Sara Hanks' Story of Professional Growth and Mentorship

Wonderful. No, I didn't know that. Congratulations. It

That's cool. That's cool.

Have you any idea what it was that excited you about math and physics in grade school?

How much of it do you think you knew intuitively versus had to learn?

I had the same dilemma and I was bored. And my mother was a teacher. She was a vice principal. My grandmother's a teacher. And they were on my case like you wouldn't believe. So I go to university at 16 just because of my birthday, not because of my brains. I had, I made deals. I would go to the lectures and see who was any good. But if the guy didn't give me any joy, I didn't go back. Yeah. The next time he saw me was at the exam. And they were always surprised they had to check my ID because they'd never seen me. Yeah. And the only thing I got caught with was labs because you couldn't think that. You had to

Well, they excited me. Physics labs were kind of fun. But then I come forward and here's my grandson. And he's 17. And he goes into the Navy. And he had an exam in his senior year. And he comes out and he says, oh, that was terrible. I didn't know any of it. I had to guess at a whole bunch of it. And he got an A. He knew it intuitively. And we were talking about it afterwards. He says, yeah, it felt like it was right. So that's what I put down there. And then to talk about grades and discipline and laziness, that's what my blog was this week on Ho 'oponopono. You have to take personal responsibility. I was a D student. Because at the same time as I was taking my undergrad, I was across town teaching at another university. Wow. For my junior year. And I thought it was cool because it was in athletics. It was in water sports, which is what I did a lot of. And I thought it'd be cool to do because I'd see babes in bathing suits.

You know, you can see where the priority was. And I was never serious about women. I was girls. My wife was the first girl that I actually felt any affinity to. So we have that challenge for you. It's too easy. You got lazy. Grades didn't turn your crank. You chose engineering, not staying with math physics. Why did you go to engineering?

Yeah. And that's probably pretty high for the day. What school was it, Sarah?

Yeah, it's a really different world. There's a whole host of things that become kind of interesting. Again, relative to the clouds being upside down. In 1900, here comes Henry Ford manufacturing cars. And we had 44 miles of road in America at that time. But business, government, labor, schools all agreed that the skill level of the workers coming out of school had to be hired to be employable in this new world. So between 1900, and it's statistically true and measurable, between 1900 and 1970, America developed, beyond any doubt, the best education system on the planet. We had the most capable workforce and all the rest. Now, in the middle of that, or part of it in the later stages, came the war. And now traditional thinking, because part of why education was good is the smartest women were either in medicine, nurses, or in education as teachers. And if you were a teacher societally, believe it or not, you were not allowed to get married.

You had to devote yourself to developing your children. So women were either teachers, nurses, or homemakers. Until World War II, when Rosie the Riveter came on and the men all disappeared, the women had to stand in. Women did a wonderful job. The men come back. It's 1946. The women have to revert. But wait a second.

When they were doing the other, and they say, wait a second. So the smarter nurses became doctors. The smarter teachers went into business. And more people left the homemaking role and went into work. So since 1970 to date, every year since, the education delivery system has failed. The grades in reading and mathematics have gone down every damn year. The SAT score has been recalibrated three times. The high watermark was 1963, and ever since then, it's gone down. I mean, these are all statistical truths that you can check. So here we are now. And I'm going to go to 1980, roughly, when Time magazine had a cover that was about the Japanese taking over North America because of Kaizen, because of total quality management, both of which started with Deming and Durand, who couldn't make it happen here. They went to Japan and then brought it back. And kind of that's looking right down the throat. So now you get a job, you go into business.

Where did you start?

And the beautiful thing about that is, and I had the same thing, and I don't know how or why it happened. It just happened. But I was listening to an interview with Ron Howard yesterday. And Othie from the Andy Griffith Show, right? Yeah. And it was a wonderful interview. It went about an hour and a half. And if you get a chance, it's on YouTube somewhere. And he was talking about being a director at 23. And all of the people, the stars that he had to direct, John Wayne, you know, so the one he mentioned was Betty Davis. Okay. And at that time, she must have been in her 80s, if not her 90s. And they introduced and he was a little anxious and she didn't really give much to him. And she called him Mr. Howard all the time. And you learn a lot about Ron Howard in the interviews. pretty special individual. And he found out, he did a lot of research on her, he does on everybody. And he found out who her favorite director was. Okay.

