Podcast Transcript

[00:00:00] Sean Steele: G’day everybody, and welcome to The ScaleUps Podcast, where we help first-time Founders learn the secrets of scaling so that they can fulfill the potential of their business, make bigger decisions with greater confidence, and maximise the value and impact they can have in the world. I'm your host, Sean Steele, and my guest today is Nicola Fowkes - General Manager of Operations at EdventureCo. How are you today?

[00:00:21] Nicola Fowkes: I’m fantastic. Thank you.

[00:00:24] Sean Steele: Excellent. Well, look, this may be the world's longest, um, setup, but there needs to be some context for our conversation, so stay with me folks. It is actually important because Nic and I have known each other for eight years.

[00:00:34] Nicola Fowkes: There's history.

[00:00:35] Sean Steele: There's history, right? So, we've worked together full time in two different companies. We've been partners in crime for six of those eight years. First of all, with online courses Australia Group, which was a fast growing education business acquired by public listed company that you and I had all sorts of really interesting times in story for another day. And then we worked together to establish and scale EdventureCo for another public listed group, which has since gone private, but over four years from 2016 to 2020. And that was really driven by yourself, myself, John Lang, you. You know, you came on board to lead the people and performance function, but now you're accountable for leading a whole bunch of the acquisitions in the group. And John, we brought on board to lead the IT training business that we bought. And he's now also running a number of acquisitions, and myself, annoying you two every day as the group CEO, setting strategy, making sure that you and John and I as a bit of a sort of three amigos, had what we need to mentor the leaders of the acquisitions that we bought or install our own management, help them develop and execute strategies to fulfill their potential. Now you and John are both still at EdventureCo. But if we cast our minds back to 2016, right at the start, it was like, you, me, a couple of other crazy risk takers that we managed to convince to come on this journey, and we started by onboarding two small education businesses that were doing domestic and international students in residential and commercial construction stuff like carpentry and bricklaying and all sorts of things. And you and I had a very steep learning curve about what any of that was. That business or that combined business was doing, like less than 5 mil rev. It was probably, you know, however you look at it, maybe it was losing money. It wasn't doing a lot. Fast forward to today and after a whole bunch of organic growth and many acquisitions including the acquisition of one of my recent clients, NCQ. You guys can thank me later for that introduction. The business is now doing over 60 million in revenue and 20,000 students a year, and it's still scaling, so it was. And it is an incredible journey, and you and I learned a huge amount together about something very specific that we're talking about today, which was finding businesses, screening businesses, and buying businesses. But in reality, that's the fun and the nice part. And there's not really a lot to lose in that sort of early stage where the value is obviously created. And loss is actually how you onboard them, how you lead them, how you develop strategy, how you execute the strategy. And I know we're going to have a bunch of people listening today who at some point love the idea of maybe doing an acquisition, maybe bolstering their business. Okay, maybe it's a reverse merger, but probably buying another business, hoping that their business plus the other business make three, one and one making three, and that the businesses become better together and they find synergies. But you and I know that lots of stuff can go wrong very quickly. So, today, after that massive setup, for goal of today is to chat about how to not screw up businesses that you just spent money on acquiring. From a people perspective in particular, what do you look for in due diligence when you're thinking about the people behind the business, like you can always get financial boffins to help you look at the numbers, and the market and all the rest. But you are buying people, essentially. You're buying a group of people and hoping that their talent is going to continue to deliver outcomes for you. So, what mindset do you need to be in? What mindset are they in when you're coming in as the new owner? And what are the implications of that? How do you practically bring them on board so that they don't all of a sudden think you are the most awful person in the world who's just bought their business and now they all want to pack up their toys and go home. You know, what are some of the things that you've learned over time, that is really my goal for today. How does that sound to you? And did I miss anything that you think is important in the context set up bit?

[00:04:18] Nicola Fowkes: No, I think that's great. I think there's definitely a lot to talk about. We could talk about for hours, but we'll keep it short and sweet. But yeah, I think, from our journey, we've definitely, there's been highs and lows and tears and laughter. And that's all really part of an acquisition process. And nothing goes smoothly, and that's what we need to prepare for.

[00:04:42] Sean Steele: That's true. It's like, you know what you can guarantee is that however you think it's going to go, it's not going to go like that, but it'll go like something. And so, the question is…

[00:04:50] Nicola Fowkes: Exactly.

[00:04:50] Sean Steele: …How do you attack and change something? So, my first question for you is, and you know your name comes up a lot when I'm actually mentoring Founders, because I always have a little Nicola around my shoulder coaching me from the side going, “Sean, you need to be thinking about it this way”, because I've spent most of my professional life having that in a real-life version of Nicola. But one of the things that you have always really talked about and I talk about with clients that I support is this difference between HR functions versus people and culture functions versus people and performance, and just the language around that and what does that mean and why is it important? You're always very deliberate about those terms. Can you just talk me through the differences from your perspective?

