanding of the numbers, they are a journey and exploration into every corner of the business. And I think it's no accident that a lot of FDs end up in CEO positions, because ultimately if they're curious enough to want to know why things are as they are, then they're going to find themselves in every corner of the business, asking lots of questions.
Making a nuisance of themselves, but trying to support those teams of people to actually achieve better performance. So that was a journey of absolutely gaining credibility initially, Jeff. And then you arrive into a point where you call them one day and the founder says, look, I'd like you to be the CEO of this business.
Jeff Dewing
Which is good because you've already built that confidence and that trust, right? So therefore you're going to get more latitude in your, let's say, elevated thinking, we'll say as an example!
Coming back to what you just said there, what was really interesting was that when we were in our very young stage of our business - year one. My business partners and I basically said we will take almost no salary to give this business a fighting chance. And we was in a position that we could do that. At the end of the first year we'd done our accounts, we went, ‘my God, look at how much profit we've made’. And they go, ‘this is great business’. And I stood up - bear in mind, I'm not financially trained in any way, shape or form, but I've obviously learned a lot of stuff on my way. And I went, ‘yeah, but if you included our salaries, we've made a loss’. Right? And they went, ‘yeah, but we haven't’. I said, yeah, ‘but you have to do, because you're not gonna continue doing this for the rest of your life, are you? You've got to put in a salary to actually truly measure what your performance is, what your margins are’.
It took me about three weeks to get them to understand that principle, which was not to attack on them. It was the general belief. It's like when people go to an ATM and they put their card in and they say, ‘I've only got 1500 quid’. So they phone the company and say, you've underpaid me. I don't think we have. I've only got 1500 quid. I should have more than that. Well, how much more? I don't know. Really? In my day, you looked at your pay slip that showed your gross salary, less your tax, less your national insurance, and the net pay was the net pay, and that's what went into your bank account.
But people have just, I don't know what it is, we've lost our way because of, I don't know, a lack of education maybe, I don't know.
Brendan McGurgan
Yeah, it's interesting, funnily enough I was having this conversation with my 20 year old daughter at the weekend about becoming more financially literate. And on one hand as a parent, you want to support your kids in whatever way you can. But on the other hand, it's so critically important that they learn hard lessons about how to budget. I literally sat down with my daughter at the weekend with a budgeting statement.
We sat down and we said, ‘right, okay, she's got a part-time job at university. What's going to be your income now for many hours’? You're going to work over the next four weeks. She's conscious of having money for Christmas. And, uh, so these are the number of hours I'm going to work. I will. What are your expenses in terms of going to work, uh, going to university? What nights you plan to go out? All of that, those good things. And I was conscious that I hadn't done that before. And I think there needs to be an understanding that certainly your kids don't waken up at 18 becoming financially literate if you haven't actually coached them along the way to become that. And similarly with cultures within business, we had to coach financial literacy within the business because there was often a mismatch between what the designers thought, the design engineers thought something cost and what it actually cost. And until you actually sit down and engage them in a conversation to say, ‘guys, did you realize just the lattice frame that you've designed there for that conveyor is X amount versus why is it that way’? ‘Oh, we didn't know that’. And so we embedded this financial literacy into the business, this understanding of margins and the reality - back to something you said earlier - we became incredibly profitable. We became number one in our industry. So the results were supporting, I suppose, the credibility that myself and the leadership team were gaining. So when you get that, then people are more willing to listen because ultimately the results are there to demonstrate that what you're doing must be the right approach.
Jeff Dewing
I'll never forget… again, going back through my days as an engineer and then obviously having a business employed 200 engineers. One of the biggest challenges that was faced and I used to be one of those people, which is why I understand it so well, but, and you might be paid £15 an hour as an engineer, but you know your company's selling you at £40 an hour. And your immediate reaction is ‘look how much money they're making on every hour I work and they're telling me I can’t have a pay rise’. So the first thing we did, because I used to believe that myself because I knew no different, right? We didn't know. So one of the things we did with all of our engineers from the very onsite, we did it every six months, all newcomers got went through it. And we basically drew out the fact that, ‘right, we pay you 15 pound an hour, we sell you at 40 pound an hour. So that would suggest that there is a 25 pound gap that says we're pocketing and I'm going on holiday with it. So I just want to take you through a journey. So you're 15 pound. On top of that, we've got employers national insurance. On top of that, we've got your pension. On top of that, we've got your vehicle, your fuel, your tools, your overhead, your sick days that you take off, your holidays you take off. And we actually take them through a step process with the cost to establish that they actually cost us £37.25 as a business. So although you're getting 15, you're actually costing all your own costs come to 37 quid, which means we are making £2.50 per hour providing you're 100% productive. If you're only 50% productive, we're making a loss on every hour you work.
