How to Go From Visionary to Change Agent to Triumphant with David Johnson

My guest today is David Johnson. David has a 20 year track record of driving organizational change. He's a turnaround expert, and often turnarounds bring with them negative connotations. harsh realities lost jobs cutthroat decision making. You will however, find that David is different. And I know you'll appreciate his unique perspectives and pragmatic advice for how to go from visionary to change agent to triumphant. I'm glad you're here to hear from David.

Welcome to the Courage of a Leader podcast. This is where you hear real life stories of top leaders achieving extraordinary results. And you get practical advice and techniques, you can immediately apply for your own success. This is where you will get inspired. And take bold, courageous action. I'm so glad you can join us. I'm your host, Amy Riley. Now, are you ready to step into the full power of your leadership and achieve the results you care about most? Let's ignite the courage of a leader.

David, you have had a focused career and an expertise that you have been building. And many would call you a turnaround expert turnaround guru. And often when we think about turnaround people, we also think focused harsh realities, cutthroat yet you would describe yourself as a full spectrum change agent. And I know you like to bring a sense of the possible. So how do you do that? How do you when you're embarking on a large scale change effort? How do you get yourself and those around you excited are thinking positively about what's coming?

Well, thank you for that, Amy. And I think it's absolutely true that my area of specialty is misunderstood. I think that many of the challenges of those with my skill set come comes down to a set of very negative associations. Yep, some of that is unavoidable. And some of that, frankly, is due to a little bit of carelessness or lack of care from practitioners. Okay? Change has got to be rooted in where you are currently. And you you need to as a foundational matter, you need to base your change efforts on where a company and organization object a team objectively is, uh huh. But to me, there's this exciting creative aspect of this is where we are now. And this isn't to blame, or to shame anyone. It's so that we can look clearly at where we are, and talk about where we want to be, and talk about what needs to happen to bridge that gap. What I see in my practice is many times, organizations that have failed to affect change, have done so because they're uncomfortable with first grounding themselves in objective reality. They have this sense of, we're over here, but you're not you're you're somewhere else. And usually, unfortunately, you're in a worse place. But it's better for the organization to understand and to recognize the reality so that you can build up. Because if you always tell yourself, you're better than you are, you're not really going to be able to determine clearly in an executable manner, what is going to be necessary to help you get to where you want to go. You'll always fall short, because there's going to be that delta, that little white lie that you've told yourself. You have to get rid of that. But getting rid of that gives you the opportunity to shoot so much further ahead. Because you were clear eyed about where you're starting.

Yeah, yeah. I like how you're talking about this, David. We all like to talk about where do we want to go right let's let's get there. That's going to be Exciting, yet when that is rooted in reality, and what factually is so about the current circumstances, then you're going to have a really realistic view of how do we close that gap. Right? And now I know I'm not telling myself Little White Lies, or I'm in denial somehow. But here's what we've got to accomplish, and had let's go accomplish that, right? So many can see that change is needed. Right? And we might feel overwhelmed by that, right? Maybe we might feel like, oh, gosh, or systems need to change processes need to change, we need to evolve, we need to do some of what our competitors are doing. There might be people changes needed, whatever it is, it can feel overwhelming. Okay. How do we know where to start?

I think that it comes down to two fold a two fold approach in terms of where to start, okay. It's critically important to look at change opportunities that are low hanging fruit that are quickly executed. And it's also very important to I advocate for my clients, we're going to embark on a process of catalyzing self sustaining change. So what, what change elements can I bring in, can I get started that once that is happening, the next level of change is going to be easier. It's supporting, I'm trying to create a virtuous cycle. And when you, when you look at it through that twin lens, it really simplifies things because it cuts down significantly, the number of it cuts down significantly the total population of change elements that you would go at immediately. So and again, this sounds like a turnaround person, but I believe that it really does help a lot. If you're not profitable, you need to drive quickly toward profitability, and maybe toward positive cash flow first, and then profitability, because that is sustaining change that is going to create the capacity for further investment, which is going to create the capacity for further growth. Yeah, I think we put that off. You, you aren't really creating sustaining chain, you're just kind of starting and stopping.

