GA 546 | Navigating Business Turnarounds with Alfonso Aramburo

There always has to be a give and take, right? You cannot always push and push and push for excellence and without truly taking into consideration how much stress you're going to put to your team member.

Today I'm excited to welcome Alfonso Arambo to the show. Now, Alfonso has a really strong background, sort of a mechanical engineer by training, but then he got into continuous improvement and then different leadership roles, general manager roles, vice president roles over his career. And he's been involved in quite a few sort of like just turnarounds of organizations who maybe were struggling financially or whatever it might be. And, and he's been able to, you know, leverage things like lean and, and just really pouring into people from a leadership perspective to turn things around. And so today on the podcast, we sort of just talk through some of these stories and some of the, the turnarounds that he's been invol, what he did, what he learned, what he wishes he could have done differently had he had the chance to do it again. And just a lot of good wisdom. There was a good balance between sort of like talking about like financial figures like EBITDA and, and, but also sort of balancing it with like, hey, you got to win the hour and if you win every hour of the day, then you're going to win the day and then if you win enough days, you're going to win the week and so forth. And so it's a lot of good wisdom. I think everybody's going to benefit from this. Even if you're not manufacturing the principles that Alfonso are talking about. Definitely apply. So show notes can be found over@gembapodcast.com this is episode 546 and please be sure to scroll down on the app and go connect with alfonso over on LinkedIn. And then if you want to keep on scrolling down and leave us a review, a five star review, we really do appreciate that. It does help the show reach more people. Okay, enough from me. Let's get to the show. Alfonso, welcome to the show. How's it going?

Hey, it's going great. Thank you for having me.

Yeah. Where are you calling in from?

From Corona, California.

Oh, okay. Was it like, let me guess, 78 degrees, you know, something like that.

Oh, man. Warm weather, sunny and we'll still complain. That's us California. Whether it's, it's sometimes it's way too hot or something that's way too cold at what, say 30 degrees?

Yeah, yeah, yeah. We're, I'm here in Texas, so we're in the summer here, so it's a little bit of a blast furnace, but, you know, a lot. It's a funny thing is, everywhere my wife and I go out to dinner or whatever, she always has a sweater with her. I'm like, why have a sweater? It's 180 degrees outside, but you want to go inside the air conditioning so strong that it's just like you go from a sauna to an ice box. You know, she's always cold.

That's the thing. That's the thing. I see. I know so many people out here that have their academy all. All year long, and I'm thinking, wow, man, you're Bill. I mean, no wonder why solar in the solar industry, so strong out here. Yeah, there's a psychological factor for sure. For sure.

Awesome. All right, well, hey, Alfonso, I'm excited to have you on. I know you've listened to the show, and we do like to get things started with our guests sharing a quote. So what do you got?

Well, the. The quote that I really like is the success, really the sum of all of your efforts. So when you're think everything seems too easy, but when you're in the moment, it's like, man, you're struggling, you're huffing and puffing and trying to make things work, but things will always make sense. Looking back, that's why I love it. So I'd like to remind myself that no matter what I'm going through, what the challenges that are that I'm trying to overcome, that there's always going to be a reward. Maybe a reward in the form of maybe my own fulfillment or maybe in some other shape or form.

Yeah, Love it. Got it. Okay, well, hey, tell us a little bit about yourself, Alfonso. Tell us about your background, how you got involved in all this continuous improvement stuff, and then what you're up to these days.

Absolutely. Well, I've been. I'm an engineer. My background is pretty. I lean more on the manufacturing side. Even though I went to. I mean, my career pretty much started as a mechanical engineer. I started signing fixtures, and then the plan manager back then invited me to participate in a Kaisen event, and that.

Was a starter Kool Aid, man.

