Episode 27
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Richard Ellis: [00:00:00] Hey there friends. Richard here with a quick note before we jump into today's episode. June marks the one year birthday of some goodness, and we're celebrating all month long by replaying a few of your all time favorite episodes. Today's replay, it's our most downloaded episode of the year. My episode eight Conversation with Mike Fouts struck a chord with so many of you, especially those navigating the leadership challenge of driving high growth inside a larger legacy company.
Richard Ellis: It's practical, it's punchy, and it's packed with real life lessons from someone who's lived it. So why bring this one back? Because the tension between agility and alignment and between growth and governance is more relevant now than ever. Whether you're scaling a startup, running a business unit inside a big org, or making your next career move, you'll walk away with insights.
Richard Ellis: As you listen, keep an ear out for how to retrain your muscle memory when moving from a legacy [00:01:00] org into a growth business, the power of prioritizing what matters and accepting what can't change, and why marketing and new client acquisition look completely different when you're building, not just managing a business.
Richard Ellis: One more thing. Visit the episode page on our [email protected] for a special free gift we've created just for this birthday release. It's something to help you go even deeper on what Mike shares in this episode. Thanks for being part of our community. And now let's hit replay on one of the greats.
Richard Ellis: According to Harvard Business Review standalone business units within a global company create flexibility by balancing the competing demands of autonomy in the present with cooperation in the future. They exploit flexibility by moving nimbly when opportunities for cooperation emerge. Today we talk about this balance between [00:02:00] flexibility and cooperation when it comes to leading such a business unit or growth company inside a larger legacy software business.
Richard Ellis: Welcome to some goodness where we engage seasoned business leaders and experts to share practical guidance and tips to help new and future C-level leaders maximize their impact. My guest today is Mike fau, a Chief Business Officer with Deep Leadership Experience and Sales Enablement Channel Sales and marketing for Global Enterprises.
Richard Ellis: Mike, welcome to the show.
Mike Fouts: Hey, thank you, Richard. So I got invited back. This is great. It's exciting. Do I need to get an agent? Exactly. And I just even felt funny saying Welcome
Mike Fouts: to the show. I mean, these are just, just casual discussions so that we can share practical goodness with, uh, with other leaders out there.
Mike Fouts: So welcome back. Really enjoyed our first discussion. So today, looking forward to diving into another one with you. Me too. Yeah. I'm looking forward to it. Let's do it. [00:03:00] All right, so today we're gonna focus on your experience as a leader in a growth company. That is inside a legacy software company. So there's some dynamics there that I, I'm sure you've enjoyed or maybe haven't enjoyed, and I, I'd love to dig into that, if that makes sense for us today.
Mike Fouts: Yeah, it does. Boy, that's, it's quite a topic, right? Uh, may, maybe one day I'll actually write a whole book on it because I probably could, being in a growth company. Surrounded by other business units that comprise a larger legacy software company. Certainly is interesting. Right? And I spent the bulk of my career in that what is now a legacy company and, and have moved into this growth business unit.
Mike Fouts: I think what I would share with your listeners. It's harder than I expected. Right? It it, so you have to make a fast pivot. Right. Because a growth company's moving at a much more dynamic pace. [00:04:00] And one thing I that, that I didn't really absorb in in the first couple of months was a lot of muscle memory.
Mike Fouts: Hmm. And so, you know, kind of adjusting that muscle memory after 20 years, you have to be deliberate. It takes a lot of patience and focus to do that. Right? You have to really be aware of it so that that's, that's the first thing, right? Growth companies are much less rigid and more flexible and, and I think everybody would naturally probably hear that and go, oh yeah, I know that.
Mike Fouts: Right? But what it means is I had to be much more aware of delegating. Of being accepting of certain things and encouraging people, encouraging them to test the limits of rules and test the limit of the box that you live in. The level of collaboration that is required was far greater. I. In a positive way at far greater with the product organization, with the operational teams, with marketing, with, with everybody.
Mike Fouts: So th those [00:05:00] were really the three things as I got into it. And now I look back after a year plus that, uh, were really, really different going from one model to the other. Got
Richard Ellis: it. Got it. So you and I are car guys, right? Um, and so I think about the high growth company running at much higher RPMs than the legacy business.