And what that does is that completely changed the attitude of every single engineer, because it was something they never understood or knew, and they was getting up every day, annoyed, anxious, frustrated, and it was just a lack of knowledge! So no one ever done that to me or us or the people in the community I was in when I was at work. So I went through years of feeling angry. Feeling upset and especially when you come to pay rise time and you've got inflation going on and God knows what. So what that done was that brought a lot of peace to the people that now understood it and a lot of appreciation for the fact that even when they're not 100% productive, we're supporting them.
Brendan McGurgan
That resonates so strongly and perception is everything. So it's really important for you to educate your team.
Something that we did a lot was actually communicate all of the other things that we were providing to our team over and above what was coming into their pay packet. You know, the culture that we created, the social events, the paid leave, the fresh fruit on Tuesdays and Thursdays, the discounted meals in a restaurant, all of these things that unless you communicate to your team, people's expectations rise and that just becomes the norm. What I would say, and we used to say to this to our customers time and again, when the customer said ‘you’re much too expensive’. And I said, ‘look, full disclosure, our accounts are available on Companies House. I said, you know, on a good year, we're making 12, 13%, you know, but it typically ranges somewhere between 8 and 12%. You know, if you take an engineering company today, making somewhere between 8 and 12%, the interest you can earn in a bank deposit account is over 6%. You know, to have a 2, 3, 4% margin for the risk that you're taking every day in running this company, you should be earning that. You shouldn't have to excuse the fact that you're making a margin. It's incumbent on every successful scaling business to ensure that they're profitable. Because ultimately, that profitability allows you to reinvest, it gives you confidence maybe to recruit in some senior hires that maybe previously you wouldn't have had the confidence to do. It gives you psychological freedom to start to think about a more expansive vision. It's all of those things that you should never have to excuse the fact that you're actually leading a profitable business.
Jeff Dewing
And of course you have to be profitable to be sustainable. If you're not profitable, you're not sustainable. You won't last.
Here's an interesting thing. So here's the interesting thing where I become disruptive again. So one of the arguments I had one particular occasion with the company that were trying to sell a product that I thought was not of good value, they made the same argument. And I said, ‘yes, I get that. And I understand you've got to make a profit and that's not the issue. I'm not asking you to cut your profit. I'm asking you to cut your overhead. I'm asking you to become more efficient because you're inefficiencies you're asking me to pay for’.
So there's one metric that's missing, right, from our audited accounts. There's one metric that's missing from every communication, internally and externally, and that is ‘what is your efficiency level’? Because you can have a company that's got far too many heads, you can have a company that's paying silly amounts of money for rent and rates and God knows what. You've got companies that are buying software and being completely ripped on the subscription charges or whatever, whatever.
And what you're doing is you're asking me to pay for that because of your poor decision-making. So one metric I think is missing for every business is what is your efficiency scale, your efficiency metric? Because it helps me understand if I'm getting value. Because if you, there are two businesses here and one's got an efficiency metric of 6% and one's got an efficiency metric of 30%, so they're 30% more efficient, well, listen, I'm gonna talk to you because I'm gonna get the best value.
Brendan McGurgan
Yeah, completely. And, you know, in all of this, that speaks to the seventh principle of our ScaleX framework proposition. And you're either solving a problem or you're servicing a need. The customer will discern for themselves whether actually you're bringing value in the context of mitigating the pain that they're currently encountering or a gain over and above what they currently have. And, you know, you live and die by the customer's perception of value and absolutely the customer will never pay for your inefficiencies nor should they, but the customer will ultimately determine that. So the point here is about value and all of the, all of the things that are happening within your business today, until actually the customer interacts with your product or service, it's largely non-value! So you've got to get this balance between ensuring that you continue to over-deliver to the customer with value and eradicate or certainly mitigate the non-value adding activities within your business. And this is why from a scaling perspective, growing is doing more with more, scaling is doing more with leverage. You know, you could say, ‘well, I can add another hundred grand in my top line, but I need to recruit in, you know, two people at 50 grand each’. You go, ‘well, actually you're not adding anything there’. But actually if I invest, you know, 50 grand in a senior hire and that person is able to embed a new process and system. Maybe there's a 10 grand investment in automation. Then we're now leveraging the competence of that new hire plus the new process by virtue enabled by the automation. Now we're getting scaling. And we're actually delivering greater value to the end customer, rather we're reducing the non-value added activities within the business.