He did. He did that one project. After that one, he saw. Honestly, he probably looked in my eyes and maybe deeper than what I thought that it would be. Um, I really didn't know at that moment what, what all these CI World lead manufacturing was only from the books, right? And when you read something, everything looks so easy. Right. When you read about, oh, seven ways or the eight ways or six 6s or 5s or whatever. However many S's. Yeah, yeah. It's. It's. Everything is again, textbook. Won't always tell you all the nitty gritty, all the. The human aspect. And that's what I fell in love with is side all the soft skills that you have to have in order to again generate an impact. Right. To. To truly impact the area, impact the company. And that's what I love, what I loved about it. Right. That it would. It will feel my ego.

Yeah, yeah, yeah, yeah. Well, you get to see already just your energy and you probably like people and enjoy that. Right. And sitting in AutoCAD all day designing a fixture, maybe not, you know, where you get your full fulfillment, right. And go out there and. Yes, yeah, yeah.

So, yeah, exactly. I think it's more about going really being in line or being aligned with. With who you are. Right. And so to me, it was a matter of someone spotting or seeing that in me and realizing, no, I don't think you're going to enjoy designing as much as you will here. And kind of like steered me into that direction.

I am interested, I tell you. I look back on my career and I can't. I've lost count of how many folks studied mechanical engineering and became more on the manufact side, you know, that sort of thing. Like when you were going through school and studying and learning about mechanical engineering, were you like digging it and loving it or were you just doing it?

Honestly, going back to the eagle side, I think I only went to, you know, I was designing and programming and I remember I would enjoy the challenge and that's what I loved about it, about my career is that I would enjoy not knowing, not having the answer first and then somehow figuring it out. Right. But then eventually it's. Honestly, I didn't enjoy it. Especially sitting on my desk for like 8, 9, 10 hours. Yeah. It's just not talking to anyone. It wasn't enjoyable to me at all.

Yeah, yeah, I got you, man. I got you. All right. So I understand that you, you're involved in like helping organizations sort of turn. Turn around a little bit. Is that, Is that true?

Yes, yes, that's. That's been my, really my, my bread and butter. I discover this a while ago. I honestly thought that anyone could do it because I started with flipping department or turning it around. Basically I was tasked to improve the efficiency. What I found is that it was not a matter of coming up with a fancy methodology rather than working with the people and changing the culture. Sure. I Did use some lean methodologies, but at the end of the day was the culture. So I do that. That's what I started specializing on, is how do I get into an area department or a company and switch, right? So flip the switch on the mindset, flip the switch on the methodology, on the structure. What are the systems and processes that we need to have the expected results or sometimes oftentimes surpass them.

So. And I. Sorry if I cut you off. And you. What are you doing these days? Like, are you working at a consulting company for a.

Well, right now I join a company. We're a power distribution company. So basically what we do is we build enclosures and do. We're an OEM for energy systems. So basically we put them together with all that. So this. This particularly what I'm doing now is it's a similar. It's a similar situation. So we're here to again, do a turnaround.

Yeah. Yeah. Okay. So, like, looking back sort of on some of the turnarounds that you've been involved in, can you think of. I mean, people love hearing stories, right, on the podcast. So, like, can you think of maybe a really challenging situation or even maybe a crisis that you were. That you were faced with? And if so, like, what did you do?

Oh, oh, yes. In fact, I have one. One story. Imagine a company bleeding money. I would think your guests are familiar with the term ebitda, right? So nowadays EBITDA is a very trendy, trendy word and LinkedIn and kind of virtually anywhere. And this company was negative 6% EBITDA. So bleeding money over the past year, definitely not good. And at that time, of course, I enter the company, I start analyzing, evaluating everything. And so I realized that there were a lot of things wrong. Starting from they had the right. Some processes were right, they were just not being followed. So you have all these people sabotaging because they were. Let's say they love the overtime, so they loved justifying the amount of time. And definitely the quality was not the best. I mean, we were losing market share at the time. And I won't disclose the name of the company now, but we're definitely suffering. So when I go in there, I do notice that there were a lot of available people that were leaving the company because they were just very frustrated of the changes. So what we had to do there was to start a people and really show them the light at the end of the tunnel. So we would tell them, hey, this is the plan and you're part of this. We want to make sure that we have your buy in. Right. Like, that you are part of this change. Because I'm not the one driving this. I'm not the. Well, in other words, I'm not the only one that's going to be. It's not like I'll just, you know, flip the switch and things will. Will magically be turned around. So these will require teamwork, team effort. And I understand that some of you are frustrated. So I was really honest with everyone that this is not. We understand this is not the ideal scenario. Some of you might have to pretty much have stronger mindset. And this is gonna help you because you're gonna see that maybe the guy right next to you who's not gonna put as much effort as you do. And so it was a lot of these pep talks, right, that I had to have with some of these people.

