Interview

“The Business of Expertise: How Entrepreneurial Experts Convert Insight To Impact + Wealth”

As his website states, David C. Baker is an accomplished author, speaker, and advisor helping entrepreneurial experts make better business decisions. In his fifth book, “The Business of Expertise,” he’s written what’s been described as an “expertise manifesto” that details the power of positioning. While his clients may reside in the creative services category, David’s book contains universal insight that any brand interested in elevating to a premium position can learn from. As Dan Pink, New York Times and Wall Street Journal best-selling author, writes on the cover:

“Genuine expertise has become more valuable than ever - and in this smart and timely book, David talks frankly about how to leverage your own expertise into a sustainable business. This book is essential reading for entrepreneurs in any field.”

For those interested, you can listen to David and Blair Enns, his 2Bob’s podcast co-host, discuss the book over a 3-episode series here.

We spent our time with David discussing how he became an expert advisor, the difficulty of relevant differentiation, and how to know if you’re ready for the leap to premium pricing. Along the way, we learned core principles applicable to any brand.

TBD: David, let’s start with how you became an advisor to expert firms.

DCB: For roughly five or six years, I was running my own firm and had subscribed to this publication called “Creative Business.” Part of the deal included in that subscription was that you got to call the editor and ask any question that you wanted. I think it was his way of staying in touch with the marketplace. Well, I took advantage of that and we spoke fairly frequently. During one of those conversations, he asked if I had any interest in writing articles from time-to-time on different subjects – topics he didn’t enjoy quite as much. I agreed to write about financial metrics, positioning and lead generation – two topics that were near and dear to me. Later, this grew to helping him deliver some of his seminars. I was simply reading and using his curriculum while fielding questions, but I found through the process that I really enjoyed it.

So, one day I called him up and said, “Hey, why don’t you provide consulting services for your clients beyond just the publication? I think there would be quite an aptitude for that and interest out in the marketplace.” His response caught me off guard, “Why don’t you do it?” I had never thought of that and it wasn’t something that I was hunting. It really did surprise me and before I could think too much about it, he told me he’d put an ad in his publication in exchange for 10% of everything I made. I didn’t feel like there was any risk associated with it, but I also didn’t feel like anything would happen. I just couldn’t really picture people calling. They did.

It took over my life very, very quickly. Within just a matter of months, I was doing it full-time. It was just being in the right place at the right time and learning quickly while risking looking stupid. Everybody’s done that. Everybody’s come back from some new assignment terrified of the promises that they’ve just made having been a little too far out in front of her skis, so to speak.

TBD: When you decided to shift focus to consulting full-time, how did you land on your own positioning?

DCB: Well, it wasn’t like I took some deep scientific exercise and landed on it. The only business I knew was firms like mine and I just simply didn’t know how to consult anybody else. I wasn’t a significant expert in the field, but I did know about running a firm. It was natural for me to begin helping other principals who were running similar firms. It was much later, through a bunch of research and science, that I discovered the principles of positioning and realized I had just unwittingly landed on the right one for myself.

TBD: Do you remember any of the options you discarded and why?

DCB: Yes. I did experiment some with firms that were not in this space and I so quickly discovered how uncomfortable it was pretending to know what I was talking about. I’ve also bounced in and out of a particular area of focus. Frankly, I haven’t made any final decisions.

An example of this is PR firms. They’re obviously under the same umbrella as the other firms I work with (which are mainly digital firms these days – ad agencies and dev shops and so on). PR would naturally fit, but brings with it some really unique things that I find they’re tough nuts to crack. They really resist positioning and the work I do around structuring roles. Those are two of the four really big areas where I focus. They definitely need it, but they consistently resist the advice. I’ve gone back and forth from “I’m going to try to conquer this,” to “I’m never going to work with a PR firm again.”

TBD: Do you have a hypothesis as to why they’re so resistant?

DCB: I think partly because of the whole nature of PR. Not as much now, but in the early days, PR was built on linking clients to particular relationships in the media. It was based on relationships and because of that it was, by definition, geographic. This makes the notion I teach of being an expert that didn’t depend on relationships and didn’t have to be delivered locally very foreign to them. The difficulty is in the nature of how that industry is actually fashioned. What’s interesting is that media relations is the absolute bottom of the scrap heap of public relations and every public relations provider knows that. Yet, most are still selling it as if it isn’t. It’s just an ongoing challenge. I think if I decided I’d never work with another PR firm again, they probably wouldn’t miss me all that much.

TBD: In the book, you wrote that as a company attempts to settle on a positioning they should list their areas of past experience to help guide their decisions on how to narrow the focus. You go on to say that the answers may not be as obvious as a vertical category and that they should look for less evident patterns.

