In this episode Josh talks with Dr. Fred Johnson, CEO of Initiative One.

Fred Johnson is the Chief Executive Officer and Founder of InitiativeOne. He has created and implemented Leadership Transformation processes that accelerate positive culture change by helping leaders become more authentic, courageous, open and human than ever before.

He is passionate about elevating leaders and exponentially impacting the leadership culture of an organization.

In today’s episode you will learn:

  1. You can’t lead others until you lead yourself
  2. You need to celebrate the mistakes you made
  3. A mindset of personal responsibility
  4. Improving your strengths and weaknesses
  5. It’s not about the person, it’s about the system


Narrator:             Welcome to “Cracking the Cash Flow Code”, where you’ll learn what it takes to create enough cash to fill the four buckets of profit. You’ll learn what it takes to have enough cash for a great lifestyle, have enough cash for when an emergency strikes, fully fund a growth program and fund your retirement program. When you do this, you’ll have a sale ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want in the way you want.

In Cracking the Cash Flow code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.

Josh:                      Hey, how are you today? This is Josh Patrick. You’re at Cracking the Cash Flow Code, which, by the way, is our brand new name for our podcast, which has been the Sustainable Business radio show for ever and ever and ever. I’m Josh Patrick.

Today, my guest is Dr. Fred Johnson. I saw Dr. Fred speak at an exit planning conference a couple of weeks ago. I was so impressed. I had a run up to him right after he got off the stage to say, “Hey that was a great talk. I would love to have you on my podcast.”

He gave an incredible talk. I thought he made the whole event really worthwhile being that. He’s the CEO and founder of InitiativeOne. I’m going to bet he’ll tell us a little bit about what that’s about. So instead of me just kind of wandering on and not really talking anything useful. Let’s bring Dr. Fred on.

Hey, Dr. Fred, how are you today?

Fred:                      Josh, it’s good to be on your show. Thank you for the honor. I’m doing really well and eager to chat with you.

Josh:                      I’ve been looking forward to this. I’m sure it’s going to be like tons and tons of fun because I like fun.

Fred:                      Well, me too. So let’s get going.

Josh:                      Yeah. So let’s start off, I have a question for you. You have a statement here, which I really like. You can’t lead others until you lead yourself. What do you mean by that?

Fred:                      What that means is that there is no such thing as having an impact upon other people unless that you become the kind of person that people want to follow. To become the kind of person that people want to follow, they have to know that you believe in them, that you trust them, that you see their potential and that you have high expectations.

And yet, we know that you can’t give out what you don’t have. So if a leader does not feel that way about himself or herself then truly relating to others becomes disingenuous. Pretty soon people can see that’s nothing more than a gimmick. True leadership starts with the ability to believe in yourself first.

Because if you don’t believe in yourself first, you can’t make decisions, hard decisions based out of your level of belief in yourself. You cannot convey that to others. So leadership is an inside job. Unfortunately, what we’re finding and as I work with leaders all over the world, the hardest kind of leadership transformation processes are those processes that require deep examination of oneself. Many leaders are not willing to go there because they’re afraid of what they find when they go there.

Josh:                      I would almost add to that they’re normally afraid of doing there. They don’t even know to go there.

Fred:                      Yes, or they think it’s a bunch of fufu if they go there or touchy feely so stuff.

Josh:                      That’s also true.

Fred:                      You know what we know, Josh is our research has shown that the highest level of the ceiling that a leader has for herself or himself is not based on their talent. It’s not based on their experience. It’s not based on their competence, technically. It’s really based on their ability to be comfortable with who they are warts and all. To be able to live with the mistakes that they made, to be able to embrace the mistakes that they make. Because all of that together really does create the ceiling of what your potential is.

Josh:                      I might even take that a step further says and just embrace I think you need to celebrate the mistakes you made.

Fred:                      Oh, we find in private business that those leaders who truly can celebrate and embrace those mistakes, what we know is success and the level of appropriate risks that a leader is willing to take really has a direct one to one correlation with their success. And yet we find that so many leaders have such a poor level of self-belief that they equate their level of being able to feel good about themselves is based on how other people feel about them, which is what we call performance based leadership.

