Floyd Jerkins addresses the Business Model

And today that the failure rate is even quicker. And that's because of the outside inputs that are causing those businesses duress. So, you know, when we talked about the sales side, I certainly, you know, see that, you know, I still see the sales side of the organization, you know, still doing well because of profitability, but not as effective. You know, When I start to talk to a business owner, you know, I always say, can you show me how your organization is structured? And he said, well, yeah, I'll send you my org charts. Okay, you know, that's a start, you know, and traditionally they're, you know, PowerPoint based or there's some charting mechanism. And they're more of, you know, in the technical term, it's a matrix style or a patriarch style. And it's always from the top down.

That type of methodology, if someone says they've got a word chart to show me, I immediately roll my eyes and go, oh my gosh, you know, because that whole paradigm in itself is flawed. That concept of creating that type of charting mechanism was developed in the early part of the 19th century. And as it was coming up, it was a way because of power and control, you know, controlling lines of communications. And it was really more about the ability for the organization to create layers of management and create power controls. This manager managed this, this manager managed this. And, you know, did it work back then? Well, I mean, a lot of it did. But I think as I move forward, when we look at social trends, I know, Ron, you've talked quite a bit about Generation Z, Baby Boomers, Generation X.

generation X decision makers on the front line today, but they're controlled by the power strings of the late boomers and the depression era people that, you know, I had a guy one time that in my company, we were selling mobile app as a part of it. And he said, Floyd, I don't want no damn mobile app in my company. None of my customers have that. And I said, well, sir, hang on just a second. I want you to go walk to your showroom floor. You know, and I want you just to look at your customers that are standing in line waiting on parts, you know, and tell me how many of those people are standing there, you know. And a lot of them are. So, okay, so what are they doing? They're shopping somebody else, you know, at your showroom floor. And I think that's a real good example that illustrates that, you know, I'm 63, Ron, and, you know, I love to be around the young people because it's a learning experience.

Now, there's some trends that, I'm just not going to buy into the F word. It's such a common word used today that it's such a waste of the English language. It's just not very proper at all. But yet when you look at the mobile apps that young kids had today where they're doing their financials on an app, well, that wasn't back in the day. But I think as we look at the customers, are we still pushing the sales team? towards making sales or are we identifying that customer and pulling that customer towards us? You know, that's a difference. And we look at organizational models. I mean, I mentioned before, you know, it still starts with mission and vision. I mean, you got to have some type of a vision of where you want to be. And those statements of we want to be the best dealership, providing the best service to all of our customers. I mean, that worked with a depression era person, because that's all we knew.

But does it work with the generation next? They're going to limit. I got 57 questions why that doesn't work. So there's some real gaps. Because I do think that if we can get the connectivity between the generations and the businesses that find that connectivity, then you're getting peak performance from all layers of people. We can't have certain layers. You know, it's just like any large multi-store complex. If I've got 20 stores, I've got five of those that I wish I'd just cut off and let them float away, you know, because not all of them and all departments and all people are performing at the same level. Continuity in that is the key. So I think when we start looking forward, Ron, I think, you know, we're going to have to have more connectivity. You know, I just think there's no doubt about that. I think that.

We're going to see more and more of this information exchange and at a high level where, you know, a fundamental of businesses, do you share your financials? You know, there's still many operations that, oh, that's taboo. We just can't do that. I'm not advocating sharing balance sheet information, but income and expense by branch. I mean, there's all kinds of options there to share the numbers and let people know. But that's kind of a no-brainer. seems like everybody should be doing that you got to have some way to allow them to measure against themselves if you will but certainly more connectivity and i think another big issue that's coming forward is these lower transaction costs you know i think it's huge is the speed which that's happening you know um white castle introduced uh flippy and flippy is a robotic device that actually cooks the burgers and, you know, handles the burgers.

I mean, now part of that is that they're trying to prevent bacteria and infection, you know, being able to control that. But it's also the, you know, that robot is not going to say, hey, I don't want to come to work today because I've got something else to do. I mean, the speed of service, that electronics, is it impersonal? Sure it is. But I think when we look ahead around 20 years from today and look back, We're going to go, well, computers are an important part. Robotics are an important part. AI is an important part. You know, I had a lady friend of ours that we kept telling her she needs to buy one little robo vacuum cleaners. You know, she don't want that because it's dangerous. And I listened for the longest time. My wife said, go ahead. No, I'm not going to say a word. It was just like my grandpa, you know, my grandfather would cover the television up. because, you know, they were watching him.

