174. Bill Canady | 80/20 CEO

Hello, Book Thinkers family, and welcome to our personal development podcast, Book Thinkers Life-Changing Books. During each episode, we interview one of the world's top authors, and as a listener, you can expect to discover new books, new mentors, and new resources that you can use to achieve more and live better. In In today's episode, we have the pleasure to interview Bill Kennedy, author of 80/20 CEO, and more to come. Bill is the CEO of 2 companies, Ohio Transmission Corporation and Arrowhead Engineered Products, that are worth billions. That's billions with a B. He is also a proud veteran of the United States Navy, creator of the Profitable Growth Operating System, has over 30 years experience as a global business executive and leader, and of course, he's an author. In this episode, you'll learn about what the 80/20 principle has to do with being a CEO, the value of outsourcing, Why systems can save your life and how to start growing your business profitably. Now get ready to learn and enjoy this incredible conversation with Bill Kennedy.

Bill, welcome to the podcast. I'd like to kick off with a little bit of a different question today. So here's the scenario. You see before you 2 pieces of wood and some screws. Your assignment is to join the 2 pieces together. Which of the following do you do? A, get a screwdriver and screw the pieces together, or B, get a hammer and pound the pieces together? That's my first question today.

Yeah, first of all, Nick, it's great to be with you. Always love chatting with you. You know, and the obvious answer is, uh, is you get that screwdriver and you work on it that way. But I can't tell you the amount of people who would take the hammer and just wail on it.

Yeah, I asked this question obviously because of divergent and convergent thinking. You know, I'm a business owner and I actually have a lot of people on my team that are dreamers. They love to think outside of the box. They love to conceptualize, which I know a lot of bigger businesses, they have the opposite, right? The thinker, the analytical person who's, you know, in there trying to work from a place of discipline and checking boxes. But I'm curious, like, what are the benefits of having both types of people on your team and why do you present the reader with this scenario?

Well, I gotta tell you, that is such an interesting question. So first of all, if you have a team at all, more than a couple people, you're for sure going to have both types on there. And they really come out when you're in the middle of these processes. And I am absolutely convinced they sometimes change sides, right? So it's, uh, they come in and they're— today they hate everything, and tomorrow they love it all. And, and, and, and the, and the role for folks like you and I is we got to give them a safe place to do it in and, and have fun with it and everything else. And you have to be careful because sometimes we— our fun gets a little too tough and we pick on people and they don't, you know, they'll laugh but they don't really think it's funny. So if you can have a standardized process that you're willing to go through, the secret that you have to have is you got to make them actually go through the process. So, so you get up and you talk about it. Now the best case always is to have a third-party facilitator, someone that's going to control the pen. A lot of times we try to do that ourselves. What happens then is you can't really participate, right? It's hard to hold the pen and participate. So you get someone facilitating you, but you get up and you say, look guys, today's our broad thinking or this next hour and everything is available, right? Whatever your idea, there's no bad ideas. There's truly not. Now, the thing that I catch myself every once in a while is they'll, they'll say something. I'll go, that's the stupidest thing I've ever heard, right? You can't do that. You gotta let it all come out. And then you draw a hard line, right? At some point, maybe it's after lunch, maybe it's the next day, maybe it's a whole different meeting. And you come back in and all those people who were expressive thinking, thinking broad, thinking deep, now we're going to take and have to get aligned around something. So the process, if you follow it, will allow people, no matter which side of the fence they sit on, to get through it and you get a better outcome.

So I think the key thing that you just mentioned and outlined for all of us is that you need a system. You know, every single company has different personalities. They have people who approach things from a different perspective, but you need a system to operate from. And that's essentially the core message of your book. So I know that we jumped right into this scenario. I wanted to give you an opportunity to highlight how you think and how you approach things, but why don't you just take a step back now and introduce yourself to the Book Thinkers audience?

Yeah, thanks a lot for that. And by the way, that was a great way to do it. I wasn't expecting it. So it came right.

Yeah.

