Esther: This is The Business Makers show, heard here and online at thebusinessmakers.com. I'm Esther Steinfeld, and my guest today is Steve McKee, president and co-founder of marketing and communications firm McKee Wallwork Cleveland, a writer for Business Week, and author of the brand new book When Growth Stalls. Welcome to The Business Makers show, Steve.

Steve: Thank you.

Esther: It's great to have you here. First, I want you to tell me a little bit about McKee Wallwork Cleveland.

Steve: We are McKee Wallwork Cleveland is a 12-year-old marketing communications firm. We are an advertising agency/consulting firm. The slash part we'll probably get into. We work with clients all over the country who are trying to find their brand voice and in this period of time, who happen to be stalled.

Esther: So did you always know you wanted to be in communications and marketing? Was that always your ultimate goal?

Steve: No, actually it wasn't. I studied just about everything in college and didn't like it, and I ended up in marketing, so there you go, but I seem to have a knack for it, and you tend to end up liking what you're good at.

Esther: Of course.

Steve: So, here I am.

Esther: Yeah, so what triggered the idea to found McKee Wallwork Cleveland?

Steve: Well, that's actually an interesting story. People think that when you start your own firm you're a high risk profile. I actually don't. It was the least risky option I had at the time. I was running a firm, trying to buy it, and when the acquisition fell through, I honestly felt like the least risky option was to go out on my own because I had had so much freedom before in my job, so 12 years ago we did. The rest is history.

Esther: Awesome. So who is your typical client?

Steve: Well these days with my research in the book our sweet spot is really working with companies that have stalled who, for one reason or another, can't seem their way through the rough patch we're that we're going into and, and need to find that new or renewed brand voice. And we really working with companies in that position, because they know they need the help, and so it's a good feeling to come alongside them and help them get back on the growth curve.

Esther: So, was this your first business, or have you had other ventures in the past?

Steve: I've had a lot of cockamamie ideas that my wife, bless her heart, has kindly shot down, kept us from going bankrupt. But no, this is my first real foray into business. It's my fifth, advertising agency that I've worked at but, so I was in the business for some period of time and learned it, saw what I liked, what I didn't like, what was good, what wasn't, and then decided to go out on my own. But fortunately, as I said, my wife has saved me from myself many times.

Esther: So, where else have you worked before this?

Steve: Well, it's an interesting story. My first job I was a field marketing manager for Pizza Hut. I worked for their advertising agency. I was 22 years old, freshly married, no money, and part of my job was to travel to all the Pizza Huts in the west and eat-

Esther: Awesome.

Steve: -for free, so that was-

Esther: That sounds like an amazing job.

Steve: That was an amazing job, not only did I get free food, I got some terrific training because Pizza Hut was owned by PepsiCo, which is kind of the king of marketers. And, and then I went on to work for an advertising agency that at that time was one of the most highly regarded in the nation, Delphamina Travasono and Partners. And then I went to another agency, and yet another agency, and what that did for me was, not only did it allow me to see how agencies were run, what I liked and didn't like, what worked and didn't work, but to work on some terrific client businesses, some big client companies, and learn how they do it. So taking my marketing education and actually putting feet on it, and that's what allowed us to distill-we have a proprietary planning process that we use with our clients and it really came from all those lessons I learned working with big companies.

Esther: You make it sound like it's really easy, like this business just started, and it was a big success. So has it always been easy?

Steve: It's never been easy and I have to say the first five years of our existence was, uh, looking back, was pretty good. We grew pretty quickly, but then we went sideways for two years, which really is the foundation for the book, When Growth Stalls. It's a personal story as much as it's a business story. And that was a very difficult time. We had 94% staff turnover in about 18 months. We lost a partner, and if you would've told me that was going to happen, I probably would've quit. It just, you know, an employee comes into your office once a week and quits, and you just deal with it. We've all been through business struggles, so, so no, it's not easy. It's not easy at all. I think no business is easy.

Esther: So with the economy in the state that it's in, how has it been getting new clients? I know a lot of companies are pulling back on ad dollars, so how is that affecting your business?

