Our guest today is Rick Dietz, President of Advent.
Rick was brought into Advent by a private equity firm to report to the founders, Dr. Madan Kandula and Dr. Gwen Kandula and grow the organization. The conversation covers many areas, including how Rick came into the organization, and why he focuses on developing people. Advent is currently in the process of changing out the entire management team for new leadership. Rick offers insights on transitioning people, as well as his thoughts around the use of data and how Advent uses data to make decisions. They explore the challenges of working with a PE firm and how that’s changed the organization. He also shares his experiences of being an outside hire and coming into the organization.
In This Conversation We Discuss:
- Why Rick believes in using data to make more informed decisions.
- His previous work in practice management within the fertility space.
- How the company culture has adjusted with the scaling and the injection of capital.
- The various considerations that have to be addressed when making changes to the leadership team.
- The importance of regular check-ins with the team.
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We had Rick Dietz, who is the President of ADVENT, which is a chain of ENT locations opening up across the US. He is a sharp second in command to the founder. He’s going to be talking about how he came into the organization, the private equity firm that brought him in as president to report to the founder and CEO, and how he’s going to be growing the organization. He is talking about how he develops people and his focus on developing people. He’s in the process of getting rid of almost the entire management team and bringing in the right leadership team. They are a 250-person company. They are building out that first leadership team.
There is a lot of stuff about turning over people and transitioning people and his thoughts around that. He is a strong people leader. He talks about the use of data and how they use data to make decisions in certain areas, the changes of working with the PE firm and how that’s changed the organization, and what it was like being an outside hire and coming in. There are great information and advice you are going to be getting. You are going to love this episode. We will see you on the inside.
Rick, welcome to the show.
It’s great to be here. Thanks for having me.
I’m looking forward to talking with you and learning a little bit about you. Before we dive in, why don’t you talk about what ADVENT is as a company? I know you are the President of ADVENT. We will talk about how you got into the role as president, why you joined the organization, and the change the organization is going through. Talk to us a little bit about the company itself, so we understand the perspective you will be coming from.
ADVENT has been a subspecialty ear, nose, and throat practice for several years. That will be an interesting comparison because the path we are on now is different than several years ago. It has the subspecialty and practice that has honed its service offering to focus on the breathing triangle, which is your nose and throat. We are focused on helping people both understand and fix their nasal and sinus obstruction. You can breathe properly through your nose. There’s a whole science behind the positive effects of proper nose breathing that we will touch upon a couple of things, but generally, that’s what we do.
It merged from a privately owned independent physician practice to, a couple of years ago, doing a transaction with a private equity firm. We have a financial partner now. Our mission is to bring sleeping snoring solutions to as many patients as we can across the upper Midwest as our first geographic footprint for the expansion of the business.
Was it a one-location business originally, and now it evolved? How many locations do you have now?
It started back by our founder, Dr. Madan Kandula, started the business. He and his wife operated a traditional ENT practice. They started with one clinic here in the Milwaukee market. For several years, they ran that clinic and a couple of others. During that period of time, he evolved what the medical protocol and the focus of the company were going to be. Rather than being a broad-based ENT practice, he saw the opportunity to focus on the breathing triangle and bring all of what is typically done in a fragmented way in surgery centers or operating rooms into the in-office environment. Ninety-eight percent of what we do, which are nasal and sinus procedures, are done in the office.
We have greatly reduced the barriers to entry for patients, both on cost, ease of access, convenience, and recovery time. It’s a fascinating model when you look at what we are able to do. From about 2016 to 2017, Dr. Kandula decided to narrowcast the business and began to open additional clinics in Wisconsin. He opened a handful of those over the course of the next several years. Right before COVID, he took the step to cross the state line into the State of Illinois. During COVID and thereafter, they opened four clinics down in Illinois. We have built and operated 9 clinics over the course of 5 to 6 years. This is all before the transaction was done with a private equity firm.
Are all locations the ones that you did startups, and none of these were acquisitions?
The ones that I talked about up to this point in the history timeline were all de novos, and our model is a de novo build model. When we look at what we have accomplished in 2020, we entered 2 new states. We entered Minnesota and Indiana. Both of those state entries were through acquisition and partnerships.