How many people were running the company?

Well, 500, 100 in the leadership team.

Or just like the company? Like, was it a small company?

Big company? Yeah, 500 people.

Okay.

So decent size?

Yeah, yeah, yeah. Now I guess, were they. How was sales? Like, were they. Was money coming in it just not. Not enough of it to cover the expenses, clearly. I mean, with the ebitda.

But yeah, there was a lot of frustration from our sales team. Yes. We had the VP of sales, we have the sales manager, and we have two sales reps who were definitely not happy with the operation. And. But of course, I go in there and when I saw so much opportunity, opportunity, I thought, you know what? When. When you don't have a process problem, when it's not a system issue and you only have a people problem, is the most difficult thing to do. But it's a simple fix. So I thought it's going to take some challenge and a lot of challenge, but I feel pretty confident that we can make this happen. And so I kind of conveyed that confidence to the sales team and they went like crazy. They started going to. With getting these customers who we got amazing projects. So what I did is I kind of form a dream team of the people that I knew that I could count on. And those were the people nurturing, let's say, these new business. Right. This new business that in turn would again generate the revenue, somewhat compensate for some of the gross margin or a better gross margin than the other college business units. So that's what's kind of the trick, how it started, because I didn't want to combine the negative culture from one to the other. Right.

Yeah. Now what was your role in that? Like, were you Hired as an outsider or are you part of the company or.

Yeah, no, in this one I was to the general manager. So in charge of the entire operation? Yes.

Okay.

Yes.

Okay.

Yes.

Well, I could have said, well, you had the authority then, you know. Right. So that's good.

Right.

So versus sometimes the lean person is called to fix it, you know, and they're like, who's this guy? You know. Yeah, yeah.

Okay. Yep.

Okay. Well, so you've mentioned it was interesting, like you mentioned some financial figures, you mentioned a little sale, some operations. I'm wondering, like what, what has been your experience on balancing sort of, you know, the financial restructuring side of things and maybe more on the operational excellence side. Like obviously both need to be working in harmony, but how do you balance that dichotomy?

Yes. So it's always really your checks and balances about how much. And this is part of my philosophy. Right. There always has to be a give and take. Right. You cannot always push and push and push for excellence and without truly taking into consideration how much stress you're going to put to your team members. Right. This is oftentimes something and again, I learned it the hard way. I put so much pressure on the team that I lost so many amazing people. Unfortunately, again, I learned the lesson. So that's on the excellence side. You always, in my experience is you have to decide what are the right systems and processes at what time. Right. So you got to give enough time for that, let's say culture to sink in. Right. For those habits. And now on the financial side, it's usually whatever you do on the systems and people side, it will be reflected on the financials for the most part. So that's my thought is as long as you are okay on the day to day basis, on the monthly basis, and this is a phrase that I tell the RT members is we get them when every minute. Right. Win every minute, we're going to win the hour. When the hour will win the week, we'll win the week, we'll win the month and we'll win the quarter and whatnot. So there is a direct correlation between what you do on a daily basis to your financials. And I've seen it over and over again. I mean in this example of EBITDA, I mean going from minus 5% going up to, I mean 11.8% or something by pretty close to that number. I mean you have a crazy improvement. Just like I said, just by focusing on one side with impacts on the financials.

