Recently, Jon Bolen visited with Gene Hammett of Growth Think Tank to discuss the ‘Remarkable Transparency in the Midst of a Crisis”. Jon discusses the importance of transparency and how important it is to have open and clear communication throughout the entire company.
Jon Bolen: The Transcript
Target Audience: Jon Bolen is the CEO of Entouch Controls. He is a business-centric technology leader who focuses on disciplined execution. Many strategies or ideas have real merit, but it’s the ability for a team to focus on executing the underlying tasks that create real value for the business. That’s disciplined execution. Jon has honed this philosophy in the fifteen years that he has been deploying the technology.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
When you think about it, we challenge our people every single day, to be creative to be intellectually amazing to deliver consistently on really complex tasks. And oftentimes, our business success really relies on their success and their accomplishments, especially now, right? When you think about what we’re all going through with the pandemic and how COVID-19 is impacting our businesses, the outcome itself is really hard to predict.
Welcome to Growth Think Tank. This is the one and only place where you will get insight from the founders and the CEOs of the fastest-growing privately held companies. I am the host. My name is Gene Hammett, I hope leaders and their teams navigate the defining moments of their growth. Are you ready to grow?
Gene Hammett [0:44]
Today we’re going to talk about honesty, the truth. More specifically, we’re going to talk about the importance of transparency, given all of the stuff that we’ve been through as individuals and in our families, and in our organization’s Transparency is even more important now than ever before, because there’s a lot of uncertainty. We want to inspire trust and others, right? Well, today we’re going to look at transparency in the midst of a crisis, the crisis being how do we all come back together? How do we all move forward, maybe with more clarity, but transparency in a crisis is something that we’re going to talk about with a very special CEO. He is the CEO of Entouch Controls, they do HVAC energy management systems. I won’t get into the details. But when I talked to Jon Bolen about transparency, he lit up, he really shared why it’s so important. He actually shared a little bit of a vulnerable moment of were why he left an organization early in his professional career because he wasn’t getting transparency. It was very frustrating. And so as he’s evolved as a leader, he’s talked about why transparency is important. Inside the interview, we look at the details of transport Where do you draw the line. And he shared a few examples of employees that took the level of transparency that they had around financials and came up with new ideas, or new ways to, for the company to really grow together. This is a special interview that I’m happy to share with you. And if you haven’t had a chance to take on the free training, we want to remind you right now that you can go to genehammett.com/training. There are three mistakes that every leader makes in their journey of growth. And when you understand what those mistakes, you can actually address them be intentional. You want to be intentional about how you’re growing as a leader, right? Well, these are new, these are special. And if you haven’t already gone to genehammett.com/training, it’s absolutely free for you to key into the three mistakes so that you can build a team of players through this recession. Now, here’s the interview with Jon.
Before we dive into the interview, I wanted to remind you that you can actually get a tool that I’ve been working with clients with for the last couple of years I’ve refined this tool has gone through several iterations. Now we have it completely automated, you can actually go online and fill out the leadership quiz. To get the leadership quiz. Just go to theleadershipquiz.com. That’s pretty easy, right? theleadershipquiz.com. What you will get when you do that is you will answer a few questions, you will see where you rate based on the core principles of fast-growth companies. If you’re ready to grow your company or you want to see where you are, then make sure you go to theleadershipquiz.com inside it you will get insight into where you are, understand where you want to improve. And you will get them mapped into the 10 areas that are most specific to fast-growth companies. Again, go to theleadershipquiz.com and you can get that right now.
Gene Hammett [3:49]
Hey, Jon, how are you?
Jon Bolen [3:51]
I’m doing great. How are you doing Gene?
Gene Hammett [3:52]
Fantastic. excited to have you on the podcast.
Jon Bolen [3:57]
Well, it’s good to be here.
Gene Hammett [3:59]
Well, I’ve already let our audience know a little bit about you and the leadership and what we’re going to talk about today. But I would love for you to tell us about Entouch Controls.