So I'm Bill Kennedy. Yeah, I'm a 30-year executive. And today I'm proud and fortunate and maybe a little bit crazy to be CEO of 2 different companies. So I'm CEO of a company called Arrowhead Engineered Products, AEP, located out of Blaine, Minnesota. And we're about $1.5 billion in that one. And the other one is called OTC Industrial Technologies, which is out of Columbus, Ohio, and about $1 billion. And most of it is parts and pieces, things that keeps the world going. And, you know, it's just, they're wonderful companies and I'm proud to be associated with them.

Well, it's not too often that somebody like me gets to speak with somebody like you who runs multiple billion-dollar companies. And I thought it was very interesting sort of in the introduction to your book, I guess chapter 1, Who You Gonna Call? You say that when you were graduating high school, you had only 4 choices, and I'm going to read them to everybody because they made me smile. Choice number 1, I had a big mouth, so I could be a salesman. Choice number 2, I could learn some trade. Hey, how about welding? Number 3, you could be a farm laborer. And number 4, you could join the military. So I know what happens next, but tell everybody which decision did you choose and how the heck did you end up choosing that? And it ends up to you leading $2 billion companies.

You know, at the time, it's actually true that, you know, it was, you could go work something with your hands and I wasn't particularly handy doing anything. And as I've proven every day, I got a big mouth. And so the options in front of me was, I grew up in this small town, a wonderful town in southeastern North Carolina, and I wanted to get out. And see the world, and and you the interesting thing not far from where we grew up was a big military base. It was called Camp Lejeune, which is actually full of Marines, and it's just a wonderful place. And we used to go down to the beach every day during the summer, and I'd watch those ships sail out to sea full of Marines. I thought, I wonder where those things are going, right? And so I graduated. I thought about it, and that was the obvious answer for me. It got it did three things I really wanted. First was. It got me out of that small town, right? And it put me out and got my feet on solid ground. And the second piece was it allowed me to get educated in something that I was going to be able to do and make a real living at. And the final piece, which I think over time I've embraced way more than I did at the moment, is it allowed me to give something back, allow me to serve the country. And, you know, I'm so proud of that today. At the time, I'm not sure I really understood it, but it became really meaningful for me.

Well, thank you so much for your service. I think that giving back is something that you're right, a young person might take for granted. And as you age, you become really proud of those moments. So that's really cool. Now, what skills did you learn during that period in your life that you're currently applying today? What lessons outside of being proud about your service? Like, what lessons did you learn?

You know, it was the basics that made all the difference. They make you kind of grow up and be a man about things. And you find out How much you can take. So I went to boot camp in Great Lakes, Illinois, right off the farm, and and showed up there, and they put you through the most mental gymnastics thing you can possibly ever imagine. And what it teaches you is the things that you really need, you know, to to to to do great in life. There's this old saying: Everything I learned, I learned in kindergarten. Well, everything I learned, I learned in boot camp, right? It was how to take and take care of myself, how to How to, how to, you know, clean my room, how to pay attention to details, how to have respect for others, follow orders, all the things that we need if we're going to get along in this world. But most importantly, you find out that inside, there's grit inside of yourself, you can get knocked down, brush yourself off, get back up and go for it. You find out how much you can take. And it turns out we can take a lot more than we ever thought.

Well, it's interesting, the parallel that I sort of saw between you know, you jumping right into boot camp and how you currently operate today and what you teach is that the sort of through line is systems. I mean, the military puts people through a standardized system and it takes people from various backgrounds and it spits them out on the other side and everybody sort of has kind of consolidated and fallen in line and they have the same operating framework to move from. So I just think it's cool that That was your first kind of, we'll call it a work experience, like real-life experience. And you're teaching what you teach today. So why don't you tell everybody a little bit about this book and why you decided to write it and maybe who the kind of core target is for it?

