Bill Canady on Driving Profitable Growth: A CEO’s Take on 80/20 Leadership

Mark Graban: Well, hi and welcome to today's webinar. It's part of the KaiNexus continuous improvement webinar series. I am Mark Graban, I'm your host and moderator for the session today. I'm a senior adviser with KaiNexus and I'm really thrilled to be hosting this session today. It's titled "Ask the CEO." We are joined by Bill Canady to talk about whatever you would like to talk about, but things, questions you have related to themes on profitable growth, 80/20 leadership, the future of lean, or whatever else you would like to ask.

So, I'll introduce him more formally in a minute, but our guest Bill Canady is the CEO of Arrowhead Engineered Products and he's the chairman of OTC Industrial Technologies.

About KaiNexus, if this is your first time attending one of our webinars, welcome. If you're a regular attendee of course, welcome back. KaiNexus is an enterprise platform that's designed to drive continuous improvement and operational excellence and transformation across organizations. So, if you'd like to learn more about KaiNexus, please visit our website at www.kainexus.com.

So again, let me introduce our guest today Bill Canady. He's someone who's been leading companies to profitable growth for over 30 years. Again, he's currently the CEO of Arrowhead Engineered Products and he's the chairman of OTC Industrial Technologies and under his leadership OTC scaled to over a billion dollars in annual revenue with a 78% increase in earnings along the way. So Bill brings to us today and in general a unique blend of vision and execution. He's built what he calls the profitable growth operating system, so we'll have a chance to talk about that today if you like. That's a real world framework that helps align teams and drive sustained improvement. Bill is also the author of the book The 80/20 CEO and his second book is coming out later this month, it's titled From Panic to Profit.

On top of all that, Bill is a Navy veteran, he is a cum laude graduate of Elmhurst University, and he earned his MBA from the University of Chicago Booth School of Business.

So, with that, let's go ahead and and jump in to the questions. Again, Bill thank you thank you so much for your time and and for joining us here today just open-ended question get the conversation going, how are you today and this week?

Bill Canady: Oh my gosh, I'm doing so great, you know. You and I were talking earlier before the the uh before we kicked off and we both just got back from Australia, so I'm doing great, I've recovered from that, I got over my cold I think I caught on the plane, I told my wife I said I think I might be patient zero if I'm not careful. So, we uh doing great. It's wonderful to be on here and I I can't thank you enough and I'm looking at all the names roll through where everyone's from, so we got a lot of Iowa City and a couple Iowa people here and one from Norway, so we're we're global my friend.

Mark Graban: Yes, international crowd here today and and I know you have a lot to to share that'll help people in different locations and and different industries.

Um, one question I wanted to start off with and then there's a follow-up question that was submitted in advance on the topic going back to the title of your first book, um, if you would give us an overview of 80/20 leadership and what that means to you and the businesses that you lead?

Bill Canady: Yeah, thank you so much. That's a it's a it's really kind of the core of the whole whole piece, right? So at the end of the day when when you get your your first role or maybe you've had multiple roles being a CEO, you show up, you ask yourself what am I going to be doing, what where do I start at? And what we always suggest is you got to start with the data. You got to take and look at the facts and figures and we think of 80/20 is kind of the brains of the system. And what I mean by that is if you look at the data, you figure out where you're making money and where you're not. Now this is going to be really complex: go do more things that make money and do less things that don't make money. And then that's when you start rolling out all the great tools, whether it's lean or continuous improvement. You know if you have a factory that's not doing well the first questions you should ask yourself should I even be in this factory, once you know you should that's when you bring lean and other tools to bear to make it so it can be the very best it can be.

Mark Graban: So, there's strategic decisions about what product lines or what business areas, I mean, th those high level strategic decisions first, it seems?

Bill Canady: Absolutely. You know, as a CEO my goal my my job, the thing I own is what is our actual goal, where are we going, right? Typically I'm in private equity and as you said I'm involved with with several companies and a couple of them I have leadership roles in. We try to determine what is it that what does good look like and for us in private equity it's a thing we call mo or multiple on invested cash, so for every dollar that the private equity sticks into into it we're looking for three times back, right? What that does for us is it gives us clarity of how big the prize is, so if you're at a hundred million, let's just say what whatever how you you do it 100%, we're looking to get to 300%. Once we know the size of that goal that's when we start bringing things in like strategy, so how are we going to get there, what tools and processes we're going to go use from it? So it's critical for my role to determine what that goal is and then the team's goal is to figure out the strategy of getting us there.

So, we had a question that was submitted in advance by Kurt who asked, "Where is 80/20 leadership most effective and which areas of the business is it less important than others?". And maybe I'll I'll tack on um you know is 80/20 leadership that kind of scales down through different levels of leadership in terms of using the Pareto principle or 80/20 thinking to to prioritize things?

Bill Canady: Yeah, so I don't know that there's one one spot that's more effective than the other. We we really try to roll it across the whole company. So we try to make oursel data driven and which is really what 80/20 is all about, call call it whatever you want but it uh you want your company speaking a common language with a common goal in it and the fewer goals you have the better off you're going to be. It's hard to do a thousand things, you can probably move those all an inch if you can move them at all, but you can pick one or two things that are meaningful for the company, it's meaningful to achieve your goal, you can generally get those across the finish line. So we use it as a way to organize the business to understand where we're going from it. It's like being a carpenter, right, so 80/20 all these just tools you need to know the blueprint of what you're building.

And once you know that blueprint which is again starting for me for us it's around an economic return, once we know where we're going, we can build a strategy, we can design a blueprint that will get us there. We're going to use tools like 80/20 to go do it. So we're not looking for 80/20 or lean or any other tool set to be in addition, we're looking to run our business through these tools, through this framework.

