The Business of Expertise: Why Positioning Beats Talent Every Time

Drew: Hello, Renegade Marketers! If this is your first time listening, welcome. If you're a regular listener, welcome back.

You're about to listen to an Expert Huddle where our flocking awesome community, CMO Huddles, gets exclusive access to experts, including the authors of some of the world's best-selling business books. In this Expert Huddle, David C. Baker joins us for a conversation about building an expertise-based business, drawing on his book The Business of Expertise, which is definitely on my top 10 all-time business books. He explores why generalists struggle, why strong positioning creates pricing power, and why the freedom to say no can be a clear sign that your marketing is working. If you like what you hear, please subscribe to the podcast and leave a review. You'll be supporting our quest to be the number one B2B marketing podcast. All right, let's dive in.

Narrator: Welcome to Renegade Marketers Unite, possibly the best weekly podcast for CMOs and everyone else looking for innovative ways to transform their brand, drive demand, and just plain cut through, proving that B2B does not mean boring to business. Here's your host and Chief Marketing Renegade, Drew Neisser.

Drew: Hello, Huddlers. David C. Baker is one of my favorite thinkers on expertise and author of a book I've recommended more times than I can count. That book is The Business of Expertise. He's also the co-host of the Two Bobs podcast, which I listen to religiously while running my agency. And David, just so you know, I don't run an agency anymore. Left that behind three or four years ago when we started CMO Huddles. But if you are a marketing leader who's thinking about going solo, or has a company that is providing expertise on a regular basis, this show is really for you. So David C. Baker, welcome to CMO Huddles community and ultimately, the Renegade Marketers Unite podcast.

David: Thank you. I'm glad to be here. It took kind of fits and starts to make it happen, but I'm glad to be here.

Drew: We are relentless here at CMO Huddles — we don't give up on the first no. Just to ground us, where are you this fine day? You look like you're in an amazing studio.

David: I'm in my studio, yes, above my workshop on a 61-acre farm in Nashville. Yesterday evening, I was in a 45-foot RV in Tampa, driving it for a friend from Boston to Tampa, and then I flew back last night.

Drew: All right, well, hopefully you saved a little energy for the show. So what we like to do when we start out the show — just in case one of our audience has to leave early, or we need to convince them to stay — is start with sort of three common mistakes that you see someone who's first setting up their expertise-based business. If you will just list them — it's really hard, I know — but list them, and then we'll go through them one by one.

David: So the first is to be poorly positioned as a generalist. The second is to assume that there's a direct connection between creativity and business success. And third, to pursue growth for the wrong reasons.

Drew: I love it. All right, so let's talk about the positioning one — poorly positioned — because I know it is really hard. I'll talk to some CMOs who are setting up their business, and they will say, "Well, I've got one client who does this, and one client who does that," and that's the problem right there. But talk about what poor positioning is or looks like in your mind.

David: I think we have to give grace to ourselves, in a way, because the world has changed really quickly around us, and so some of the methodologies that we're using right now were valid in the past. They just aren't now, because of the way the world has changed. But it's also true that we have to build our businesses in a specific way, because that's what's successful. Usually we just keep doing that without realizing that we need to switch paths. So you build your business at the beginning by saying yes to everything, because you have to — you've got kids to feed, or whatever — and then you're successful with that, but you assume that that same methodology will help you get to that next level. And getting to the next level is not about saying yes, it's about saying no and deepening your expertise, making more money, having a marketing plan, and so on. So I'll stop there — we can dive in.

Drew: That's perfect. It's sort of — was it Michael Porter? — the definition of strategy is what you say no to, something to that effect. And it's really hard when you're starting out, there's no doubt, because sometimes you just need revenue and clients to, kind of, sometimes figure out where your deep expertise lies. Okay, so that's number one — just saying yes too much — and that doesn't give you a framework for an ongoing business. Number two, assuming creativity matters. I know this is particularly relevant to the agency world. How does that apply, do you think, to consultants and, say, fractional marketers and marketers in general?

