Having the right consulting team is critical to establishing a strong and stable organization and, ultimately, a successful business. Today’s guest is Mike Zani, CEO of The Predictive Index, a talent optimization platform that helps businesses build high-performing teams and cultures. He joins host Michael Zipursky to share the aspects of an individual he focuses on when choosing to hire. Mike emphasizes that industry experience may not always be the right move depending on the role you need to fill. He taps into his own experiences in acquiring and creating high-functioning teams and cultivating a successful culture to give tips you can apply for your own business. Mike also shares insights from his book, The Science of Dream Teams: How Talent Optimization Can Drive Engagement, Productivity, and Happiness. Tune in and don’t miss out on eye-opening discussions that could help your business!
I’m with Mike Zani. Mike, welcome.
It’s great to be here, Michael.
You are the CEO of The Predictive Index, a talent optimization platform that helps businesses build high-performing teams and cultures. Your clients include very well-known names like Nissan, DoorDash, Bain Capital, as well as many other businesses that you might not have heard of. These are the local companies that are doing cool things. You have a book that came out called The Science of Dream Teams: How Talent Optimization Can Drive Engagement, Productivity, and Happiness. I have been enjoying that book so very well done on that. I want to take us back a little bit because you were the coach in 1996 for the US Olympic Sailing Team. Tell us, first of all, how did you get into the world of being an Olympic Sailing Coach?
I was an aspiring Olympic athlete in the ‘92 Olympic Quadrennium and I tried to qualify myself for the Barcelona Olympics. I didn’t like raising money to fund my sailing, which is what I had to do. I did not come from a family that was going to fund me to go sailing all around the world whimsically, even if it was a great cause. I decided to coach for the ‘96 Quadrennium. In doing so, I took a lot of what my competitors and was able to organize training strategies so that we could optimize performance.
Interestingly, you are sitting in Canada, the classes that I coached, there was a men’s and women’s 470 division. They did not compete against each other for a slot at the Olympics but they competed among female or male teams. Our ultimate training squad was the top Canadian male and female team and the top US male and female team. I’ve got to coach those four in 1995 for the last year as a run-up. We had this fantastic training group. 3 out of those 4 teams qualified for the Olympics, which is why the US Olympic team asked me to come on board as a coach.
When you look back at that experience being an Olympic coach, what did you learn during that experience that you think that still stays with you that you use regularly?
I kicked off my people-centric journey then. It was the lesson about having to modify yourself as a coach to get through to each athlete. These athletes are super high performance, passionate so talented but quirky, often. To modify yourself, some people liked analogies and some people didn’t. Some people like very specific data, others like a softer touch. As a coach, to get the most out of your athletes, how do you modify yourself so that they can be the best they can be? Not necessarily that it’s easy on you. That was a skill that you bring to management and leadership. I started learning that process back then.It’s the little things that you can do, not the massive mountains. Click To Tweet
A lot of companies, big or small, define their values and get clear on their vision. They try and instill this culture. They think about hiring, team building and growth from the perspective of, “Do these people fit our culture and values?” What you are saying is it’s a little bit different, which is, “How do I modify, how I approach leadership or how I approach working with the team so that I’m almost meeting my team members where they are.”
If you are seeing that there’s greatness inside of them, there’s something there that you want to benefit from and build with. Can you give some examples of how you have modified your approach to work with specific people or how you have seen other leaders modify their approach? That might be very interesting for people to know.
The culture of an organization, the values, the social mores at those organizations are guard rails for the modification. For every manager, for every leader in the company, for anyone who has an important relationship, ask yourself the question, “How do I modify to get the most out of working with Michael?” If you are my boss and I have to manage you to be effective, how do I get the most out of that relationship? If you are someone who is an early starter, likes to plan and put everything on the table, even though I might be pressure prompted and wanting to come in late but in earnest, I have to modify myself so that you are on board with my work product.
A simple way to do that is when I have introverted individuals that I’m working with, they typically like to think through things before you present a topic. Just pre-wiring an agenda like, “Michael, let’s meet at 2:00 and we are going to talk about these three things.” Even if I only do that half an hour beforehand, hopefully, it would be more but you would appreciate the fact that you get to think through what we are going to talk about. Especially in a power dynamic as the CEO if I ask someone to meet, they always pretty much have time for me.
