Welcome to Season 16 of the Troubleshooting Innovation podcast. We’re spending this season with Dale Easdon, president and CEO of Klosterman Baking Co., to discover how this leader is carrying a legacy name into the industry’s future. Sponsored by Bundy Baking Solutions.
In Episode 2, we delve into Dale’s views on leadership, training, professional development and succession planning.
Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.
Joanie Spencer: Hi Dale, welcome back.
Dale Easdon: Thank you. Great to be back.
Spencer: I am so happy to have you join me again this week. Last week, what an incredible conversation we had. We teased out a lot of stuff as we were getting to know you, and you’re bringing a lot to Klostermann and the industry, and so that’s what I really want to focus on this week. And in looking at your career history, I see that you’re usually brought into a company specifically to lead it, as opposed to staying at one company and making your way up the ladder into leadership and then staying there. I think you mentioned that this is your third company that New Water Capital has brought you into. So, I guess what I want to ask is, what would you say sets your leadership apart and makes it so attractive?
Easdon: Well, thank you. I think the key part for me is I come from, you know, the west coast of Scotland, from a large family, a working-class family, and we had a wonderful life. But I’ve always appreciated the values of family, you know, my brothers, sisters, cousins and, of course, I have four children and a beautiful grandson. So the family core to me is very, very important. And no matter how far up the ladder I have gone, I try to keep myself grounded. So, titles are really not that important to me. But taking care of 1,000 employees is, and I take it really, really seriously.
I’m not sharing this story for anything other than giving an example. I normally fly home at weekends to go to be with my family because I’m away from home every week. But we lost an employee. He passed away in one of our bakeries, and this past Saturday was his family funeral. So, I actually stayed and attended the funeral and got to spend time with the family to thank them for his contribution. And it’s very, very important to me because this is, this is an employee who was a member of this family.
So, you’ve got to make sure that you stay humble and you don’t forget the small stuff, and you’ve got to stay close as possible to the associates that are making it happen every day. So that that for me, is very, very important.
The second part, I think I bring to the table is a global look and outlook to how to run a business. I’ve been lucky enough to work all over the world, and the first half of my career was in large corporate organizations. I worked with Lufthansa, and I worked with Continental Airlines. So, I flew around the world, many, many, many, many times, and I’ve learned so many different cultures, and I’ve taught and done Lean principles in many different cultures. And I think putting that together and then trying my hardest to simplify change is where I think I gain the success.
The other is I wake up every day with a passion to do what I do. My wife and I are starting to talk about my retirement because just few weeks ago, I turned 60. I don’t know how that happened, but it did, and I’m now talking about retirement. And of course, my wife Jess likes to say, ‘You’re never going to retire.’ because I actually truly enjoy what I do.
So I try to bring as much energy into the business as I possibly can.
And then finally, for me, it is surrounding myself with truly, far more intelligent leaders than me. I always make sure I recruit the best, and when I do recruit the best, generally, when I interview, I ask the question, ‘What am I going to learn from you?’ Not, ‘What you’re going to learn from me?’ But, ‘If I bring you into my team, what will I learn?’ And when you ask someone that at an interview, it really gets them to think, yeah, to tell me, what will I learn from your leadership when I build that team? It for me, it’s really important that the team works, works clearly, clearly, well.
And then on my wall in my office, I have a picture that we actually designed ourselves as a team, the senior team, and it’s swim lanes. And then we all talk about swim lanes. But one of the things in the early stages is what I found here Klostermann was everyone was an expert at the other person’s department. Remarkable.
So, everybody had an opinion on the other department. So, when we very quickly established swim lanes, then the subject matter expertise makes the decision. And that’s a little bit tricky at first to sit back and allow them to give guidance. We all have a say, of course, but the final decision generally comes from them. So for me, it’s the orchestration.
