Leveraging the 80/20 Rule to Become an Effective Leader: Bill Canady on The Business of Government Hour

This is the business of government hour, a conversation about leadership and management with government executives and thought leaders who are truly changing the way government does business. Welcome to a special edition of the business of government hour, a conversation with authors. I'm Michael Keegan, your host and leadership fellow at the IBM Center for the Business of Government. How can leaders replace uncertainty with insight? How can they zero up experiment help leaders eliminate complexity and figure out how to allocate resources and what two types of thinking are necessary for building a new path forward. I'll explore these questions and so much more with my very special guest Bill Canady, author of From Panic to Profit. Bill, welcome to the show. It's great to have you.

Well, it's great to be here, Michael. Thank you so much.

So, your book, From Panic to Profit, focuses on uncovering value and boosting revenue using the 80/20 principle. Uh, Bill, can you explain how this principle applies to business and even possibly the government sector.

Yeah, absolutely. You know, this this book, which is the second one that I put out on this, is really about someone coming in and they have to turn a business around. They they have some issue. This book walks you step by step the steps that you need to take and then what you're going to expect out of that and how and how you get through it with you and your team. And when you look at this through the lens of government, I mean, just look at where we're living at today, right? So much is going on. We got new min ation. There's things going around the world, be it wars or whatever. What is a better situation coming in and getting your team aligned around what it takes to be successful? Whether you're in the government, where you're in a specific job, or where you're just trying to make your lives better.

Bill, what inspired you uh to write this book? And and and how does your personal experience shape the strategies that you present in the book?

Yeah, that's a that's a great question. So, uh like most people, uh I go back and I was, you know, during the pandemic, I was trying to figure out what I was going to do next. I always wanted to write a book and and I started thinking about had time on my hands and I started pulling together the information and over a lifetime a career of uh over 25 years leading businesses turning them around it really coalesced itself putting together from panic to profit and I took that time I mapped out where I was going with it and it's really turned out to be just such a a wonderful journey for me and and the folks folks I work with every day.

So Bill the 80/20 principle is a foundational concept in your book. Um, how does it help leaders cut through complexity and focus on what truly matters?

You know, it's interesting. So, I always like to take it from day zero. You just got the job and uh and you got to go figure out what to do. How do you decide? How do you decide what to go do next? Right? And when you walk through that door, you're going to have every opinion that you can possibly get from from all the folks around you. Some are going to say it's this and some are going to say it's that. Some where it was the people who came before us. But the reality is it's in the data. And what 80/20 does is it drives us right into who's our best customers, our best products. It's irrefutable, right? You look at the data and you know this is where I'm making my money. And more importantly, this is where I'm not. And when you come in and you get that job, you get that big job, you got to figure out what you're going to go do. Starting with the data, that's where you want to go. And from that, once you know where you're not making money, you can quit doing that. I mean, it sounds so simple. I guess everything's simple to the person that doesn't have to do it. But you can you can absolutely quit doing that or change the way you're doing that just by stopping. You put more more money in your pocket. You put more money in the company. You start freeing people up to go actually focus on the things that are working. So, you have the data, you can share it with your team, you can talk about what are we going to do about it, and that's where your strategy comes from.

That's a great point because, you know, folks are just in a lot of um institutions or or businesses uh there's a lot of people being set in their ways and you know many organizations focusing on growth at any cost. Um I'm wondering Bill, how does the 80/20 principle shift the focus towards what you kind of hinting at earlier a more sustainable and in some cases profit or missiondriven decision-m?

Yeah, it's uh it's interesting how how it actually kind of plays itself out. So if you if you from the day that you start from the moment that you want to go with this, you pull your data, you can actually get your data uh generally within a few days, sometimes even quicker depending on the system. As you segment this out and you just simply go from highest to lowest, right, where and you you think about it either on a gross margin or material margin. So in other words, you're looking at this is where I'm making my money. It'll take you generally three months to get people to agree with you because they'll look at that data and they'll go, "Yeah, but you don't understand, right? You look at this customer here. I know we're losing money, but you know, they're special. They've got something new coming out." And you hear these things on and on. on and on. So, you start with the data, you get it really quickly, then you're going to have to negotiate with your team to figure out what you're actually going to do, what you're actually going to be focused on. And what I always tell people, it's a very simple process. There's four steps you're going to go through. Step number one is you have to get a goal as the CEO, as the person in charge, that's your responsibility. You have to decide what that is. It's important to work with your team, but you also got to work with your board and other people. You pick that goal. Once you understand how big the prize is, is it will drive what you actually do with that data because if you're kind of already there maybe you don't need to change anything but if you got to go do something whether it's save the company remember even a drowning man catch an anchor right it's save the company to growing the company profitably by having that data it shows you where to go where to focus at right that's your step that you get through step number one is that