The problem is when my whole sense of self-worth and self-validity is based upon what other people think about me that’s really a no win situation. I’m scared to death to make a mistake with people because they may think of less of me. Therefore, I’ll think less of me. So what we know is leaders truly have to learn how to embrace what we call failing forward.

Failing forward is when we make a mistake, we own it. We talk about it. We embrace it, but we don’t go into shaming ourselves. We don’t go into beating ourselves up.  We go into evaluating, “Okay, what I learned from this? How can I use this to accelerate my success in the future?”

We have found that people who can really embrace those failures are not afraid to take appropriate risks. One of my favorite sayings is that many private business owners, they are so afraid of failure that they play it safe. You cannot play it safe and no greatness at the same time.

Josh:                      I would say that’s absolutely true. So it sounds to me and I had this conversation a lot. By the way, the folks who are listening today, this fits into our whole values discussion, which we think is stage one in creating an economically sustainable business. It also kind of goes to this conversation around mindset. It seems to me that I mean the mindset you’re talking about is a mindset of personal responsibility versus blaming and justifying.

Fred:                      Yes.

Josh:                      So could you talk a little bit about the concept of personal responsibility and why it’s so important if you’re going to be a great leader, why you need to be personally responsible?

Fred:                      Well, the opposite of taking personal responsibility is to be what we call a volunteer victim. Now, there are some times in life that truly someone is victimized. Those circumstances are far less than what we would want to believe. Most people live what I call being a volunteer victim. That is if they’re in a situation that is less than ideal.

It’s easy to default to blaming other people and finding fault in other people instead of turning the finger into yourself and say, “Okay, it doesn’t matter who caused this, the fact is we have a less than ideal situation here. This is not what we committed to. This is not what our standard is.”

So what do I need to do differently in order to add to a better outcome the next time? And when you’re in that kind of mindset and we call that taking 100% responsibility. What that means is taking hundred percent responsibility does not mean taking the blame. The best definition I’ve ever heard for taking responsibility is it, I choose to be part of the solution.

Josh:                      I like that.

Fred:                      It doesn’t matter whether I caused it or not. The fact is, we’ve got a less than ideal situation. One of the things that we know, one of my mentors in my early career was the co-creator of the lean manufacturing process. Her name was Dr. Rosetta Riley. Work with the gentleman by the name of Dr. Edwards Deming.

Together, they were in Japan for 23 years creating the lean process on the fly. One thing that she taught me a long time ago, is that there are two things that truly separate world class leaders and world class companies from everybody else. Here are the two things. One, it’s how they solve problems and how they make decisions.

They simply are not afraid to address issues. They’re not afraid to look at themselves and to take rigorous evaluation of themselves. Because they’re not afraid to solve problems, they’re able to make decisions in a much more timely fashion without drama.

And yet, we also know my ability to take responsibility. My ability to believe accept and love myself have a direct one to one correlation. Because if I don’t believe in myself and if I take responsibility for a mistake, what that means the American adult on a scale of zero to 10 has a self-belief level, believe it or not of 2.7.

Josh:                      Really?

Fred:                      Yeah.

Josh:                      That actually makes sense to me.

Fred:                      Tell me why.

Josh:                      I’ll tell you why. Almost every time I do a talk, I go to the now discover your strengths question, which is, what’s more important, improving your strengths or improving your weaknesses? My experience is that employees almost 100% of the time will choose improving their weaknesses and business owners almost 100% of the time will go to improving your strengths. It says there’s a lot more employees and business owners that makes sense to me.

Fred:                      Yes. The reality is you need to do both because if you take a chain, the chain is only as strong as its weakest link. If you ignore that weakness then that becomes problematic, but same time, if you’re not maximizing your strengths, you missed major opportunities that come with your particular makeup.

Josh:                      The way I say it is, I would much rather be world class and mediocre.

Fred:                      Yes.

Josh:                      So if I focus on my strengths, I can become world class. If I manage my weaknesses by building a complimentary team and my company, I cannot even do this stuff I’m not very good at. I’ll have other people who are stars at it and let them do it.