And then the final comment I would make from my career, is I would say, I spent half my career in corporate and half my career in private equity. I did learn a lot from corporate, but I also learned what I didn’t want to do. And that’s what I love about private equity, is when we get aligned on the strategy, the vision, they allow us to move fast. They allow me to deploy, and they allow me to make decisions. In one of my large corporate companies, I had to fly across the Atlantic every month, and so did all the other CEOs from all over the regions of the world just to go over the month-end close. So, I would fly from the United States through the night, go to a hotel, get changed into my suit, go straight away at 11 a.m. and present the financials, have dinner with the board, fly back the next morning, arrive back in the US at 2 p.m., and I’d be in my office at 3 p.m. And I quickly realized that micromanagement was not what I wanted to do. And I managed the $1 billion budget, but I couldn’t approve a truck, $180,000 truck. I needed four levels of authority.
I quickly realized I don’t want to be in corporate. And now in private equity, we have a very clear mission, very clear path, and I’m allowed to deploy. And I like that. I really enjoy it. If there’s anything I feel needs to be elevated, and I call for help or guidance or mentorship, the New Water Capital team — and I include the partners — will always answer the phone and give me guidance. And I really, really enjoy that. And that’s why this side of the business world, for me, they allow me to manage, and I try to allow my team to manage.
Spencer: Okay, first of all, I want to just extend sincere condolences for the loss of one of your teammates, and I’m sure that is really just hard to take as a leader and for everyone in the company. So, I’m very sorry for your loss.
And then I also want to wish you a happy birthday.
And I am interested in something that you said you used the word several times, guidance and setting apart a private equity mindset versus a corporate mindset. When you as a leader are looking to identify future leaders, how does the concept of guidance vs. oversight come into play?
Easdon: You know, I’ve mentioned many times now this topic of subject matter expertise. When we’re sitting in those interviews and getting to know each other, for me, it is understanding that experiences and leadership and how they’ve orchestrated change. The second part is the speed to change. As wonderful it is in private equity, let’s be very, very clear, the private equity groups are managing a large fund with an expectation of an ROI that has to be made in a period of time, and that’s normally somewhere between three and five years. You’re really moving pretty quickly, but you have to do it correctly. It’s not just touching the surface. So, I’m looking for leaders who have a real track record of driving change. And when I listen to the conversation, I like to hear them say, ‘We did this. We completed this.’
You’ve got to make sure that they’re going to be actually part of the team and a strong team member. I also include senior leaders to be involved in the interview for any anyone director or higher. Anyone VP or higher, also flies down to Boca Raton in Florida to meet with the New Water Capital team. And they also will spend the day with those guys. Those guys are incredible, teaching them their vision, and they also interview. So, it’s quite a challenge to get through the process, but once we all reach alignment, then we execute quickly and bring them into the team.
We don’t always get it right. That’s the risk of recruitment. But really, really making sure they’re going to be able to orchestrate. And the other part for them as well is I am in the business, and I have to tell them that, that they need to understand that. It’s the fact that one of the things I tend to do, which I know can be a frustration, is I generally go to the source, rather than down five layers of an organization, to get a decision. My example I gave you, with the funeral that I attended. I also asked the director for operations of that particular bakery, could he meet me on Saturday morning for a coffee, just for a business overview. So, I actually went there first, and actually whilst in the market, had a business overview, then we attended the funeral. So, I’m doing both to ensure that the vision is correct, the deployment is correct, etc. So, once I get those, those leaders in place, it’s really set them free to drive the change.
Spencer: It sounds like you’re sort of carrying on that, that mindset from New Water Capital, that they’re not just, ‘It’s a free for all! You can do whatever you want!’ But they are sort of empowering you. Like, ‘We trust you to make the decisions that are going to earn us our ROI.’ So there’s still, like an expectation, ‘We’re investing this money, but we expect you to give us that return, but we trust that you are the person who knows how to do it.’ And it sounds like you sort of carry that on with your leadership and interacting with the other leaders in the company. Is that a fair assessment?
Easdon: It’s a very fair assessment. To be very transparent, our investors are an incredible team, but we have a very clear expectation. And, you know, we have a weekly call with the team, with the investors, as a business overview. We have a monthly review on our financial performance. We have a quarterly strategy session. We have an annual budget session.
