How Great Leaders Turn Engineering Into Growth | Ep. 75 [Bill Kleftis]

What separates leaders who simply manage engineering from those who turn it into a true engine for growth, margin, and shareholder value?

In this episode of Industry Ignited, Dr. Leeanne Aguilar sits down with Bill Kleftis, CEO of Spartan Consulting Solutions, to unpack the real-world leadership lessons behind building high-performing engineering organizations. With experience spanning HVAC, medical devices, rail, and beyond, Bill shares how he scaled global teams, led over 60 major product launches, and navigated the complexities of executive leadership.

This conversation goes far beyond theory. Bill explains why engineering alone isn’t enough, how marketing should actually drive strategy, and why so many companies fail by building products without truly understanding customer value. He also dives into the mindset shift from individual contributor to leader, the importance of alignment from the boardroom to the front lines, and how to create systems that consistently deliver results.

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Transcript

Dr. Leeanne Aguilar 0:07

What separates leaders who simply run engineering from leaders who turn engineering into repeatable engine for growth, margin, and shareholder value? Welcome to Industry Ignited, the podcast where we talk with executives shaping the future of industry through leadership, innovation, and execution. I'm your host, Dr. Leanne Aguilar. And today I'm joined by Bill Cleftis, CEO of Spartan Consulting Solutions and a seasoned technical and operational leader who has transformed product engineering, organizations, scale global teams, and delivered many major new product introductions across industrial, medical, transportation, and residential markets. Bill, welcome to the show.

SPEAKER_00 0:50

Well, thank you, Leanne. Thank you for such a wonderful introduction.

Dr. Leeanne Aguilar 0:54

Absolutely. Now let's dive in. So you started as a chemical engineer and quickly pursued an MBA because you wanted to lead technical organizations, not just be the top individual contributor. What did you learn early in your career that shaped your leadership, ambition, and style?

SPEAKER_00 1:12

Well, I think I learned early on that one with an engineering career can pursue one of two paths. Either on the one hand, they can either pursue becoming a chief technical expert for either a very specific topic or industry. The other is managing engineering resources for an organization. Early on, I realized that I wanted more than just being a single entity uh contributor and that I wanted to be able to be more effective in an organization and leading other technical leaders. My first job out of school was working for Raytheon in Waltham, Massachusetts. And they had a leadership program that I was a little disappointed the first year I was there, I wasn't selected for their leadership program. And I looked at my competition and said, why is he being selected and I'm not? So at that point I decided I need to do something for myself and not rely on others to make my future. So I enrolled in our uh local um uh business school, entrepreneur uh school, Babson College in Wellesley Mass. And it was one of the best decisions I made. I mean, obviously that prepared me for broadening my understanding of more than just the technical components, but really what an entire organization requires. So fortunately or unfortunately, in an engineering undergrad study, none of those classes are accredited in a business school. So I had to take the full the full curriculum of 132 credit hours, I believe, was the uh was the numbers. So but it was good. It really presented me to a uh the the the broad range of topics that a an executive and a business manager needs to know when pursuing this path. So it was definitely worthwhile.

Dr. Leeanne Aguilar 3:00

Right, yeah, a total totally different skill set. Absolutely. Definitely. No, I get that, but but yeah, that that makes you super valuable then in that that essence, you know, not only knowing the engineering side, but then also being equipped with the the business side and and then sharpening your leadership skills, you know, as well. Absolutely. Yeah. So then did you were you still with Raytheon at that point? Did you end up getting into their leadership program?

SPEAKER_00 3:25

Uh no, I didn't. I I was only there for a couple of years, and I started early on to seek a more aggressive career path. I did pursue that my second job was with a company that was into freeze concentration technology. They were funded by a uh venture capitalist. But unfortunately that was short-lived because obviously the technology uh had some challenges and the company was dissolved probably about a year, year and a half later. So it was disappointing, but you know, you just get back up and you know look for the next opportunities. You have to experience some of those things to really live life. And, you know, life is full of wonderful and sometimes disappoint disappointments as well.

Dr. Leeanne Aguilar 4:06

Absolutely. Yeah, and I've heard from from others just saying that you actually learn more from failures or losses oftentimes than you do from from wins or or successes. Sure. Yeah. And it it helps you appreciate, you know, more and you're more motivated, I guess, to solve problems and to get in there.

SPEAKER_00 4:23

Yeah. You don't want to fail. You don't want to experience it again. So yes. Exactly.

Dr. Leeanne Aguilar 4:28

Now you've worked across HVAC, medical devices, rail, and ultimately served as CEO in the firearms industry. What themes stayed consistent across industries and what changed dramatically depending on the market?

