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Unmanage Your Agency: A Conversation with Jack Skeels

Published by Summit Marketing Team on 11 Mar 2024

In this episode of the Creative Agency Success Show, Jamie and Jody welcome Jack Skeels, CEO of Agency Agile and author of Unmanaged. Jack shares his deep expertise in agency management, offering nuggets on how to unmanage your agency and why layer cakes make a healthy organization. They discuss the complexities of marketing agency management within growing service-based agencies. Lastly, the conversation covers the problems of having too many managers, the shift from department to matrix management, and the importance of a flat organizational structure.


Intro (00:00:00) - Welcome to the Virtual CPA Success Show for Creative Agencies. The go to resource for agency owners looking to scale their business. Join us every week to stay ahead of the curve and position your agency for future success.

Jamie (00:00:15) - Jody, Jody, Jody that was a fun podcast with Jack Skeels from Agency Agile. I know he's an old friend of yours, and I've met him the last couple of years and he just brings great content and really relevant content for us. So, I thought that was a really, really fun episode to talk with Jack.

Jody (00:00:28) - Yeah. Rolling out his new book, unmanaged is a must read for sure by agency owners. And really not just agency. It's really any kind of service-based business because it really kind of unwinds the manager. Because as we get bigger and organizations and Jack talks about it and really easy language, it becomes complex and we start having too many managers, managers, managing managers, managing, managing and so forth. And so what he's trying to do or what his research has shown a smaller structure as a more productive structure.

Jody (00:01:00) - And it doesn't have to be flat. Flat. And that's not what we're talking about. But,getting some of those managers out and having them be more productive is kind of the key there. And so we talk about it in great lengths during this next episode here, I think we pushed the 30 minute boundary by probably ten minutes, I think.

Jamie (00:01:16) - Yeah, we went 45 minutes. But again, it was it was one of those things where you were like having therapy live. We, we, we actually analyzed our business a little bit and had some real moments where we were we were going deep on it. So I didn't want to stop the recording early because I think it was really valuable, and I think everybody would really get a lot out of going into the full 45 minutes.

Jody (00:01:34) - And I think it's also important, as we kind of use ourselves as a test case in there with our own company, with summit.

Jody (00:01:40) - I think it's important to understand that, hey, a service-based company, like an accounting firm is very similar to an agency and a lot of a lot of respects. And, and we go through the same issues pipeline, we go through utilization average bill rate if we're, you know, we're subscription based or a little different in that regard to a lot of agencies. But we're going, you know, we're doing it in a in a very similar manner with the, with PMS, AMS, the whole works. And so, I think what we're talking about during this, we'll shed a lot of light on what, maybe some of the common issues that you're having, in your productivity, you know, with productive issues you might be having.

Jamie (00:02:16) - Great. Yeah. So everybody, enjoy listening to Jack and, enjoy the show. Hello, everybody, welcome to today's episode. This is going to be another great episode because we're bringing one of our long time friends on here with Jack Skeels, who both, Jody and I have traveled with and been to, been to several conferences with.

Jamie (00:02:34) - So these are always the ones where we're pretty comfortable and have a lot of great conversations. So we're really excited to have you on Jack. Jack is with Agency Agile, and he works with a ton of agencies out there. If you're an agency, I'm guessing you've heard of Jack. But even with that said, Jack, why don't you give a little bit of your background and introduce yourself?

Jack (00:02:49) - Thanks so much, Jamie, and thanks for having me on the show. I appreciate it. Yeah, we've, I've been on a, multi-decade journey of entrepreneurship and management consulting and was a think tank researcher for over three years and eventually stumbled into the agency world and loved it. Wonderful people, exciting environment and, you know, people who think differently, all that fun stuff like you guys as well. And, and I just, you know, at some point I was trying to write a book. I tell more about this in the book, my new book unmanaged.

Jack (00:03:24) -but I was trying to write a book that would help agency owners understand what's going on. And and it's not a leadership book. It's really a managing book. And I think today you guys probably noticed this. There's an overemphasis on if you only led better. And, you know, if you become the great leader, your agency will become amazing. And I just dispute that. I think that at the end of the day, agencies are managed. Leadership matters don't get me wrong, but agencies are managed to success. And I think that we're trying to fill a gap here. And we do that with agency agile. We teach how to manage your agency better, especially from a delivery perspective. But the book is really aimed at what do you need to know as a leader to actually make great managing happen inside of your organization?

Jamie (00:04:14) - Yeah, it's definitely a great read for anyone that's not only in the agency world, but anyone that's really, in the leadership role to think about.

Jamie (00:04:22) - Okay, how how's the best way to utilize managers and make sure managers are really, doing what they need to do within the organization. And as always, we have, Jody Grunden here as well. So welcome to the show, Jody.

Jody (00:04:32) - Yeah. Jack, it's been a pleasure knowing you for such a long time.

Jack (00:04:35) - Likewise.

Jody (00:04:36) - First we met wet in Puerto Rico.

Jack (00:04:38) - Yeah, yeah. VCs island. Yeah, yeah.

Jody (00:04:41) - An island. Yeah. So that's, pretty cool. And then, known each other ever since. And the last time that, saw you was just a couple of months ago. It was at a sort of in Mexico City. And, you know, with that sat in the one of your workshops there. And I learned a ton, so much so I brought it back to Jamie and say, gee, we gotta make some changes here pretty quickly.

Jody (00:05:03) - And so hopefully we can talk about that. And, and, and I would love I would love for you to as we're going through there to kind of use us as a test case like a, as we're going through maybe. And that might help the, agencies kind of identify different issues that that may be out there and kind of, you know, trying to get the gist of everything because, you know, again, we over manage and that's, that's the biggest, that's one of the biggest things that you point out in your book is that, too much managers, we've got to have got to keep your team how to manage themselves, how to really shave out that extra layer of bureaucracy or whatever, whatever you want to call it. They're so super excited about it. And, I can't wait to dive into this book nicely. Nicely done. Jack.