Richard Ellis: And as a result, you know the implications of that. Certainly you highlighted collaboration and that flexibility and being nimble and agile. When you think about just the processes and the. Tools or systems within the business are, are there some changes there that you have to adapt to or, or anticipate?
Mike Fouts: Yeah, there are, you know, I'll keep your car analogy and, and if you think about that, a high RPM car, right? I'm a, I'm a Corvette guy, and so I can take the corners a lot faster in a Corvette than you can take in a Volvo. Right. You know, the reliable Volvo is gonna do the job, but in a vet, I'm [00:06:00] gonna take the corners much faster.
Mike Fouts: You have to be ready for that. You have to be ready to steer into it and all the things that come with that o. Operationally, I, I think this is where the acceptance. Comes in that I mentioned in that first section, you have to accept that there are some things that you would like to change, but you can't do it right now for various reasons, right?
Mike Fouts: Number one, it might slow things down. It might have a negative impact. I. It's not a highest priority. Yes, it needs to have some evolution and some maturity to it, but I gotta run really fast. I gotta take the corner fast. I'll worry about that. When we do a pit stop with systems, the biggest thing I noticed was a level of acceptance.
Mike Fouts: Got it. Got it.
Richard Ellis: Now, what kind of, let's just say, uh, friction or uh, muscle memory of. The larger enterprise, kind of the mothership, as I like to think about it, just caused some challenges for you as you're trying to manage and grow this very [00:07:00] agile and HRP in business and getting support from the mothership in these ways where they're thinking totally differently.
Mike Fouts: I. I'll give you a couple of examples here. The, the first one is I left the Legacy company and did an sort of an outgoing business review right to, to do a turnover and, and in that business review, it centered on how do we maximize efficiency? How do we drive profitability growth? Not necessarily top line bookings or revenue growth, but how do I drive profitability growth in that business?
Mike Fouts: And then literally two months later, did a business review with the same CEO in a growth company, and it centered on very different things. It was about how do you drive top line growth? Right. What are you doing to do that? Right? What talk, talk to me about your marketing function, your funnel, and the top of the funnel.
Mike Fouts: And so the conversations are very different to, to kind of drill down and give you an [00:08:00] another example. Generally, in a legacy company, you're thinking about, there's a lot of history, there's a lot of process. It's been done a certain way, and those processes exist because it works at scale. Sure. And then you move into a growth company, which is a little bit smaller in scale and your velocity's much higher.
Mike Fouts: So those rules around the box are very different. They're much more fluid. And so here, here's an example. We looked at people at just pure headcount. Mm-hmm. And, uh, we tried to maximize the productivity of the existing headcount. In a growth company I was looking at, I can add ahead and that directly correlates to X in bookings.
Mike Fouts: Um, so so the conversation then pivoted quickly in that business review to do you have enough people to drive 20% growth? You're right, right. So, so that's an example of some of the muscle memory things that you really have to switch in a big hurry. [00:09:00] Yeah. Love it. Love
Richard Ellis: it. So we've talked about a number of differences between legacy versus high growth.
Richard Ellis: What, what happens when leaders just don't recognize that, those differences? So kind of think about a new leader coming in that has, you know, habits, biases, you know, history, experience of a legacy company coming into, uh, a high growth company.
Mike Fouts: Yeah, I, I think there's two things. The first one at, at a high level, there's a cultural impact.
Mike Fouts: What I mean by that is if you're unable to pivot quickly into it and understand the differences, you appear to the team as out of touch. Okay. Slow set in your ways. Old, you're, you're the old man standing there shouting at the kids, get off my lawn. Right, right, right. That's, that's the cultural impact.
Mike Fouts: There, there's also a functional impact as well, right? If, if you don't adapt, you're gonna quickly put a governor on the growth rate. True. Right? Uh, that's [00:10:00] the first thing that I realized. You're going to introduce process where you don't need process, right. Back to kind of the acceptance and delegation.
Mike Fouts: Accept it and go and let it run because it's in a growth mode. And then. You'll negatively impact people, right? The people are different, and you do need different people, meaning they're looking for a particular pace, they're looking for a mission and charter, right? They're out to conquer the world,
Richard Ellis: right?