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Yeah, a great, uh, a great, great point there. The, uh, the piece with the systems is I, I can't, I can't stress that enough. And through my life, I, I've led and been part of things, and each and every time, the thing that got not only me through it but gave me the ability to do success was the core learnings of how to take and put a system together, how to do a process. And the whole military runs off of that, whether it's a— in the most terrible of times, you're at war, Your ship gets damaged, you know what to go do because you've been trained how to do it under those circumstances. Later on in my life, I became a pilot, learned how to fly, learned how to fly with instruments, and which means you're doing it where you can't see. The only way you save yourself is by having those checklists, having those systems to get through it. Running a business is no different than that. There's so much coming at you, and the vast majority of time, particularly when you start out, you have no experience at all in doing So how do you approach it? Well, you approach it by, by having a process, by having a system, and really it's standing on the shoulders of giants, right? It's the folks that came before us. So in my book are the things that, that I've learned and really learned from others, the people who were successful, people who were mentors for me, and the processes that I was able to do. I was able to go through and detail those out. And, and like I say, it was really the things I learned over my 30-year career and able to distill that down and You know, probably 20 years ago, as I was really getting my, my legs under me, the thing that I heard time and again is, boy, wouldn't it be great if we had something to follow, something that we could actually see? And through time, we put that together and we did it in the standard way that any business does— PowerPoints and Word documents and all that. And then as I kind of been getting further into my career, I, you know, I, I thought, why can't I put this together that maybe we can give back to everyone? Something I really like to do, put it out there for the world. And in today's world, when we're looking at these broad global issues, things happening all the time, when it's coming at you fast and you're not sure what to do, you need to have a stable rule set, a stable process that's proven to work under every condition. That's what you get with 80/20, right? It's a natural law started out with Pareto back well past 100 years ago. He figured it out then. It still works today. And that is your, your vast majority of what you get, 80% or greater of what you get comes from 20% of the things we do. And our whole process is based on nothing more than identifying that, identifying the math and taking appropriate actions for it.

Yeah, I also wrote about 80/20 in my book, Rise of the Reader. So we're sort of cut from the same cloth in terms of how much we value, you know, he was an economist and a philosopher and all sorts of other things. You say in your book, and I thought this was fun. If mathematics, as the old saying goes, is the queen of all sciences, 80/20 is the queen of all management processes. And then you go on to say it may well be the single most important assumption in managing the processes of a business to achieve strategic growth. So when you step into a new company, what role does 80/20 play? And for the audience, you know, there are a lot of small business owners or maybe entrepreneurial kind of C-level executives in a business. So I think this is going to be really relevant.

Yeah, I think you're exactly right. It works no matter what size the company is. It works no matter what type of company it is. I've been blessed to be across various, uh, roles, various different industries. I've never seen one yet that couldn't improve by focusing on the critical few things. So when I show up with day one, I have a 4-step process that we're gonna go do, and I talk about that in the book. But the very First process we look at, our very first step is what's our goal? Where are we going? And it's always a numerical goal simply because it sizes the prize. How big do we got to get to be successful? Right? And that will tell us right out of the math. Right? So when we're looking at what's our goal and where we're going, and the second step is get a strategy to achieve it. The third step is what's your structure that you're going to have in order to go achieve that? That's the one most people. Or most companies typically fail at. They don't reorganize themselves. They just keep doing what they were doing. And the final one is, what's the actions? You write down what you're going to go do. So you're in that first meeting and you're trying to take and get the team to buy into what's the goal. We start the data gathering exactly at the same time. We run that process in parallel and we can do it for a couple of reasons. Typically, the group that is working around the strategy is not necessarily the same group that's going to do the data. You and I were talking before we came on, you know, most of my products and most of what I do are already ongoing businesses, right? You can use it as a startup for sure. When we're doing that, it's just us. We don't have to convince anyone. But as soon as you hire one person, you've got to get that person aligned. And what you want to do is have something factual to talk about, something that is irrefutable. The math of what the business is doing is irrefutable. We may or may not know why it's doing it, but there's the math, right? Once you have that in front of you, you have something you can start talking about. You can start saying, how do we go improve it, right? So by starting the data right away, it gives you and your whole team a way to get through the process. And that's what makes this so powerful is you can get everyone aligned around a common goal.

