73. Master the Art of Business Leadership! Key Insights with Jim Derry, CEO of Field Fastener

Karthik Chidambaram: Hello, everyone! Welcome to a brand new episode of the
Driven by DCKAP podcast. We are joined by a very special guest, Jim Derry,
CEO of Field Fasteners. We are talking from Washington DC.

Jim, thank you so much for joining me. It's great to have you join the
Driven show.

Jim Derry: Gosh, thanks for having me on the podcast. I'm excited to be a
part of it.

Karthik Chidambaram: So, Jim, the Field Fastener story is very interesting.
I was reading about it. You guys started in the 1990s, or you bought the
business in the 1990s, you and your brothers.

Jim Derry: Yep. One brother. Brother Bill.

Karthik Chidambaram: Oh, just the two of you. Yep. Okay, the two of you
bought the Field Fastener business. And when you bought it, the business was
just doing about $800,000 in revenue.

Jim Derry: Yeah, 12 people.

Karthik Chidambaram: 12 people, $800,000.

Jim Derry: In a really, really dumpy building. I mean, it was terrible.
Yeah.

Karthik Chidambaram: But I'm just curious, did you have experience in the
fastener business? How did you get into this?

Jim Derry: In a word, no, I didn't. But my brother, Bill, he's 10 years
older than I am, he was in the fastener manufacturing business. Back then,
Rockford was the, Rockford, Illinois, our hometown and the location of the
business, was the fastener manufacturing capital of the world.

And actually, my brother, Bill, worked for Dick Field at the same company.
Dick worked for this company for a bunch of years, retired, and started
Field. And Dick was getting to the point where he wanted to retire and get
out of it. My brother, Bill, and Dick were friends. And long story short,
Bill said, hey, why don't we buy this company?

I was living in Minnesota. I was selling computers. And he thought it'd be a
good idea. And I was 29 at the time. Honestly, didn't really know enough
from a bolt. I kind of figured, like, what the heck? Why not? So we picked
up, moved our family. We had one son and my wife was pregnant. We moved back
home and bought this little company.

And Bill was, he was going to stay in corporate America. He was an investor
in the business initially. And I look back and honestly laugh. I really had
no business running a business back then. But we just kind of thought that
really it was a bet on ourselves. Like, let's do this. I was working for a
great company.

Giant. 25,000 people. I knew I wasn't going to work there forever and retire
and get a gold watch. I kind of always felt I'd get into my own business and
this opportunity presented itself and it's like what the heck, went on.

Karthik Chidambaram: So you talked about, you just had 12 people when you
bought the business and $800,000 revenue, but one thing I find very
fascinating is you guys have been growing at 20 percent every year.

And today, you’re just a little under 200 million dollars in revenue. 180
million. I'm just curious, right? Was that a planned strategy? Because I
think, you know, the power of compounding works like magic, right? And 20
percent every year. I mean how did that happen?

Jim Derry: No, we couldn't, honestly could never have dreamt this. I think
when we did our projections and financial modeling and buying the business,
I think we got the revenue up to 5 million and thought, gosh, if we could do
that, you know, that'd be pretty cool, but there's just no way you could
predict, kind of, what has happened.

But as we got into it, you know, we just started to click and we made some
decisions early on to really have a real clear focus of the business to
provide these inventory management systems, you know, where we sell
fasteners.

Our customers generally build stuff. They build football helmets, they build
elevators, they build train cars. So they use our parts in the production of
their products. So we provide vendor managed inventory systems and then
we're really good at providing technical support. So we started doing that
in the early nineties and it's at the base of what we do today.

Karthik Chidambaram: Yeah. you talked about football, Riddle, and it was one
of your customers, one of our customers as well, we enjoy working with them.
But vendor managed inventory. Is that how the whole fastener industry
worked? Or you guys were a pioneer in that process?

Jim Derry: It started really right at- right in the very early 90s. And we
didn't invent it, but we saw it as, really a way to differentiate ourselves.
Again, the business was really small, kind of this dumpy little thing. But
when we started, you know, for a $2,000 investment to get a barcode reader
and a barcode printer, all of a sudden we kind of look pretty high tech,
right?