Jack (00:05:43) - Cool. Thanks, man. High praise from you.

Jamie (00:05:48) - Nice. Let's jump right in. So, if you want to just kind of start with, you know, the elevator pitch of what the book is trying to, to tell our listeners in us. And so I think Jody's idea of kind of walking through our organization would be a great way to, to evaluate it. So, yeah. Why don't you start with that elevator pitch of what exactly the synopsis of the book would be.

Jack (00:06:07) - You know, that's I should probably be more practice at that by now, but partly is the post-holiday food coma, I imagine, as well. Look, I think the probably the biggest thing you can take away, as we almost named the book The Manager Tax, that was the working title for nine months and the like. And we just we did some survey work and it turned out we needed something a little bit more provocative, which unmanaged is a little bit more provocative and a little bit less negative. But the reality is, is there's a negative reality inside of all of this.

Jack (00:06:40) - And that is the manager tax. And I you know, I can let me peel some of that onion first before you guys.

Jody (00:06:46) - Let's peel it away. Yeah. Let's talk about this.

Jamie (00:06:48) - And I think that you were smart by not including the word tax in your title, because most people will just run away from books that have the word tax in it. So that's probably exactly.

Jack (00:06:57) - Yeah.

Jack (00:06:58) - Well, you know, I and I think I want to say something up front, I have to say because of what's going to follow, which is I love managers. I've spent a lot of my life as a manager. I think every manager, virtually every manager goes into work trying to do a great job, trying to make the organization better, etc. And the question is, you know, just sort of like a coaching thing if if you don't see yourself as well as you could, you can only you're limited in how good you can be at what you're trying to do. It's like getting a coach for pickleball or something like that, right? You know, they can tell you, hey, put your foot over there, you'll hit better shots.

Jack (00:07:33) - This is that same sort of thing. I come from a big racket sports background, my whole family and all that kind of thing.

Jody (00:07:40) - Here's the here's the note to self never play Jack.

Jack (00:07:42) - And yeah what just started.

Jack (00:07:45) - So you've got you got a window of opportunity here then then it would be closed here. Um so here's the idea. Managers are far more costly than we know than we realize typically. And that is that is typically comes in a I outlined five different ways that managers are cost. So if they're a couple of those real quick one is this is a Nobel Prize winning idea. Anyways. So a guy won a Nobel Prize for the idea that the bigger you get, the greater the percentage of managers you have in your organization. And that ultimately, ultimately is the greatest limit on productivity for your organization. And said quite simply, is the more managing you have going on, the lower the overall productivity of the organization. And you can think of this from a financial perspective like managers are the most expensive people we have in our organization.

Jack (00:08:36) - Right. And is that group grows, the overhead cost grows, and you can think of it in other ways that the the act of a manager interacting with someone, which we'll call a maker, if you will. Right. That is non-productive time. It may be productive for the manager, but it's not productive for the maker. And the speed of the agency or the speed of the organization is really the speed of the makers. Okay. And I'll do one other, a couple other little distinctions here. Now I want you guys to outline your, your thing. Well, what happens a lot of times inside of agencies and other complex project driven organizations. Is we assign people partial managerial roles. Okay. Like, I'm, you know, I'm a department manager for creative or something like that, but I'm still doing creative. Now there's this very strange situation here where I just took my best person. Okay, presumably most productive, highest impact on the quality and productivity of our work and all that kind of thing.

Jack (00:09:37) - And I took some of their time and made them managerial. Now, the thing is, being a manager is inherently a chaotic world to live in. So, I not only reduced the productivity of that top deep specialist, that amazing person, by the amount of time they spend being managerial. But I also now have exposed them to all the other managers who can interrupt them and distract them and call them into meetings and all that kind of thing. And what you'll see is there's like almost A2X decrease in productivity. I make someone a half time manager say goodbye to their productivity. And typically, this is what we do is called the meritocracy, where I promote someone because of merit. They're really good at it and I put them into a managerial job. Right. And even it's just a little bit one toe in the water or one foot and the other boat immediately drops your productivity. This all research is great research behind all this stuff. Of course, we see it live in action with the over 200 agencies we've worked with and the like, and the number of managers.

Jack (00:10:37) - Last little thing inside of a typical agency, you get up to 50-person agency. It's 15 to 20 managers, people that have a manager, title, project manager, account manager, requirements or strategy manager, department manager. It's just crazy how much managing you have going on inside of these organizations, and it definitely drives productivity down. We've proven that over the last decade. As you unmanage your organization, productivity goes up, happiness goes up, etc. Okay. And a presentation. Now back to you guys.

Jody (00:11:11) - You want to explain I'll give the overview on our situation. And maybe this will help some of the people in the audience. Now keep in mind that we're an accounting firm. So a little different, but really the same. You know, a lot of things that we do are identical to what a creative agency is going to do at a dev shops, going to do, you know, all that kind of stuff. And so hopefully this will kind of help, help out a little bit.

Jody (00:11:31) - So when we, before we merged with Anders, we were pretty much a flat organization. We have, you know, Jamie, he's the accounting manager ahead of all of the CFOs in the accounting department. And, you know, the basically our service delivery. And with that, you know, that's kind of going horizontal, right? And so that's by touching each of the different layers. And then we had in addition to that, we had a CFO. Under that CFO, we had what we call the senior level accountant, which was typically 2 to 12 years of experience. They're the ones actually doing a lot of the work, the day-to-day work, whether it's accounting or whether it's, you know, finance, you know, whatever that they're preparing it for the CFO who then delivers it to the client. And then underneath them, we had simply the doers, you know, which were the accounting team.

Jody (00:12:19) - And a lot of times those folks were either nearshore or offshore, or we did have some onshore, folks doing that work. And so, it's just pretty much a three-layer system, pretty flat in nature.