David: Yeah. Okay, so I could switch that phrase and just say expertise does not predict business success. What I mean specifically is that sort of the boring, disciplined, under-the-radar firms are usually the ones that make a lot of money. They pay attention to their financials. They have a steady drip marketing plan. They manage people well with a good culture. Those are not the kind of big, splashy things that we tend to notice with peers. Folks who are very, very talented and can think on their feet just assume that that can carry them, when in fact it can't. I think my success is a mixture of intelligence, discipline, and luck — and luck is the biggest part of that, I think, and then probably discipline. Intelligence is like — man, I know a lot of friends that are really successful and do good work. They're not remarkable, but they do really good work, make good money, have happy people working for them. So that's what I mean by that, essentially.

Drew: And what's interesting is — one of the things — the steady drip marketing campaign: even if you are a solopreneur, there is a tendency to take every client until every single day is full and you have no time to market the company. And what I've noticed is the ones that seem to do better, they are only taking four days a week and one day to build the flywheel and keep it going, whether it's writing content, sending emails, or doing that. So I'm assuming that's part of this business success component that you're laying out here.

David: Absolutely. In fact, when I measure how much time is spent from a typical firm on marketing and sales activities to make them successful, it's about 6%. Somebody asked me a question last week that I'm writing the answer out to, and it's going to go out to all the people who get my emails. The question was, how would you start a new firm? What would that new firm look like? And one of the points I wrote in there is that I would spend between 15 to 20% of all of the firm's efforts on marketing, because the gap — the delta between your capacity and your opportunity — so if your capacity is here and your opportunity is up here, this gap represents your ability to say no. And if you don't have more opportunity than capacity, then you have to take everything that comes your way, like you just said. So a marketing plan gives you the freedom to say no.

Drew: I love it. Thank you for connecting those dots — it's just absolutely true. And the other part of this that you started to talk about was pricing power and how that connects to the clarity of positioning and the strength of your expertise. I wonder if we could spend some time on your thinking on pricing power and how that develops. I know first-time entrepreneurs selling expertise tend to really under-price to get the first client or two, but talk a little bit about pricing power relative to expertise.

David: And we should probably talk about terms power too, because terms are almost — maybe even more — important than price in some cases. Like if you see some of your large clients taking too long to pay you, or making you jump through all kinds of hoops with the RFP and their procurement department and so on. So it's not just price, it's also terms. I want to say a little bit about smaller firms, because when I was starting this firm, I knew what I thought I was worth — it wasn't tested in the marketplace yet, and the marketplace could have told me, "No, you're not, David. You think too highly of yourself." But it didn't. I also knew my own tendency to not let my family starve, so I had a second-shift job full time and did this during the day so that I would not compromise. That's also the advantage of running a strong business where you have enough cash sitting around so you don't have to make reactionary decisions. Price is not just about how much money you make — it's also a positioning thing. And so even if you don't need the money, I think it's important to be priced in such a way that the marketplace thinks of you accordingly. And then you have to back that up by standing firm on that stuff. We all have different choices to make around that, and we're at different stages in our lives and in our businesses, but ultimately — are you good, and do you believe in that enough that your client should pay for that? And then can you back it up? Blair told me one time: don't be afraid of data. Like when somebody is disagreeing with you, it's just data. Don't be afraid of the truth. So I say, okay, I can tentatively agree to that. If you aren't afraid of the truth, the sooner you find out the truth, the better. So when you're talking with a prospective client, find out sooner rather than later whether you're going to be able to do a good job for them. And price is one way — to me, it's like the bus is rolling towards you and you're wondering if it's real or not, and all you do is throw obstacles in front of it. If it's real, it'll keep coming. Price is an obstacle. Throw a price into the middle of a conversation and see if the prospect keeps coming towards you. If it's real.

Drew: Okay, there was a third point about growth and that being a common mistake, and I wanted to make sure that we wrap that up. Was there a specific aspect of that we haven't already covered in terms of marketing?

David: We haven't covered it yet, but it's not complicated. So we — especially in the US, where many of your listeners may be — have this concept that unless you're growing, you're dying. And it's just not true at all. We think that we have to grow because it looks better, or because we think we can make more money as a large firm. That second one is just simply not true. Growth, to me, doesn't matter — it's not good or bad. There can be great reasons to grow and bad reasons to grow. But if you don't understand that, central to growth is this notion that your role as a leader needs to change. You're further away from the work and you're closer to people. And if you want to be in the people business, grow. If you don't want to be in the people business, don't grow. And some of you are really good at the people business — some of you are really bad at it.

