GA 625 | Dealing with Hidden Threats with Dean Svarc

Why are we changing our thought process? Why are we doing it this way? Why are we doing processes and procedures? If you don't explain that, you're not getting buy-in. You don't get buy-in, they're going to be— you just confuse them. You're just running in as a normal owner coming in, making some rapid change without any talking to anybody. And that is probably one of the biggest problems in leadership.

Today I'm excited to welcome Dean Smart to the show. Now, Dean and I had an interesting conversation. He's got a lot of energy, a lot of passion, a lot of excitement, and he really kind of dived into, and today into his book. He's written a book called Trojan Horse, and we talk a little bit about sort of these hidden threats that are inside manufacturing companies that leaders may be blind to. And so what we do is we sort of just walk through his approach. He goes in and he helps companies who are struggling and helps turn them around, and he's had a lot of success doing that. And so we just sort of walk through like some of the things that he sees and some of the actions that he takes based on the situation. In particular, he focuses a lot on culture and mindset. And so he goes on to explain like some of the warning signs of like, if you're seeing these things, that's going to be a problem. We're going to need to adjust. So then he's got like a framework, like a 6-step framework that he walks through. And so we sort of touch on those, but obviously more will be in the book if you're interested in checking that out. So show notes can be found over at gembapodcast.com. This is episode 625. Again, Gemba podcast.com. Look for episode 625. Okay, enough for me. Let's get to the show. Dean, welcome to the show. How's it going?

Hey, good. Thank you for having me.

Where are you calling in from?

We are in Rockford, Illinois, just north of Chicago, Illinois. Okay.

All right.

All right.

I actually lived up in the Chicago area. My wife's from Chicago, so I lived up in the sort of Libertyville area.

Yeah. I used to live out there, so I've lived in 11 different cities in Illinois.

So. Okay. Okay.

I've been around a little bit. Moved my way from Chicago slowly out to Rockford.

Yeah. My wife's from Westchester.

Are you familiar with that?

Yeah.

Yeah. Very much.

She grew up. Yeah.

That's funny. That's awesome. Yeah.

Yeah.

It's a nice city. It's a clean city, you know, compared to New York or compared to like California. It's a very clean city, which is nice.

Yeah. Yeah. Got it. Got it. All right. Well, hey, Dean, I know you know how we like to begin all of our shows. That's with our guest sharing a quote. So what do you got?

So I think the biggest quote that I would say commonly is fail. Don't be afraid to fail because fail stands for first attempt in learning. There's no way, there's no way you can't learn without failure. You learn your best lessons from failure.

Yeah. Fail your way forward even, right?

Yep. I encourage, I encourage mistakes at my company. Seriously encourage it.

Yeah. That's awesome.

At least you're doing something.

First attempt in learning, right? Yep.

For sure.

I like it. I like it. Good stuff. All right, well, hey, tell us a little bit about yourself, Dean. Tell us about your, your background and how you first got involved in all this continuous improvement stuff and what you're up to these days.

So, so I started out as like a journeyman, like a machinist back in high school and college. I was a mechanic. I had 2 jobs my entire life until I was 50, uh, 2015, which is not that long ago. Um, and I kind of worked in as a mechanic for years, journeyman machinist for years. I was a plumber and electrician certified, probably expired 15 years ago. Then I went into corporate America for about 14 years in CIT, which is corporate IT. And an opportunity came up where my wife and I always wanted to own a company. So, we purchased a manufacturing company, kind of like a job shop, small, and we kind of grew it larger and moved it to a new state-of-the-art facility in Illinois. Won manufacturer of the year a couple of years later, sold it, and then I kept buying companies after that, and now I own about 6 companies in Rockford. And my passion is just kind of turning companies around. I've learned a lot over going through numerous companies. All right.

Well, and I understand that you've written a book called Trojan Horse. So first of all, I always like to ask people that write books. I've never written a book. Maybe I will one day. I don't know. But what made you want to write a book?