[00:05:32] Nicola Fowkes: Yeah, absolutely. It's a little bit terrifying that you have Nicola around your shoulder. But we'll move past that. Look, I think HR has had a bit of an identity crisis over time. So, for the last, probably 10 years or so, perhaps even more, the function of Traditional HR has changed significantly, as businesses have changed, their direction, their focus, to really look at the people they've got engaged within their business. So traditionally HR was a function. If you got a call from HR, it was bad news. They moved the paper around, they were the fun police, all of this sitting up in a crystal palace and you went there when you had a disciplinary issue, or you perhaps met them in the recruitment process as well. So, that's very…

[00:06:18] Sean Steele: It was exact same thing, so the principal wasn't like, you're going to be sent to HR. Watch out. HR is going to have a chat to you.

[00:06:23] Nicola Fowkes: Exactly. I'm going to report this to HR, which is a very traditional approach. And yes, those industrial relations and employee relations aspects do need to be addressed within a business. But when we're talking about the movement from HR to people and performance, we're really trying to make that move a more proactive approach. So, HR is not reacting to the business, but is a step ahead and always looking at what's going on and where the problems might arise, where the opportunities are, how we can engage people better. The HR function definitely moved to people in culture. And that's great. That's definitely a move to creating an environment where people engage. From my perspective, culture is actually not built by one department, it is built by every single person in the business. We all know that if we make a bad recruit, or even two or three, it can significantly change the culture of teams or businesses very, very quickly. So, culture is, it's definitely a priority within the people function, but I like to see culture as a whole of business approach. And so that brings us on to people and performance, which is I guess where a number of organisations are moving to. Now when we are talking about performance, we're really talking about what does success look like and what does success look like for the business? What does it success look like for every department, every team, and every individual. So, if we're all aligned in what success looks like in all of those aspects, then we've got a really cohesive team moving forward to achieve the goals of the business. So, that's why we focus on people and performance because it's really supporting leaders to ensure that we're doing everything to align success.

[00:08:19] Sean Steele: It's such a great description. And the couple of things that bubbled up to me there, one is just that concept of, you know, not recruiting for cultural fit, but sort of cultural contribution. Like, what is this person, to your point, you know, each individual in that culture is going to be influencing what the culture's like in every single hire either adds or tracks something from, you know, it's a moving thing and you may design it sort of mentally at the start, and you're conscious about how it's being created. No question. But it's also organically evolving with the people that you hire. Second thing was just the context of performance. You know, it's still rare in this day and age, like I feel like you might have been a bit of a pioneer, but it's still rare to be having a conversation with a people professional about performance. But the thing that I'd love that is the glue of all that is success. What does success actually look like for the individual and for the organisation? We're generally pretty good as leaders about talking about what success looks like for the business. You know, this is where we're trying to go and these are our goals and blah, blah, blah. But how often do we get really clear. As opposed to, you know, you look at job descriptions and you go. Wow. That's just a big list of tasks. What does success look like for the individual? How do they know if they're succeeding? Is it just completing tasks? Because it's not a very, exciting job you get.

[00:09:39] Nicola Fowkes: It's not a very exciting job and it doesn't allow people the opportunity to bring themselves to the party either. So, when we're talking about success, we want people to bring, uh, all of their skills, knowledge, experience, their personal attributes to what success looks like. So, when we're talking about, we don't use job descriptions, we really talk about what success looks like in your role, and the key capabilities, experience, knowledge, et cetera, that you need to bring to the role to achieve the core objectives of the role. How you do that is what creates innovation? So, job descriptions may actually hinder innovation and creativity. Something where we're focusing on what success looks like allows that creative side to really come out in people and try new things.

[00:10:28] Sean Steele: And if anyone wants to listen to, you want to kind of think about this a little bit more deeply, and you go back to the Liz Wiseman episode, the author of Impact Players, she talks a lot about how you help this person understand what success looks like for them so that they're clear about what that is. And then of course they're going to want autonomy as much autonomy as is reasonable over the how. But if you don't setup what success looks like in the first place. Pretty hard for them to know kind of where to head, and then you're just kind of waiting with them to do things wrong, and it's telling them when they do stuff wrong, it's like, that's not very helpful.

[00:11:01] Nicola Fowkes: Yeah. Absolutely.

[00:11:03] Sean Steele: Okay, so let's talk about, let's get into actually the nuts and bolts of acquisitions. You and I have spent a lot of time looking at businesses to buy. We bought some, and you know, we always used to split up our accountabilities amongst our team around different sort of work streams, you know, so we might be looking at any acquisition and looking at the cash and the finances, how the reporting's going to work, how the integration is going to work at a sort, you know, maybe, legal contracts, entities, all this sort of stuff, but people, sales and marketing product, but people was always a stream on its own. What kind of stuff do you look at when you want to do due diligence on the people side? Like what are you thinking about?