Similar-minded ENT physicians were doing in-office procedures. We loved our model. We wanted to fully commit to what we were doing. We partnered with each of them in Indiana. We are in South Bend now, down the street from the Notre Dame campus. In Minnesota, we are up in Blaine. We are going to be opening several new clinics there in 2023.
This is completely weird because I am a client, not of your business, but of this exact set of types of procedures. Several years ago, I had to go in and get two procedures. They decided to do them both at the same time because my travel schedule was insane. The doctor said they almost never do both procedures at the same time because there’s so much healing process.
I had a badly deviated septum. I struggled with breathing through my nose. They had to do a cut here where they lifted my tongue and moved it forward or stitched it down or did something. He is a veteran ENT here in Arizona. He said it was the narrowest breathing at the back of the throat that he’d seen in many years. He said that after the surgery, not in trying to get me in.
Did you have terrible snoring?
At times, yes. It also struggled with breathing. I used to be a runner. I ran marathons, half marathons, and 10Ks. I used to ski race. I always was a mouth breather and had struggled with breathing through my nose. It took about several months to get all the pain in the neck to completely heal. It feels like I’m cheating now with breathing.
It feels like I have two noses. I can, through my nose, get so much air. It’s weird. It’s a completely different sensation. I read a book, Breathe. It is a fantastic book. I remember listening to it on a hike that I was doing in California. I was hiking and started practicing nose breathing. I have used the strips that go over your mouth. There’s some real science behind this stuff. It’s cool stuff there.
When you ask what ADVENT’s mission and vision are about, we look at it as developing the category that this is such an underappreciated and under-focused area that more consumers need to understand that you don’t have to live this way. You don’t have to continue to go through those struggles. The last unique piece of our business model is that we are direct-to-consumer.
Most subspecialties rely on referrals from primary care and other subspecialists, depending on the situation. One of the things Dr. Kandula did early on was to throw away the traditional model and go direct-to-consumer. We have a substantial marketing budget annually to get the word out and get ADVENT’s name in front of folks who can benefit from this. The model is proven to be effective.
I have been a part of three different roll-ups in my career. We rolled up the house painting industry. We did it with the collision repair industry. It’s called Gerber Auto Collision in the US. The first company was called College Pro Painters. I did it in the garbage with 1-800-GOT-JUNK?. In all of those cases, the category existed. ENTs and this surgery have been around forever, but there’s no brand around it or household. I had no idea where to go because there were all these independent physicians. Is the idea back then to build a brand?
Your experience is why ADVENT exists because most consumers and patients who have this problem don’t know where to turn. Many of the primary care physicians will be prescribing nasal sprays. They might send you to a pulmonologist, who might send you a sleep lab. It’s fragmented. The vision that Dr. Kandula had for our model was to bring it all under one roof, do it in the office, as opposed to focusing on taking you to the surgery, and do it with this as minimally invasive as possible.
I like that there’s going to be a brand around it because this is embarrassing. I am happy with my surgery. The doctor who did the work was spectacular. He has a great bedside manner. He is easy to talk to. I can’t remember his name and it was only a few years ago. I have been sitting here for ten minutes going, “What is his name?” I can’t remember what his name was, which means I can’t even enthusiastically give a referral. You are onto something big. Were you from the industry or were you from outside of the industry?
The way I would describe myself is I have been a private physician practice operator for many years. Prior to coming to ADVENT, I was doing similar practice management work in the fertility space. I’m both managing and running individual fertility centers. In my last position, prior to coming here, I served as interim CEO of a management service organization of 25 clinics across the US and Canada.
It’s a similar work when you are a management service organization providing services to clinicians and practices. The nature of the work is similar no matter what subspecialty you are in. I looked at this opportunity uniquely from my background because practice management is in my blood. Prior to coming back into this space back in 2007, I spent a handful of years in consumer packaged goods, healthcare, and OTC products.
I had an accelerated, fun, and interesting education on what it is to market direct-to-consumer. For me, coming into this environment was a great match because I have both backgrounds and can appreciate them. In our case, most subspecialties invest about 1% of their budget in marketing. We invest 10% of ours. It’s a different animal. It was a great fit where I could use both my business skills and my direct-to-consumer marketing skills.