That guy always wore a suit on set. So one day, she's sitting in the makeup chair waiting to go on to a scene. And behind the lights, here he comes walking in. And she can't, you know, who is that? And he's wearing a suit and a tie, and he's formally dressed. And they have a little discussion and a disagreement about a scene on how it's to be played. And he said, do me a favor, let's just have one cut this way. And she said, okay, I'll humor you. And they did it. And it was phenomenal. It went into the movie. And she walked off the set, patting him on the ass and said, That was pretty good, Ron. And it's like, how do you get this crusty guy who's been doing this job for 30,40 years the same way? And here's this young whippersnapper lady who's showing him a different way to consider things. Look at the clouds upside down.

And he did it. Yeah. And he had an aha moment. saying, geez, why didn't I see that earlier? But that's not human nature. There's some people like you that get really excited about digging underneath the covers and finding out how things work and what the hell's wrong with this because we can do it better this way. Either I can make more money or I'll save more money, I'll make a better product, I'll have more worthwhile, whatever it is, we'll do it better. And you were given freedom because you delivered. Yeah.

And how old was your boss?

Oh, so you were both pretty young. Yeah. Yeah. It's typical of Welsh though, isn't it?

Competition is, a lot of people are afraid of it. And that's kind of why in our culture for the last 40 years, we've had these participation trophies. Oh, gosh. You know, rather than let's celebrate whoever the best is and let's try and learn from that.

do it better. Yeah, but the other part of it is we're not all stars.

differentiation.

That was probably the first lesson I was given, that you're not here to compete with anybody other than yourself. I was a swimmer, so if I finished last in a race, but I beat my best time, I won. Yeah. And that was imbued in. buried in me from a very, very young age. The second thing was I got fired five or six times by a guy who if he was still alive and he called, said he needed help, I'd just ask where he was and I'd be gone. I love this man. And the lesson I learned from him was never, ever settle. If you can't give me your best, I don't want to see what you're going to give me in its place. And that's kind of intimidating. Both of them are intimidating. And both of them. they're kind of a cross to carry, aren't they? You're never going to be good enough. You can always do better. And that's a drive that's different than, oh, that's easy, so I don't need to study. I can get through this thing easily.

But it's the other end of the coin, isn't it?

And I don't want to change anything in my life, but that's not a good place to be for somebody who's a competitive idiot like I am. doesn't want to sell. I used to, Marlene, my wife, bless her, in our first number of years, I used to do a personal evaluation of my life in December every year. And after a couple of years of this, she came to me and said, Ronnie, I need you to go get in a hotel when you do this because you're not very good to be around for that two-week period of time. And I reflected, so I stopped doing it. I must have been terrible. But have you had performance reviews?

Have they helped you?

Okay. So how were they done? What do you think that performance review was trying to do to you?

Again, it's kind of an evolution in business with the boss in the front of the room on a raised dais with a hat on, visor, looking down on his stable of employees and criticizing poor performance rather than encouraging good performance. And then last year, when the Federal Reserve finally decided they were going to start attacking inflation, the Falsy Journal had on the front page the fact that major corporations were going to return to performance reviews on steroids because they were determined to find the people that weren't standing up to the job. And my whole deal with performance reviews is to have a discussion with the employee about what can I do to help you get better? And so it goes back to our assessments, our job function skills assessments, skills and knowledge assessments,96 questions, multiple choice. And it was a client that got me to do that. He said, I wish I knew who I should be spending money on for training and who not.

He said, because the only way I know is after they've completed one of your classes and they don't do very well. He said, can't you give me something that'll evaluate? And so that was the genesis. That was the seed that created these 18 job functions.

And this man, who was the executive vice president of a large organization in the distribution channel, he did both sides, the dealer and the manufacturer, said after five years, he had replaced 25 to 40% of his staff. Because he found that all they were doing was taking oxygen out of the room. Rather a startling statement.