SPEAKER_00 4:40

That's a great question. Uh, you know, at the end of the day, I I say widgets are widgets. It doesn't matter if it's a service, if it's a product. Um, at the end of the day, the fundamentals still apply. But I have to say that I very much enjoyed the medical device industry. One of the things that is paramount in the medical device industry is risk mitigation. Uh, everything is calculated. It's all about reducing the risk and having to make choices. The other thing that I learned and that really enjoyed and I thought was valuable in the medical device industry was everything follows a standard distribution curve. I drive my kids nuts when I talk about this topic because people believe that we live in a binary world, ones and zeros, black and white. That's not the case. We live in light gray to dark gray world, and every decision we make is a calculation, or at least it's it's the risk versus the reward. And we consciously and subconsciously make those decisions all the time. And to me, it's it's it's critical that those that seek binary solutions will be very much disappointed because there's no such thing as the right decision. It's really all about the best decision. And I I think that's a fundamental concept that that not just people in industry, but all humans need to understand that because it's not a binary world.

Dr. Leeanne Aguilar 6:08

Yeah, that you make a good point. And it's very circumstantial. And there are also so many variables that you've got to consider because what's best in one situation may not be best in another situation, right? Depending on those variables and the objective and the desired outcome, right? So gotta look at it at all all sides from all sides and then get strategic.

SPEAKER_00 6:32

Yeah. Absolutely.

Dr. Leeanne Aguilar 6:33

So that that is a I think valuable lesson to to kids too. It's just okay, well, what's right and wrong? What's what's good, what's bad, what's right, right?

SPEAKER_00 6:41

You know, well, obviously, our personalities are formed in our early years. I mean, really, from zero to twelve, there's a lot of influence of the world around us. Uh, and you need that bias, you need that background, the rights and wrongs that our parents tell us, those serve as valuable experiences and but also a bias on on what we think is right and what is wrong. But you can't stop there. You really need to be able to be open-minded and understand that the world around us is not like what we have experienced, but what others and the expectations can be much different than anything that we've ever experienced before.

Dr. Leeanne Aguilar 7:25

Especially when you're working with, let's say, multiple cultures, and I mean it's interpretation as well, it's perception. So how we see something and interpret it may be completely different than how someone on the other side of the world does. So a lot of considerations. Now you said you got tired of developing white elephants without asking the hard customer value questions early enough. Was there a moment that permanently shifted how you think about product strategy and the voice of the customer?

SPEAKER_00 7:55

Well, I I look back in the my HVAC days and worked for a number of companies in that range, and and the marketing experience or expertise in each one of those companies varied. I remember working for one company and I succeeded the previous director of engineering's position. And there was a story, there was a particular product that that was developed that wasn't quite finished yet, and I had to pick up the pieces. But what resonated with me was that he made a comment to his department leads and kind of carried forward. He says, Well, we will build it and they will come. And it was like, Oh, you don't understand the concept of marketing, understand what do what do customers want. Just because you're building a tank of a product, you're missing what are the customers actually value. And and that's really what's key is understanding what do customers value, what utility are they are they gaining from this? What um and if we're talking about exotics, what what position and within the day-to-day living does this bring value? To me, it it was a clear sign that at least at that particular company or at that particular time, um, there was not an understanding. And as a consequence, I I think that was really the time when I started really fortifying my expertise in the marketing world and understanding that marketing, how critical marketing really is in this in all different spaces, understanding what the customer values. And back to my standard distribution curve, uh, you know, there's a lot of times when when folks will placate to, you know, that the right tail or the left tail, but the the majority of sales are is that that middle third that you're trying to satisfy. And if if you're trying to entice, the only way you can and you can either broaden the standard distribution curve or develop another subset so that you don't alienate the group of people that are buying from you today. So I'm a huge advocate of the good, better, best approach that GE introduced back 30 years ago. Procter Gamble has been around for over 100 and I think 50 years when it comes to healthcare products and so forth. They know their customers best. And that's that's really the only way to succeed in this in this world is understanding that that what customers want. And customers change all the time. They change what what they value, and you need to have your finger on the pulse to make sure that you're not missing something.

Dr. Leeanne Aguilar 10:38

Absolutely. And in addition, it's a what value do you bring that's over and above what they're already receiving? You know, what are your differentiators? Why would they change? You know, why would they switch to your product or service? What are you bringing to the table that others aren't? And is it a compelling enough difference to make them do something differently? Right. Because people are are creatures of habits. We don't like to change. And if something is already working for us, why, you know, we need a good good reason to to change. And so, yeah, communicating.

SPEAKER_00 11:11

No, no, you're you're you're so right. I mean, what problem are you solving that that compels them to want to change? Uh, because to your point, change is difficult and it's gonna be compelling enough that that they will indeed, well, let's try it, right? And it's gonna be a compelling reason. So no, you're you're absolutely right.

Dr. Leeanne Aguilar 11:32

Now you've lived the executive reality. I can't complain up and I can't complain down. So how do you manage pressure, expectations, and decision making when you're accountable to both a board and an organization?