Jeff Dewing
Every business has to work their back heels off to try and demonstrate value. ‘Trust me, we're gonna give you a great service. Trust me, you'll be really pleased. Trust me, our cost base is the lowest you'll ever find. Trust me, trust me, trust me, trust me’. And sometimes you'll get that trust. That's how a business makes sales, obviously.
But there's also lots of times where they don't even get the chance to do that. And that's why I'm saying if there was a metric that is missing that you could publish in your process of business development that says, ‘my margin I earn is X, which is sustainable for the long term future, I can invest and improve the services that I'm offering you every single day, every single year. And the reason that you will be confident that you're getting the best value is here is a metric that's not something I'm going to I'm going to ask you to trust me on this, a factual metric that's benchmarked against every other business or any other company you're working with’.
Now that benchmark becomes very, very powerful to anyone buying a product or a service. Then what happens is you create change because now what happens is you've got other businesses, competitors, all the like saying, ‘if we don't get our efficiency level to that, we're going to be losing sales hand over fist because that is an auditable function that says that's their efficiency.’
So then you drive behaviors for people who just focus purely on customer centric scenarios because they've got to drive their efficiency. And that's why I'm saying it's a metric that's missing, that could be relied upon. And it's therefore down to the relationship strength and your ability to convince someone to trust you.
Brendan McGurgan
Yeah, there's a couple of sides to that. So the fifth principle of our Scalex framework is process. And we host a year-long accelerator program to support SMEs, who have a desire to scale. And during that workshop, the process workshop, we actually take them to an exemplar, a wonderful local company here in Northern Ireland. We're so fortunate to have them, a company called Seeding Matters. Seeding Matters are exemplars in ‘lean’ and part of the lean methodology, the lean concept is ‘show, don't tell’. So people can read, and when lean was first introduced to me, I thought you needed to have, you know, four years degree and a PhD and kind of all of this operational expertise. This is over my head. I don't know this, but we'll recruit somebody in who knows lean and they're black belts in this and they're six sigma and that. It’s not that at all. It’s compounding small improvements every single day over the course of a week, a month, a quarter. And we lean heavily on the distillation of the lean methodology by a guy called Paul Akers who wrote a wonderful book called Two Second Lean. And it's about creating a culture, something that you refer to, creating a culture of improvement. The biggest waste in any business is the waste of the unlocked potential within the people that reside within your business. That's the single greatest waste because the culture doesn't support people in actually expanding their potential. People just go in, do what they've always done. And if they're not delivering value, the leadership just get more and more frustrated. The voices get louder and you say, ‘they're rubbish, they're rubbish, they're rubbish. You know, let's get rid of all of them, get more people in.’
The culture that Seeding Matters have created, when you go into their morning meeting, starts at a quarter to eight every morning, 60 people in the company, classic SME, they make orthopedic chairs, distribute those chairs across the globe. When you go into that morning meeting, it's about 20 minutes, and everyone within the company takes the opportunity to chair that meeting. So you could have Betty, who's a machinist, who's standing up, and she starts off with gratitude. And she and she shares with everybody what she's grateful for today. And she's given a little insight into her family. She's maybe grateful for her grandson, who has just come through an operation. And everyone is now aware that Betty is a human being, has a grandson who has just gone through an operation. So there's an emotional bond that's being created just by virtue of the fact that Betty in the course of three minutes has given some small gratitudes.
Betty will then chat through some of the improvements that she made yesterday. She'll go around the room, invite any improvements that anyone else has found from yesterday, any issues that anyone needs to log on the improvements board. And they go through this process and then Betty will finish off, take the entire company through some stretches and they give everybody a round of applause and they're off to do their 3Sing: they're sorting, they're sweeping, they're standardizing. And it's a lovely, warm human way of getting the best out of people. Betty could be my mother who I could never envisage standing up amongst a group of 60 people, sharing the background to what makes Betty Betty and hosting this morning meeting, which is a bedrock of a lean mentality. And that's the culture. There's a WhatsApp channel that everybody feeds their improvements into. So it becomes almost this healthy competition of every person trying to improve their existing process. And ultimately as, as people are encouraged to develop themselves, they develop their teams and the organization develops as a whole, you eradicate the non-value, and ultimately what the customer gets is the best value product that they could possibly get.