you know Bill your title of the book suggests sort of a transition from crisis to profitability And I'm just thinking about the idea of crisis or panic is the word you use. I was hoping you could elaborate on some key steps you would advise leaders to take when they're faced with a crisis like when you're turning a a company around or an organization around whether it's in business or government. What what are some of the things you would suggest a leader? Some of those steps a leader should take.

You know, it doesn't matter which you're in. Any type of group where it's you and a bunch of people that got to go figure it out. It's all about coming together getting aligned around a couple of key points and uh and going from there. So I I tell people if you're running an organization, there's four four key steps that you got to look at. I call them the four commandments, right? And these are in no particular order. So the first one is be data driven. You need to have the facts of what's going on. If you have less than 20% of the information, 20% of the data, you're simply guessing. If you have more than 80%, you've probably gone so far, you've waited so long, everyone else has passed you. But you need that data. Second point, no surprise, rises. All right, bad news. Fish and relatives all stink after 3 days. Everyone needs to know what's going on. Have open and honest communication. Right. The third one is be on pace. If you outrun everyone, you've left them behind. No one's going to follow. If you're behind everyone, you're the bottleneck. You're you're holding them back. And the final one I think is the most important, Michael, and that is results matter. We will not be a best efforts company. We have to score some points. We have to get it across the goal line. We have to have wins if we're going to keep this thing open. So with those four ideas in mind, you're coming in, you get the data, you start with the data, you put it out there, and you let people uh see it, touch it, understand what's going on, so they understand exactly what your current situation is. Now, the interesting thing is if you think of a scale of companies on one end, they're in terrible shape. They're falling apart. On the other end, they consider themselves to be significantly successful, right? They're winners. It is far easier as a leader to manage a company that's failing than the company that's that's being successful. People who are successful think they already have it figured out. They have all the they won't listen. As I said earlier, even a drowning man catch an anchor. So, if you're coming in people people want to be successful, they want to be on a winning team. They don't want to fail. And if you come in with a thoughtful, calm plan that gets everyone together and they can see where it's going, you're going to be successful just by starting with that. So, start with the data. Put it out there. Let them understand it. Let them understand where you're going. Now, remember what I said? Your first step is you have to pick the goal. And private equity typically likes a multiple on their invested cash. They call it a mo multiple on invested cash. What that means is for every dollar they put in, they want so many dollars back. So, if they put in a dollar, typical one is they want at least $3 back. A private company is typically whatever the values of the owners are. And the value of the owner may be taking care of their community. It could be looking after their employees. They could just want a bigger your boat. But the normal value driven by private companies is the dividend. The dividend is how they support themselves and their family, the the shareholders. And public companies are kind of in the middle, right? There's times they have social issues they're trying to look at and then as they get towards the end of the quarter, they need to make the number. You miss by a penny, you can your stock can tank. As the leader, it's important to understand whatever ownership values. So from a private equity, we know we have to grow to a certain amount in a certain period of time for the owners to be uh to be be happy. When you walk in and you have that number uh in your head, you have to communicate it to the team. So, we're at 50 50% of where we want to go. Our goal is to get to a hundred or 100%. How do we get there? You start with that.  Bill, what are some of the common mistakes leaders make when trying to implement the 80/20 principle in their organizations?

There's a couple that really get people in trouble. So the first is as the leader you have to set the goal that is mand it has to come from the CEO or the leader of that department. It has to be and you have to make it a condition of employment. We are going to achieve this. If you're in the government and uh and fighting a war. The goal is we have to win. If you're running a business and you have to make a certain amount of money, that's the goal. Then the next piece that once you've gone through that, so that's on the leader, your team, some are going to get on board and some will not get on board. Those who will not do it, they need to do something else. Doesn't mean they have to leave the government. Sometimes they should, but you have to have people who are willing to fall in line to go with the strategy of winning the war. Give getting health care out to people, achieving a profit whatever it is because a strategy even a poor strategy that is well executed will always win out on a wonderful perfect strategy that no one will follow. You have to have a team that will align around this is our mission. We are here to do that. It's all hands on deck to go do it. If you don't have a leader who insists this is the goal and will get clarity and allow the team to organize around it and make sure it's resourced correctly, then you're in trouble. And if you don't have a team that will organize themselves around that goal and own that goal, you're never going to achieve it. Those are your two key issues. I