Jon Bolen [4:09]
Well, Entouch is an energy management solutions provider, who, where we’ve organized all of our core principles around driving profitability, and increasing multisite customers ability to run their businesses and reach their sustainability goals so that we can all say the plan in one building at a time
Gene Hammett [4:30]
I love that’s a sharp little elevator pitch you got.
Jon Bolen [4:36]
We’ve been working some time to craft it, but it’s really encouraging to work in a business that’s driving so many technological advancements, but at the same time, we can accomplish some great things for a larger community. So it’s a big business to be part of.
Gene Hammett [4:51]
And John, you’ve been the CEO for Entouch for how long?
Jon Bolen [4:55]
I’ve been the CEO for in touch for about nine months, and I’ve been with him for about seven years.
Gene Hammett [5:01]
All right. Well, a piece of the story I didn’t know. So I’m glad you shared that with me. When you think about growing a Fast Company, there’s many different elements we could talk about. But I and my team have been looking at your style of leadership and your approach to culture and people. And the word transparency keeps coming up. Why is transparency so important in today’s world?
Jon Bolen [5:25]
It’s a that’s a great question, and it takes me back. I’m gonna go back in the Wayback Machine 25 years so I was one of the youngest directors in a privately held company. I reported directly to the president CEO on this fair, new newly minted MBA. We were in the convenience store marketing, business, and a fuel management business. And we decided due to the deregulation of the trucking industry that we were going to remake this fuel hauling business. Am I driving a newly minted MBA? The only thing I know about 18 wheel truck Is it 18 wheels, but I was a pretty darn good internal consultant. So I have laid out this plan. But what we needed to do the core talent we needed to bring to maintain internally so we could keep serving our existing business, the assets we needed to sell-off. I had a rock-solid plan and myself, my team put together and I presented it to the president CEO. And they said,
Jon Bolen [6:19]
No, we’re not going to do it that way. I was like, Yeah, but, but we need to do this is it now In fact, just pick two people, there are 200 people in this company. Just pick two people, you need the two smartest, and just pick the trucks, you need the drivers and we’ll just get going. And they had a larger commercial reason for doing this one that they quite frankly, here I am. 25 years later, I have some suppositions about why they wanted to do this. But for me as a young leader, they just made my job infinitely harder. But I had to ask my people to solve for core knowledge that they didn’t have to understand trucking regulations that they couldn’t possibly know. And meanwhile, We had to maintain some level of delivery of fuel to these large convenience stores in a way that was virtually impossible to hit. I mean, they, they, they almost set us up for failure, to begin with. Now, mind you, we were successful in the end, but I was deeply frustrated. And I end up leaving the company A year later, and I was there rising stock. And I was the guy I mean, I was the youngest leader in the on the leadership team. And when you think about it, we challenge our people every single day, to be creative, to be intellectually amazing to deliver consistently on really complex tasks. And oftentimes, our business success really relies on their success and their accomplishments, especially now, right?
Jon Bolen [7:43]
When you think about what we’re all going through with the pandemic and how COVID-19 is impacting our businesses, the outcome itself is really hard to predict. And so we have to be able to make hard decisions whether it’s around Getting off another company as this organization was whether we may or may not have to reduce headcount in the future. And or invest in a different way. And if our people don’t understand the challenges that are in our business that are driving those decisions, then why should we expect them to keep following us? I didn’t write I made the decision to leave because I was so frustrated because I was working so hard, but I didn’t know why. Why didn’t you make my job that much harder? Why did you have to make that decision? It might have been perfectly rational. And I feel certain that myself and my peers would have enjoyed sitting down at a table with our at that time I see ya and have him say, look, here are the reasons we have to do this. It astounds me that other folks feel like now the better dancer was to hide that information from the from your best and brightest.
Hold on for a second. Jon just said we challenge our people. It was very fast. I want to bring a spotlight to this because when You challenge your people, you give them an opportunity to step up, you give them an opportunity to think for themselves, to not be afraid to make a mistake. When you truly give them that opportunity, and you challenge themselves, you’re not there to guide them, you’re not there to, you know, tell them how to do it. You want them to take ownership of it. The best way I know to encourage more leadership across the company is not to talk about it. But to actually let people lead. Let people own the projects. The result, the process, let them own it. This is something I talk about quite a bit. So make sure you figure out how to challenge your employees and challenge yourself as well as a leader. Back to Jon.