So we don't have that efficiency metric, but what I encourage people to do is find best practice exemplars to go and see and witness with their own eyes what can be done. And that's why I'm a huge fan of actually bringing people to companies like Seating Matters to witness what best practice looks like in the context of process.
The other side of the argument here was the fact that I have to articulate to my customers that what we do is best value, that our efficiency is the best in the industry, and what they're getting is a competitively priced product or service. What I encourage people to do is stand in the shoes of the customer. None of us really like being sold to, but we will trust others who have experienced your product or service. And this is the power of testimonials. I can talk to brand advocacy, get those who love what you do, those who have experienced that trust, experienced that value and get them to tell others. Get the voice of your customer out there. If you don't already have customer testimonials, I encourage you go and hire a videographer and spend an hour with a customer, ask great questions, and get the customer to tell you in their words where they have experienced value. Often we see, and I've seen this coming from an engineering environment, we have been emotionally involved in the development of this widget that we think is the best widget that's ever been developed and it's galvanized and it vibrates, this hertz and it does this. And I go, ‘well, that's all great. But what does that mean for the customer? Why does that matter’? If you can't articulate the value to your customer, then it's not fair that the customer should have to discern that value for themselves.
So whatever you're doing in terms of the development, always look at it from the lens of your customer and be able to articulate the value that this new widget that you've developed will actually make to the customer by either reducing their pain or bringing again.
Jeff Dewing
One of the guys that I've met recently, this guy called David, he's head of AWS, Amazon Web Services. And he gave me another concept, because we've all heard of MVP, right? Minimum Viable Product. And a minimum viable product could be the wheel of a car. Right, so we're all excited because we've got a wheel. We've got an MVP. Wow, how good is that?
Well, the customer says, ‘well, what am I gonna do with a wheel’? Right, so we're focusing our attention in the wrong place. Right, so Amazon have changed MVP to MLP, Minimum Lovable Product. A product that when you put it in the hands of the customer, immediately fall in love with it because it's usable. And the way he articulates it is he says, ‘if we're trying to make a car and it starts with a wheel, the wheel is no good to anybody. And then the wheels on a chassis is no good to anybody. It's not until the car's done is it any good to anybody. So what we do is we do a skateboard, which is a minimum lovable product. Then we do a scooter, which is a minimum lovable product. Then we do a motorbike, then we do a car, because that minimum lovable product has been of use to the customer through its journey. Whereas a wheel on its own is of no use’.
Brendan McGurgan
I love that. I haven't heard that before. Minimum lovable product. And that's, they've changed the frame there to encourage their designers to think about the product in the hands of the customer.
Jeff Dewing
Exactly. Whereas you just quite rightly said, you know, an engineer that's really excited about his, he's created this widget with ball bearings that go sideways. He's going, this is an engineering fate that no one knows about. Well, it's also an engineering fate that no one cares about.
Brendan McGurgan
And I always use that we read about this in the book, the example of the car. Years ago, people geeked out about what was under the bonnet. And I was one of those people. I enjoyed that. I went through in the last six, seven years, maybe three cars. And I would say I could count on one hand the amount of times that the bonnet was opened on each of those cars. I just don't care now what's going on under the bonnet.
Jeff Dewing
Yeah, no, I know, I know. And I think the reason I've just picked up on that was because when I was an engineer, when I was an engineer in the 80s, we had like Escort vans and new Escort van come out. And I used to adjust the tappits and I used to make sure the rotor arm was clean. And I used to make sure that the gaps were right on the spark plugs because it gave me that little extra quarter of a mile an hour or whatever it was. But I enjoyed the knowledge of an engine, right? And of course in those days, you also had vehicles breaking down quite frequently. My van would break down through various problems with pinking or whatever the case may be. And you used to see broken cars everywhere and the AA everywhere and RAC fixing cars. And at that point you're going, ‘well, that's gonna happen because there's so many moving parts and mechanical things. There's so much to go wrong. It's just inevitable it's going to’. Yet today, cars don't go wrong. There's more mechanical stuff inside them. There's more computerized inside them. There's a million other things that can go wrong, but yet cars today, new cars, are unbelievably reliable. And you're absolutely right.
Where I used to love all that, the moment we brought in electronic control over gearboxes, electronic control over engine management systems, I suddenly lost the desire to lift the bonnet up, even though I was that way inclined. And today, because of my commitment to climate change today when I lift the bonnet up, there's nothing in there anyway because the car's electric. But yes, fascinating. Anyway, listen, Brendan, we're going to move into a wrap up now.
