Latest / The Inspired Stories Podcast / Building a Business with People: Eric Johnson on Arnold Motor Supply's Partnership Culture | Auto Industry Series

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Building a Business with People: Eric Johnson on Arnold Motor Supply's Partnership Culture | Auto Industry Series · The Inspired Stories Podcast

0:04
Welcome to another edition of the Inspired Stories podcast,
0:08
where leaders share their experiences so we can learn from
0:11
their successes and be inspired by how they've overcome
0:14
adversity. My name is Anthony Kotaspodi and
0:17
today's guest is Eric Johnson, President and Managing Partner
0:21
at Arnold Motor Supply. Founded in 1927, it's
0:25
headquartered in Spencer, IA and focuses on wholesale automotive
0:30
parts distribution. They have nearly 80 locations
0:34
across the upper Midwest and follow a unique partnership
0:37
structure that makes employees part owners.
0:41
This promotes a strong sense of loyalty and teamwork.
0:45
Under Eric's leadership, Arnold Motor Supply has flourished, and
0:49
Eric's promotion to President and Managing Partner in January
0:53
of 2021 stands as a major milestone.
0:56
With ABS in Economics and Finance from Northwestern
0:59
College and an Ms. in Information Systems from Dakota
1:03
State University, Eric brings a blend of financial and technical
1:08
expertise to the table. He has guided the organization
1:11
to strengthen its partnership program, helping employees share
1:14
in the company's success. He also draws on a track record
1:18
of uniting cross functional teams and fostering new ways to
1:21
improve service delivery. Now before we get into all that
1:24
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AD back benefitsagency.com. All right, back to our guest
1:56
today, the Presidents of Arnold Motor Supply, Eric Johnson.
2:00
I appreciate you making the time to Share your story today.
2:03
Well, thanks for having me. I look forward to the the
2:05
opportunity to talk to you. All right.
2:07
So before we get into talking about the company, I want to
2:10
hear a little bit about your origin story.
2:12
What first sparked your journey in this industry and what
2:17
moments made you realize this was your calling along the way?
2:21
Yeah. So it is it's kind of an
2:23
interesting story. I'm surrounded in this industry,
2:26
You know, we are automotive, everything is primarily about
2:31
making either cars run, tractors run, trucks run.
2:34
You know, it's a very automotive focused, although we do get into
2:39
commercial vehicles and other things and I am not that.
2:43
So I'm surrounded by car guys and you know, I don't really
2:48
have I, I get picked on frequently for my lack of
2:51
mechanical skills by my my colleagues and and Co workers.
2:56
So you know, it's not like I always dreamt of working in the
3:01
automotive industry. Really it was more reluctance.
3:05
They had a Co worker, former Co worker of mine from way back who
3:11
came to work for this company and they had an opening that I
3:16
was kind of in alignment with that I, I might be a good fit
3:19
for. They kept coming after me and
3:22
trying to recruit me to come here.
3:24
And really it was the company and the partnership culture more
3:28
so than the industry that ultimately got me to decide to
3:33
to leave what I was doing. I had a good job that I enjoyed
3:35
and wasn't looking at all. But you know, in hindsight, one
3:38
of the smartest things I ever did was coming over here.
3:42
But it is almost like I was fighting my what?
3:46
Fighting against Kim coming here.
3:48
And I'm glad that I I finally gave in So, but it really is the
3:52
company, not the industry. Yeah, not a car guy.
3:55
So that wasn't what drew you in. What was it about the company
3:58
itself then that drew you in? Well, you know, the, the
4:03
partnership is a, you know, a unique, I'd, I'd always kind of
4:06
had this entrepreneurial kind of interest in entrepreneurship,
4:11
you know, going all the way back through my education, business
4:15
education, you know, there's a lot of people who take the
4:18
courses I was taking that are entrepreneurial minded, but yet
4:23
I always never really found that right niche to become an
4:28
entrepreneur. And you know, maybe I was a
4:30
little more risk averse than than what a typical entrepreneur
4:34
would be. So this was a unique opportunity
4:38
to, to have some ownership stake in something.
4:41
And it really turned out to be a very good fit.
4:45
So to me, I it was really about the partnership and the
4:48
ownership aspect of it. And so is it set up as an ESOP,
4:51
an employee stock? It's actually a limited
4:54
liability partnership. So you know, you typically think
4:58
of ALP as maybe a group of dentists or a group of lawyers
5:03
in an office where there's four partners.
5:06
And in our case we're not aware of a limited liability
5:11
partnership anywhere near our scope anywhere we have hundreds
5:15
of partners. And it's so it's a really kind
5:19
of unique set up. So it in some ways functions
5:23
similar to an Aesop, except there's no stock, it's all truly
5:27
partnership or all of our equity is is pooled and then profits
5:32
are distributed based on what percentage of total equity each
5:36
of us have. Maybe without nerding out too
5:39
much, can you break down? Do you understand a little bit
5:42
more of the differences between the two setups?
5:45
Well, in some ways, you know, the as a partnership, the entity
5:49
doesn't pay taxes is one way of, of looking at it.
5:52
So and we're not a corporation where the, you know, the
5:56
corporation is a, a entity from a tax perspective.
6:00
So in in the case of a partnership, all the profits
6:04
just flow through to the partners and then we are all
6:08
individually self-employed essentially.
6:10
And so we are paying the taxes as hundreds of individuals, and
6:15
there are no corporate taxes. So our employees, are they still
6:19
W2 and then they get the profits on top of that?
6:22
So we because we, we do have W2 employees.
6:26
So you know, we have close, let's just call it 1000 for
6:29
round numbers who work here and in again round numbers, let's
6:35
say 700 would be AW2 employee and 300 would be AK1 and no
6:43
different than if you were any other self-employed.
6:46
So we do quarterly estimates and, you know, just like a
6:50
farmer or a guy who does has a construction business and is
6:54
truly self-employed. This is fascinating.
6:57
I'm somewhat familiar with Esops.
6:59
I'm not really familiar with this structure.
7:01
No, I and again, we're not aware of anyone else structured like
7:05
us, but it, it really does create a what I think is a very
7:11
powerful dynamic for for the company.
7:15
Say more about that kind of what was the I don't know the
7:17
inspiration for putting this in place whenever.
7:20
It was. So you go all the way back to
7:21
our beginning in 1927, Mr. Arnold was a big proponent of
7:30
getting equity into the hands of his, you know, managers, other
7:35
people who are around him. He actually had a meeting in the
7:38
30s with JC Penney from obviously the JC Penney
7:43
Corporation and, and JC Penney had also modelled this.
7:47
I don't know much about what it looked like in the early days of
7:50
JC Penney, but every store manager had some equity and was
7:57
paid basically off the bottom line of their own store.
8:00
And that really reinforced Mr. Arnold's our he was already
8:05
thinking in those terms. But after that conversation with
8:08
JC Penney, he really solidified that.
8:12
And so the company moved. It originally was founded as a
8:17
corporation, but very quickly moved to become a partnership.
8:21
And then we restructured it 25 ish years ago into a limited
8:27
liability partnership just to make sure that, you know,
8:29
partners were a little more protected in case of some
8:33
catastrophic lawsuit or something so that no one's, you
8:37
know, personal equity was, was at stake.
8:40
Yeah. And So what do you think the
8:42
knock on effect is for the company, but how do you guys
8:45
benefit as a larger organization?
8:46
I think all the way from the beginning, we have been able to
8:52
attract better talent because of the ownership aspect of it.
8:59
And because even I think beyond what, what would be true with an
9:04
ESOP, you are a direct recipients of the fruit of your
9:12
labor and the, your neighbor's labor.
9:16
You know, we're all working for each other at a level that is
9:22
not true at other places I've been.
9:25
So I think it's a very unique structure.