I have to make sure that if you are in a power position, not to wield power because they are going to have time for you but then you could have gotten more out of it. I am so impatient that if I want to talk to you, I will slide my proverbial chair back, approach you and you will make time for me. If you are introverted or patient, I’ve got to pre-wire and I’ve got to ask you for permission to interrupt you when it’s okay for you, not when it’s okay for me. It’s little simple things that you can do. It’s not massive mountains.
I was going to ask you this later on but I think it’s an appropriate time now, which is the power of vulnerability. You talk about this in your book. For many leaders, especially hard-charging leaders, it’s not always comfortable to accept or to expose vulnerabilities. Where do you see the power of identifying where to be vulnerable? I would love to get some examples of how you or others have taken that identification of something that you are not great in or side that you need to expose, and what you have done with it so that people can see it at work?
The onus is on the leader to be the first person to be vulnerable. If you don’t create a culture of vulnerability, people will not be open to the things that they are working on. Every human is working on something and some just don’t know it. The self-aware among us are actively working on things, which is fantastic. If the leader kicks it off, “I am working on these items. I want your help,” if you nudge me when you see me doing these things, which I’m not as proud of or that I consider to be things that I’m working on, I would love your support or help to nudge to get me back on track. I’m actively working on these things. If you can show that vulnerability, then when you approach them about the things that they need to be working on, their first move is not to be as defensive.
You can create this positive virtuous cycle where people are becoming more self-aware together, asking each other about, “When do I frustrate you, Michael? How did we get to this caustic discussion? How do we back this up and be our own Monday morning quarterbacks so that we don’t do that again?” Most of us don’t want those tension-filled moments. The power is in the onus. The onus is on the leader to be the first to do it.
You have given us two powerful principles. Modification is one, the second now being around vulnerability. Is there some other principle or keyword that when you think about working with a team is top of mind for you or an integral part of how you operate?
If you have a line in on the strong mission, vision culture of what you are trying to accomplish and how you are trying to accomplish it, those are the guardrails for how you can modify. This is what got Wells Fargo into trouble. It was a win at all costs and the culture of “hit your numbers,” and they started going astray. They somehow convinced themselves, not all, that it was okay to create false accounts for people. That was a culture mission, vision breach. They didn’t have those guardrails in place. They didn’t have that North Star.
When you look at teams of people in high-performing teams, the majority of the people are working on themselves. They are open with each other and exploring ways to be better but they have to make sure that they are doing the work and they are aligned on what that work is. If it’s a junior team, it’s work. If it’s a senior team, it’s a strategic vision. That’s because it depends on the tenure of your team. A group of managers doesn’t connect as much with the corporate strategy as they do with what their department is working on.
Fairly early in your career, you took over a company in an industry that you didn’t have much experience with, just a line for everyone joining us now, what was that company and why did you buy it?
When you come from the world of sailing coach, almost every industry is new. My business partner, Daniel, we adopted this business model called the search fund, which is the opportunity to buy a used company with other people’s money. We were snot-nosed kids, 34 and 32. I’m two years his senior. We raised money from ten high-net-worth individuals and we bought a company. It was a little audacious, but the company was doing $6.5 million in revenue, 45 employees and it was in the rugged docking station space. They enabled hardened computers to survive in cop cars, utility trucks, fire trucks, military vehicles.If leaders don’t create a culture of vulnerability, people will not be open with the things that they’re working on. Click To Tweet
This was this little niche space, not a bad business but we knew nothing about rugged computing. We knew nothing about vehicle dynamics, shock, vibration and temperature, all the struggles. We didn’t know a lot about how do cops and utility workers work, how do they stay productive? Honestly, it took six months to get up to speed in an industry. People put too much weight on industry experience.
You didn’t have the advantage of understanding the business and the product. What did you see in that business? Where was the opportunity that you identified to gather the investment and to have that level of confidence? I’m guessing that you were very confident that you could make us successful grow revenue. What did you see in that business that gave you the confidence to move?
My wife used to work for Bain Consulting. When we were starting to look at businesses, I went to my wife and I said, “Does Bain have a framework for analyzing companies?” She says, “Yes, they have two. One is a three-column, the other is an eight-column.” I’m like, “Let’s do the three-column. That seems simpler.” One, the three-column framework was marketplace attractiveness. Two was competitive position within the market, then three was value creation opportunities. Every company that Daniel and I analyzed, used this pretty simple framework.
