Relationships lie at the heart of partner networks and business organizations. Michael Zipursky’s guest today is Dr. Sherri Malouf, who recently got her Ph.D. in Human Development focused on studying the relationship between leaders and followers. In this episode, Dr. Sherri explains a tool she developed to help you determine critical unconscious building blocks in your relationships within your organization. Called “Implicit Social Elements,” these building blocks include fairness, status, trust, empathy, reciprocity, mutual recognition, respect, and self-control. If you want to bring your organization and partner networks to a higher achievement level, this episode is for you.
I’m here with Dr. Sherri Malouf. Sherri, welcome.
Thank you. I’m excited to be here and talk to you.
Sherri, you’re the Chair and Principal of Situation Management Systems. For many years, you’ve been in the personal development space where your programs have been used by over 100,000 people. You’ve received your PhD in Human Development, where you study the relationship between leaders and followers. In 2021, you’re publishing another book on your research, which is called Science and the Leader-Follower Relationship. I have a little advance copy here, which I appreciate. I enjoyed the read. Before we get to the details of your business and everything going on, tell us a little bit more about your PhD, what the interest was, and what the research was all about.
It’s a fun story because I did my Bachelor’s and my Master’s Degree in Britain. When I lived there, we were talking about living there, and both of them had aspects of research in them. I thought, “This is fun.” My Master’s Degree is completely by research and I enjoyed doing it. I like thinking about things, looking at things, explaining things, and talking to people. Twenty-five years later, I decided to do it again so I started my PhD. The intention of the PhD was to write a book. It was to give more visibility to our company. It’s like a calling card, per se. There’s also this curiosity that I’ve always had about the magic in life, the things we don’t see, and the things that are hard to explain. I wanted to see, “Can I use some science and explain some of this?” That’s what the PhD was about.
The goal is to write the book but who would you say is the audience of the book? Who are you hoping to make an impact with from that book, and in turn, the research to support that book?As we grow, we’re socialized, and we need each other more than we know. Click To Tweet
It can help a lot of people at a lot of levels. The book itself gets people thinking about relationships because they’re complex. What’s in the book is only a piece of the science that goes into it because my dissertation is a lot more complex in terms of the theoretical argument. There’s a lot of complexity in the relationships and there’s a lot of unconscious impact on how people connect with each other and how they relate. When you add into the difficulties and everything of being in a relationship with somebody in an organization, you’re compounding how to have a healthy, close, and rewarding relationship.
How would you describe that overall argument, the point that you wanted to make, and to have your research support? For everybody reading right now who’s going, “Tell me a little bit more, Sherri, what were you trying to prove?” How would you describe it in a concise way?
Each one of us grows up with our parents, social systems, schools, churches, and whatever influences are around us. As we grow, we’re socialized. We need each other more than we know that we need each other. What happens is that the brain creates some unconscious shortcuts for us and determines based on how we grow up. Is this person valuable to me? Do they exhibit qualities that mean that I want to connect with them? If they do, I give them time, attention, and I want a relationship with them.
If they don’t, they go into the discard pile. To the degree that I can do that within an organization, I will say that person is not going to support me moving forward. I make these very quick unconscious assumptions about people. I want people to think about that. I want them to understand that people who are different can open up your eyes to things in your life. The connection between leaders and followers is tough. There are so many things that put pressure on it and make it difficult.
Do you think a lot of people miss opportunities because they dismiss what they don’t understand or don’t fit the box of what they’ve defined as being desirable?
There’s been a lot of research into these unconscious pictures that we have. They’re idealized pictures of people in our life. We’ve got idealized partners, wife or husband, leaders and followers. That’s operating constantly in the background and there are these little tick marks that go off in our head and we quickly will decide, “This person is valuable and this person isn’t.” For a lot of people, I would think they miss out.
Did you find in your research that proves it shows a percentage of opportunities or times where somebody gets something wrong? Maybe you could have found a great partner or a great opportunity but you didn’t because you weren’t looking for it or you weren’t open to it. You’re only looking at the conventional box and if it didn’t tick, that box you moved on but there was some great opportunity sitting in front of you. Was there anything in your research that spoke to that?
I didn’t look at that. There is a bunch of research that looks at that but that wasn’t what mine was about. I wanted to build a tool that could test people’s unconscious thoughts that could say, “These are the ones that are going on and these are the ones that are contributing to the quality of the relationship.” What I did was I created a tool. It’s a questionnaire and it takes about fifteen minutes to fill out. You fill out this questionnaire and there are seven questions that look at the relationships. I hired a statistician because I’m not great at that stuff and we had to create the correct statistical test to use on this. The company that I worked with ended up with a score between 0 and 5 for the quality of the leader-follower relationship. One of these things that I call the implicit social elements was statistically related and had a relationship with that score. That’s what my research focused on.