So you put some barcode labels on a bin and we're doing vendor managed
inventory, and it really changed the whole kind of way people look at,
looked at us and our ability to go after large customers and basically start
selling. And really, really grow in the business. But, so that was a part of
it.

But the ability, and this is Bill's orientation, was to provide technical
support, like to look at fastening and joining and help our customers use
the right fasteners, put the right torque on it, so that whatever they're
building stayed together and it was done the most efficient way, the cost
effective way.

Those two things back then were incredibly powerful together and they still
really are. That’s what differentiates us today. And it’s a fun thing is, it
differentiated us in the early 90s, and it still does today.

Karthik Chidambaram: So is that more people driven? I'm sure it was then,
right? But is it more tech enabled as well right now? For instance, you
talked about which fastener to use where. And that's a question a lot of us
have. Let's say I'm even doing something. I don't know what to buy. You
know, I really need help from somebody, right? But then I go to a store and
I ask them, hey, you know what, this is what I'm trying to do.

But then, oftentimes, you know, it depends on luck, right? I have to find
the right guy. Even if I go to a Home Depot, I have to find the right guy.
But let's say, you know, the guy I talk to, he doesn't have that
information. Then I buy something, it doesn't work. Then I go another time,
hey, I don't want to work with this guy. He didn't provide me the right
information. How does that work and how has that evolved?

Jim Derry: It's funny though, because our customers kind of have that, you
know, their engineering people are kind of like what your experience is at
Home Depot. Some of them really get it, they understand it, but a lot of
them don't.

So we have a whole team of applications engineers that are highly trained.
And their whole world is to go work with our current and potential customers
to help them find a way to better fasten and join things together. To look
at, you know, again, head styles, thread profiles, torque, tension, all that
stuff so that when you put a fastener into a joint, it stays there, it holds
together whatever needs to be held under whatever operating condition it
ends up in.

So there's a lot of expertise that goes into that. And quite frankly, We
have probably more of that than any other company in our business based on
relatively to our size, right? So we have a bunch of engineers that spend a
lot of time in front of our customers and prospects, and that's really why
people tend to choose us, right?

Because lots of companies can put parts in bins and manage inventory, but
providing the technical support proactively that really ultimately helps our
customers save money year in and year out. That's really what kind of makes
things different

Karthik Chidambaram: And are you guys leveraging AI? I mean, I know AI is a
buzzword- Are you leveraging technology, and so that knowledge is passed on
from one team to another, because there are a lot of people who are joining
new and there is also an aging workforce. How are you managing that, you
know, that know-how?

Jim Derry: Yeah, the AI, I would say we're really trying to, I've truly
challenged like our leaders of all the functional areas in the business to
find a way to use AI, right? Whether it's in marketing or human resources or
The training development folks and to some degree that the application
engineers can do that, right?

So now our customers have more access to fastener stuff because of AI. So
that just means we have to continue to up our game so that we really are
bringing the highest quality and most effective technical support solutions.
It's hard to really like plug in all the characteristics into an AI model
and help have somebody and really have it tell you exactly what to do in the
right application. But our people really are. It's critical that they're
very, very technically oriented.

Karthik Chidambaram: And you have to, yeah, make sure you invest in training
and make sure they are up to it.

Jim Derry: And we have the ability to do a fair amount of high end testing.
We bought an engineering consulting firm a bunch of years ago, so we have
the ability to measure torque and tension and load and all that kind of
stuff.

So we have the ability to really analyze joints and then make
recommendations for the right solutions that ultimately are going to help
our customers have the fast and join the most effective way possible.

Karthik Chidambaram: So what is one thing right? Which you think or maybe I
mean, I know it's hard to say one thing, but what are maybe a couple of
things which really led to your growth or consistent growth?

I think that's where a lot of businesses struggle, right? So maybe I have a
very good year and then the next year may not be so good. And I maybe let's
say, you know, I'm at like 10 million revenue. I had 15. Next year I might
come down to 13, and then I have to come back up, right? So what do you, I
mean, what do you think that differentiates you guys?

Jim Derry: There's really, there's really two things. Cause this is a people
business, right? I mean our- We all sell the same stuff. We all have trucks,
computers, everybody does barcoding now. So it's all about, first thing is
all about people. So it's finding and keeping the right people. That first
and foremost.