Mark Graban: Yeah, so one challenge that I've seen in a lot of healthcare organizations and and that this happens in in other um companies including in manufacturing is having too many you know quote unquote top priority initiatives. And you know sometimes there there there's just great benefit that comes from trying to scale back from like at one health system, you know across the sea suite and the senior VPs there were something like 300 different projects and initiatives that were all deemed top priority by somebody and the organization had to make some choices and and kind of scale back like we got to focus. So I'm I'm I'm curious if if if you've had similar experiences or you know seeing the benefit of where scaling back and not necessarily canceling things but saying hey we got to do some of them now then we'll move on to others, has has that been part of the approach in your experience?

Bill Canady: Happens 100% of the time. And it's interesting, it's amazing how you offend people or you make them feel like they're worth less when you say, "Well, we don't want to do this project". Because they'll equate it to what their job is, well, geez if you don't like this project maybe you don't like me or maybe my department's not important to you. And so this is why when we get together as a team, when we start out and we determine where we're going, what our goal is, what destination, what good really looks like, we ask ourselves as we go around the table what is the strategy that we need that's going to get us there and not the strategy by a group, so not what our sales strategy is or our operations, our finance strategy, what's the strategy for the company and is it big enough and meaningful enough that it actually works for us all?

So think about what you said before, if I had for every goal that comes out of the CEO's office if you action plan that out, if any of you guys use policy deployment like the old Xmatrics and the and the uh and the action plans and the TTI if those terms resonate with you, you'll know what I mean. But but I'll try to keep it pretty simple, if I say that our goal is to get earnings, so we'll just use a percentage from 10% to 15%, that's one goal. There will be a hundred targets to improve by the time it gets just to the action and that hundred targets to improve are going to translate themsel probably across a thousand action plans if we're a company of any size at all. So if I have 10, I don't have 10 goals that is reaching the the group out there, it's a thousand times, it's 10 thou, no company can survive 10,000 and the way that we know this is we look at the names that are against it, it turns out to be all the same names doing all 10,000, right? So we try to fully staff the first one, say what's left over and then go to the second and it's no more complex than that. Keeping focus is really the key to it.

Mark Graban: Yeah, so uh another question I wanted to ask and I think it helps us kind of learn about your background and experiences, Bill, um you know how how did you come to believe that whether we call it lean or operational excellence or continuous improvement, how did you come to believe that that's so important to a business because that that seems to not be on the radar of um every CEO out there?

Bill Canady: Yeah, it's absolutely critical, right? It comes down to resources. So our process is really simple, so we start out, we look at the data, we ask oursel where are we making money where we're not and that's that's really all it is. And then we force rank that, we'll we'll put those in in quads, right? So our top quad is our best customers and our best resources, right? Once we understand that in order to to organize oursel around that number one opportunity, we don't have extra resources, we don't have buckets of money sitting around, we don't have a whole army of people we can't afford to go have, in fact we probably have too many, that's why our numbers don't look good. Our goal our job is to take the resources that are being underutilized, whether it's people, whether it's capital, whether it's factories and shift those to our top resources.

When you do that you make chaos in a business. If you shut a factory down and move all those resources, those those tools, those machines to it, they have to get laid out again. There is no better tool on the face of the earth than lean to come in, take your business and again if I'm using too many terms from order to cash, we want to lay out how it's going to flow through the business. Then we want to walk in that factory and we're very visually driven, we want to lay that factory out, so it's very common way and I'm trying to keep this at a at a reasonable level here, the only tool set that works well in it is lean. Lean's about waste reduction, it's not about variability reduction, if you're into that you might be into Six Sigma, but for us and in our manufacturing and many manufacturing today it's about redeploying resources and then laying them out properly. The best game in town to do that is lean.

Mark Graban: Yeah, and when you talk about order to cash, you go even going back to Taiichi Ohno in his books on the Toyota Production System, I'm paraphrasing but I think it's a pretty direct quote, all we're doing is reducing the amount of time that elapses between the order being placed and the cash being received. And and I think, you know, that that business flow is more, you know, it's more broadly encompassing than just thinking production flow or supply chain, like this includes business functions and and other um possible improvements that that reduce that time to cash cycle, right?

Bill Canady: Absolutely. We track we track our cash conversion cycle or CCC depending whatever you call it, but it's how long does it take us to take a dollar and get that dollar back, right, in really really simplistic terms. And the natural thing that we all do that we've done for years is we go out to what we call the concrete, right, where and we start Kaizening, we start leaning, we start doing all the things that we're going to go do. A lot of times where the real opportunity today is actually on the carpet side, right, in the office because maybe it takes a day to do a drawing, let's just say that it takes a day. There might be four or five weeks of setting time while that drawing is waiting to get done on it. Whereas for us, like I remember early in my career we would take and calculate what's the drop time, a drop complete, right? So if we were going to make a fitting, we would want that fitting to come in as a bar stock and then on the other end of it it comes out in a nice fitting in a box, it's ready to ship to someone.

It turned out that really where the waiting time was getting it through engineering, getting it through uh uh uh uh sourcing, getting all that material there, that was a target-rich environment for us. So we like to look at the entire cycle because there's huge, it's not so much the production time that does take a long time. You can start looking at SMED or single, you know, the the the the how long it takes you to change your dies, you can start looking at that but maybe you're nine minutes and you're going to take it to seven. It'd be much better if you can take that 13 weeks of waiting time for engineering to get it through there, so it turns out that'd be a whole lot more impactful for you, right? Learning that and getting people who normally don't think about continuous improvement involved makes a big difference, mhm.

Mark Graban: So one other question, you know, I'm curious because, you know, we have an opportunity to hear from, you know, a CEO here and and Bill, what's your role when when when you think about operational excellence, of all the things that you're responsible for as a CEO, how would you describe your role and, you know, think you if you're looking at other businesses other CEOs are are there things that, you know, you you wish other CEOs would do more of when it comes to continuous improvement or operational excellence or are there things that maybe sometimes they should do less of?