Yeah, My, my, my good friend Paul Akers is often, he's often said, you know, just sort of fix what bugs you fix, you know, focus on, you know, like the process and, and the money's gonna come, right? The money will come, right. But, but if. I think the, the lesson there is if you let the money sort of drive you and while we gotta lay those people off so we can just whack that, that cost out, you know, you're, you're. It's a tailspin, right? Eventually.

Yeah, yeah. And unfor. I mean, old practices have been cut cost down and that people automatically think lay people off. And that to me is the way I see things, is that people are the most valuable asset in the company. Because imagine you have amazing people and even without great processes and systems and you could do amazingly. Right.

Yeah, right. Or, or as Toyota says, we take average people and perform exceptionally well because their processes are so good, you know.

Yes, yes, exactly. Exactly. Tps, baby. All day long.

Yeah, yeah. Well, so speaking of Lean then, I mean, obviously you've got a background in Lean and, and Kaizen events and all.

The rest of it.

Like, but you know, it's not always a silver bullet on a, like in a turnaround situation. So what have you learned as far as the role that Lean can play and really can't play in these turnaround situations?

Man, I mean, Lean, like for instance, a project we're working right now is. And one of the. I think what Lean to me is it's, it's a set of tools that you can use at any given time, depending on the situation, right? So, and those tools will evolve. So what I do is, let's say right now the problem that we're having is we react to problems and then we don't have a risk mitigation plan, meaning that you decide, okay, let's go ahead and do, let's create this new product. Then you come up with an amazing product. But the next thing you know, you have engineering issues, you have execution or assembly issues and all kinds of different problems. Purchasing for not getting parts on time and whatnot. So what Lean provides is that a structure or framework that you can again apply, for instance, an fmea, right? So you introduce an FMEA to the equation and then now suddenly you are starting to consider all the variables that could play into or could affect that project that you have in mind. Now when it comes to improving the process, I mean safety, you go with 5s when you are talking about, let's improve a system or a process, okay, let's stream up, let's do a valid stream map or maybe a process flowchart, or maybe why don't we do an ad, a root cause if to. To improve the process, to truly understand how much or how big of a problem it is sometimes. Right. And not only going through and taking the symptom as the cost.

Right? Yeah, yeah. No, for sure. So, I mean, obviously, as a general manager then, and, you know, I'm sure other leadership roles that you've been in throughout your career. So, you know, yeah, Lean and all these things are tactics we can do. And, you know, it's a management system as well. Not to diminish Lean because it is a management system. But. But when we think about leadership, maybe there's. I don't know, there's. Maybe there's qualities of leaders that you've seen like. Or characteristics maybe of individual. During these really bad times or really difficult times. What have you seen and learned that that allows people to be more successful than others?

You know, it's interesting because as I was, I'd say, developing and really starting my career, I felt really insecure about my leadership style because I was not fitting in the box. Right. So I, however, I had one boss and in fact was the one who introduced me to continuous improvement and lean manufacturing. He literally gave me a book, put it on my desk, and he said, next Kaisen event, you're going to lead it. And I love his style. He was always pushing you to be better. He was like, kind of figure it out, but I'll be here for you. So the traits that I saw in that leader, I mean, fortunately, he was the first leader that I worked with, and so far, I think one of the best ones. Right? That's that till today. I still give him a call and I appreciate what he's done for me. Right. It's not only showing you a path. I think the value of a leader is not only acknowledging, but also seeing what you're not seeing at the moment. Right. Working alongside with you and truly adapt to whatever leadership style that you have to have, depending on who you're talking to and what situations you are in. You cannot be the same leader with your high performers or with independent people than you are with those people that love being micromanaged.

Yeah, man. We actually just released a new course called On Adaptive Leadership. And it's just that, man, like, it's so critical that you've got to be able to flex and adjust accordingly. Even personality types, you know, like, I think even my own kids, you know, one of my daughters is what they call sanguine. She's always talking and chatting and wants to know what's going on on all day long. Right. Whereas and I've got other kids who are just like, eh, you know, real quiet, you know. So you got to sort of communicate differently with those different types of folks.