You weren’t a physician.
I have been an administrator my whole life. I followed in my dad’s footsteps. He ran a hospital for 60 years of his life. He came in as controller and quickly became President and CEO. He ran that community hospital forever as a teaching and research hospital. I have the advantage of having a great tutor who studies the healthcare system each and every day. It got passed on in the genes.
You won’t find a lot of successful doctors/entrepreneurs. It’s two different skillsets.
Those who have had success and gravitate to it have been subspecialty physicians who have that flare. The fertility field was full of them. Fertility came into commercialization in the 1980s. Once Louise Brown was born and the technology was proven to work effectively and safely, the category took off. It’s only been around for several years.
The group of physicians exiting out on retirement were all those physician entrepreneurs. They all said, “We want to go do this IVF thing.” The hospitals are like, “We are not investing in that.” They are like, “I’m going to go do it on my own.” Dr. Kandula here at ADVENT is that same visionary and entrepreneur. He also has a great knack for marketing, which was important for him to bring the business where he is brought it at this point.
It sounds similar to the cannabis industry, where you have a whole bunch of these businesses. These were a bunch of people who liked to smoke pot and opened up businesses. They weren’t necessarily good at horticulture and the growing of actual plants. The ones who have been successful are the ones who are from the science side of it, not necessarily because they like to smoke pot once in a while.
At the heart of all of that, all great entrepreneurs have is that vision, drive, and mission to practice what they see in front of them.
What was it about the doctor that you liked or resonated with that got you to join his business? Was it his vision? Was it his personality?
He’s charismatic. The way that culture he built here early on, and the energy and enthusiasm that this organization has and continues to have was a check in the right box for me. He proved to be a great marketer, which is unusual. I know physicians who are great scientists and have creative development minds for new technology and advancement.
Dr. Kandula is a great marketer. It’s in his DNA. He gets it naturally. He is committed to it. He recognized early that was going to be his major point of differentiation and how he was going to be able to grow the business. The fact that was core, he believed in it, and the model was clear to me. From who I was going to be working and partnering with, those were the two key factors for me. I was like, “This certainly can work.”
What do you think he saw in you?
He appreciated the fact that I had a marketing background. That was a good fit. He got to a point where he recognized that in order for this business to scale and go forward, there was a new generation of leaders in the organization that needed to come together and help the organization mature to the next stage. For the last few years, we have been focused on building the foundation department by department, but across the organization, developing policies and procedures, best practices, and ingraining a discipline within our management team of how we want to do business.
Relatively speaking, we are still a fairly small company. We like to act like we are a big sophisticated company. Being able to bring those techniques and data analytics is a huge part of what we practice every day, but by bringing those things to the forefront and using them as tools to run the business, he intuitively knew that it was time to do something different. It’s also part of the reason why he chose to partner with a financial partner, because that help and assistance, they recruit and bring in people like me that have the pertinent experience to be able to drive these things. It was the right time for him to do that.
Did he partner with the PE firm prior to bringing you on?
In my case, it was a traditional working with the PE firm and founder to begin to bring in new team members.
It’s interesting to hear you talk about how you are a smaller company, and you want to try to act or work more like a bigger company. I had a mentor years ago who was being groomed as the second in command at Starbucks. He mentored me for several years. One of the mantras at Starbucks and a huge saying on one of the walls at their head office that I saw one day said, “Grow big, act small.”
They are already in 14,000 locations. They were trying to stay entrepreneurial. I love what you are talking about, which is we know that these tools are out there. They have almost become commoditized or democratized, and we can leverage a lot of these tools now at a fraction of what they used to cost us. It’s almost irresponsible not to use them.
There’s a business discipline. One of my big mantras over the years has been, “Make informed decisions by using data.” The data in front of you should be the thing you are using as a guide to help inform decision-making. It doesn’t make the decision for you, but it certainly is there to help guide and provide as much factual perspective as possible.