Bill Canady: It's an interesting question, right? So I in in my mind, we have three three basic pieces that we have to do and we got to get really good at. So the first one is determine where you're going, we talked about that earlier. The second piece is measuring and monitoring, that's regularly looking at the metrics, talking to your team, letting them report out on how it's going and then using your process, a lot of people use might use a three in one or 3A, call it whatever he is, but it's the what went wrong and what are we doing about it charts on it. The final one and I actually think this is the most important and it's the hardest one to do, you kind of got to make it a condition of employment, right? You're going to follow this process. I don't want to say you we're robots but we're going to use lean, we're going to use our talent process, we're going to use M&A, we're going to use 80/20, these are our tools and techniques. It's a condition of employment to be here that you're doing that going on with it, otherwise what happens is for us time is really money, so in private equity we come in, we're thinking on a thousand days, in a thousand days I need this company turned around, aimed in the right direction, fully functional, so I can get a return in my capital. Every day I miss that buy is going to take it's going to be a cost for us.

The only way you can make that happen is you got to get your team in there aligned around just a critical few things. It takes a strong leader to make that happen, it takes a good team about uh who are dedicated to it. We call it, we call it the the rule of three. You need a strong visionary, sometimes as a CEO, typically it is, who says this is where we're going and they're going to make sure that people follow it. The second one is the operators, the people actually have to go do the work, that's the presidents, that's the directors, that's the managers, the VPs, those are the people running the company, they need to follow the process. The third one is you need help, we call them prophets, but really what it is, you need someone who's been there done that, someone like Mark or someone that's got experience. You need to bring those experts in, make sure you adopt those processes, not just do it and go away, right? We all have that great strategy book that's still sitting on our top shelf we never did. But use those to train yourself, so you get those skill sets inside, so you can go faster. Don't try to reinvent the wheel here. Call the experts, call people like KaiNexus, they'll help you, they'll make it better for you.

Mark Graban: Well, thanks thanks Bill. We're talking about prophets, that's prophet with a ph.

Bill Canady: It is, it is. It's our little play on the word, right? Like Moses come down with like follow us, we'll show you how to get there and plus it's the word profit and we like money, so it's really those uh those two things that it's a it's our little inside joke and it's kind of it's got legs to it, well so and and again the title of Bill's new book coming out soon uh is From Panic to Profit and that's the profit with an F in the middle there, we you know, so there you go. People will check that out and I I put a link um to Bill's books on Amazon in the chat.

Um, there's a question that came in from Regina who asked um Bill, what's the best way to convince top leaders that they need lean in their efforts and that it it's not only about the immediate bottom line, but rather also an investment in um capabilities and people that will be in the long game of business success?

Bill Canady: Yeah, that is a uh, you know, it's boy, it's hard to, you what's the old saying? We can lead a horse to water but you can't make them drink. You know, if you've done this before and you've been part of it and you've seen real turnaround in businesses, you recognize that it's the consistency and proven processes that make a difference. The other thing I've learned is the world's best strategy, the world best tool, if no one follows it, it doesn't matter. You can have an average strategy with an okay team that everyone is dedicated and excited, you can change the world, right?

So when you have a leader who doesn't want to do it, all you can do to them is show them the facts and figures, right? And say, "Look, this is what this is what good looks like." There's a lot of prior art out there already. Many of you on this call today I'm sure have either been in or associated with or know where you can get those figures from. The data doesn't lie, when you have a strong process with a team that follows it, you're going to win, right? So start with that and if you can't get those folks involved, you can't get in, you might be in the wrong company, right? Because that it's going to hard it's hard to win when you're directionless and rudderless.

Mark Graban: Yeah, and um I think, you know, you're trying to engage thinking of something you said earlier, you're trying to engage everybody in improvement and I'm I'm I'm curious your thoughts on, you know, all all of the little small Kaizen improvements that can be done maybe simultaneously in combination with the bigger strategic initiatives that might be prioritized and selected based on strategy deployment or Hoshin Planning or all the different terms that people use for?

Bill Canady: That I'm I'm curious how you see those fitting together culturally. Yes, there's a couple pieces to it. So the first and I think really good leaders do this is you engage your team. My team is way smarter and there's you know many hands make light work, so I don't know it all. My job is to take and and challenge them to come up with the strategy and the tools and the processes they're going to be using in this and then hold them accountable and I do that through how we measure and monitor. So if you use bowler charts or you might have some software or whatever but you need to make sure that you're reading that, you understand and you're asking, you know, the five W's, this is basic blocking and tackling, what happened, why did it happen, what are we going to do about it and you got to get down to the root cause with this? That's the leader's job. That team, when you take that job on, it's incumbent upon you to figure out the best way to go do it.

Now we expect you to use the tools, we want to see you using a Hoshin chart, we want to see you doing Kaizens and in fact we're going to set up a meeting where you get to report out on how did that Kaizen go, what did we do, what was the result? So we ask the questions through the language and the framework that we're using because we expect to get that result back, right? At the end of the day it's about good people being empowered and letting them go do the job.

So there's a few things that we have, there's four things in fact that we use to that we think actually brings brings excitement, energy. So the first one is be data driven, right? You're not going to have all the data, you don't have to have all the data, but if you've got less than 20% you're guessing, if you got more than 80% you probably took too long and everyone else passed you. Be data driven. The second one, no surprises, fish and relatives and bad news all stink after three days, right? Make sure you keep involved what's happening, where where where is it going, right uh uh with it? And then this one I think which is probably the most important is results matter. We will not be a best efforts company, right? We will not be a best efforts company. We have to have some wins. Now maybe 300 in baseball get you to the Hall of Fame, here we need to bat 700 to 800. We got to win more than we lose because we're in the process of selling, uh, you know something, uh, you know, with it.

