Two posts ago, we introduced the concept of the Growing Professional (Part 1). In the most recent post (Part 2), we talked about three kinds of professionals, the Going Nowhere Professional, the Typical Professional, and the Growing Professional and introduced the acrostic of RISK to talk about important aspects of the growing professional. Recall that the R in RISK stands for Responsibility. The growing professional is responsible for his or her growth and manages that growth by the management of his or her time. Now we move on to the I in RISK as we begin Part 3 of the Growing Professional.
The I in RISK Stands for Integrity
Having integrity is having a sense of wholeness or completeness. As individuals, having integrity informs what we will do. It also informs what we won’t do. Merriam-Webster defines integrity as follows:
2 : an unimpaired condition : soundness
3 : the quality or state of being complete or undivided : completeness
A strong sense of integrity enables a professional to have confidence in his or her actions and informs what makes sense to do or not to do.
Years ago, I took a call from a banker in the boothill of Missouri. His bank had an ESOP and we were known for valuing both banks and ESOPs. During the conversation, he told me that the conclusion of any appraisal would have to be two times book value. This was at a time when rural, MidSouth banks were worth perhaps book value. He asked me if I could provide an appraisal at two times book. I’ll never forget my response, which was:
I haven’t looked at your bank’s financials yet, and I’m not saying that we would not reach a conclusion of two times book value. But I will say that if we do, it will be the first time ever.
He ended the conversation, and we did not get the job. We have to have personal integrity and firm integrity.
I say to young analysts quite often.
Don’t be surprised if a client tells you what conclusion they want. The client is a party at interest and naturally wants a result that is seemingly favorable to him. What matters is your response. We have to deliver independent appraisals. How you respond will determine whether you maintain your integrity, that of your firm, and most likely, that of the client as well. We don’t help clients by providing conclusions that we can’t support, defend, and believe in.
Your personal integrity informs your “vision” of yourself. It is this personal vision that will put you on or keep you on the path of the growing professional!
I talk about integrity and a personal vision at the same time. There is a good deal of information out there on personal vision statements (see here for an example). I’ve never had a formal, personal vision statement. However, I have had a simple “vision” for many years. The first part of this vision was simple:
I decided that that I was moving on a path in the broad finance field. I didn’t know what that meant, but I knew the general direction for my professional life.
The second part of my personal vision was also simple:
I decided that I would be the best professional I could possibly be and would do the things necessary to be becoming that person while I was moving on my path in the broad finance field.
My first job after coming out of the military in 1974 was as assistant treasurer of First Tennessee (that was my last position there). My first job was in internship with the CFO, Bob Rogers. First Tennessee had substantial real estate problems at the time, and bank management determined that operating expenses had to be reduced 15% in 1975 relative to 1974. When that internship ended, I was placed in charge of Investor Relations for this public company and found myself in charge of financial reporting, working with our upstream correspondent banks, the company’s short-term commercial borrowing portfolio, and more. Amazing experience.
Then, as luck would have it, I was asked to become the bank stock analyst at Morgan Keegan & Co., then a small, regional investment bank, in late 1978. I didn’t know how to write a research report on a bank or to make recommendations, or to talk with institutional buyers of bank stocks. But I was determined to learn, and quickly. I had good success as the bank stock analyst, and then moved to be Director of Fixed Income Research (I was the only analyst at first!). While all this was going on, I took on responsibility for handling any appraisals that needed to be done at Morgan Keegan.
I didn’t know where I was going, exactly, but I kept moving in the direction of opportunity, and I liked the opportunity I saw in business valuation. In June of 1982, I resigned from Morgan Keegan and started Mercer Capital. As I said in Part 1, that was almost exactly 34 years ago.
The point of this discussion is that the I in RISK, or integrity, is a key ingredient in the life of a growing professional. Combine this sense of integrity with your vision of where you are headed as a professional and you may be unstoppable.
The S in RISK Stands for Specialization
I valued a mortgage company and a few banks while working at First Tennessee in the mid-1970s. I prepared my first formal business appraisal in 1979 while working for Morgan Keegan. There were no books on business valuation. My first training was “monkey see, monkey do” from reading as many valuation reports as I could. Shannon Pratt’s first edition of Valuing a Business wasn’t published until 1981. So I grew up in business valuation from pretty near the beginning of the profession.
I was, like almost every other business appraiser at the time, a generalist. There was hardly an income stream that I couldn’t, or wouldn’t, value. But I also learned the benefits of specialization very early on. Because of my banking background, valuing banks was a natural, so Mercer Capital developed an early specialty practice with financial institutions. That practice today accounts for about 20% of our total business.