Gene Hammett [9:44]
I want to ask you, Jon, you’ve talked about the past and I totally get the story and how it relates here. But I want to ask you about today we were coming out of COVID and hopefully coming out of it or kind of still have a little bit but why is transparency so Important now or even more important?
Jon Bolen [10:02]
You know, I touched on it a little bit. But to dive a little deeper, you know, and we’ll take, kind of call it March 13, plus or minus 24 hours when the entire, the entire United States essentially turns the lights off. And we all take our businesses remotely. But we all still have to run our businesses, we have to pair employees, we have to, we have to create livelihoods for our employees and deliver our value proposition to our customers. And my business. I’ve had four of my customers see chapter 11 protection, right. So what that really means is, there’s a level of uncertainty in my business, there’s a chance that I have to change headcount. There’s a chance that some of us in these high growth businesses have to pivot. We may have to sell to new customers with new products. And these decisions are really challenging.
Jon Bolen [10:51]
Now, we’ve been very fortunate, I’ve not had to reduce headcount through this pandemic, we’ve been able to manage our business very effectively in Qatar cost in certain places. But I immediately began communicating with my employees in the early days I was on a 48 to 72 hour all hands communication, whether it was by email or over the video, making sure they knew exactly where the business stood. And we’re talking about this is how much AR we have. This is how much cash we have. This is what our payables are. This runway of cash allows us 12 months without selling another product, this runway of cash allows us 18 months, but really letting them understand all of the planning that we were doing financially because I needed them to be at their best. And I needed them to understand that we would give them as many answers as we possibly could to some of their unspoken questions. And if we weren’t giving them information, it wasn’t because we were hiding it. It was because we didn’t know and it was okay that we didn’t know. It was okay that we didn’t have all the answers.
Jon Bolen [11:56]
Our goal is to lead them in the face of uncertainty. Good Lord, if we had roadmaps we’d all be good at this. Right? I mean, the issue is we don’t. And it was important to let them know that we were all lazing the approach the most appropriate trail. So if I do have to make a hard decision, and again, I’ve been very fortunate I, I’ve had to make cost reduction decisions. I’ve had to change salaries. I haven’t had to reduce heads. But I, I truly believe that if I went to my team, and I made some decisions around headcount, and I showed them why, the while they would be happy about it, they would trust that I made the best decision I could. And, you know, the most important thing we can do is create that bond between ourselves and our employees. So that when you have to make hard decisions, we can make them and you can make them without your best and brightest doing what I did 25 years ago with just going you know what, there’s got to be somebody else out there that will tell me the truth.
Hold on for a second. Did you catch how Jon talked about employees making decisions have you got an email from employee that asking for permission on something or asking a question, when you really wish they just would have known or just done it anyway, whatever they asked, they just had the idea in their head about what should be done and they just did it. They didn’t bother you about it? Well, that’s a sign that your leadership model is broken, if you are getting emails, or you’re getting questions about things, that people should have the confidence and courage to make decisions for themselves. Your job is to let them make those decisions, set expectations, maybe even set some boundaries or guide rails around what is expected of them. And your job then is to get out of the way, when you think about getting your employees to make decisions isn’t that really kind of the end goal is to empower them enough to have those ideas and make decisions when you’re not in the room. Because here’s the key. You can’t always be in the room. And so you want to trust that they know what to do when you’re not around and you want them to continue doing it. Even if you’re on vacation. For a month, let’s say, I remind you this because empowering your people is a part of leadership. Back to Jon.
Gene Hammett [14:09]
I want to ask you a question here. And I call this the transparency line. Where do you draw it? There’s always a place where people are willing to put that line those with remarkable or even radical transparency, push it toward what’s legally possible. Others find a way that’s closer to what this makes sense. Where do you draw the line?