Yes, yes. And I think everybody gets we need to be profitable businesses. They need to be profitable to keep existing and do all the other things that it can do. I like this, like thinking in parallel paths, right? How do we get some of that low hanging fruit so we get some successes, people feel it, there's momentum created, then I like how you framed, catalyzing the self sustaining change, right, and what needs to be set up as the foundation for the next step, and then as a foundation for the next phase. David, you already have told us so much great stuff. Let me let the listeners know more about who you are. David Johnson is the Founder and Managing Partner of Abraxis group has a 20 year track record of driving organizational change. David has served as an interim executive or financial advisor to dozens of middle market companies in transition. Throughout his career, David has demonstrated a commitment to thought leadership with numerous speaking engagements and articles on the topics of change management, performance improvement, restructuring and turnaround to his credit, David received his MBA from the University of Chicago and completed his undergraduate studies at Farley Dickinson University. David, I'm so glad that you're here to talk about change.

Thank you so much. It's a pleasure.

Yeah, so glad you're here. Change scares people. Right? We don't like change. I mean, David, I don't like getting a new iPhone and to all the new pieces that oh my gosh, now it's lost my password. I dread it which I sheepishly and humorously admit, as we're making changes along these two parallel paths that we just talked about. How do you help people get more comfortable? How do you help make change? Interesting no harm.

I think that the the critical piece is transparency, I believe in communicating to the fullest extent that I responsibly can based on the stakeholder constituency that I'm speaking with. So if I'm speaking to employees at the staff level, there are things I can't share with them. But I'm going to share everything that I can with them. And I try to carry that across all of my engagements. And with all stakeholder constituencies, I will tell my suppliers, everything I possibly can tell them, I won't tell them any more. But I'll tell them all that I can, I will share everything I can with my leadership team. So they have. And the purpose of that is to reset expectations. I'm not hiding anything from you. I'm telling you all that I can. And in many cases, every case that I've found so far, far more than my predecessor was willing to tell you. And that gives me a level of credibility that, really, you see that your audience's opening up, because you've brought something to the table that they didn't have before. And that's really an opening to start talking about, hey, look, I'm bringing transparency, we have to do some things. I recognize it's going to be hard. But there are going to be benefits for you, you're going to know more about what we're doing and why we're doing it, you're going to hear more. And I also believe in being incredibly upfront about the painful pieces, guys. So a lot of times I'm introduced in a town hall. And generally speaking, I have been around the company a little bit, generally, I will be brought in as a financial advisor to do an assessment. That assessment is usually two to four weeks. And I'm there about part time interviewing people wandering around. And then there's usually about a two week span of time when I'm negotiating with the client. And then I'm back in a C-level, interim executive position. So when I get introduced, it's after I've already been there. So people have seen me, but they don't really know me. Yep, yeah. And all of a sudden, these people that were telling me some things, I'm being introduced in the role in some cases in a position that the company's never had before. And in some cases in a position in which the predecessor was extremely long, tenured. Yeah. And that can create a lot of discomfort. So I'm very frank, this is who I am. This is my background. This is what I'm here to do. This is what you can expect of me.

Love this, David. Yeah, that people like, Okay, we know that David's going to tell it to us straight. He's gonna tell us everything about who he is, why he's here. I love that you talk about talking about what's hard, and going to be painful, and what the benefits are, right? I think so many of us leaders, when we're working to create change, when we're being the change agent, the one who's leading it, we want to get everybody focused on this great, ideal future that we're going to have. But we're also not talking enough about what it's going to take to get there. And people know people know it's going to take work and discomfort and some pain to get there. So they do great to speak directly to it.

It's so important also, to piggyback on what you're saying to meet people where they're at. And this is an area where I continue to work and refine my skills. I'm not where I want to be, although I feel like I'm much better than I used to be. In my career at my current client, we're looking to drive a bonus culture, culture of, hey, look, you're going to share in our upside, but it's a real change for people and communicating that this is a true opportunity for you and I want you to participate in our improved performance. A there is pushback in I'd rather just have my base salary increase. Well, look, this is why this way works for both of us whereas That doesn't. You have to be comfortable with those give and take conversations. And you have to be comfortable understanding that transparency with your stakeholders is going to foster some conversations that can get tense, because you're telling people where you're really at. And telling them where you're really at can can cause some frustration, but it's better to get it out. It's better to be clear about it, then try to get away with avoiding the awkward conversation, and then you have a much worse conversation down the road. I told you straight up as soon as I knew what this was, where we were going, this is why and what you can expect of me. And here we are now. And I can refer you to that prior conversation. And you'll see over time that I'm rigorously fair in that, you got what I told you, you would get. Yeah,

