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2023: The Year of Fractional Executive Services

Mary Grothe January 11 2023

Meet Host, Mary Grothe

Mary Grothe is a former #1 MidMarket B2B Sales Rep who after selling millions and breaking multiple records, formed House of Revenue™, a Denver-based firm of fractional Revenue Leaders who currently lead the marketing, sales, customer success, and RevOps departments for 10 companies nationwide. In the past year, they've helped multiple 2nd stage growth companies between $5M - $20M, on average, double their MRR within 10 months, resulting in an average ROI of 1,454% and an average annual revenue growth eclipsing $3.2 million.

 

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Mary Grothe: Hey, Revenue Radio®. It's Mary Grothe, and I have a first-time guest today. This is so special because first-time guest and first-time podcast ever. Welcome, Kristin. Kristin is one of our Fractional CROs at House of Revenue®. Whoah, this is crazy. Your first time fractional, too.

Kristin Westberg: I am.

Mary Grothe: This is the year of new things.

Kristin Westberg: Year of change. Yes.

Mary Grothe: Today, we're talking about the year of the fractional executive. It's 2023. Are we in a recession? That's what everyone's saying.

Kristin Westberg: Good question.

Mary Grothe: You should ask the Feds [laughing]. I don't think they like us very much. Going fractional is one of the best ways to reduce costs for hiring an unbelievable, talented, seasoned, mature executive. That's a good start. They're also way more talented, typically in their role, because they're at a point in their career where they're willing to do fractional work. That is very different from being an employee. 

I would love for you to share a high level of your background and what triggered that “I think I’m ready to go fractional.”

Kristin Westberg: Yeah, very much. So, yeah, I'm a seasoned corporate executive. This is my first run at being a fractional executive. I had worked as, you know, a revenue leader in several different organizations in the hospitality industry, in gaming, in B2B travel, and in luxury travel. I would say what motivated me to become a fractional executive is just kind of sitting in that seat inside a corporation as a revenue leader.

What I enjoy most and what I'm most passionate about is the ability to build in scale, be strategic, and develop thoughtful plans to address changes in the market, changes in the product, changes in the people, and the process of the scale of business. I am definitely sitting in that corporate executive seat. Sadly, he's spent very little time doing those things.

I think they're just always a myriad of challenges with a growing business. Often you find yourself just reacting to challenges with people, challenges with clients, just kind of the whims of change in the business. It is kind of disappointing that you don't get to spend as much time developing, building, scaling, and focusing on the things that matter and drive change for business.

So, I found myself in a position this summer to kind of reconsider what my next path would be. I heard a lot of great things about you and House of Revenue®. I would say it's kind of all playing out exactly as I had hoped. I love the seat, being that fractional revenue leader. It's just amazing to be able to spend the time looking at the business through a different lens, building strategy, and not being tied up with everything that...

Mary Grothe: Like water cooler [laughing].

Kristin Westberg: Corporate executive.

Mary Grothe: Yeah. I hear you. The way that I look at it is if you look at a plate of food, this is going to be an awful analogy. If you look at a plate of food and you have everything on here on this plate in a supercard, maybe like a Thanksgiving plate or whatnot.

It's full. It's so full, and there are things on there. Once you sit down, you go to the buffet, Thanksgiving, or whatever. Then, you look at the plate, and you're like, “Okay, what did I do? There's too much on here. I don't need this. Why did I get to a spoonful of that?” 

Please. Okay, not going to happen.

Then, you start eating, and you’re like, “Well, I like this one better than that one. If I’m going to eat a certain amount of calories, I’m going to spend it on the things I enjoy. Not everything on the plate you have time, energy, attention, capacity for, or desire to take in. But that corporate plate is always so full with not everything that’s fully desired.

When you're in a fractional seat, I believe people who choose fractional want to lean out. They want to remove the card, the mess. They want to lean out for the things that move the needle, the things that produce the best results, and the things that are most fulfilling. That's such a privilege when you're sitting in a fractional seat. When you're a full-time employee, all of a sudden, things get on your plate, and you're asked to do things, and it's a lie.

Then, the people management and the reactive nature of it, it’s just very different. Also, what’s so strange about being in a fractional seat is that we get things approved that internal employees have been asking for, for years. Sure, but it’s coming from us, and they’re like, “That’s a great idea,” and we get it approved. Then, the internal employees go, “You got to be kidding me. I've been asking for that for three years. How did you get that?” 

It's so interesting because we are seen in a different way as a third party. I also think because of the investment level. People also take it very seriously. Sometimes when you're an employee, you're just filling a seat. You're a sunk cost. Maybe that credibility, that authority, isn't there.

It’s so interesting once you’re a fractional. It’s like, “Whoah, shiny, shiny object.” What have you experienced going from corporate to fractional that you think works to your advantage with the two engagements that you have right now?

Kristin Westberg: Yeah, I mean, they're both very different. I would say kind of different answers to each. I would say, thinking about my more recent engagement, it's a business where the entire leadership team has been with the company since inception, bordering on 20 years. They're incredible. They're very talented.