So, the team are involved. They do not micromanage. They have an exceptional partner who is one of the top operational leaders I’ve ever worked with worldwide, and he has a very strong background in automotive. So, I actually have a mentor, which is great for me to lean into another colleague and just double check that what I’m doing is right and get his input, which I value. I’ve built a nice friendship with him over the years as well, but I really trust his decision making, and he looks at things differently than I do. I think that’s key. All of our leaders must perform, and we do have an expectation of the significant improvement year-over-year, is what we always set ourselves.
Spencer: So, when we talk about mentorship, what would you say is like the key to bringing up future leaders, as opposed to recruitment? So, looking at the frontline workers, do they have management potential, or does a bakery director have the potential to move up into the leadership team? What’s the key to, sort of, identifying those skills or the potential in order to bring them up? And I almost want to say, like I hear stories out in the industry of there are people who don’t recognize in themselves that they have those leadership skills — the ones that are super humble and are just willing to go the extra mile — and they just say, ‘Well, that’s what you’re supposed to do. I didn’t know I was doing anything special.’ So how do you identify those future leaders?
Easdon: Yeah, it’s a really good question. Again, I’ll digress slightly, because it links back to the answer.
I recently was in Orlando, as you know, we had the ABA session there, and we had a great turnout, and I was asked to be one of the key speakers in a breakout session, and it was all about internal development of future leaders, etc. And I asked the question of roughly 100 people, how many leaders in this room are still a family-owned business, and over 50% of all the executives in that room were family-owned, which I found remarkable. So, it’s really, you know, multi-generations business.
And the session was based around, ‘How do you find the next leader, and how do you develop next leader? Especially if it’s a three-, four- generation family business, how do you get that next family member ready to be the future leader?’ And one of the things I opened with was telling the group in that session, ‘If you’ve identified in your team a future rock star who is going to be — he or she — the next leader, please tell them.’ Because do you know how many times someone leaves an organization only to be told at that point, ‘You do know that you were next in line to be the next senior leader?’ And they say, ‘No, no one ever told me.’ So, it’s a very clear message, which is, if you’re going to create the next leader of development, please tell the leader they’re on that fast track. And make sure it’s something they want to do, and they want to go through the fast track.
We often talk at a senior level about who’s the next up-and-coming leaders, but they don’t know. And that part I want to open with, because I think is very important, and then it’s clearly actually identifying who can mentor that particular leader to get them through this fast track. And we are trying our hardest now to — now — we’ve brought in what I believe are some of the key players. How can we develop our leaders internally to move faster up through the ranks to be the future leaders. And now we’ve got some great, strong mentors teaching them, we find that we’re making a lot more progress with that. So, that, to me, is very, very important, and coaching around that to grow the next level of the Klostermann team for the next the next coming generations. And I get really, really excited about that because we have some great rock stars here.
We also have, we use a couple of executive coaches from outside to be executive coaches. So, I can tell you that four of our leaders have gone through a one-year program with an outside coach. I’ll drop one name just as an example is Randy Pennington. Pennington Associates. He’s an author. He’s on his fourth book right now on high performing teams, and Randy has been working with us on building a high-performing team for a good number of years. And he’s also an executive coach to a number of leaders with different skills, net deficiency and they need to gain. We have a real detailed session, and then he coaches them for one year, and they have a quarterly review with me so we can start to progress these future leaders. And it’s something that’s worked really well for us.
Spencer: I love when I hear companies who invest in executive coaches because it’s one thing to have the potential to be a leader. You can take your potential and step into that role, but it doesn’t change the fact that it’s still new to you and the skills that are required, like, there’s a difference between potential and skills. So, I love that you guys invest in your workforce in that way to help teach those leadership skills through a coach. I think that’s really cool.
Easdon: Yeah, thank you. Thank you. And it really helps. It’s been it’s really paid off significantly.
Spencer: I like that. I like that. And I’ve heard a lot of companies who do that, and they think it’s really smart, and it’s a way to set someone up to succeed and not to fail. Or at least set someone up to succeed in a much less painful way than it would be by just continually learning by mistakes and learning things the hard way.
So okay, Klosterman obviously was family owned, and then it sold. I’m curious, what is the mindset shift that comes in when you’re thinking about succession, when it’s a family name, but the family doesn’t own it anymore? Like, how does the mindset and the culture shift when the ownership shifts, does it change how you think about succession?