SPEAKER_00 11:47

Well, it it I think it starts early on. I mean, obviously, you know, at the CEO level, there's someone at the board level has expressed an interest in and wanting to place you into this position. And I think that that what's critical is understanding not only what that one individual may have reasoned for selecting you, but what is the rest of the board, what is the culture of the entire board, as well as what's the culture of the executive leadership that that it presumably you'll be leading. So there has to be a clear understanding between the two. And if it seems unsurmountable, maybe this is not the right opportunity because you've got to know whether you can be successful at doing what is being asked of you. And it really is a top-to-bottom approach. You you can't have one group in complete opposite of what the other group is is thinking as well. So there has to be some alignment. And if there's not, you know, obviously, you know, at the CEO you can't you can't change the board, but you can change the executive leadership that works for you if that's the case. And and quite frankly, a typical CEO uh um contracts are three-year periods. So you've got three years to make something happen. Um, if you've got problems within your organization, you have to route those out very quickly and make sure that you can turn those things around um and and create the value that the board is expecting from you.

Dr. Leeanne Aguilar 13:17

Right. So top down, like ultimately the board is the the priority. It's uh getting in alignment with their vision. And then if the other leadership is not in alignment, making decisions there to find people who are, you know, in alignment. And so Right. Because if there is struggle within an organization, if there's not that alignment, then it's a recipe for disaster, right?

SPEAKER_00 13:38

Absolutely. I mean, if you look at the professional team sports, we don't have to pick any one of them. The ones that make it to the you know, number one spot at the end of the season and and have dynasties are the ones where there's complete alignment from the the owner, the owner of that team all the way down to the water boy. So, you know, it has to you have to have that synergy. I've likened this to another concept that I I'd like to bring up is a system approach because a lot of times people think that you can change one thing and it's a it's a one fix fixes all. Quite frankly, that's that's just not possible. You have to look at any type of organization as an entire system, and it's important that every single element of that system is rowing in the same direction, is in alignment with each other, because it can be absolutely draining. And if one finger is not working, the hand is not working efficiently. So same thing with an organization. It's a it's a system approach and making sure that the entire system is operating properly.

Dr. Leeanne Aguilar 14:45

Right. And intentionally, right. So you've led transformations using lean, agile scrum, and uh stage gate methods. How do you decide which operating system a product organization needs, especially when legacy culture resists change?

SPEAKER_00 15:02

No, it's a that's a great question. Uh uh one of the things that I I think what's common between all three of those is the elimination of waste efficiency, even fail fast, fail often. I think that there's a common thread there. However, I think it's critical, and this is where just simple lean objectives can be effective in creating momentum. Often lean is is incorporated into a manufacturing space. And if you could pick one of the top two or three pain points that the manufacturing operation is experiencing, and even doing just a simple kaizen event that that over a five-day period, you could take something that is absolute mess, and now you have believers, uh, you know, the five or six people you're gonna have on that kaizen team from a cross-fection cross-sectional background with any organization, and all of a sudden they've created something, it becomes infectious because people later on, hey, we're having this problem over here. Can we can we do that too? And before you know it, you start to have a uh kind of an infection going on within the within the space that people want to experience that. Now, like I said earlier, standard distribution curve, you know, you're gonna have your rock stars, you're gonna have your people in the middle, but then you're gonna have people on the left that say, that'll never work, that'll fail. We've tried things like that before, you know. So you you got to keep plowing forward. And you're not gonna change the shape of that curve. What you're trying to do is move that curve to the right. You're still gonna have people on the left tail. You just need to be able to move that curve to the right. And however you do that, whether it's education, training, replacement, elimination, you have you have to move that curve to the right. Um, but lean does bring a uh an early adoption and demonstratable benefits um that that can create some momentum. Now, I will say that one of the things, even with a 5S or 6S program, the S that is the most difficult is sustaining. So you've got to create a cadence and a there has to be a leader, someone that's going to be carrying the torch, because sustaining is the whatever initiative, any one of those three or any others that that are out there in the commonplace, sustaining a an initiative is the most difficult. And it does require perseverance and someone that's going to carry that torch without exception. Trevor Burrus, Jr.: Yeah.

Dr. Leeanne Aguilar 17:29

Well, and they say the only constant is change. And so be because that is true, then sustainability by you know nature is gonna be difficult to sustain, right? Right. Because change is always happening. So well, there's a concept.

SPEAKER_00 17:46

It's funny, there's a concept in in chemistry called entropy. And entropy is around us all the time. Everything wants to go back to its natural state. So you've got to keep fighting that that that entropy change.

Dr. Leeanne Aguilar 17:58

Right. Yeah. So building momentum, getting people excited, but then at some point things start to die down again. And so, yeah, how do you keep that momentum or how do you reinforce that that you know change so it's sustainable? So always a challenge. But like you said, I I like that you just want to shift it. You want to shift it so it's um yeah, there's more of it.

SPEAKER_00 18:21

Sure.