It's been fascinating talk. I want to ask you a couple of questions. So what would you say the one thing is that you are grateful for?
Brendan McGurgan
I'm grateful for books. Every challenge that I've ever encountered, every opportunity that I've wanted to explore, somebody has been there before me, done it and written about it. And I've had the great fortune and the great privilege of reading hundreds and hundreds of books over the last five, six years. I typically read a book, a book a week. There's always three or four books on the go. And they have fundamentally changed my life. They've changed how I think. They change how I interact with people. They have provided inspiration for new ideas. So I would say I'm hugely grateful for books.
Jeff Dewing
That's a great answer. I've got a good friend of mine, Jeroen van der Waal. He's the same, he's a fanatic book reader. He's read thousands. And I feel a little bit envious because I can't read a book. I get to page two, my brain slows down, I'm asleep. So I tried audio books and I would walk up and down the garden with my headphones on. I can't keep walking up and down. I'll sit down, then I'll sit down and fall asleep because my brain slowed down. The only thing that keeps me awake is when I'm active.
So then I found this fantastic product that changed my life called Blinkist. And you get to read a book in 12 minutes. And because I again, I love the knowledge in books, but I just, I'm just one of these people that if I'm not energized and pumping like mad, my brain says time to sleep. So I've always struggled to read a book. But there's always a solution. So in my case, Blinkist, if I want to watch and read The Chimp Paradox or something like that, then I can go into Blinkist and get the gist of it - listening or reading and get the whole gist of the book and the principles of the book in 15 minutes as opposed to six or seven hours. So that's how I overcome that challenge.
Brendan McGurgan
Yeah, I'm a huge fan of Blinkist. Yeah, I interviewed actually Holger Simm, who was one of the co-founders of Blinkist, so wonderful guy and a great product.
Jeff Dewing
Yeah, which is brilliant products, brilliant products and a brilliant solution. Right? It was the he only made that for me because he knew I couldn't read. I couldn't read.
Brendan McGurgan
Absolutely. There you go. You know, if I ask you the subscription price of Blinkist, you’d probably struggle to tell me, but you know that it is mitigated a pain that existed in your life prior to you discovering Blinkist, which was your challenge in actually sitting down to read a book.
Jeff Dewing
That's exactly it. Absolutely.
So my next question, the final question, is if there was one message only, just one message, you've only got the opportunity to send out one message, what would your one message be to the audience?
Brendan McGurgan
I'm going to lean on books again. And there's a wonderful little book called The Four Agreements by Don Miguel Ruiz.
Jeff Dewing
I've read that one!
Brendan McGurgan
And the four agreements are essentially be impeccable with your word. Don't take things personal. Don't make assumptions and do your best. And those are values, those are agreements that I try to live by on a daily basis. Take being impeccable with your word. What that means is across every facet of your life. Let's take business leadership. Being impeccable with your word means that you will not tolerate someone who comes into your office and starts to berate another team member. You will not allow that conversation to take hold. If somebody is constantly berating other people you will be very careful not to enter into discussions where you are making judgment on others. You simply won't in terms of being impeccable with your word. In the context of the family, my kids will often start a conversation saying, ‘Dad, I need to tell you about such and such. And, you know, I'm being impeccable with my word. This is just the fact.’ They're trying to get around the fact that they potentially are going to say something here and they know that I won't tolerate it or entertain the conversation. I won't get into the conversation if it's a slight on someone else, unless it's factual. And that slide rule on everything you do in terms of being immpecable with your word, it also means being really kind to yourself in terms of what What's the, what is the tone and content and quality of your inner voice? Are you constantly berating yourself? You know, a lot of people that I will come into contact with, you know, you'll hear them say, ‘I'm stupid’. And you need to be really careful. You know, what follows I am follows you. And would you say what you're saying to yourself to your best friend if they came to you asking for a piece of advice? So being immpecable with your words starts with your own inner voice, examining the quality, tone and content of your inner voice. And also, if you've committed to doing something, then do that, show up and do that.