9:28
I, I really like to, you know, we are also very fortunate in
9:31
the size of the company that we are that were big enough again,
9:35
roughly 1000 employees. We're big enough to offer a lot
9:40
of opportunities and things, but we're not some corporate
9:44
behemoth that you know, I pretty much know most everyone that
9:47
works for us. It's pretty.
9:50
Easy for people. Pretty close.
9:53
You know, I, I actually, everybody gets a birthday card
9:56
from me, which, yeah, in some cases I know them, you know,
10:00
very superficially, I will admit that.
10:03
But, you know, I know most of them by name and you know, know
10:10
their face and know something about them.
10:13
So, you know, it's, it's certainly different than some
10:17
large corporations where, you know, I, I worked in a place
10:21
once where I was in the corporate office with the, the
10:25
CEO for 4 1/2 years and never saw him one time in the same
10:29
building. So, you know, we tried not to be
10:32
that. And so I really like the size of
10:34
this company, but the the ownership structure I do think
10:39
is very unique. And I think, you know, Mr.
10:41
Arnold made that conscious decision.
10:42
And yeah, it'd probably cost him some early returns by letting
10:48
partners in. But I think you know, you, you,
10:51
you. That's a sacrifice that I think
10:53
paid off in the long run because he was able to attract such good
10:56
talent and really made the company what it is.
11:00
So, Eric, we're recording this interview in January of 2025.
11:04
You guys are two years away from your Centennial birthday, 100
11:09
years coming up. It started in 1927.
11:12
Aside from sort of this unique partnership structure, what are
11:15
some other interesting things about the story of the company
11:20
itself, Arnold Motor Supply? Well, if you think back to, you
11:24
know, what was the and this kind of goes into I actually wrote a
11:28
book about the beginning of the company a dozen years ago
11:32
because it as I dug into this and my net intent was never to
11:36
write a book. It was just to because it was
11:38
kind of an interesting story and I was curious.
11:41
But when you think of, you know, Iowa rural when when he was
11:46
starting this business, there wasn't even paved roads into
11:51
Spencer yet. So, you know, you, you think
11:54
this is a different world than what we live in today.
11:58
And automotive was the next big thing.
12:01
It wasn't a super established at at any point.
12:04
A lot of people still didn't own a car when he started this
12:09
business. And you know, so then you also
12:12
think about immediately after he's starting, you have 1929,
12:17
you have the Great Depression, which then rolls right into
12:21
World War 2. And you know, so that he, he did
12:25
a lot of growth through the depression and through World War
12:29
2 was really the, the foundation of the company and it grew very
12:34
well. He made some really good
12:36
aggressive decisions in the face of depression, which you know,
12:41
seems a little bit counter intuitive, but it really is a
12:45
fascinating story of him reacting well to what was going
12:52
on. Him having a little bit of of
12:54
good foresight. And you know, he was a visionary
12:56
on, on what was going to happen with the internal combustion
13:00
engine in general and how it was going to impact agriculture, how
13:04
it was going to impact transportation of, of goods.
13:08
So, you know, he very early on, I, I, and again, keep going back
13:12
to the point of by bringing in people as owners with him, he
13:18
did a fantastic job of solidifying the foundation very
13:22
early. And a lot of those.
13:24
Early aggressive moves that he made, was he like acquiring
13:28
similar companies? Was he, yeah, it well, early on
13:30
there was no acquisition. Today all of our growth is is
13:34
almost almost exclusively acquisition.
13:36
But at that point there really wasn't other mature people to
13:41
acquire. So it was all going into a
13:45
community and renting a building, putting some inventory
13:49
in there and starting to take care of customers.
13:53
There's someone, and I don't know who, somewhere back in the
13:57
probably the 60s had the foresight to save a lot of
14:03
documentation, newspaper clippings, things from the very
14:07
beginning of the company. I also had the privilege of
14:12
meeting our first employee, who was 102 years old at the time,
14:17
and sat down with her for hours upon hours.
14:21
Now she's passed away since, but I'm so grateful for the
14:25
opportunity to meet her. And her memory of those early
14:30
events was just amazing. And so I learned so much about
14:35
what was the business climate like in the 20s and 30s and what
14:39
were the some of the challenge they faced.
14:41
So yeah, it's really a fascinating story about the
14:45
beginning. What's the name of the book and
14:47
where can people find it? The book is called You Build a
14:50
Business with People. It's available on Amazon.
14:53
It's available on Audible. So it's, you know, I haven't
14:58
thought about it too much. Again, you know, it's 12 years
15:01
old at this point. But it, the title comes from
15:05
that's kind of Mr. Arnold's famous slogan.
15:09
His saying is that you you don't build a building, you don't
15:13
build a business with buildings of brick and stone.
15:15
You build it with people. And that pretty much summarizes
15:19
who he was as a leader. Very people focused kind of
15:23
ahead of his time probably in in that regard.
15:26
I was going to say, you know, I wasn't around back then, but
15:29
from what I can remember studying, that was not really
15:33
the common approach to business. It was more harsh.
15:37
It was more, you know, top down kind of a thing.
15:41
Much more command and control. And, you know, he was a strong
15:46
leader. He, he certainly, you know, was
15:48
not, it was not a democracy. It was he was the boss, but he
15:53
did it in a way that was much more people centric than I think
15:58
in almost any other business, at least based again, my perception
16:02
is the same as yours of what things would have looked like in
16:06
in typical 1920s. OK, so now tell us about the
16:10
products and services that Arnold offers and how it sets
16:14
you guys apart from competition. So we are mostly selling
16:20
wholesale to other businesses. So, you know, if you're going to
16:23
do a brake job on your own car, you're probably not going to
16:27
come to us. You're more likely going to go
16:29
to one of the big box retailers. But if you're going to take it
16:32
in and have a a technician do work on it, more than likely
16:37
your technician's going to get the stuff from us.
16:41
So we are big in the automotive space.
16:44
We also commercial vehicles. Agriculture obviously is big in,
16:50
in most of our footprint. So geographically we're through
16:54
Nebraska, through Iowa with a little bit into Minnesota,
16:57
Illinois and Missouri. So a lot of AG in that
17:01
footprint, a lot of trucks, but we'll do tools, equipment, we'll
17:07
do repair parts both engine and under car, you know, anything
17:15
that you would need for, you know, we don't sell tires, but
17:18
outside of that pretty much anything else that you would
17:21
typically need to either do replacement parts on the vehicle
17:25
or the tools equipment needed to do the repair.
17:30
So that pretty much is, is what we do.
17:32
The reason that we're a little different from most of our
17:35
competition is if you think of the cost of that technician
17:42
who's working on your vehicle, he's got a couple constraints.
17:46
When you you pull your car in and tell him you've got a rattle
17:50
in the front or whatever you you might have, one, your
17:53
expectation is going to be that you're going to get the car back
17:55
tonight. And two is he's got a pretty
18:00
expensive set of tools, equipment and employees.
18:04
And so as soon as he rolls your car into that Bay, the dollar
18:09
signs are chinging up as as as he, you know, So what he needs
18:13
is someone to be able to get the right part to him as quickly as
18:17
possible. And that's really where we we
18:20
thrive is fast and accurate delivery.
18:25
So a lot of what we do is really predicated on predictive
18:31
analysis of what parts are most likely to fail and try to get
18:38
them in the right places so that they're close to where the
18:44
failure is going to occur, which is obviously a little bit of a
18:48
probability problem is what it boils down to.
18:50
So we know things like how many Toyota Forerunners are
18:56
registered in a certain zip code and what the failure rate on a
18:59
water pump on that vehicle is. So we can do some predictive
19:04
analysis on what is likely to fail because at the end of the
19:10
day, that's really the the trick of our business is having the
19:14
right inventory in the right place.