We looked at it in the marketplace as being attractive for police and utility. This was the early 2000s, computing was booming and with productivity through adopting mobile wireless, cops were no longer calling in a dispatch to run a plate. They would run a plate themselves. We looked at this and says, “This marketplace is attractive. They are going to be a lot more cops with computers and they are going to need solid equipment.” We determined in our due diligence that if a computer went down, the cop and the cop car went down. You basically drove back to, “My computer had broken. I can’t do my job.”
We thought it was a very attractive market. It was growing. The company that we bought was pretty competitive. They were fifth in market share but they landed New York City Police Department. If they can land NYPD at the highest price point, there has to be something there. Value creation was a long list. This company was run by two great founders but they were not super sophisticated in how they approached their business and we knew that there were a lot of value creation opportunities. It’s like buying and flipping houses, slightly using a business lens as opposed to, “I put a new kitchen, two new baths and I’m going to make a lot.” This is a five-year project and you are like, “What rooms am I going to fix?”
In your book, you mentioned one of the things you focused on was the team and the talent in that business. What specifically did you do within the landscape of team and talent in that organization? What do you do that had the biggest impact?
We missed the talent side so badly in due diligence. When we did that analysis, marketplace attractiveness, competitive position, value creation, we did not identify, this team is not the team that we need to execute this more aggressive strategy. It took us about 18 months to 2 years to get our footing at turning around the talent side. As a matter of fact, it was in our first company, LEDCO, that we ran into The Predictive Index’s clients and it was one of the tools that we adopted. I tell people that the first company was getting a Master’s degree in Human Resources.
Daniel and I were lucky enough to go to Harvard Business School. They teach you a lot about strategy, finance and competitive position in marketing but they don’t teach you anything about how to build world-class teams. There are a lot of natural leaders who attend schools like that but I don’t think the books teach you how to do that. We missed it. It was painful. We had to build it from the ground up. Other CEOs need to do a better job with respect to pulling the talent lever.
What did that look like more specifically? Did you essentially have to go in and let go of a lot of people and then was it about finding people that had more experience in that industry? When you look at all the different things that you do, what do you feel had the biggest impact on the growth of the business and from a talent perspective? I want to give readers a little bit of a look inside what were the different chess pieces that you moved that helped you to win the game.
We, unfortunately, only had 4 of the 45 people make it over the five years. It was a 90% turnover of that original team. Some of them made it most of the way but we were trying to create a super high performing team where everyone in every role was a top 10% for that role, that job and for that pay. We took that attitude. We were trying to play Major League Baseball. We are trying to put a world-class team on the field and outrun our competition. It worked empirically. We went from $6 million to $35 million in revenue and went from 5th to 1st in market share. It was about getting the right behavioral fit for each job, the right cognitive capability for the complexity of the role, as opposed to industry experience.
I didn’t use this back then but we used this head heart briefcase. In the head are your behavioral traits and your cognitive capabilities. In your heart, what gets you up in the morning, what motivates you and the briefcase is your experience. Everyone always overweight’s the briefcase. That’s your resume. What have you done? What industries have you done it in? We basically downplay the briefcase as much as possible and focus on head and heart, and get with people who can run hard. We have done that now on four-platform companies. If I started the fifth platform, that’s the first thing we would look at. How do we build a world-class team with head and heart?
As you are doing that, was there any challenge or hesitation in bringing in world-class people? It sounds like to bring in world-class people, your expenses or costs may have ballooned. I don’t know if you did something to cut down on that. I just want to dig a little bit into your mindset as you were making those decisions. Was it about, “We have investor money and we know we are going to take a bit of a hit but we need to bring these people in?” What was the thought process and conversation in the mindset you had around made the investments into bringing seasoned or high-quality people in that potentially could have bumped up your expenses and costs for that period in time?