An example you provide includes a list of an internet provider, a branch of the Federal Reserve, and a pharmaceutical behemoth. You suggest that these could be grouped together as “a highly regulated segment.” What’s another example of this?

DCB: Usually when you’re trying to solve this issue, you’re presented with a whole bunch of verticals and you can’t figure out how to tie them together horizontally. It’s not the other way around. If you already have a horizontal positioning that works, then you’re not trying to turn it into a vertical. You’re usually trying to keep it horizontal. That’s the challenge that folks face.

For instance, you could combine theme parks and churches because that’s where you go to lift your spirits. Now, that’s hokey and wouldn’t actually work, but that’s an example of how you could say, “We’re talking about a specific place and going there for a specific purpose. So maybe we can tie those two things together.” If you need examples of trying to make this work, you can just search the web because there are firms out there doing their best to talk themselves into how this can work. Sometimes it can, but frequently it does not.

TBD: Would you consider your own positioning with the use of “entrepreneurial experts” to represent this type of nuanced vertical?

DCB: It is because it includes multiple verticals. It is a broadening of my positioning and I’m not sure it’s the right one, honestly. It’s something that I’m using because my own practice is moving away from a company and more toward a personal branding. It’s tied more to my speaking and writing. “The Business of Expertise” is written for a much broader audience than my typical clientele and it’s been brought in for that. Whether it’s the right decision or not, I’m not sure. It will be some time before I figure that out.

TBD: You wrote that the goal of narrowing your business focus is to achieve a price premium. How important is positioning for those not ready for that level?

DCB: Honestly, I don’t think it’s that important. In fact, if we’re looking for some commonality in what people are trying to solve, they are a long way away from trying to achieve a price premium. Most are just trying to get enough work at a normal price to make their business work.

What’s interesting is that most people actually are busy, while being poorly positioned. So, if you’re trying to convince people that they need to rethink their positioning in order to stay busy, then it’s going to fall flat. I emphasize this because it’s so important to have that distinction. If a price premium is not important to you, then don’t mess with this. Don’t turn your life upside down and work so hard at this. You may not need it. The moments when people begin to think about a price premium are the moments when they are pissed off at being taken advantage of by their clients.

TBD: What would an example of a business not ready for it be, followed by the evolution of their positioning once they are?

DCB: I think a firm not ready would be one that isn’t super confident that they deserve it. They’re pretending to be somebody that they aren’t. Another would be one that is so invested in growth that they consistently compromise their pricing in order to achieve it. To them, growth is more important than profitability. That desperation is something that prospects smell and generally take advantage of.

Frankly, a lot of folks just aren’t interested in doing the hard work of being a deep expert. They love solving client problems. Notable, but they like solving them one at a time, as opposed to seeing the particular problem that a client has as a larger opportunity. Saying, “Oh, wow. This is fantastic! I have a client willing to pay to help me think about the bigger picture. I’m certain that there are hundreds of clients out there suffering from this same exact challenge and can use this as an opportunity to solve for all of them, rather than just one.” A lot of people aren’t thinking that way. They have their head down day-to-day, solving specific, individual client problems, as opposed to the larger industry. I’m not criticizing that. That’s just the way some people are. Those are not the people who are inventing future value.

TBD: In one of your 2Bobs podcast episodes, you and Blair were discussing your book and which type of positioning you’d gravitate to. You answered vertical, but mentioned that for most of your clients you’d say horizontal and immediately follow that up with the advice to “gut check it really quickly” and ask themselves “are we able to find our clients?” What would a successful answer to that question look like?

DCB: I’m going to answer that, but then there’s going to be a visceral reaction in your readers. The quick answer is asking if you can buy a list of prospective clients. Most people react, “I’m not going to buy a list.” Listen, I don’t really care if you buy the list or not. I just want to know that you can. That’s the easiest way to answer if you can find your client.

If you’re sitting there scratching your head, thinking, “I’m not sure where I can get a list of my clients,” – and by list, I mean email addresses and names – then it may not be viable. That’s one of the most important questions to ask. If you can’t buy a list, then it means that these people that you’re hoping to serve are not suffering from a problem that’s similar enough from client to client. If somebody else hasn’t come along and tried to make money from that group of people, it’s quite possible that you could be the very first person to stumble on this issue. However, it’s unlikely. Which means other people have likely thought of this and decided to abandon it. Otherwise, it was worth pursuing and they develop some sort of product or service that could be sold to these people resulting in a list. They go to the same conference. They read the same blog. They buy from the same place. So, that’s an easy way to answer that question, “Can you buy a list?”