You develop this tool. How do you go about using that from a business perspective? A lot of people would like to do something similar, maybe not as in-depth in terms of doing a whole PhD to be able to find the research to develop the tool but they can figure out some way to create a quiz, an assessment, or something along those lines. You have this piece of intellectual property tool, how do you now go about using that to build a business? Are you using that on the front end to generate leads and inquiries? Is it only when a client is paying you and it is part of the engagement? Walk us through how you’ve been using that tool in your business.
It’s on the front end. We’re starting out and getting the word out about this because the first idea was, “Let’s get the book out and get some people excited about the possibility.” I have several people that have looked at it and are thinking about using it. What the tool does is you have to choose at least 200 people in the organization. You can choose a group, a particular function, or whatever you want to do. You choose 200 people and you run through this test.
What the results do is they say, “In your organization, this is your score out of five that you’re getting for the relationship between leaders and followers.” That’s interesting because this tool for the relationship was previously used on personal relationships and the highest score anybody got was a B-plus. When you’re looking at it with organizations then you’re looking at the culture of the organization. You’re starting to say, “Relationships are the basis of everything. They’re the basis of all decisions that get made and the culture in the organization.”
For example, in the organization that I worked with, the ones that came out as the most critical were trust and status. The reason behind that was because they were going through layoffs. They hadn’t done them yet. They were about to do them but people know. People know when this stuff is going to happen. All of a sudden, you have trust, which is obvious, “Am I going to get laid off?” Status is, “How valued I am to the organization,” which is an interesting thing that came out of it.
The way I want to use this tool is that we talk to people. We say, “You’ve got to get the top people in the group, the division or the organization involved in this. Get 200 people to do it and we’ve got to have a conversation on what you want to do about it.” There are seven what I call Implicit Social Elements. It’s fairness, status, trust, empathy, reciprocity, mutual recognition, respect and self-control. You can take any one of those and it’s an interesting conversation for an organization to have. There’s one particular company I’m talking to and what they’re thinking is that respect is a big deal. The mutual recognition and respect to have a conversation about that with a group of people. What does respect mean to you?People who are different can open up your eyes to things in your life. Click To Tweet
How do you use the tool itself? You mentioned that it’s on a website. People can go through it and they need at least 200 people so it’s not a small company. You’re targeting your ideal client which are larger organizations. Is the path that they take, fill it in, and you get the result, the data back from that, then use that to sit down and talk with the leaders about what the findings are? From that, it would turn into training, workshops and coaching. What would be the follow on? How would you help them to take those findings and turn them into results through the organization?
It depends on what the organization wants to do. Another organization that I’m talking to about potentially using it is they’ve got this whole set of values that they want to implement in the organization and these are some of them. This helps them take a look at where their gaps are and where they need to go. The next steps are, what do you want to do about it? Which ones do you want to focus on? How do you want to do that?
For example, the top training program that we have is called Positive Power and Influence. That can be a customized program to be able to help people talk about whatever it is whether it’s empathy, reciprocity, or whichever one of the pieces it is. It could be a straightforward training program, it can be a customized one, or it could be coaching. Coaching is at senior levels and training for the organization. Part of it is that people have to decide on what this means in our organization?
How are you even opening those conversations? Let’s say you have this tool. How have you decided who to approach? Are these people that you know, people that you don’t know, or a mix? What are you saying to get them? It’s a big commitment, even though it’s not a full-on engagement. There are 200 people in an organization to go through a tool, that takes time. Even if it’s not a lot of time for them to do it, it’s still a level of commitment. How are you positioning this so that people are receptive to it and are open to moving forward?
It’s a long conversation and it’s not a quick sale cycle. I’m moving into doing this particular thing. It’s a brand new product for us. I’m planting seeds. I’m giving people books, I’m talking to them about it, I have a PowerPoint, and I tried to connect with them in terms of how it fits with what else they’re doing in their organization and what it supports. Mostly, it’s people that I know so it’s people that I’m already working with. I’ve also offered to do pilots for free, there’s a specific thing around it, and trying to get at least four pilots done so I have some actual results other than the research that I did to share with people. It’s an ongoing developing process. Let’s put it that way.
This is a new initiative for you. The book is connected to the tool. You’ve got the tool that then will turn into training, workshops, coaching, or some paid engagement.
That’s the idea.
Let’s go back a little bit in time because you’ve had programs that have impacted 100,000 and some odd people. What have you been doing over the last many years and your marketing has changed over time? If you were to hit on what has worked best for you to generate revenue and win new client engagements, what stands out for you as being the most effective way of making that happen?