And then the final one is progress not perfection. It's okay if you didn't get it right and try not to make the same mistake twice, but let's keep moving forward. I think that's really one that we took from the Japanese more than anything else and those of you of a certain age may remember when the Honda Civic came over, it wasn't very much of a car, but look at that thing today. They didn't get there all at once, you know, they got that mirror right, then they got that air vent right and then there that little knob went on there and they they learned it and they continue to make cars that people can rely on and be excited about, energized and they go tens of th hundreds of thousands of miles. Just look at the Toyota Tacoma. That's the game we're in, right? It's continuous improvement little steps every day out there.

Mark Graban: Yeah, yeah, I think, you know, those Japanese imports at the time and now a lot of them are built here in the US, but yeah, I mean, they had the reliability but then, you know, some of the other um nice features, the other dimensions of quality, you know, the the styling, the look and feel, lots and lots of improvements um over over time.

Um another question came in and I think this kind of prompted by the previous question about different modes of improvement uh so Emily asked "How do you move an organization's improvement strategy from doing large improvement projects like Kaizen events or sprints to doing um true continuous improvements through small incremental improvements every day? Do you believe there needs to be space for both of these to coexist?".

Bill Canady: 100%. These rapid improvement events, call them whatever you want but instead of it being a three-day or a four week, maybe it's just something we did before lunch, right? We don't have to get so formal with it. I think it starts right with leadership. One of the most empowerful things we use is daily management. Every day we're going to stand up in front of a board, ask ourselves what's going on and it's not me talking, it's like it's the people living with it, right? They get, they talk safety, quality, delivery, cost, plus whatever else is going on. What's the thing that didn't work before, we want to find that early, solve that problem that day and come up with a permanent solution, right? So these little rapid events is really how you make the difference, right? It's really how you get continuous improvement day in and day out. It's it's about a mindset. It's the same way with safety, right? You start out and you're like, okay, let's not you know, let's not do any terrible damage, crush people, hurt people, but then we start looking at near misses, right, like things that could have happened.

Same way here in continuous improvement, as you get more mature and as you do you do that big lay uh you know relay out of your line, the next thing is maybe your bins are not in the right place, maybe we should be using a light curtain, maybe there's a thing that we can be doing with air, there's all these different things we can do. It takes the people on the line who are living with it every day raising their hand and saying I want to go do that. Now I recognize it takes the right kind of culture where people are comfortable doing it, they can raise their hand and they're heard when they're doing it, right? But it starts with each one of us, let's raise our hand, see what happens, you might be improved, you might be surprised.

Mark Graban: Yeah, um, there was a question that came in from Michelle, you talk about learning from mistakes and and some the question disappeared but going off memory here Michelle, maybe re-enter that if I don't have this quite right, but Michelle asked an interesting question of are there mistakes that you've seen, oh here we go, "What's one mistake you see leaders make when trying to drive cultural transformation through lean or the 80/20 leadership approach?".

Bill Canady: I think there's several. The first one is making it like some forced death march, right? Hey, I know all the answers and you're going to do it this way, I'm going to fire you, right? That will not work. I said before you made it a condition of employment but that doesn't mean it has to be painful, it just means people got to start doing the stuff, right? Starts at the very top, you know, you won't need titles, I saw a question come in about what about members titles don't mean anything. I get out there and do Kaizens, my badge doesn't say Bill CEO, it just says Bill, right? Now I'm not foolish, I know they know who I am and things like that but I help move and sweep up the floor like everyone else. It's us getting in there and using the philosophy of many hands make light work. So first of all, ask them, second of all, let them go try it, so listen to what people have to say, then encourage them to do it and guess what, they're going to move that ball forward probably faster and quicker uh and in a more meaningful way than I would have done because they're living with it every day. And you praise them and you thank them, you reward them, whatever you can. Sometimes it's a pizza party, sometimes it's an attaboy, sometimes it's capital, right, there's there's resources that go into it, whatever it is, but it's that listening and learning and leveraging what you learn together is really where people want to win. People want to be part of a winning team. Let them go show you what they can do.

Mark Graban: Yeah, well, and I think it's great when you talk about, um, you know, need needing to win, you're not setting, I don't hear you setting the bar on improvement wins, if you will, at 100% success rate. You know what what what are your thoughts of when somebody has an idea, a concept, they they they implement it and the prediction of success turns out to be a little bit incorrect, we we tried something that we thought was going to work and it was a quote unquote failure, um, what what what are some keys for leaders, you know, kind of reacting to situations like that and helping people through that kind of situation in a way that's best for the business?

Bill Canady: Yeah, I think it was Thomas Edison said something to the when he was trying to do the light bulb, he had failed 10,000 times, it didn't work, right? And he was being interviewed and the reporter reminded, he goes, "I didn't fail, it's not just move 10,000 things that didn't you know out of the way, now I can you know get down to it". It's the same thing here with us, right? You should expect that, you should encourage it, right? And there's all sorts of different types of failures, right? We try to do small pilot projects, so we don't want to bet the farm if we're wrong. We try to take and do it in one small section of the factory before we shut the whole thing down, right? So you know, some common sense is going to help go a long ways. Take a take a small line that's kind of out of the way and try your new idea on. Expect it to fail, but you should expect to get learnings out of this and you should be able to take those learnings, apply it to the next one so you can go faster and and whip and and and and really be impactful on it. Your failure will typically, even if it doesn't go right, will be such a powerful learning tool and if you've got the right people in the room, it's a game changer a lot of times, right? You prove out some theories, you're able to say, "Well, we don't want to do that". And almost in every case, you learn something that doesn't improve whatever you're already doing.