I never had a dream of writing a book. Actually, what happened was as I was going through my life, learning all these life lessons, fail and all the good stuff after that, and I'm picking up companies that are either in trouble, stagnant, turning around, I've learned so much and I came up with a process that really does work to turn these companies around. And I said, God, I have this in my head. I'll teach my kids this. But I wish I had someone that would have shown me this stuff and said, Hey, like a mentor, like, hey, I don't know how to get past this. I'm a small business, small to medium-sized business owner. I don't know how to get past this. I don't know what's next. So I said, let me start writing notes down. So I wrote notes and eventually wrote a book and it was a number one bestseller on Amazon for new releases for a while. And people seem to like it. I get a lot of feedback on it, but it's absolutely a blueprint of what to do to your company, whether you're stagnant, hurting, or actually good and want to get better. All right.

So, it's called Trojan Horse. So, let's jump into it a little bit and like, what's— explain your model maybe at a high level.

Yeah. So, the name is Trojan Horse: The Unseen Solution to Critical Business Problems. And what it does is it covers the first third of the book is critical. It covers a lot about mindset. Are you ready for change? Meaning you as an owner, as a leader, as a business leader, PR firm, whatever it might be, operations manager, and it goes through Are you ready for change? A lot of the times the owners are the ones that are actually making the company the way it is. They're the leader. The next part of that, the second part of that is your company ready for change? Let's just say you've gone through all this, you're all ready, your whole mindset's changed, but your company may not be ready. You can't just flip a switch, start making these changes and the company's not on board. And then you eventually get into the actual tactical part, which is more the basics framework, which is brute force, analyze, structure, improve culture, and sustain. And when you go through that process, it's pretty hard not for your company to be significantly better than it is.

Yeah. So, I know that you've written about this, the whole idea of some hidden threats inside companies that leaders can be blind to. So, I'm wondering if like, what are these threats and why are folks blind to them?

So, it's so funny when I go into companies as I have a consulting agency that does this now to go into companies and look at their look at where they're at, provide analysis, and eventually fix if they choose. But when I go to these companies, people always say, it's just sales. I need sales. That has absolutely never been the answer. I'm not saying you don't need sales. I'm saying sales is not the primary thing you're having a problem with because when they have sales, they can't support it anyways. The culture's not there. The processes and policies are not there. The structure's not there. The leadership has not empowered any of the employees to actually do their jobs properly. So, usually stagnant for everything else but what they actually think. They think they just need sales and maybe a couple of new trucks or something. That's completely the unseen solution to critical business problems. It's what's hidden. It is not what's forward-facing.

You mentioned a little bit about what you're seeing. Talk about culture and what you think about culture and why that plays such an important part. And so any organization really.

So, let's try it two different ways. You've got a company that's stagnant. Your culture is really not good. Why would the people try real hard if they don't see you trying hard? I don't mean working hours. I mean, having the culture, meaning that making the employees feel like they're empowered, make them feel like they're valuable, make them feel like they're not just a number. That is why most employees work at small and medium-sized, even sometimes larger companies. They don't want to be a number. And that is one of the biggest problems we have in these companies when I go in. Is they don't— I don't say they don't care about the employees, but they don't recognize them in any way. No award systems. No. Yeah, they might do lunch once a year or something, but they're not asking their opinion. They're not empowering their employees. They're basically making them where brainless people, just, you do this job, don't think, and we'll discipline you if you don't do what we want. They're not asking the right questions to figure out why their culture is the way it is.

Now, I don't want you to name any names or anything like that, but I'm wondering if maybe you could maybe share an example of— maybe we can do it two ways. We'll start with the less ideal. Like, can you think of a situation to where you've gone in and it just didn't work? And I'd be curious, not that your consulting failed or whatever, but let's be real. I mean, not everything's a home run. So, can you think of an example? Again, don't name any. Yeah, this company.

John Doe Company sucks.

Yeah, yeah, yeah. But like what you saw, and then obviously we'll finish on a high note with like a success story. But I think it's, it's good sometimes to learn from what didn't work.

