Culture and IT Services Companies feat. Chelsey Nord

Mike Harvath  00:04

Hello, and welcome to this week’s shooting Moon podcast broadcasting live in direct from revenue rockin world headquarters in Bloomington, Minnesota. As you know, revenue rocket is world’s premier growth strategy and m&a advisor for IT services companies. I’m thrilled today to have my partner Ryan Barnett. And Chelsea Nord who runs our strategy practice here at revenue rocket. Join us to talk about culture. Welcome, guys.

Chelsey Nord  00:38

Thanks for having me. I’m really passionate about leadership and culture. So this is a topic that I’m excited to kind of dip my toe and get introduced to the podcast.

Ryan Barnett  00:50

And we are equally welcome, very happy to have you here at Chelsey. And in a little bit of this is, we’d love to learn a little bit more about you, Chelsey, and what you’re coming from and your background. So Chelsey is one of our newer additions to revenue rocket, and we can’t be more pleased to have her at the company. And the impact that she’s had already has been just exponential to our clients to our work and to what we do. And we’re a much much better firm because of her efforts. And I’d love to know, tell us, where did you come from? What were you go to school? What you look, what did you do? What, what made you get into what you’re doing today?

Chelsey Nord  01:30

Yeah, thank you for the high praises Ryan. I have a background in industrial organizational psychology, which is, which is a practice area of kind of bought how people behave and how they make decisions in the workplace. And it’s, it’s an interesting kind of background, it’s kind of half statistics and measurement of employee behavior. And then the other half of it is kind of more your standard, kind of OD management kind of MBA type classes. So that’s my background, I’ve got kind of a diverse set of roles that I held previous to joining revenue rocket, and kind of both internal and external management consulting type of roles, as well as having my own kind of independent consulting company. So I’d say specialize in, you know, employee survey and assessment development in the world of culture, employee engagement. And then on the other side of it having some kind of multidisciplinary experience in management, general management consulting. So that’s a little bit about me.

Ryan Barnett  02:41

That’s great. Now, it’s been a helpful background, I think, when you look at what we do at revenue rocket, we do growth strategy consulting, to help IT services companies really realize their growth potential. And a lot of the work that we do was in mergers and acquisition. And we when companies are ready to buy, or when they’re times ready, right and ready to sell, we help people go through that process. And again, you’ve been invaluable in, in producing some great content for clients to really dig in and understand where their growth potential could be. And the area of helping realize what’s in the workforce where companies can grow with great people has been has been very helpful. And today, we really wanted to take something where it’s almost to me, it’s before you were here, it was more of a fuzzy word. And that would be culture. And something where I would have looked at it in the past and said, This is a set of beliefs that someone may have on how a company would run. But defining culture was a little bit harder, something where you had to kind of feel or ask or ask around to get something that was more worthwhile. And what I want to do in this podcast is actually understand just simply what is the definition of culture? And what’s the definition culture, which is how it applies to IT services companies. So I’ll just start there and tell us what what is what is culture?

Chelsey Nord  04:15

Yeah, I would agree with you and that people kind of talk about it in this abstract kind of fluffy way. I think that there are kind of different definitions of culture, and it’s really only loosely used term in the business context. And I think the key here is that a lot of people define culture as more like organizational climate, think about ailments of organizational health, you know, things that would typically be measured by an employee engagement survey, or measuring kind of the well being of employees think about things like commitment and job satisfaction, employee retention, advocacy of the company. Those are all kind of organizational climate, and I think people can fuse that with culture. How we define culture and how we look at it from an m&a lens is not really synonymous with that, or climate, or employee satisfaction. It is more about routine kind of behavioral norms, a shared set of values and beliefs that guide how people show up to work every day, kind of how they approach the job, and in a guidance behavior of employees and teams. So that’s kind of how I would define it, I would, I think of it really as any other societal group. So if you’re thinking about like a family, a club or a religious group, there’s kind of these shared set of values, norms and beliefs that guide how people work. And they’re built up over time. And they’re built through experiences and knowledge gained, certainly impacted by by leadership and direction from leaders. It’s almost like anthropology in the workplace. So that’s kind of how I would how I would visualize the the construct of culture.

Ryan Barnett  06:01

And I think it’s a great understanding and a differentiation. So it’s not a an org climate and where we’ve seen it before, getting a pulse of where it’s at, and how it may impact company, what you’re saying is that this is the set beliefs of why people will work together, why would they be in a group together? If I take a step back? How do companies start to define? Or How does culture ingrained in a company in that context? To your point, is that the CEO who demands it? Or is it the hiring practices and ways that people come to work? And how was it? How was it? How was that shaped?