Mark Graban: Yeah, yeah, and I I love that emphasis on on on celebrating or at least embracing the learning, um, because I I mean I think if if a leader were demanding a 100% success rate people would get very cautious in you, there's a related thought, um, I forget who to credit this to, um, if you know the outcome of the experiment with certainty, it's not really an experiment.

Bill Canady: It's not an experiment. The other thing, if you set activity based, I remember early in my career I was in a company and we had to do so many Kaizens, so guess what, people went out and did so many Kaizens, they were absolutely useless, right? Just was to hit the quota, to hit the target.

Mark Graban: Just to hit the quota, right?

Bill Canady: Right. It wasn't and so you got to move away from activity based, you got to move away from if you're not 100% is a failure, because then they'll only pick projects they know they can win at. Nothing's going to be really change from it. And then they and then they will only do what I call as if or performer projects, they go and we didn't actually do this, because I I participate in some of those. We laid it all out, we presented it to leadership and said, "If we'd have done this, we'd have saved $50,000" and everyone's happy, right? So those are not useful, right? Go with, we got a problem, let's put a team on it. You have to decide how big, how far, how fast, given whatever the situation is from it and let them go try and then document that and then afterwards have a post-mortem that said, "Well, what did we learn and how do we use that?". And I I have never done one yet that did not improve something that we were already doing. Sometimes it's a giant leap and boy we're celebrating, but I find it's the old joke about being, it took me 20 years to be an overnight success. It's a rare one that you crush it right out of the gate. Many times it's the culmination of all the things you've done before and finally you get to go execute it.

Mark Graban: So, there's a question that came in from Paul, "What's your opinion of training an in-house continuous improvement group for projects versus hiring an outside group, one of the big consulting firms, um to work within a large company?".

Bill Canady: I've done both and I've had success with both. Long-term if you're going to win, you've got to have your own resources inside, right? I like to have a few resources across all the businesses and then bring them together to do projects and so then they can take that back to their businesses versus having massive groups. And I don't like to have them at the center, in other words, I don't want them to be corporate led at the center. You might have the person in charge or one of the be but the people need to be in the business every day. I'm a huge fan of using consultants to come in and teach us something we don't know how to do, but we need to embrace that, own that and go do it. So first of all, don't re don't recreate as I said before, there's a lot of really smart, whether it's 80/20 or lean or finance or M&A or T, there's a lot of great brilliant programs. Use that and bring it in, make it your own, embed it in part of your culture, make it how you do your business. It's a game changer to them, takes a little while though and it does take some investment.

Mark Graban: Yeah, yeah, um Bill, I want to ask, I think there's two follow-up questions related to, you know, lean as a condition of employment. Um one one question is, what advice do you have for CI leaders and organizations where the culture isn't there yet, you know, where maybe people feel like, uh, I mean, we we don't have to do this, it's optional, they're just not doing it at all or thinking about it even?

Bill Canady: Well, I think there's a couple things that have to happen. So if you're the CI leader, the first thing you got to do is get your plan together, right? You need to listen to leadership, figure out where they're all going, then take your plan and say this plan will get us there. Then you need to ask for buy in. If you cannot get buy in at the top, it will not matter, right? If that if the people are not walking the walk and talking, you know, they're going to talk to talk but if they're not walking it, it's almost guaranteed to be at best mediocrity, right? So it's okay to come into a bad culture, in fact, it's almost preferable to come into one because a culture that is failing is looking for leadership and looking for win. So don't don't think coming into a successful culture is going to make it easier, in fact, a successful company is much harder to rule and run and grow because they think they already know what they're doing. But if you come in one that has a lot of opportunity and you have people that have a good culture who are going to listen and want to be part of it and you can bring your skill set, you have a home run on your hands and it's going to get there quick because they want to listen and they want to make it better, right? Just my experience.

Mark Graban: Yeah, and I I think the second follow-up question around lean is a condition of employment, let's say you've acquired a company, there's culture problems, there's leadership problems, like how how do you find the balance between trying to coach leaders up versus deciding we need to manage them out?

Bill Canady: That is the, that is the hardest part of my job, the most challenging piece and it's the one that uh makes all the difference in the company. So when I come in and I'm just going to say I take it from day one, I have four steps I go through. First is get the goal, that's me and the CFO and the board figuring out what good looks like from a financial standpoint, what how much money do we have, how far we got to get there by when. The second thing is I take that goal to my team and we're going to build the strategy and they're going to own that strategy. For me it's super important that the team owns the strategy because if it's my strategy, they're going to say, "Well, I told you it would never work to begin with" and uh they don't feel ownership, so they've got to own it for all the right reasons.

The third step, and I can do this in a 100 days, doesn't have to be a 100 days, but the third step that we get to is now we're going to organize the company around that strategy. This is where people start showing, are they in bought in or not? Up until this, it's all talk, right? We've talked about where we're going, we've talked about our plans. Step three, we start taking action, we start organizing the company to do it, we start cancelling projects, we start putting more resources on the big project. People will show themselves to either be blockers or leaders at that point, right? It's not about getting things perfect, it's not about even being close about it, but that leader is going to say, "This is my strategy." I say, "That's great, how are you going to organize yourself?". The ones who really believe and do it start right away. If they don't, this is where it becomes a condition employment for me. I look at them, I talk to them, I do everything I can, if they can't get there either because they don't want to or they don't know how or they're incapable and they're not going to move, that person is going to leave the role for sure, leave the role, most likely leave the company. So somewhere in that third step, and for me it's about 90 to 120 days after I start, we will start seeing leadership change within the organization. And I'm very clear about it and I and if I don't do it, we will never get the company aligned, it'll never happen.

Mark Graban: Yeah, there's a question from Michelle, I think is a good follow-up um to what you said there Bill, "What leadership mindset shifts do you believe are essential for lean to stay effective in the next generation of organizations or even is that different than what's necessary in today's organizations?".