Dr. Leeanne Aguilar 18:21

Now with 62 major product in introductions, you've clearly built repeatable product development capability. What are the two to three non-negotiables that consistently separate high-performing product teams from mediocre ones?

SPEAKER_00 18:35

Well, uh, the first one is dedicated team members. Um, number of the engineering organizations I've led, almost all of them had engineering resources that were split between manufacturing support and new product development. And the the solution there is to separate the two because both of them suffer. New product development programs are delayed because you know there may be a new a new issue that's happened on the shop floor that that engineer is going to go run and take care of that problem. In the meantime, you know, whatever needed to get done on that new product, new product development uh isn't getting done, and and vice versa. So there has to be dedicated team members to new product development that just have to be dedicated. I think the second one is there also has to be strong marketing leadership because there's always going to come, there's always a crossroads in new product development where engineers always think that they they have a, well, we we can do this. We know that this had this this can improve the product. Time out, where's marketing? Does this add a feature that has added cost, added development cost, added lead time potential to the project? Is there value to this additional feature to the to our customers? So there has to be a symbiont uh relationship between engineering and marketing to make sure that there's clarity on what the customer values at all times. And you might have some beta testing that goes on in the meantime to you know develop something and let's see what the customers say. So it I think it's critical that there's strong uh marketing presence. And I think the third, the third item for new product development is making sure that there's a mechanism of eliminating obstacles, and that has to come from the top. That's one of the nice things about the agile or scrum methodology, is those obstacles are announced, they're clear, and the expectation is that the obstacles are removed. So uh there those obstacles that again it has to be supported from the top, and those obstacles can make a big difference. If if you eliminate them, you've you've got a lot of energy with your dedicated teams that want nothing more to be successful. And it it the last thing that they want are is to have have any obstacles in their way that prevent them from making it happen. So I'd say those are the three things that that are most important to to uh a new product development team.

Dr. Leeanne Aguilar 21:15

Yeah. Now we spoke a little bit about marketing before this conversation, and you mentioned that many organizations treat marketing as support and not strategy. And you argued the opposite, though, that marketing sets strategy and scale or sales executes tactically. How should manufacturing leaders structure marketing and sales so the company competes on value and not price?

SPEAKER_00 21:38

Well, most organizations that I've been in, except for one, the VP of sales and marketing was a salesman first. The one organization that I was with that had a VP of sales and marketing that had a marketing background was huge difference between the two types of personalities. Because he understood the market and how to develop a strategy and how to implement that strategy. The caution, and I want to be careful how I say this because I don't want to ostracize either sales or marketing. It's really that the two have to be connected, but there has to be an understanding of where who develops the strategy, who's primarily responsible for the strategy, and who's in a support role versus who's leading the tactical component. And that it's those relationships that the salesmen and saleswomen have out there with the customers that's important as well. So the two are necessary, but there has to be a clear understanding of the role that each plays. Not to say that sales folks don't have an important part to this because they do have direct contact with customers. They can bring back information from the customers, but that also has to be filtered because I've developed products where you know we were guaranteed that if we developed this product, we would absolutely get that part of the market. Well, you know, after a year, I kept it on my calendar. I went back to that salesman and said, Well, we did what you asked for, but we got a pittance for sales. Why is that? So, anyhow, lots of excuses afterwards. But but again, the two have to be connected. And it really does take strong leadership at the top. But I believe it really, again, my experience is that the VP of sales and marketing that that comes from a marketing background that that can make the difference in an organization.

unknown 23:37

Yeah.

SPEAKER_00 23:37

And as well as a CEO that understands the value of marketing, of course.

Dr. Leeanne Aguilar 23:42

And as you mentioned, there's got to be that alignment and that synergy, and they've got to work together towards the same objective. So having that solid strategy in place, knowing which direction they're going in is important. Also, that that inner that communication, that regular communication between the two, because they depend on each other. If marketing is doing a great job, then sales should be using that their tools and that communication, that language to reach their customers. And then on the other side, sales should be bringing back to marketing feedback from the customers and suggestions and actual input there that marketing can take to adjust their messaging and strategies. So I think it, yeah, that's synergy. It's important they work together.

SPEAKER_00 24:28

Yeah, I mean it's like I I'm a huge fan of the OODA loop, right? Observe orient, uh, decide and act. And you know, everything needs to go through a cyclical type of configuration. Because what happens, I think, with what what people sometimes miss is that an input that now becomes available, all of a sudden people have blinders on and they just stick with their initial observation instead of looking at these new inputs that might come in. And you you need you need to continuously enact the the OODA loop to make sure that that you know the decisions that you made are are they still valid? Uh and that constant plan, do, check, act in the quality world is a common approach as well of plan, do, check, and act. Um just constantly looking as these inputs potentially are changing, you you need to make sure that that those prior decisions and plans are still valid.