19:15
That's fascinating. Where do you get that
19:18
information? A lot of it is available.
19:22
Experian is a big source for us. There are also some in in
19:28
specific to our industry, some data consolidators that will
19:34
pool a lot of the report or the the reports of repair diagnostic
19:39
information and help us to make some of those predictions.
19:44
We also are part of a larger buying group that so you know,
19:53
basically our industry, the big four, wouldn't it be names that
19:57
everyone would know AutoZone, Advanced, O'Reilly and Napa and
20:02
then from there there's a pretty big gap to everyone else.
20:07
So we're something like 1213, but again, order magnitude 100
20:13
times smaller than AutoZone. So we will join forces with. 50
20:20
other companies like us and we'll pool our resources to do
20:25
some, you know, maybe we don't have the budget to do a an
20:30
information technology project that keeps us on on equal
20:35
footing with some of the big four.
20:38
And it also helps us with buying power, but it also helps us by
20:42
pooling our data. We have a much bigger data
20:46
warehouse available to us to again do a lot of these
20:50
predictive analysis type things. So you've partnered with some of
20:54
the smaller auto supply companies like yourself to build
20:57
out this tech. And so a lot of these folks that
21:00
you're probably not competing with because they're in
21:02
different geographies are, are using the same tech
21:06
infrastructure. And you know, I'm looking at
21:08
your website here, for example, you may know that there's, you
21:11
know, 50 Toyota 4 runners in a 20 mile radius of store number
21:17
one in Oskaloosa, IA. And then you know, you may know
21:20
that there's a hundred of them within 20 mile radius of the
21:24
Lake, Iowa store. So that tells you what parts to
21:27
stock in each of those locations.
21:30
Am I understanding? That, Yep, that's pretty much it
21:33
in a nutshell, yeah. That's fascinating.
21:36
A lot more data-driven than I would have even guessed, you
21:40
know, prior to coming into this industry.
21:42
So this kind of setup was in place because I know you've got
21:46
a a background in information systems, but this setup was
21:48
already in place before. Yeah.
21:50
I mean, we, I think we have, I think we've done a lot in this
21:55
space over the past four years to really, in fact, we brought a
22:01
mathematician in three years ago to help us with some of the
22:07
algorithms that we do, you know, for, because again, it's
22:11
basically a giant probability problem is what we're dealing
22:14
with. And so that, you know, we've
22:17
done some things there, we've done some software things to
22:21
leverage those algorithms to, to help us to understand, is this
22:26
part becoming more popular? Is it becoming less popular?
22:30
Basically every replacement part follows the classic bell curve
22:34
as, you know, the, the vehicles that it fits, you know, start to
22:38
come into the prime retirement, you know, repair age pretty soon
22:44
that, you know, eventually they, they start to get taken to the
22:47
scrap heap and they're off the road.
22:49
And so the parts that go with them follow that same curve.
22:52
And one of the biggest challenges is to, to understand
22:55
is this part gaining popularity, losing popularity.
22:58
And so we've done a lot of work in that regard here in the last
23:01
couple years. So you've got a client that's
23:05
one of these auto repair shops and they've got a customer who
23:08
pulls in. They're like, oh, I need part
23:10
XYZ. Are they getting on the phone
23:12
and asking you guys to Courier it over same day or how does
23:16
that work? Yeah.
23:17
So it's going to be 5050 in rough numbers.
23:20
They're going to jump on our website and place the order or
23:24
pick up the phone and call us. In more urban areas it's going
23:29
to be more web-based. In the more rural areas it's
23:31
going to be more phone based. But in general, you know, rough
23:34
#5050 and then we have about 500 vehicles of our own that we will
23:43
run either a hotshot straight to you to bring it or we'll have a
23:46
pre established route that you know.
23:49
They know that if they get that order placed by 10:00 AM,
23:53
they'll have it by 11:30 and they can schedule their repairs
23:58
accordingly. So you said that, like me, a guy
24:02
off the street probably isn't likely to be your customer.
24:06
Could I be? Oh, absolutely.
24:07
One of your locations. Yep, Yep.
24:09
Virtually every one of our store has a counter and you know we
24:14
will sell. It's not going to be as cheap.
24:19
Our labor costs are higher because we do have a more
24:23
experienced and talented workforce.
24:26
And so that's the primary reason why people would tend to go
24:29
elsewhere, because they can save money by, you know, no different
24:34
than you're going to buy something cheaper at Walmart
24:36
than you are at a boutique salon.
24:39
But. And you say it's a counter, so
24:42
I'm not going in and sort of browsing the shelves.
24:44
I'm. You know, for the most part you
24:47
have everything is so specific to the vehicle, to the year, the
24:52
make, the model, the engine. You know, you can't just walk up
24:57
to a shelf and find the piece that you need.
24:59
You you really have to have a lot of cataloguing data for most
25:03
of it. Now you know, some things, if
25:04
it's a chemical or you know oil, those kind of things are a
25:08
little more generic, but even that has become a lot more even
25:13
simple things that used to be simple, like antifreeze, are a
25:17
lot more vehicle specific today than they were 20 years ago.
25:21
So it's very difficult. You really have to know what
25:25
you're doing, and you have to have access to data in a lot of
25:28
cases to get the correct thing for the vehicle.
25:34
Let's talk about growth strategies.
25:35
Eric, you mentioned earlier that most of your growth now is
25:39
coming through acquisitions. So are you acquiring other like
25:44
smaller mom and pop kind of part shops?
25:46
Is that how it? Works, yeah.
25:47
So typically what we'll do and there are still in our part of
25:51
the country, probably more so than most, there are still a
25:55
fair number of independently owned auto parts stores.
25:59
I think on the coasts they have probably gone away more quickly
26:04
than they have in the middle part of the country just because
26:07
competition is is fierce and it's difficult to to stand alone
26:12
today. But for example, Carquest, a lot
26:17
of you know you might be familiar with seeing Carquest
26:20
branded stores somewhere in your area and they're owned by
26:25
Advance Auto Parts. Advance is closing about 700
26:28
locations across the the country.
26:30
And so a lot of these independent carquests are have
26:35
been buying from Advance for 40 years and now all of a sudden
26:38
they're going to be cut off. And so, you know, they're
26:42
looking for another source. And so we will approach them one
26:47
of two ways. One is, you know, from our
26:49
warehouse, we will just sell you parts.
26:51
But in a lot of those cases, it's, you know, maybe someone in
26:55
their 50s, they're starting to think about an exit strategy.
26:58
Maybe they don't have a son in the business that they plan to
27:02
pass it on to. And so, you know, they're
27:04
looking for a way to get cash out of the business.
27:08
And, and that's kind of our ideal scenario.
27:12
I basically sum it up by saying that we could buy a building and
27:16
throw inventory in it anywhere at any time and that would be
27:18
easy and we would fail. What really sets us apart is we
27:24
will find the the Bob's Auto parts in the small town Nebraska
27:30
and everybody knows Bob. Bob knows everybody.
27:34
And we will approach Bob and say we want you to stay on, manage
27:39
the store for us. We will now own it, but you
27:43
still do what you do, except we'll take care of the headache
27:46
part, the human resources, the payroll, the stuff that he
27:50
probably didn't like doing anyway.
27:52
And you know, you keep the same local people that you have, the
27:56
relationship that you have. Give us 5-10 years before you
28:02
retire. And at that point we will have
28:04
built up that next manager. And that's our recipe for
28:07
success because it's really all about people.
28:09
You know, when we go to acquire these, we acquire just like
28:12
anything else you're trying to figure out what are the assets
28:15
worth, how much revenue do we think we can generate and what's
28:19
our return on investment. All of that goes into the, the
28:23
calculation. But at the end of the day, it's
28:25
really the people that where the value is.