Fred:                      You just described something powerful, Josh. If I’m at a 2.7, I’m not going to surround myself with people who can complement my weaknesses because at 2.7 I’m not going to own my weaknesses. I’m not going to acknowledge my weaknesses. In fact, if you hold me accountable for something that I need to improve on, I will actually see that as a threat.

Because you’re not talking just about something that I need to do better. You’re talking about my entire being. You’re talking about my entire identity. So when you’re talking about how I need to leave my department better, what we call that is it becomes a threat because you’re talking about me and my mom. We know that a leader has to get to a self-belief level of eight or above.

At eight or above, we call that a being based leader and a being based leader is a leader who leads through relationships. First of all relationships with themselves first and relationships with others. A being based leader is not afraid to make a mistake because they know that their validity comes from who they are not from what they do.

So if I make a mistake, it just means that’s information. This is a learning opportunity. Whereas if I’m at 2.7 and I make a mistake, at 2.7 I suffer from what I hear. We’ve been talking about this now for 20 years, but it’s becoming invoke lately to talk about what is called the Imposter Syndrome.

We call it the Fraud Syndrome. The research out of North Carolina State University indicates that 70% — a minimum of 70% of all leaders believe that if people really knew who that they were, if people really knew their mistakes, if people knew their self-doubt, there’s no way that other people would believe in them.

We believe that number is significantly lower. We just haven’t done the research yet to show that higher number. But we believe that the vast majority of leaders in America really believe that they’re frauds. So when that’s true, I’m so afraid of being found out that if you hold me accountable for something, I immediately begin to become very defensive about that because I don’t want you to find out me out.

So I’m going to become very good at blaming other people. I’m going to be very good at scapegoating. I’m going to be very good at being defensive. The problem when you’re defensive as a leader is you cannot grow and be defensive at the same time.

Josh:                      Yeah, that’s absolutely true. I used to own a vending and food service company. In the company, we had these posters all over the place and there was a board responsibility then there was a line and below the line was lay blame and justify.

Fred:                      Yes.

Josh:                      So one of the tools we use all the time was saying, “Is this above the line or below the line behavior?” If it’s below the line, then we had to stop it because that was one of our core values, which was personal responsibility. It’s a really simple thing to bring out. The truth is making mistakes, I mean, I’m a big Buckminster Fuller fan who was a contemporary of W. Edwards Deming [inaudible 00:14:55] to saves around mistakes I really like. One is mistakes are learning opportunities. The second thing he was saying is you don’t learn less.

Fred:                      Let me tell you the story that happened that very few people know about this. When Deming and Rosetta Dr. Riley went to Japan after they had been kicked out of GM. They were there about five years after they started working with Toyota. In the first five years, they had tremendous success, exponential increase and in year five, it flattened out. They couldn’t figure out why the result for flattening out pretty dramatically because they were still working and teaching the same processes.

What they learned and it took them a couple years to figure this out. That at some point, they didn’t have the opportunity to make these big nugget changes that could create huge opportunities because they have worked on those big opportunities.

Now, if they were going to continue to get better, it had to be through many, many hundreds of tiny changes that collectively would lead to improvement. You couldn’t put your hand on which one of those was the definitive reason for the improvement. So in that environment, anything and everything has to be up for complete constant total evaluation. No one or nothing is off limits.

Well, what they found is if you do not have a level of psychological safety in an environment where everything and everybody is up for constant evaluation, at that point, that can become a very threatening environment. For instance, if you make a change that we need to take this little tiny spring and we’ve decided that that little spring in our manufacturing process is no longer necessary.

Well, there was an engineer who spent hundreds of nights behind making that spring at his or her kitchen table. That spring became the basis of their whole identity. It was their biggest win in their career. It was the basis of their pride. All of a sudden, you come along and say that spring needs to change and their identity is tied to that spring.

Now, what you’re saying is, “Well, you’re saying that spring is not good enough. Therefore, what you’re really saying is I’m not good enough.” At that moment, I have to begin to fight that change. Because now it’s a defense of my identity. We find that many organizations that struggle with change have not equipped their environment of people to understand that if we change something that is not an indictment on the person who created the original process in the first place.

It’s just new information. What we learned that it’s how my company came into being. It was we created our company to be the twin of the lean manufacturing process. Because we had to teach people how to become comfortable with who they are warts and all. Because if they saw their identity based upon their performance, or how other people view their performance, if someone asked them to change their performance then they saw that as an indictment of who they were.