Drew: I love that. And I felt it so much running an agency. I vastly preferred when we were smaller and I got to do the work — I had my fingers in it. It's just what I liked. That's what gave me joy. So I totally appreciate that perspective. And again, assuming you're good at running a profitable business, one of the things that's interesting — and I think is relevant to the conversation so far — is the need for focus, and how hard it is for service firms and expertise businesses to have that focus. I think it would be helpful if we step back and use your definition of expertise just to sort of start, and then we can move into why focus is so important to that/

David: There are lots of candidates for why focus is difficult, and they're not all true for everybody — we're all different people. Some people are afraid of focus because they really like the challenge of variety. They like being in front of a new problem and trying to figure it out. These are the people I think of as diving into empty concrete pools and inventing water on the way down — that's what really gets them going. Other people are just afraid that there's not going to be enough opportunity. They're looking at everything from a glass-half-full standpoint. And so the moment they're most likely to think about focusing is also the moment when they most desperately need new work, which makes it a very tough situation for them. Another reason why people struggle with it is because they think it's a democratic decision, so they're interviewing and asking for votes from people who are much earlier in their careers — who are still in that exploration phase and haven't yet tasted competence in a deep way. And once you've tasted competence, you never want to go back. They're still on the variety stage versus the competence stage. So there are lots of reasons why we do it. Oh, I'll tell you one other one. This one I hear a lot: you look across the landscape of consulting firms or marketing firms or whatever, and you see that the most successful firms are the large ones — who are also the ones least likely to be tightly focused. And so you say, "Oh, okay, well, I guess I don't need to be." And that's a fundamental misunderstanding of what I call the waterfall, or differentiation. Those big firms are focused — their focus is being large. Clients can't trust a smaller firm with something this important, so they go with a big firm. And then they don't say focus isn't important — they just put it to the second point and say, "Okay, what's your category experience?" So anyway, those are four that I would start with.

Drew: Interesting. I like the waterfall of differentiation. Part of this process is understanding what expertise is and isn't, and how you know you have it. And a phrase that struck me from your book, that I just remember and use all the time, is "drop and give me 20." Can you explain that concept for the folks who may not have read your book or heard someone like me rave about it?

David: So the phrase comes from — you think about this: a sergeant, and you've disappointed him, and he says, "Drop and give me 20." At any moment, he can demand that you give him 20 pushups, right? So that's where the phrase comes from. But the idea is that you're sitting on a plane next to somebody who's a competitor of yours, who's also a consultant or a marketer or whatever it is, and you're interviewing each other, and you're both generalists, and it occurs to you that neither one of you knows something that the other person doesn't, right? And the notion of "drop and give me 20" is that I can be sitting next to a firm in the same category — so I could be sitting next to another consultant — and because I'm focused in a particular area and she's focused somewhere else, we can each have 20 almost immediate aha moments that the other person doesn't know. That is evidence of expertise, because I know something that somebody else doesn't, and the world is willing to pay for that.

Drew: It's interesting, because I also see this happening in just the CMO's career — there are generalists who've worked in lots and lots of categories, and then there are folks where their last four jobs were cybersecurity. Those guys can do a "drop and give me 20" without hesitation, right? And they could sit down with anybody else and do it. Whereas if you're broad strokes, you could go up a level and say, "I know these things." I think there's something — I'm going to go back to the narrowing thing, because in the book, and I was focused on this book when running an agency, you talked about vertical and horizontal and trying to find that match. And at the time, it was getting a buy list of 3,000 to 5,000 people, and that defined a good focus. I'm wondering — do you still see things in terms of vertical and horizontal? Is that still a good way of defining whether you have a large enough addressable market, if you will?

David: Yes, I still — nothing has changed there in terms of the definition and the reasoning and the advantages, pros and cons of horizontal versus vertical. One thing that has changed is that while many people prefer a horizontal because of the variety, they stumble on the fact that it's less addressable than a vertical focus. A vertical focus is defined by NAICS code, so you're in a particular industry, right? So it's easy to identify your targets. That's the biggest challenge of a horizontal, and that has changed even more since I wrote that book — I guess it was seven or eight years ago — in that it's more critical than it ever has been that your horizontal focus is addressable. And I encourage people just to think about creating a campaign on LinkedIn. Could you create a campaign for that on LinkedIn?