I will give you a quick anecdote about why that’s become ingrained in me. Early in my career, I spent a few short years in the environmental business. I was doing a presentation to the CEO of the company I worked for. We were doing a market analysis. We are talking about competitive situations and capacity in the market.
During my presentation, I said, “I think so-and-so.” He said, “Rick, stop. Don’t tell me what you think. Tell me what you know.” I did it again in the presentation and he stopped me. It stuck. It has been a guiding force for me over time in terms of we have got all this data. In this world, we have too much data, but how do you use it for decision-making? Back to the point of acting like a sophisticated company, that’s one of those places where you can make better decisions if you commit to it.
One of the most successful companies of the last several years is Google. Google famously says, “I don’t care what you think. What does the data say?” It’s because they have many smart people who have opinions that if they let these smart people raise their opinions, it’s dangerous. They are like, “Thanks for your idea and opinion, but what does the data say?” I had a question about how to use your data, but that makes a lot of sense.
In our business, we are using it around trying to optimize. We are knee-deep now in a labor optimization exercise. We have developed new modeling around demand and capacity. We are figuring out how we best flex our clinical resources because that’s where the transactions happen for us. How do we optimize that and use staff smartly and wisely to get the most out of the dollars we have? If we have periods where demand is light, how do we flex and not carry a lot of fixed costs?
It’s smart that you measure that because, as the company scales, especially when they have an injection of capital, they often get a little bit lazy on people. It’s often their early stage managers in their career and first time managing people who don’t necessarily have the wisdom of seeing this yet or the experience. Their answer to every problem is to hire more people instead of optimization or saying no, or automation, or how do you get more labor efficiency? How many employees do you have, system-wide?
We are 250. The dynamic you described is the cycle we have gone through.
I identify companies that are the 1s in the 3s and from 1 person to 3, from 3 to 10, from 10 to 30, from 30 to 100, from 100 to 300. When you are in the 100 to 300, that’s what happens. Mid-level managers are messing stuff up. You are building your first leadership team from a first management team to a leadership team. You are also busting through silos, politics, and stuff that’s starting to creep in. What do you think has changed with the culture from the first injection of capital? How much have they grown in that? Was it a 3-year or 2.5-year period?
From a top-line perspective, we have doubled the business in a three-year period. The bottom line has followed. We have seen tremendous growth in the top and bottom lines. The thing that’s changed the most is we have had a lot of changes in the management team. We have been critical of the skillsets that we need on the team. When the business has outgrown the skillset, we have made the hard decision to make changes. I am now at the end of turning over the entire senior leadership team. That’s been an important piece.
We are now doing the same thing at the next level down. One of the exercises we went through in our annual planning was a nine-box evaluation of our director levels. We had an open, honest, and 360 input around each individual, where their skillsets were, where their strengths were, and whether we thought they were going to be able to scale with the business or not. That exercise will inform us of what we are going to do in 2023 in terms of development because if we can develop people, we certainly want to do that first. If they prove, they can turn with us, great. If it’s too much, we will have to make further hard decisions.
That’s been a real focal point for us because without the right mindset, and I will come back to the other big theme, both on the senior leadership team as well as how it trickles down to the next layer of management, we need alignment. We don’t have alignment on what we are trying to do, the philosophies we are following, and why we make the decisions we make. People can go off, cause disruption, and slow things down in a way that’s not going to be productive for the organization.
I dropped a link into the chat that you can look at after we get off our call. It’s a course I launched several years ago that you guys might devour at that management level and the mid-level management. It is called Invest In Your Leaders. It’s all the soft-core skills that managers need to be better at.
I wanted to ask you about turning over the leadership team. There’s an art and a science to doing that when you have to start firing people who have been there and people who have grown with the organization. It’s almost the looking for the ripple effects that these great people bring. If you bring them in, they are going to do great, but there are all these unintended ripple effects that happen, good and bad.
People are frustrated that they have to report to this new person, or they are disappointed. They don’t get to report to the old one. They are pissed off they didn’t get the role. Can you talk or speak to some of that about how you think about those advanced chests 3 or 4 moves in advance and get the team ready for all that? How do you react to it better?