Well, I can tell you this. So I have not had direct failure where I couldn't resolve the issue. Now we've stepped away from projects, which if you want to call that a failure, we can call that that. But there has been twice where I've walked away because I had the owner and they're the decision maker and I've tried to work with them, gave them a plan, they agreed to the plan. I said, this is what we need. And they agreed to it. As we're trying to execute, they couldn't get out of their own way and they wouldn't be willing to give the reins of the decision-making to another party in the company. So at that point, we did as much as we could to make them with their mindset, try to understand a different way of viewing things. But if they don't want to change their ways, they don't want to change their ways. And I'll just make a really brief funny story as an example. There's an owner with a son standing next to him yelling at an employee, which by the way is not appropriate by itself, yelling about how he has a hoodie on. How could you have a hoodie on? We don't allow hoodies in this company. And the son's standing next to the dad saying, calm down, calm down. The dad's going on. It goes on 2 or 3 times back and forth. And finally, the son yells at the dad and says, "Dad, stop it. Come over here." And the dad starts yelling about how we don't allow hoodies in our company. And the dad's like, well, the son is saying to the dad, "You're wearing a hoodie." Oh boy. So, that's culture that if the owner's not on board, sometimes people are so stubborn, they know everything, they don't want to change. There's sometimes things just will do not go and we'll actually step away from the project. I'm not going to fail on my project. I'm not going to take money from somebody where I don't believe I can succeed in making their company what it's supposed to be.

Yeah.

Oh, that's a true story, man.

You can't make this stuff up. Man, that's incredible.

Yeah.

So, okay. On the flip side then, maybe a success story or one that you're particularly proud of, not necessarily the biggest, baddest or whatever.

No, no. So, actually, I went into a company one time. It was a large gearbox manufacturing company, had about 60 employees. So, it was a decent size. And They were a union. So union was on one side, office on the other side. And the president, which is the leader, he thought that the union was out there just to steal from them, lie, cheat, steal. And that was his mindset. That was his culture he set up. So union hated management, management hated union. So I come in, of course, I'm management, right? So I come in and I remember the president of the union comes up and goes, hey, Dean.

I go, yeah.

He goes, just so you know, we're 9 out of 9. I go, okay, I don't know what that means. What's 9 out of 9? He goes, We've had 9 grievances and won all 9. So he's already telling me like, they can't be beat. I said, okay, well, I would like to get us established a thing where we don't need to have grievances. So I was there for just under 2 years and we demoted people. We got rid of people and it was very hard in the union, by the way. We got people promoted. We got people better off than union. We got management together with union. And there's a lot of history I'm not going to get into detail about, but in a matter of a year and a half, I had not one grievance. I did not have to fight a grievance because I worked with the union, not against them. The rapport was built incredible. The culture became incredible to the point where the president of the union says, Dean, I like you 80%. I said, I'll take 80% any day. That's great. He goes, no, you don't understand. If I like you more than 80%, the union leaders will think I'm in bed with you. So that was the culture I built in a year and a half. Of having control of the company. And by the way, productivity went from 72% to 85%. It was $100,000 for every percent in profit. I did that probably in 4 months, by the way.

So, I mean, without sharing the full story, like, give me an example of like some of the things there. Are you practicing lean, like continuous improvement?

Yeah, I mean, lean manufacturing, absolutely. Six Sigma, absolutely. You know, 5 Whys. We do that, but it's not our focal point. There are experts that only do sales.

Mm-hmm.

This book is not a sales book. There's people that only do lean manufacturing. This is not a lean manufacturing book.

Mm-hmm.

This is an owner coming in that doesn't know lean, doesn't know Six Sigma, and they can make tactical changes to their company, but it has to start at the top with mindset. We are not specializing in sales, lean, Six Sigma. There's plenty of books out there. Why would I rewrite a book on something that somebody's already been an expert at? I have not seen a book like this as tactical, addressing mindset, addressing culture, and fixing companies with a very streamlined mentorship type of attitude.

All right. Well, speaking of mindset, let's talk a little bit about leadership. You've touched on it a little bit, but maybe we can go a bit deeper and talk about maybe some mistakes that you're seeing leaders make and what we need to do to sort of help them not do that.