And one of the big takeaways that I had from reading your book so far has been that, yes, you do need to have a strategic goal and you do, you do need to have an outcome in mind, but falling in love with the process of standardizing things and building a process and getting everybody aligned in the process is a very important piece of what you teach. And so could you tell everybody a little bit about the Stockdale Paradox and maybe why you decided to include this piece and this lesson in the book?

Yeah, one of the things about my book is, so I'm a big history buff and, you know, and I particularly like World War II and Founding Fathers and things like that. And if you read the book, you'll go through, there's all these little quotes in there. It's just like what I like to do. And so Admiral James Stockdale is a personal hero of mine. And he was in, he was in Vietnam, and he was taken prisoner of war. And, and those of you who follow any of the history, you know, John McCain, who was a senator and ran for president, he was also in there at the same time. So that kind of, kind of maybe bounds it for a certain group of people. So he gets out, 7 years goes by, he survives, and he's being interviewed by Jim Collins, a famous author who wrote this great book called Good to Great, right? Many of us have read that. It's a terrific book. If you haven't seen it, I'd recommend it, right? And a lot of wisdom in there. And Mr. Collins is interviewing him and asking him, how did you make it, right? It's amazing. It was torture. He was deprived of things. It was beatings, everything that could happen. And not only did he survive, he thrived, right? And, and, and he said, you know, how did you make it? What was the difference? He goes, well, that was easy. The optimist died first. And Mr. Collins was taken aback and said, what do you mean by that? He goes, well, listen, when you come into something like this, you have no idea what's going to go on. And it's bad. It's bad all over. You have to have faith and absolute certainty that you will make it through, that you will do what it takes. However, you must deal with the brutal fact of It is going to be hard, and you don't know when you're going to get through it.

Right?

And so taking those two together, a person is able to get themselves and their team through it, and that's critical. I can't tell you the number of times I've stood in front of people, and I've watched someone give an answer, and they'll say, "You know what? That's right. We're going to get that done," and then they'll time bound it and say, "It's it's done now," or "It's going to be done in a few weeks." Guess what? It doesn't get. Done in that amount of time. Some of these changes we go through are extraordinary, and it takes a long time to go through them. You have to set the reality that, one, you will get through it, and two, it will take time. And that's what the whole story about Admiral Stockdale is about, right, is, is that he went through the most brutal thing that he could get through, right, and he got his whole team through it by managing expectations appropriately. It's something we can all learn from.

Yeah, it reminds me of that quote and I'm going to butcher it, but it's the man who loves walking will move farther than the man who loves the destination or something like that. And so this is one common mistake I assume that when you step into a business you're going to find is people fall in love with the destination and they forget about the process. What are some other things, some other common mistakes that maybe bigger businesses are making and when you step in, it's clear as day, but for them, they can't see it? Hello, Book Thinkers family. A quick word from today's podcast sponsor. Today's episode is sponsored by Audible. Audible is the leading provider of spoken word entertainment and audiobooks ranging from bestsellers to celebrity memoirs, business, and my favorite, personal development. And as part of Audible's partnership with us, we're actually offering listeners a free 30-day trial. This trial includes 1 credit good for any premium selection titles you'd like on the whole platform. So that's pretty much any book, including the one we're talking about today. That book is yours to keep even after the trial is over. Now, this trial also includes access to Audible's Plus catalog of podcasts, audiobooks, guided wellness programs, and Audible Originals. You can listen all you want, no credits needed. Now, everyone on the Book Thinkers Instagram knows that I love physical paper books. There's nothing better than having a book in your hand, scribbling notes everywhere in the margins. I kind of tear those things up, but I've been completing an additional 20 to 30 books every single year using Audible by listening when I'm in the car, doing chores around the house, or while I'm on my morning walks or runs. You could take advantage of this free trial by clicking the link in today's show notes or going to www.bookthinkers.com/audibletrial. You will not regret it. Now back to today's episode.