Jack (00:12:29) - And that's actually more hierarchy than I thought you guys would have had. I mean, I actually just assumed it was just, you know, the direct, the direct delivery people. That's interesting. Okay. Go ahead. Yeah, yeah, yeah.

Jody (00:12:39) - Yeah. And so then then we merged into a traditional accounting firm format where they have an accounting, they have an accountant, they have a senior level account, they have a manager, they have a senior level manager. They then have a director and then they have a partner. So you've got many, many different layers within that. And the idea is that, you know, it's a it's basically it's a, you know, pyramid type thing. You know, the idea is as you grow up, if you're if you're people are going to build, get to the next level and so forth until they have the partner at the top.

Jody (00:13:07) - And so it completely two different structures. And so as we merged into it, our task is to kind of meld the two structures together to form something that really does well and, is highly productive. So that that's the idea. And so what happens is, we before we make the merger, we're at a 50% gross profit margin overall. Super excited about it. And as we're about a year and a half into the merger, we're down to about a 39% gross profit. So we lost about 11%, right, right there. And you know, and so, so now we're like, okay, well that's not acceptable. We can't do that. And so we've got to figure out how to get back to that, 50% or near it doesn't have to necessarily be 50%, but, you know, a solid profit margin between 45 and 50%. And so that's kind of the gist of it. And Jamie and Adam and, and a few others are tasked at making that happen.

Jody (00:14:00) - So that's, that's the background.

Jamie (00:14:02) - And just to add to that a little bit, I think just pre-Anders, one of the things that we always did at summit was we would think about something. And so for example onboarding. Right. So like you kind of talked about the partial manager. And that was something that. Adam and I have had arguments about several times, but the question would be is okay, can we have someone that only focuses on onboarding? And anytime we would add something like that, obviously we'd have to make our producers more productive, right? So that was kind of the summit model prior to Anders is we had an onboarding team. We had a training team. We had 3 or 4 other teams where it was 1 or 2 people in those roles, and that's all they did, right? All I do is onboarding. All I do is train to employees. All I do is do this. And so we had 3 or 4 people, project managers.

Jamie (00:14:45) - We have 3 or 4 people in our role already that we're doing that. And of course, back in the day when we were a little smaller, it was easier to be like, okay, we're going to add this one person that's going to do a be a project manager. And so they're going to be $75,000. And so they're going to cost that. So we have to charge more or we have to have our people work more hours or have a bigger book of business. And so we did that prior to merging with Anders. So then you take those two models where we already had these people on the side doing specialized things, blend them in with the organization that has that very true hierarchy. And then that's where the 39% gross profit came from. It's like we already kind of blended two models that don't necessarily work well together. And we're trying to figure out how to make it work. So that's just a little bit more background on that too. Is that again, we had those manager roles, but we were really good at managing them, knowing exactly how to pay for them in ways of like, hey, we need we know we need someone to focus on onboarding.

Jamie (00:15:35) - So onboarding is better. But in order to do that, we're going to have to have our team have a little bit bigger book. And so we were always able to do that. But once we merged together it just got out of control because it was too much. It was too big to do both those models at one time. Yeah.

Jack (00:15:48) - Yeah, very, very interesting very interesting story and challenge. Yeah. There are a whole bunch of ideas in the book, obviously, that touch on this. Let me, let me hit I think probably the a good place to start because it's one of the big shifts between the two models. The, I'm a back up in time to the 1960s, 5060 70s as I love to do, and there's a point where someone decided maybe we don't need to just have department managers, but we should have what end up being called matrix managers. In other words, there's it started actually originally with designers, you know, engineers, designers versus production engineers.

Jack (00:16:28) - Like if you're going to design something, let's make sure it's buildable kind of thing. Right. And eventually the idea and Ken Olson of Digital Equipment Corporation, deck, the CEO, piloted this thing called matrix managing. He loved it. And then he killed it three years later, he said, because it's killing innovation and productivity. We have too many managers now, but the rest of the world didn't get the memo. Okay? And people think it's really, really interesting is that if one manager is costly to a worker, okay. And they are okay, that's just fact, okay. Multiple managers are more than multiple costly okay. In other words, the manager times manager math is pretty ugly. In other words, if I have look typical I'll do the agency thing because I that's part of our little spiel right? Yep. 50% agency, 15 managers. I've got a senior art director who has three account managers, two project managers and at least one department manager, six managers who can come visit this person in a given moment and interrupt them and tell them what they should be doing and not doing right.

Jack (00:17:36) - Okay. And this is all in the idea because it's a multi project environment. These different account managers have different projects. They're multi allocated all that kind of thing. The point being that when I introduce a multi managerial environment I get multiplicative impact okay. It's not a linear impact. The second manager. And by the way as I add managers they make other managers less effective. Right. Because if I was the only manager I didn't. All I could do is just manage okay. But now that I've got other managers around me, I got to go interact with them. So I get less effective. I get more expensive every time you add another manager to the mix. Okay, this is another one of those. This is, I think, number four. And the manager taxes is that more managers equals less effective managers. Now there's a thing that happens and I'm not sure I'm going to ask you, but I'm explaining it first. This is a question whether it's happening to you. You talked about partitioning which is a great thing to do, okay.

Jack (00:18:33) - When you don't partition, when you start saying, well, we're all managers and we call that so the in the literature they call this the vertical manager is the department manager. Another is I'm the creative department and the creative director OECD or something like that. I'm the department manager. I'm responsible for all those classic vertical functions like skills development and hiring and firing and all that kind or just, you know, those decisions, at least the other managers, we add, are referred to as quasi managers because they're not really a department, they're not a vertical manager. Yet they can still assert managerial control and have impact on the cost and effectiveness of managing overall. Okay. So that's you see all of a sudden that's one of the things is that's where I start getting multiple managers, even though they're not managers. Now a couple of weird things happen in here. One of which is if I was a single vertical manager with my eight people, their productivity is directly attributable to my custodianship, my supervision, my wisdom and my actions and my letting them get their work done.