And the second is, we just stay really true to our value proposition. We are
good at what I just talked about. Vendor managed inventory and providing
technical support services. So as we talk to a potential customer, if they
don't see value in what we do, Then it's just not a good fit, right? We're
not, we don't, we don't compete on price.

We don't come, you know, we do what we do. And if a customer doesn't have
those needs, then we just go on to the next opportunity. So I'd say we're
laser focused on who we choose to do business with and are equally focused
on who we choose to hire in our organization. Because if we. And we're good
at that. We know how to do those kinds of things and the, and candidly, the
market for that is enormous. I mean, we're pretty excited about being, I
don't know, a couple hundred million dollars in revenue, but we could grow
at 20 percent for the rest of my life and still, you know, hardly be up on
the, I don't know, on the map of the big companies. So it's a huge market.
So just staying true to what we know we're really good at.

Karthik Chidambaram: One thing I find very interesting in the way you guys
do it as well is, You just, you also focus on the profitability of the
customer, right? So in terms of, hey, you know, it's not just about me being
profitable or Filed Fastener being profitable. It's about the customer we
are working with. We want to make sure that they are profitable. So tell us
about that.

Jim Derry: Well, that's really kind of the underlying kind of theme or kind
of war cry for our application engineers, right? We want to be the best at
helping our customers save money. And if we help them save money, they
become profitable.

And quite frankly, that kind of keeps our competitors out, right? So they're
not, our customers, if we're doing a really good job proactively helping
them save money, they become profitable. And making sure they don't run out
of parts. They're not likely to beat us up on a, you know, a price- you
know, your competitor's 2% cheaper.

We're like, well, who cares, right? So, if we're really good at providing
the services that we offer, well, then we ought to get paid for that, right?
If we're helping them save money, well then, Many times if we bring out an
opportunity, like here's a way to save a customer a hundred thousand
dollars, well, you know, our profit ought to go up some as well, right?

So if we do this right, our customers save money and we make more money in
the process. And ultimately we, we create a loyalty in a relationship with a
customer that they want to keep us as a supplier. So, we tend to not lose
customers. I guess that's the point in this growth. Many companies, you
know, like grow 10%, but they lose 5 and they grow.

So in our 30 some years of doing this, there's probably five customers that
went away that we didn't want them to. So we've done a pretty good job of
kind of keeping customers so the new growth just incrementally adds, it's
not like filling a hole kind of customers that left. Does that make sense?

Karthik Chidambaram: It makes a lot of sense. But let's say you save a lot
of money for a customer, right? So you tell them, hey, you know, we have
saved so much so we're going to increase our prices. Is that how you do it?

Jim Derry: No, I think, I think what we can do in this is like, if we know
what a current application is and we come up with a better way, well, we
know what the cost of that is. So we know what the- we can save them some
money, but we look at our margin on the parts that we're selling them.
That's going to save them a bunch of money.

We can make a little bit more money on that. We don't have to necessarily
advertise that, but we know that. The solution is probably not they're not
going to scrutinize the cost of the parts in the solution because it's
saving them a bunch of money.

So we can, we can basically get paid for our services by making a little bit
more money and when we save our customers money. So we both can win.

Karthik Chidambaram: So Jim, you are also the president of NFDA, National
Fastener Distributor Association. Tell us about your work there and how is
that helping your business or and you're also at NAW, National Association
of Wholesale Distribution. You're a board member. So tell us about your
learnings there and?

Jim Derry: So the NFDA was great. I remember when we had to get the 5
million in revenue to join and it was, it was wonderful. There was, we
learned so much from, there were so many kind of icons in our industry that
were part of that association. And I just remember that they were incredibly
helpful.

I'm this, again, little snot nosed kid, 30 years old, and I didn't really
know much. And they, so many of them were just super helpful. So I did get a
chance to get on the board and be the president and I found that, you know,
there's a lot of strong willed people, right? These are business owners and
they're, you know, they're leaders, you know, they, and they're on a board
and, and to kind of manage those personalities and egos was challenging,
right?

It was really It was a kind of a good time to kind of test out my leadership
skill to, you know, some, some regard it's kind of herding cats, right?
There's a lot of strong personalities, but it just kind of helped me figure
out how to manage different kinds of personalities. And then what's really
interesting, so when I, you know, joined the NAW 30 years after that, it's
kind of like that same thing.