Yeah, that's a great question. So, you know, my second big job I ever got, I almost killed the company, right? And I did this myself. So I'd went into the first company, I'd had a bunch of success. That's how I got the promotion for the next one, right? And I go into the second, uh, company and I start doing the exact same thing. And within short order, we were in trouble and the company was not doing well. People were leaving. And what I realized was that what works in one company does not necessarily work at another company. Michael Jordan is arguably one of the greatest basketball players in history. He still could not hit an inside curveball in baseball, and neither could I, right? So, so just because it works one place doesn't mean it'll work in another place. But what will work and will work every time is seeking answers and having a process to go find those answers. And the example I like to use is a doctor. So you're not feeling well, you got to go to the doctor. You go in, imagine 2 scenarios. The first scenario, doctor opens the door, throws in a prescription of penicillin, says, see you in 2 weeks. What was that, right? The second one, and maybe this is one that we would like to have, he comes in, he goes, Nick, how you feeling? Where does it hurt? Tell me about him. He seeks to understand. Now, he has a process that he goes through every bit of. He trained in school. He has a checklist he's working with there, and when he's done, he writes it all up. He documents what it is, and then based on all of that work, he'll make a recommendation. He will not give you penicillin if you're missing your finger. He might will go and solve the missing finger. However, if you have a right kind of cold, if there's certain kind of virus, there's medicine out there. He'll make sure he gets that to you. But to the man, and this is a great quote, I would say, that has only a hammer, everything looks like a nail. We have a whole toolset at our disposal. We must first seek to understand. And once we know what we're playing, what our blueprint is, what our game plan is, we know which tool to come and bear. And that's what I learned by almost bankrupting a company early in my career.

Well, it's a great lesson. And now I'm curious, this one might be kind of hard to answer, but how are you applying that same thinking to launching this book and launching all of the books that you're gonna put out there? Because this is an entirely different business for you. It's much smaller. It's a new territory, new industry. So when you step into book marketing, launching a book business, how the heck are you approaching that?

Yeah, you know, it's interesting. I am learning so much. So first thing for me is I'm a continuous learner. I love learning new things, and I'll roll my sleeves up and I'll get after it, right? I expect to fail time and again and again, and I brush myself off and I, and I get back in there, right? I, I, uh, I hired a company to build my website for me, and the company was fine and everything, and for whatever reason We could not get that. We worked on it a year. And so I get really frustrated, and I have a bit of a personality that's kind of a bulldog on things. I'll get excited about something, and I just run it, run it to ground, and which drives my wife crazy. So, so my wife— one of the things I didn't tell you is this year we had our, we had our first grandchild, grandson. So it's wonderful, and it's so exciting. And this is why I'm mentioning it. My wife has to go out of town to go see my, my daughter and my new grandson, right? She has to go babysit that. That's going on. So she leaves on Friday and she's gonna be gone a whole week. I did not sleep at all. I don't think in my office I was surrounded by like empty Mountain Dew cans and crackers. But I built that website in one week. Now it didn't work very well. But today, if you get a chance to go on there, I think you'll find that Maybe for someone who does it, I probably put together a very high C or maybe a low B website. But for me, I was so impressed that I got that thing up and going, and it got to be where, where, where I needed it at the time. Now, as time goes by, I'm like you. I'm starting to bring in other people. It's getting a little more successful who are helping me with these things. It'll continue to go. So the thing I always tell people is, first of all, you cannot fall out of a basement. So go try. Sometimes I feel like I'm trying to dig a hole in the bottom of the basement, but you can't fall out. So go try, right? And it is progress, not perfection. Give yourself a shot. Go defeat the white page. It's the hardest thing anyone does. Put something up there, go get some reaction, and then you start looking around. This is how you and I found each other, is who out there has— and it turns out almost everyone— more knowledge about this than I do. And I, I reach out to those people, and sometimes they— I'm fortunate they reach out to me as you did. And I'm able to start learning and looking and, and growing and listening and leveraging that knowledge, which I talk a little bit about in the book there. I call it the 3 L's. I'm able to take and go and build upon that. And while I'll never be an expert, I'll never, never get to the level that you are, I am far better off and, and having a great time doing it. I'm learning something I've never learned, uh, in my entire life.