Jack (00:19:38) - Am or am I always going and bugging them and interrupting them? You can attribute it to me. You can go, hey, you guys only made 200 widgets last week. What's going on? I'm like, well, I had seven meetings with the team. Maybe that affected it. Right. And so we've got that direct attribution when I get a multi manager environment, okay. There's no direct attribution to any manager. So all managers actually have costless actions because you can't attribute the cost of calling a meeting or creating a crisis around priorities and all that kind of thing. Right. So essentially, we get to an unmanaged managerial environment because all these managers actually in an agency especially, think they have a right to weigh in on any topic. Okay. And this is in the literature from over the last 50 years, is that agency style organizations, ad hoc project organizations, typically managers don't stay in their lane. Okay, is they don't say, it's my job to only talk about project administrative topics, okay.

Jack (00:20:38) - It'll be like, I don't think the client's going to like that. It's too red or whatever, that kind of thing. Okay. They, they, they slide out of their lane. And also, because it's a just get the work done, time driven, project delivery driven environment, they go to this I can do whatever I want because my job is to just get things done okay. And to for me to get my things done, not the overall productivity of the organization. I will optimize my actions for my outcomes, not the organization's outcomes. And so then if I take multiple managers that are all trying to optimize their outcomes individually, I start getting a suboptimal organizational output. Follow what I'm getting at there. So this is the that's where you where you had sort of swim lanes, like with the onboarding team is great because they know that the only thing they can be a manager about is the onboarding function. Right? The minute you start saying, well then fine, we're going to line managers, vertical managers be part of onboarding.

Jack (00:21:40) - Now we get all this muddiness right. And even if you just have like your onboarding team and the vertical managers doing it, all of a sudden you got a lot less efficient. Plus your vertical managers or your power players like you want them to be doing as little managing as possible. Right? Because that it the research shows it directly drives productivity loss. The more you make the lead, you know what they call the deep specialist manage, the less productive the department is. So I'll stop there through a couple ideas from the book A.

Jamie (00:22:11) - Yeah. And I think that's it's very similar to what happened, like you said, like we had people probably in management roles, but they were very specialized. Right. Like we said, we had an onboarding manager there. Their main role was onboarding. We had awe had project managers who weren't even managers. I mean, they weren't managers in title, but their actual role was to make sure that any projects we had going on were being, thought through and planned out.

Jamie (00:22:34) - So they were more just like planning people. And then, you know, that's there's a couple of roles we had in that manager role, and they were very specific to to your point now, I think that we've grown. I think the part where we've really got got to think through Jodi. And you can you can, jump on this one is when we're as we're getting bigger and we have CFOs that are what we're calling pod leaders. So we have the pods and the CFOs have their book of business, but they also have to manage the pod. It's like, okay, how do we how do we get down that path of making sure that they have the best interest of their pod profitability in line and not their, you know, just their own book or whatnot there too. So.

Jack (00:23:12) - Yeah, I think that. Oh, yeah. I'm sorry Jody. Go ahead. Yeah.

Jody (00:23:15) - Yeah. So kind of tackling to that point. We did that. We've done a lot of different things over the years.

Jody (00:23:20) - I mean, we tried everything to make sure, you know, the to come up with different ideas, what works, what doesn't work. And the pod thing,I thought was really a solid solution. We just had two fewer to two fewer people in the pod. It became for one person would leave, and then the pod would kind of crumble while we're replacing with another person. And so I think the size of the pod was is a big part. Now that we've grown to think about 75ish people,I think we can break it back into the three, you know, maybe a three pod structure there and then just add a pod once we get to, you know, 100 people or something like that, add another pod.so you've got the different pods coming down. Jack, just kind of for clarity, each pod would have, you know, 3 or 4 CFOs, some accounting people, and so forth. The only thing they wouldn't have is, like the management team, they wouldn't have the supporting staff, so they wouldn't have the I would say not the management team, but the marketing team.

Jody (00:24:12) - They wouldn't have vice dove in the pod. They wouldn't have, maybe the technology, guys in pod department, people, you know, so those folks would be outside of the pod, but it would be primarily a production pod, you know, all four of them would be. And we thought even making them specific to different industries, like we like we're heavily obviously in the creative agency industry. So that might be two of the two of the four pods. You know, we're at right three now. Maybe as we develop new niches, whether it's cannabis or trucking or legal or whatever that might be, you know, maybe that's a third one, or maybe that's like the all the cart one. That's kind of everything that doesn't belong, you know, a, a pod type of thing. Because like I said, 90% of what we do is service based anyway. So it's very similar from one to the next.so that that kind of gives you a little bit more background on what I'm, what I'm thinking through.

Jody (00:25:01) - And then horizontally, you'd have an accounting manager, you would have a, you know, the advisory manager like Jamie has, and you'd have those two managers overseeing the entire, you know, all the different CFOs, all the different, you know, accountants, because we you divide accountants and advisors are two different, two different folks. And they'd be, you know, horizontal and vertical. That's kind of, I think your matrix and what you're talking about there.so that kind of gives you the background on that. So, Jamie did leave anything out on that?

Jamie (00:25:31) - No, no, I think that's exactly kind of the model we have is like Jody said we have the vertical where the pod leader there. And then we kind of have the, the sideways where it's like, okay, you're working on a consulting issue. You come to me, you're working on an accounting issue, you come to an accounting director. That's kind of the path that we're thinking about.

Jack (00:25:48) - Yeah. So, you know, pods, it's a great topic to bring up because the if you believe what the research says, which is that there's that the size of managing grows faster than the size of the organization, eventually you're going to hit a spot where it gets quite chaotic and agencies will get to a like a 1 to 2 ratio of manager titles versus maker titles. Right. That's crazy. It's one manager for every two maker, so you gotta be kidding and the part of it is that the is of that is the proliferation of clients like 50 person agencies, you know, might have 30 or 40 clients. Right. So that requires a lot of account people, which then blah blah, blah. Now pod design which is not covered particularly in the book, but something agency does all the time. Right. And that's the real answer to some, that geometrically growing chaos is to actually just say, well, the organization only gets so big, and then we clone it and make another one.