Drew: You also have this notion of costing influence when you're too broad. Can you explain this? Smart leaders — the notion of when you know you have expertise is when you are able to have influence in your domain, if you will. And it's really hard if you're a generalist, right? Who's going to call you and say, "Hey, solve this problem for me," because you're a generalist. But talk a little bit more about how smart leaders sometimes cling to this broad positioning.

David: Yeah, they do. And there are enough examples of people who are very well known as generalists that it keeps fooling us. But the only way for that to happen is if you've written a bestseller or you have this amazing viral TED talk — and I'm not even sure that works anymore; it would probably be more the book side. So here's the way that my podcast partner Blair ends talks about it. He says, "You have a certain amount of influence. Think of it as a certain amount of water in a container. You can pour that in a cake pan, and it'll spread very broadly, but it'll be very, very shallow. Or you can pour it into a tall champagne flute, or something — whatever you call those — and it will go very, very deep." So I want the sort of expertise that most people in the world would not even be able to judge as viable. I want to have the sort of expertise that if the right target is on the phone, they're going to think I have a camera in their office. And so if you have deep expertise versus broad expertise, it's so much easier to have a repeated influence on the same people without spending a whole lot of money to make that happen, because you know where they are, you know what they care about, you know what they read or what events they go to, and you can just build on that repeatability — I guess that's how I'd say it.

Drew: It's so interesting, because that playbook you're describing is what content marketers and businesses have been trying to do for a long time, but mainly failing.

David: Yeah. Or you have people advising their clients to pick a focus, make a decision — and they can't do it for themselves. It's like, it's not that we don't understand this advice; it's just hard to follow for ourselves.

Drew: And so — it seems like there's a Goldilocks position here: not too big, not too small, not too broad, not too narrow. How do you know when you've landed there?

David: Yeah, you don't really know. Again, my podcast partner calls the positioning exercise "finding a perfectable positioning," not a perfect positioning. So you don't know if it's perfect until later. And then it never stays perfect for long, because the world is changing pretty quickly. And so you are likely to land on something not because you lack courage, but because you lack sufficient information to narrow it further. And then, as you have conversations in new business settings and you work with clients and so on, and you think deeper about things, you realize that your positioning could be adjusted even more, and it's inevitably going to be narrower, not broader at that point. So think of the two things that stop great positioning decisions: one is courage, and the other is information. At the beginning, you may have the courage — you may just not have the information.

Drew: "Perfectable" is such a great word versus "perfect." 

David: I tell my wife I'm a perfectable husband. 

Drew: How's that go over?

David: Not too well

Drew: Well, there you go. Okay. Well, that's the difference between business and home life, I suspect. So, okay — you don't know when you have that expertise with the positioning just right. Maybe it would help, because you've worked with so many services firms and you've helped them actually find that perfectable position. Can you give an example or two of expertise-based firms that you think have really nailed it?

David: Hmm, yeah, let me see if I can do it off the top of my head. The vertical examples are obvious and easy. You know, like folks who focus on building materials — something in a particular category — or cybersecurity for FinTech or something like that. Those are all pretty easy. It's the horizontal ones that are harder to think of. Sometimes one would be — so there are two ways you can define a horizontal positioning, unlike vertical, which is just one way via NAICS code. Horizontal ones: you could either have a demographic — so I focus on old people, young people, rich people, poor people, immigrant people, you know, whatever — or it's a very tight service offering. So there are really well-positioned firms that are tied to a particular theory of change or some scientific methodology about how people change their minds, right? There are others where — let's say you're — and so when you think about a horizontal positioning, it's really very specific, but it can be applied broadly across industries. So if you think about firms that focus on having inward alignment for external marketing, that would be an example where the theory is: American Airlines can spend $100 million on ads, but if I'm treated poorly in first class or whatever, then it's all wasted, right? So that would be another example. Or you have, like, in the early days, somebody that focused on TikTok — that was a horizontal positioning that's out of date right now, right? The current one that a lot of firms are jumping on and will regret is basically AI-driven anything. Yeah, yeah, yeah. So those are — I'm writing an article right now about good examples in both categories, but I haven't finished it, or I'd have more to say.