Well, if you start with the place that my granddaughter calls it quiet quitting. younger generations are going to work. They're getting their money. They don't really, they do the least that they have to do and they go home. Sure. And, you know, neither of my grandkids are that way. And, you know, it's almost a disease in the family. My daughter, the same thing. We're all maniacs for work. So my granddaughter is getting a master's at 22. Not bad. She's already teaching. It's crazy stuff. But our assessments break down skills. into discernible education levels. It's called developing, beginning, intermediate, and advanced. That's what the school world has as gradations.

Yep. So what we've done is we've taken eight classes for every one of those areas. You get a score less than 50%. That's called developing. And here's eight classes you should take. And now we're building learning paths for classes that or accelerate the program. And it's unbelievable the change. You still have the circumstance that the employee who cares does really well, but you find out real quick who doesn't. So this gentleman who said that, you know, call it 25% of his workers are just taking oxygen. We talked back and forth and I said to him, you need to hire more people because customer service has gone into the toilet. And this brings me back to Deming and Duran, that we're in a rut. We view employees as tools in a toolbox. If things change, we change the tool. We don't try and do any development. Like when you went onboarded in the first 24 months of your arrival of General Electric, you were in training programs for 24 of those months.

And your education, in my view, starts when you leave school, not ends, which most people figure.

So how long were you at General Electric?

And what did you think you were going to do when you were divested? That's a pretty major change in your life. Sure.

You've been through schooling. You found your way to get into a job. The job was good. You liked it. You were productive at it. And all of a sudden it's over. Okay. What did that do to your head?

That's pretty impressive. That's

Welcome to my world.

A self-imposed rut, an organizationally imposed rut.

It's really interesting listening to, you know, talented people of which you're one. You know, Steve Clay, who is another colleague and contributor, graduated from the Air Force Academy. Any of the service academies are pretty tough duty. Then he went to the University of Chicago to get his MBA. One of his professors was Milton Friedman, who's kind of the father of economics before Art Laffer. And at 22, Friedman had Steve at his house sitting on the balcony with two or three other professors peppering him about a paper he had written that was about interest rates, the U.S. dollar and employment. And he was so impressed with it that. He got in charge in touch with Paul Volcker, who was head of the Federal Reserve at that time. And the Federal Reserve had Steve sit with them in New York City. They paid for him to go from Chicago to New York and explain this paper. And they've been using that as a foundation of a lot of the work ever since.

This guy is amazingly, and he's a very, very humble, wonderful man. So he leaves academia, he leaves school, and he goes to work for a consulting company called W.R. Grace. Okay. And this is a long time ago. And in those days, consulting companies choked on data. They didn't have any information. So Steve got involved in creating computer programs and organizing it and transforming that data into information that could be used. And then after that period, he went to work for Avis, a car company. Okay, yeah. And he was in charge of all of the purchasing and market. analysis of the world. And so that got him looking down the throat of how business performance could be measured. And then he was hired to come into a company that bought and sold businesses. So they'd go out, so think of the data evaluation, the systems work and taking data, transferring into information, then developing the algorithms to look at how business could perform.

Now I'm going to test this. I'm going to buy businesses. We're going to go in. We're going to do exactly what you do. Find all the holes, make the changes, implement them. Then we're going to sell it and do it again. Yeah. And you've got a very similar pattern. So what are you doing today? What is your business today?

Okay, so it's free stream on there. Let me try and put that into it. Let me see if I understand what it is. You've got two guys that are primarily techies, system design and application.

And one person who is looking for bottlenecks. And so in effect, you review a business and give them kind of a roadmap of here's the good news, the bad news, and the... not so different with us. That's right. So the good, the bad, the ugly. And do you charge for that?

How long is the initial consultation?

Okay. So from that one or two hour discussion, that's kind of an exploratory discussion. Yep. You're going to create a proposal, a quotation, a timeline and tell them what the deliverables are that you're going to do. That's right. And if you get the work, then you create a team and go in and get into details. put the documentation, here's the executables, here's the process changes, blah, blah, blah. That's

And then I said back to about a year later, you come back in and do a postmortem and here's the good, the bad of what was done. Here's the openings that continue. It's kind of like repairing something, right? I got to determine what's wrong. I'm going to give you a proposal. I'm going to correct it. And then a year later, I want to come back and make sure that everything that I told you was there. Bye.

long?