Chelsey Nord  06:44

I think it’s shaped through all of those things. I think that you know, at the surface level, policies and practices and how you incentivize people from a compensation standpoint, those are all things that can definitely impact behavior, but they’re pretty surface level, when you get into like, truly shaping organizational culture, or in the future, thinking about how you need to maybe change it and modify it, then you get into things like leadership direction, values, beliefs, norms, shared experiences that happen in the workplace. So all of that takes takes some time to build up. And it takes time to change to be honest with you. I mean, it can be done. But it takes intention and kind of purpose and how you approach that.

Ryan Barnett  07:30

If you take, and, there’s a clear intention there can culture truly be defined?

Chelsey Nord  07:38

I think it can. And I think there’s some different kind of elements, cultural elements or components that I would that I would look to. And you know, I can, I can give it maybe an example of one to give kind of visual or a little bit more description for, for you guys. If you think about, for example, let’s say, holiday organization approaches that customer experience, what type of relationship do they want to foster with their customers. Now, if you think about, like a dichotomy, like a continuum that can visualize this for a moment, and it’s more dichotomous on one end, you might, you might try to drive and create a really, really, really extreme close, intimate, individual relationship with all of your customers. That’s extreme customer intimacy. And then on the other end, he could actually be trying to create a very transactional experience, focus on me in the customer journey without getting to know much about the customer can have on an individual basis. So if those are the two extremes, you could also as a company, kind of be somewhere in the middle building, repeat customers who are loyal, you might have a delivery that’s designed according to like a customer segment or type, but not drive such an extreme customer relationship. So this is like one component of, of culture I might articulate for you. And you can see how both approaches are effective. It’s not like one is better than the other both are world class. And they’ve been proven out by different companies. And the extreme customer Missy example if I were to give an example of this, it’d be like, Ryan, you going into your local coffee shop, right? You walk in the door and they know you so well on a deep level that you walk in the door, they have your drink ready, it’s your custom, Triple Shot, half Caf coconut milk mixture, hot drink ready when you walk in the door. And on the other end, you could have a coffee shop that runs more like a McDonald’s Cafe franchise. Super transactional efficient, you’re gonna get out you’re gonna get you’re drinking, you’re gonna get out the door as fast as you can. You’re gonna get on with your workday. No small talk here probably know how, how are the kids doing? But nonetheless both world class experiences. It’s just a very different strategy.

Ryan Barnett  09:59

Absolutely, I think you just described Mike’s Coffee order. Not here, but Well, I totally agree.

Mike Harvath  10:08

There’s a couple more things, actually a couple more things sprinkled in there. But she got pretty close.

Ryan Barnett  10:14

it’s a good example. And I think what is nice is, there’s definable elements there that, that if you’re looking at a company, and we peel back why we’re talking about this today, that starts to matter in how your company is built in what it means to have the right processes, people technology in place to to enforce, and to supplement and help that culture and cultural development. I think that’s important too, just to know what it is. Mica. You know, you’ve been working with IT services companies for for nearly your entire career. But in the last 20 years, we’ve been exclusively focused on IT services companies and helping them grow. Why does culture matter when it comes to IT services companies?

Mike Harvath  11:04

Well, Ryan thats a good question. You know, IT services companies are people businesses, and I think that’s super important to understand, get given the challenge that, you know, we saw in the press around, you know, the pandemic and some challenges with people and the great resignation. And, you know, all that, right, I think, understanding how to create and codify a great work environment and culture is paramount to your success. And IT services, it’s not really optional. I think the companies with the best culture wildly outperform and when I say best, I mean, just the most vibrant, interact interactive and amazing culture and think about it many ways, like, have the best results. In the end. They’re ones where people are content and happy and happy to come to work. I mean, I think you have to remember that, you know, we spend all a lion’s share of our life actually working. When we think about that we spend more time every day working than we do with our family, typically doing almost anything else in our life. So you need to be in a spot with an organization where that’s good, right, you feel good, you’re satisfied, you can contribute up to the highest level that you don’t have distractions from, you know, drama, or things that might be occurring in your career. And I think a lot of that comes from just creating a healthy culture, one that is vibrant, and one that thinks about all of the staff members and what they need and an individual basis, and yet can contribute to, you know, where the parts, the sum of the parts are greater than the whole.