[00:11:43] Nicola Fowkes: Yeah, I think, traditionally people go straight for culture. What is the culture of the organisation? And so, they dive in there looking for some sort of indication, or a statement from the vendors about what the culture is in the business. But actually, when you're looking at the people side of things, yes, you do need to check the IR activities and all Legal side of it to make sure that you can tick that off. But more important than that is you can get some really great insight by looking at the documents that are provided to you within the business and not the HR documents, but the actual operational documents across the business. So, we always start with an organisational structure and we look at how that's sitting now. Now that sounds pretty boring, but an organisational structure is actually how the business works. So, it's not a representation of reporting lines, it's far more than that, or it should be. So you can look at things like, what is the reporting line structure? How many direct reports do people have? And that's just the start of it. The organisational structure is really, how people group together to complete the tasks that are required to achieve success. So, when we are looking at that, we actually need to look at the organisational structure, along with the operational processes, and then overlay that with what the client journey is. Now what we are looking at there and what we're always looking at when we're looking at people due diligence is alignment because you need to know if you're going to walking into a business where it's siloed, where there's conflict between teams, that's a difficult thing to change. So, we're looking for alignment. Sometimes we'll look at businesses and we can see there's some interesting ways that they're structured and when we look at operational processes, you'll be able to tell that there's a lot of what we call pinballing, and that means that, an activity comes in that needs to be completed and it's received by someone flicked to another department, flicked over to another department, then comes back, and that just creates huge amounts of inefficiency and you can guarantee there'll be frustration in the culture along with that as people are relying on other people getting back to them and moving them around. So, those sorts of details that you look into, you can really pick out where your operational issues are going to be as you move into the business. Now, it's not the worst thing in the world if the structure is not right, but it allows you to prepare effectively for the acquisition itself and to be really aware of what resources that you need within the businesses. You can have a look at, is it top heavy? Which means there's a lot of strategy talk going on. Is it bottom heavy? Which means that people are very busy, being busy, and just really looking at that structure in a great amount of detail, but overlaying it with other aspects of the operation. The people side should never be separate from the operational side. They connect together. And without looking at the both of them together, then you create a silo in itself.

[00:14:58] Sean Steele: And so, if you see that, you know when you see that pinballing, okay, you look at a structure and you go, wow, there's a lot of silos going on here. For example, I don't know, sales has got a separate leader. Marketing's got a separate leader. Oh, by the way, they actually reporting to two different people. And you're going, oh, sales and marketing probably aren't actually talking or working together very cohesively in that business unit, for example. When you see the structure that might suggest that there's a lot of pinballing or inefficiency going on, what does it mean to you, or what questions does it raise for you when you're thinking about due diligence? Are you going, oh, yee-haw, opportunity, like I can see efficiencies that are going to be gained here and say, maybe there's going to be some savings, but it's going to be a whole bunch of work and probably we're going to have to reorganise this leadership structure over here. Like, what are you thinking when you see such?

[00:15:38] Nicola Fowkes: Yeah, it's all of those things. So, we definitely look at, there's some, some key aspects that come out. If there is all of this pinballing going on, you can guarantee there's frustration. So, it gives us something to work with very quickly on an acquisition is to address the frustrations within the business. It's about digging down and going, okay, is this a people problem? Is it a systems problem? Is it a process problem? What is that? And so, you just keep digging. So, the structure is the first piece. Then you highlight where the issues are, and then you keep digging to exactly where those problems arise. So, you know, and then it helps you set the plan. And it helps you also ask questions of the vendors and if you're lucky enough to get a management meeting with some of the leaders, ask questions about how that structure came about. If you are hearing things like, well, those two didn't actually get along, so we separated it out, that's not a problem with the two people. That's a decision-making process that is evident in the business. So, if they've made that decision in the business, then that's how they go about decision making. And then that again helps you figure out the operational aspects of the role.

[00:16:58] Sean Steele: Wow, so interesting. And just for the avoidance of doubt for somebody who's thinking about this for the first time, because if you haven't done an acquisition, you don't realise all this stuff, right? You want to be walking in with a plan. Now the plan is going to change, no question. The plan is going to be informed, it's going to evolve, but you've still got to walk in with the plan because you've got to, how deeply am I going to be integrating this business? Where do I think the changes are going to need to be made? Because the worst thing that you can do to a business that you've just acquired, I think is, have the process just go on and on and on at infinite. Like there's no finality, there's no like, okay, we've done the stuff that we're going to do, because everyone is wondering what you're going to do, right? What are they going to do when they come into this business? And it feels like it just keeps going and going and going. People get really tired, don't they? They sort of, it's a major reason to increase their frustration rather than, to your point, if you see some frustration areas and you are thinking; it'd be great to be able to come in and get some quick wins with these guys, so they realise we're actually there to help them and help do their best work and, and find a great new home. Knowing what some of those frustrations might be and then being able to resolve them is going to help you build some credibility and some trust with them.