Jon Bolen [14:33]
I’m closer to legally possible than competent, comfortable. Um, there’s, you know, they, I would tell you and I present virtually unvarnished to my entire team, our board deck after every single board meeting. It’s one of the core things that I do. There is very little that I will remove from that deck before I present it to the entire company. And there are two things Diane careful and they bounce up against, I’ll say the legal line one for sure, which is to the extent that there are any third party investment discussions, things along those lines, you know, any sort of m&a kind of discussions that you might have with the board until those are fully fleshed out, that would be inappropriate to share for a number of I think, pretty obvious reasons. Right. It’s so I’m very careful with speculative kinds of comments that I would share in a broader abroad room only because I don’t have the opportunity to put them in context. And out of respect for other parties, people outside of my company.
Jon Bolen [15:36]
The other area is any place where we, I would say project headcount, things along those lines, that again, are forecasted and not certain. But to be clear, right, you know, we had a COVID-19 Action Plan, right. So sort of the things we had done and then the sort of the in case of emergency To break glass items, and we actually laid out what those actions are. And for the most part, all we did was redact names or roles or things along those lines. But, but basically, my employees knew there was a bigger list that if things didn’t go, Well, we had already mapped out what our core actions were going to be. So I would say where I draw the line is anything that I think would be incendiary, or not helpful, and create much more emotion. But up to that right off the bat, you know, again, the easy ones, the financial statements, those are to the extent that we’re sharing that with the board. There’s 100% transparency with my team, right, they see our cash projection 12 months out, and we’re not a cash flow, positive business, and most financial periods we are we’re a very traditional venture-backed high growth company that has a burn rate. And when you look at cash, and if you don’t understand these kinds of companies, especially folks from bigger companies, cache line kind of freaked you out? And you know what if you’re going to work in this business, and I’m going to help you understand why you shouldn’t be freaked out, and I’m gonna share that with you, and so you know, what it means to me and what it might mean to you.
Gene Hammett [17:12]
Jon, what links Have you taken? Maybe even personally, but just engaging in other resources to help people understand these financials?
Jon Bolen [17:22]
You know, it’s funny, you say that, um, I have become, and to a lesser extent, my CFO, a bit of a teacher at times, right. So when I first started presenting the board deck, rather than, you know, provide people classes and whatnot. It was a fairly parochial delivery of the first deck that I delivered to the entire team. So when the financial side came up, I literally walked up to the screen and walked them through the financial statement, and said, these are the key metrics that our board looks at this, you know, this revenue metric here and if trajectory matters because of this, right? This recurring revenue versus this non-recurring is matters because of this. And outside investors value was more on this recurring piece than they do on this non-recurring piece. By the way, our gross margins, which are really healthy are really exciting to people. And this is our target, right?
Jon Bolen [18:16]
So in general, we’d like to drive to a target of a 50% gross margin our business, and here’s why. And walk them all the way through, walk them through, here’s what makes up our off x, you know, so you know, 80% of our operating expense tends to be headcount. That means you guys right, and this is how that’s calculated. So as you guys might understand, if we’re trying to grow the business and doing well, we’re going to add headcount because that’s, that is the dry powder we can use to grow the business but if we fail, and we don’t hit this revenue plan that we all signed up to with the board, they’re not gonna let us change our number down here on profitability, they’re gonna expect us to hold the line which means the number one place we’d look to cut expenses headcount, right we had that conversation with the whole company, laid it out broke down the metrics exploded it for them. So they understood where the cost and the business were, and why we push so hard on, on certain initiatives. And when you do that, what you get is very adult decisions. I mean with it the most.