But this business is kind of how they grew up in their professional life. So, I think coming in with an outside perspective, having worked in several different organizations, having different perspectives, having failed, having learned, having faced all sorts of challenges, it's just a different perspective. I think that they listen to my perspective because it's different. It helps provide a counterpoint to all the experience and knowledge they bring.

My other engagement is a little different. I mean, I think that coming in, they were so hungry for help, right? They had tried several strategies to solve challenges plaguing the business. They're just hungry for new perspectives and new ideas. Although many of the ideas we're bringing to the table were ideas that had been discussed in concept, they didn't have the leadership to drive it, execute it, or manage it for accountability. I think that's what we're bringing to the table, and we're able to do that with that outside voice.

The people are listening to us, trusting us, and wanting to see these ideas carry forth and see if it does solve their business challenges.

Mary Grothe: Yeah, that's critical. I love just having the outsider's view. I feel like it's a fresh, shiny perspective, and it is so valued. I am just one of those people that don't want to be a drain on somebody or an inconvenience. I want to be in a seat where I am bringing forth value. I've seen our team be able to do that time and time and time again.
I think a lot of it is about that fractional type of question. When you are a corporate executive, did you ever, as a corporate exec, lean on fractional help yourself? Or did any of the companies you work for ever bring in fractional execs?

Kristin Westberg: No, honestly. It's a shame; I think part of it was a lack of knowledge. I would certainly say that the fractional executive is more of an up-and-coming trend in the business world. It's brilliant. I think the perspective of even being someone sitting in that revenue leadership seat, knowing that I was pulled in many different directions, is more a lot of hats.

I think it would have been incredible to have someone come in that could stay laser-focused on that, not as a threat to my own personal performance, but as an accelerator. Somebody who can kind of pour some fuel on the fire and help me succeed in my role. It's a shame that I hadn't had that exposure. Knowing what I do now, I would have absolutely welcomed it.

Mary Grothe: I think it's a phenomenal perspective coming from a corporate executive role. How do you classify a fractional executive versus a consultant?

Kristin Westberg: It's an interesting question because I think a lot of people aren't sure what the difference is. I would say as a fractional executive. We are invested in the business outcomes. I think we lean in, we participate, we become part of the team, and we're immersed in the business.

A consultant is kind of perceived as someone who sits on the outside and performs a very specific task or function but isn't entrenched in the business and invested in the outcomes. That's a major difference for us as fractional executives.

Mary Grothe: I love that explanation. I always feel like there's a time and place for consultants. Consulting, I think, just in the term of it, is more advising of, “Hey, this is what we've uncovered. This is what we found. This is what you should do.” 

The fractional exec is sitting in the seat. They're fully immersed in the seat. They are doing the work. Even our fractional CFO that we work with, because of the size of our company, we don’t have a lot of complexities where we need even a five-hour-a-week CFO. I think, technically, we pay for a quarterly CFO. He’s super cool. He engages whenever I need him. It might be two or three emails a month and maybe one quick 30-minute conversation. He is so talented and so knowledgeable that even in that short amount of time, it injects enough. Then, he'll do things as an action step. He doesn't just tell me what to do, “Hey, here's how you should solve this problem at the State of Pennsylvania.” Then, record QuickBooks. He is going to go solve the problem for me.

I think that's what's different. I don't have a financial consultant. I have a fractional CFO, and that means he is sitting in this. Even though our business only calls for such a small, minimal amount of time, but he does the work. He also has a team at the other levels of Financial Controller, Accounting, and Bookkeeper to delegate and get some work done as well, which is fantastic then also.

I do think 2023 is the year of the fractional executive. Also, a lot of layoffs happen. It's crazy, but some good talent just flooded the market. Hiring right now is tough because I don't know what my LinkedIn feeder algorithm is doing, but it's optimizing stories for me right now of people struggling to find a job.

Some people don't understand because they're like, “Aren't we still in a shortage in some roles?” There are so many people hiring right now, but the problem is most companies hiring practices are broken. These poor people have been laid off, of course, in a tough time of year, and they are now applying for jobs. Because each company has a wide array of processes to hire and screen talent, they are putting them through the wringer. Some of them would click and apply. Some of them fill everything out. 

Then, you get into the next step of the screen, and you have to refill everything out in an ETS. So now, you're being screened by a recruiter. Then, you've to repeat everything and go through the process again. Some of them are having them go through 5, 6, or 7 interviews. Some of them are having them travel for interviews, do presentations present their 30, 60, and 90. 

They're doing all this work and not getting the jobs. It's a full-time job to find a job, especially in revenue leadership. I'm just watching their stories, and even some of them share the presentations they were putting together to get a job they didn't get selected for. They're showing them. If you guys understand for a moment how hard it is right now, in this scene, to be laid off and be looking for a role. I think about how difficult that is just on that other side and how convoluted hiring processes are. 