[00:18:04] Nicola Fowkes: Yeah, absolutely. And by being able to pinpoint through the use of documents and vendor discussions, by pinpointing where you think the problems might be, you can know what other information to ask for through the process. So, you're going three, if it's a quick acquisition, six, nine, it can go on and on and on. You've got this opportunity to keep digging and keep requesting information, and that's what looking at that you can be able to really drill down, and get the information that you are looking for so that you can set the plan moving forward. So, if you think there's frustrations on efficiencies or systems, you might be able to request an employee engagement survey in which you can drill down on those questions a little bit more. And that insight allows you to really move quickly once you acquire the business, you still need to listen and you still need to understand, but having sort of a one-page strategy to go in with, this is the process that we are going to undertake. And this is our big goal, and having that one page allows the people to anchor to something, which is what a lot of people forget. In a change process, it's very, very difficult for the individuals involved if you don't give them something to anchor to, and that's sort of where a one-page strategic plan, which may change three months in, gives people something to work with.

[00:19:36] Sean Steele: Nice. So, like that really, it kind of links to my next question which is about the mindset that you need to be in and the mindset that they're actually going to be in. Because again, if you've never done an acquisition or you've never been through one before, you've never been part of a company that's been acquired, like you need to understand what's going on in their psychology. Talk to me about that and how are they thinking about this, and therefore, as the buyer, how do you need to be thinking about it? Just that from a sort of, I guess, mindset sort of perspective.

[00:20:02] Nicola Fowkes: Yeah, I might flip that and start with the buyer, because if you've gone through six months nine months of DD and you finally made this acquisition, it's because you believe it has something that will help you build the business. So as you are coming in, you are excited, you've got a plan, you know the details. It couldn't be more exciting for you. You've just bought a brand-new business. On the flip side of that, you've just taken on the livelihood of every person who works in that business and those people depend on that business for their livelihood. So, there is absolutely going to be fear involved in an acquisition. So, balancing out those two different perceptions of the situation, is really important because as we move in, this is the best thing that's happened to us. We've got an acquisition, there's so many opportunities, it's going to be fantastic. We definitely need to be motivational and enthusiastic, but we've also got to be really rarely aware of that mindset. And I think that's where it's really important to really focus on the difference between project management and change management. Now, they're both sort of intertwine, but project management is the process, you get your Monday board or whatever it might be, and you write a big list of things that you're going to do and it sort of ties into that one-page strategy, and you've got the hundred-day plan and you are good to go. That's project management. Change management is the changing of people, the changing of systems, which basically you need your people engaged in. So, what we're talking about is hearts and minds. So, project management is minds. Change management is both of those things. It's like a whole of brain experience. And where people tend to go wrong is thinking it's just one or the other. So, we are excited. We're going to share that enthusiasm with you, but we're not going to give you any details of the strategy or the project. Or we love project planning. We're very detailed. We’re going to put in this project plan, there's 500 tasks on there. It's very exciting, but we don't focus on the emotions involved in change. So, it is a sort of a balance of both of those things. But 70% of change management projects fail. That's the sort of widely accepted. Now, that either means that we're all crazy taking on change projects, or that somehow, we see some real value in there. So, when we're talking about the 70% failing, it is generally because we focus too much on one side of the brain or the heart or the mind. You know what, however you want to describe it, it's both aspects. So, as you are going into an organisation, you need to have both sides, engaged and ready to move on.

[00:23:07] Sean Steele: And so, what would be some examples then practically of how you make sure that you've got that in place. Like what sort of things would you do to make sure that you've engaged both hearts and minds in that process? Because to your point, you've got a whole bunch of things. You are walking in with a plan, like you think you know what you're going to do and they're walking in going, oh my God, we just got bored. I don't even know that yesterday. And as of today, I've got a new owner, like, oh, I wonder what they're going to do to me, and is my job safe? Is this company going to be, are they going to strip out all the people? Like, you know, they got so many questions and so much fear. What do you do practically to build that?