28:28
And so that's what we're looking for is that that local guy who
28:33
really has a lot of knowledge, has a lot of respect in the in
28:38
the community and is ready for some sort of an exit strategy.
28:42
Why do you think Arnold's sees value in these locations?
28:47
Where? Who?
28:47
Who did you say it was? Napa or Advanced Auto?
28:49
Parts. It was advanced.
28:51
Advanced is is selling them and doesn't see the value there
28:53
anymore. Well, I think part of it is
28:55
simply geography because we have a distribution point in Omaha.
29:01
We have, we're creating another distribution point now further
29:04
West in Nebraska. We can service them more
29:08
economically. So you know, I don't think
29:10
there's any magic crystal ball that we have.
29:13
But I, I do also think that we are better at that part of the
29:19
business then advance is advance is, is very good at what they
29:22
do, which tends to be more retail oriented.
29:27
And I just think we're better at operating the, the more
29:30
wholesale where our customer is a business that's just our sweet
29:35
spot. And I, I think we're better at
29:37
it than they are. And therefore can you know, but
29:40
I think in a lot of cases it's just simple efficiency of we're,
29:44
we're located closer and can deliver better.
29:48
So, you know, it's a mixture of both, just fortunate location,
29:52
but also I think it more aligns with our sweet spot than theirs.
29:56
Are you guys, would you say that you're an aggressive growth
29:59
period now since there's a lot of these locations that are
30:01
closing? I would say that aggressive is
30:04
probably not the right term. We are cautious about you know
30:10
again as because we're a partnership, we are self funded.
30:15
So we aren't going out to private equity.
30:18
We aren't, you know, selling stock to the public.
30:21
So it's our money that's on the line.
30:25
So, you know, we don't want to get out over our skis, so to
30:29
speak, and, and become overextended.
30:32
So, you know, I think we're cautious about not just snapping
30:36
up an opportunity. You know, in some ways you can
30:38
almost fall victim to the fear of missing out syndrome of, oh,
30:43
if we don't buy this store, somebody else will.
30:45
And we kind of have the mindset of well, if somebody else wants
30:48
it, that's fine because it might not be right perfect for us and
30:53
and maybe there's a better opportunity for us.
30:55
So I would say that we're growing on a nice comfortable
30:59
pace where couple stores a year. We actually just picked up about
31:04
a dozen a year and a half ago, which is the most that we've
31:09
done it once and since 1999. So that was a a big one, but for
31:14
the most part that's not normal. We are usually adding one or two
31:20
at a time and and taking it slowly, cautiously, making sure
31:23
that we get that shored up before, you know, you use the
31:27
military analogy of an army can can outpace it's supply line and
31:31
we don't want to do that. So you guys have been around
31:35
almost 100 years, but I'm already hearing examples of
31:39
innovation that continues to happen.
31:42
I'm curious, Eric, if there are other examples that we haven't
31:46
already talked about that would be fun explore.
31:48
So you know, I think part of it because of my background in
31:52
technology, I do have an affinity for data-driven
31:57
decisions. So we do use data for a lot.
32:01
But e-commerce is another thing, you know, especially during the,
32:06
the pandemic years, we saw a real big spike in e-commerce in
32:11
our space, people, you know, going online to, to order
32:16
automotive parts. And so we purchased a, a
32:20
business that was 100% e-commerce a couple years ago.
32:23
And, and I think we were lacking in that area, didn't have enough
32:29
internal expertise to really build it in ourselves.
32:33
And so we went out and bought a a business which has been very
32:37
helpful for us, kind of got us jump started into a lot more
32:42
e-commerce than what we were doing.
32:44
And when I say e-commerce, we've always for a long time been
32:47
doing business to business e-commerce where you know we're
32:50
behind a log in and you're going to our site because you have a
32:54
relationship with us. I'm talking business to consumer
32:57
e-commerce, which we hadn't done really at all prior to this
33:01
acquisition. So you know, that's another
33:02
example of trying to to make sure that we're staying with and
33:11
ahead of when possible the the times and, and the trends in in
33:16
the industry and in the market. Is there such a thing as doing
33:19
like your own private label branded products in this space?
33:23
Yeah. So we do have not us as Arnold
33:28
Motor Supply, but us with the larger group that that we
33:32
compete against. And so, you know, the the big
33:35
four will have some of their private label.
33:39
Duralast Gold would be an example of 1.
33:42
And so we own McPherson, for example, McPherson Strats would
33:47
be a brand that is owned by our group.
33:51
And so we can private label that nobody else will have it in our
33:55
geographic footprint. Typically.
33:57
I mean, there are other alliance members that we do compete with
34:00
head to head. But for the most part, you know,
34:04
we kind of have our geography where we stand alone.
34:08
So, yeah, we do put a fair amount into those brands and
34:15
that's definitely a part of our our market strategy.
34:20
I'm going to guess there isn't really the opportunity or the
34:23
desire to take these products onto a marketplace platform like
34:27
Amazon we. Do some things on Amazon, but
34:33
you know, the core of our business is delivering it fast
34:40
and you know, Amazon is all about who's the cheapest.
34:46
So we try not to, you know, we don't want our differentiator to
34:50
be price. You know that that's just kind
34:53
of AI think for any business a smart approach whenever
34:57
possible. You don't want price to be the
35:00
reason somebody buys from you. You want it to be service or
35:02
something else. So yes, we do do some things in
35:07
Amazon, eBay Motors, but not it's not significant.
35:13
Now there are some of our peers who are willing to accept those
35:18
smaller margins for the volume that comes with it and they do
35:21
play much more heavily than we do in the Amazon type space.
35:28
And you can make up for lower margins with volume.
35:33
And you know, volume does cure a lot of ills.
35:37
You can typically buy better when you're buying higher volume
35:40
and so you hope you make up for what you're not making on the
35:44
Amazon sales with your more traditional sales.
35:46
But we don't play in that space very heavily at all.
35:50
Usually in our case, it's maybe some extra inventory that we
35:54
have or some things that we're trying to sell down of and we'll
35:57
use it more of as as a place to liquidate.
36:00
Eric, behind Every Success is a philosophy, and you've mentioned
36:04
the idea of there has to be a better way as a guiding
36:08
principle. Can you talk more about this and
36:11
maybe even describe a specific moment where this mindset led to
36:17
an innovation or a breakthrough? Sure.
36:19
Yeah. I think, you know, personally
36:22
that is probably sums me up better than any other phrase
36:27
that I can come up with is I just AM.
36:31
And you know, I guess it's a little bit of A2 edged sword in
36:34
the sense that I'm never satisfied.
36:35
There's all you know, and that can be a little dangerous too.
36:39
And, you know, sometimes you just have to step, you know,
36:42
stop and smell the roses, if you will.
36:44
And, you know, celebrate the fact that you had a success
36:48
instead of saying, OK, that was great, but we can do better.
36:52
So, you know, I think you have to be a little cautious there to
36:55
find the the middle ground. But you know, I'll go back to,
37:00
we did a customer survey, I think 4 years ago where we, we
37:06
went through the exercise of let's define what we think
37:10
success looks like to our customers.
37:13
And then let's find out how they actually define success and look
37:17
for gaps in a either we think what they want and we're wrong
37:24
or we know what they want but we're failing to deliver it.
37:27
So we went through that exercise and one of the things that we
37:31
discovered was we were starting to gain the reputation of our
37:37
people are better in terms of finding that hard to find thing
37:43
or answering the difficult question.
37:46
And so people were using us for the challenge difficult.
37:52
I'm trying to restore a 1963 Massey Ferguson tractor and I
37:58
need a whatever, but they weren't calling us for just the
38:02
basic 2019 F-150 that there are hundreds of thousands of on the
38:10
road. And you know, that's where your
38:13
bread and butter is, is on those repeat, you know, brake pads for
38:18
a Ford pickup. You're going to sell a whole lot
38:21
of those for every refurbished job on an old tractor.