When you don’t pay for the experience, you can lower costs. Going back to the head heart briefcase, a heavy briefcase is expensive. If you have someone with twenty years of experience in rugged computing, they are going to command a six-figure salary that starts with a two at least. We can lower our costs by going with head, heart, not briefcase, be willing to train, teach, cultivate, coach and develop the industry-specific stuff.The onus is on the leader to be the first to do it. Click To Tweet
I will say my philosophy on pay is you’ve got to take it off the table. It has to be competitive enough that it’s off the table as a decision-making criterion. That’s different for each person and each role. If you take it off the table and you are in the ballpark, what you end up doing is you start having discussions about the more meaningful parts of why you are going to work here.
Do you have a connection with our mission? Do you want to work here? Would you be a good member of this team? Do you fit culturally and ethically here? When you are interviewing, all of a sudden, you are like, “I could learn from you.” Not only could I learn from you but you could learn here and develop the career that when the conversation goes their people and pays off the table, you’ve got not only an employee but you probably have an employee for many years. I would estimate that we pay 75th plus percentile but we still burn investor’s money to overpay just to get someone who looks to be the best.
You build up that business and things went well. With investors, you later purchased The Predictive Index from the family or the trust that owned it. What were the first changes that you made when you came in and took over? There’s this great platform for those that are familiar with The Predictive Index in terms of the data, the tools and the assessments. There are a lot of value in intellectual property. You now coming in again. I don’t know if you ran your three-quadrant Bain Capital assessment on it but what were the first things that you did in this business that you had taken over that had a long history?
As soon as you take a company over, you have to address all the me issues that happen. There was the mid-30s number of employees at the company and there were 37 different sets of me issues. Everyone is thinking about, “What does this mean to me? Do I get to keep my same office, my title, who am I reporting to? Is it going to be better or worse for me?” In acquiring a company, the first thing you do is you address the me issues and then pull people into what you are trying to do.
For The Predictive Index, it was interesting because it’s not often they take over a 60-year-old technology-based company. It was a science-based company. We said, “Our science is world-class but our tech stack, how we deliver it, our software is not. We need to make sure we build the surround around science to unlock its potential.”
At first, people are like, “What does that even mean?” You have to paint the picture like, “We are not going to be this great science, which is delivered by humans, which it is and was but we want to build software around it to support it. Now we have a network of over 700 certified partners that are mostly management and talent consultants. The work that they do is consulting powered by software and a powerful data model. Before, they used to say, “I’m a consultant who uses this great system,” but they didn’t have that power of a software platform behind them and it did a lot of the mundane work.
How many consultants do you have or were there in The Predictive Index delivering the data, services and assessments when you took over?
There were 47 companies, probably about 80 to 100 active consultants who are doing it.
Was that one of the big areas or big ways that you have grown the business, or have there been other ones that you would say have even provided a greater growth in terms of changes that you have made?
The single most important thing that we have done is build a world-class network of consultants and partners. If you are trying to change people’s minds about talent, our number one competitor is people doing nothing, just relying on their old talent strategies, which we could get into. Our unstructured interviewing with their own biases and managing the people the way they themselves want to be managed. If you are trying to have a new discipline, think about a new way of doing things. A world of talent and designation.
You can’t give someone a log-in to the software. You do need the guided tour by someone strategic, a consultant, to understand the company what they are trying to achieve and help the client build these muscles in this new discipline. We couldn’t do it without our certified partners. It’s the single most important element that we have done. It’s getting the ball rolling. At first, we were able to add twenty partners after two years and we successfully added 250 partners. You are adding a zero to these motions.
What changed when you were adding 20 versus 200? What are you doing differently now that you weren’t doing then? What have you identified that works better?
It’s the attitude of scalability. If something is not easy to do, how do you make it easier to do? When we bought the company, we were not easy to do business with. Even two years after we bought the company, we were still not easy to do business with. We still have more work to do. We need to be even easier to do business with.People put too much weight on industry experience. Click To Tweet
When a consultant has an a-ha saying, “I like the way you talk about talent and strategy. I would like to add a talent practice to my portfolio,” and when they come to learn about how we work and how they can work with us, we have to take out all of the noise. It’s easy for them to be the consultant that they want to be, add a talent practice while it’s easier and it’s more scalable. It’s still not as easy as we want it to be.
You mentioned how important it is in terms of this network of consultants that you have. Is there any other area or any other way that you looked at when you thought about how to grow the business? Any other channel that you were considering but for whatever reason, you decided to focus more on the consultant channel?