Bill Canady: Yeah, I don't know if it's different or not, but I see a couple really keys. One is a spirit of continuous learning, right? Lean is all about, you got to go change something, right? There's a way to make this better and you have to have people who have the energy, the drive, the desire, the curiosity to figure out what better is. You've got to dedicate time to it, they got to train people on how to do just the process and then they got to be willing to spend the money to get in there and go do it. They need to do it themselves as well, right? So it's that type of mind shift to do it. If you think you're doing everything perfect or you just don't have the will to go to it, you you will, it's not just lean, you're not going to do anything. Prepare for failure on that, right? Because you really don't have a choice, you can either go forward or you can stay behind. Let's just take the world today, the world is as crazy as it's ever been. There's always been good times and bad, we're in whatever we are right this second, whether you like it or not, there are things going on around the world that is are affecting us, we have to change in order to do it. So for us that is a huge impact on our supply chain and we're starting to ask ourel, well we're getting it from here, can we get it from somewhere else? The amount of change that it takes to move a product not just from a to a different vendor, but across the world, maybe it's language differences, maybe the codes are different, maybe I got to have different certifica, all this stuff is exhausting. Not everyone's going to want to go do that. So it's that continuous learning and then the ability to get in there and make something happen that makes all the That's really that lean mindset.

So, um, there's another question here, I think might be helpful, we have a lot of, you know, people in the audience who might describe themselves as um continuous improvement professionals. What advice would you give a CI professional who wants to move into broader operations or P&L responsibility someday?

Bill Canady: You know, we find I find that CI professionals are the absolutely perfect operational piece. They don't all want to do it, but they will know the business better than anyone else, right? They know where the factories are, they know how they're laid out, they know what's working, what's not working and what is operations other than just running the company, right? So that is the absolute core for it. Now since you know all that, then you have to ask yourself, are you set up to go do the next piece? And you'll see this in in uh in continuous improvement people, some people are very focused on being a subject matter expert, that's what they are, they come in, they do that piece and they move on. Other ones are a little more expansive. You will have the opportunity, just by virtue of what you're doing, you're going to be in front of the CEO, you're going to be in front of the segment leaders, the business unit leaders, you will get to see them all. There is no better role to showcase what your skill set is than a CI professional. So with that, then you just got to decide what it is you want to go do next, right? It's a little harder sometimes to go over into sales because generally it's a, sometimes it's a personality, but mainly it's because they already see you as being an operational effectiveness, right? If you want to be in sales, you want to get something that's outside of operations, try to get them to start doing CI on it. Sales could use more CI than anyone else. Go in there, become the expert in that function, that's how you get the next role.

Um, let's see, there's so many, I'm trying to think how to sequence questions, there's probably no one best way to sequence them, so, um, you, I'm going to go back to maybe if you can elaborate on um lean within sales. So Stephen had submitted a question in advance, you've touched on this a little bit um when you were talking about carpet land as as you and and people tend to call it um but Stephen asked "What's been your favorite or most impactful implementation of lean for office work?". I don't know if that's a sales example or or even something else from the land of carpets.

Bill Canady: Yeah, yeah, it's a great question. Well, there's a couple things to think about and it's really we've done it across all of them. From a sales side, you know, there's this black art piece to it that's always mystical and mystifying probably even to the sales people themselves, right? Where you really have your impact is getting them to get the information from the customer back into the company. A lot of times that's around CRM and all that. You have to come up with tools that are simple and easy and they can do it on the on the run. Laying out that process, using a Kaizen on is about the only way you can get there. Sales people typically never think about doing it that way, right? They know what they're doing is not working, they come out of the customer, they get in their car, they drive, I'm talking about an outside salesperson. By the time they get back to their office, they've forgotten whatever has be, so sometimes they can write it down but if maybe you can create an app, maybe there's a website, maybe there's a certain form, there's all these types of things that a that a continuous improvement mindset on them will will absolutely have a huge impact for them.

Now that's one, probably the most impactful thing I've ever seen in carpet land as you call it Mark, I love that term, is around engineering and looking at the intake around new products that customers are wanting, right? Constantly that salesperson comes back in and says, "Oh, I went and saw my customer, boy, they've got this product they want to do, let me just tell you all about it". You have to decide if that product is worthy of your time. Sometimes it's just a salesman trying to figure out something to sell, which is not a bad thing, but just because he can sell it doesn't mean we want to make it, right? Doesn't mean we can make money on it. Having a filter that that has to go through, a lens that looks at is so critical. Engineering needs to have a way of pushing back and not to say no but to create a hurdle so you're not bringing in all this extraneous noise which has its own issues with it as well. Continuous improvement will have a master effect on that.

I'll give you one really easy example. So we had one engineering team that everything would come through and it was the design team that was kind of the front uh load piece of it. What we wound up doing was we looked was we really had big projects and then small projects, I'm using very simple terms. On the small projects, it was simple design changes, it was parts, it was some things like that with it. The big project was a true NPI, a new product introduction, right? We split those up. We redesigned how engineering was taking, we redesigned the filter on both sides of that. What that did was it allowed us to get more of that daily business in, which is really what most of our customers were looking for and as opposed to clogging everything up with the one random NPI project that came in. And it put the right hurdles because they're very different, the size is very different, the impact on the organization is very different. Laying that out allowed us to grow our business in a much more meaningful way and it made our customers happy.

Mark Graban: Yeah, um another question kind of related to maybe, you know, culture and and leadership styles uh Morrison uh submitted this question um empathy is often seen as a hallmark of great leadership yet research suggests that overall empathy levels may be declining. Um do you do you agree with this or do you see this trend impacting leaders ability to drive change and and transformation efforts?