Drew: Okay, fine. We'll get that article from you when you're done; let us know and we'll include it in the show notes. Let's talk about the challenge you mentioned — this notion of often selling outcomes you can't guarantee. Say that again. So experts — I'm an agency, I'm going to reposition your brand. I'm selling that I'm going to help you reposition your brand. But I can't guarantee the outcome of that, right? And so — just for aspiring experts thinking about how they sort of manage this, because there is no — in most cases, even a lawyer defending you says, "I have a high probability I might be successful, but I don't know what the outcome is going to be." 

David: It starts by not being so desperate that you overpromise, right? That would be absolutely the starting place — where you overpromise what you can do. I think if we had solved this, then we would be offering very different pricing methodologies with clients. We'd be willing to tie our compensation to the results, excuse me. And one of the things I like — that idea of getting paid only if it works — terrifies me, because I'm not worried about the advice I'm giving; I'm worried about whether somebody will take it, whether they'll implement it correctly, and so on. On the other hand, even though that terrifies me to offer it, there's one really amazing advantage in offering that, and that's that you're a whole lot pickier about who you work with, right? So I think there's kind of a middle ground here. What you could do is to think of your high anchor as something that's tied to results — not because clients will pick it, but because it sets the high anchor price, and also because it just exudes confidence in what you do, right? I have played with that. I actually had a program like that, and I quickly dumped it because the expectations were way too high.

Drew: Yeah, no. I mean, this is classic. When you run an agency and you want to be able to say, "Okay, we're going to grow your business," then you say, "Okay, we're going to have to control sales." For sales, we're going to have to control product — and you can't get all those things. You can't get all the go-to-market. So you can never guarantee results, which is awkward. It is interesting that some expertise-based firms — the digital ones — can do that. You know, "We can get this kind of yield for you through spending this kind of dollars," and some actually have that sort of performance pricing model and are able to do it. It's a wonderful thing when you can get there. It's rare in the expertise world. 

David: And I think we probably ought to just quit talking about our "proven process." That's nonsense.

Drew: Oh, okay — talk about that. What's wrong with "our proven process"?

David: It's not proven in any sense of the word. You use that phrase, and it just means, "Hey, you found a process, you named it using alliteration for the first four letters, and it works for you." Fine. It's like — it's not a proven process. It's like, God Almighty, can we just quit overstating things? It's just ridiculous.

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Drew: So you compare this notion of being a vendor versus being an expert. I have in my notes the differences, but I'm curious — off the top of your head, can you riff on that difference? You know you're an expert when versus you know you're a vendor when.

David: Yeah. I think the big difference — it all hinges on one thing, largely — and that's whether you are directing the relationship or you're an order taker, right? So if I don't like my dry cleaner down the road, it's just not an emotional decision at all. I just quit using them, go to the one across the street — like, who cares? Then you move up a level and something's really wrong with your car, and you don't have a lot of money to waste on fixing it. You're not going to self-diagnose this. You're going to go to somebody and say, "Hey, tell me what you think this might be," and you're going to listen to it, see if it resonates, and so on. Then you're going to make a decision based on — you're not going to want to go to somebody who takes your recommendation for granted and just does what you say. It's like now you've got a car with new brakes that didn't need them, and it's still making that weird noise, you know. So when you think about the expertise level, the ones at the top end — they don't take orders from you. They listen very carefully, and then they prescribe what you need, whether you like it or not. Think of a great attorney, a great physician — and hopefully great consultants and marketers ought to be in that category too, and there are a bunch of them, right? But we tend to adopt the vendor phase because we think we need our clients to like us, or they're not going to keep using us

Drew: So we're not competing on price and speed. We are competing on judgment and consequence, but not guaranteed outcome, I think.

David: Not guaranteed outcome. And I don't think we should be jerks or disrespectful at all. In fact, if you have all of that expertise and you wrap it in great customer service, man, you're just unstoppable, right? But the customer service is not the center of it. It's the wrapping around great expertise.

Drew: Okay, your book actually came out in 2017. If you were to revise it today, I know we're coming up on the 10th year. Are there some things that you would rewrite or add to it?

David: There are some things I've considered. A hundred things that have hit me since then. One is that waterfall differentiation thing I was talking about — I don't think I understood that concept very well. I think I would emphasize addressability a little bit more, like I mentioned earlier, and then I would probably drop the last third of the book. I think it's kind of filler, so I would make it shorter. But otherwise, I just love that book. You know, it sold so well. I'm just very pleased. It was the fifth book I wrote, but the first book I wrote that I just poured my entire soul into. And it's like, I just don't care. This is — I'm doing everything right. And I feel really happy about the book.