[00:23:39] Nicola Fowkes: Hmm. And it's true, there is a lot of fear. Even those ones that are enthusiastic and on board, there's still fear because it, it's unknown. You've been working on this as a buyer for months and months and months. This is brand new to them. So, you've got people who react in different ways, and that's where you've got to be really aware of the different ways of addressing it. So, you've got people who will take off, not interested in being a part of it. People who are just frozen. So, it's that fight or flight freeze response, that's what you're dealing with and every single person is going through that process. And it takes some time. So, practically what do we do? It's obvious that we communicate, communicate, communicate, we can do all of that. But it's more than just communication. It's actually storytelling. So when you are going through a change process, you're actually taking people through a journey. I hate that word, but it's the only one I can think of right now, are you taking them through, and you need to make sure that you are storytelling, letting people know the background, what the goals are, what's happening now, and how that impacts the goals. So, you are always explaining through story where we are now and where we're heading to. So, that's really important. But from a communication perspective, I always use the three-by-three communication technique. I don't know if I made that up or I stole it from someone else. I have no idea. I think, I learned about it whilst I was studying. But anyway, that means you need to let people know your key communication points three times in three different ways. So, important messages should be told at least three times. Don't worry about repeating yourself, because there's this wonderful thing called perception that people take on. So, if you just tell people once, there's perception and talking and influence that happens behind the scenes. So, it's always three times to let people understand and then ask questions and then in three different ways. So, you might have town halls, emails, small group communications, and you're just telling the same story, letting people understand where we are going as characters in this business. So, that's really important is that three-by-three. So, when you come into an acquisition, you have your hundred-day plan. Make sure part of that a hundred-day plan is engaging with the people. So yes, you need the initial email. “Hooray, can you imagine getting that email as an employee going, oh, we've just been acquired. Oh my God, what does that mean?” So, you've got to be up there in front of the people early, communicate with them if you are able to do that with the vendors. Even better. That's a nice transition. So, think about that as you're moving forward, and you know, get up in front of the people and start talking to them, and really focus on your learning about them just as they're learning about you. And that that creates an environment where you can learn from each other. So those things are really important in the beginning. Town halls, I think we did a road show once, Sean, do you remember that?

[00:27:02] Sean Steele: I will never forget that road show. Like I'll never forget being in Melbourne in the hotel room, you know, like night before where just you we're working through all the coms. Like what are we going to say to people? How exactly how is that going to roll out? Because we're going to out to do a teleconference with 150 people or something. And you have to explain to them, Hi everyone. We're the new owners. We've just purchased you. You know, unfortunately your CEO's not going to be here maybe after tomorrow, but you know, we've got a new one, or I'm the new one. Or, you know, whatever the message is like there's a lot of information for you to manage and to think through. And one of the things I really love, just to interject for one moment that you said, is it really, it reminded me of the metaphor of pacing and leading. You know, I always found the visual of a greyhound race. I don't condone greyhound racing, so please don't attack me. But, you know, when you think about where the rabbit, where the automated rabbit thing is placed near the greyhounds, if you start that thing a hundred meters down the track, and then you let the greyhounds out, they're all just going to start looking at each other going, oh, what? There's a rabbit somewhere. They can't even see the rabbit. It's too far away. And if you have the rabbit so close that they come out of the gate and they grab that rabbit straight away, everything stops. They've lost momentum. They think goal's already been achieved. And so, this concept of pacing and leading is always about, you know, like meet people where they are and then you have to be able to provide that sense of where we're going, but only at least like the next bit. It doesn't have to be all the way around the track. We don't have to describe absolutely everything, but we have to meet them where they are and then move it out, meet them where they are, and then move it out. So, to your point around storytelling, it's like, well, where are they going to be right now? So, to your point, if you don't give them context and background and then think about; well, you might be feeling this right now. You might be feeling that right now. You might have these questions right now. Let me talk to you a bit about where we think this is going, but we're going to iterate together. If you can't connect that and you start with, “In the next five years, we're going to be this and we're going to be that…” And like you are way down the track and the greyhounds coming out going, what? There's a rabbit out there. Like what? They're looking at each other again. Huh? I don't get it.

[00:29:00] Nicola Fowkes: Yeah, exactly. And the storytelling thing is exactly the same thing. People need to start at chapter one to understand what's going on, and then we move through all the chapters, and so it's exactly the same process, but that pace and lead is just so vital. And I think a lot of people, are so excited because, you know, when we're talking about people who have acquired a business, ready to go, and so you're so enthusiastic, but that in fact can have a really negative impact if you're not pacing out the change process.

[00:29:33] Sean Steele: And so then what about, so I guess it kind of leads into my next question about how you bring them on board. And we started talking about that. So, we're kind of naturally moving, moving through the dialogue, but the things that you think about that are really important to be able to practically bring them on board. Because you may want to be making changes, but not everybody's going to love, like yeah, that's the reality, right? Sometimes you're looking at business where you go, actually we've got a whole bunch of duplication of roles here. You know, we've got three HR people and they've got three HR people, and we've got two of these, and they've got two of those. And you're thinking, oh, there's a cost saving opportunity here. That's part of where you can make money in acquisitions. But that's not something that they're super excited to hear about on day one. Hey, guess what, everybody, we've got the best people and you've got terrible people, and therefore our people will be better than yours. And so, you guys, you are out. Like, that's not a great idea. So, talk to me about how you think about bringing them on board in circumstances where maybe not everything that they're going to experience is all, you know, rainbows and daffodils.

