6 Characteristics MSPs Should Look For In A Fractional Executive

The Rise Of Fractional Execs

When I was an MSP, one of the most pivotal points in our journey was when we brought on a fractional CFO. Not only did this dramatically increase our financial intelligence, but it also kept us accountable to someone to maintain high reporting standards and put profitability first. Looking back, this relationship was actually a stroke of good luck. A forward-thinking CPA down the street from our office pitched us on the idea and frankly we had everything to gain, so we took him up on it. 

While Fractional Execs have been around for quite some time, I have noticed a large bubbling of this recently in the IT Channel, primarily directed at MSPs. In this article, I’d like to take a shot at describing what this model looks like, why this trend may be happening, and what MSPs should look for when evaluating a Fractional Exec. for their business. 

Defining The Model 

Consulting in B2B takes a lot of different shapes and forms and it can be easy to misunderstand exactly what type of engagement you are entering into as an MSP. In terms of a Fractional Exec., there are a few defining qualities that I look for. They are as as follows: 

Experienced Executive – While anyone can do work on a fractional basis, the “Executive” portion of the title is actually what matters. Ideally the individual has served as a Founder, CEO, CFO, CIO, COO, CSO, CTO, CRO or CMO at some point in their career. If they haven’t, that’s not to say that they are not capable of the work but I would just be wary of whether or not they are leading you in the right direction. 

Independent Contractor – Most Fractional Executives are independent contractors and are not on your payroll. If they are just a part-time employee (that may be half-retired) and they do not also serve other businesses in the same capacity, then I would not necessarily define them as a Fractional Executive. 

Limited Client Base – While Fractionals should have at least two clients, they also probably shouldn’t have more than eight. There is a similar one-to-many consulting / coaching model that scales well beyond this. I would call that the “Virtual Executive” model. For example, when an MSP acts as a vCIO, they are not a Fractional Executive in my opinion. 

An M&A Byproduct

As I wrapped my head around what the Fractional Executive model actually consists of, I also tried to understand where the supply of these individuals is coming from. At first glance, it would seem that this is essentially a byproduct of the recent frothiness in the MSP M&A market. A lot of the Fractional Execs that I have run into over the last few years have been Owners or C-Suiters that experienced a Private Equity exit and are now looking to leverage that experience to help others do the same. While I don’t necessarily root for consolidation, I think this is a great benefit. Keeping these individuals in the IT Industry and distributing their wisdom and experience on a multiple-to-one basis will only make the MSP market better. 

Characteristics To Look For 

Now that we’ve got a good understanding of what this model is and who these individuals are, let’s dig into some of the characteristics to look for when evaluating them. To get a more rounded view, I reached out to existing and former MSPs, Consultants, and Fractionals for their opinion. Here’s what they had to say: 

Cultural Fit 

Naturally, when looking to add any new member to your team, you need to make sure that the individual has a net positive impact on your culture. As MSP Consultant Brian Hoppe explains, “While a Fractional Executive for an MSP should have a proven track record and ability to get results in a shorter time frame, it’s incredibly important for the executive to be a culture fit. They must be bought in and aligned with the vision of the leadership team. In addition, they should be able to immediately integrate with the team on the level of core values and be in solid alignment with the culture so that they can hit the ground running.”

While sometimes friction is necessary to right the ship and put your company in the right direction, you need to make sure that the team has bought into that vision to begin with. If they see the Fractional as an “Outsider” that is coming in to crash the party, then there is a chance that the integration of this individual may fail. That is unless the “party” is the problem that they are there to help fix. 

Relevant Experience 

I recently read Ben Horowitz’s book “The Hard Thing About Hard Things” and I thought he had a great point on how you can’t take a high-level corporate executive and stick them in a startup and expect it to work. Experience is important, but only if it’s the right experience. Mark Jordan, a former MSP Owner turned Fractional COO echoed a similar sentiment as he describes how MSPs should assess the place they are at and find someone that knows how to get from there, to the next stop on their journey. 

