Dave Reeve 00:05
COVID caused the model for remote work to change, and these new regulations hit at the same. So, we were dealing with a bit of a double or triple whammy there. You know, one was an opportunity, of course, one was a challenge.
Chaz Thorne 00:20
Welcome back, or welcome to Toughest Call a podcast for organizational leaders where we hear stories from your leadership colleagues about career defining decisions. I'm your host, Chaz Thorne. In this episode, I'm talking with Dave Reeve about a tough call, he made transitioning his 28-year-old business from a service model to software. Dave is the CEO of InvestorCOM, a leading compliance technology provider to the wealth management industry. Like many other leaders I've talked to recently COVID helped hasten a change that was in the works for some time. Interestingly, it wasn't making the call that was tough, but the implementation of it, what was particularly challenging was managing the difficult conversations with staff that inevitably happened when you transition out of a long-standing pillar of your organization.
Dave Reeve 01:16
We run a business that I founded back in 1992. So, it's been around for a long, long time. And, you know, the DNA of the business is documents, we've served, you know, largely the financial services industry, we've outsourced a lot of their document management and the business has really evolved to a compliance focused company. And so, you know, we will all know, as clients of financial services company, just how much compliance and, you know, documents you get related to operations, whether it's, you know, the your bank statements, or your investment statements or compliance documents. And so, you know, just as a background of the business is really manage that for some of Canada's large largest wealth leaders. And I don't need to tell you historically, all of those documents were physical, and you know, we're going through a pretty dramatic transformation towards digital. And yet, you know, like, with many transformations, certainly, in large industries, like financial services that can be quite slow. So just to kind of the point of context, is the pace of that transformation, and how that has been influenced over the last 12 months, particularly, you know, as we've all kind of moved to a virtual operational posture. And that's, of course, accelerated a lot of the digitization of the business.
Chaz Thorne 02:41
Your decision, you had been thinking about it for a while, was really about moving from this service services model, to more of a software model. So when even though you kind of knew this was the direction that that your business needed to move? What did the resistance look like prior to COVID, in terms of moving in that direction?
Dave Reeve 03:11
we as consumers, and I would, I would underline we, as Canadian consumers, are relatively change a verse that we're not, you know, just as a population of people that, you know, we we don't change our habits or our practices that quickly, I think, Chaz, when you overlay that with financial services industry, that, you know, they're dealing with new regulations, they're dealing with, you know, a ton of legacy, it issues that, you know, they are not, as an industry a shining example of transformation, either. So, it's interesting combination. You know, if you look at any, you know, remarkably exciting digital businesses, one thing you find is most of them are brand new, you know, Uber all it's a brand new business, why? Well, they have, they have no legacy challenges, like a Shopify, fully digital, no legacy challenges the issue in financial services, these businesses are a century old or more.
Chaz Thorne 04:18
What was your justification for that move for your business specifically?
Dave Reeve 04:24
You know, our positioning was really being client responsive. For example, a couple of our clients came to us, we had long long term relationships, you know, basically had a kind of outsourcing service level with these clients. And these is the clients, you'd recognize, you know, a couple of major banks and very large asset managers in Canada. So they came to us back in 2015, because they were faced with some new regulatory challenges in the regulatory challenges really required a software solution for them to become compliant. So you know, we're really responding to a wonderful opportunity. Immediately, the very best way to build a business is to have a client ask you for your help, which they did.
Chaz Thorne 05:07
What happens that allows you to accelerate that transition other than the obvious COVID happens, but what was the positioning around that with, especially with your internal team?
Dave Reeve 05:22
Yeah, well, you know, I think COVID hitting, I think it's difficult to say that COVID alone was the what was what was really the, the single event that caused us to change because for us, our relationships, were starting to shift pre COVID. And importantly, in our business, we help our financial services clients deal with regulations. So had a coincidental with COVID, where, you know, a couple of the largest wealth reform regulations in North America. You know, the other thing I would add is we knew pre COVID, that the software business was likely our future, what we couldn't do is assign a kind of a timeline for kind of a real kind of reset of the business. But I will say that, you know, the, the world moving to virtual combined with these regulations, made us accelerate our transformation.
Chaz Thorne 06:28
So at that point, the decision is made. And now you move into the implementation of that decision. What happens at that point?