Dr. Leeanne Aguilar 25:26

Exactly. And especially when the customers are involved and understanding their evolving needs. So not discounting that because oftentimes sales is a lot closer to with those relationships to the customers that you know directly than marketing is. Yeah, marketing needs to have the pulse in order to direct the ship as well. So global capacity building is hard, different regions, cost structures, and talent models. What's your playbook for scaling engineering and operations globally without sacrificing speed, quality, or accountability?

SPEAKER_00 26:00

Well, I think one has to understand that talent exists around the world. The question is, what talent exists in any of the regions? So I worked for a multinational, and it was pretty clear that the engineering talents around the world are at different levels, different experiences, different capabilities, and so forth. So I think the first step is really to understand, develop a profile of each of those engineering resources and determine how best to use them. I think that's first and and foremost. Second is especially if you're developing complex design that has multiple interfaces, the interfaces have to be clearly defined. I mean, if you were to build an airplane and you wanted the engines built in one country, the fuselage built in another, landing gear in another, well, eventually all those pieces have to come together. So it is absolutely critical that the interfaces are defined and controlled to make sure that there aren't any changes, because you don't want to wait for all those parts to come together and realize that they don't fit or they don't work. So interfaces are absolutely uh critical. The other is um a weekly or some type of cadence to make sure that there's transparency between the groups, making sure that the interfaces are upheld, as well as sharing of knowledge and so forth. Because again, they're not perfect, they're not perfect containers of knowledge. Everybody has overlap, developing some collaboration between the different groups, it goes a long way. And and I think again, going back to uh obstacle removal, absolutely critical on making sure that there's a methodology for removing obstacles, whether they're within the country that the country that they're that they reside in, or if there's a a lead in a global organization, there's always going to be someone who is ultimately in the lead for that particular design. So there has to be a mechanism at the lead level as well as at the plant level. But you don't want to have inundate the lead every single time for minor issues. You'd like to be able to think that those types of issues can be resolved quickly within the teams themselves. So, but again, identifying those obstacles and getting rid of them is paramount to having a successful global design organization.

Dr. Leeanne Aguilar 28:26

Right. A lot of moving parts. You've got to make sure that, like you mentioned, regular communication, having the systems in place so they can integrate that, all the different parts, and then just removing obstacles along the way, making sure that they're free to move forward. So you've worked in environments ranging from small caps to multinational business units, as you mentioned. What does creating shareholder value look like in practice? And what metrics actually matter when you're running the business?

SPEAKER_00 28:53

Well, I think that there needs to be a clear pathway to net income, right? I mean, EBITDA is is what is is what matters in the in the real world, both, you know, in privately held as well as publicly held companies. So I think that at the end of the day, there's always going to be more demand than resources allow. So the question is which initiatives or projects are going to bring that value? And one of one of the tools I like to use is a four quadrant chart. And the two axes might be one is low to high, let's say um uh impact to bottom line, and the other axis might be difficulty or capital necessary or cost opportunity. So you could develop a number of these four quadrant charts and start to hone in on what are the activities that that are going to bring the greatest value uh in the organization. I think identifying those and making sure that there's a priority to those projects, because not everything can be number one. There has to be a clear priority. And I'm a huge advocate of getting rid of the shiny objects that we pursue. And, you know, stick with two or three major items and get rid of the distractions because they are killers when it comes to understanding, you know, what are we supposed to work on? What's number one? Well, if you have 10 number ones, you have no number, you have no number ones. So and having that supported top to bottom in the organization is absolutely going to help.

Dr. Leeanne Aguilar 30:28

So um, yeah, it's removing the shiny uh you know objects. So how do you identify those shiny objects? What what makes a shiny object?

SPEAKER_00 30:39

Well, it might be somebody that has some cultural influence that says we've got to do this. Hmm, okay. Tell me why we've got to do this. So that often if you go back to doing a return on investment calculation and it becomes pretty obvious. I mean, if you have an R if all those projects have an ROI, the numbers speak for themselves. So you take the subjectivity out of it and put some quantitative analysis to it, and and it becomes a lot easier to do so. You can point out maybe some some flops from the past that, you know, you know, folks, this is why this failed. You know, this was not we we missed this. Let's learn from this and not repeat the same mistake. So it takes strong leadership and support. You know, obviously the board is looking to the CEO to be able to make that discrimination, but within the organization itself, it's up to the CEO and his executive, his exec, his or her executive team to be able to not only walk the path, but be able to speak it and and support it as well.

Dr. Leeanne Aguilar 31:45

Yeah, like you said, then the numbers will tell the story. You know, they speak for themselves, they will identify and help identify those shiny objects. If they it might sound great, but if it just doesn't make sense financially, it's probably not a great movie.

SPEAKER_00 31:58

Right. Right.

Dr. Leeanne Aguilar 31:59

No, you highlighted how boards can make or break a CEO, especially when board culture and company culture aren't aligned. What should leaders evaluate before taking a CEO role to avoid becoming trapped between competing agendas?