Jack (00:26:48) - And those are essentially pods there. Are there questions about how you organize the pod? Right. And some of them are intuitive. Some of them aren't there's also things like pods have to exist with outside resources. You mentioned one already, like marketing resources pods generally exist with some shared resources. In other words, resources that serve into the pod. Right. And how do you manage those? There's overflow and underflow and other words. When this pod gets slow, what happens? Right? Or when this pod gets too busy? And essentially one of the what we see over time and working with a lot of different agencies is the pod boundary rules. All those things I just talked about are probably 60% of the success factor, right? In other words, we worked with one Wisconsin shop, large 250 person agency. They had like 6 or 7 pods and they were pods in name only. Okay. They're literally like, yeah, you're in this pod, but anyone can grab you anytime from any other pond.

Jack (00:27:53) - I said to the CEO, and he just nodded his like, yeah, I know it's bad. I said, saying you have pods and then not having them is worse than not having pods at all. Okay? Because now you made a promise to everyone and it's routinely betrayed on an hour-by-hour basis and the like. So, it's the pod operating system and the pod interface model that you need to master. And you guys are also, you know, their size considerations. What's too big, too small, right. It depends on your work mix.in general, small pods are really fragile just for the reason you were talking about, right? If you did ten person pods either lose a person, it was a client, and now what do we do? And all that kind of thing.

Jody (00:28:34) - Yeah, yeah, yeah.

Jody (00:28:37) - So with managing inside those pods. So kind of talking about that then so let's say we do have the three pods, 75 people probably.

Jody (00:28:47) - How many of those think of production people Jamie?

Jamie (00:28:49) - Probably 40 of our 75.by a little higher than by 50, I'd say we're two thirds production.

Jody (00:28:56) - Yeah, two thirds production. And then the rest of it would be what, directors and

Jamie (00:29:02) - Directors and, like marketing? H.R.

Jamie (00:29:05) - Yeah, that type of stuff.

Jody (00:29:06) - That sort of thing. Yeah. So, we're probably even closer to 60, about 60, 65 of those. So, we got about 20ish folks in a pod. And so out of that, if you're just taking one pod and let's say it's 20 people, Jack, and let's say that's all we're going to focus on. How many layers of management would you need? Pod what's considered a layer of management, you know, is, you know, are we talking about the doer and then a manager or top of the doer and then a manager over the manager? I mean, what what's at what point?

Jack (00:29:33) - Yeah. Yeah.

Jamie (00:29:34) - I'm gonna ask this a different way as well.

Jamie (00:29:36) - And I'm gonna call one of my weaknesses out. And this is an argument Adam and I had the other day is so I. I'm a director. Right? Like, I consider myself a director. And the reason I'm a director is because I feel like I have to direct the managers and the managers go and go and work. And so I guess the question is, is that a flawed model? Should I really just be a manager and not have the in-between path between me and the and the production people?

Jack (00:29:59) - So this is one of my favorite topics in the book and in life as well, is we overestimate how important managers are. Okay? And as if somehow nobody can manage but a manager. And this. This is the reason why agency Agile, my consultancy, is named that way. It's probably a bad marketing in one way because we don't really teach agile. Right. But what agile showed people years ago, 2001, etc. is that you can let the team just run it.

Jack (00:30:34) - Okay? Is it literally you need much less managerial interaction. I start the book out with the story where we took a 15-person team that is being managed by 11 managers, and we removed nine of the managers. Nine and a half, really not half of the managers and the team went like 2 or 3 times faster and got the project done, which was going to be a disaster. Right. So, it's this amazing shift in productivity when we shift the managerial cohort. Now there's the thing I talk about in the book. Which is the idea of managerial control. I'm over you. Like you were saying, Jamie. Okay. I'm directing. First of all, the titles are screwed up, okay? They're all military. All that stuff came from command and control. Military. Okay? It should really be. And I have a model in section five called the layer cake model. And basically, the idea is you getting a increase in your career growth status or whatever words we want to use. I don't use promotion, okay.

Jack (00:31:33) - But because that's again, that's a military term. Right? Okay. But I've attained a new level of competency as a practitioner. Right. And maybe that includes young client management skills and all that kind of thing. Congratulations. Now my job is to grow more people like me, okay. My job is a growth job now to control job okay. And so what happens is that I only grow people when they have the chance to make decisions and self-manage and the like is there. I got to where I got because I'm a great self-manager. Right. And the idea that because that everything that got me here is something that I should then apply to everyone, right, is exactly wrong. It should be the other way around. What do you guys need to manage this situation? Make good decisions, let me support you. But it's yours to run, okay. And that's the flat organization. And I see Jamie's or Jody's face. You remember this from back when you were smaller. You. You didn't know how to over manage people when you were smaller.

Jack (00:32:37) - And agencies see this as well. The 15-person agency just everyone gets it and you, you get this amazing level of trust the minute we start telling each other that that managers are needed and that managing is needed, we start driving down productivity and actually driving down capability growth as well. And so, I call it the layer cake because you don't move up the layer cake, you move down the layer cake. Okay. You've got more layer cake to support. Every year you go from mid to senior. Now you've got the mids and the juniors that you're propping up, you're teaching, you're mentoring, you're supporting. Okay. And as if I go from whatever seniors to expert or something like that, then I've got the whole stack I got to be responsible for, but I'm responsible for helping them get to join me in this level. Okay. And so that's a very different mentality. And it creates very different behaviors as well.

Jody (00:33:31) - Does it take away the behavior? Because we get this thrown back a lot, that the people come to XYZ organization because they see the growth opportunity there.

Jody (00:33:41) - So the layer of growth and if they don't, if they're not seeing a different title every 2 to 3 years, they're going to.