Dave Reeve 06:45
You know, we did a couple of things. Number one is we looked at what we were doing, and we made a decision to outsource a lot of the physical production to a third party to a partner of ours. The you know, that was really difficult, because that displaced a, you know, a group of our team members that, again, had been extremely valuable members of our team, but, you know, ultimately, it was something we had to do, because that was a declining business, and that we're also a business that required a lot of capital expenditure. And we really needed to, I'll call it, turn that top off and redeploy those funds into our software business. And then you know, we made a decision to sell our physical warehouse, and then leased back half of it. And so you know, all now what you've done is you've taken your, your, your physical business, and let's face it, a lot of us really associate where we go to work with kind of the physical surroundings. So now all of a sudden, we've shrunk that in half. And, and that was tough. I mean, it was a really, really difficult decision. Yeah, real estate transaction, super easy. But what's really difficult is, is the impact on the people. And so that was, that was difficult. You know, ultimately, we made that decision sort of six months, five or six months into COVID, as we knew that that physical side of our business was going to, you know, really, really shrink through COVID. And, you know, a lot of people say, Our business is shrinking me through COVID. But it's going to recover. I mean, our assessment was this business is not going to recover.
Chaz Thorne 08:24
What was the mood amongst your, amongst your staff, particularly those that were going to be the most heavily affected by this change? And how, how did you communicate with them to? It's through that, through that change process,
Dave Reeve 08:43
we've got a couple people on our team that have gone through some of the structural change before, and they were incredibly valuable in getting our communication strategy clear, because one of the, one of the decisions we made is, people will be affected. And you can't sugarcoat that. But here are two things that we want to make sure we do. Well, number one is people that are on board for the transition. And what I mean by that is people that are either have the skills to transition to you know, kind of the software side of our business, or are prepared to make the investment in those skills. We are going to support them in that regard. And that that's that's point number one point number two is, you know, to be very open and transparent that this will not include everyone the transition will not include everyone but one thing we will do is will be very clear and open and should should you know someone's job be impacted by our decision we're going to treat them fairly as as they exit the business.
Chaz Thorne 09:53
What was the darkest point for you Dave during this during this time, This moment where you were just like, Okay, I know, this is the right decision for the business. But, man, this is hard.
Dave Reeve 10:13
Yeah, you know, Chaz, it's it's a combination, I think of two things. Number one, it's the people for sure. You know, we are a 28 year old business. And so, you know, several of the people that left the business had been with us, you know, a decade or longer. And so that's, that's very, very difficult. You know, we've, we've always, I think, been viewed as our wizard amongst our employees as being a very forward looking agile business that, you know, is constantly changing. But the change here to four, we included the team and this change, all of a sudden, didn't include everyone. And so, you know, really that kind of, I'd say that emotional impact was significant. For me and for, for, for, for a lot of our team members. I think the second part that was really difficult is, you know, when you force a business, that some kind of lived in two worlds, for us, it was services and software, there's, you know, I'll call it a bit of an insurance policy there, you know, if you, you know, if one doesn't do well, and the other does use, you've kind of, you know, you've got a lot of optionality and you know, of course, that's good. And it's bad, because it means you're doing a lot of different things, and, you know, not as strategically focused as you might be, but as soon as you take one of those options off the table, you know, there's also sort of a little bit of business risk that gets added. And, you know, I, you know, when I think of dealing with the my partners in the business, I have an institutional equity partner in the business, all of a sudden, they're, you know, seeing us make a decision where we're walking away from, you know, what might be viewed as a, call it a cash flow business and investing, you know, those funds into more of a software venture type of business. And so it would be those two things. I mean, there's, there's no question in my mind that the people, impact is the biggest one, but kind of that I'll call it that strategy piece where you're doubling down on your new future. It's exciting. Don't get me wrong, but but there's, you know, a little bit of that kind of counterbalance of Oh, boy, we better make sure we're successful in this new world.
Chaz Thorne 12:24
So how do you bridge that gap? in conversations with functional, functional staff? to help them understand the need for change?