Bill Canady: I agree with both of those statements, right? Empathy is more people want to feel like they're heard and heard in a in a meaningful way and people every day get more jaded, right? We just watch the news, we It's like a tidal wave of stuff coming at us, we hear, particularly if you're in a big organization, you you just hear so much stuff coming at you, after a while you just start tuning it out. But the person who can keep in front of them, keep their humanity while still doing the right thing from the company side has a special gift and can really lead the organization to great heights and do tremendous things for their for for for themselves, their people and their company. So so yeah, people empathy is absolutely critical and I'll give you an example of what I'm talking about weaving through. So as a CEO, there's nothing more than I want to do than take care of that individual. I I do town halls all the time, I do them in person, I do them online, things just like this and at the end and the majority of it's Q&A like what we're doing right here. And I'll get a I'll get a question and this I'll I this is not quite made up but it's close enough, you know, we were in one a woman stands up and goes, "You have, we have terrible insurance, right?". And she she went on to relate the story that she had a sick child and it was going to be devastating for them. There's absolutely nothing I wanted at that moment than to go take care of her and help her in any way possible, right? But at the same time I've got an obligation to almost 10,000 other employees out there to make sure that I have the right benefit package that everyone can afford that gives meaningful resources to them and things like, because I can put together an insurance package that'll take care of everything, no one can afford to buy it, right? I can have one that everyone's really happy with, but they are mad about it as soon as anything goes wrong.

So as the leader, I have to navigate that way through that and how do you do it? Well, you know, you rely on experts, they'll tell you what the stat statistics are, you look at the population of your own company and you start saying, "Well, where are we, what is it?" You know, sometimes you're in kind of a bulge situation where it all the needs are being taken up by by people in the middle of your population. Other times you're a barbell where it's on the end like you've got an older and a younger population, so you have to know what you have and you have to design it from that. At the end of the day, it's got to be meaningful and impactful and at the same time affordable for everyone in there. It's hard to do that and it's hard to sit up there and listen to people tell you things like that and um, you know, you care deeply and you want to do the right thing. So being that leader and dealing with it, I think is being able to listen to it, do the best you can and still be able to go home at night and live with yourself.

Mark Graban: Yeah, um, let's see, we've got um couple really good questions that um, so a question from Raza um what role do you see AI playing in either supporting lean or maybe more broadly, I mean, you know, for for being an industrial company, what what what things are are you thinking about or or looking at in terms of uh AI and and helping the business more broadly?

Bill Canady: Yeah, I think uh AI is extraordinary and going to be extraordinary beneficial to us and I'm just going to go back and make an example, it's like computers, right? We didn't want to do computers, they came in, what were we going to do with it? Can you imagine running your business today without having you know an ERP or you know, or or some type of software that you're using? Using for AI is the same thing, right? In and of itself it's meaningless for us in in business, but everything from helping you write a letter that maybe used to take a a half a day to put together to now you can you can have it write one for you. You better read it and make sure it fits what you're looking for, you're going to have to clean it up, but it does the extraordinarily great job of defeating the white page. Same thing in what used to be copy for marketing and and websites and all that. All that stuff has gone from from you having to be a super expert, you can take you know, in the in the back in the history, you'd have your engineering person who truly understood the product and you'd have your marketing person who truly understood how to go sell it, but neither one knew how the other and it was translating that through it. Today AI can help both sides. You can you can train that agent, uh, that GPT by loading with information and then you can ask it those questions and then both sides can look at it and say, "Hey, is this good for us?".

I think that's true across all groups. Everything we're doing. I can take a massive set of data in an Excel chart, upload it into a chatbot, ask it a few questions and it will go through in seconds or less and absolutely give me what I asked of it from it. Is it perfect? Is it no? Of Of course not. So it's helping us shorten the cycle and do it at a lower cost uh uh price point. Now there's two outcomes of that, certain people are going to be like first of all, it's going to take my job, either I don't want to learn the new stuff or I'm the person over there writing that copy today, where am I going to go? I think it's going to go just back like it was with the computer, it didn't take people's jobs, it forced us to upskill oursel, learn new pieces. You didn't have to do it, right, but you did do it, right? I you know today when I started my career, this is how old I am, you used to call your secretary and they'd come in and they would do dictation or you'd speak into a little recorder and the tape would come in. Your secretary or your assistant or the letter pool, whoever it was would put that letter. Today we do it ourselves, right? And assistants, the job has expanded, became more powerful, they're doing event planning, they're doing coordination, travel and all that. It's uplifted it. It's the same thing here, it's something that's going to make us all better as all of us better than we were. Not only is it in things like I said marketing, we use it in manufacturing. We can look at today, we can have a lens, a camera focus on whatever it is we're making and AI, we train it and it will say, "Is that meeting specifications, not" and it can do it in a blink of an eye. It can look at more faster and give better results than what was doing it before, right? So it is making us all better on us, it make s us have to upskill ourselves, get comfortable, learn what it was, just like we did with cell phones and fax machines and computers and now we're in AI, right? I can't wait to see what comes next.

Mark Graban: Yeah, there's another um really good question here um might be hard to answer because I I don't know if you've, let's say for example ever been on the board um of a health system, but another question about health care and and maybe it prompts other thoughts from from your perspective. You mentioned insurance and benefits and how that um can can pressure a business or employees. The the the question as it came in, "In what ways do you think lean principles could drive large-scale transformation across health care particularly in addressing inefficiencies, costs and disparities?".