OK, so there's there's the other missing element. Are you instituting new KPIs or are you using their KPIs or what are you doing that?

Okay, so that's one business. That's hardcore process improvement, I'm going to call it.

Technology today with everything that's going on, I'm going to put it into three camps. I have a business called the Capital Goods Sages with a guy by the name of Dale Hannah that has 200 metrics for people in the capital goods distribution channels across part service sales, rentals, and administration. And I've used that tool across almost all of the major manufacturers all around the world. So I've got standards by manufacturer by geography. It's all interactive. We used to do this with meetings. Everybody would send in their financials and I'd put it into a model like what you're doing and come back. We'd have a discussion and look at best in class and all the rest of that stuff. And the business owners were the guys and the leaders were the ones that were in the room. And they're competitive idiots. Whoever was last in one meeting didn't want to be last again. So the next meeting.

So over the course of time, we took the net income of that group. There were 12 of them. Everybody used the term 20 groups. I thought 10 to 12 was better. And we took the net income of these businesses up between three and a half and 5% as a group over five years. And yeah, it's pretty dramatic. And it was too much work. It was too much travel. So I said, well, only we're going to put it on the internet, which is what Dale and I did. And people put their data in. They get a scorecard. It's kind of like your GE thing, the red, green, yellow type of stuff. And then for every metric, I'm in the process this year of putting five tips that people can use. And it's kind of like a DIY, D-I-F-Y. So here's the tips, and we'll do those interactively. It's $25, $50, $100, $250, whatever. Yeah. And if that doesn't work, then I got a bunch of retired guys I call aces who will go in and do consulting work for you.

If you don't know how to do it, we've got people that can do that for you. And it's amazing how all of this stuff, people truly do want to make change. But now we've got a generation thing going on. I'm going to say 40 to 45 years old and down. They'll change. 50 and 55 years old, they're hanging on. They don't want to change anything. They've got more money than they've ever made in their lives. And this is cool. Are you seeing that in this work that you do where you have the one or two hour discussion?

So how do it, this is what, this is the clouds are upside down thing. How do we accelerate this process? How do we get, like I always used to look for a champion, somebody who's going to carry the torch and make this damn thing happen. Because you've got to be committed. If you aren't, when you run into an obstacle, you'll run. And there's no way for that. So in my early consulting years, you and I talked about this. I'd go in, I'd do the same thing you're doing. And I'd leave them a to-do list sort of thing. And at the end of it, I'd say, well, if you want, I'll come back and I'll implement it for you. And about half the time, I ended up implementing it. And it's an interesting evolution. So shift gears now. What's the other business that you're involved in? That's one of them.

You know, it's really, that's an important point. Let's stay there for a second. You learn nothing from success. You only learn from failure. True. And failures are actually a gift. You just can't let it destroy you. It has nothing to do with you just happened to have made a mistake. That's okay. And if you're not making a mistake, what the hell? You're not learning.

Well, it is, but you want to talk about an amorphous organization that's built like an amoeba. It's a single cell. And how long do things take?

So leverage for data is you and how many others?

What is the other company called?

Virtual Leverage, okay. Yep.

So what else is coming down out of the fertile mind of Sarah Hanks? You've got the software business, the virtual solution, the virtual leverage. You've got the consulting slash training leverage for data that's being, let me call it, re-energized and more clearly defined. Yes. What else is there going to be?

Okay, no, that's cool. So one of the things that I've always believed growing up in Canada, my family originally were dairy farmers. And I was the first boy born. And my uncle, Henry, who ran the dairy farm was ecstatic. because now he had somebody he could pass his business to. And I was not at all interested. That's really hard work. And this is before the milking machines. So I grew up with the philosophy that everything in life was a three-legged stool. You needed to balance three things always. People, money, purpose kind of thing. And if any one of them was suspect, you'd fall on your keister. And I believed that until I spent a lot of time in Europe and found out the milking stool they used in Europe had only one leg. And they put their forehead on the side of the cow while they're milking. And they got the, I mean, it's much smarter, much more cost effective. It's a better approach to life.