[00:30:32] Nicola Fowkes: Oh, absolutely. And there's sometimes there is some really tough acquisitions where changes get made very early on. Normally when there's a change of CEO and that sort of thing, be brave, you know, understand where people are coming from, but don't hide behind just because it's a difficult decision or it's difficult change. You've got to be brave and just be aware where people are coming from. But they will respect your authenticity, rather than trying to keep everyone happy. So, the biggest advice is, is be brave without being callous. So, there's certain approaches that can be quite harsh. But if you are looking at a growth organisation, that's the type of acquisition where you need to be brave, make the big decisions. Just be careful as you move forward. You've made all these decisions in DD, you still need to learn about the business. You need to learn about the people, the operation lives and dies on the people. So, you need to still learn. You might have been wrong in DD. When you dive in, you always learn so much about things that you thought, is this going on? Or, I think this is the situation. They go, oh no, that's why. And you go, oh, okay. So, communicate a lot. Ask the questions, keep the information that you learn at DD and keep digging and digging and digging. I think it's really important as you're moving in an acquisition to have an onboarding team, even if it's you and one other person. So, probably in smaller businesses you think, I'll do everything. Always have an onboarding team, it allows the team to sort of spread out and get different perspectives and to see things differently and to help you as the leader to really get a wider view of what's going on.

[00:32:30] Sean Steele: As you said, because your plan is essentially made up of a whole bunch of hypotheses of which you have not yet tested.

[00:32:36] Nicola Fowkes: Correct. Yeah.

[00:32:38] Sean Steele: So yeah, you absolutely think you're at the end of that and you're like, great. We know exactly what we're going to do. But then you get in the reality, to your point, could be quite different. And so, if you don't have those different, and it's actually quite an emotional experience. Like I remember our first acquisition and you're so present in your part of it or what the things are that you've got to do, you absolutely lose visibility of what else is going on, what other conversations are happening, how other people might be feeling. So, being able to tag team works exceptionally well.

[00:33:07] Nicola Fowkes: Yeah, absolutely. So, always make sure you've got that onboarding team and you're aligned and you're communicating and really driving forward. We talked about having the strategy, just a one pager to anchor people. That's really, really vital as you move forward. One of the other areas that is also important is getting people involved from the very beginning. So, we are big believers in working groups, you can call them project groups, whatever it might be, changes you want to make, you need the people to make those changes. So that's why we use working groups a lot to engage people, and you actually end up with a better product. So, you've got to be cautious of throwing that baby out at the bath water as the old saying goes, that you bought this business for a reason. So, just be careful that you don't get lost in what you are doing and throw some of the good stuff out because it's impossible to get back again.

[00:34:11] Sean Steele: True. I remember, the first acquisition I was involved in, I think was in 2012, maybe. And we set up a sales and marketing committee, and I'd never really given any thought, because I'd done acquisitions before, but we had a sales and marketing committee made up of sales and marketing people from both businesses. It was like, here's the things that we're trying to achieve, here's the synergies we're looking for, but actually we want both sets of teams in it. And I thought, that's so clever. And it was because all of a sudden you learned in that it's like everybody had a common goal even though it was a bit awkward, of course at times because you know, it's like people are still sniffing each other out. But it created so much because both of those sales and marketing teams were going to have to end up implementing those things to achieve the synergies that were expected as part of the business case. And I think one of the reason that sometimes people, you know, when I think about some of the stuff that we'd done, one of the worst things that you could do is make the starting assumption that just because you know your people, if you think there's cost savings, for example, or duplication of roles or something, making the assumption that your people are going to be the best. It's like, what are you buying for this business for? You might have a, I don't know, an accountant or something and you trust the accountant because you've had the accountant for ages and so on. And you know what, we probably only need one accountant for this entire group. And now there's two accountants. Don't fall under the trap of making the assumption that just because you've got an account that your accountant is the best accountant, you might find if you walk in with that, it's going to permeate all of your communication as well, isn't it? And you might find exactly the opposite. You'll find you're buying this business for a reason. There's all these, the team is producing results, so.

[00:35:46] Nicola Fowkes: There are diamonds in there, but you've got to take the time and find those people, find those systems. And it might be, you might find some areas of the business that you go, why didn't I think of that? But you've got to be looking for it because we can tend to, just human beings in general, we like to go with things like us, people like us, you know, this is what I know, and we can move down that pathway and forget everything else. But in actual fact, the value is outside of what we already do. That's where the value is.

[00:36:20] Sean Steele: Awesome. Anything else that you didn't get a chance, because I kind of cut you off?

[00:36:27] Nicola Fowkes: I'm used to it, Sean. It's alright.

[00:36:31] Sean Steele: Well, that's nothing new. Just because I get excited. About how we bring them on board, anything else that you wanted to share?