It’s believing in your brand and believing in what you bring to people. If I go back and look over the years, we’ve done all kinds of analysis. We’ve been around since ‘75. I haven’t been around that whole time. A lot of people have experienced our programs and it doesn’t matter. We go back and look at things over the years. It’s word of mouth. Word of mouth has always sold us best. Part of the thing is investing in having something that’s high quality that brings people what they need. You’ve got to figure out for yourself what that is. There’s also the follow-through. The experience afterward. How do you follow up with people? How do you keep it alive? How do you create that experience as an ongoing thing so they keep talking about you?
What would you say that you do in that department or the company does in their department that might be a bit unique or different that you think gives you an advantage or supports the success that you have?
Of the things that we know and we’ve been told repeatedly by customers is that our work changes people’s lives. I always tell people that what we’re doing is we’re changing the world one relationship at a time. We do training programs. It used to be. It would be a 2 or 3-day experience, and now it’s a virtual experience but we always follow up with people. We do webinars afterward. We invite people to stay connected with us. It’s the follow-up piece and the fact that it does have such a strong impact on people’s lives.
A little more clarity. You use the word “we” a lot in terms of the company. It’s not only you. You’ve said that it’s also been around even before you were part of the company. Explain the company, the “we,” and how did Sherri end up as part of the “we.”
The company is a small women-owned business in Milford, New Hampshire. We reside in a colonial house so it’s called Vikki because she’s a Victorian. That’s us here and we’ve got partners all over the world. A lot of those partners have been connected with us for 40 years or more. The program has been delivered internationally and has been translated into fifteen languages. That’s been ongoing for a long time. When I say we, it’s because I think of everybody and all our partners.
Is that partner network directly connected to your company, Situation Management Systems? Are you the owner of the intellectual property that your partners use?
You said that when you joined and it was running even before you in the ‘70s. Did you acquire the intellectual property? How did that piece work?
There’s a little bit of drama in this whole thing. My father started up a company around the same time and he had been connected with the founders in prior businesses. My father started up a company which is a parent company now. He was delivering and selling the program for many years. There was a bit of a hiccup in the relationship so we ended up through ten years of litigation acquiring the company. It’s quite a story but we don’t have time for it. In that process, my father stepped away and he gave the company to my sister and myself but there was nothing to it. When we took it over, we had three months’ worth of work and money. It’s the same as starting up except that we started off with a lawsuit and a debt.Relationships are the basis of everything. They’re the basis of all decisions that get made and the culture in the organization. Click To Tweet
When you say that the value of the company at that point, like the assets, it wasn’t the intellectual property that you were using or was there nothing at that time?
There were two companies, LMA and SMS, Situation Management Systems and Life and Management Applications. LMA went from about $3 million in value to about $200,000 in the space in about two years and then we had the lawsuit going on. The intellectual property was with SMS. Through this whole convoluted process, we ended up with SMS. That’s how we got the intellectual property.
I’m intrigued by this idea of a partner network. How many partners do you now have across the world?
It goes up and down. A couple of years ago, we sold the intellectual property rights to Zuidema, to our partner from Holland. Even with the individual countries in Europe, we’ve got somewhere between 15 and 20.
Why go the partner route? Why not say, “We own this intellectual property. We want to be the exclusive providers of it. Here’s what we charge. We build up the brand, demand, deliver, and keep doing that with everyone internally as opposed to having external partners that are running their own companies?” I’m guessing they paid you a licensing fee or something along those lines. Why that path?
You always have two choices. You can go externally or internal. We go back and forth because we have the same thing here in the United States. We have partners in the United States as well. The dilemma always is you have more control when you do it all yourself but you have a higher cost. In our business, your payroll is your highest cost. People of that caliber that are going to be delivering that business are going to be expensive.
You’re always in that thing and it’s the same with trainers or consultants. You’ve got that same dilemma. If they won’t sell them, what are they doing when they’re not delivering? There’s always this dilemma in our business of trying to figure out, “Do I keep it internal and go external?” We inherit it the way it was. We tried pulling in salespeople and all that stuff. We’ve gone through so many rounds of it and have decided that partners were the best way for us to go. Our sales cycle is a little bit on the long side so it’s tough.
You have these partners and they’re delivering the work on your behalf. They’re using your intellectual property to deliver for clients. How do you go and find those partners? How do they find you? Let’s say, I want to take our intellectual property, build a partner network of people that can help consultants to grow their businesses, and take the framework that we’ve developed, it is proven, and hundreds of people through, all that good stuff. How do we go about finding partners if that is something we want to entertain? What has been your experience? What best practices or guidance would you provide on that?
A lot of this for small companies, the challenge is you’ve got to do most of it based on trust because I can’t go out, travel around the world, and audit everybody’s business. I’m not going to do that to people locally. A big piece of it is connecting with people that you can create a trusting relationship. I’ve written lots of contracts and I’ve done all kinds of stuff to support and structure those relationships but on the front end, it has to be around trust. It’s been an interesting journey to say the least but the best way for me is networking, talking to people, connecting with people, and going to conferences. We do ATD every year so we put up a sign if we’re looking for partners. People come in and talk to us but most people find us honestly. They ask us to be partners for this.