Easdon: Yeah, a lot of times, when a private equity group purchase a company, the founder generally comes over for a period of time, and ideally the founder will remain, because the founder obviously has the creativity and the passion, because they created the company.
And what I generally do when I’m working with founders is I try to get the founder in front of the customer, because they have such a passion for the business that it’s the best sales pitch you can ever have. Because it means everything to them.
In this circumstance, the founders, the family, decided to step away, and so I never got the experience to work with the founder. So, I basically came in as the CEO with the team below me, which was absolutely fine, and create the journey for the next three years. But what I wanted to make sure that I did was I kept the strong brand and quality and service fulfillment that the family had. Yes, the business had grown. Yes, it got complex. Yes, there was some challenges that we had to solve to get to the fulfillment we spoke in one of the other episodes. But the brand of Klosterman, I mean, we all wear Klosterman shirts, and if I go to a restaurant, or I’m, you know, out in the city, wherever I go, someone will say to me, ‘Oh my gosh. Klosterman, my grandmother worked there. My grandfather, my dad, I worked there when I was at college.’ It’s incredible. We’ve just been such a strong brand and family awareness that for me, that’s an amazing foundation.
Everything we’re doing behind the scenes to improve it is based on that foundation. It’s something that we don’t take for granted. I certainly don’t as a leader. It is, you know, I’ve been in companies where I have to protect the brand and get ahead of it as quick as I can, whereas here it was 130 years, four generations, instilled in everybody that works here, and everybody growing up eating Klosterman’s bread. It’s pretty impressive for me.
Spencer: I honestly thought when you said you wear your Klosterman shirt, that people would say, ‘Klosterman, oh I love that bread!’ I was not expecting, ‘My family member worked there!’ That is so incredible to be known in a community when they see that name to identify it with ‘My family worked there.’ In many ways, that says more about the brand than the label in the store, in my opinion.
Easdon: I agree. And just to digress slightly: We have nine distribution depots across the state, and two of those depots have a little look I could only explain as a corner shop at the front of the depot. So, when we deliver our fresh products into our customer base across the distribution network that fresh bread — give an example, may go into a customer store and they want to turn around every four days, but it’s got 10 days shelf life — that bread is still good. So, we bring that bread back and put it into two stores, and we sell discounted bread. We call them thrift stores, and we have two stores. And the goal is to feed families that need help and support. So, we sell it at a very low, discounted rate. It’s great quality bread and buns, and families come and get that product. And for me, that’s amazing. It’s not run as a profit center. It’s simply to avoid waste.
And if you look at our larger goal, it’s zero to landfill. We don’t want to be sending waste to landfill, and then the bread that isn’t purchased, the local farmers come in, and they take that product to feed livestock. And I share that story because my senior leader in sales, who’s an incredible leader, has been here since he graduated school, actually went to one of those stores with his mom to get bread to feed the family. So, it’s been running for such a long time through the Klosterman family, and it’s such a help to families that need it, that we will always have it, and we’ll always have discounted product to share that.
So again, the next generation of children are growing up in Klosterman bread because of what we’re doing. So, it was never done for marketing. It was done to help and assist families that need support. And now our head of sales is obviously the SVP, and he grew up with his family eating that bread from a discounted store.
Spencer: That is incredible. Okay, so kind of the next bucket that I want to touch on in this episode is training and professional development. There are two things that that I’ve heard. You’ve mentioned one, working with Xavier University for that leadership training. And also, a little birdie told me that you like to sometimes give reading assignments, and so I’d love to hear about that as well.
Easdon: Yeah, let’s start with the first one, which is actual, an actual fact. Just yesterday, I went to the first graduation with it, with Xavier University. As you know, Xavier has a wonderful reputation and a great campus here in Cincinnati, and we have been developing this partnership for one year. One year to build a training module development class based around what we call the Klosterman Way.
And we actually just had our first 20 leaders went through this program over four-day, seven-day modules, managing change, good communication skills, managing conflict, investing in people, quality.
They had a full half day of Lean principles, Lean engineering, and the tools to manage overtime. So, really teaching supervisors and middle management, production managers, etc., the next level of leadership to go through the program.