Drew: I love that, and I love the fact that you would make it shorter. And that is another thing — we've managed to talk for almost 30 minutes without mentioning AI. Yet there is a sense out there that real expertise may matter more, but there's a lot of good expertise out there at everybody's fingertips, and one might even argue that expertise has suddenly been democratized. What are your thoughts right now, and what are you seeing in terms of services firms and expertise-based firms and how they are dealing with AI?

David: Well, some of them seem to be trying to ignore it, which is really sad. I think you should be experimenting a lot. I subscribe to every major tool. Use it many times a day. In fact, I just can't believe how good it is. But that's just the minority that are not really experimenting with it. The majority are just way too nervous about it. It's like, please, people — God Almighty. It's like, we've seen these kinds of things come along and say it's going to reinvent everything. It's not going to reinvent everything. It's going to settle down as some great place. It'll cost $150 per employee at some point. It'll be very, very useful. Everybody will have it, and we just won't think about it too much. What it's done is it's exposed the people who weren't really good at what they did, and you know, so thank God for that. That's great. It's like it threw the weak kids off the merry-go-round as it sped up. And that's fine with me, right? But the value of deep expertise is like — okay, now you don't have to come to me for some silly thing. You can type it into ChatGPT. Now you can come to me as the advisor for the really tough things, to apply really specific things to your very specific situation. That's never going away. I love AI. I think it's fantastic that it's here. I'm not worried about it at all.

Drew: Interesting. I mean, you're seeing it out there — a lot of agencies, because if they're not moving up, if their bread and butter was the execution of multiple iterations of things, again, probably not really expertise-based, it was just sort of being able to outsource this — they're hurting. Yeah, lots and lots, right? Lots and lots of services companies are hurting because what used to take a week now takes a minute, and you can do it in house. So it probably is a moment where every services firm with — in theory — some expertise really needs to rethink their positioning and their expertise. What is it? Because execution and tactics is not expertise, necessarily.

David: No, it's not. The book talks about the two-room model, and the smaller first room is the expertise room, and then the larger room that's hopefully only available through a connecting door is the expertise room.

Drew: And you mean the execution room?

David: Execution room. Yeah, sorry. So expertise is the small first room, and then execution is the second, larger room, right? And AI impacts both of those. AI is primarily a threat to the execution side of things, and that's fine with me. We've lost execution for 50, 60 years in the expertise space. It's like — this is not new, right? We just have to figure out how to get around it. AI helps the expertise room because it helps with some research. You have to be careful about what you believe and what you don't. But it's a really useful foil for just lazy expertise. So I think, yeah, it impacts those two rooms differently. And firms that really are just execution — and there's a whole lot of digital marketing firms that are just execution — yeah, those firms should be worried.

Drew: Okay. And again, I think the folks certainly in this live audience are offering strategic expertise. I think the challenge that they're facing is all in the positioning of that expertise and sticking with it over and over again. You know, I want to go back to one thing, because if you do something really well and you've done it over and over again, you have pricing power. And it's a common thing — this is true for pretty much all brands. If you are a leader in your space, one of the ways to know you're a leader in your space is if you have pricing power. Can you raise your rates and will people stay with you? I'm sort of getting to that point because I feel like it's often forgotten that if you don't have pricing power, then you don't have a position.

David: Yeah, right. Or if you are consistently struggling to find new business, it doesn't mean you aren't good at what you do. What it does mean is that you have assumed that you don't have to market yourself and tell people about it consistently. And that's particularly odd for the marketing space, right? Because we tell people how important it is to talk about their brands, but we don't have the time to build a great website for ourselves. It's like — that's funny at first, and then it's kind of ha-ha, not funny, and then it's just disgusting after a while when we keep doing it as an industry, yeah. And same for consulting, too.

Drew: So I think we can shift the lens a little bit. For CMOs and corporate roles, they're essentially selling expertise that a lot of folks in their organization may or may not take seriously. "Oh, you're the head of marketing, great — you're the arts and crafts department." And a lot of them — I literally know CMOs who've had a CEO say that to them. But one of the things that they want to be able to do, I think, is to demonstrate that they have expertise that matters to the business. I'm wondering about your thoughts on how individuals demonstrate expertise in person and through conversation — I know that writing and that kind of thing, setting that aside — but from a stylistic standpoint, any advice you can give to CMOs who are trying to establish themselves as experts on something that will matter to the organization.