So leaders think they're the best people that can do the job. That is probably the number one problem. I'm the best. They were the plumber that started a plumbing company, hired a bunch of people. Now he doesn't have time to do the plumbing, so he's a president or an IT guy or a machine shop. They started off somewhere, they got hired in that position and they think there's no one better than them. So they do not believe basically in their own employees. So they think they're the best at, so they'll do these $20 an hour jobs that they can pay somebody else to do that's not valuable for them to do because they're supposedly not according to their yearly wage, but what their value is to the company is a lot more than your yearly wage per hour. That's one of the huge ones. The second one is they don't get out of their own way. They don't empower the employees. They don't encourage people to make mistakes. They don't allow mistakes. How they handle things from a soft, soft skills tactic. They have no soft skills. They weren't raised with it. They came up through the labor workforce. So those are the kind of things that are number one stoppers. And that's what I come in to kind of set that mindset so we can tactically go after the company and make it successful.

All right, well, let's jump right in deeper then on mindset. Like, what are you trying to instill in these leaders from a mindset perspective?

Well, let's just use an example. Let's just say, for instance, I'm in my household and I'm a father and I act a certain way and I decide tomorrow I'm going to act completely different. I change my mindset. Now I act completely different to my wife, my kids, all my friends, this and that. They're not going to understand it because they'll be like, why is he doing it this way? You didn't explain anything. You didn't get the rest of the company on board with your plan. So, if I change my mindset and don't work on the company, meaning getting them on board, explaining the benefits to them, explain the benefits to the company. Why are we changing our thought process? Why are we doing it this way? Why are we doing processes and procedures? If you don't explain that, you're not getting buy-in. You don't get buy-in. They're going to be— you just confuse them. You're just running as a normal owner coming in, making some rapid change without any talking to anybody. And that is probably one of the biggest problems in leadership, not including nepotism, a whole different subject.

Oh, okay. Yeah. All right. Well, I know in the book then you're laying out a sort of a 6-step framework. So, I'm wondering if maybe we could just kind of, I don't know, high level.

Sure.

To walk through those steps.

So, we have, you know, the 6 steps are basically, it spells out the word basics. And we have brute force, analyze, structure, improve, culture, and sustain. Brute force is low-hanging fruit. You go into a company and the ceiling is leaking horribly over a very expensive machine. I don't need a lot of conversation. I don't need a lot of debate. I don't need to have meetings on that. Fix that. That's low-hanging fruit. The truck doesn't work. Go get it fixed. We need that truck for a job. Those are like, there's not a lot of conversation around that. Then you get into analyze. Analyze is where you start now looking at the problems in the company that maybe aren't so blatantly obvious. Machines aren't running right, things don't work, there's no processes up front. Then you get into structure. Structure is saying, where in the org chart do you stand? Who makes decisions? Who's actually responsible for AR, AP, all these different processes that are required in a company? You go to improve, and now you're taking what you learned from structure and analyze and now actually trying to improve those processes, writing a process, a policy, a guideline, understanding who's in charge of what. How to empower the employees. Then you get into culture. Culture is actually focusing on culture. It's instilling accountability, urgency, continuous improvement. Those are the things that employees want. Humans are just like dogs. We want to be told when we do something good and bad so we know when we are doing good and bad. We're all like that. I'm like that. Then you have sustain. Sustain is the end result. That's where the owner or operations manager or president is supposed to get to. He's supposed to get to a point to where he cannot be there. He can step away, not sell the company, but not have deliverables, not be required daily there. The company should run without him. I have 6 companies. I don't have to be at any of them at any time. I don't even sign checks. I built this process because it works. I do it now. How can I run 6 companies and not be accountable? I'm sorry, not be responsible for anything in the companies. I'm accountable because I own them. I'm not responsible. I have people doing this for me.

So I'm curious, like, what role do you play in those 6 companies then? Are you completely hands-off or are you touching in with the CEOs or whatever?