What does the model then look like? You have these partners that are going to deliver based on that intellectual property. Are they paying an annual licensing fee? Is it monthly fees? How do you structure that model? What have you found to work well in that department?
There are two different structures. There’s one for domestic and one for international. The international one is royalty and that varies based on the markets because some markets can’t charge the same as they can in other markets.
Is the royalty a percentage of sales?
Is it per person that goes through the training?
Most of those are per person fees. For domestic folks, we have a whole range. It’s like this smorgasbord of options for them because we can be their back office if they don’t have a setup. If they want to go out and sell, there are different commissions. There are all kinds of things that get put together and structured around it. It can end up being a per person fee if they do everything themselves, like all the administration, administrative stuff, and selling everything. If they do that themselves, there’s a per person fee that they pay us. If they want us to be a part of it, there are some additional fees that come in on that.
You write, do research, deliver programs, running a business, there are teams, partners, and all that. How do you structure your typical day or your time to make sure that you’re making great progress and moving towards your goals? What does that look like for you? What best practices or habits do you leverage?
I am self-disciplined. I set out what it is that I need to get done in the next week. For example, in the next week, I’m doing two podcasts for the book. That’s that piece of it and I have to write 1,000-word articles so I’ve got to get that done. I’m training two women to be lead trainers in our virtual programs. We had to come up with a whole new structure around certifying people because we have a strict quality process for other people getting certified to run the programs. I’ve got six hours of Zoom and getting them to the next step in their process for becoming certified. Every week is different and whatever I set out to do that week, I do.
You’re right. I could get pulled in a lot of different directions but my focus is what is it that I need to do and what’s on the table. I’ve been trying to remove myself from some of the day-to-day stuff because of the writing and the next steps that I want to take. That means that I have to get other people to take responsibility and be able to do the training and that kind of thing. We also have a huge network of independent trainers that we use.The most effective way to generate revenue and win new client engagements is believing in your brand and what you bring to people. Click To Tweet
When you look back, what would you say has been most successful in terms of moving the business to that next level or creating whatever success is for you, however you would define that, but specifically related to the business. Is there any new strategy, a new tactic, initiative, and an adjustment of mindset? What would you say stood out to you that’s successful where you feel excited about the future because of it?
Fortunately, I had got a couple of our customers interested in virtual training before the pandemic. In fact, one of them said that they were so grateful to me for having exposed them to virtual training because they were ready to go and they could jump into it. The biggest thing that I had to tell people was, “You can connect with people virtually.” In your head, you can’t sit here going, “Face-to-face is always much better than virtual.” Get that out of your head. You cannot be that way because we have to connect with people, help them, and support them in the way that we always have, irrespective of whether we’re face-to-face or virtual with them.
One of the biggest things for me was to get that message through to everybody, to my customers, trainers, partners. It works. You’ve got to do it. The only other pieces have been hard because we lost every single piece of business that we had. Everything got shut down. I’m immediately doing all the things to create some cashflow that we needed for the organization. There’s this thing that’s funny. My sister is also part of the organization. She does sales. We have this similar mindset that, “It doesn’t matter what happens, the money is going to show up. We will make it.” There’s this optimism, constantly looking towards the future, and belief that what we’re doing is good. It’s good for the world. It’s good for us. Even what happened in 2020 didn’t change that at all.
When COVID reared its ugly head and many businesses got impacted, it sounds like yours got heavily impacted, wiping out contracts, customers putting things on pause, and they’re saying, “We can’t move forward now.” You need to get cashflow back up and running. What did you and your sister do? What was one thing you guys did to get cashflow back up and running in an environment, especially at the most acute time when many organizations weren’t ready to invest, holding off, or cutting back? What did you guys do? What was one thing that you would say that this was a successful effort on our part?
We’re in New Hampshire, and New Hampshire hasn’t been a particularly hard-hit state with COVID. Governor Sununu was a little bit slow to declare us in a state of emergency which meant we couldn’t apply for any of the support like the EIDL and the PPP. We were on the phone with all of the representatives, senators, and everybody was going, “Push Sununu. Get this declaration done.” We were on top of getting those applications in. That’s what helped us survive in the beginning. Also, the other thing we started doing was immediately moving clients over to the virtual world. There are still some that are reluctant but they’re slowly realizing, “This is the way we have to do this.” They’re all slowly moving over to it.
Sherri, thank you again so much for coming on here. I want to make sure that people can learn more about you and your latest book. Where is the best place for them to go?
Go to SMSInc.com.
Sherri, again, thank you.
Thank you, Michael. It was a delight.