David: Yeah, this takes me back to a time before now. I don't do this anymore, but I used to do the same sort of consulting for in-house departments for large companies. So I did a lot of work for Toyota and Hallmark and PricewaterhouseCoopers, and Whole Foods — it went on and on. There were like 30 of them. And inevitably, the first time they called me was to get my external, objective assessment about whether the money they were spending on their in-house department was a good ROI. And for the first, I don't know, 10 or 11 times I was asked that question, I did the study, and in every case it was not a good ROI. And then I would say that, and then in the very next breath, I would say, but that's not the freaking point. That's not why you have an in-house department. The reason you have an in-house department is the same reason you hire an agency — it's for specialization. And your in-house department is specialized in understanding your company, your clients, and your brand items better than anybody else. And so that's where it starts. You're not there to take orders. You're not there to save them money. You're there to guide them as an expert. Now, how do you do that? To get to your question — I think you need to have a marketing plan, just like I think an agency needs to have a marketing plan. And you also need to act like an agency does. One of the biggest problems with in-house departments and the CMOs that lead them is that there is no mechanism to say no. As an agency, you can say no by either pricing it too high or saying you're not a fit or whatever. You can't do that internally without being called not a team player, right? So you end up taking all these requests, and it's inevitable that you are viewed as an order taker versus an expert. You need to start leading. And one of the ways to do that is to make sure there's some sort of a chargeback system in place so that requests have a cost to them, and let your internal clients be free to use you or to use somebody else. Don't be afraid of competition. They can go hire an agency if they want, as long as they follow the brand standards. So anyway, I've got some really strong opinions about that, which is exactly why I'm not working in that space.

Drew: All right, I want to make sure — if some of you out there in the business of expertise have a question for David, please raise your hand so we can bring you on. Otherwise, I of course have more questions, as I always do. Oh, okay, well, let's see — we got one comment in the chat box.

Alan: I just want to thank you for your books. I think The Business of Expertise and your second, The Secret Tradecraft, have been really helpful. When I think about the bible of building a consulting business — I'm a solopreneur. I was a many-times CMO, and I've started a business five years ago as an interim CMO for private equity. I coach a number of CMOs and help with go-to-market alignment and go-to-market transformations. The work you've done — and I would also say David Fields, I don't know if you've looked at what he's done — but I think the two of you are the bible of building a business. So I just wanted to thank you for that.

David: Thank you, appreciate that — very kind of you.

Drew: And, Alan — by the way, his business is — one of his focuses — he mainly works with private equity firms at a certain level, a certain size, so mid-market, exactly. So it really does — if they're not PE-backed and they're not mid-market, he's not going to work with them. So let's talk about this — there's a quote, or an idea, in your book: "If a client can easily compare you to three alternatives, you're not positioned as an expert." Does that ring a bell? And do you think that's still true?

David: I probably would say you could have more competitors than that and still have a very viable positioning. The world is increasingly complex, and so the need for tightly positioned experts is even greater, which means there's probably going to be people with a little bit more overlap. So what terrifies me more than finding competitors is finding none, because we operate in what an economist would call an efficient marketplace. So if there's a low point, the water quickly rushes to fill it. If there's a certain amount of demand, the water rushes to fill it. So if you find no competitors, it means you are brand spanking new to this and you're brilliant — congratulations — or, more likely, a lot of people thought about it, tried it, and it didn't work. 

Drew: It's funny because, you know, a lot of folks want to create a category of service, and it can be a really hard and lonely path, particularly if there's no line item in the budget for the service that you're providing.

David: I know. And so you have, you know, real new category creators — places like Airbnb, Uber, whatever, you know. And so if you're a marketing firm and you did an invitation to the CMOs' Bar Mitzvah, now all of a sudden you're a category creation expert. It's like, no, there's one category creator in every category, and we're not big enough to be creating categories — none of us are.

Drew: So there are folks who go out on their own who probably aren't right for going out on their own. What are some of the early signs to you that someone probably isn't on the right path for them?