Dave Reeve 12:37
Yeah, well, it's first of all, it's never easy. You know, I would say that a couple things that we've done, that we will continue, these are kind of new habits we've created that we will continue to follow. Number one is, we started meeting every single week for 30 minutes, with our entire team, to talk about what we are doing and what changes we were making. We with feedback from our team, by the way, have back those off to bi weekly, just because of you know, kind of availability to meet. But I mean, this notion of regular communications with absolutely everyone in the company has been super helpful in terms of communicating that strategy. That's one two is, you know, data. There's nothing better than you know, when you look at trends in a business, and you've got one side of your business that's going one way and one side of your business that's going the other way. And by the way, one way is negative and one way is positive. Now, that data is awfully helpful in terms of communicating where you're headed. And so let me use the example of outsourcing some of our print production, which is what we did, you know, it was very clear that, you know, where those businesses were going and, and the impact on on on our future. And so, you know, I think the more you share data, the more people understand, you know, ultimately, what is strategy strategy is putting plans together to respond what February reality of, you know, what you're facing? You know, maybe that's a oversimplified view of strategy. But, you know, regardless of the level, you are in a company, Chaz, I would say that if you get 10 people from, you know, top to bottom and a company and they're presented with the same set of data, you're going to be surprised how many people make the same decision.
Chaz Thorne 14:40
You've now gone through at least a significant part of this transition. So where does that put your company at? Now?
Dave Reeve 14:52
We've tremendously simplified our business and allowed us to focus. You know, I'd say laser focus on On the, you know, very specific things that are going to drive our success in, in, in our software future. And so give me just a couple of super quick examples. One example is that we're now you know, kind of, you know, each quarter our senior team gets together, we established two or three objectives that are, you know, absolutely necessary to complete in this quarter in order to achieve our kind of growth in the software business. And, you know, one thing that I know I shared with you is, we launched our US business in March of 2020. So, you know, kind of our software transformation is market independent, you know, it's, it's, it's across the markets we serve in our business was primarily a Canadian business. So, you know, we've launched in the US, one of the things Incidentally, we've done, which is, you know, also added a complexity as well, we've reduced a big chunk of our workforce on the physical side of the business, frankly, we've hired him in another part of the business as well. And so you know, kind of that, I'll call it redeployment of resources has been a big part of, of what we've done. And, you know, I feel that we're extremely well positioned to realize our success and some of the growth areas of the business that are focused on the digital or software side. So it's a, you know, it's, it's, it's been great strategically, and, you know, it's remarkable how many people have embraced the change, you know, not everyone has, but remarkable how many people have and how many people have come to us and come to me to say, you know, I'd really like to invest in skills to be part of the future of the business. So it's, you know, that's super rewarding. And, and, of course, the rewards need to offset some of the, you know, the tougher decisions that, you know, have been made over the course of the past year or so, feel like we're really well positioned, and everyone's fairly aligned on what we need to do to, to have success in the future.
Chaz Thorne 17:04
What have you learned? Or is there anything that you would potentially do differently, if you were faced with a with a similar challenge? Again,
Dave Reeve 17:18
it's interesting. I've learned that it's really important to be brave as a leader, that that, you know, to, first of all, be very open and in and, you know, open to input and in collaboration amongst your team, but ultimately, you need to I'll call it pull the triggers, you need to be, you know, you need to make those decisions, and whether the decision is to exit a, you know, sort of real estate oriented physical business, like, like we had, you know, to to actually make those decisions. And then, of course, there are, there are stakeholders that are all, you know, every step of the way, there's multiple stakeholders and those those decisions, but, you know, ultimately it comes down to the leader who's, who's making those calls, making the calls to hire people in the face of reducing people in other parts of the business. And so, I, you know, I think, I think, listen, all good leaders are very sensitive that everyone's needs are considered and making decisions, but but when the decisions need to be made, you know, I'll use the word brave. I, when I say that word, it sounds it sounds a little self congratulatory, and I don't have exactly the right word there. Um, Chaz, but, you know, to be, I think, you know, very intentional about what you're doing is, is important. And if I could turn back time, would I accelerate some of those decisions? I might, I might. But, but frankly, the course of the last year has, you know, enabled us to make those decisions and I think made me make the decisions with broad support across our company.
Chaz Thorne 19:17
If you'd like to learn more about Dave and his work, check out investor comm.com. If you're in wealth management, asset management or insurance, their suite of solutions will help you easily stay on top of your compliance requirements. And if you'd like some assistance with your own tough calls, we've compiled a collection of free tools just for you. Go to toughest call.com to check them out. If you're not yet a subscriber to toughest call, please add us wherever you listen to your podcasts. Thanks for listening. I hope this conversation helps you when faced with your next tough call.
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