38:26
So we recognized that we were failing a little bit in our
38:31
having the right inventory on the shelf and it was taking too
38:35
long. Too many times somebody had to
38:37
wait until tomorrow to get a common part from us.
38:41
So we put a lot of and that goes into the the exercise we did
38:45
with the mathematician. You know, I think that's a case
38:49
of listening to what are your customers saying and grabbing on
38:54
to that kind of tenacious, we can do better, we're going to
38:58
find a better way. And you know, so even that, that
39:03
math project I was talking about earlier is a perfect example of
39:08
we, we've, we can do better at this.
39:11
And I think it's it's been very successful.
39:14
And obviously you've got the data that sort of informs that
39:17
decision, right? Because you could see, oh, we've
39:20
had X number of customers request this specific part and
39:25
80% of them had to wait, you know, 1.2 days, something like
39:30
that. And you're like, oh, I bet if
39:32
and then, you know, a certain percentage of them cancelled the
39:34
order or they just didn't come to us because they know it's
39:37
going to take them. Yeah, and that's the deadly part
39:40
is you don't know when they've stopped asking, you know, and
39:44
especially when you're ordering, you know, when you go back in
39:48
time, everything we sold is either somebody coming into the
39:51
store or calling us on the phone.
39:54
And so you establish those relationships and you hear them
39:58
asking for, hey, I need a water pump for a 1997 F 250.
40:06
Oh, we don't have that. I better get it.
40:08
But in today's world, so much of that is online.
40:12
We don't even know that they were looking for it.
40:15
We just didn't sell it because someone else did.
40:18
And that that's scary. I mean, that's dangerous in our
40:21
world. So, you know, we recognize that
40:24
we can't just rely on anecdotal. I talked to the customer and
40:29
this is the third time this month somebody has needed this
40:31
and I hadn't didn't get it because they're not calling us
40:34
anymore. And so we had to be proactive
40:37
about identifying what don't we have that we should.
40:42
Interesting. We've talked a little bit about
40:47
employee loyalty already, Eric, and you guys have this
40:52
innovative partnership structure in place.
40:54
I'm curious to hear if there are other initiatives that you've
40:58
put in place that you think have helped recruit and retain good
41:02
folks. Yes.
41:03
So we do a, an employee survey every year.
41:09
We typically get about a 70% plus response rate, which is
41:15
pretty good, you know, relative to what other companies get.
41:20
I would like to have it higher than that, but you know, I, I'm
41:23
happy with, you know, 7072%. We typically score extremely
41:29
well. For the most part, our scores
41:32
get better every year. We recently were recognized as
41:39
one of the four best scoring large employers in the state of
41:43
Iowa. And you know that's not by
41:48
accident. It's because we are very
41:51
intentional about paying attention to the feedback we're
41:55
getting. For an example, a couple years
41:58
ago, the the point on which we scored the lowest was the
42:03
statement, my manager helps me learn and grow.
42:06
So we put a lot of focus into OK managers.
42:11
What types of things you know, so we did like situational
42:15
leadership in terms of, you know, put managers through a
42:20
situational leadership training. We looked for what skills are
42:26
necessary both from a, you know, soft skills, for example, you
42:32
know, like leadership type training.
42:34
But we also looked at how can we arm our people to be technically
42:40
proficient in answering questions about this type of
42:44
sensor or, you know, this new technology that's coming into
42:48
the the automotive space. So we tried to look at both
42:52
sides of that coin in terms of training people, both with
42:56
technical skills about the products that we sell, but also
42:59
more soft skills in terms of, you know, just how to sell, how
43:03
to interact with customers, how to manage people, those kind of
43:07
things. So, you know, we definitely pay
43:08
a lot of attention to that survey and I'd say that's
43:11
another key piece of how we're able to recruit and retain Eric.
43:21
Growth often comes from our biggest challenges.
43:24
I'd be curious to hear about a serious challenge that you had
43:28
to overcome, either business life or personal life.
43:32
Yeah. What you did to work through
43:33
that and some lessons learned coming out the other side.
43:37
So hands down the the biggest challenge that I have faced and
43:43
we as a company have faced happened seven months ago.
43:47
We were hit with a flood. And so right here where I'm
43:52
sitting in our corporate office, the same building at the other
43:55
end of the building is our primary distribution Center for
43:59
for the whole company. And across the street is our
44:03
flagship store where you know, customers would would come in,
44:06
where we do deliveries from. All of that was swamped in the
44:11
flood. So we had millions of dollars of
44:16
damage in loss here in the distribution center and the
44:21
store across the street is about 5 feet lower than the
44:24
distribution center. And so it was completely
44:28
destroyed. Basically structurally the
44:31
building was intact, but we, we had to basically got everything
44:39
across the street. So what, you know, what that
44:41
looked like here was we were, you know, no power.
44:45
So we we had this flood happen on a Saturday, and it was late
44:51
Sunday before the water receded enough that we could physically
44:56
get back into the building. And it was just heartbreaking to
45:03
see the devastation of millions of dollars of stuff just gone,
45:09
destroyed. So I mean, it wasn't gone.
45:12
It was laying on the floor and scattered in the aisles.
45:15
And so, you know, we had to respond.
45:19
We had to respond quickly. And so for the first several
45:24
days, we had no power. So, you know, we had people,
45:28
first thing we had to do is make sure is it even safe?
45:31
Can we be in the building? Is there any electrical thing we
45:34
have to deal with? What about air quality?
45:37
What about, you know, slip fall? Because the ground was just
45:40
covered with the remnants of the flood.
45:44
So that was, could have been overwhelming.
45:49
I, I, you know, at some level, looking back on it, I think we
45:54
just focused on what we had to do and we didn't think so much
45:57
about the magnitude of what was ahead of us.
46:00
And we just took it one hour at a time.
46:03
But you know, for those first several days, we, we had no
46:05
power. So we're running around with
46:08
lights attached to our heads in in the dark, trying to start to
46:13
throw things away because that was the first thing we had to do
46:16
was just go through the entire distribution center and throw
46:18
away everything that was. Everything, nothing was
46:21
salvageable. Well, everything because it was
46:25
only a couple feet deep. So, you know, you picture a
46:28
warehouse full of shelves, 165,000 square feet full of
46:32
shelves. Everything on higher shelves was
46:35
OK Everything on the bottom was pretty much destroyed.
46:39
There were a few things that we could dry off and, and salvage,
46:43
but you know, anything that's been submerged, certainly any
46:46
electronic thing, you know, there were some things as a, if
46:50
it's a, you know, a plastic jug of oil, while you can dry that
46:54
off and it's fine, but for the most part, anything on the
46:57
bottom was lost. So our first, we just went
47:00
through the entire place and started hauling product to the,
47:07
to the pits where, you know, the, the loading docks, just
47:10
throwing it off the pit. And then we'd come with tractors
47:12
and haul it to the curb and just made a mountain of inventory
47:15
that had been swamped. Then we had to come behind that
47:18
and every, you know, so now everything's covered in sewage
47:22
and river water and who knows what chemicals that had spilled,
47:27
you know, all of that. So we had to go through then and
47:30
get that mitigated and pressure wash everything and clean all
47:35
that up. And then you'd have the issue of
47:38
all the the moisture in the water and the humidity.
47:41
And so then we had to extract as much water as we could.
47:44
So, you know, it, it was so overwhelming that literally I
47:50
went home at one point and just lay down on the floor and cried
47:54
because it was just so much loss.
47:58
And while this is going on, we had roughly 40 employees whose
48:02
homes had been one level or another damaged from, you know,
48:08
minor damage to had to evacuate to, you know, things collapsing.
