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Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch and my guest today is Scot Hunsaker. He is the author of a book we’re gonna talk about today called Heroic Ownership: Build Your Team, Plan Your Exit, and Create Your Legacy. So Scot, thanks for joining us.

Scot Hunsaker: My pleasure, thanks for having me.

John Jantsch: So, let’s start with ‘what is heroic ownership?’ Let’s define the term.

Scot Hunsaker: Well, really what it is, is an answer to an observation I saw with entrepreneurs and small businesses, and that is 66% of companies close their doors when the current leadership team leaves. And so what I was seeking to was to explain the why and the how to make that number smaller. And what it takes is heroic ownership. It takes thought, it takes planning, and it takes responsibility, because think about the number of lives that entrepreneurs touch. And it’s a tremendous privilege, but also it’s a tremendous responsibility. We live so much in the day of our businesses, I’m trying to suggest that we look a little further down the road.

John Jantsch: So you have successfully exited business, so do you want to tell us about that experience?

Scot Hunsaker: Sure. So I actually purchased one of my father’s businesses, it was an engineering firm. And my father was a very successful entrepreneur and businessman. Well what I observed in his journey was that he touched everything and controlled everything. He was very good at it, much like a lot of entrepreneurs, was extremely good at what they do. THat’s why they’re successful. But what he wasn’t good at was transferring that institutional knowledge and business savvy to the rest of the team. So when it came time for him to step out, there was really nobody prepared to be able to continue that legacy. I was able to do that, but very early I started trying to create a team and transferring that institutional knowledge and business savvy to the organization, so it wasn’t dependent upon one person.

I had one of my friends describe it this way: How many business leaders do you know that have a horse that only one rider can ride? In other words, the owner or the founding owner. And so it’s really about transferring that institutional knowledge and business savvy of the organization. So it can live on for multiple generations and continue the legacy, take care of the employees, take care of the customers, and create a liquidity event for the present ownership so they can view it as a success as well.

John Jantsch: Now you have, since exiting your own business, you’ve started a company to teach people just how to do this.

Scot Hunsaker: I have, but I kinda stumbled into it. My plan was actually to go lead a ninth company. I’ve had the privilege of leading eight companies. To go lead a ninth company and kinda do what I had done before, and that’s find a company with a proven product, but maybe a 1950s management style and no succession plan, and do what I’d done before; kinda flip the house, you might say, you know the reality television show, but only with companies. But what happened was, I started talking to some of my peers. They were a little older than me, I was 49 when I sold my last company. And they said, “Scot, you know I’m 10 years older than you and I haven’t even started. How do I do it?” And that’s what caused me to create Ardent, which is the company that I’ve created to help turn your employees into owners. And it was also the driver for writing the book, Heroic Ownership. Build your team, plan your exit, and create your legacy is kinda the message there.

John Jantsch: So I’m gonna go right with the middle part of it, because I think that’s a part that I think … not to suggest that’s any more important than the other two parts, but the ‘plan your exit’ is the one that’s probably got a lot of heartburn for a lot of business owners because, you talk about transferring to ane executive team or a leadership team. There’s a whole lot of businesses that don’t even feel like they have that, a leadership team or an executive team, but they’re gonna close the doors on a shop one day because they want to retire, and it’s basically gonna be a pile of sand. So how do you fight that? When do you fight that? When do you start trying to figure out your exit?

Scot Hunsaker: Yeah, you know a lot of owners want to start with the exit. And that’s great, and I respect that, but the reality is, if you don’t put the pieces in place you don’t have anything to implement through your strategy. You know, we can’t predict the future, so I think we have to create as many paths as possible to go forward. So the strategy outline in the book is five steps and I’ll hit them real briefly: One is authentic conversations. How are you gonna teach the team to understand what it means to lead the organization? In other words, how are they gonna anticipate what needs to happen?

Two is how are you gonna find the leaders? Instead of picking them, maybe let them become natural leaders and self-evident.

Three is institutional knowledge. We store most of our business information in our head, and that’s probably the worst place to store it. How are we gonna get it out of our heads into the organization?

And then the fourth is teaching them how to keep that information current, because all that information comes with a ‘born on’ date.

Now after you’ve done those four steps it’s only then that you can really talk about ownership, because who in their right mind is going to sit down and have a conversation about ownership if they don’t have the confidence and the wherewithal to push all their chips in and betting on your company, that they’re gonna be successful in leading it? So you really need to have those previous steps before you can have the succession planning steps or else they’re gonna be in over their heads and they’re gonna be very leery about entering into that dialog with you, because they’re not gonna be able to have a knowledgeable conversation with you. You’re gonna know a lot more than they know.