Bill Canady: I have been on the board of hospitals. I was on I was involved with University Hospitals in Cleveland, I was on the AHOUA board there for him, so I'm very familiar with it and uh it was something we actually talked about all the time, right? Or was around lean inefficiencies uh from it. You if you look at the cost of what all this crazy stuff is costing us, you would think they're rolling in money, they are not rolling in, it's just the opposite and a lot of us dealing with horrible efficiencies around it. So my daughter's a dentist, I sit on the board, I have friends that are doctors. They take one minute in front of a patient and that one minute, now I'm not sure exactly sure what the ratio for each one is, translates into an hour's worth of of charting for them, right? So they'll spend five minutes or 10 minutes with a patient, we've all experienced it. Then they're going to spend, they'll spend 20% of their day, 10% of their day with their with their customers and then the remaining 80 to 90% is documenting everything, right? Imagine the amount of lean that opportunities that are available in a system that is that skewed to measuring and monitoring things. Imagine the opportunities, imagine what AI can do with that. It takes a combination of technology, it takes a combination of AI to go through and look at these things and then get those notes on there and get it in a way that can be followed up with it. Because it's all about patient records, it's how they get paid, it's how we make sure we're not giving too many drugs to one patient, we're not going to hurt them and we have to do this through a veil of secrecy. We have HIPAA laws that protects people's rights to privacy off of it. It is a huge load. Hospitals are begging for this type of stuff. Now they may not know it's called lean, they may not have been on a factory floor, but if you walk in there as a CI, if you can understand that world, right? Dealing with HIPAA, dealing with human emotions, we talked about empathy, dealing with all of that and with doctors who are working 100 plus hours a week, it is an opportunity, right, for help? But it is a hard place to go and make those changes because you get something wrong, someone dies, it makes people very cautious.

Mark Graban: Yeah, no, it's interesting you make that connection, it's interesting those two questions came in together. Um, I I very recently as a patient signed an authorization for a healthcare provider to have the visit be recorded and an AI tool is going to write the first draft of the visit notes and, you know, that healthcare provider of course is going to review it, but that takes less time than than writing it from scratch. And we think about, well, what's really value adding and and this provider was excited, um she said I can see a couple more patients per day.

Bill Canady: Not that and and and that's fulfilling, right? It's it's not, you know, it's just that's what they went to school for, not to do paperwork, right, to to help patients.

Mark Graban: So, you know, back to your theme of um AI helping us in instead of um completely replacing us, um maybe we have, we have time for um there's two more questions. We'll we'll wrap up by the top of the hour. Um one question, um looking back what do you wish more CI professionals understood about the CEO's perspective?



Bill Canady: You know, that's a that's a really really great question. It's one of the things I try to do all the time and I see is put myself in someone else's shoes. What are they trying to do, right? When I look at the board, when I look at investors, limited partners, I'm like what is really what what's going on? Like I think about my board and one of the things that we do is we when we have a board meeting, I like to bring in other people who are in the company. One it gets to showcase the m and their talents to the board, gets to meet people within it and it really drives a connection, right? Every time I have to have a conversation with a person coming in, I say, "Listen, you may think they know everything, but they think about this company four times a year". And that four times a year probably translates into 20 hours, you do 20 hours by Tuesday, right? So remember who you're talking to and remember they probably don't understand with it.

Well, it's the same thing here with a CEO and continuous improvement. We all, I can assure you that CEO is nothing more to their motivated than to run this company efficiently, productively, keep everyone happy, have exceptional opportunities for their employees, be tremendous partners for their customers and suppliers and give a superior return to their investors. I promise you that's all they think about and continuous improvement is a huge portion of that. So when you're saying you're going, know that that person is already on your side. Now what they're looking for is for you to tell them succinctly, here's the opportunity and here's what I would do about it, right? And you need to recognize that the problem you're facing may not be the whole biggest problem in the company, right? You may be thinking about this one factor, which is super important and I promise you it is important, but their other division may be completely on fire, right? And that means that you're not going to get the machine, that means you're not going or maybe you are going to get the machine, right? So understand that there's a lot of priorities out there and this is how we started off this meeting, which was you need to get focused on it. As a CI professional, it's your job to help them understand the hand that they're playing, so they know which card to go with next. If you can come in and say, "This right here will save you a hundred million dollars," I'm just making up a number, "And their whole budget is $200 million," you just became the bell of the ball, right? They want to do nothing more than talk to you. So just keep that in mind, everyone's got an angle they're coming from.

Mark Graban: Yeah, well Bill, um thank you for for everything that you've shared, thank you to everybody for the questions and and Bill thank you for um you know sharing your answers and experiences and and guidance for us. So I want to encourage people again, um check out Bill's previous book The 80/20 CEO and his second book um coming out real soon From Panic to Profit, so you can find those on Amazon. Bill's website, I put a link to it in the chat, billcanady.com, Candy billcanady.com. And, you know, Bill, I I've appreciated getting to know you over the past year, not quite year, but having you on the podcast on my lean podcast to talk about your first book and this is kind of like a live podcast today with other people's um questions. So um I want to thank you uh for that. We're getting thank yous coming in on in in the chat. But maybe you know with the the minute or two that we have left Bill, I don't know if you have any final thought that you might want to share with the audience here before we go?


Bill Canady: You know, really just echoing what you said, I think you said it very well and I look through the list here like Resa just said thank you Resa and Lynn and everyone else that you're coming through. This is so exciting for me and such an honor to be here. It's this type of work that you're doing every day that makes the difference. It makes it makes it possible for these companies to be successful, it makes them for to grow, which means more jobs, more opportunities for each and every one of us. So, you know, you're doing as I always like to say you're doing the Lord's work out there. Keep doing it, it's important. Sometimes it feels like you're maybe echoing in the darkness, I assure you these are important jobs. So thank you all, I hope everyone has a great and wonderful day.

Mark Graban: All right, well thanks thanks again, thanks everybody for attending. Um we look forward to seeing you at future KaiNexus webinars. If you'd like to um go through the webinar library um you can go to kainexus.com/webinars. Uh we don't have any future webinars to announce yet but we we aim to do these every month so please stay tuned, we'll email you about um future webinars. Um Bill, thanks thanks again so much.

Bill Canady: Thank you, have a great day.

Mark Graban: Thanks.