But he grew up in, you know, in World War II. You know, he grew up in that era where I can't really speak to the points of how Russia was not a country, you know, especially today with what's going on in Ukraine. It's just a mess. But, you know, I think we're going to continually see this automation kick in, Ron. I really do. I think we're at the verge of it, you know. It wasn't that long ago we didn't have these cell phones like what we have today. You know, I mean, we didn't have it. You know, when Steve Jobs introduced the iPod, it wasn't brand new. It was just better, you know, and it was a better pitch. It was a better marketing, but it was a better product than what the Walkman was. You know, and as we fast forward and look at technology, we're going to continually see, you know, Amazon has set the world on fire with automation. You know, I mean, they really have. I mean, they're.

The competencies that were brought to the table to their frontline people to be able to accelerate automation, I mean, that's just amazing to me. I mean, some years ago, we had a chance to go into an almond farm out in California. And, you know, I understand the mechanics of it, but the use of lasers to separate the almonds, the use of, I mean, it was just. You know, my language then was rock and roll technology, you know, at its best to provide. And they eliminated, you know, eight to 10 jobs. But they also had other jobs for those good people to do. So I think that in the society shifts, Ron, I think those are some of the biggest, you know, the waves coming that we're going to have to deal with.

That's right.

You know, I always go a little deeper on those things because the question is why. Why does a customer say, hey, listen, Mr. Salesperson, Mr. Manager, I'll call you. It's because that value is not there. The value of that salesperson, the value of that operation is not as great as what they can access on the Internet. The businesses that continue to try to compete on price, I think that's crazy. You know, it just doesn't, that's a rant, Ron. I mean, that's...

Yeah.

We know historically that people pay more for a service when they feel better about the service. You know, that, you know, the old adage of, you know, Who do you sell more of? You know, a repeat customer or referral customer, a brand new customer. Well, you make more money on the repeat customer and the referral because there's familiarity. You service them. The front end sale is still made by what happens after that sale is made. It's all those steps behind it. And that's where this, you know, I think the ability for the organization to harmonize and to have. a seamless process for that customer experience to go from one end of the operation to the other. And it's seamless. It clicks. And, you know, when you walk in, you feel it. When you call in, you feel it.

You can tell by how the receptionist, how the, you know, I mean, I still remember all this on hold and the receptionist functions and all the discussions we used to have in our 20 groups about this. And every time somebody would say, all right, Floyd, you just be quiet for a couple minutes because we know what you think. You know, you made yourself known. Because this whole idea of using the automated attendant to answer your phone to me was crazy. Just didn't make sense. And then say, and to have it be that as the first point of contact was ludicrous. Now, I'm okay with a live person answering and then transferring to someone's voicemail if they're busy. I support that methodology. But we disconnected ourselves from the customer. I kept saying, I said, how many customers hang up? We don't know. Ask your telephone company. They can tell you. And when you find that out, I want you to call me.

Calm down with the numbers because you're going to be really surprised at the volume of people that do not like that. You know, well, that was a sign of, oh, we have to control our cost. We can't get somebody else in that. But yet we lost touch with the most important thing, you know, that matters. It's the customer. And I guess where it's back to pulling that customer, knowing that customer well enough that we anticipate what their next purchase is going to be, that we become a consultant to that customer, that we're anticipating, we're giving them more value. And inside the operation, that's their focus. How do we help that customer improve their operation, improve their timing for the job, the speed of deliver? you know, all the things that we can help them. We have, they have a lot of tools available, I think in these operations. Some of it's, I don't want to share it. You know, I can't do that.

Yeah.

You know, Ron, I think there's examples out there. I really do. I mean, here's one example that comes to mind. You know, and just a few years ago that CVS was undergoing radical growth. But yet internally, there was a recognition. about where do we want to be at in 10 years and 20 years? What's the legacy of our company? You know, they took such a hard stance on tobacco that they quit selling tobacco in their operation. And it was a big profit center. Some of the old patriarchs in the organization struggle with it because how are we going to replace that on our bottom line? But yet, you know, we're a health company. You know, we're CVS. And they had to redefine. I mean, it took them a couple of years to redefine their total vision of what that company is.