John Jantsch: Yeah, I think a lot of companies sit back and watch the news headlines and, you know, XYZ Company acquired by Big Corporate Company, and it’s a big splash and the founders make all kinds of money, but really we’re talking about somebody who, most companies, if they are sold, it’s because they’ve groomed somebody to buy that company. I think that that is, your first point of ‘build your team,’ it’s almost intentional to build their team with exit in mind, isn’t it?

Scot Hunsaker: Yes, I totally agree with you, but I also point out that we really can’t predict what the future’s gonna be. Think about the number of people that we’re planning to exit their business in 2008 when the recession hit, and they’re still trying to recover from it. What we have to do is create an umbrella with a lot of different things can happen five, ten years from now, so we have the flexibility to be able to adapt and change to what’s facing us that we don’t even understand or anticipate today. But we want to create the capacity to be able to make it successful.

John Jantsch: So another Missourian is cited in your book, Jack Stack, who I’ve been a longtime fan of and I think he was one of the first people to very publicly start preaching this idea of ‘owner mindset,’ of teaching everybody the numbers and treating everybody as though they’re an owner with the idea that even if you don’t have an Aesop setup or something, that everybody is making decisions like an owner. That’s really a culture thing, isn’t it?

Scot Hunsaker: It is. I would even say it’s become more important with some of the generational challenges we’re having as owners today and leaders today. Because Millennials today are looking for an environment where they can be, they’re constantly learning. They’re looking for a mentor or coach. They want to have ownership in the [inaudible 00:08:37] and participate in that. You know, 20, 30 years ago we just got the memo, and we were just there to do merely what we were being told. Today’s labor force won’t tolerate that. They want to be engaged, they want to be interactive, they want to be part of the conversation. And these are just sound business principles that are becoming more and more important today to be successful.

John Jantsch: I think one of the hardest things for a lot of business owners, and I’m not saying this is right, but it’s just human nature, is that they started this baby, they grow it, they can’t ultimately trust anybody else to do it like them, so how do you get past that trust and control issue?

Scot Hunsaker: Well that’s where a lot of discipline becomes in. Because you’re right; I see CEOs kinda think about that transition in two ways. The old style, which there’s still a lot of it around, is “Here’s my company. This is my baby, it’s perfect. Now here it is. Don’t change a thing, and don’t screw it up.” And the model that I think is more viable is this one, it’s “Here’s my company. This is the best I could make it and I trust you to make it even better.” Really the second one, to me, is the only one that is a sustainable model to be able to carry it on, because that first one will only last until something changes, and as soon as something changes the wheels come off of it. And then it doesn’t work out for anybody.

John Jantsch: Yeah, and as cliché as it sounds, you get no buy-in in that kind of a situation. I mean, people are ultimately picking up a paycheck and they’re not incentivized to make things better and so consequently that, it just sort of withers, I think, and dies. One of the things you talk about, could you talk about this ‘authentic conversations’ and constantly getting input from employees, and you actually have a pretty good explanation of employee surveys; how do you do that in a way, and again, it probably is a cultural thing, but how do you do that kind of, get that kind of feedback in a way where you get real, authentic, valuable information?

Scot Hunsaker: Well, let’s talk a little bit about what the purpose is. The purpose of this conversation is to understand what’s going on in our organizations. I use the example of a beach ball; if I’m holding a beach ball up in front of the leadership team we all see it from a different perspective. It’s not important that we agree on what color we’re seeing, it’s important that we understand how we each see it. So there’s a lot of business tools out there that are gonna allow us to have authentic conversations about how we view the issues inside the company. One is the corporate dashboard, you talked about Jack Stack. One is an employee survey.

I was a big fan of the Baldrige survey, it was a way of using a statistically valid model to kind of ask questions, to make it valid and to get buy-in, I think it’s really important you share the results with the team. We actually shared a number of years’ results and we could identify what we’re good at and what we needed to work on. We also looked at customer surveys, so the employee survey’s looking inside out, the customer survey is looking outside in.

You know what’s really interesting, one of the things we also did is when were interviewing a new candidate, we shared our dashboard. We shared our employee and our customer surveys and it allowed us to stand out instead of blend in from all of the other companies that they were considering. So this isn’t just good stuff for inside our company, this is good stuff to attract the best of the best in the industry.

John Jantsch: One of the things that I have seen in some organizations that the leadership gets very gung-ho about, this idea of ‘owner mindset’ and ‘building leaders’ and ‘everybody’s got a voice,’ and ultimately they’re, I don’t know what percent, let’s say 10% of the folks are like, “I don’t really want that. I want to come, I like doing my job, I like being able to interact with the data or whatever it is that I do, but I don’t really want to go to the company leadership meeting and give my input.” How do you deal with that if that exists?