Now, I feel like The small guy and kind of wide eyed with it. There's so
many great members of this organization. I've learned so much in the last
couple of years being a part of the NAW. Because the people are super
willing to share insights and perspective. And it's been so helpful. Just a
wonderful experience. And I was honored, honestly, to be asked to join the
board. NAW's been a great organization.

Karthik Chidambaram: Congratulations. Switching gears a little bit. There
are a lot of private equity players in the market and but you guys have
always kept it in the family and that's what you intend to do.

One thing which is also cool is something I read or watched is even with
respect to family members You've got to be on par with the rest, right? But
let's say if somebody is not on par with the rest of the team, they just
can't be at the job Is that how you approach it?

Jim Derry: Yeah, I think the expectations of our family are higher than they
are of anyone else, right?

Because, and Bill and I both have two sons in the business, so and we've
done all the work to kind of keep the business in our family with these
trusts and children's agreements. So we hope the business stays in our
family, but the only way that makes sense and it works is if our children
perform at the level that we expect, right?

So there's- they come into it knowing there's a very high bar. And early on
they probably have to work harder than anybody else in their other peers
just to kind of be viewed as being the same just because I think there's a
tendency like, oh, he's the boss's kids, you know, they're probably lazy and
they're slouches.

But our kids have all kind of worked through that and you know, they stand
on their own and they've done a nice job, but they, but it's a lot of work.
There's, you know, there was I mean, a fair amount of pressure to kind of,
to kind of continue the success the company's enjoyed. I mean, so it's in a
good way, right?

It's not, it's not overly stressful, but you know, Bill and I are both kind
of, you know, in the fourth quarter of our careers you know, Bill's 73, I'm
63, Bill's son, Adam is our President. So that second generation is now
leading the business. So they're feeling the pressure to, kind of, hey, we
gotta keep this going.

Karthik Chidambaram: So you're also a Six Sigma black belt. So I'm a little
scared.

Jim Derry: No, not the Karate guy. My brother's he's actually a black belt,
black belt. You gotta be scared of him.

Karthik Chidambaram: Tell us about that, right? I mean what drives you,
right? The theme of this podcast is driven. And you've seen a lot of success
and you guys have grown the business, but what drives you today?

Jim Derry: Candidly, it goes back to solving problems for our customers. I
mean, that's, I guess, as I pondered that, that's what this is all about.
You know, it was a degree, a mechanical engineer in college, and that's all
about solving problems. The Six Sigma Black Belt came relatively early on in
my career. Actually, one of our customers offered this training, and I
jumped at the chance to do it because as an engineer, I'm kind of a data
geek.

You know, I like looking at data to help solve problems. And that's really
what it all, what it boiled down to is, looking at a situation, get the
right data, and have it help us solve problems. And we found that those
tools that the tool set, then the learning around a Six Sigma Black Belt is
applicable everywhere.

I mean, it doesn't, any part of the business, the operations part, the
office part. The only time where the Black Belt stuff doesn't really work is
at home, right? My wife doesn't want to hear about that. She doesn't want to
hear about efficiency and, you know, we could do this in the kitchen better.
She's like, you know, leave that stuff at work.

Karthik Chidambaram: I can totally relate to that, right? Because I think
whatever works at work, sometimes, you know, I mean, you learn all these
things, you know, Six Sigma, Black Belt, and all that, and you try to apply
that at home, hey, it doesn't work.

Jim Derry: Yeah, my wife doesn't want to hear about that. But there's
countless examples of where It didn't have to be a formal Six Sigma project,
but the whole idea around looking at the data to help drive improvements.

One of my favorite examples is in our, in our distribution center. So a
couple years ago, we put an addition into our distribution center and in
Rockford, and we wanted to go to these, this carts to parts, more of a
mobile workstation kind of a thing. And we struggled initially getting that
working, but over time the warehouse team kind of started to see some little
wins and some successes and they really bought into this 'cause they could
see now the improvements.

And over time, over a couple years, it totally transformed everything we did
in the operations part of our business. And now we do that everywhere. So
this, the. Once it got started, the momentum built and built and built and
again, it was so helpful because there's so much data in the operations, you
know, picks and times and distances and all those things we could use that
data to really drive improvement.

