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January 8, 2017

The Grand Plan

A bit of context: For the past 10 years, I’ve owned a wealth management firm called LotusGroup Advisors, and at the end of 2015, I transitioned out of the day-to-day operations. I spent 2016 Q1) transitioning clients, Q2) vagabonding, Q3) starting with ‘why’, and Q4) building the ‘next’.

Flow’s initial service offering is to help companies convert more of the traffic they’ve already paid for — with a team of Colorado-based live chat agents who know their business almost as well as they do. However, some readers may not be aware that our long-term plan is to train and educate sales and customer service reps to become leaders and managers through an apprenticeship program. The founding purpose of Flow (and the reason I am funding the company) is to help accelerate Colorado’s initiative for statewide youth apprenticeships, which I believe is the best opportunity we have to create a sustainable solution for our economy.

In order to realize this vision, we need to build an agency without compromises, which is why Flow’s agents are trained to outperform any internal hire or outsource provider in a throw down. Native-English speakers so well trained that they can flow off the top of their heads. On top of that fact, our innovative hiring approach allows us to deliver the service at a cost competitive with scripted overseas providers.

Flow’s strategy is to work with CEOs and Marketing Directors of  companies $10 – 100MM in size, because they have the marketing sophistication and ability to run a program at scale.

We’ll be running 3-year apprenticeships to create project managers. Each apprentice will have a supervisor and mentor so that they can receive work and non-work related coaching. Upon completion of the apprenticeship, graduates will earn $45,000+, regardless if they graduated college. Companies are already lined up to take these hires for a placement fee.

There are three common objections for hiring apprentices and turning them into highly productive employees, so I’d like to address them here.

Objection #1: College is the only path to break poverty

Low-income kids drop out of high school at higher rates: 29% of low-income students never graduate high school, compared to only 13% of higher-income students. Here in Colorado, 45% don’t graduate high school and that’s an improved figure over previous years. However, the college application rate is dropping: in 2008, 56% of low-income students applied to college, but now only 46% do. So while more low-income students are graduating high school, they aren’t applying to college. And those who do, don’t apply to elite schools, even though elite schools have more funds to offer a free education to these kids, they opt to pay to go to community colleges.

Now things get weird. Of the low-income kids who graduated high school and applied to college, 40% never show up. They literally never step foot on campus (hint: it’s not because they’re lazy). But let’s say they made it to campus and attend class. They’re in the clear, right? Heck no, not even close. Only 20% of low-income students complete college in 6 years, compared to 99% of their higher-income peers.

This gives us a 9th grade-to-college grad efficiency of 100 x 71% x 46% x 60% x 20% = 4.

Education is one of the greatest levers we have to get out of poverty but it’s not because colleges create so much value in in the marketplace. It’s because not going to college means you’ll make jack squat.

Bottom line: with fewer people going to college, and the income gap widening, we’re going to see more people living in poverty. By definition, this is not sustainable. We must at some point lift more people out of poverty or else we will have a civilization of suffering. Today’s education system clearly is not working for the poor. So what will? Flow’s answer is to create apprenticeships.

Objection #2: The best employees have college degrees and work experience

While a long-held belief, this is simply not true. A meta-study was conducted to identify the greatest predictor of successful hires: skills.

Source: Innovate Educate, 2015, “Skills-based hiring data and outcomes”

As such, we have partnered with Skillful (a collaboration between LinkedIn and The Markle Foundation) to implement a skills-based hiring and training process, as opposed to focusing on education levels and work experience.

One of the largest constraints to business growth is the ability to find talent. For any growing company, the implications of not being able to find talent creates a ripple effect. Unfilled positions lead to missed targets, employee burnout, or poor service delivery. Many companies require a college degree to apply for a job but only 30% of working-age Americans have a college degree. By focusing on the actual skills needed for a role, a company allows for an additional 70% of the population to apply, including groups with highly valuable skills (e.g. veterans, workers with non-traditional training and certifications). An expanded talent pool based on skills reduces hiring costs by 74%, reduces the time to hire by 38%, and reduces training time by 75% to reach an employee’s full efficiency.[1]

In addition to expanding the talent pool, moving to a skills-based model allows us to attract better-fit candidates. We had to clearly articulate our requirements vs. preferences and in doing so, candidates are better able to self-assess.

Emphasizing certain skills helps candidates understand what they need to succeed in the position. This increased insight helps us hire the right people and train current employees to gain valuable skills.

Finally, by stacking skills assessments atop other proven hiring techniques such as reference checks and interviews, we increase the odds of making the right hire. From a customer’s perspective, they receive stability, continuity of service, and their costs remain low due to low turnover. This is critical to delivering our service at half the cost of US-based staff when our largest cost is labor.

Objection #3: Business should stay out of education

Let me first dissuade any notions that business knows how to educate students better than educators. This is simply untrue and not remotely in line with my thinking. Some people like to think that schools, governments, and any other non-profits should run like a business. I flat out disagree. You have shitty businesses – should schools act like them? What all organizations have in common is a goal of being great. But don’t get it twisted, being great is not the same as being a business.

Businesses do need to clearly communicate what skills they need and work with educators to create a curriculum that builds those skills. To put a finer point on it, there are skills specific to a company and skills specific to an industry – the latter must be trained by educators.

Here’s the challenge: businesses create job descriptions that look for experience in doing what they want. Educators create curriculum that provides theory, but not experiential learning. Flow is taking a different approach by identifying the skills needed, finding courses that provide education and certification of those skills and using internal training to fill the gap. We hope that other businesses will follow suit to realize the ROI that comes from hiring apprentices, along with the opportunities they create for those who don’t otherwise get a shot.

The Grand Plan, in short:

Build a live chat agency and apprenticeship program
Use that cash flow to place apprentices in dream jobs
Use that cash flow to expand business lines and states
All the while, being one of Colorado’s top places to work

[1] Talxcellenz® Tools, 2016, “Defining, Validating, and Communicating Competencies Using Talxcellenz® Tools”

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