Jack (00:33:47) - Go, well, you can doesn't give titles out. You just got to be careful about not giving hierarchical titles. Right okay. In other words, and some great you know, some engineering organizations do this really well like a Google or something like that, where I can become higher and higher in my craft, achieving whatever guru status or, you know, like guru of gurus kind of thing. Right? But this doesn't mean that I'm a director or a president or something like that right now. One of our clients who dealt with this problem, they implemented a very flat model, 40% agency. And they dealt with it as follows. They said, when you leave here and on LinkedIn, if you want, you can call yourself whatever you want. That's fine. I don't care. Why should I care? Okay. If you want to go exaggerate your skills by giving yourself a higher title than you deserve, then you're going to go on that journey.

Jack (00:34:42) - Whatever that journey looks like, right?

Jody (00:34:44) - Right.

Jack (00:34:45) - But you get to say you get to decide. But I don't want to have the titles inside the building here. Okay. The title, your title inside this building is helping us all succeed better, right? And being a member of the team. And we're judged by. Remember the layer cake model? We're judged. I'm judged by how well the people above me in that model do. Okay and one of our other great clients from years ago, a guy named Ben had 105-person agency. Catch this 105, I think 105 or 120 with eight managers. Okay. Eight managers. Yeah. Yeah. Exactly. Yeah. And I said, how do you do that? And he said two things. One is I decided I didn't want to be like an agency. And every time I think of what an agency would do, I do the opposite. Okay. And, that included saying someone needs me says we need a manager.

Jack (00:35:36) - I say, no, figure it out. Otherwise without a manager. And they did they. And the second thing is, and this is part of the layer cake model, he said, we review our managers annually. I said, how do you do that? He goes, well, I ask all the people that they support, whether they get a thumbs up or thumbs down. I said, oh interesting. So, and there's managers. The only way to evaluate the manager is whether the people they're supporting, aka the makers, say that they've been supported by this manager or not. And I said, well, what? What happens when someone gets a thumbs down? And Ben said, then they come talk to me. And he paused. It's just beautiful. Pause. Right, because you're asking the next question, what about when you get a second thumbs down?

Jack (00:36:23) - And he.

Jack (00:36:24) - Smiles. He laughs and said, nobody gets a second thumbs down. But that's elegant.

Jack (00:36:33) - So go ahead.

Jody (00:36:35) - Yeah, I mean, that's a great one.

Jody (00:36:36) - It was Ben's story his people weren't managers, so. So they did they have any kind of hierarchy at all? They give the guru and the. Did they give different levels of his organization?

Jack (00:36:49) - He did a couple of things. It's probably more like your organization than many. He they were like an SEO, SEM optimization company with some other functions thrown in. Right. And so what he decided is, he avoided account managers, by the way, it's kind of interesting is he said, no, all the makers are account managers. I want my makers talking directly to the clients, okay. And I want them supervised by someone who's more senior to make sure they're having the right conversations and doing it well. But I and I'm also going to give them line of sight financial incentive to make those accounts perform. So, they he tapped the makers natural, innovative, entrepreneurial, self-serving thing. I want to do a great job for this client, and if they get a lot of revenue and margin, then I'm going to get a piece of that to really drive down all the incentive stuff down to the lower levels of the organization, which made people care about what the organization cares about, happy clients that are delivering good revenue in the white.

Jack (00:37:50) - Right. And so that way, the manager job was really it sort of changes the manager job now. Right. Is that's what do I need to do to help our makers create more revenue and create sustain clients better. Right. And instead of just being my eyes, the one manager worrying about that, I've got 8 or 10 eyes, all focused sets of eyes, all focusing on making sure those clients are happy.

Jack (00:38:16) - Right. And I so it's very, very interesting shift in how we think about it.

Jamie (00:38:23) - Oh, yeah. I think this is really good stuff. We could probably keep going for another hour.

Jamie (00:38:27) - And, I think, we might have to do is turn off the cameras and just, like, pay you by the hour to help Jody and I come up with our new structure.

Jack (00:38:35) - Let's do it. Okay. 

Jamie (00:38:37) - Let's call anyways. So, but, yeah, no we actually are to the point where we get our fun question.

Jamie (00:38:41) - And, you've already kind of mentioned that this is the this is the week. This is the week between, Christmas and New Year's that we're doing this, this interview. And so I'm going to I'm going to ask the boring question. And first off, you are allowed to say I don't believe in New Year's resolutions. So that's the first question is, do you believe in New Year's resolutions? And if the answer is no, then then give me a goal for the next six months that you might have. And so that's the question is a first. Do you believe in year's resolutions in either way? What's a goal you have for improvement over, over the next 6 to 9 months or maybe something new you want to learn. So, Jody, I'm going to start with you this time. So we'll give, Jack a little bit of chance things. So first off, you do you believe in your resolutions?

Jody (00:39:18) - No. I know I've never believed in your resolutions.

Jody (00:39:21) - Okay, so, don't have any of those. Actually, it's kind of funny. At the gym, I see all the people that do.

Jamie (00:39:25) - Yeah.

Jack (00:39:26) - In January.

Jody (00:39:28) - And they disappear. It's great. I, you know, I try to avoid the gym in the first month.

Jamie (00:39:34) - Do you have any goals or any things you want to learn over the next six months to a year then?

Jody (00:39:39) - Yeah. Yeah. Yeah, definitely. You know, health wise, you know, I'm always looking to, you know, improve my, my, my health and working out is important. And so, you know, I mentioned in earlier episode that I'm going to be taking up jiu jitsu. And so that's something that, will be happening in the first quarter and only in the first quarter, because the last two quarters, I've been traveling three weeks out of the month. So I've not had an opportunity really to be in one, one place for any period of time with jujitsu.

Jody (00:40:07) - It's something you really got to spend some time and energy and focus and that sort of thing. And so that's something I really want to do. And in order to do that, I've really got to stay in, get better shape, you know, because otherwise my jujitsu career will be really short.