It starts with the philosophy and the mindset of our functional leadership and what I’m looking for. In my role, I’m certainly looking for my key senior managers to be business leaders, first, and functional leaders, second. That’s been a huge mind shift. As I have thought about some of the changes that have been made, it was that an individual might have been narrowly focused on the function and, by default, in a lot of ways, was siloing.
In other cases, the interests in the pursuits were more esoteric and chasing the kinds of things that weren’t immediately value added or needed to focus on to drive the analytics around how we are managing our human capital. Those are places where I need the right mindset leader. Once those changes and decisions are made, we go into the hiring process.
In the cases where the departure was known, I invited members of the team to interview the people and have some input into the process. I do that for a couple of reasons. One is the more obvious reason, which is it’s good for team members to participate and feel like they have a say and some influence in the decision-making. The other part is when I sit down with the individuals and invite them to the process. It gives me a chance to explain where we are going and set the table for, from my lens, what I’m looking for in the next leader for that particular group.
It serves a couple of great purposes. I have found that over the years to be helpful. Across the board, I’m sure you have seen this time and time again. It always helps to stop and explain the whys and connect the dots for people and not tell them the what but explain the why. When you can explain the why, a lot of times, you get better buy-in and execution because people have a better understanding of the bigger picture.
How many direct reports do you have? What’s your typical day-to-day or week-to-week look like?
I have six direct reports. It was a little less when I got here. We eliminated one of the director levels. The two people reporting to that person are now reporting to me directly. I don’t feel like I’m top-heavy on direct reports, but that’s how it evolved. In my day-to-day, 60% of my time is spent one-on-ones with my department leaders. We have standard one-on-one meetings. This organization has followed EOS for many years. We use traction tools or Bloom Growth now as the software we use to run our meetings. It’s been helpful for organization and structure.
That’s about 60% of my time. The other 40% of my time is spent on driving business development and expansion activities. 85% to 90% of our business is commercial payer. We spent a lot of time in 2022 developing our value proposition, getting it tight and pointed, and are now out in the marketplace talking with the major insurers as well as self-insured companies about what we do and the benefits that we can bring. My time is on business development, working with our vendors in terms of relationships and contracting. It was 60% to manage my people and 40% to manage the business split day to day, week in and week out.
You mentioned traction in EOS. I know Gino Wickman well. EOS or the traction tends to break down when you get to the 100-plus employee market. Are you moving over to Scaling Up, Verne Harnish’s content at all? Are you looking at Shannon Susko’s 3HAG WAY? Are you iterating and making traction into something more corporate or bigger?
Is it still working?
It’s not. For those of us who came to the business from bigger organizations that hadn’t had any exposure to EOS, we are all scratched on our heads, and we realized we have outgrown where the organization is. It’s a great tool for the company.
It’s amazing, from 10 to 100 people.
We are in the process of evaluating what structure and system we need to move going forward.
Are you familiar with Verne Harnish and his book Scaling Up?
Take a look at Scaling Up because Scaling Up is horrible from 10 employees to 100. It’s amazing, from 100 to 1,000.
I will certainly do that.
It tends to be a little bit more robust. You need strong leaders who understand the methodologies across functional teams as, even as you mentioned you are getting your leaders to be business leaders first and functional leaders, second. My analogy is always that if you have got the Dallas Cowboys and you have got the wide receiver from the Dallas Cowboys, what’s the most important team for him? Is it the offensive team, the special teams, or the defensive team? What’s the most important team for the wide receiver?
I will go offensive, but you are going to tell me it’s different.
Where do you think I’m going to tell you it is?
You are going to tell me it’s defensive.
What’s the business team that he should focus on? It’s the Dallas Cowboys. The most important team for every business leader is the company itself, not their functional team. Most people say, “It’s the offensive team.” Every single player is obsessed with the Dallas Cowboys. They are high-fiving the defense when they come off. They are telling them what they saw. They are helping each other. They are not so focused on their role. It’s the whole team. That’s where we need leaders and where managers become leaders. They argue and debate stuff for the good of the core values and vision. That’s what you intuitively already get.