Jeff Dewing
The bit I loved about that book or the bit that I really drew on from that book, the one thing that pushed a button in my head, which I now push very, very hard with the people around me, is the ability to take nothing personally. And when you learn how to take nothing personally, you become a giant, because now suddenly your ego is disappeared, your ego doesn't exist anymore. You're able to have difficult conversations, you're able to receive feedback without going to bed thinking ‘I'm useless’ or ‘you're stupid’, as you just put it. And you can go, wow, okay. And it just changes your whole mindset on things. And if you can get people around you and people in your organization to genuinely, I mean, it's not easy, you can't flick a switch, you've got to go through a journey and a process, but you've always got that anchor point. And whatever conversation you're having and someone reacts, you go, ‘are you taking it personally’? They go, s’hit, I'm not supposed to do that, am I’? No, you're not, right? So, and it helps people have that anchor point. But for me, it's been really, really powerful.
Brendan McGurgan
I completely agree and we can have a whole podcast in the book alone, but just to add to that, it's never about you. When somebody says something that you infer as a criticism and you, they're simply projecting where they're at in their current stage of evolution on this planet. It's never about you. It's the mental lens by which they're seeing this, by which they're interpreting this, it's being informed by their belief system, by their experiences, by their habits, by who they have relationships with. What you're hearing is channeled through that lens. So it's never about you.
Jeff Dewing
Brendan, fantastic talk with you today. I had a great conversation with you on your podcast a few months ago. It's continued today. We've gone a bit deeper, which is great. It's been great to get your understanding of different areas and different challenges. And I've really, really enjoyed the conversation. So I hope we cross our paths again soon.
Brendan McGurgan
Likewise, Jeff, thank you for having me on the show today. I've really enjoyed the conversation. Thank you.
Jeff Dewing
Well, another great conversation and a big thanks to Brendan for spending time with me today. I hope you agree that he brought lots of insights from his experience and obviously scaling methodology. I enjoyed the principles from his ScaleX framework that he's developed and that Brendan has designed offering any company that genuinely wants to scale a real concise approach with absolute clarity, no ambiguity, creates a real focus. So I urge you to look up the ScaleX framework.
His book, Scalex, will also bring lots of incredible nuggets to all walks of business, not just scaling up, including leadership, of course. His podcast is also very popular, hosting some incredible guests. So I'd urge you to try his podcast. All the details and references will be in the show notes below. And of course, from my podcast perspective, there are so many other episodes that you can enjoy. There are some real gems from treating autism with breakthrough medicine and medical solutions to diversity in the workplace. My podcast website has recently had a refresh and I'd love you to take a look and give me some feedback when you get the chance.
You can listen to all episodes for free on your favourite podcast platform. Just head to jeffdewing.co.uk and click on podcast. And of course, you can now also watch all these episodes too in video format. You'll find the link to my YouTube channel in the show notes.
Once again, a huge thanks to Nichola and Gabriella at Cloudfm, to my PR team at Thinking Hat, and to my production team, Sam Walker and Michael Blades at What Goes On Media. Thanks for listening.
Brendan McGurgan – Transforming and Scaling Businesses through Visionary Leadership
Feb 21, 2024•50 min•Season 4Ep. 9
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Episode description
In this episode of Doing the Opposite: Business Disruptors, Jeff Dewing speaks to Executive Coach Brendan McGurgan. Brendan spent 16 years as Group MD of CDE where he steered the business through the financial crisis of 2008 and scaled the business at the same time. In 2020, co-founded Simple Scaling with the sole purpose of inspiring and enabling millions of ambitious leaders to scale with purpose.
Brendan reflects on the successes he enjoyed at CDE and how they inspired the next chapter in his career – helping SMEs to scale. Brendan admits ‘I had no CEO experience. You don't go to CEO scaling school. Scaling actually wasn't even a thing back then. It wasn't in our business lexicon. But we were just innately wired to grow.’
Brendan talks through the importance of understanding cashflow. ‘Sales is vanity, profit is sanity and cash is reality’. Brendan makes the case that without understanding cash, it’s impossible for a business to effectively scale. He also shares an example of a business he was consulting, that were sceptical of him when he tried to extend the overdraft. He quickly dug the company out of its overdraft and the financial progress meant they then took Brendan seriously when he attempted to address other areas, such as purpose and vision.
Jeff and Brendan discuss the misconceptions around service cost and remuneration; for example when a business may charge £40/hour for a worker who is paid £15/hour. That worker can become disillusioned but taking them through the cost journey and explaining the overheads can enhance their understanding and reduce anxiety or frustration that may come from that.
You can buy Brendan’s book ‘Simple Scaling’ now, and listen to the ScaleX Insider Podcast.
Hosted by Jeff Dewing
Discover Cloudfm Group
Transcript
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