Then, you flip to the employer's side. Well, guess what? They’re all tightening their purse strings. They cannot afford to mis-hire, so they’re adding steps and stages into the process. They’re making it more complex. They want to make sure because if they have a mis-hire, it could take their company to a senior level. Yeah, it’s not good. Now, it’s fighting on both sides, which greater positions people to come in as fractional executives. Why? Lower commitment, less expensive, try-before-you-buy,

Kristin Westberg: Date before you marry.

Mary Grothe: They're able to get typically higher level talent that they normally wouldn't be able to afford full-time at a fraction, and it might be just what they need for that company stage. I feel like it's a perfect recipe as we sit here in 2023. Are you seeing any other trends outside of that, or what's your opinion?

Kristin Westberg: No, I couldn't agree more with what you're saying. I think that, certainly, this looming recession has a lot of companies afraid. There are so many unknowns, so many uncertainty years, and especially a lot of the clients that we work with, we're kind of ripe for scale and growth. But one misstep, a mis-hire, or lack of hiring could cause them to miss that opportunity altogether.

A fractional executive and, exactly as you said, the caliber of talent out there. I look around our office, and our team is so unbelievably impressive. These are people that have incredible experience and knowledge and a lot to offer and are drawn to this fractional work. It is such a beautiful opportunity for companies to minimize risk. They can hire fast, lower commitment, lower cost, and take advantage of the opportunity they have for scale right now, even with all of the uncertainties that are looming.

Mary Grothe: Yeah, I completely agree. 2022 was a tough year. I wrote a LinkedIn post in which I said my goal in 2023 is never to mention 2022 again. I have to abide by that.

Kristin Westberg: You’ve got a week left.

Mary Grothe: What's funny is I have to abide by the comment section. We said we'll probably need a swear jar for 2022 because of how many times I have talked about this, so I have to let it go. Let it go.

Kristin Westberg: It’s kind of the culmination of the last several years. I mean, it has been a roller coaster for all of us. I mean, unbelievable what we've all lived through and how it's kind of continued to challenge us in ways we could never have imagined. So, we all go into 2023 with optimism. This fractional practice is a way to combat anything that does loom with the economy.

Mary Grothe: I agree. It's lower risk. You're getting higher-level talent. It's less expensive. You're not embarking on a journey with a full-time employee, and you're getting unbelievable talent. So, whether it's as a fractional CFO, it's a fractional COO. I mean, there are so many amazing fractional executives out of there. My encouragement for you, though, is to screen, screen, screen, just as you would with a new hire, and understand where their specialty is. Can they work with you in your stage, the size of the company, and the challenges you have right now? What are their main initiatives? Not all fractional executives are created equal. Some have had unbelievably big corporate careers, but they've never sat in a small business seat, scaled, and exited as an example. 

You may have somebody who's phenomenal in a B2B landscape, but you're more of a B2C. Well, that probably isn't going to work. Well, I mean, it's pretty unbelievable. We've been doing this for five years, and we've had a lot of conversations with CEOs where they had executive misalignment. Sure, we follow the RPAC methodology for hiring. I think it's something that you could follow as well, whether it's a full-time employee or fractional. It is Role Match, Proven achievement, Acumen, and Culture-fit. That role match improvement-achievement are two pieces that I think are incredibly important.

If you can find somebody who has sat in a very similar seat, done the thing, is excited to do the thing again with you, and they had proven achievement doing it. It is the fastest way to get there because then people aren't learning, training, exploring, or figuring it out on your dime. Some people have a high figure-out factor. Some people are a little bit slower, and it can slow things down and be expensive. 

As we wrap up today's episode, do you have any last insight to share on the year of the fractional?

Kristin Westberg: I do have one piece of insight, I think, to share on your last comments, too. Often, corporate teams can miss something important that complements their existing team. Going back to my example with my newest client, with the amount of industry experience, relationships, and expertise, I think it has been pretty valuable that they came to us and didn't go find somebody that's also been in that same industry for 20 years. It's an industry that hasn't innovated and needs outside perspectives. 

I think it's good to introspect as well and look around as an executive in a corporate environment and recognize what's missing from your team. What do you need to inject something new to drive change? I think that's important to consider as well.

Mary Grothe: Oh, that's a beautiful, differing viewpoint. I usually take the easy road and the safe road, like, “Good. You've done it before? Great.” You're exactly right. I think some of the best talents bring some of the best perspectives when they haven't been conditioned to have that curse of knowledge and be like, “This is how it's always been doing in the industry.”

They're so limiting. I believe there's quite a bit of beauty in that. I would say in the role match and the proven achievement, I think you need to have discernment, as Kristin said. What do we need here? Would we benefit from an outside perspective? What kind of outside perspective and you be aligned with that?

I also don't think it's a bad tactic inside an interview to ask to bring forth some of the situational challenges. How would you approach this? What would you think? What would you do? And allowing that candidate, fractional or full-time, to be able to start opening and sharing like, “Hey, this is what I would do.” You got to start understanding what's behind the curtain to understand.
Well, thank you all for joining us today. Kristin, you did an amazing job on your first podcast.

Kristin Westberg: Thank you. It was a lot of fun.

Mary Grothe: I love it. Thank you, everybody.

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