Jody (00:40:20) - And I, you know, don't want that on a business level, you know, the, the you know, the biggest thing I think we've got to overcome in a business level is that we've got some unhappy folks, and we got some really happy folks. And so we've got to make sure that the unhappy folks turn into real happy folks. And I think that's going to happen, you know, as we look for ways to, to unwind what we currently have in the manager, you know, the two different structures combine it into to one level and, and in the process, you know, getting a profit margin back up to where it needs to be, because right now, you know, I'd be I'd be okay with the profit margin of 40% if everybody is super happy and clients are super happy.

Jody (00:40:59) - But in this case, we've got employees that aren't. And so I got to make sure that we, you know, we look at the employees, we get them to the happy level. And I think that's going to be unwinding a little bit and helping them out. So those are my two goals. They're, healthy, you know, getting things going, staying out of the gym for the first month as everyone else's doing their New Year's resolutions, coming back in when I can actually get things.

Jamie (00:41:23) - All right, Jack, how about you? What do you. First off, do you believe in New Year's resolutions?

Jack (00:41:27) - I, I guess I think so, I mean, I'm a huge one on planning and I don't know, I, you know, I think if so, every year, I mean, every year towards the end of year, I actually just started the process in December, I started looking at last year's whatever goals, affirmations, all that kind of thing.

Jack (00:41:43) - And, and, you know, grading myself about how I did, I don't treat them as a absolute and that kind of thing. But one of them was to get the book out this year. So, I did actually get that done awesome. I do believe I just want to throw in real quick. I've been so inspired by a book called Success Principles by Jack Canfield. And if you know the book. 

Jody (00:42:05) - Okay. Is it because of the first name?

Jack (00:42:07) - Yeah, exactly. It's he's the chicken soup of the soul guy but he's he did the same thing around business advice and career advice, and it's sort of like it's like that other book, the Chicken Soup book, because you can look and read a page and a half and either throw it away or figure out how to use it. Right. And it's just a great collection. So highly recommend it to your listeners as well. Great for CEOs and that kind of thing. I did, I started reading a couple of years ago.

Jack (00:42:33) - I still go back to it. I think, personally, I'm building my writing career, obviously. And that's a, that's a personal thing as well as a work thing. And if I was to say, and I'm pretty sure it's going to be on the list, I already have book number two in my head. And it's I'm gonna try and get that out this year. That'd be sort of a big thing to do we're probably going to slightly reposition agency and just from a name branding perspective because of that agile problem. 

Jody (00:43:02) - And I think it's a great idea. I think that's great.

Jack (00:43:04) - So those are those are the two big things. And of course, and yeah, the health thing. So, you're so spot on Jodi. You just got it. It's got to become a lifestyle. And I'm lucky here in Southern California walked three blocks and I'm on a hiking trail walk for block summit. I'm at the beach. And I don't do that often enough, but I do it often.

Jack (00:43:24) - So, yeah, I'm with you.

Jody (00:43:27) - Yeah. And kudos to you on your book. I mean, I've written two and that first.

Jody (00:43:34) - That first one is horrible. So I commend you on finishing it. There's many times I'd be like, oh my gosh, do I want to quit at any point here? Because, you know, some chapters would go like just like that, as you know, other chapters you'd spend oh no, you know, so it's like weekend versus a month. It was like unreal. I'm sure you have that. 

Jack (00:43:51) - I think my number I think my numbers are larger that way. So just we won't talk about the exact numbers. But it was a long journey.

Jody (00:43:59) - Took a year and a half for me to do my first book and my second book. You're right, because once your first book down, I think you start thinking that way. It's like you, you start kind of figuring it out. And the second book, it was maybe two months, boom, I had it done.

Jody (00:44:12) - So I will tell you the second book to me, a lot easier than the first book. So I definitely, kudos to you for getting it done and kudos for that.

Jack (00:44:21) - Thank you. Thank you. Awesome.

Jamie (00:44:23) - So those are great answers. And I'm gonna say it in a similar light, something I've learned this year with my son. So just specifically is sometimes New Year's resolutions get a little stale. So, what we've what we've always done for my son is we have like, you know, the realtors every year give you like, all the calendars. So, you end up with like five calendars. And so, beginning of each year we're like, all right, what's your what's your basketball goal for this year? And the first year we did it, his goal was to make 50,000 shots. And we actually I think early on it was like 24,000 shots, which we hit in like June. So like okay, that goal didn't really let's keep let's add on to it.

Jamie (00:44:54) - And so like we've tracked that every year. And this year as he's getting older, what we found is those goals get a little stale after a while. So, what we're doing this year is we're actually making them not quarterly goals but four-month goals. So, what, how do you want to do over the next four months? Yeah. So, what's the goal of the next four months. Because I think like if especially when it comes to athletics, like you can accomplish a lot in four months okay. So, what's your goal. And especially it works for him because in four months he'll be working with the high school or basketball team for the first time. Like, what do you need to do before you achieve that? And then at the end of that four months, by the time the next four months comes, then he'll be doing the high school tryouts. And so we've kind of broken it up into four months. So, I was thinking about that for myself as well. And so my short term goal again, I used to do a lot of Mudders and Spartans and stuff like that.

Jamie (00:45:34) - I haven't done one for a couple of years because I've been playing so much basketball. But this year I'm like, oh, can you do one of those again, am I? My daughter actually wants to do one with me. So we're cool. We are signing up for a Spartan Race in May. And so that's my short-term goal, is to be able to keep up with her during that Spartan race.

Jack (00:45:49) - Nothing like a deadline.

Jamie (00:45:50) - So.

Jamie (00:45:51) - Exactly. That's. Yeah, that's kind of the way I looked at it this year. I'm gonna do shorter. I'm gonna do like shorter 3 or 4 month goals and then like, let them build on to each other. So that's kind of the way I'm looking at it now. So cool. Well, I think this has been an awesome episode. Like I said, I know, I'm sure I have a ton of homework coming out of this. Like Jody's going to keep the camera or turn the camera off and then just start asking me questions about how we're going to do a lot of this stuff.