[00:36:38] Nicola Fowkes: Yeah. I just probably one other thing is, another old saying is build it and they will come, do not use that philosophy at all because if you build something, yeah, they'll come and have a look at it and. Okay, thanks. Bye. So, if you don't engage people, and you build a new system and it's wonderful. It's a great new system. Actually, we are just going to plunk our system in here. Yeah, it's fantastic. What will happen? So, what you're saying is we built this. And that's saying build it and they will come. They will not come because it has to be whatever you're building, whether it's a system, a team, an organisation, you need to educate your people. And that's a bit that tends to fall out of all DD for all acquisitions. So, whether it's training, education, knowledge, people forget to train their people during onboarding. And that's from everything from who are we, how do we operate, to who are you, how do you operate? So, the education across teams is so important. The training of, we're doing this now. Great. That sounds fantastic. If you don't train and educate and spend time investing in that, you are expecting people to do it just because you built it. Does that make sense?

[00:38:06] Sean Steele: Yep. A hundred percent. So, I mean, you and I, I know you and I could talk about this for hours because we have spent just hundreds and hundreds and hundreds of hours together.

[00:38:15] Nicola Fowkes: Way too much time.

[00:38:18] Sean Steele: …looking at businesses, buying businesses, integrating businesses, et cetera. So, we've done this quite a few times, but when you reflect back on some of the kind of key principles, key lessons, whether things to do or things to absolutely not do that you think, you know, things that really create value or things that massively lose value. What are some of the key lessons that you think, given you have done? I mean, this is before you ever met, before we ever met. You've been doing this for years. You were doing this in the hotel industry, and so you've done a lot of acquisitions in your time. What are some of the things that you think are big lessons for people to really take?

[00:38:52] Nicola Fowkes: I have been doing it for a fair while, but in very different roles as well. So, it's given me a really a different view perhaps because I've worked in it through different roles and been in businesses that have been acquired themselves. So, that really helps. I think, that point I made before about change management and project management being intertwined, yes, but different is vital. And it should be really part of every conversation that you are undertaking in regards to your hundred-day plan, is make sure that you've got someone who's actually managing the change as well as the plan. So that's a really important aspect. I've seen a lot of people forget to have fun. You're not going to go into this and it is not going to be rosy every day. It is hard work. There is no “ifs” and “buts” about it. Acquisitions are not easy. You're dealing with a whole new business that you're trying to integrate and people that you're trying to bring along with you. So, don't forget to have some fun along the way with the people that you're working with in your change management team. You're doing this because you thought it was a great opportunity. So, when you're in those really tough situations when you're making tough decisions, just remember that there is value in this and to celebrate when the time is right. And have a laugh because you'll need it. So, it's really, really important to know that it's not going to be smooth sailing, and if it is smooth sailing, there's something going on underneath the surface that you need to take an awareness up. And I guess the other thing is pace and lead. Give people time to breathe. Give the businesses time to breathe as they're moving forward. So yes, you might want to change everything immediately, but separate it out. Spend some time pacing, spend some time leading and make sure that you're giving people the space to come along with you. I think, the key overall aspects. And you know, sometimes I think when I'm talking about this, I make it sound like, there's no tough decisions to make. There absolutely are tough decisions. Be really aware of those tough decisions. Don't space them out. Don't try and hide them. Just make sure that you're communicating, that you've got fair reason behind the tough decisions that you're making. And that's all about leadership and respect more than anything else. So, yeah.

[00:41:37] Sean Steele: Yeah. Such great wisdom I'll never forget. In that precise context, I always think one of the things that I learned in us working together on acquisitions was that people are adults, and they can deal very well with information they know, it's the information that you hide from them thinking, oh, they're not, you know, if I tell them they're going to worry about it and so on. It’s like people are super smart and they're adults. And I remember, in one of the acquisitions that we did, we had some big savings that we needed to make, and some of those savings were going to come from people. And so, what we did was to actually be super transparent with the business who had not had a previously transparent leadership approach. And so, they didn't know what the numbers were. They didn't know that actually the business's profitability was like practically zero. And that was shared with them very quickly to create, partly because that's how we led. And that was our style and our culture, but also to bring them on board to go; Hey guys, you realize this business is pretty much not making any money and in the absence of us actually making some savings, there is no capacity to invest in its future growth and opportunity for you guys and to do new things and serve new clients and take on new products and make everything better, and all the stuff that we all want. And they absolutely got it. And they were so incredibly behind us and supportive when we were making really difficult decisions about people that, you know, some roles that were not going to continue in the business because we'd brought them in and we'd give them a real sort of transparent and authentic rather, we didn't try to hide it; we didn't surprise them. We didn't walk in one day and just, you know, sack a whole bunch of people and all of a sudden go, okay, everyone, let me just tell you what we just did. It was like, they knew change was coming. And then once the change had been prepared and people were ready for it, we made change. We made it quickly, so it wasn’t prolonged and painful for people. And I really, I really took that out of a number of our experiences, but I always try to encourage Founders to remember that people are adults, and they do a great job. They do far better job than you think they're going to. And quite often it's relationship building, it's trust building that you let them in if things aren't all rosy, you don't have to hide them. You don't have to hide it from them when things aren't rosy, like tell them, hey, you know what? Things aren't rosy. Tell them you've got a plan. Talk to them about the plan, whatever the plan is. But you don't have to shelter them from it because they'd rather not be surprised.