There’s an interesting up-and-down dynamic, maybe a 30,000 and a 3,000-foot dynamic, that I see going on, particularly where this business is now with our team members. That is the ability to embrace and understand at a core level what’s going on in your function and being a subject matter expert on the various aspects. You don’t have to do the work, but you need to understand the work and be able to come up and, to your point, explain it within the context of the broader organization, the good of the organization, and how it fits and collaborates across functions in a way that’s cohesive and productive as opposed to being either destructive, which it can be in certain cases or not.
There’s an interesting dynamic that goes on there. Different people have different abilities to go in between those two levels. I feel like we are there right now. To put a finer point on it, the thing I see most people struggling with is the definition of accountability. It is old-day accountability and new-day accountability. As we grow and there’s more pressure on performance, the importance of achieving things on deadlines and dates and creating milestone plans quarterly around rocks as it is in EOS becomes more critical to the pulsing of the organization.
We have started a weekly check-in on milestones. We still have it in EOS, but we pulled out the review. I bring the entire team together. We have many, but we have about twenty projects. We had our first 20 and 20 meetings. That is 20 rocks are reviewed in 20 minutes on track and off track. We go right around the table. If you are off track and you need help, you stay after we sit and work on it.
We are doing this weekly. There’s no escaping. There are Gantt charts that have been established with due dates on all this. Back to this point of discipline, it’s another level of focus and commitment. I keep telling everybody, “I know this is a royal PIA, and it seems like micromanagement, but I promise you that if we get disciplined in this, we will hit our milestones on the dates we say we are going to hit them.”
That’s what Jim Collins used to say, “Discipline people, disciplined thought, and disciplined action.” I used to coach a company over in Switzerland. I talked to them one day. I was like, “It’s incredible how you guys consistently deliver everything on time.” The CEO started laughing. He goes, “We are Swiss. Everything has to be on time.” It’s weird to them to not even think that way. I laughed. I have two final questions. What did your first 90 days look like at ADVENT? Do you remember, several years back, what were your first 90 days coming in? How did you operate?
My first 90 days, everywhere that’s new and for most people, is trying to figure out how the organization runs, ticks, what the culture is about, and how they have gotten to where they have gotten. In my case here with EOS, that was a foreign system to me. I hadn’t even heard of it until I got here. I needed to be respectful of the system that was in place and listen, learn, and observe what it was doing for the organization and what it was not doing for the organization. I began to digest and start to architect in my mind what the future of how we were going to operate was going to look like.
I have had a couple of mentors who taught me early on, and I have carried this with me. That is, in your first several days, go and observe. Sit with the people that do the work. Watch what they do and ask questions about what’s going on. You will learn so much about an organization by listening and asking, as opposed to the old don’t come charging and trying to make changes on day one to impress people or feel like you are somehow adding value from the moment you step in the door.
It’s dangerous. You have to test the hypotheses. I want you to go back to the 22-year-old and you are getting ready to graduate from university. Rick Dietz needs some advice. What advice would you give yourself back then that you know to be true now but you wish you’d known back when you were 21 or 22?
There’s one practical piece, and that is, if you are willing and able to go into a sales job for a short period of time and learn traditional selling, those skills will stay with you forever. Sales get a bad rap a lot, you know, as a profession. With the skills we all learn from getting some traditional selling training, you use them every day. You are always selling to somebody every moment of the day. If you are willing to put a little bit of time into that and do it, it is a great, simple, and tactical professional development exercise.
The second piece is what I violated all the time. It is to learn some patience. Those that are hardwired to like me, and I met a few of me along the way. We wanted to change the world overnight. We were at our boss’s doors, banging on the door with frustration, “Why is this place this way?” Not having enough experience with organizational dynamics and how places run, from that learning to step back, observe, and try to understand every organization is different. Decision-making is different. How the process works is different, and how bosses like to interact with you. How they are asking you to carry yourself in the organization is different.
Having some patience when you go into these early jobs and being able to observe from a cultural and behavioral perspective first, you can get into your subject matter and elements next. I certainly wish, along the way, I had a little bit of that whispering in my ear. I know there were plenty of moments where I was like, “Shut up and sit down.”
Rick Dietz, President of ADVENT, thank you so much for sharing with us on the show. I appreciate all your time.
It is great to be here. Thanks for having me.