Mike Fouts: You can really get it wrong with your teams, and that's how you'll put your growth rate governor on if you're not careful. Got it? Got
Richard Ellis: it. Good insights there. And when we think about right sizing the processes, the tools. When you think about just some traditional processes, like quarterly business reviews and things like that, anything come to mind that you're doing differently now that really needs to be done differently and we can't just kind of adapt the old model to the new?
Mike Fouts: Yeah, the [00:11:00] the biggest thing we do differently is customer acquisition and marketing. Those are the two biggest differences. Right? When you're in a legacy software company, you are living off of the historical base of customers. Large
Richard Ellis: installed base of customers that you're trying to cultivate, expand, and That's right.
Mike Fouts: Yeah. Makes sense. And it's, it's really your two primary plays are expand and renew. Right, sure. Those are your two pluss. And so in this one you have, you, the lifeblood is the land component, right? We've got to go land new and we've gotta drive a marketing motion that fills the top of the funnel and puts things in there.
Mike Fouts: So with, with high volume and high velocity. So in Q bs, that's probably the biggest change, is what are we doing and how are we doing in with injecting customer acquisition in there?
Richard Ellis: I love that. And so, you know, just taking it outside of the QBR then as well, so whether it's QBR or territory reviews or account reviews, it, [00:12:00] it, it's less about the account development expansion motion, but more about marketing and new client acquisition, kind of that upfront growth engine, so to speak.
Mike Fouts: Yeah, we, we do have a very healthy expand motion. As well. It's balanced by that new business motion. Yes. Got it. Got it. In,
Richard Ellis: in terms of high growth versus legacy, are there some dynamics and commonalities that we want to say, Hey, we've learned a lot, right? Uh, let's, let's not throw the baby out with the bath water.
Richard Ellis: But these businesses have been successful over time and so, uh, albeit maybe they're. They're slower and they have some of that history that doesn't apply. Have you found some goodness that does apply that we need to bring forward into a growth business or a smaller software company?
Mike Fouts: Sure. Absolutely. I enjoy sports too, and I'm a fundamentals guy, right?
Mike Fouts: So, you know, if you look at teams regardless of pick, pick your favorite sport, right? The teams that win championships, they are always good at fundamentals. Whatever the sport is, [00:13:00] they do the fundamentals really well and all the little things they do, and I think that's the same regardless. So when you talk about fundamentals, you have to build pipeline, you have to have your sales methodology, you have to have gates and make sure that as you're managing your business and things move from one stage to the next, it qualifies out.
Mike Fouts: And so all, all of the value selling, all the fundamentals of the sales motion, those still apply. If you skip those in either business, you're in trouble. You're gonna have, you're gonna have a problem along the way. So, yeah, there's plenty of things you take from both of them that apply universally. I like that.
Mike Fouts: Let's not
Richard Ellis: forget the fundamentals that good business is built upon. Right, right. Well, I've asked you a lot of different questions along the way, and I I, I don't wanna miss an opportunity for some goodness or insight from you. So let me just pause and are there anything else comes to mind as I reached out to you and said, Hey, let's cover this topic on our next podcast that, that we haven't talked about yet?[00:14:00]
Mike Fouts: Yeah, I, I think here, here's what I would give everybody to both of the topics we've talked about. I'll, I'll give you three things. Number one is, uh, embrace, right? When, when you move into this model, don't fight every current, right? Embrace. And especially if you're someone like me who has come out of a more traditional, and now you're going into a growth business.
Mike Fouts: Uh, you can't fight everything. It's not, it's not worth it. So, so embrace those things. Prioritize and prioritize what matters. Things are gonna move really fast. The pace is gonna change dramatically. Uh, you're gonna be outta your comfort zone. Prioritize what matters. Right? And then the third one is, I, I've said it a couple of times and it's some very fundamental advice that a former boss and mentor gave me, which is accept a few things, right?
Mike Fouts: You can't change. Everything.
Richard Ellis: Mm.
Mike Fouts: So prioritize what matters, and then just accept the rest and put it on your list and [00:15:00] address it as time and the business evolve and permit. And that's been a really good guideline for me to live by, especially as I move from a legacy company into a growth company.
