DANIEL MARCOS

Mexico 2021 | EDUCATION | VIP INTERVIEW

TBY talks to Daniel Marcos, CEO of Growth Institute, on sales in 2020, the profound global changes underway, and new courses being introduced.

How has your business model been impacted by the pandemic, and what executive education trends have you witnessed?

March was a tough month, with a big dip in sales of around 80% between March 10 and March 30. We were extremely worried; our company is all about scaling, and we wondered who would want to scale up at such a moment. We had internal conversations and reviewed our courses and realized there are many courses to help one be more agile and nimble, which is what companies need today. We decided to change the message and adapt our programs to help companies with what they need today. Today, we are having a record year and will end up up 30%, with 3Q2020 being our best in history in terms of revenue and profit. Another thing that was extremely important for us is that we have been telling our clients to do online education for the past eight years, but most wanted to pay us three times more for us to come to them or attend a live event. Now, they have gotten used to being online, and we are pleased that our clients have gone from pure live to completely online. Our growth reflects people being more open to online education. Secondly, our tools and training are very much aligned with what is happening today.

Do you predict that this spike in demand for online education will remain long term?

General online education was growing at 16% per year before the pandemic and now there are predictions it will grow up to 26% per year even after the pandemic. We will see a spike that will come down slightly, though the trend will be at least twice as fast as before. Adoption of online education has advanced by five years in just three months. I have been using Zoom for five years, for example, and people were just hearing about it in March for the first time; it shows that many were unaware of such tools.

What is the main idea and objectives behind your Four Decisions methodology?

Verne Harnish is the co-founder of the Growth Institute and author of the book Scaling Up, which covers the four decisions that all entrepreneurs need to make. The subtitle of the book is how a few companies make it, and why the rest do not. Of all the companies around the world, 96% of the ones that survive earn more than USD1 million in revenue, but in Mexico 96% of companies earn less than USD500,000. It is important to emphasize that we do not have a start-up problem as in 2019, 11,000 start-ups were started every hour around the world, but we do have a scale up problem. I have coached entrepreneurs who have owned a business for 20 years with an income hovering around USD500,000. Many end up wondering if they would have been better off being an employee of a company than an entrepreneur after weighing the levels of stress their investments have created. Ultimately, you should not start a company if it is not scalable. The caveat is having a lifestyle business that generates USD100,000 and allows the owner to live wherever they want and work whenever they want; however, if you are going to have a company with employees, you need to go above USD1 million. The Four Decisions are those that business owners have to get right to scale past a million.

What advice would you have for someone to envision scaling up?

The biggest issue in Latin America is that we create companies that do not have the capacity to scale since there is no market to scale. This is a huge misunderstanding in the market. It is important to think outside of the box and find niche markets that are not being taken advantage of. There is a great deal of great training for start-ups and for Fortune 500 companies around the world; however, there is no training in the middle, as once a company is doing USD3 million or USD5 million of revenue, no one looks at them. This is the opportunity that we saw to scale up and double our revenue in the last three years.

What market trends would you suggest executives in Mexico keep an eye on?

Since the beginning of the pandemic, I have said that having either access to or generating dollars will be extremely important, and I am helping many of my clients sell outside of Mexico to generate dollars. In the next five to 10 years, those companies that have a percentage of their revenue outside of the country will fare much better than the rest. There will be at least a five-to-10-year change of trends, as this is not a small financial crisis that will go back to normal. It is a profound cultural and political change and a reorganization of the world in many ways. We have a debt cycle in the world of 90 years, a social cycle of 40 years, a generational cycle of 90 years, and an economic cycle of 500 years, and they are all colliding today. We have a significant change in the structure of our society, and those businesses that can generate revenue not dependent on one country will fare the best. For example, in the Growth Institute we have clients in 68 countries around the world. We have a varied portfolio of clients which means that if one country or region is in financial trouble, we will be compensated by the others while we continue to help many of our clients adapt their business models. The second is to go online and work remotely, which I have personally been doing for 12 years. Mexico is now the largest partner of the US, and if we take advantage of this we could double Mexico's GDP in the next five years. For example, if we take advantage of the US-China trade war, then the manufacturing that US companies are moving away from China can be located in Mexico.

What upcoming programs do you have planned?

We have the online Scaling Up Master Business Course that we teach every quarter as well as a program called Tribes, which is a group coaching program that lasts one year whereby we help companies implement all the scaling up in a virtual program with five or six other companies at a lower price than an ad-hoc consulting program. We then have individual consulting programs. In Mexico, we have been helping companies pivot or adapt their models to the new reality through our learning programs. We hold a Hot Seat in our programs where someone proposes a problem that they are having, and the other executives in the program help fix it.