David: There's one consistent flag that is pretty much without fail in terms of predicting success, and that's aptitude for risk. If they really drag their feet about starting something, they're probably not a good fit. There are people who start things that turn out not to be a great fit — they had an aptitude for risk, but it was sort of a reckless risk because they just didn't have what it really took, and the early signs sort of sent them the wrong signals of success. So yeah, that's how I would answer that. I can go deeper if you want, but that's kind of how I’d answered it.

Drew: No, that works. And so that risk — how does that risk manifest itself? Is it a willingness to turn down customers, prospects? Is it just the fact that this is going to be a bumpy road? Where does that aptitude for risk come from? What are the key risk factors that they sort of are afraid of?

David: Partly it could be money, right? But mainly it's more, I think, in disposition to clients — like, can you speak confidently to them and tell them what you think, acknowledging that you might be wrong, but you'll never be dishonest to them. So how you speak to clients — that shows up there. I think reaching out, even in some cold-calling sort of scenarios where you're willing to take that risk and you're not so terrified of rejection that you walk away from it. I don't think you need to do a lot of cold stuff, but at the beginning you have to do more of it than later. Obviously pricing — like, are you willing to price something and risk losing it? Yeah, I can see it all over the place. And I had this inkling that was true, and then I discovered through a different research project that cost like $300,000 that, as a byproduct of that, I had the personality profiles of 1,340 successful principals. So I went back and looked, and all but four of them had a pretty high aptitude for risk.

Drew: Interesting, yeah. I mean, because if you want to play it safe, go work for, I guess, a bank — I don't know. The irony is, I'm not sure there is such a thing as a safe path in business today. So, government? All right, looking ahead, is there anything that you're particularly excited about right now? Maybe it's AI — where is the opportunity for experts to sort of jump in and weigh in? As far as companies, do you think it will get better or is it going to get worse?

David: I don't think it gets better or worse. I think it kind of stays the same, but you just kind of find new wrinkles. I don't care either way about AI. I think it's a mistake not to fully embrace it. I think it's a mistake to be nervous about it. So that doesn't even register as an answer to your question. In my mind — I'm not sure this is the exact answer to your question — but one thing that I think will be really important over the next few years is the notion of transparency, authenticity, humaneness. When you look at LinkedIn, for instance, I hardly want to read anybody on there. It's just such nonsense — so much AI stuff. It's like, do you people realize that every paragraph doesn't have to be one line? Yeah, I sound like an old man yelling at clouds now.

Drew: Yeah, I love it. I mean, it really is this moment — as we do work more with machines, there's no doubt that humanity is going to be a differentiator. All right, well, let's close out — even if it's redundant — with one do and one don't for CMOs looking to turn their expertise into a business. So one do and one don't. 

David: The do is to write, even if it doesn't get publicly consumed in any way. I think it's very difficult to figure out what you think unless you write about it. It's not clarity and then articulation — clarity occurs in the articulation and not before it. So that would be the do. The don't: probably don't read any books in your field. You can get almost everything you need from longer articles. Now, of course, you should read my book — that's different.

Drew: Yeah, and maybe mine.I love your first point. I mean, I write to understand, and I don't necessarily understand until I write about it, and that forces the structure in. The more I force myself to write every single week, the more I can bring clarity around it. So yes to that. And reading — yeah, I read probably three or four novels — or historical fiction — for every business book, at least. Well, David, it has been a real pleasure and an honor. It's like a master class of ongoing solo expertise. Where can people go if they want to go deeper? I know you mentioned your newsletter — where should they go?

David: Go to Punctuation.com — that includes everything that you need, with links to books and events and all kinds of free articles. There are tens of thousands of people that get the weekly email. That's where you'd sign up.

Drew: I love it. On punctuation.com should I expect to see some em dashes or the absence thereof? 

David:I love em dashes, and always have. 

Drew: You and Ann Handley, it's hilarious. I love it. All right, well, thank you so much.

 

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Show Credits

Renegade Marketers Unite is written and directed by Drew Neisser. Hey, that's me! This show is produced by Melissa Caffrey, Laura Parkyn, and Ishar Cuevas. The music is by the amazing Burns Twins and the intro Voice Over is Linda Cornelius. To find the transcripts of all episodes, suggest future guests, or learn more about B2B branding, CMO Huddles, or my CMO coaching service, check out renegade.com. I'm your host, Drew Neisser. And until next time, keep those Renegade thinking caps on and strong!