Yep, exactly. Exactly. And you know, it's interesting that at some point you're, you're thinking to yourself, okay, what, what is this? I mean think about this. Ten years ago, five years ago even it wasn't that trendy. I mean now you're, now there are more books about servant leadership. I mean there's like outdoors, like Simon Sinek, white leaders eat and your why and whatnot. Right. So there is more. I mean before, sure you had John C. Maxwell with all these leaderships and teamwork and whatnot, but truly the definition of the right leader, I think you had to figure it out by yourself. It's based on your experiences. And lately at this point we're more advanced in there's more literature about all those more books, more audiobooks. And I think that gives people more confidence. Right. About.

Yeah.

That meaning me. Yeah, yeah.

So maybe to wrap things up, I'm curious if you can. I have a two part question to wrap things up. I'm wondering if you could look back and maybe the first part of the question would be you look back on your career, you know, and I know it's not over, but just what you've done so far. If there's something, one thing that you could change and do over, what would it be? And then the second part would be like just what are you most proud of? You know, like over, over your career. So we'll finish with the proud, then start with like if you could go back and like change something like a style or a tactic or decision, anything like that, what would it be?

Probably what I, what I would change or what I would have changed. And again, not that I'm regretting anything, but definitely I lacked the. I was finding myself. I think it took me a while to truly recognize that I'm good at what I do. It took me forever to truly realize that I'm good at turnarounds. And now I say proudly because this is a skill that I have that honestly before I was so insecure about, I didn't know all the time I was asking like, what am I good at? I couldn't. Even though people will tell me those things, I would lack the confidence right. In that. So what I would have changed maybe is do more Introspection. Right. Maybe reflect even more about that and truly gain that confidence by following or getting better mentors. Right. Rather than just one person, maybe finding some other people who could should not only point me in the direction, but also confirm what I'm seeing in myself.

Yeah, well, and thank goodness the boss who turned you on to Lean and all that came along. Right. Because sounds like that was a really important part of your. Of your career. Right. And your journey, which sort of leads us all back to you. Never, never underestimate the impact that you can have on an individual's life. Right. Like, yes. A conversation or, you know, a little support or whatever, you can change the trajectory of that person's life. Like, really? So.

Yep. Yep. As he did to mine.

Yep. Wonderful. Well, hey, Alfonso, if folks wanted to connect with you over LinkedIn or whatever, like, what is the best way? Is it LinkedIn or some other.

Yes. Yeah, people can. I mean, feel free to message me. I mean, my name is Alfonso A L F O N S O. And then my. My last name. Or a Ramburo.

Yeah, I'm gonna have to try to say that on the intro when I record it here as soon as we stop. So I apologize in advance for everybody. I butchered Alfonso's name probably.

Yeah, Yeah, I think LinkedIn is the best way to. To contact me. And of course I'll be. I'll be happy to. To answer any questions about. I mean, in. In any way that I could be of service. Right, for sure. Or to help anyone.

Perfect. Perfect. All right, well, everybody, we're gonna have Alfonso linked up in the show notes, so just kind of scroll down on your app, hit it, and go, go connect with them and tell them thanks for coming on the podcast. All right, well, hey, this has been a lot of fun, Alfonso. You take care and keep up the great work.

Appreciate it, Ron. And you have a great day.

All right, you too. Thanks for listening. Whether you've been on the continuous improvement journey for many years, or perhaps you're just getting started, Gemba Academy is here to support you. And while we're best known for our more than 1500 lean and 6 Sigma teaching and virtual tour videos, we also have a team of experienced Lean and Six Sigma practitioners available for one on one coaching, as well as a variety of of Lean and Six Sigma certification options. To learn more and to schedule a demo, head on over to gembaacademy.com.