Steve: Well, the good news is my message is well timed with the book When Growth Stalls. I didn't set out to launch it during this downturn, but it just worked out that way, so we're getting some traction that way. Our, our current clients, for the most part, are reducing their budgets as most companies are. Um, some of them are struggling more than others, but we've also found an interesting phenomena that we've actually gotten called by a number of perspective new clients who recognize that this is an opportunistic time, and they want to take advantage of it. And so we've been able to land some new business at, you know, at a good time for us, and, and we're going to do okay during this time period. We're not setting the world on fire. Nobody is, but we're going to do okay.

Esther: I think that's a really good point that you make, that a lot of businesses are taking advantage of this downturn, what is your advice to companies who are trying their hardest to continue to grow even though this economy is just so awful?

Steve: Yeah, well this is as time of great cleansing, if you want to look at it that way in that inefficiencies that companies were either born with or have allowed to creep in, just can't stand anymore. And so I was reading a column this morning in the Wall Street Journal about fear and greed, which are kind of the two things that drive investors. I think the same thing applies in business as you know, nobody is certainly being driven by greed these days, but a lot of people are being driven by fear. And both are bad, you know, there's two extremes, so I think the thing is a calm, rationale approach to how can we use this time to get back to our focus and to win market share recognizing that it will end.

Esther: How do you choose not to be fearful of the economy?

Steve: You take it two steps back. You reexamine your foundation, make sure that your company is doing what it needs to be doing, or correct it if it's not doing what it needs to be doing. And then courage is not the absence of fear, right, it's doing what you need to do even though you're afraid. So I don't' know if you can get rid of fear entirely, but you sure can make it more productive, I think.

Esther: I'm talking with Steve McKee, president of McKee Wallwork Cleveland, and author of When Growth Stalls. And we'll have more with Steve after this. I'm Esther Steinfeld, and you're listening to The Business Makers show, heard here and online at thebusinessmakers.com.

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Esther: This is The Business Makers show, heard here and online at thebusinessmakers.com. I'm Esther Steinfeld, and I'm talking with Steve McKee, president of McKee Wallwork Cleveland, and author of When Growth Stalls. Steve, before the break, we were talking about how to avoid being fearful of the economy in your business, and I think this is a great way to start talking about your new book which is called When Growth Stalls. So why don't you tell me about the big idea behind this book.

Steve: The big idea is really buried in the subhead, which is How it Happens. Why You're Stuck and What To Do About It. And it's really that middle frame. I think we all have some sense of, of how stalled growth happens. Obviously, the economy is a big factor in that. But what we don't realize, and what I didn't realize when our company was stuck is why we were in a prolonged funk. And it's because of the internal psychological dynamics that happen within stalled companies. That's really the finding, if you will, the big idea behind the book. And once you open people's eyes to what might be going on within their companies, it's like a marketing therapy in a way. They can say, "Oh, okay, that is happening here. What do we need to do to address it? How can we start to focus on fixing our internal issues?" And then they can begin their process of recovery. I know I sound like a shrink, but-

Esther: No, not at all.

Steve: -I'm not one. But I actually have had clients tell me that, that when they leave they do feel somewhat better, just for having figured it out and talked about it, so...

Esther: I'm sure they do because when you're so close to a business, it's very difficult to see the big picture and see exactly what's going wrong in something you're doing day to day.

Steve: Uh-hunh (affirmative), and that was my my problem as president of a company that was stuck and stalled, a lot of guilt, a lot pointing the finger at myself, a lot of insecurity and uncertainly, and all of those emotions are not very productive. They take a lot out of you. You can hide some amount of that, but you can't hide a lot of it from your staff and your clients, and it, it can be really debilitating.

Esther: So the inspiration behind the book, it sounds like, was your own experience.

Steve: Yeah.

Esther: So how did you take your own experience and turn it into this book?

Steve: We had made the Inc. 500 list of the fastest growing private companies. People are probably familiar with that. Just before our stall. So there was kind of this dichotomy of feeling very successful and then feeling very much like a failure. But what it did for us was it put us in a club that enabled us to go and research among Inc. 500 companies over a 20-year period to see which ones of those kept growing, which ones of those stalled, and why. That was really the spark of the idea that we had. It was an act born of, I wouldn't say of desperation, but necessity and it was when we got those research results back and started probing them that we began to see these patterns, not only in the research data but in our own business. And that's when the lights really went on.