Yeah, I actually drive around all week. I drive around, just I kind of touch base with— I phone call, drive to each company. The larger companies I go to, some of them don't require me. I've really tried to empower and instill in people leadership. So, there'll be managers that were never managers before. There'll be operations managers that we didn't even have one in the company before. That operations manager or vice president takes over my position. They should be able to. If I die, are all 6 of my companies going to die? That doesn't make sense. I don't know how to run a company then. I should be able to go on vacation. Why did we all do this? Why is anyone even listening to your podcast? They're doing it because they want to learn about business. They want to learn how to run their businesses better, more efficiently, Run it so they can do what? Why did they get into business? They want to set their own hours? What, so they can work 20 hours a week instead of the 8 they did before, 40 they did before, 80 instead of 40 they did before? No, they wanted freedom. By going through this process, changing your mindset, putting some effort in, you now will get what you originally went into business for, freedom. That's all they wanted was freedom.

What is freedom?

Freedom is doing what you want to do. For instance, some people just want to work. That's fine. You can work, but you have the freedom to work versus if I'm sick for 6 weeks with mono, my company falls downhill. I'm stressed nonstop. Or maybe their freedom was I want to take 4 trips a year out of the country, in country with my family. Most people want to spend time with their families. And by doing this without having the structure, you're not going to do that. Or if you do, it's going to be very painful. You come back and you're like now swamp all these problems. No, I go to these companies for years now. I don't walk into any problems. I do not walk into these monster-sized problems. They call me when they have to spend a certain dollar amount, a major problem, someone gets hurt, building catches on fire. That's it. I don't walk into my companies nervous, stressed out, nothing. That's freedom. Yeah.

No, I like it. I like it.

All right.

Well, maybe to wrap things up, I'm wondering from, if I don't know, there's somebody listening right now and maybe they feel like their business, or maybe it's not even just their business, maybe it's just a practitioner out there just feeling a little bit stuck, plateaued, flatlined, whatever you want to call it. Is there any sort of like mindset shift or action that you would encourage that individual to sort of consider?

100%. And it's not that hard. It's not for me to sell books, man. I don't make money on books. I swear. Buy the book. Buy the book and read the book. If you don't have whatever the dollar amount of the book costs and you don't have the hours to read it, you're not ready for change. Just right off the bat, you're not ready for— if you don't have time to read a book to save your company, make it better, make sure that every hour you work is better, you're not ready for change. Get the book, read the book, and then reach out to me at DeanSpark.com. You can schedule a I think it's got 30-minute or 50-minute free consultation. We can talk about what kind of problems you're having and decide if the conversation needs to go further than that. Also on the website, we have videos. I think it's 1-hour videos per chapter discussing the chapters. And I have a lot of shorts out there that talk about business. So yeah, absolutely. There are things you can do, but if you don't want to put the time and effort into it, you're not ready for change. That's my first signifier. Absolutely for sure. Got it.

Got it. All right. Well, hey, and if folks do want to connect with you, what is the best way then? Just like your website?

I would say deansvarc.com, which is D-E-A-N-S-V-A-R-C dot com. And you'll see an ability to get a hold of me. You can also go to LinkedIn, look me up on LinkedIn. I have the ability to be reached out there and it shows a little history about the companies I own, what I do, why I do it, and obviously look for some of the podcasts, audio, audiobook, stuff like that. Got it.

All right.

It's available on every Amazon, Barnes Noble, Ingram, you know, yeah, it's available everywhere.

Got it. Awesome. All right, man. Well, I appreciate you, Dean.

Excellent. Thank you so much for having me on. All right.

Take care.

Thank you.

Thanks for joining us today. We know the path to continuous improvement can be challenging to walk alone. That's why Gemba Academy exists, not just to provide training, but to be your partner in problem solving. Whether you're just taking your first steps or leading a global transformation, our goal is to help you bridge the gap between knowing and doing. Beyond our library of Lean and Six Sigma resources, we're here to coach and guide you through your journey, whether that's through personalized support or joining us for a live training to get that immersive, hands-on experience. To learn more, go to gembaacademy.com.