And so one of the things in high performance environments today is that we have to work with leaders to change their mindset to separate the idea of change is not an indictment of who they are.  The people who can really embrace change are those people who can embrace themselves first.

Josh:                      The interesting thing about what you were just talking about gets in with one of Deming’s 14 points. By the way, again, for people listening, Google Deming 14 points, read them, print them, put them on your wall and study it every day. One of those 14 points is don’t blame the person, blame the system. What you just talked about is a perfect example that I’m here I am, I designed this little spring.

In the spring, which you design may not work as well as something else. This is a systematic problem. It’s not about you as a person. This is where senior management really, really needs to step up. There are too few companies in my opinion, where from the CEO, to the President, to the owner.

Folks, if that’s you, you’re the one that needs to be setting the tone for it’s not about the person, it’s about the system. Stop saying if only this person did it better job, my life would be wonderful because it’s not the person.

Fred:                      I couldn’t agree with you more. Yeah, in my heart– I’ve had the opportunity to work and coach hundreds of CEOs and senior executives all over the world. I will tell you in the C-suite, often the most driven personalities in the C-suite, the reason why they’re driven is because they’re overcompensating for their inner messages that they give themselves every day that they’re not enough.

And so, what we have found is a life changer, is a game changer for leadership, is beginning to understand that until I accept the fact that I am enough that warts and all mistakes and all that my journey, that I am enough and that my sense of dignity and meaning comes from who I am and not what I do.

When you begin to embrace that change from 2.7 says, “I’m not enough.” But 8.0 and above says, “I am enough.” Until a leader does the deep inner work to change that narrative from I am not enough to I am enough, they’re blaming and scapegoating and perfectionism, and not allowing for mistakes continues to haunt them in their leadership.

So if I could say one thing that I have seen over and over that transforms leadership potential. It’s when a leader makes a decision that I am going to live not by desperation that I have to prove that I’m enough to everybody, including myself, but I’m going to start living by declaration. Declaration is a choice that I am going to choose to believe that I am enough warts and all.

It takes is a much energy to believe that you are not enough as it does to believe that you are enough. I work with leaders all the time to begin to change the narrative about themselves. When you change yourself narrative, it changes the way that you think about yourself. When you change the way you think about yourself, it changes the way you think and behave with others.

When you change the way you behave with others. It changes your results. It all comes back to your level of belief and acceptance in yourself warts and all. That is the leadership secret of the modern century.

Josh:                      Yeah, makes perfectly good sense. Hey, Dr. Fred, unfortunately, we are out of time. I’m going to bet there are some people who are listening who would love to get ahold of you and learn more about what you do and maybe even contact you. If they want to do that, how would they go about doing so?

Fred:                      They can reach us at our website at They can reach me there. My email is We have lots of videos of me speaking on our webcast on our website. So that would be the very best way to get a hold of the slide on our website at

Josh:                      Cool and as you heard when I opened the show today, we’ve changed the name of the show to Cracking the Cash Flow Code. I have an offer for you that kind of goes along with that. The first step you need to know if you’re going to craft cash flow code is to find out where you are now on the road to financial independence.

Because, frankly, that’s what most people want to do with their own businesses is they want to become financially independent from a business. I put together a really kind of a cool seven minute quiz. A little bit of information in. It will tell you whether you’re on the road or not on the road of financial independence.

Get it. It’s really easy. You just go to That’s Click on the big orange button. Spend seven minutes on the quiz and you’ll get your answer. This is Josh Patrick. We’re with Dr. Fred Johnson. You’re at Cracking the Cash Flow Code. Thanks a lot for stopping by. I hope to see you back here really soon.

Narrator:             You’ve been listening to the “Cracking the Cash Flow Code” where we ask the question, “What would it take for your business to still be around a hundred years from now?”

If you’ve liked what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102. Or visit us on our website at Or you can send Josh an email at Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.


Topics: sustainable business podcast, Sustainable Business, cracking the cash flow code, personal responsibility, self improvement, fred johnson, systems and processes, initiative one, leading others, celebrating mistakes

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