Jamie (00:46:14) - But, let's do final thoughts. And then while you're doing your final thought for us, Jack, as well, how do people find you? So we'll start with you, Jack. Final thoughts. And then again, how can people get Ahold of you and find you?

Jack (00:46:24) - Yeah, I think the I did I might end with what I started with as well. Is that the message to the managers that might be listening to this as well? I wrote for leaders but also for managers, and that is that you can be different as a manager in the first step like with anything is gaining the awareness of what it takes to do things differently and the like. And that's the books designed around that, just helping you see those things and lots of vignettes in there and everything like that we'd love to hear from you. Would love for you to take a read of the book as well you can reach me on LinkedIn at Jack Skeels, and also at AgencyAgile.Com you can reach me in our whole team and we can come help give clever advice like I was giving today here to the Anders CPA.

Jamie (00:47:12) - So great.

Jamie (00:47:14) - Jody.

Jody (00:47:15) - Yeah.

Jody (00:47:16) - Jack I guess the definitely read the book here.

Jack (00:47:19) - Oh. Thank you. Yeah, I had it here.

Jody (00:47:21) - So love the book. Yeah. Love the book. Yeah. You know, a lot of the good nuggets in this book and whether you, whether you go that route or not, I mean, it's just a really good reading and it'll give you some really good ideas that you can take away and apply to your agency. Because if you're like, if you're like us, we usually take little bits of everything, you know, hey, I like this idea. Like this one. Let's incorporate it, see how it works. And I think, Jack, you really did a great job in putting it together. Oh, thanks.

Jack (00:47:50) - Thank you.

Jody (00:47:51) - For everyone. So yeah, nicely. Nicely done. Actually, bought quite a few of the books and gave it to my entire director team. I don't know if Jamie's got his.

Jamie (00:47:58) - I have the PDF version. Yeah, I should yeah.

Jack (00:48:01) - Yeah.

Jody (00:48:02) - But yeah, we were one of your first, you know, first, probably 5 or 6.

Jack (00:48:06) - Oh, cool. Thank you.

Jody (00:48:07) - So I just want to say, you know, nice. Nicely done. And, you know, for those that, you know, that they're looking for help, because one thing we didn't talk about is, is, is that, you know, the biggest thing that we see in agencies when it. Comes to us is really the difference between what they build clients versus what they truly realize in that billing. You know, if their if their standard billing rates, let's say it's $200 an hour or whether you're flat fee or value based, whatever it comes out to being and they're achieving, you know, 170 or 160, in some cases a lot worse.

Jody (00:48:42) - You know that's where you need to bring in, you know, somebody like a Jack in there. And he can definitely help you out. And that's what we specialize in helping you get that, that net margin closer together to whether it's, you know, within 5 to 10% or 5% better, whatever that might be, to really help grow. And I think he's done a great job over the years. And, you know, and, you know, we speak with a lot of agencies, and I've not heard even one agency complain about how, you know, poor job ever done, you know, that sort of thing.

Jack (00:49:11) - Thank you.

Jody (00:49:11) - It's like, you know, they're always talking how great and helpful you are and how you've really made a difference. So, you know, kudos to you for that. So, definitely reach out if you need.

Jamie (00:49:21) - I will second that. I've heard a lot of agencies I work with say Jack has changed my life.

Jamie (00:49:26) - Jack has changed the way we do things and agency agile is a blessing. So, yeah, I would definitely say that. But my final thought goes back to something you said early on as well as you were talking about production and margins and you weren't really mentioning margins, but I'm going to tie it back to the financial aspect. And, I've been a CFO for several agencies. I work with all of our CFOs who all of them work on agencies. And one of the things we find is that it's really hard to find margins. It's really hard to find profit at the overhead number. Most agencies, most companies are somewhere between 33 to 35% overhead. Right. It's really hard to find numbers there. So if you're going to be one of those extraordinary companies that are hitting 20, 25, 30% profit, you have to be the most productive client you can, most productive company you can be. And the way you do it is exactly what you said is you want to make sure you have as much, many producers as possible because that leads to productivity.

Jamie (00:50:15) - And so if you're if you're operating at a 60% margin, then guess what? You're going to be a lot closer to that 20% than anyone else out there. So, everything you're saying really does tie back to financials because that's where you find the percentages. That's where you find those numbers. Is that is that the gross profit? Not at the overhead. So, all ties back to the to the numbers that we tell our clients. But that's that's a great way you started. It was just talking about you know, how can you produce more because that will get you those big numbers you're looking for in the bottom line.

Jack (00:50:41) - Yep. Yeah. Thank you very much, guys. Thanks for reading the book and understanding it as well. So, I appreciate that.

Jack (00:50:48) - Yeah. Great idea. Well, you know, actually.

Jack (00:50:53) - The majority of the book is about exactly what you guys spoke about, right? We you know, we did the manager text on this. So, I'd be happy to come back and dive into what we call the project failure rate.

Jack (00:51:03) - Right. And, the high cost of the project failure rate or a challenged project thing as well. And that's probably our bread and butter. So, I appreciate you bringing it up. Thank you. Yep.

Jody (00:51:15) - Yeah. For sure. And we'll definitely have you on for another one I definitely I enjoyed this a ton. I'm sure readers will have the same.

Jamie (00:51:21) - Yeah. No. Yeah thanks everybody. Um yeah, definitely check out, Jack and reach out to him on LinkedIn. It's definitely a good connection that you want in your Rolodex. So, appreciate you coming on.

Jack (00:51:30) - Thanks so much, guys. What a pleasure. This was fun. Thank you.

Outro (00:51:33) - Enjoy this podcast. Visit our website SummitCPA.Net to get more tips and strategy for achieving business success. We're here to be a resource in this ever-changing industry.

Unmanage Your Agency: A Conversation with Agency Agile's Jack Skeels

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