Jon Bolen [19:14]
I think gratifying part of this is not the fact that you get to tell them this is actually the response you get back. So yes, you want, you want folks to trust you, and you want them to believe in you when you make these hard decisions. But you also want to think creatively about how to change the business, right? So a similar conversation I had with my team. Around the same time we were starting sort of this, you know, I’d say, significant culture change at n touch to drive this information into the team was, by the way, guys. The reason we want to start this communication is that the next best idea, the next great idea for n touch, we cannot hope that it comes from inside the leadership team. We should hope it comes from outside the leadership team. It’d be great if It may have coexisted. But the reality is, they’re smarter than we are. They know more about our business. And we do that we can sit in here and in our leadership team meetings and think that we know everything, but all of the real works being done by your extended team. And if you create this environment, then you can challenge them to come back at you, guys, now that you understand how the business is managed, now that you understand what’s important, help us make it better. And so, we’ve had folks try to find ways to you know, I’ve actually recently we spent a lot of money on bandwidth and cellular bandwidth because we’re, we play very heavily in the IoT space. I’ve had Junior people come to me and say, I think we could save money on our cellular communications by doing these things. I just had a young woman who’s one of my favorite hires of all time, she’s right in just a sweet spot of her career. She’s probably I’m gonna guess the late 20s, early 30s.
Jon Bolen [20:57]
I don’t really know but just in an amazing young woman, an incredible member of her family. And I challenged the team to come up with new ideas. She scheduled a meeting with me this is two weeks ago, and said, I have an idea about how we can change our revenue streams and take our current products and pivot them and maybe sell them to a new set of customers because I understand what the value proposition is that my customers and their partners are getting from our software. And so she scheduled an hour-long discussion with me came prepped with a modest business plan about something we could do to drive more recurring business into our p&l. And that’s a, you know, that’s a customer success manager and a customer-facing organization who just feels empowered to be able to do that. And that’s why you do it. You don’t do it because you feel good and you show them the p&l and later when you have to make a reduction. They don’t think you’re as bad as you might have been. You do it because they feel like they can participate in the management of the business. And they’re gonna make you smart.
Gene Hammett [22:01]
Jon, I appreciate that story so much, because it is why I think transparency is so important. If we as leaders draw the line and have us versus them conversation consistently, they never feel what I call the sense of ownership or the feeling of ownership. And what you just described was someone who saw value out there that the company could tap into, within the right guidelines, and had a conversation with you. It could have been a terrible idea. It could have been a great idea, but you had the idea, and you get to decide how we move forward. And that’s what we want our employees to do.
Jon Bolen [22:37]
Absolutely. I actually, I mean, one of the most moving, really two of the most moving conversations I’ve had recently is as we were entering the pandemic, and we laid out everything we needed to do and what we were doing, we talked to them so we proactively deferred a significant amount of executive compensation. We did we made no pay reductions to anybody below the leadership team and laid all of this out, told them what we were doing, and essentially said, we’re going to do our level best to protect everybody else. And to, again, a little bit of luck, a whole lot of work. And we’ve been able to do that. But right at the beginning, after we delivered that presentation to the team, and I say, You know that I delivered that presentation to the team. I had one person come to me and say, Look, I’m actually a fairly recent hire. So to some extent, I call it a little bit of self-preservation, but still, it goes right to why you want to do this. And he said, I couldn’t help but think as I was sitting in that room, everybody else’s contributions to what we’re trying to do, and I can’t really deliver that much. I’m a highly compensated person who just got here. I’d like to raise my hand to be further and I said, Excuse me, and he said, I just don’t think it’s right. I don’t think I can add value right now and listen to everything else that you guys Doing, I would if you’re okay with it if you can help me with my benefits, um, I can survive a little bit and just be furloughed. I just want to work here. And I really, I really want to do what I can. So that was conversation one conversation two happened right before that I met with each of my individual leadership team members, and I explained to them what we were doing. And I talked to them about our compensation deferrals.