Scot Hunsaker: Are you saying that the individual doesn’t want to share [crosstalk 00:12:50] or the leadership doesn’t want to hear?

John Jantsch: Not so much share, just doesn’t want the responsibility. They want to be told what to do, they want to do their job, they like, I think you use an example in the book of an engineer in one of your organizations that didn’t really want to be part of the leadership team. They just wanted to do their job.

Scot Hunsaker: And you know I find that too, and I’m less, I struggle less with how to get that person in the old quote, “the right seat on the bus” type of a thing. To me, I find it much more challenging “how do you identify those that have the will and the ability to lead and then nurture and grow them and help develop them to achieve their potential?” That person that’s just gonna be that Steady Eddie that always gets the job done, in my world I’ve been pretty successful in just seeing them go on autopilot. Because they’re gonna get in their groove and they’re just gonna do their thing. But what I’m really looking for is I’m mining for gold. Think of it this way: What does a coach on a professional sports team do? Does he spend most of his time with the B and C players? Or does he spend most of his time with his A players? I would submit he spends most of his time with his A players, trying to figure out what they’re doing right, then share that with the B and C players. I think CEOs can learn a lot from professional sports teams about how they’re led.

John Jantsch: You have participated in that family business, you talk about your father and his businesses and your relationship in those businesses. There are a lot of family businesses out there. Does that add a whole other dimension that has to be figured out and managed?

Scot Hunsaker: I think family businesses have some unique components to it, and one of the rules of thumb that I start with in family businesses is something called, I call the Thanksgiving Test. In my world I think it’s more important that we keep the family unit speaking, that would allow, we can sit down for Thanksgiving Dinner together without having tremendous upheaval. So I think as we start these conversations, you know, we want to keep in mind that we don’t do anything to upset the family dynamic, at least that’s my value set. Not everybody’s is like that. But let’s focus on what’s most important and understand what that definition of success looks like and go down that path. In my journeys what I have found is the most open and honest and transparent you are, the easier it is to get through it.

And this one may be a little awkward, but it’s much better to have these conversations when the founder is still able to participate because when the founder’s no longer able to participate everybody kinda has their own agenda. But when the founder’s there, he’s able to share his or her perspective about what they would like to see in the business and what they would like to see for the family. So it’s not just the survival of the fittest and working it out the other way.

John Jantsch: So the final point in the book or the section in the book, really, is this idea of creating a legacy. I’m wondering if, and I’m probably projecting a little, my own business I’ve owned almost 30 years, and I’m not sure I thought about ‘legacy.’ I thought about what I liked doing, I thought about the purpose of the business, but as I am now in my mid-50s I’m starting to think, “Huh. What is the legacy that I would like to leave?” Is that kinda a typical evolution in your experience?

Scot Hunsaker: Well again, I think it’s a purposeful one. One of the, I’ll give you two quick examples: One is that I think we all are very keen and focused on creating a mission and values statement for our companies, but I would strongly encourage your listeners to think about what is their personal mission and values statements for them as individuals. When they look back on their career as leaders, will they be proud of what they’ve accomplished? My guess is they’ve probably done a great job at accomplishing their strategic plan and mission and goals of the company, but is that as reflective of who they are and what they are gonna be proud of when they look back on their career?

I have a dear friend that I shared this book with and some other things and he was in the venture capital space and those types of things. At the end of one of our conversations he said, “you know Scot, I’ve probably had an intimate role with 30, 40 businesses, but I’m not sure I’ve ever created a legacy.” And it may or may not be okay, you just have to decide for you, as a business leader and somebody that touches a number of lives, what’s your definition of success? What’s gonna make you proud when you look back on your leadership tenure? That you felt you did good work?

John Jantsch: I think a lot of business owners, again, I may be projecting a little bit here, we’re so focused on that moving horizon that keeps moving farther away as we move to it, because we have bigger and bigger goals, and I think sometimes we forget to turn around and look how far we’ve come.

Scot Hunsaker: Yeah, I also think entrepreneurs think they’re indestructible and they’ll last forever too, so we don’t often get around to having these kinds of conversations with ourselves and our peers, but it’s critically important. It impacts not only us, it impacts our families and all those that work for us and all their families. So it’s a tremendous privilege and it’s a tremendous responsibility.

John Jantsch: Scot, where can people find out more about you and your work at Ardent as well as pick up a copy of Heroic Ownership?

Scot Hunsaker: Well Heroic Ownership is available on Amazon, it’s also on Kindle and I’m working on an audiobook version. My website is and they can learn all about me there as well as opportunities to participate in their groups or speaking at events and those types of things also.

John Jantsch: Thanks so much for joining us and you’re just across the state in Missouri, so maybe I’ll run into you out there on the road someday.

Scot Hunsaker: Fantastic, John. Thank you so much for having me.

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