Esther: So the book details characteristics that usually correlate with stalled growth. Can you share just one as a preview?

Steve: There are four internal factors that tend to correlate very highly with stalled growth, the first one being a lack of consensus among the management team, which is, when things are going well often there are consensus issues there, but they don't arise, because you're, you're doing great, you know. Sales are up. Profits are up. Everything's cool. When things start going south, it's easy to start questioning each other's decisions, whether you're in a partnership as I am, or if you're just a senior manager and you're questioning the CEO's vision, for example. Those lack of consensus issues can really pull a company apart. And when you read the business press knowing that this happens, you really start to see, you start to see it in a lot more places that you, than you thought. And that's really the first critical factor because when the elephants at the top of the company are fighting you know, the ants get killed, as the old expression goes.

The three other factors are a loss of focus which happens sometimes before growth stalls, sometimes after growth stalls, when a company gets away from its core competency. Loss of nerve, this whole fear, uh, versus greed issue, where you, you start to drive the business based on fear rather than based on overcoming your fear. And then the fourth one is, is somewhat of a result of all of the other three, which is inconsistency in marketing, that you're looking for a silver bullet, so you're out there in different ways. Those things all tend to work together in sort of a vicious cycle, and they can really debilitate companies. They can really tear them down. And most of the time management won't even know that that's really happening. That's what we found.

Esther: What's the most important thing management and the CEO should do to insure that those things don't happen?

Steve: The most important thing is that they look into the mirror and, and deal with the consensus issue first. We found that in our consulting practice as well because as long as there's in fighting or rolling of the eyes, or doubt, none of the other stuff's really going to get taken care of. And so we actually have a self diagnosis on the website for the book, whengrowthstalls.com. No need to register or anything, it's, you know, we won't even know you're there. But you can take a 20-question survey loosely based on our research, and gives you a report that indicates what you might be struggling with. And one of the things I suggest for companies that are trying to heel themselves is that the CEO and the rest of the management team take the self diagnosis, print out their report, go into a room, close the door, and start to talk. Uh, because the report is sort of an independent arbiter of what might be going on in the company, and to the extent that, uh, there's disagreement, it's, it will be right there on paper, and it starts to frame the issues.

Esther: Interesting. It's kind of like a benchmarking tool.

Steve: It really is, yeah. It's a little bit of a mirror that you can hold up to yourself and see how bad your problems may be.

Esther: I see, and so tell me more about the research side of it, because clearly you, you said five years of research? Is that how long you were researching this book?

Steve: Yeah, it really was. We did the initial study of Inc. 500 companies in 2003. That's what gave us the, the insight into the amazing results. And then over the intervening years, I interviewed a number of companies, and of course, spoke about what we had found around the country. And inevitably at speaking engagements, people would say, "Where's the book. Where's the book. I want the book." I said, "I don't have a book yet, yet." Now we have a book. And then we went back out in 2008 with a similar study but we went deeper, probed these issues of consensus, and focus, and nerve, and consistency, and found amazing correlations between stalled companies on the one hand suffering from these factors, and then healthy companies not suffering from them as much. So, yeah, altogether it was about six years of research, qualitative, quantitative, two different studies nationwide profiles, and everything was, was very consistent, which leads me to believe we're onto something.

Esther: Did you interview small and large businesses?

Steve: Yes we did. The companies we talked to were as small as, you know, one-, and two-, and three-person shops, and up to over $250, $500 million dollars in, in revenue. So, we weren't really operating at the Fortune 500 level, but just below that.

Esther: I'm talking with Steve McKee, president of McKee Wallwork Cleveland, and author of When Growth Stalls, and we'll have more with Steve after this. I'm Esther Steinfeld and you're listening to The Business Makers show heard here and online at thebusinessmakers.com.