And I was fully submerged in this with the teachers at Xavier. We made a couple of decisions; we were talking about, do we do it by individual bakery, and do the tutors come to the bakery? And we decided, no, let’s have cross-functional teams from all bakeries and depots and headquarters, so that everybody can share their experiences. So that was that was number one. And number two, we decided, let’s complete the training on campus. So, for a number of the leaders who have no further education, this was a great experience to go to the campus on Xavier University and go through adult learning at the campus.
I closed the first session, I went and gave a business overview, and then I went this week to the first 20 who graduated. And I went, closed that session, we presented their certificates from Xavier, and we had a dinner at Xavier with the tutors and our team together to really celebrate this. So, now we’re working on the next 20, and we’re going to put everybody through this program, and they’ll graduate … which I am so excited about. And it took us some time to develop it, but it’s now launched.
I know we do a lot of work with the IBA. We do work with the ABA, and we sign up for all those training classes, of course, we do. But doing it in our own market, around our own values, I think, is something that’s going to pay off, you know, and it’s just a, it’s a wonderful experience. So that’s just one example.
The second example I share on development is when I arrived and I was talking about Six Sigma. I was talking to one of our operational leaders, a great leader in the company, and he became very interested in the topic, and said, ‘Dale, I think I’d like to get my black belt in Six Sigma. So I said, ‘Well, let’s start with your green belt. Let’s start there. See how you feel, and we’ll get you through it. I’ll help you and mentor you through the program, and if you really enjoy it, we’ll go forward and get your black belt.’ Well, this leader took two weeks off at Christmas and did the Green Belt and Black Belt. Two full dedicated weeks. By the way, this took me a year, and this individual did it in two weeks.
So, I shared this wonderful achievement with everybody that has email in the company. I have a ‘Dale’s email group.’ I shared it with everybody, saying, ‘This is incredible, what an achievement. And I just wanted to share what this leader had done.’ Well, I was inundated with emails from all aspects of the business saying, ‘Dale, I would like to do that.’ So, I wrote back again and said, ‘We will fund your education. Feel free to go forward. I suggest you start with the Green Belt, and if you want to work to black belt, just have your direct report approve that.’ Today, Klosterman has 56 leaders qualified in Six Sigma, and we have 19 black belts. I did work in the airline side with GE engines on an initial project, and they have about 25% of black belts that we have. So, this bakery has 19 black belts in Six Sigma. And we have leaders in the depot. We have leaders in headquarters, all of the sales team. All went out and did this. We funded it, and basically today, we have an organization who now start to think of Lean principles and Six Sigma. That tells you that Klostermann really wants to learn.
And that story, to me, is just incredible. I’m actually overwhelmed by it. I didn’t expect it. It was never part of my strategy. But once it started, I couldn’t stop it, so I just had to get out the way and let everybody go with it. And they did, and it’s still going on today. The green belts want to be black belts.
Spencer: I mean, usually you have one person with a black belt who leads the team, but you’ve got like, black belts and green belts throughout the organization that is incredible. And you know I was going to ask you, like, how do you choose who goes through these trainings? But it sounds like the answer is, you just have to ask and show interest and be committed to it, in order to get your support.
Easdon: Yes, I mean, that’s, that’s the culture I’m trying to create, which is, we often look upwards to the leadership to see what, ‘When do I get promoted?’ And I’m saying, you know, ‘Put the effort in where it’s available, and we are going to fund it for you.’ I’m working with one of my department leaders right now who wants to go back to school and get a degree. And I have said, ‘If you are willing to sign that you will remain with our company for two years, we will fund your education.’ And absolutely, I mean, the payback is incredible. I keep an amazing leader, and I have an amazing leader that’s getting educated. And you know, they have to go to school on their time, give up their weekends, they have to make their grades, they have to qualify, and, of course, get the right scores, and we will pay for it. And that’s something we’ve been doing for a long time. It’s not something that Dale’s just created. But I encourage that, and I think it’s important.
And then the second part of your question is basically the books. And what I’m trying to do is, I try to create an environment where leaders read and continually read. So, I call it ‘teach back,’ and it’s where we share books. We purchase the books you can either buy online and you can either listen to it. You know, I spend a lot of time on the road or on aircraft, so I listen to a lot of books, which I think is a wonderful thing. But I make sure that the leaders then understand what I’m trying to achieve.