But that three stool, the three-legged stool thing has stuck with me my whole damn life. So I had the teaching leg. I had the consulting leg. And they had the financial evaluation leg. Insight Institute was the 20 groups. Quest Learning Center was the education. RJ Slade and Associated was the consulting. There we go. Now there's only one left and it's learning without scars. So there is a third leg there and let your mind put it out and there's synergy between all three. Okay. So we look at the world. you and I, and many others. We see opportunities. We see shortfalls. We see lack of efficiency. We see people's primary purpose in life is to make money. And they're doing everything that they can to make more money in their company. General Electric with Welch did it in a red light, green light type of circumstance for all his direct reports. Elon Musk does the same thing.

throwing $2 billion at SpaceX and none of them have made it into, you know, they explode. But the US government's funding that. Nobody really cares. And that's cool. So if I'm making money, what companies seem to have been doing is shedding people.

And the circumstance in America is we've got fewer people doing more work with less time.

All together. So we've got Jay Lucas, who purchased Jordan Sitter, one of the largest recruiting businesses in the capital goods industries, and John Dowling, who's running the construction equipment piece of that puzzle for Jay, trying to figure out they're selling recruiting services on a monthly basis. Then we've got John Sessoms, who does that for technicians. He does recruiting through advertising on social media, et cetera, and charges his clients not for placing people. It's not the 25% of your wages I'm going to get if I place you. It's you're going to pay for my getting people for you. And through all of that process, we've got systems people. So here comes all of them, SAP, JD Edwards, Microsoft Dynamics, DIS, all these people. Not one of those key software providers in the industry knows anything about the damn business.

It's stunning.

And what the hell was the reason that it is not usable? And how do I make it better in the next case?

So I'm sitting in a meeting in Chicago. This is a long number of years ago. with one of the major, not Oracle, but one of that kind of stature. And I have their European and Asian counterparts on that. That makes it a little harder for people to figure out who I'm talking about. I was the only one in the room in Chicago that didn't have a master's degree. And I'm telling the international people that their product needed to be developed and presented in a different manner. And they proceeded to lecture me on how Data storage wasn't an issue. It's cheap. Memory is not an issue. It's cheap. It doesn't matter how big it is. And my statement was, of course it does, because the people using the software have to understand what the hell it does. And the answer that came back to me was, oh, no, no, no. That's where we make our money. We make our money from consulting.

course you do, because your product's no damn good.

Yes, and it's remarkable. So we have people who are selling system solutions to businesses that they don't understand. We have businesses in the capital goods industries that are being led by people who are beyond their expiration date. And I mean that nicely. Because I've worked with most of these guys and they all recognize the same thing. It's time to get out, but they don't know how to escape. And the transition to the next crowd has been delayed. People are not viewed as an asset. They're viewed as a tool. We're getting rid of people to make more money. And we're slashing customer service and losing customers right, left and center. Here's a good example. I started in 1969 and in 1965, Caterpillar, at that time, I was with a Caterpillar dealer. They interviewed personally every customer, everybody who owned a machine everywhere in the world had a sit down interview.

It was unbelievable. A friend of mine, Ray Pohlhills, his name, took over in 1966 and they did 20% a year instead of 100% every five years. And Ray, to this day, defends it on the basis that it's much more cost effective to do it that way. I said, your delay in response is what's going to kill you. So in 1970, first time I saw a report, the market share for Caterpillar machinery, the dealer would get 83%,83 point something percent of the parts business went to the Caterpillar dealer for parts that went on the Caterpillar machine. Okay. That's pretty powerful. That's really good. I used to call it a printing press. They'd make money. It was easy. I'm putting a talk on in Biloxi, Mississippi in the early 2000s. I got 100 to 150 Caterpillar people in the room, dealers and manufacturers, and the guy who ran North America is in the room. And I wandered the floor. I'm a teacher. I've got a lavalier on, but I wander around with a mic.