In parallel, we are working on product-led growth. Product-led growth is a juxtaposition to sales and marketing-led growth. Most companies are sales and marketing-led. When you market, you have a funnel, salespeople address that funnel and try, and move you to client status. Product-led growth is having your product do more of that work for you. If you build what internally we call a buttery smooth product experience, then someone can try it at a freemium level and say, “Interesting. That adds value to my life. I would like to use that more often.”
Most of us realize product-led growth every day with our phones. You download an app and you give it 30 seconds. If it adds value to your life in 30 seconds, you keep using it. Some apps you give more time and then you might use it and say, “I will buy the premium package. In fact, this is indispensable. I’m going to buy the super-premium package.” Product-led growth is creeping into the B2B side of things and it’s even creeping into consulting where you have to show people value right away or they are not going to want to work with you.
One thing that a lot of consultants feel in terms of assessments, whether it’s Myers-Briggs, Predictive Index or others, is there’s a level of comfort and confidence that there’s value in the data. Sometimes, people question the accuracy or you will do like, “I have done it myself.” You do some personality or assessment, you look at it and answer the questions like, “I answered as best as I could but I still feel a little bit uncomfortable about that answer because it feels like I’m not saying exactly what I wanted to say.” You get the results.
You look at it and you go, “There’s some truth here but I don’t know about over here.” How do you look at them? You have been part of thousands of tasks. What would you say to a consultant who’s thinking about using this even for their own hiring or for working with our team? How should people think about these types of assessments and tools to get the most out of them?
My favorite part of this industry is that the majority of the industry is run by industrial-organizational psychologists. Smartest people in the room by far. PhDs are brilliant. They know more about psychology than I will ever know. If psychologists are running businesses, what they do is always err on the fidelity of the tool. Everything should be higher fidelity. If the tool has higher fidelity, things are better.
Whereas business people don’t run on the highest fidelity. They don’t actually want to know about science. They want the science there, just like we want the science to make our Tesla’s drive themselves, our airplanes flying autopilot and our vaccines to work. We don’t want to know about it. We just want it to work. Businesspeople are right in that camp of, “Give me a red light, green light. Tell me yes or no. Get me to a simple response.”
The tool does not have to be 99.9997% accurate. It needs to be 90% plus accurate and you need to use it across your entire organization so you create these data models that work. Amazon is guessing at what you are going to like with 60% accuracy and you are like, “I did want that snowblower. Thank you for suggesting that.” If I just bought a snowblower, “Would you like a snowblower cover?” I do.
They are guessing with some level of accuracy. You need these data models to help you drive your learnings. If you don’t have the data models driving your learnings, how do you build a better team? You need to build a better team over time. I made a bet this one didn’t work. Let’s learn from that and have these feedback loops.
The assessments you use should have the systems, data approach and be efficacious enough what we call valid. Do they measure what they say they are going to measure? Are they good on a three-test basis and are they fair against adverse impact with socioeconomic groups to make sure that you are not biasing against females, race, ethnicity?
When you have that, if the data model is there, like the Hogan Assessment is a world-class assessment but the only you, only use it on SVPs and above. You can’t build a data model on the whole organization. The reason they can’t is it’s too expensive on a per-test basis and it takes 90 minutes. You are not going to make that investment on the shop floor.
There’s so much more that we could cover here and the best way for us to wrap up is to point people to where they can dive into what you are offering at The Predictive Index and all of the research and content that you have. I want to recommend that people check out your book, The Science of Dream Teams. If someone has a team or is thinking about building a team, there are a lot in this book to help you with that journey and to do it efficiently and effectively. Mike, where’s the one place that you would recommend that people go to learn more about you and the work you guys are doing at The Predictive Index?
If you go to DreamTeams.io, which is a URL, you can take The Predictive Index assessment for yourself or a team. You can learn about the book. It’s a great place to learn about the discipline of talent optimization. You can also go to PredictiveIndex.com to learn about our organization. The team has done a fantastic job with content so there are a lot of free content to learn about the disciplines of talent optimization and how to use it in your organization without us trying to sell you something. If we take the approach that if you become an evangelist for improving how people manage their talent, there are a lot of growth forever going.
Mike, thanks so much for coming on.
- The Predictive Index
- The Science of Dream Teams: How Talent Optimization Can Drive Engagement, Productivity, and Happiness