Ryan Barnett  13:02

Absolutely. And this discussion here, just has me thinking so many different questions. And, and part of this is, we’ll be going into culture a bit more throughout these podcasts. And bringing Chelsey on board here, as we look at these look at calls for and how can be impactful and in in companies. If I hear this, right, if culture can be defined, and it can be transformational to how a company can act? Can culture change? And can culture be modified? And have an impact? It’s different than where we started out with? Or can culture change and tell us something you

Chelsey Nord  13:44

It can. It’s not easy to change, but it is absolutely possible with with intentional efforts and focus, and it really starts with being able to get a good assessment or financial understanding of what it is today, right. So the other things I would add is it’s the change will require more than policy or incentive changes. So again, I go back to my reference of, you know, incentive structures or policy or process changes in culture runs a lot deeper than that. And if you are in a position or organizations in a position where they need to shift culture to be better aligned, to drive growth, it, it’s going to take some more more effort than just policy changes. It’s gonna take really, really strong leadership, it’s going to take intentional kind of definition around what you want your future culture to look like. And then you’re going to have to be really, really take care along the way and have a good change plan for how to get to current state. That’s going to take a little bit longer than a lot of people may not may realize, too, so I think the average is more to see behavioral change and changes in how people kind of values and beliefs and norms take takes more of like the 12 Have the 18 month range to see meaningful shift? I think research says so. It’s not impossible just takes time and focus.

Ryan Barnett  15:08

Yeah, time for intention. And if you with that intention, if you can build something great. Mike, you have a phrase that it what do you call m&a? Again, it’s a was the act of m&a?

Mike Harvath  15:22

Yep. The most unnatural act of business.

Ryan Barnett  15:27

Right. Exactly. And when you think about that, in a cultural standpoint, that’s what we’re going to start to dig into in future podcast is that m&a will happen or cultural Heaven is one of the three pillars that we need to look at when we look at a deal, look at strategic fit, cultural, fit, and financial fit. And as we start to go into that, we can, I think, start to unravel m&a from being the most complex sail in the world, and the most unnatural act if we could start to put more structure and rigor around to defining what culture is and how we can align those cultures in the future. With that, for me, this is a bit of a teaser of where we’re trying to where would like to go in the future? Mike, I’d love to gel or perfect Chels any other definitions of culture? Do you want to eat any main points that you’d like to start here?

Chelsey Nord  16:26

The only thing I would do is add to what Mike said around kind of the why culture matters. I would just just add in that there’s actually a lot of research to support that organizational culture can have a lot of impact on employee performance, retention, as well as organizational performance. So including customer retention and growth rates, you know, if, if employees, employees tend to work harder to achieve organizational goals, if they are, they feel like they’re part of a corporate environment that aligns, and they have better fit in. So just just wanted not to belabor it, but wanted to just stress the importance on organizational outcomes and kind of what the impact of culture can have in terms of organizational and individual employee success.

Ryan Barnett  17:12

You’d have cited a stat, I believe it’s a James Heskett. And from the culture cycle,

Chelsey Nord  17:18

Yeah, so he had some research in there. And that’s just that’s one example that an aligned culture, which means kind of an a culture, that’s an a, an alignment to organizational strategy, can account for as much as 50% of the competitive difference between organizations. And that’s just one, one research finding, there’s been quite a bit of research that would confirm that in the last few years as well. So it’s not just fluff.

Ryan Barnett  17:45

There’s a straight ROI to that, I think we put it in the m&a context, and you’re likely to get exponential returns if you combined, and align cultures in a way that can bring something together that you couldn’t do alone. Make any thoughts from you as we define culture?

Mike Harvath  18:05

I think, you know, a couple thoughts. One would be that you know, your culture within an IT services business is your own. I think I would encourage all leaders that are trying to create a healthy culture to be very sensitive to, you know, walking a mile in the shoes of your team members. And under trying to understand seeking to understand their position in culture that you’re creating, and to be empathetic to whatever situation or things that they’re, they’re going through their life, we all have those times. But we’re challenged in times, sometimes that we’re not and we’re in the endzone, I’d like to call him and I think the best leaders and purveyors of culture are one that can be can really, you know, the shoes term walk a mile in their shoes. And if you create a culture that sensitive and empathetic, it will be one that will return dividends to you for many years to come.

Ryan Barnett  19:02

Totally agree. Thank you, Chelsey for being on our first podcast here.

Chelsey Nord  19:09

Absolutely. Thank you for having me. It’s great conversation. I’m excited to come back if you’ll have me

Ryan Barnett  19:17

You’ll stay on future episodes, I’m sure but Mike with that, I’ll turn it over to you.

Mike Harvath  19:23

Great, so that will tie a ribbon on it. For this week’s Shoot the Moon podcast I would encourage all of you to tune in next week, we’ll unpack and explore more topics around m&a and strategy for IT services companies. Take care and make it a great week.