And here's this guy. I go up to him. I stick the mic in his face. And I said, thanks for being here. Really appreciate it. Would you mind if I asked you a question? He said, no, go ahead. Because he saw the whole room was interactive. That's the way I teach. And I said, what's the market share for Caterpillar dealers on parts that go on a Caterpillar machines? And without too much of a delay, he said 38.3%. And I thanked him for being so honest. He said, there's no point in being dishonest. That's not a good number. I said, absolutely not. Because when I started, it was 83%. Yeah. So in the last 50 years, you've lost more than 50% of your market share. Yep. And I'm looking at the room and I'm saying, and every one of you suckers is making more money every year, correct? They said, yes. I said, you realize, have you got any idea why that's true? Is it because you're better?

The number of dealers that are competing in the marketplace over the previous 20 years have gone down by 50%.

If you're not selling more, what's wrong with you? So it's kind of like the proverbial duck swimming in the water. Everything looks peaceful, but the feet underneath are going like mania. Sales are going up. We think everything's good. The market share is going down by 50. Yeah. And I used to say, congratulations, you know, you got another 40% you can lose. And they kind of look at me. What do you mean? Well, you've gone from 80 to 40. Now we'll go from 40 to 20. And you won't care. How do we fix this? I can't come up with a solution. Everybody I talk to like you on this particular subject recognizes where we are, what the situation looks like, but we don't have a solution. Have you got one?

I don't know how to scale any of that. At the moment, we can't. It's Jacques Cartier coming across from France to Canada in 1535. It's Christopher Columbus coming from Europe to the islands in 1492. It's the Vikings arriving in Newfoundland in the year 1000. It's the Russians coming across the land bridge in Alaska in 1000 BC. All of these things, and we're at that place, and it's a good place to end this. Because we're also at a place where from data analytics, with artificial intelligence, with where technology is now, it's kind of magic. You're going to have a nerve center that's going to be the database. People are going to own the data fields. Can't do anything with that data field without the approval of Sarah Hanks. And that's not true today, but that's coming. And then we're going to have best in class. So SaaS, systems as a service, IoT, Internet of Things, all of these things. So Salesforce, best in class today.

Target, best in class today. Just use small examples, and they're not necessarily best in class. Just use that as an example. And so you're going to have this octopus in the cloud, the nerve center, mission control, whatever you want to call it, that's the database. And you're going to have all of these arms that are best in class. And the software people, the consulting people, the business people are going to partner with the best in class because that's transitory. You've got to work your ass off to stay best in class. We've seen that. Yeah. Or they're going to buy them, which is it's OK, but it's short term spends a lot more money. Or they're going to produce it like we used to do. You're going to build it. Yeah. So I got the three P's. You're going to partner. You're going to. purchase or you're going to produce. Yeah. And we're not at that place yet.

We got a whole bunch of people talking about it, thinking about it, but there's not enough resource who marry the technology thinking with the business operation thinking.

With the leadership thing, which is what Steve Clegg and I are trying to do. He's got a scorecard for business performance, A, B, C, D. I've got a scorecard for operating skills and knowledge. management, ABCD. Now we're looking at a couple of tools to evaluate the leadership quotient. We've got a guy by the name of David Jensen who has a tabletop exercise. He ran HR for Sarah Lee that gives us a profile of who they are. And then we've got John Carlson in executive function who that's a tool that was used in university to determine the success of students 10 years into their workplace. I mean, this is coming. But I ain't going to see it, Sarah. I'm too old already. So you've got to carry the torch. Sounds good. No, I think you're right. We're making progress. It's one person at a time. And don't worry about scaling it. Just worry about making sure you've got enough on the table and you can look after your life properly.

Oh, I agree.

And that's a good way to close this. I think we have looked at. What you and I do, the markets that we work in, from a clouds or upside down perspective, from a different perspective. And I want to thank you for contributing to this discussion. And I want to thank everybody who stuck with it and listened to this. And, you know, there's a lot to do and there's limited time. So get off your tush, folks, and get to work. So thank you very much, Sarah, and thank everybody for listening. Mahalo. We will see you at another conversation, either on the clouds or upside down or the candid conversation in the near future. Mahalo. Thank you for listening to our podcast. We appreciate your support. Should you have any thoughts or comments, please don't hesitate to contact us at www. learningwithoutscars. com. The time is now. Mahalo.