SPEAKER_00 32:13

Well, I think that kind of like what we talked about earlier is understanding uh the personalities of the board and the culture of the board, as well as, you know, as I said, the CEO has very little ability to change the board. The only thing that he or she can do is to change the the leadership that works for them. But keep in mind that the CEO has three years to be able to make a difference before he's gonna have to decide, am I looking for a renewal or am I looking for an exit? So, you know, what you plan will have an impact on whether you're gonna be renewing or you're gonna be looking for a new job. So I I think it's very important to understand exactly what what the landscape looks like, understanding who your board is, understanding who the people that you have, and maybe be willing to walk away because not every situation is is ripe for success of the CEO. Now, uh you may be one of a succession of two or three different CEOs that eventually become chess pieces to get to where the company needs to be 10 years from now, right? Three, three-year terms. Every you always see, as I said, there's no black and white. There's a spectrum of where companies are. And for those that really want to be in a different place at some time in the future, it may require a certain talent for this first three-year period, a different talent for the next three-year period, and even a different one after that. So it's critical for the board to be clear on what long-term gains are they planning on that may exceed the tenure of the current CEO or the planned CEO. It'll be predicated on that long-range plan. So you may be subjected to a a set of wants and asks, and and if you've accomplished what you were set out to do, you may not get a renewal because the next CEO may re may be needed to take it to the next level and you may not have that skill set. So interesting. It's uh it's it's kind of a I I think a a little longer range view of the world. And don't be disappointed if you don't get a renewal because you may not be the one that can fulfill that.

Dr. Leeanne Aguilar 34:37

Yeah. Well, and it also means that that doesn't mean that you weren't successful. You might have been successful in that role, in that part, and now they're moving on to the next person who meets that that step or you know, additional need, right? Yeah. So that's interesting.

SPEAKER_00 34:53

Well, and it also when you're talking about, especially if the ownership is uh PE or MA uh firm, what's their exit? Ideally, you know, they don't want to be holding on to an investment for very long. The ideal amount is within three years, got to get some extra value out of this entity that we bought. So it's paramount that lots of things happened in that first three years. If you're talking about uh private ownership, private ownership in some cases is willing to give up ROI for the longer term. And that can be valuable to a CEO that may be seeking a longer-term relationship that that chances are uh at the renewal point, as long as the objectives are being met at a renewal contract might come their way. With uh PE and MA, you gotta you gotta turn the you gotta turn the inventory. You gotta I mean the the cash, the cash outlays the call, I call it inventory. You gotta make some money on that inventory, right? It's uh no nobody's waiting for that to happen. It's gotta churn. You gotta you gotta churn churn the dollars.

Dr. Leeanne Aguilar 35:59

Yeah. So the firearms industry taught you about extreme volatility driven by regulation, politics, and public events. What did that experience teach you about building resilience, especially when the biggest risks are outside of your control?

SPEAKER_00 36:14

Yeah, and it's funny because you know, my entire life I've been involved with firearms. I'm a competitive shooter. I I also train folks up here in in uh northern New York, four different counties on their uh CCW permits. And I realized maybe a couple of years ago that uh oh, I I'd love to be in the firearms industry. Well, be careful what you wish for, because I think what what I've seen in the firearms industry is probably the greatest pendulum swings between um the demand for for product than any other industry that I've been in. Huge swings from feast to famine. And the problem is that the customer demand changes with simple things like administrations. Um, you know, they they there there appears to be a demand for for firearms or firearms-related products when there's a Democrat in the White House and or any particular state that that's planning changes to uh firearm ownership. And then when there's uh a Republican, the heat's the heat's off. Well, we don't have to buy guns. So so that the swing is significant. And and the concern there is if you have a high debt ratio and you've got to service that debt, you've got to be able to service that debt when sales are off. And you see consolidation. I mean, there's lots of that going on right now. There's consolidation, there's there's companies that are struggling, and if you have a high debt ratio, you've got to be careful, and and you're gonna uh have to rely on draconian measures if or maybe they may not be sufficient enough. So big problem. The other thing is firsthand, we experienced this at uh my previous employer is that uh we were kind of new kids to the block, and there was a significant 2020, 2021, um, in the firearms industry, there's um a lot of interest in firearm ownership uh for lots of different reasons. And um what happened was that we were kind of the new kids to the block to building firearms and could not find suppliers that were willing to supply us because they were already supplying with long lead times to their existing customers. So that forced us to do some vertical integration, which takes effort, takes time, takes money. So I think that what's critical in the firearms industry is to be able to make investments in vertical integration, but within your ability to service that debt, because a lot of times there are suppliers that make things better than you do. So there's gotta be a balance of what you should buy and what you should make. But again, the debt is critical to those big pendulum swings.

Dr. Leeanne Aguilar 39:01

Yeah, absolutely. So you're now building a consulting practice with two tracks, supporting investors on diligence and helping owners, operators prepare for exit. What are the most common value leaks you see that reduce valuation and what can leaders fix fastest?