I start with books, and the very first book that the team was introduced to is the book Traction. It’s an amazing book by Gino Wickman. All leaders in my directors and above received the book. All general managers received the book. And then what I ask is, when they finish with the book, they pass it on to their teams, so that everybody starts to learn. And that’s the book which focuses on traction and picking the right leadership for change. And it’s an incredible read. And there are tutors across the US, across the world, actually, that will come in and help facilitate that transformation.
But the main focus on it is Rocks, which I spoke about the first session. And instead of working on a three-year strategy, what is the next 90-day Rocks? What are those projects as we go forward? And then I, you know, I’ve introduced them to a number of books. I like them to read.
Another great book that I introduced the team to is the book From Worst to First, which was written by Gordon Bethune. It was his time of the transformation of Continental Airlines, which was a very, very straightforward read, but an incredible story of how he created cornerstones, and how he built an amazing team, and how that team turned the airline around. And I was part of that team, so it’s close to my heart. And all the funds that came from that book went to the Continental Airlines employee charity called We Care. So, everything that came in from that book, he donated to charity, but it’s just giving them information on successful turnaround stories and keeping them to learn and read.
And one of the things I asked my team to try and do on the commute to work or the commute home is just to listen, if they can, every day, to a TED talk. I tried to listen to at least one a day. And if I’m on any journey, I’m either listening to a book, or I’m listening to a TED talk; what a wonderful tool to get free education. And so, it’s just to keep the minds active and get everybody thinking in a more educational way. And it’s something that I try to do, and it’s something I try to encourage.
Spencer: Okay, so with these types of assignments and programs and support, what would you say the ROI is like? Are you seeing a return on this, like, tangibly?
Easdon: Well, I can tell you that in two years, year over year, we’ve doubled our EBITDA. In two years, we’ve reduced our injuries, as I said, by 70%. We’ve reduced our waste by 40%. Our overall productivity’s improved by the high 30s. So, every indicator that we have is improved. Our employee retention — we tend not to measure employee turnover — we don’t want to measure how many people left; we want to measure how many people stayed.
So, one of the first changes was we actually measure retention, and we’re in the high 90s. Where we do have turnover is in the first 90 days in the company, where employees are obviously trying to learn, work in the heat, the busy environment. But once we get past that 90 days, we have amazing retention. So these are, these are all the clear focus when I came in.
The year prior to my arrival, we spent $1.2 million on temporary agency labor because we couldn’t recruit at that time. It was a tough year coming out of COVID. Today, we have 100% of our workforce is Klosterman. We had zero temporary workforce. We have done amazing marketing campaign with Amy and her friends at Scooter [media]. We advertised in the baseball stadium, the soccer stadium, the zoo. And Klosterman has a great catchment for recruitment, and I think we’ve done a great job of expanding that.
So the ROI is huge, and I remember Richard Branson being interviewed, and it’s been used many times since. But the first time I heard it was Richard Branson, and he was asked the question, ‘What happens if you invest all this cash in training your leadership and they leave your company to go to someone else?’ And he answered by saying, ‘What happens if you don’t invest in them and they stay?’ And I think it was an incredible statement, and it was a big learning for me. So, for me, it’s simply invest. Yes, you may lose some they go to promotions to another company. You know, we have some local companies that come to get our people because they know they’re well educated. That’s the risk, but that’s okay. A lot of times they come back. But, you know, that’s just part of the risk of educating well. However, the team that remains behind are educated to make sure that our business has a huge ROI. Quality, safety — everything we do — if you look at every indicator we measure, we have got significantly better since we started that process.
Spencer: Amazing. Okay, I think that is a great note to end on, Dale. So, I think we’re going to wrap this episode up, and I will see you next week to talk about something I’m sure all the listeners are waiting for, and that is operational excellence. It’s something that you bring to the table, and I cannot wait to dive into it with you. So, for this week, I say thank you for joining me and for your incredible insight.
Easdon: My pleasure again, thank you. Look forward to seeing you next.