48:14
And so it was just, it was overwhelming.
48:17
It was, you know, physically overwhelming because we were
48:20
just working non-stop. It was emotionally overwhelming
48:24
because, you know, you're looking at all these suffering
48:26
people. It was mentally overwhelming
48:29
because of, you know, you're you're answering questions and
48:34
making decisions on a such a rapid fire.
48:38
And did we make them all right? Absolutely not.
48:40
You know, there's all kinds of things that in hindsight we
48:43
would have done differently. One of the biggest, most obvious
48:47
ones that I learned very quickly was I had not done nearly a good
48:50
enough job of getting to know some of the key people in our
48:55
community. That when all of a sudden
48:58
there's no power or there's no sewer or there's a road issue
49:03
or, you know, I didn't have good enough relationships with some
49:07
of those local people that I, I should have.
49:10
And that cost us, you know, days early on when I'm trying to
49:14
figure out who, who do I even call when everyone else in the
49:17
entire community is also trying to call?
49:20
How do I get a cell phone number of the guy in charge or some of
49:23
those kind of things? So we went from complete
49:27
devastation to shipping product in 17 days.
49:31
What? Yeah.
49:34
And we, we had to because we had the entire company depends on
49:40
this is the heart. It pumps the blood of inventory
49:44
to 80 locations. And without that they would
49:49
starve. So, you know, we, we had to
49:53
figure it out. And you know, this is kudos to
49:57
the people in the outlying locations because they were
50:00
getting creative. They were figuring out truck
50:03
routes on their own to pull from 1 store to another store.
50:07
I mean, it was, it was A and, and the best analogy that I can
50:11
say to describe what we did as leaders that was the most
50:18
successful was taking charge, but not taking control.
50:24
And what I mean by that is, you know, I, I talked about the,
50:28
that we have to dispose of inventory, then we have to
50:32
pressure wash and clean everything, then we have to dry
50:35
everything. So three steps, easy to
50:38
articulate. These are the three things we're
50:40
doing. We're doing them in this order.
50:42
We're starting at this end of the building.
50:44
We're going that way, you figure out the rest.
50:47
So, you know, it could have very quickly become a bottleneck if,
50:51
if I was trying to control all that.
50:55
So, you know, it, I think the key of in a situation like that
50:59
is to take charge and not take control, that, you know, people
51:03
had to get clear, concise direction, but they couldn't
51:09
have micromanagement. And I think that's how we were
51:14
able to go from complete chaos to 17 days later when we loaded
51:20
those trucks up. And it was.
51:22
It was beautiful to see what they were able to accomplish.
51:28
I'm going to guess the fact that you guys have attracted so much
51:32
great talent through that innovative partnership setup
51:35
that we described at the beginning of the episode, it it,
51:40
it probably really shined. Unquestionably.
51:43
And you know, we we all recognize that this is my life
51:46
savings. And Bob, who's standing next to
51:49
me, shoulder to shoulder with me, it's his life savings too.
51:53
And so we're in this together and we're going to figure this
51:56
out. And even those of us who aren't
51:58
partners, you know, their livelihoods are at stake.
52:02
And I think there is a somewhat contagious because so many of us
52:08
are partners and we act like it's ours because it is.
52:12
That kind of carries over into the people who haven't become
52:16
partners. And in some cases, they've opted
52:19
not to just because they don't want to.
52:21
They don't want the risk associated with it or the tax
52:25
headache of being self-employed. But yet they kind of just get
52:31
that sense from the rest of us. You know, you talk about
52:33
ownership thinking is is a popular book from several years
52:38
back. We have ownership thinking
52:40
because it's it's real. We're owners.
52:43
And I don't, you know, without that, I don't think we turned
52:47
this thing around in 17 days. Now, it was nowhere near done.
52:51
I mean, actually this seven months ago, Wednesday was seven
52:54
months ago. And we just had the grand
52:57
reopening at the store on Saturday.
52:59
So, you know, it was a long process to really get things
53:05
back, but it was, I mean, it could have been catastrophic.
53:10
It could have something like that.
53:13
According to FEMA, you know, statistics would indicate that
53:16
about 40% of businesses would fail within 12 months of an
53:20
event like this. And you know, we won't fail when
53:24
and because we can't, we can't let that happen.
53:27
So it just, we just won't do it. Eric, going back to some of the
53:31
early days when this first happened, call them the darkest
53:35
days when you know, you admitted like you came home and was so
53:38
overwhelming at one point, just lay down on the floor and cried.
53:42
What was it that got you through that time?
53:45
You know, some people you know, in ultimate moments of crisis,
53:49
there's, there's family members, there's friends, there's
53:52
mentors, there's faith. What what was kind of your go
53:56
to? Well, you, you just kind of
53:58
named them. I would say the biggest thing
54:02
for me was my faith. I am a strong Christian
54:07
believer. And, you know, I think that
54:12
really gives you something an anchor, you know, to, to hold on
54:17
to. I have a really good family
54:22
connection, you know, with my, my parents, my, my kids, my wife
54:29
and, you know, so there was a lot of encouragement coming from
54:33
there. I also think one of the biggest
54:36
things for me personally was one of the best pieces of advice
54:42
that my predecessor gave me during kind of the ramp up as he
54:46
was getting ready to retire and I was going to move into this
54:49
role. So I was with the company for a
54:51
dozen years before moving into the the, the chief executive
54:57
role or president or whatever you want to call it.
54:59
We're not big on titles here. But one of the biggest, best
55:04
pieces of advice that he gave me was the need to have a peer
55:07
group that, you know, you can people who are in a similar role
55:12
that 'cause you, you don't have that anymore within the company.
55:17
You know, when, when you're the president or when you're the CEO
55:19
or whatever, you know, when you're in that chief executive
55:22
spot, it's kind of a lonely spot internally.
55:26
And so I did also have a really good group of, of guys that
55:33
it's, it's through an organization called Ignite
55:35
Christian Business. And it's, you know, peer groups
55:38
and we, we were getting together every week.
55:42
And so that also was a big thing that I could, you know, bring to
55:49
those guys. Hey, here's something that I'm
55:52
thinking about. I'm struggling with this.
55:54
What do you think, you know, do you know anybody who's got this
55:58
expertise, all of those kind of questions that yeah, it's great
56:02
that my wife is supportive and it's great that, you know, I've
56:05
got all these other things, but they aren't going to know who to
56:08
call with a warehouse distribution question or, you
56:11
know, so that was also a big piece.
56:14
So yeah, faith, family and, and that peer group to me were the
56:18
biggest things to. But yeah, I, I mean, I, I don't,
56:23
I, I'm not an emotional person, but to get to the point where
56:26
all I could do was lay on the floor in my house and cry, I
56:31
mean that that has never happened to me before.
56:33
I hope it never happens to me again but it was so
56:36
overwhelming. Yeah.
56:40
You know, and I think those are the, the breaking points that
56:42
not enough people talk about that most people have been
56:46
through, they've been to that point and they felt broken and
56:50
overwhelmed and they don't know what to do.
56:51
So I'm grateful that you gave voice to your own experience
56:54
there. And, and I think the other
56:57
helpful thing, you know, I hear a lot of that people lean on
56:59
their faith, people lean on their families.
57:02
And then I think another thing that doesn't get enough credit
57:05
is the benefit of peer groups, right?
57:08
Because like you're saying, when you're at the top of a
57:11
relatively good sized company and almost 1000 employees, you
57:15
know, good for you for making it there, Eric, but now it's kind
57:18
of lonely, right? There's, you know, you can't
57:22
power around with everybody, you know, like you used to and yet,
57:25
you know, kind of go internally for that support.
57:27
So to have folks who are in similar positions at different
57:30
companies that it, that's a really great support system.