yeah, so many important reasons to be transparent. First of all, knowledge is power. It is right, we're most uncomfortable when there's unknowns, right? And when you're telling us as much as you can, as soon as you can, right, then you're knocking out those unknowns for us. And wanted to translate this guidance that you're giving us to all team leaders out there. When we're in middle management, and we're making a change. Right, David said, share what you can. So for some of us, we got to get clear on what can we share. So ask HR, ask your leadership, find out what is it okay, like, I want to share as much as I can. What is that? That's because I think lots of times leaders are uncomfortable, because they're like, Oh, what if it gets into a place? And I'm not sure that I can say that? Well, be sure before you go into that conversation. And when we give that transparency, knowing it's going to generate dialogue, and being able to be with those emotions, being with those thoughts and feelings. Listen to them. This could be a lot of great information. What are they concerned about? What obstacles do they see?

It really can. And that's a reason that I love town halls for those companies that have a large enough in person contingent, obviously, you can do so much, remotely now. And that's always fair. But to me, there is a special electricity with being in person. But I regardless of the medium, I love being having the opportunity to speak with stakeholders, particularly employees, and an open forum and seeing where the conversation goes. Because what I've learned is, when I'm transparent, yeah, consistently, it has this cascading effect. And you start seeing other people being transparent, and you start seeing silos breaking down. And what happens is issues that might not seem that important at the c-level bubble up, and you start seeing from the other point, other points of view, how actually, that problem that is pretty easy to solve is really a pain point for people. So I'll give a perfect example. I've been working for myself for a long time. I I don't have a lot of direct experience with being concerned with PTO paid time off. Okay. I can take whatever time off I need in between a case. And during a case, generally speaking for the first six to nine months, and taking very little time off and after that it's a responsible amount of time. But for middle managers and staff level employees, the difference between five days and 10 days, or 10 days and 15 days. Yeah, is absolutely enormous. Yeah. It's not native to my thinking, but when someone raises the issue, ah, that's an easy fix. You need more days. Okay.

Yeah. Are you getting your work done that that's easy? No, but I don't know. Unless you tell me that it's a problem here. Yeah. Yeah, only come Is with people feel uncomfortable? Yes, yes. Great example of something that we might just not think of Sure. But once it's once it's brought to us, our transparency allows for the transparency out there.

Many of us at a high level we, we operate in a milieu in which you can get quite a decent amount of time off. And you're used to working through vacations and everything. But it's not really a big deal to say, I'm going to be away for five days. Right? Then you talk to people that are new to middle management that are that are at a staff level, maybe they're at a company that hasn't really looked at those policies in a while. And completely different mindset.

Completely. David, you're taking me back, right? I've had my own business for over 25 years, and I had forgotten. And now you're having me remember, those initial job position negotiations? Pretty soon after college? Right. And number of weeks vacation was a huge right in that package. Yeah. No, David, I know that. You're a believer that turnaround efforts, big business transformation, can change needs to change, maybe we would love to have people thinking about it differently. Absolutely. Probably already talked about some of the elements of how that can shift how you would like to see it shift. What else would you like to add?

So I think one of the one of the greatly misunderstood elements in my chosen area is there's not a lot of understanding that a successful business transformation is a value creation supernova. People think about it in terms of all of the scary headlines, yes, there were layoffs, lots of cuts, a sharp elbowed person or a small army of sharp elbowed people came in, and it was massively disruptive. And unfortunately, there's too much of that. But what I always like to stress to my clients is we are partnering together to create an inordinate amount of value in a short time. And structured correctly, we should be able to get all of our stakeholders excited about that. Because a company going from a history of losses to upward sloping profitability, and cash flow is a company that is going to be valued very differently, and have a much brighter future. Yeah. And unfortunately, I don't feel like there is enough understanding or thinking about it in that way. It's all negative. And it's it doesn't need to be that way. A company that goes through this successful business transformation is a better customer. It's a better employer. It's a better wealth creation vehicle for owners. It's a better better if you're lending to it. There are so many ways in which it's just a better Counterparty. Yeah. And we don't talk about that enough. No, we don't hold the negative. We don't

hear those stories, right. Media, we want more of the stories of, of the transformation, the value creation, supernovas, power, powerful language. I mean, you've talked about so many possibilities, you're creating the value the Win Win Win silos breaking down. I know, I've heard you say before, like, what if we could just make every company out there? 20%. We're better right, creating more value?