Karthik Chidambaram: It definitely helps in improving efficiency and
operations.

So Jim, talking about giving back. I think you guys also give back a lot to
the communities you serve in. And I think that's a great purpose to have.
Instead of just going another route or selling out, you know, you're able to
do so much more by running the business profitably. Talk us through that
thought process.

Jim Derry: Yeah, that's a great question. In 2019, we put together a 10 year
strategic plan that's going to go from 2020 to 2030. And at the center of
that strategic plan is improving lives. So really, the essence of everything
we do is improving lives. And that's the lives of our people, their
families.

Our customers and the communities that we operate in. So we put a big effort
in trying to make a difference. We created a team called the Do Good Team.
And their responsibility really is to identify organizations that we can
partner with to make a big impact on our communities. And each one of our
operations, we call them Centers of Excellence, they have a budget and they
can pick whatever local organizations they choose to work with and do what
they think is best.

But we look for organizations where we can, where we can match our human
resources like our team can volunteer and then we some provide some
financial resources so that we can have the biggest impact so it's super
important. We've been incredibly blessed as an organization and Bill and I
feel compelled to, you know, we've got to give back.

We've got to be a great corporate citizen, God blessed us abundantly, and
it's an expectation that we have on each other and the organization to give
back. And to that end, every person on the team can have a week's paid
vacation to volunteer at a non profit organization. So we're trying to put
our money where our mouth is.

And, you know, just quite frankly, just a couple months ago in Rockford, we
were voted the most philanthropic company in the community. So that meant a
ton. It really did. Cause it isn't what Bill and I do. It's how our team
embraces this. I mean, they really do put a big, sincere effort into making
a difference in our community. And it's just super gratifying to see that,
right? We kind of threw this idea out there and the team just kind of took
it and ran with it. They took it to a level we could never imagine, so.

But it's fun. But especially young people, they want to come to work for
some, an organization that kind of has a soul. That has a purpose. And it
isn't just like, you know, we have to make money. I mean, that's part of the
deal, but what we're committed to every year is to give a bigger portion of
the operating profits back to improving lives. So every year as we make more
money, more, a bigger percentage of that goes to improving lives. So we're
trying to, we're kind of trying to walk the talk in this way.

Karthik Chidambaram: Make money, have fun, give back. Yeah.

Jim Derry: Exactly.

Karthik Chidambaram: What are some things you do outside of work?

Jim Derry: Well, I'm kind of an adrenaline junkie. I like to go fast. I like
to ride my bike and snow ski and water ski and snowmobiles. I have a car I
take onto a track and race. Try to stay fit, work out pretty much. So, yeah,
and we spend a ton of time with our family. We’ve got four kids and six
granddaughters, so we spend a lot of time together as a family.

Karthik Chidambaram: That's awesome. So you work out every day or?

Jim Derry: Try to.

Karthik Chidambaram: Awesome. And what's something you're reading or
something you're learning right now?

Jim Derry: Well, one of the things I've been really focused on the last
couple years is emotional intelligence. You know, there's tons of books and
podcasts and stuff and, you know, it's a really learnable skill. And I wish
someone would have told me about this 30 years ago.

I don't think I had invented it when I started in my kind of role as a
leader. But I'm a big fan of trying to become more emotionally intelligent
and more aware and, you know, reading people. I'm fascinated by it. I'm
reading a book right now, To Know a Person, Herb Brooks, I think. And it's
just really interesting to, to kind of get to understand kind of how people
think and that's not empathy is kind of not my strong suit, you know, I'm an
engineer and a data geek.

So it's just an interesting way to kind of help to really kind of understand
how people, how they see the world so differently and trying to understand
why people see the world so differently.

Karthik Chidambaram: There's another great book on this called The
Psychology of Influence. Have you read that?

Jim Derry: I have not.

Karthik Chidambaram: Yeah, I think that's a great book to check out in the
same genre.

So Jim, thank you so much. I really enjoyed this conversation. Thank you for
your time and thanks for joining me on the Driven Show.

Jim Derry: Thanks for having me. It was a lot of fun.

Karthik Chidambaram: Thank you.