The profession remains largely comprised of generalists. What I can say about being a generalist is that it is difficult to differentiate oneself or one’s firm from others who are also generalists. So price competition becomes a great differentiator. If you are competing on price, you are not selling quality valuation services. You are selling what I call “its”. And if you are selling “its” and not relational professional services, your clients don’t respect what you are doing for them and you are in trouble.
Specialization is becoming increasingly important. At Mercer Capital, we have several other recognizable niches today, including asset managers, insurance companies, the fintech industry, business development companies, and several other, smaller niche industries. In the early years, one could make a name by being a generalist. Today, to go after better business and better fees, I believe we need to specialize in something.
As growing professionals, it is increasingly important to be perceived as an expert in a niche.
Going deep is better today than going wide.
The K in Risk Stands for Kaizen
Dr. Edwards Deming is credited with facilitating the post WWII economic miracle and industrial recovery of Japan. He introduced statistical techniques designed to facilitate constant and never ending improvement in manufacturing processes. In business and for growing professionals, the meaning of Kaizen is constant, never-ending improvement.
For the growing professional, Kaizen is an attitude of constant growth and development. We must develop analytical competence and analytical confidence. We build analytical competence by repeatedly working on problems and resolving them, and by studying to improve. We gain analytical confidence through successful experiences.
We gain professional competence and professional confidence by dealing, over time, with a wide variety of problems and issues ranging from analysis and client relations to learning how to sell yourself and your firm.
In the context of Kaizen, we need to be getting good and better at DOING our work continuously. And we need to be getting good and better at GETTING work continuously. You may be looking outside to sell work if you are more senior. If you are junior, your source of work may be internal and you are selling yourself. Just don’t forget that work acquisition is required of all growing professionals, even if you don’t think of what you are doing as work acquisition.
I read an article a number of years ago in the Harvard Business Review that talked of the concept of deliberate practice we mentioned in Part 2 of this series on the growing professional. Deliberate practice involves two kinds of learning: Improving the skills you have already and extending the reach and range of your skills.
1,000 Hours to Becoming an Expert
I liken deliberate practice to engaging in Kaizen for growing professionals. It is also the same as developing a series of fallback activities that govern one’s efforts at professional improvement. It takes about five years of full-time experience in business valuation to develop the basic skills needed to function in that field, to acquire necessary professional credentials, and to have enough age and experience so clients can believe in your credibility.
After that, each professional will decide what kind of professional he or she wants to be. Do you want to become an expert? Building on your base of experience, whatever that is now, identify a niche that you find attractive and interesting. Then focus on learning all you can about that niche.
Can you make two hours per day to focus on building and expanding your skills? If you focus on yourself for two hours per day, you can write articles or books, research ideas, build expertise in a niche and more. That two hours might be at work, or at home early in the morning or later in the day. But if you focus on personal growth for two hours per day, that’s about 500-600 hours over the course of a year. In two years, that would be well more than 1,000 hours.
If you have identified a productive niche, you may not be the best-known professional in it, but if you devote 1,000 to developing yourself within that niche, you will be one of the rising experts in it. Invest in yourself and do this.
The Will to Finish
The road of a growing professional can be lonely. Not all of your peers will adopt the attitude of a growing professional. It is easy to be dragged down by peer pressure or by inertia, an exceedingly powerful force. There is another Chinese proverb which says:
The temptation to quit will be greatest just before you are about to succeed.
This points us to another characteristic that growing professionals should develop – the will to finish.
In sales, I’ve heard of this characteristic or habit as the will to close.
The bottom line is that to succeed as a growing professional you have to finish things. And you have to create initiatives or projects where you can practice your will to finish.
As we close, remember the acrostic of RISK.
- R stands for Responsibility. You are responsible for the business of you.
- I stands for Integrity. Let your integrity inform what you will do and what you won’t do. Let it also provide a vision of yourself and your future.
- S stands for Specialization. In today’s world it is increasingly difficult to succeed as a generalist. So find a niche and fill it.
- K stands for Kaizen, or constant, never-ending improvement. Kaitzen is the mantra of the growing professional.
We began Part 1 of this series with three thoughts pertaining to you and me as growing professionals:
- Growing professionals are made, not born. I hope our recent series has convinced you of the need and benefit to get on or continue on the path of a growing professional.
- You have to invest in yourself and your career to grow. That investment comes in the form of “deliberate practice” or in developing and implementing an ongoing series of fallback activities that keep you growing.
- You are responsible for your own growth as a professional. The truth is that no one can grow for you. Growth is personal.
My advice as we close is to be passionate and persistent and get on the path of – or continue on your path –as a growing professional.
My two most recent books are available in an Ownership Transition Bundle. The bundle, priced at $35 plus s/h, has been attractive for many business owners, appraisers and attorneys.