Absolutely. Well, I'll share some numbers with you that really, really energize me. The United States middle market, traditionally defined as companies between 10 million and a billion dollars in revenue, okay, is approximately 200,000. companies, companies make that up in the US in the United States. Got it. If you include nonprofit organizations, yep. And from 5 million in revenue, okay, you add another 20 to 25,000. Okay, so you're talking about 225,000 organizations in the US United States alone that are at this size. Simply working with the companies that have a history of losses, and getting them to a executable path for consistent profitability is going to be a game changer for 30 to 50,000 of those, if you assume a normal distribution of performance that absolutely swamps a lot of what we talk about in terms of disruptive change, because you're talking about millions of employees, you're talking about so many stakeholders, communities, that will be better off lenders, that will be better off owners that will be better off. Yeah. We talk about creative destruction in terms of too often, and especially in the last decade or so in terms of oh, that's old. I'm going to go over here. I look at business transformation, as the essentially recycling and re energizing of the entire ecosystem. Yeah. I can't simply walk away from it. And we shouldn't

there's been money invested. There's been effort, there's been absolutely thinking and care and skills have gone into this.

Absolutely. And there's so much value to be created just in that transformation. go from bad to pretty good. And you're creating an inordinate amount of value. go from bad to great. And you're doing even better.

Yeah, yeah. I love this perspective. A final question, David? Sure. So advice for a team leader out there who wants to make a change? And they think folks are going to resist? What What would you tell them?

I would share a rule of thumb that I've developed in the last few years, and I believe heuristics, while not perfect can certainly be guiding principles for us. So this one, I call my 15/70/15. Okay. roughly 15% of your audience is hungry for change, and is with you from the start. There. You go into a room, you say I'm ready to change things, they're on board, you don't even have to finish the sentence. Yep. Okay. 15% are never going to get on board. They like things the way they are there. They're embedded in that many times they have a significant stake in the status quo, they are not going to change. Okay. Your job is to get the 70% in the middle. Those are persuadable people who are reluctant to give you their support, because they need to see it working. You You don't get over excited that you got the change ready, folks, because you should have those people from the get go. You don't waste time trying to get the last 15% Because they're never going to go with you. Your entire goal is to go from having 15% support to having 85% support.

Got it. And they need to see it working. They need to see it working. So that's taking me back to the parallel paths, David and that low hanging fruit, right? So there's seeing some of that work. So then once you knock one of those out, I'm here and make a big deal about it. Right, communicate and make sure everybody understands it, not just you're talking about it, the people impacted about it or impacted by it or talking about it. That's right. Okay, great.

Communicate rigorously, you look at it in terms almost of a political campaign, how can I get growing support for this change initiative? And that gets you back to how can I catalyze self sustaining change? How can this change initiatives support the next change initiative, which supports the next one and every one is a little bit more ambitious than the last? And

yeah, I love it. David, you have shared with us so many great things. And let me recap some of them for our listeners, the power of transparency, we're being transparent about what's going to be great. After we make these changes, and we're being transparent about the pain that you're gonna go through to get there. We're listening as others are being transparent. We've got our parallel paths, right, our low hanging fruit that we're working on, and then we're thinking about what is going to create the self sustaining change. That's right, what needs to be done foundationally for the next phase, for the next phase, you want to get folks rooted in where they are today. So that when you talk about, here's where we want to go, they've got a realistic view of how do we close that gap? Right. And then when you're thinking about making a change, you're going after that middle 70%? Absolutely, you've got 85% of the folks on board, and they need to see it working as soon and as often as you can enable them to see that. That's right. So much great stuff. I love your perspective and your approach. And you've got me excited about what's what's possible when we bring business transformation to existing companies. Thank you so much, David, for being on the courage of a leader podcast.

Thank you so much for having me. It was a pleasure.

Thank you. Thanks.