I'm wondering, Bill, as we discussed, you know, could you spend a little time on um on telling us how agencies, organizations can uncover hidden value in businesses? And where I'm going with this is identify hidden inefficiencies or untapped opportunities. What is some of the insight in your book related to the 80/20 principle where you could help folks seize opportunities that maybe they don't they don't notice?

Yeah, that's uh It's really interesting. So, when I'm working with a company, whether I come in and I'm I'm running the company myself or I'm helping someone else, there's a few things that uh that stand out. So, the first is they want to be good at everything. They're not sure what their mission is. They're not sure where it's coming from. You know, is there a a monetary target? Is there a uh service quality? Whatever it is, they're just not sure what it is. And so, they have too many priorities that they're going to be uh dealing with. So, what you have to do is You first have to start with what are we trying to achieve and you have to get everyone around that. Once you know once you know what it is, it will become quantifiable. It is easy. If yours is we're looking for the highest satisfaction, if we're if we want to sell our big user, we want to get more throughput. How do we how do we identify what's holding the line back? It goes on and on and on. Once you know what you're trying to achieve, you can quantify it. Once you can quantify it, you can use my tools or any tools to simply segment this is where the opportunity is. So if it's using the license bureau again and you look at what's really gumming you up, you go, "Wow, our big issue is we have some huge users who sit here all day and they take and so none of the little guys can get through. How do I set up a program for them?" You it would be very simple to pull the data of who filed the most license requests this year. Look at them and ask what are they trying to do and how do we set up something different for them that allows them to flow through really easily. So we can take care of the person who really does the one or two license a year. Same thing on health care users, right? If you have people coming in and one of them is representing a very large group, they probably need to be treated differently just so the system can handle it. So start with what good looks like, quantify it, take the data from that and then because you can look at anything, make sure it's the data that relates to the goal that you're going to do. Once you have it, the answers, believe it or not, become obvious. And the you get to those answers is you get the people in the room who have to live with this every day and you say, "Here's what we're facing. How do we solve it?" They will solve it quicker than anyone else and they can't wait to solve it because it makes their life better, too. What tools, frameworks, and insights can help leaders go from panic to profit and find success? We'll explore this question and so much more when our special edition of the Business of Government Hour returns. Welcome back to a special edition of the business of government hour, a conversation with authors with Bill Canady, author of From Panic to Profit. I'm Michael Keegan, your host. You know, as I mentioned earlier, Bill, the public sector, profit isn't always the primary goal. Service delivery and impact are. How can leaders in in this sector use the 80/20 principle to maximize mission effectiveness?

That's a really great question. What would be a good example in in in in the government industry? What would great look like for them? Time of service? Is it is it accuracy? Is it flow? Like there'll be something that they need to measure. And if they're not, maybe that's where they need to start, right? So you can pick any department and you can say this is what we're here for. This is what we're here for. It's this this is what At the end of the day, if I get this done, this is this is good. It could be satisfaction. It's probably not going to be one thing for all of them. So, in the way that we approach it, we would divide it into some type of buckets, right? This is purchasing, this is supply, sourcing, this is uh managing our current product, you know, on and on and on. We would pick one of those and we would look at the data around where are the big users, where are the bottlenecks, things like that coming in. That data is typically always uh uh available. You just have to ask for it. Once we know what good looks like and we look at that data, we ask ourselves what does it take to to improve it. So, you know, the challenge is I'm giving you example and I'm so high level it's almost impossible to to go with it. But I'll just bring it back to this, right? So, take an organization, understand what its number one mission is, and make it something that is quantifiable. You don't have to be perfect on it, but make it something quantifiable and then ask yourself what does good look like. Once you get that down, you can actually improve it. And our tools work with whether you are a for-profit, a non-forprofit, whether you're a government agency, you're making a product and selling widgets, or whatever it is, we all are here for a reason. How do we make it flow through better?

That's a great way to do it. So you when you when you think about this, you take a step back, Bill, how how can you measure whether or not a strategy for success is actually working.