[00:43:55] Nicola Fowkes: Yeah. And then it also allows them the opportunity to come up with ideas themselves. When we've talked to people about situations where there's negative impacts or there's issues that need to be addressed, you'd be surprised the number of people that come up afterwards and say; Hey, I was, you know, this is an impact that I have. They've all got lives, so they're all willing to make decisions for themselves or had you thought about that. And sometimes they come up with the best ideas. So, to hide behind it just because you think people won't buy in, in fact, as I said before, it's about leadership and respect. So, by allowing people to, um, express and understand and, and be part of the decision, it actually creates a much better environment or culture for the business moving forward.

[00:44:45] Sean Steele: Yep. Couldn't agree more. Nic, I would love to keep asking you questions, but I'm also conscious of how much brain span people have to listen to a podcast. And so, I know I'm going to have to shut up very shortly. Is there any question that you, on this topic that you really wish that I'd asked you that I haven't yet?

[00:45:03] Nicola Fowkes: Hmm, that's an excellent question. I think, you know, the overall question that we started with, which is, how not to mess it up.

[00:45:18] Sean Steele: Yeah, I said screw it up. That's very kind…

[00:45:21] Nicola Fowkes: I'm more polite than you. So, how not to mess up the acquisition, and how not to mess it up is to check your mindset your approach. So always when you're going through this transition process, which can be three months full on, six months at about 70%, and then it starts just being part of change, starts being part of the businesses is just check your mindset. Are you stepping back? Are you taking a helicopter approach? Are you viewing the whole business and all the people within it, because we get so stuck in the weeds sometimes that we forget that helicopter view. So, if there's one way of messing it up, it's just getting in that lane and just doing what you've got to do, and forgetting to just hop up in your helicopter and have a look every once in a while.

[00:46:19] Sean Steele: I love that because when you think about it, you know, no matter what kind of business it is, they're all people businesses. You're not buying an asset. I mean, yes. You know when you get into all financials and you're looking at numbers and you're like, oh yeah, we can make an extra 200 grand here and times five that accounts an extra million bucks of enterprise value, blah, blah, blah. And we're thinking of it as an asset quite often as business leaders. But when it comes to the crunch, these are people, you're buying an opportunity, to be honoured with the gift of leading these people and helping them get the most out of the next chapter. And so, you have to remember that they’re humans, they’re not assets, and they have lives and have opinions, and they have views, and they're not going to like everything that you do. And so, you actually have to engage them probably in the same way, hopefully, that you've engaged your existing team. You know, they're a new team that you have to build trust and relationship with. So, there's so much about leadership in here. You know, Nic, I'd love to acknowledge you. You have taught me so much over the years and I know that you and I have probably got about 20 podcasts in this, we were going to cover all things people and all things I've learned. But one of the things that I've really have valued about our experience together is that you always made me a better leader. You are probably one of the people that helped me be one of the most courageous, certainly helped me be the most courageous in my leadership that I'd ever been in any previous time in the past. And so, thank you for what you've done for me personally. I continue to talk about you all the time to anyone who will listen to me as one of the most four influential people of my life, particularly when it comes to my professional career as a CEO. So, I hope we get another opportunity and you let me, I know you'll make me chase you a lot because you'll probably avoid it. But I hope you let me bring you back on the podcast at some time in the future to talk about some other topics that I'd love to pick your brain on.

[00:48:05] Nicola Fowkes: Absolutely. And you know, I don't like compliments. So he did it on a podcast. Thank you,

[00:48:13] Sean Steele: My pleasure. Nic, if people wanted to follow along, if people wanted to connect with you or ask you a question or follow along with a EdventureCo, and the journey that you guys are going on, where would you direct them to?

[00:48:26] Nicola Fowkes: Probably LinkedIn is a good option. Or also you can connect with me from the EdventureCo website.

[00:48:34] Sean Steele: Beautiful. Thank you, Nic. Folks, I really hope you enjoyed today. And if it's raised questions for you about acquisitions that you're doing and acquisition that you've just done, and you know, you've got some questions that you want to ask. Just email us at [email protected]. If I can't answer it, I'm certainly going to get Nic to answer it, and I'll find a way to get that answer back to you. Obviously, if you valued today and you want to hear more, make sure you subscribe. Leave us a review. That's always very helpful. If you're not driving, take a screenshot, send it to somebody who you know would love to hear a bit more about this topic.
Just helps us expand our impact and who we can help in the world. But that's it for me today. You have been listening to the ScaleUps Podcast. I'm Sean Steele, and thank you so much, Nicola, for entertaining me and finally getting on this podcast.

[00:49:21] Nicola Fowkes: My absolute pleasure.

[00:49:23] Sean Steele: Look forward to speaking with again next week, folks. Thanks very much, Nic.