Jon Bolen [24:28]
I felt it was critical that as a CEO that I took the highest percentage difference was just absolute. And I so I’ve finished let them know what we’re doing and actually one of the founders and one of the senior people, my leadership team, came to me offline and says, I feel like I should do more. And I said, I’m not asking you to do more, and he’s like, but is there more that I can do? And so I tell this to stories because nobody raises their hand. What if they don’t trust that the rest of the organization is being managed in a thoughtful, transparent way, and we’re being truthful with them, I mean, no one literally just puts their hand up and says, Please stop paying me. I’ll go on furlough. And in exchange for that, right, so we actually didn’t accept the, we didn’t reduce anymore of the leader, the leadership team member salary, but I did accept the offer for furlough because it was a challenging time. But the moment we got our RPP loan funded, the moment it was funded, I restored him to full time. And he was shocked because he had signed up for an eight to 12-week furlough, and three and a half weeks later app that Pilon was funded. And I called him and I said, Look, I hope this isn’t too disappointing for you, but you’re going back to work full time. And I mean, he was thrilled. And I said, Look, my obligation to you is that the fact that the federal government is not funded by payroll makes it incredibly hit. critical of me to not put you back on. And you know what, let’s get to work.
Jon Bolen [26:04]
I think one of the hardest working people I have on the team right now, and so that the real goal and transparency is to make sure that you get this kind of communication and I’ll steal from. I’m an author of my favorite business book, which is Ben Horowitz, who wrote the hard thing about hard things. And it’s a fantastic book for people in high growth environments. It is a bit unruly in the manner in which he speaks. It is not the traditional business tome, very instructive, but more of a storytelling approach. And one of the things he talks about transparency in his book, but he also talks about making sure bad news travels fast. And I would love to tell you that this is, you know, my idea but um, but as I read this, right, and I recognize this is one of the things that I really need to work on, write as much as I’m I love transparency. I love people talking to me, I’m a very passionate guy. And so you also, you also have to make sure that you create the opportunity for people to tell you and things are broken, man, because in a fast-growing the big business, if you don’t find out about a product defect, a deal, you’re losing a customer that is just ridiculously annoyed with you, and you don’t find out about it fast, right? It’s going to hurt and it’s going to hurt really badly. And so you have to create an environment where that same young manager who came to me with her idea can come to me and say we have a problem. And I will say developmentally for me, right? Usually, I’m just like, God, darn it great. You know, you want to get you to know, you get fired up. And you have to really make sure you don’t shoot the messenger, but you’ve got to make sure that they can be as transparent with you as you are with them. And so they’re not coming to me with a p&l. They’re coming to me with a defect and some software and they’ve got to feel like they can tell you Do that.
Gene Hammett [28:01]
Yeah. Jon, thank you so much to come in here talk about, you know, the value of transparency. And really it is something that does bind us together, provides connection, increases trust, and increases the bottom line. So I really appreciate your sharing your ideas around transparency.
Jon Bolen [28:21]
Oh, not a problem, Gene. Hopefully, you know, a little nugget of what I said resonates with somebody. I just appreciate having the chance to share my thoughts and my ideas and whatever anything and I’ll try and question you when your listeners want to know and be happy to jump on jump on the phone or exchanged emails.
Gene Hammett [28:39]
I just love interviews like this that could go on and on and on. We could go deeper and deeper into this one idea of transparency. Now, when you think about this, do you have red flags about no transparency could really backfire on this or, you know, where do we draw the line? Well, my thinking behind this is if you have the courage to really be transparent with your people, they will have the courage to be loyal to you, they will have the courage to stick around when times are tough. Jon shared a few stories today about employees that are really demonstrating their level of ownership and how they’re really showing up. Some of those have been around for a while. Some of those were fairly new employees. But when I remind you of this, make sure that you think about your own courage, your own vulnerability, to be transparent where necessary. transparency in the midst of a crisis is not just something that we do. Because of the crisis. Transparency is something you want to do at all times.
Gene Hammett [29:36]
My name is Gene Hammett. I work with leaders and their teams to help them understand the defining moments of their next level of success. All of my clients are very successful, but they know there’s something else they can achieve levels of impact. I help them get really clear about not just where they’re going, but who they are, at their core identity, what their values are. You may say that you don’t need anything like that. I would argue otherwise, because I see people that are very successful, that just become complacent. And I was one of those people. My story is, you know, I’ve told through this podcast many times, so I won’t you know, belabor it here, but I will remind you that my job is to help you get clear about who you are so that you can be the leader that your team craves. When you think about growth. You think about culture, think about Growth Think Tank, as always lead with courage. We’ll see you next time.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
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