Yeah. So, we run off of what's called KPIs, key performance indicators. And it it's funny, you know, I I see these things all the time. I'll get a list and say, "Here's your key key KPIs for your business. It's profit, it's revenue, it's customer satisfaction, it's on and on and on. If you understand what your mission is, if you understand what your mission is, that becomes the the measurement that you're looking for." So many years ago, I was a city councilman. uh in a in a town uh in Cook County, Illinois, outside of Chicago called Streamwood, right? And so it was a small community. It was about 40,000 people. uh but we had our own police department, our own fire department, public works, all the things that you get with any city out there, right? But there was a few things that we really uh looked at and citizens held us accountable for. They hated potholes in the street. They hated sidewalks that they would trip on. They needed safety uh and and protection. So we looked at things like how long did it take the fire department to respond, right? Uh what did we mainly had? Do we had fires or ambulances? On every call that we went on, a fire truck went and an ambulance went you know that I think it's that way in most places. What do you think the number one call is? Is it fires? Is it emergencies? What's the number one number one call? It's health emergencies, right? By far. It's it's rare. You know it's health because when you look at the news, if it's on fire, we see it. You don't see everyone having a heart attack, right? But guess what? All that comes in. So we measured oursel in from the moment we got the call, how quickly did it get there? And then from that, what was the outcome? Was the person saved? Did they have to be transported? Did they use our ambasses? Did they use a third party and all that? So our big metric was we wanted our folks obviously to live. What do we need on that truck in order to do that? What was the type of emergency that we were having? So it wasn't fires. For every fire that we'd have, we'd have a thousand health calls, right? So what are those types of things. What do we need on those ambulances? What has to go with it? Once we were able to look at the data to see, we knew that we had to have, and I'm being very basic, right? You had to have typical first aid sub, but we also need a defiill on there. We also needed oxygen on there. We needed someone who was capable of handling this. We would look at the size of what how big folks were coming because all those types of things were measurable. We tracked all of that, right? And in order to get the satisfaction higher and we determined We defined that as people needed to make it to the hospital uh with the ability to be saved. There was certain things that we had on those trucks. That was our data. And we spent an enormous amount of time asking ourselves, how do we get the mortality rate down? How do we how do we make sure that we took care of our citizens? Same thing with the fire. You know, we had to look out there. What kind of trucks do we need? So, in our community, the tallest building that we had, and it was just a suburb, was five stories. We needed a truck that could do that. That truck had to be available and on and on and on. So all that stuff becomes measurable, but it got down to the fire department which had the ambulance as as well as the uh fire. They had to come back with the data. Here's what we have. Here's what's available. We want to be there in so many minutes. That means we need a fire station in so many different locations. We need certain training to run the equipment. The equipment has to be on there. We know it has to be on there because these are the types of calls we get. Do you see how we quantified all that and then we just started measuring it. How are we getting better and better would be people lived, fires didn't spread things like same thing with the police department.

As you look to the future and I was wondering about this um I was hoping to get your perspective on this. How do you see the 80/20 principle evolving when you face with so many emerging tech and and the shifting economic landscape?

You know, it's really interesting the uh so if you go back to uh the paro principle, which is what 80/20 is, it was this discovered, if you will, uh by Vfredo Paredo in Italy. He he was many things, kind of a Renaissance man, but he noticed pea pods. It started out that certain land would produce more peas than other land. Then he noticed that certain groups own more land and everything else. And it and it kind of went on and on from there. And the reason I bring this up is the 80/20 principle really looks at everything from agriculture to the clothes that you have in your closet to how many fire trucks should have and where they should be stationed at. As we move to the future, it always comes back to the same thing. Typically, if we're going to do anything, be it technology or AI, we want to be successful at it. And 20% of the stuff that we do, it represents 80% of the success that we're going to have, right? So, if you're looking at technology today, the real question becomes is where do we think we're going to win at and where do we have the highest probability of achieving that outcome? Right? And so if you look at it today and you think, I'll just use AI and chat GPT. We all see that. Many of us have it on our phone now. And whether you do the free version or the $20 version or the now the $200 version depends on what your needs are. But I'm willing to bet right now Chad GPT probably has a better chance than a lot of them out there. But some real interesting things are happening in that market. I don't know. Did you see that with um was it deep? Am I saying that right? Look out of nowhere, right? A black Swan event happens, right? It was almost like Sputnik for us. uh uh you know, back with the space program, you apparently needed billions and billions of dollars. Look at the money they're raising. These guys did it, I think, with like a 10 cannon, a piece of string, and five bucks. Now, is that true or not? Well, who knows? But but they've sure shaken up the market, and Nvidia and these other ones really take a big step back. Here's the important part. By looking at the data and then taking a bigger view, where do I think this is going? And you can go back and throughout history whether it's you know starting with flight and sending a man to the moon uh to calculators and then computers now we're at AI this stuff is continues to come and it increases at an increasing rate right uh Moore's law if you're if you remember that uh from Intel right so if you follow that looking at the data will tell you this is where I should be looking this is where I should place my bet it gives you the highest probability but just like with sputnick and deep sink sometimes they come out of left almost nothing you can do about that. But if you're flexible, you're on your game, people are already starting to pivot and saying, "Is this real? Can I do something about it?" 80/20 is going to give you the best chance of being successful. But it takes that human component of us sitting there with our hand on the tiller and going, "Wait a minute, what about this?" Right? That has helped, but it's not all powerful.