Esther: This is The Business Makers show heard here and online at thebusinessmakers.com. I'm Esther Steinfeld and continuing on with Steve McKee, president of McKee Wallwork Cleveland and author of When Growth Stalls. Steve, we were talking about the research you did, the extensive research with small and large businesses to get this book going. And I found it interesting on your website that you have a place where you can actually submit your own stories, for businesses that want to tell you their stories and give you some feedback. How many stories have you gotten?

Steve: We've gotten a handful. The actual idea behind that was as a possibility of a second book, is companies that have, have either recovered from stalled growth, or are still struggling with it. And it was a little bit of an experiment, but to my surprise, we have gotten a number of companies that have said, "I'd like to tell you my story." You know, "We're struggling right now," or "We were struggling." And it's touching in a way, that someone would trust you with that kind of information. And so we're just at the beginning stages of following up with these companies because of the stage that we're at, but it's a fascinating experiment.

Esther: It sounds like a very interesting experiment, because a lot of businesses, especially right now are experiencing these problems and this kind of stalled growth, as you say.

Steve: Uh-hunh (affirmative).

Esther: So, are there certain qualities that every business, large or small, have that give them better chances of surviving the long run?

Steve: Yeah, I would say so. Somebody asked me the other day whether small companies or large companies were more susceptible to these factors. And, and my answer was, "They're all susceptible to them, because we all struggle with the same things," but the dynamics of a small company are different than a large company, so whereas a small company might struggle with a loss of nerve more easily, a large company will struggle with a lack of consensus more easily. I think the key to success in both cases is having an open unafraid management culture, where decisions can be questioned. You know, where it's about the idea, not about the rank of a person saying it, if that makes sense.

Esther: It does.

Steve: Because then you can be honest about these issues, and you can either avoid them, or if they do crop up begin to deal with them. In, in my own partner meetings-there are three of us-uh, believe me, we take our own medicine. We talk about are we suffering a loss of nerve, you know. It's important that we retain our consensus. We talk about these issues in our management meetings, and I'm not saying it's any easier for us, but we're certainly cognizant of them. And it seems to work, it seems to work well.

Esther: How important is it to have a CEO that has a very clear vision that he or she shares with the rest of the company and the management team?

Steve: I think it's essential. This would make an interesting study as well-there's an interesting spectrum of CEOs. You have the visionary kind of "follow me, everybody" CEO. And then you have someone who's maybe a little bit more of a natural consensus builder. And one of the interesting topics that we were chatting about with a group that I was speaking to, was the, the relationship between consensus and corporate culture. And you take a Southwest airlines, where consensus really reaches all the way to the bottom of the organization, which defines its corporate culture. And they've been able to manage through two CEO transitions just fine because the culture is so strong. Compare that to an Apple maybe, with Steve Jobs, who we don't know, or a Starbucks with Howard Schultz, where both of those gentlemen departed the company for a period of time, and things didn't go so well. So you have to wonder if, if they're more the former type of leader, which is just "follow me, I have a strong vision". Whereas Herb Kelleher was the latter type of leader who built a strong culture that could outlast him.

Esther: He endued that culture within all the employees, including the people who were working at the airports.

Steve: Right, which is why we all site them all the time in all of our case studies.

Esther: Of course.

Steve: Yeah.

Esther: So before I let you go, given all your experience with success, and with advertising, and marketing, in general, what would you give, what advice would you give to young, aspiring entrepreneurs?

Steve: I think the, the main advice I would give this is going to sound biased-but I really believe in the marketing perspective. I call it big M marketing, not little m marketing, which is not the marketing department, but the marketing perspective which says, business is all about satisfying customer needs and wants, and so the more you can learn about marketing theory, you know, deep and rich, and really understand that, the better off you'll be. That customers' needs have to come first. The customers may not always be able to articulate those needs, or they may not want to articulate those needs, but as long as you keep them in your sites, and orientate the company around them, you'll probably be okay.

Esther: Steve, thank you so much for chatting with me today. It's been really a pleasure.

Steve: Thank you.

Esther: So that wraps up our discussion with Steve McKee, president of McKee Wallwork Cleveland and author of When Growth Stalls. I'm Esther Steinfeld, and you've been listening to The Business Makers show, heard here and online at thebusinessmakers.com.