57:33
To be able to tell this, no, I agree.
57:34
I, you know, I, I, I wish that I hadn't needed to lean on it, but
57:39
I'm glad it was there when I did.
57:40
So yes. But Eric, if you were going to
57:43
recommend one resource, a book, a podcast, a course, something
57:49
along those lines for our listeners, what would it be?
57:54
That is a tough question and I think I have to answer it with a
57:57
little bit of a caveat. I would say that there is one
58:03
book that I use more than anything else that has really
58:07
helped me to navigate being a relatively new CEO in, you know,
58:15
a pretty good sized company. And actually you can probably
58:18
see it over my shoulder Traction by Gina Wickman, the
58:24
entrepreneurial Operating system.
58:25
It really has done a good job of I think it does two things for
58:31
me. One is it creates an
58:33
organizational structure. In fact, I have it right here in
58:37
this drawer, our vision traction organizer that goes through and
58:40
talks about here's big picture what we're working on, here's
58:44
more granular what we're working on, here's who's responsible for
58:47
each of these pieces. So it really helps me to keep
58:52
all that organized. And then it also creates a good
58:58
communication vehicle because what we then do is we have kind
59:02
of a simplified version of the Vision Traction Organizer that
59:05
we publish on our intranet and anybody in the company can see
59:08
it at any time. So they understand also here's
59:12
the big picture where we think we'll be for revenue, what our
59:15
KPIs are that we're continuing to measure.
59:18
And here's the 10 or 12 projects that we're working on right now.
59:22
So I think from a running a business, being an executive
59:28
type thing, that would be the biggest one in terms of personal
59:33
development. I I can't pick one.
59:36
I'd have to say there's three. And again, I think all three of
59:40
them are over my shoulder. Yeah.
59:43
So John C Maxwell has a couple books.
59:47
One is Today Matters. Another one is Talent is Never
59:52
Enough. And there is a book by Bob
59:55
Chapman called Everybody Matters.
59:58
And those three personally had probably the most impact on, you
1:00:06
know, kind of maybe smoothing some of the rough edges that I
1:00:09
had that needed to be dealt with.
1:00:15
Moving into a leadership role like this.
1:00:18
Any daily rituals that have become kind of a cornerstone of
1:00:22
your day and helpful to you and setting your path?
1:00:26
You know, I do try to have a a pretty calm morning.
1:00:34
I try to, you know, spend some time and for me, I read some
1:00:38
Bible verses in the morning, try to get centered.
1:00:44
You know, my personality tends to want to go a little too fast
1:00:50
maybe. And, you know, I, I left to my
1:00:55
own inclinations, I would be too task centric, too focused on
1:01:01
accomplishing the next task and maybe not enough presence with
1:01:06
the people around me, which is where, you know, I think having
1:01:11
Mr. Arnold, someone I never met, but having him as almost a
1:01:14
mentor in the sense of you build a business with people.
1:01:18
So, you know, I also will walk through the the building in the
1:01:23
distribution center and back to, you know, knowing people by
1:01:25
name, make a point of doing the good mornings and the, you know,
1:01:32
how's everything look today? How are the orders from last
1:01:35
night? You know, just get a general
1:01:37
sense of in this building what, you know, what is the pulse of
1:01:41
everything. Now, this is only one building
1:01:43
out of 80. That's something that this year
1:01:47
I've really struggled with because the flood was so
1:01:50
overwhelming and demanded so much time.
1:01:53
I haven't had the opportunity to get out into our other locations
1:01:56
like I normally would. So now that things are returning
1:02:01
to normalcy, I have a spreadsheet that I maintain that
1:02:05
records my visits to our other locations so I can keep track of
1:02:10
when I was there last, you know, what types of things we talked
1:02:13
about so that I make sure that things don't fall through the
1:02:17
cracks. You know, somebody raises an
1:02:18
issue, it's, you know, the last thing that you want to be is the
1:02:21
leader that pops in and says, what can I do to help?
1:02:24
And they give you 3 things and then you forget the three things
1:02:27
and you don't do any of them. You know, pretty soon they're
1:02:30
going to stop answering the questions.
1:02:32
So, you know, I, I am pretty meticulous about visiting
1:02:38
locations. You know, that's not a daily
1:02:40
thing, but it is something I think is important to get a
1:02:44
pulse of, you know, what's going on in the in the trenches.
1:02:48
And so let's use that. You go to 80 stores over the
1:02:52
course of. I don't know how long that takes
1:02:53
you, maybe. A couple of years 3.
1:02:54
OK. And yeah, each store is telling
1:02:57
you, hey, yeah, we've got these 3 problems.
1:03:00
Maybe it's 5 or 10. What do you as the leader of
1:03:05
this thousand person company going to do to try to help them
1:03:08
with each of those problems? Do you have sort of like a a
1:03:11
chief of staff or somebody that you can kind of delegate to and
1:03:14
say, hey, we need to to help with these couple of things?
1:03:17
Yeah. How does that work in a
1:03:18
practical sense? Typically what I will do is when
1:03:21
I go into a location, you know, there's going to be a mixture of
1:03:24
people there who I've met and who I haven't met.
1:03:28
I will freely admit that sometimes I screw that up and I
1:03:33
have met someone and I forgot that I did.
1:03:35
And so I, you know, I just own it and say, sorry, You know, I,
1:03:39
I, it's been a while since I was here.
1:03:41
I apologize. And that that happens more often
1:03:43
than it should. But if it's a relatively new
1:03:47
employee, I always ask the question, where did you come
1:03:50
from before? You know, thank you for being
1:03:52
here. I, I like to thank people for
1:03:54
things a lot. And I always ask the question as
1:03:59
in a, in a lot of cases they've come from a competitor.
1:04:02
So, you know, that gives me the opportunity to ask the question.
1:04:05
So what do you like better about us?
1:04:08
But I always ask the inverse of that and say, OK, what don't we
1:04:12
do as well as they did? And that one, you know, a lot of
1:04:16
times people are reluctant to answer that question.
1:04:19
And I will say too, that, you know, before I was in this role,
1:04:23
I would go into a store and could have a rapport with people
1:04:27
and I would get different answers than I get today, which
1:04:32
makes me a little bit sad, frustrated in the sense that
1:04:37
when you have the president title, it does change the way
1:04:42
people respond. And at some level that's good
1:04:45
and that's healthy. But, you know, I guess I would
1:04:49
encourage people who are on the other side of that equation, you
1:04:52
still have to tell your leader. Be honest.
1:04:53
Just tell them the truth. And if they don't want to hear
1:04:55
it, well, maybe you need to work for a different leader.
1:04:58
But, you know, that's valuable when you're leading an
1:05:03
organization and you're asking those kind of questions.
1:05:05
Don't just tell me what you think I want to hear.
1:05:08
Tell me what's real. And then, you know, what I do is
1:05:12
I look for trends. So, you know, if one person is
1:05:16
mad because this screen on the computer is green and it should
1:05:19
be blue, OK, You know, I, there's not much I can do about
1:05:22
that. But if I keep asking the
1:05:25
question and I keep getting the answer, that says, well, when we
1:05:28
were at so and so I used to work at O'reilly's and they did a
1:05:31
better job on training me on this.
1:05:34
And then I hear that three more times.
1:05:36
OK, now that's not it. That's now a trend and we can
1:05:41
deal with that. So yeah, we have a executive
1:05:44
team and we get together as an executive team once a month and
1:05:51
we will talk through here's some things, you know, that maybe we
1:05:55
need to focus on. This is not just me saying,
1:05:57
here's what I think we need, but they're also, you know, and then
1:06:00
we build our vision traction organizer from these meetings to
1:06:04
say, OK, what are the things that we need to work on?