So I know we're getting close to the end of this first interview. We'll have you on again to do a deeper dive. Maybe after the book is out. But I'm curious when, because there are a lot of small business owners in my audience and we get questions all the time about when is the right time to delegate because just like you, everybody wants to dive in and roll their sleeves up and learn the process. But there are people like you who are also running $2 billion companies. So it's like, what is the value of outsourcing compared to spending your own time on it? And how do you navigate those questions?

So in order to really figure it out, you have to compete. You have to have two competing thoughts in your head at exactly the same time. The first is you must have a basis of knowledge enough to to know what good lot looks like and where you're going with it. You know, I don't I don't need to know how to make sausage to know I like sausage, and I can identify what good sausage looks like without having done all that, right? So at the beginning, you're going to be way more involved in making the sausage than you probably ever wanted to do. But you're gonna, you're gonna learn from that, and you'll learn faster. As soon as you find yourself, you know, unable to, you know, progress more than, than where you need to be, you need to seek help. Now, how do you do that? You must put in a trigger point, right, that once you get to that, you're willing to take the next step. And what I mean by this is, and this is where, where people, I think, can sometimes get off track, is At the beginning, you must say, "I want to accomplish this, but I must accomplish it by this time." Right? If you don't put a time factor in it, you will run across it without even realizing, and you'll wind up wasting time that you could have said. All right, I got as far as I could. I can get further, but my diminishing returns are telling me now I must go do it. You, you know, I must seek help. Now, some people have more resources than others, and maybe your help is calling your. Your sister, your mom, or your brother and say, "Hey, do you know how to do a computer thing? Maybe you can afford to hire someone." But we all know people. We all have some level of resources and people out there. Call them, ask them. I have had the best help I have had so far. I have paid zero money for it, right? It was people who knew me, were excited about the journey I was taking, and wanted to be part of it. And just being part of it, you know, but it's your friends. It's People you work with, tell them what you're going through. It is amazing. It is absolutely amazing, the skill sets that are sitting around us every day. We have no idea because we only recognize them in the role they're playing for us today. But it's amazing what those people— and they want to come help. Go ask them for help.

So many people, they, they struggle asking for help, whether it's an ego thing or an insecurity thing. I mean, it could stem from a lot of different places, but It's fun to hear that somebody as successful as you is willing to ask for help and recognizes that you're not the smartest person in the room when it comes to social media or website building or podcasts or whatever the case is. So almost— that's a lot of fun.

Yeah, I'm not the smartest at almost anything.

That is fun. All right. Well, hey, great first conversation for people that would like to grab a copy of the book. Where should they go? What should they do?

Well, it's available in all fine bookstores, or will be. You can pre-order today. Uh, the book becomes— drops on February 27th. So it's available Amazon, Books-A-Million, uh, Barnes& Noble. So it's available across all, all the bookstores out there. It's also an e-format, right? So we have a— if you got a Kindle or Nook or something, it's available for that. And we have it in Audible as well. So we've got it in all the You want to listen to it, have it read to you, whatever you like. We're going to get it out there for you. So I hope everyone enjoys the book.

Did you do the audiobook?

I did do it. So you get to hear the dulce tones of Bill Kennedy whispering in your ear how to go do it. But it was a lot of fun. I'd never done that either. And I found a really bright guy in Canada who's done a ton of these, and and I can't recommend him him him enough. You know, his name's Johnny, and and and you know people like that. They go a little bit further for you, and it makes it a special journey.

Shout out, Johnny. Well, hey, Bill, thank you so much. I look forward to having you on the show again, and fantastic book.

Thank you so much. And by the way, I got to read your book too. I thought it was absolutely outstanding, right? Great book. I'd highly recommend everyone to get out there, get a copy of Nick's book as well. You'll learn a lot with it.

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