So, you know, if I'm a reader or I'm listening and I wanted to pick up your book and I've read your book and I want to start applying the principles in the book, today. What is the first thing I should do, Bill?

Yeah. So, that's uh you know, it's it's kind of funny. Uh we do it every day in our lives, right? So, I I uh if you go in your closet and you have all these different clothes, you'll find you wear the same shirts and the same pants day in and day out. You're using about 20% of your closet. The rest of the stuff you you never actually get to. And what I tell people is we're living with this today. We naturally gravitate towards where we're most comfortable and where we think we can win. It's how it's how we're built, right? So whether you're running a big business, whether you're running a government agency, or just in your own life, if you can start identifying what your goal is, what that group's goal is, what does good look like? If you can pick, if you can pick, the next question you ask yourself is given what good looks like, given what winning feels like, how do I take my resources and align it around that? That's all it is. You don't need any special tools. you don't anything special at all. It just starts with this is what winning is for me and this is how I take and put myself to give myself the best chance. So running that government agency maybe it's in this case where we had the fire uh fire department it's about getting people with the highest best chance uh at the uh uh to the hospital in time. That's what success we save lives where it's about running a business and it's about making money. It's getting the biggest return where it's about being a success in your own life. Start with what your goal is. Take your resources, focus around that, right? And recognize that you're going to have to deal with fair but not equal. You're going to have to give some things more than others if you're going to achieve that mission. If you're going to achieve that mission, you better be prepared to differentiate between them so the resources can go where they really matter.

That's terrific. What's next for you? Are there any other new projects or research areas you'd like to focus on uh that builds on the ideas and uh from panic to profit.

Yeah. So, first of all, the book will be out uh April 29th. You'll be able to get it in all fine bookstores, whether it's Amazon or Barnes & Noble, you name it, it'll be available out there uh uh with it. So, right now, we're focused on launching that. We've got the 80/20 Institute where we look at doing original research around, you know, what does it mean to focus on the critical few? uh uh from that, we'll continue to take and dig into the data and use that to help people go achieve their goals in life. And then, you know, For me, it's really just about continuing to do that, trying to, you know, look after uh uh look after these business, take care of the folks that are on the team, and and try to hopefully be that that candle in the darkness out there. So, it's exciting times, and you know, I think we're living in probably the most interesting times in history, and I think our future is brighter than it's ever been, right? At the end of the day, we are fortunate to be here and be be uh with the opportunities that we have.

Bill Canady, author of From Panic to Profit. Thanks for joining us today.

Thank you so much, Michael. This has been fantastic. I I hope your listeners uh you'll get something out of this. Feel free to go to my website, billcanady.com. Uh you know, if uh you know, we you can download a free chapter from there. You can even register to win a free book. So, we're we're happy to help people out there at all times. So, thank you again for having me. This has been a special edition of the business of government hour, a conversation with authors with Bill Canady, author of From Panic to Profit. Be sure to join us next time for another informative, insightful, and in-depth conversation on improving government leadership at a effectiveness. Until then, subscribe, download, and listen to the entire interview at Apple Podcast, Spotify, Audible, or on your favorite podcast app. And as always, at businessofgovernment.org. For the business of government hour, I'm Michael Keegan, and thanks for joining us.