Richard Ellis: I like that a lot.
Richard Ellis: Those are three very good practical tips, both inside of business and out. Even if as we think about our families and our relationships Yes. And our friendships. That's awesome. Well, I do have one other question that comes to mind before we wrap up our topic today. I know, uh, of a couple of leaders specifically that are looking, uh, at making their next career move.
Richard Ellis: And certainly one choice would be go to a smaller. High growth startup type of company. Others might be joining a larger legacy company and, and then a third would be a high growth company within, uh, a larger legacy company or, uh, conglomerate, et cetera. Any of your learnings come to mind in terms of just being able to offer some advice to those that are trying to make some of these hard decisions on their career move?
Mike Fouts: [00:16:00] Yeah, I will. There, there's really two things. The, the first one is know who you are. Hmm. Know who you are, right? Have self-awareness to your strengths and your weaknesses. I have seen over the years bidirectionally, right? I've seen folks who, their profile is more a smaller. Agile fast company and they come into a larger company that's more stoic, more process driven, higher scale, and it just doesn't work.
Mike Fouts: So, so know who you are, and by the way, the reverse is true. I've seen growth companies make the mistake of. Going too early and getting someone from a larger company to instill some process. And if the timing's not right, that's a disaster. So right. Know who you are is number one. Number two is be honest about what you want.
Mike Fouts: Right? Oh, I like that. It's okay, right? If, if you want to live in a fast-paced environment. Great live there, right? Our time on this marble is pretty [00:17:00] short, so don't be miserable in, in that time, right? Know what you want. If you like the structure, if you like being a little bit more deliberate, if you like a little bit more process around things, that's gonna lead you in a certain direction, but I, I think it's important to know who you are.
Mike Fouts: And know what you want out of your life and your career.
Richard Ellis: Uh, that's fantastic. I think that's really good advice and a great way to wrap up our segment today. As we bring things to a close. As you know, we like to share goodness, even outside of the business realm. Anything come to mind that, uh, that's just bringing you some delight these days?
Mike Fouts: Yeah. You know what, Richard, this is occurring in the summer months here, so I'm gonna be a little bit. Off the reservation here. With this one, we had tickets to see Def Leppard. I'm an eighties Hairband child. Yes. I had a child of the eighties and so we went to Boston to see them and we got into town early and I went to a Starbucks, my wife and I, and I just ordered my.
Mike Fouts: Traditional [00:18:00] tea and in walks the drummer of Def Leppard. Wow. And there was nobody else in the store. And we spent about 15 minutes talking to him. It was really, it was just so much goodness and fun. We talked about the history of Boston and anyway, uh, then we went to the concert that night. So here's my goodness, right?
Mike Fouts: You go to these concerts with these folks like that and we're all a little bit older, even though we don't wanna admit it, but I. It transports you back to a point in time, right? I felt like I was back as a teenager in the, you know, 1988 or 89 and for a couple of hours it was incredible. So, uh, that's my goodness for everybody.
Mike Fouts: Little eighties hairband goodness. You know, it's,
Richard Ellis: it's funny, as much as we've worked together over the years, we haven't talked about our musical choices and that, uh, you hit it right there for me. I love, I love the eighties. I love eighties rock and hairbands. That's, and in fact, I just saw, I think it was like early August 3rd or something, a couple weeks ago.
Richard Ellis: It was Hysterias [00:19:00] 30th or 35th anniversary. That's right. So good, so good. I still remember I had three cassettes of Pyromania because I played them so much that I wore out the tape and it kept getting caught in my tape deck. So I, I just went and bought another one
Mike Fouts: that happened to be with Hysteria. So, yes, I, I love it.
Mike Fouts: Hopefully most of your audience knows what we're talking about with a CAS tape, but uh, yes, I know that problem. If we
Richard Ellis: don't reach out to both of us on LinkedIn, we're happy to educate you on the goodness of Hairbands in the eighties. That's right. All right. Well, fun way to end the show. Uh, really appreciate again you coming back, Mike, and, uh, look forward to, to doing this again sometime.
Richard Ellis: Me too.
Mike Fouts: Thanks Richard. It was a great time and hopefully everyone enjoys it. All right, thank you.
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