SPEAKER_00 39:17

Well, I th I think a lot of the things that we already talked about would apply, but uh I I think I think going back to distractions and shiny objects, I think that those are the most glaring and can can help to drive a focus on what really mattered. I really do think that there's that's kind of the start of uh of the assessment. I think the other thing is uh whether there are any metrics that have been generated, validate those metrics or generate new metrics, because you you need to be able to see am I making progress or not. So um one of the things it's it's funny, any of the organizations that I've been in where you know there's cost savings or there's a business case, there's only one person I trust, and that's the CFO. I put it in his or her lap and saying, hey, I don't care what anybody else says, you tell me whether we're gonna save money or not, because everybody has all kinds of models that they use, and you know, they may be extracting data from their ERP system, but it could be the wrong data. So I want to make sure that the metrics tie back to our financials, and my financial person is the person that I trust to make sure that I'm getting the real story because at the at the end of the day it's it's EBITDA and it needs to tie out.

Dr. Leeanne Aguilar 40:39

That bottom line. And yeah. But it's the pulse of the the business. I mean, if the finances aren't flowing, the if the the money's not there, then the business is is not sustainable.

SPEAKER_00 40:52

Right. Right? Right. Right. So, you know, and it and again, making the assessment is it's what's the plan or what has been the plan and why is it not working or is it working? And and really, I mean, there's a lot of fundamental pieces that have to come together. And as I said earlier about treating it like a system is where where where are the gives the the gives and takes and making sure that we're following the strategy that we've established, pretty clear.

Dr. Leeanne Aguilar 41:20

Aaron Powell Now, when you assess a target for PE MA, what are the red flags you look for that most buyers underestimate, especially in manufacturing and product-led businesses?

SPEAKER_00 41:31

Some very quick things. Clearly, if there's if there's gaps between the information that's been supplied and on-site visit, you know, those are the types of things that I'm going to challenge uh to kind of poke holes on the credibility of the data. Uh, you know, is it manufactured or is it is it really representative of what's really going on? Lack of marketing intelligence. It's got to be more than I think or I feel. You know, has there been any um any effort to size the market? What market, what, what market they're serving, what's the, you know, uh, who are the competitors? Really a Porter's Five Forces model pretty quickly identifies opportunities to see what what what they're doing well, what they're not doing well. Bill of material, the bill of materials tell a lot. Over the years, I've had to defend bill of material, bill of materials from an engineering capacity. And, you know, a lot of times people say, well, the bills are wrong, the bills are wrong. Nine times out of ten, it's the transactions that are wrong, not the bill of materials. And uh, you know, uh there's a lot of smoke and mirrors that go on with bill of materials, you know, whether it's a flat bill or a very deep bill, uh can produce lots of different unintended consequences. So, you know, looking at the bill of materials, you know, from an engineering perspective, also the cost structure. What are the is it a standard cost? Is it actual cost? What's the cost structure? Because very different things can come out of that. I I think also the quality program, looking at, you know, do they have a quality program? Are they certified to a quality program? Are they simply complying with a quality program? The audits, looking at the audit reports, whatever compliance program they're following, looking at the auditing detail because the auditing detail will uh give you a clear understanding of whether it's a check the box quality program or do they really believe in qualities. A lot of times you have to check to make sure that that they really mean what they say. And you know, you might you might be handed a bunch of evidence and you kind of look through and say, yeah, okay, okay, you just you're just pulling these from file cabinets, you don't really believe it. So an in-person walk around and you know, having experienced being a sensei in a lean environment, you you go to where the things are at and you just observe, observe, observe, ask. A few questions, you can learn quite a bit by just observing and not talking because people actually say quite a bit if you're listening.

Dr. Leeanne Aguilar 44:08

Very true. Right. Just being there in the environment, looking at the physical processes, products, people asking the questions, and then identifying. It's harder for them to right make something up or you know, sweep something under a rug if if you're right there looking at it and asking the questions.

SPEAKER_00 44:25

And the art of asking questions, right? You can't ask yes-no questions. You're going to say, well, tell me how did you achieve this objective? Or, you know, what is your greatest, what is your number one, two, and three in priority order of uh what's troubling you, right? And and why and how does that impact you, right? If you're asking yes, no questions, that doesn't help.

Dr. Leeanne Aguilar 44:47

Mm-hmm. Yeah. Now, Bill, on the sell side, you described it as putting lipstick on a pig. But really, it's about building real capability and credibility. What actions most reliably increase enterprise value before a transaction?