1:06:06
And so maybe back to the I got good training and I, I missed
1:06:11
that, you know, so now we mole talk is OK, how do we address
1:06:15
that? What, what can we do to solve
1:06:18
that issue? We'll put that down on the VTO.
1:06:21
We'll assign it to someone and we'll report back on it for a
1:06:25
period of weeks or months until we have some resolution on it.
1:06:29
So it it's seems to work pretty well.
1:06:33
And you know, it's more than not it's coming from.
1:06:36
So you know, we have a vice president of store operations.
1:06:39
So he is much more closely in touch with the stores than I am.
1:06:43
He's in them every day. So more than likely he's going
1:06:47
to be the one hearing a store specific thing.
1:06:50
And then we've got a vice president of distribution.
1:06:52
And so, you know, he's going to probably have a better pulse on
1:06:55
we we need to do something with truck routes or whatever it
1:06:58
might be. So we, you know, we do that once
1:07:01
a month and that's what then feeds into our organizer of, of,
1:07:07
you know, the projects that we need to tackle next.
1:07:09
That makes a lot of sense. You can't take every single
1:07:11
piece of feedback that every single employee at every
1:07:14
location is giving you and try to act on it.
1:07:17
You have to look for what those patterns are and then evaluate,
1:07:20
you know, are these worth acting on?
1:07:22
You know, is there something that we could do to improve on
1:07:24
that? You know, I do try to at least
1:07:26
they'll follow up with, you know, somebody will ask a
1:07:29
question about whatever it is. I will try to make a note of it
1:07:33
and either shoot an e-mail back to their manager after I find an
1:07:37
answer. You know, again, back to that
1:07:39
idea of if, if I keep asking and then I keep doing nothing with
1:07:43
their response, pretty soon they're going to stop
1:07:45
responding. So I, I do try to, even if the
1:07:49
answer is we can't do that, I try to at least say here's why
1:07:53
we can't do that. So.
1:07:56
Understanding of why is so important.
1:07:58
Yeah, yeah. I just got one more question for
1:08:01
you, Eric. But before I ask it, I want to
1:08:03
do 2 things. Everyone listening today, I know
1:08:05
that you love today's content. Please hit the share, like
1:08:08
subscribe, follow button on your favorite podcast app so you can
1:08:12
continue getting great episodes like this.
1:08:14
Eric, I also want to let people know the best way to get in
1:08:17
touch with you and follow your story.
1:08:19
And I think you've told us that that is your LinkedIn profile,
1:08:22
which we will share in the show notes here.
1:08:24
But if somebody can't wait and they're listening to the audio
1:08:27
version of this, if you search for Eric M Johnson and Arnold
1:08:31
Motors Supply, you should find him on LinkedIn.
1:08:35
Yeah. So one of the downsides to
1:08:37
having the last name Johnson is I'm difficult to find because
1:08:40
there's 10s of thousands of us out there.
1:08:43
But yes, you you should be able to find me on LinkedIn.
1:08:46
All right. OK.
1:08:47
So last question, as we look to the future here, Eric, what
1:08:50
exciting changes do you see coming to the industry?
1:08:55
Oh, this industry really is in a in a very interesting place
1:08:59
right now. You know, you'll look at you
1:09:01
can't watch TV without seeing electric vehicle commercials.
1:09:05
So, you know, I think we're going to see multiple power
1:09:09
trains coming into the commercial and small vehicle
1:09:14
space. I don't think electric is going
1:09:18
to be the long term answer to the extent that a lot of the
1:09:21
experts do. I think we're going to see a
1:09:24
mixture of hydrogen and combination hybrid, internal
1:09:30
combustion, electric. You know, I think we're going to
1:09:32
see a lot more mixture of powertrain than than what maybe
1:09:38
some of the experts would predict.
1:09:41
The other thing that's really happening that that's has a lot
1:09:45
of potential in this industry is a lot of the it's starting with
1:09:49
the advanced driver assist systems, things like adaptive
1:09:52
crews and lane departure warnings and some of those
1:09:55
things that are slowly moving us towards more and more autonomous
1:10:00
vehicle type things. And again, I think we're quite a
1:10:03
ways away from autonomous vehicle.
1:10:06
Truly. I just get in and punch in a
1:10:08
destination and read the newspaper while it takes me
1:10:10
there. But a lot of the sensors and
1:10:14
even the paint that we are putting on vehicles and some of
1:10:19
the infrastructure that is going into surrounding the vehicles,
1:10:22
roadways, signage, there's really some interesting things I
1:10:28
think that are happening. You know, we're not Jetsons
1:10:30
flying cars, but there is a lot of change happening.
1:10:37
And it's exciting when you're in this industry because every one
1:10:40
of those changes is an opportunity.
1:10:42
And so I think multiple power trains, electrification, hybrid,
1:10:48
hydrogen, all those things and the, all of the sensors and the
1:10:53
driver assist things that keep us safer and, and you know, kind
1:10:57
of help with the augmented reality even.
1:11:00
I think there's a lot of exciting things coming into this
1:11:03
industry, especially for companies that are forward
1:11:07
thinking enough to to not just want to sell spark plugs and you
1:11:12
know, the, the stuff that we've sold for 100 years.
1:11:16
So I think we're well positioned there and it's exciting.
1:11:18
So I'm a guy who's on the periphery of the car industry.
1:11:21
I see headlines and whatnot and right, it makes me think that
1:11:25
everything's going to fully electric vehicles.
1:11:28
So I'd like to hear just kind of quickly, what are you seeing?
1:11:32
What is your sense on the inside of it?
1:11:35
Why? Why am I not hearing more about
1:11:38
hydrogen? But you think this is part of
1:11:39
the the future plan? Yeah, I think, you know,
1:11:43
hydrogen tends to be getting more traction in the commercial
1:11:50
off road space. You know, there's a lot of
1:11:54
variables that come into play and weight is a big part of it.
1:11:58
So for example, and I, I'm, I'm going to butcher this number a
1:12:03
little bit, but let's just say a, a true electric full electric
1:12:06
vehicle is about 130% heavier than its internal combustion
1:12:11
engine counterpart. So that creates a lot more wear
1:12:15
and tear on under car suspension, steering, all of
1:12:19
those kind of things. And also the roadways on which
1:12:23
they're driving. So, you know, there's a lot of
1:12:27
hidden costs and hidden detractions behind the electric
1:12:34
vehicle that I think in the emotion of no emissions kind of
1:12:41
have been glossed over and and missed.
1:12:46
You know, we're not, I'm not certainly anti electric vehicle
1:12:49
by any means, but I think there's a lot more options out
1:12:53
there that are not getting the buzz just because they're maybe
1:12:58
not the the sexy thing to talk about.
1:13:01
But there's a lot of possibilities in some of these
1:13:05
other hydrogen just being one that's on the tip of my tongue
1:13:08
because just actually was reading about it yesterday.
1:13:12
But I think there's a lot of other things that even just
1:13:16
incredible efficiency gains in the good old internal combustion
1:13:21
engine that we we've seen with a lot of the turbocharging and a
1:13:27
lot of things that have really added complexity and efficiency
1:13:32
when a lot of times those two things don't go together.
1:13:34
But in the the case of the internal combustion engine, they
1:13:37
have been able to do some some pretty cool things in that
1:13:41
regard. So I think there's a lot yet to
1:13:44
be written in the powertrain space over the the next decades
1:13:50
that really do create a lot of interesting opportunities for
1:13:55
people in our industry. Well, Eric, I want to be the
1:13:58
first one to thank you for sharing both your time and your
1:14:01
story with us today. I really appreciate it.
1:14:03
No, I appreciate it too. I enjoyed the conversation,
1:14:06
thank you. Folks, that's a wrap on another
1:14:09
episode of the Inspired Stories podcast.
1:14:11
Thanks for learning with us today.