TBD: What if the service they’re offering is an existing commonality, but it’s one that spans several verticals? A made-up example to frame that is “We help businesses live up to their promise.” This would certainly stretch across any vertical in any category and could likely lead to a list in any one of those verticals. Couldn’t they simply buy as many as they want at that point?

DCB: You could buy a whole bunch of lists, but then you’re going to end up with 20 different lists where none of the people on that list will self identify with that horizontal problem. Using this example, and we’re just going to laugh when we ask this question; Is there a conference that people attend to help solve the problem of not doing what they say their brand should? Of course not. That’s a difference without a distinction.

Another simple way to test this is to ask one of your would-be competitors “Do you work with businesses to help them do what their brand promise suggests?” And what you’re going to hear is, “Oh, yeah … of course! We work with people like that.” Then you ask that question of ten more would-be competitors and they’re all going to say the same thing. That tells you that it’s not a distinction that holds up. You need to ask that question of ten people and nine of them need to say, “Oh, no. No, we don’t work with people like that.” Otherwise, that’s like somebody cutting hair saying, “Now I am really different. I’m not like all these other barbers.” And so you say, “Well, how are you different?” And they respond, “Well, I mean, you won’t believe this when I tell you, but I use scissors.” Okay, everybody does that and it’s an example of a very lame positioning that would not hold up in the marketplace.

TBD: In our own experiences, we’ve found that most creative service firms place the value on implementation and either heavily discount or offer the thinking for free. Chapter 9 serves as an in-depth argument to reverse that thinking. What has the feedback been from your readers and/or clients regarding that switch?

DCB: It’s generally negative. They love the implementation and that’s where all their training originated. Not only that, but that’s where all of their initial work was. They didn’t know how to think strategically at the beginning and they didn’t start to notice those patterns until later. What makes their heart beat faster is this implementation work. So, yeah, it’s negative. Though, I would say, as you stated at the beginning of the question, this is where most of the money comes from and that’s actually true. It’s just not where most of the profit comes from. That’s a pretty important distinction.

TBD: As one test for an expert’s positioning, you describe what you call the “Drop and give me 20” exercise, in which the goal is to offer 20 insights related to your expertise to an individual of relative intelligence and experience within your focus that would still come away with some “a-ha” moments. What are some ways you’ve found for people struggling with this exercise to improve?

DCB: Well, it’s interesting because we have to divide the room into two different camps. A portion of the room thinks they don’t have relevant answers to that exercise. They feel frustrated because the things they are coming up with don’t seem all that interesting. And to those people, I say, “No. That’s really interesting. It fits the exercise perfectly.” They’ve just heard themselves say it so frequently, that they’ve forgotten how intelligent and insightful it is. For these people, I urge them to have somebody else monitor a conversation with a prospect or client to see when that audience pays more careful attention, looks up, or writes something down. That provides the clue that they’ve just said something that’s really interesting. That’s one of those “drop and give me 20” statements.

The other group will quickly embrace this exercise and start writing all kinds of things down with this excitement that only comes from people who know they’re just “nailing it.” But what happens next, they read their observations – still happy with them – and they’re just not that insightful at all. They’re really basic, broad observations that could have been passed around by anybody. They’re not that unique. This notion of deep pattern matching is still really foreign to them.

It’s really interesting to see how sometimes it’s just the opposite of what people think they are. Some of the smart ones aren’t all that smart and some of the ones who think they aren’t smart really are.

TBD: You’ve mentioned that the book ended up covering only a third of what you originally set out to write. What would we have seen in the unwritten two-thirds?

DCB: It would have looked more like a handbook with really specific ways to deliver expertise. I decided to eliminate that because it didn’t feel as passionate as what I ended up with and I was afraid that I’d lose a lot of people with that approach. I wanted to just get their attention and really smack them around, not getting lost in all kinds of textbook sounding things. So, that’s what I eliminated.

TBD: Last question, we know you’re working on your next book already, what can your audience expect from it?

DCB: I haven’t settled on the title, but it’s something about the advisor’s trade craft. The notion of how spies go about their work and the specific tricks they use. That’s the bulk of what I left out of this book and what I want to cover in the next. I’m really excited about it. I don’t know how interesting it will be to people, but I’ve learned a lot myself and I’m almost at the point where I need to start writing. If I had the time right now, I would go to some island or retreat and start writing. I really enjoy the process.

To learn more about or from David, follow him @david_c_baker or listen to his 2Bobs podcast. For those looking to get a copy of “The Business of Expertise”, you can learn more here.

Discuss your thoughts and perspectives @tobedisrupted