“You should look for a Fractional Executive that has experience in achieving the desired result you are looking for. If you are a small business trying to break $5 or $10M in revenue you want to hire a fractional executive (COO in this case), that has successfully scaled and grown a small business like that. If your greatest need is for someone to lead and manage a sales team, make sure the fractional CSO you hire has successfully led and managed sales teams. Seems obvious but as a busy entrepreneur, you often don’t have the time to coach someone up. So, experience is vital.”

Big Thinking

When you are operating an MSP, it can be difficult to see the forest through the trees sometimes. We’ve all experienced those days where mass outages, breaches, or project delays force everyone to put their heads down and focus on the tasks at hand. The more customers you have, the more days like this there are, and before you know it, you can forget to look up and see the bigger picture. Since Fractional Executives are often removed from the day-to-day, they can also positively contribute by thinking bigger than the moment and adding a fresh perspective across multiple departments.

As Joshua Davis, Founder of AspireSix explains;; “It’s critical that a Fractional Executive has the ability to look beyond their expertise and really connect the dots across different areas of the business. For example, if you’re bringing in a Fractional CMO, they should understand revenue operations as well as sales too—because marketing and sales have to work together. Too often, there’s a ‘war’ (or disconnect) between these departments. A great Fractional Executive acts more like a doctor—they come in, diagnose the bigger issues across the organization to find the good, the bad, and the ugly, and then help align everything, not just pull the levers in their own department.”

Narrow Expertise

While the ability to think big can be incredibly useful for MSPs that are earlier in their journey, those that are further along sometimes prefer the opposite. They know their weaknesses and they need a specialist to zoom in as close as they can to the problem and find a way to fix it. Dave Sagraves, Founder of MSP Growth OS shared with me his experience, as he recalled this scenario playing out several times over his 15 years of growing an MSP. 

“When I think of a Fractional Exec, I really want to consider where their 10,000 hours are. If they were an operator of an MSP, that’s great—they were either really focused on ops or really focused on sales. But to say they’re just good at everything… I don’t know if that’s a good fit for me. When I think of someone I’m going to bring in fractionally to help my business, I want to see that specific expertise.”

Ability To Listen

While there is a ton of upside to having access to leaders who have “been there, done that” there are downsides too. Sometimes if the individual is too headstrong, they may ignore the realities of the situation and only look at things through the lens of their own experience. It’s important to find a Fractional Executive that is always willing to listen first and has a good ear for problem solving. 

Kevin Hagemoser, a Fractional Integrator provided a great example of this; “Sometimes in MSP meetings, issues with clients and issues with Technicians get rolled into one compound sentence or conversation. The Fractional Ops person (or any Fractional Exec.) should be adept at parsing similar, related conversations but calling for the identification of the outcomes that would solve each of the separate issues. The danger is that one solution is proposed for what are two discrete issues, then later the team will realize they did as directed but the issue still persists.”

Trustworthiness 

The role of Executive should not be taken lightly, even if it’s on a fractional basis. Trust plays a central role, as explained by Dori Spade, President of Call To Action, “In my experience, one of the most important characteristics I would seek when hiring a Fractional Executive is trustworthiness. This is critical because in bringing a Fractional Executive into the organization, you are entrusting them with both your customers and internal teams. It’s crucial to be confident that they will consistently follow through on commitments and uphold the values of the organization.”

In today’s influencer economy, there is no shortage of people out there exaggerating their experience to find consulting opportunities. Knowing who to trust can be difficult. My advice would be to take it slow, get to know the individual and ease into it. If they’ve been around the industry for decades then chances are they’ve had staying power for a reason. If it seems they are just “bursting onto the scene” then I would proceed with caution. 

Conclusion

I am a believer in democratization on multiple levels, and this is partly why I see the Fractional Executive movement as a value-add for the industry. Industries are a lot like nation states in a way. If we want to succeed over the long term, we need to be able to keep the experienced, intelligent, and energetic people within our borders. This allows them to redistribute their wealth (knowledge) across a new generation of MSPs, many of whom are ultimately looking to chart the same path that they took.