SPEAKER_00 45:03

Well, I think that certainly looking for uh single points of failure, the single points of failure, whether it's people, suppliers, processes, what are the greatest, to your words, leakage? Where's the greatest leakage and identifying what those are and which ones will have the greatest impact primarily on EBITDA? But there are there may be other reasons why a company may be interested in in this entity, right? It it could be consolidation, it could be market share, right? So you have to understand what potential silo of value you are bringing to a buyer. And it would have to be some understanding of who your target um entity is for selling, right? Are you selling within the industry? Are you selling to be a complement outside of the current industry? There was a company, when I was in the HVAC industry, there was a company out in California that used to make high-pressure steam boilers, and they had made an acquisition of a company of engine dynamometer business for determining horsepower and torque of not just automobiles, but all kinds of totally different, right? But here's a steam boiler and here's an engine dynamometer business. But what that enabled them to do was with the capital equipment that they had with the engine dynamometer business, they were able to fabricate and vertically integrate items that that in the boiler industry they had to outsource. So there was a there was a complement there of resources. So there's there's lots of reasons why you might be a target understanding that and being able to position your company with the right story to be able to maximize the the number of times you're EBITDA.

Dr. Leeanne Aguilar 46:53

Mm-hmm. Yeah. Now finally, for executives stepping into bigger roles or founders trying to scale, what's your best advice for building the right internal environment for success while still delivering results quarter to quarter?

SPEAKER_00 47:07

So I'm a full throttle guy. You've got to put the pedal to the metal and you've got to create a sense of urgency. It's not the same old, same old, uh, you know, either get on the train or stay off the train. But the train is moving. You need to be either on or off the train. So that'll get people, you'll find out pretty quickly whether who's on your team and who's not on your team, but you have to develop that team environment and there's no waiting because again, you may only have three, three years. You've got to make things happen. So it's full throttle. The other thing is you have to have clear two or three objectives. You can't have ten of them. You need to have at least two or three clear objectives. You have to have uh cadence and metrics. And last but not least is uh assess your leadership team, either build or replace. I think those are the the uh most fundamental and and most important at the beginning stages of um of a new um new and exciting career as a new CEO.

Dr. Leeanne Aguilar 48:08

Yeah. And I guess I'll consult with organizations and say start with the end in mind, right? But I I guess with that position in itself, especially if it's a three-year tenure, um, you're looking at that right as a complete unit and looking at the end in mind if it's only three years, what does that look like? What can I accomplish? And how do I, you know, not expecting it to go on and on and on, but but expecting to complete whatever you can within that time frame. And then if it does go on, then it's a new strategy, it's a new set of years.

SPEAKER_00 48:38

Yeah, no, totally agree. And and and it's funny because you know, this the strategy you may develop in year one. Well, so I'm a firm believer of long-term strategy. Company I just left developed a three-year strategy, three to four-year strategy, but and we have a cadence to be able to continue to see on a weekly basis, are we meeting the objectives and rolling uh rolling all those elements up to make sure they're consistent with the objectives that we've established? Most companies, their budget process is their strategy. It's a 12-month project. 12-month process. Me, nothing, major accomplishments, major changes in your company's success uh can't be done in 12 months. It it has to cascade to that vision that you may have, whether it's a three-year plan or a five-year plan or a 10-year plan. There they have to be cascading elements to be able to come together to be able to achieve that long-range goal. I I that many times I see the CEO, I kind of liken that to the conductor of an orchestra. Uh-huh. And you're trying to get every musical instrument, every department, every employee to work together to create that music, to create that that harmony, to be able to achieve those goals that have established have been established. But but clearly um there has to be a long-range plan with credible milestones established on an annual basis and with a and a cadence to are are we meeting our objectives? Uh are we not meeting our objectives? Why are we not what are the obstacles, right? That has served extremely well for me. And that's the type of approach that I would use in supporting any company that that may be interested in utilizing some of the experiences and and expertise that I have.

Dr. Leeanne Aguilar 50:36

Excellent. Yeah, I like that analogy, like a conductor of an orchestra and coming together to create the harmony, the melody, and make the overall composition. Well, Bill, thank you for sharing such a grounded perspective on engineering leadership, value creation, and what it really takes to build an organization that performs under pressure and for specifically that CEO role. Now, for listeners who want to connect with you, whether they're on the investor side evaluating a manufacturing or technology target or on the operator side preparing for growth or exit, where's the best place to find and learn more about your work?

SPEAKER_00 51:12

Well, you can reach me at my uh on my website, it's uh Spartan Consulting Solutions.com, or you can send me an email at bill at spartanconsulting solutions.com. Uh certainly uh get back to you quickly. And schedule is is gonna be filling up here soon. Kicked it off on January 1st of this year, but been uh working at expanding the network for a number of months now. So so things are coming together and would love to have a conversation with uh whether you're a buyer or a seller, I'm here to help. I have over four decades of experience. I don't want it to go to waste, and I'm still full throttle. I I can't stop. I need I I I I can't just I can't stop. So, anyhow, thank you very much. And uh, Leanne, I appreciate the opportunity.

Dr. Leeanne Aguilar 51:58

Oh, absolutely. No, great conversation. Thank you, Bill. And for our listeners, if you enjoyed today's episode, please subscribe and share it with a friend and tune in to our next conversation. Until next time, stay bold, stay curious, and keep igniting industry.