And it took them a long time to start getting their value processes established so they could walk the talk, you know, because just to stay at the top of the chain isn't the same as the frontline people. And I mean, customers threw a fit about it, but the Marlboro man has died. I mean. It's been proven smoking kills people. And, you know, that's a whole nother rant because we could talk about why the government allowed, you know, the tobacco company such a long leeway, you know, but there was a whole lot of tentacles to that. But the main point here is that CBS made an executive decision. I think they backed it up with their values, you know, and they made a radical change despite what it looked like. They made a radical change to their business model. And, you know, are they better for that? You know, I think so. I mean, that's, you know, when you look at their numbers, they look better. I mean, they're healthy. You know, are they sustainable?

Well, they look more sustainable than others. So I just think that's an example of a company that has evaluated their principles and their process and said, we've got to make a change. And it's best to make a change before you have pain. Because the one that are in crisis management run to say we're just going to change our mission and vision. That's not what happens in crisis management. That's a different animal. It's a whole nother discussion. We're talking about, you know, what are the outside inputs maybe that could affect the brand to be able to help them understand how to make these changes? And then what are those key points, you know, that that affect it? And I think once an organization gets that. Because I think the winning businesses of the future are still culture driven. You know, it's the, you know, when you walk in a mall, Ron, you go by a computer store and then you go by an Apple store. I mean, wow.

That tells a story about not just the culture, you know, but what's happened at a product development level, a distribution level. I mean, one of the reasons Steve Jobs picked Tim Cook was because of his distribution expertise. You know, I mean, that was a huge piece to his puzzle.

But that didn't fix the problems you were having. The money didn't fix it.

Yeah, that's right.

That's right. Same concept on movie CDs and DVDs. Same concept.

Well, when you understand what that big machine is doing, and then you start going, wait a minute, you know, and the old adage about you can't fight City Hall. Well, that's not true. You know, I mean, it's not.

I'm going to shift gears just a little bit. You know, if we look at the inputs of what create the business models, I mean, there's the centralization and the decentralization structures. You know, I do not think that in the future we're going to see highly concentrated, highly centralized style organizations. I think we're going to continue to see decentralized mobile units. flatter organizational structures. I think we'll see those that are fitter. There's much more cross department, cross

cross pollination of information. We're gonna see people being able to access anywhere within the organization to get the answer that I need versus having to follow that traditional hierarchy of The parts guy's at the counter. They want to return a part. The parts manager says, let me check with the parts manager. I'll get back to you tomorrow. You know, I mean, that has to be instantaneous, you know, right then and be done to satisfy that customer. It can't be minutes and hours and days for the delayed decisions. So I think those decentralization structures are going to be really, really important to speed up the customer experience. Underneath all that becomes company-based training, the ability to have the right people at the right time on the front lines. So you can't just put people out there that don't know your systems and your processes.

So when you hire them, it's probably a longer onboarding process than just you hire them today and throw them out there tomorrow. So all this kind of integrates. I think another piece to this, Ron, is that departmentalization. is really an accounting method. It's important that we understand our income and our expense streams as they come through a business. So we look at them by departments and we can judge and really have better insights to where are we in relation to profitability. But yet from a management standpoint, departmentalization isn't really the answer. You know, we need to have this decentralization structures that allow these departments to cross over and to communicate and allow this exchange to go on because we find new ideas when we do that. We find better servicing methods when we do that. We find, we also find bottlenecks and problems.

You know, if we see that we're 10 steps when we should be doing three, you know, I always love to take a piece of paper, you know, an organization, how many people touch this? Yeah. How many people should. You know, it's amazing. Well, we, you know, when we take that work order, we run all the way through, I mean, there's sometimes there's 15,20 people touching those things when really it needs to be about four, you know, and at the end of the day, I think that's, you know, it's process, but it's more important. I think we're going to have people are going to be going, we're going to see more specialists because I don't think any of us can absorb the volume of not just information, but the technical aspects of everything that we're looking at. You know, somebody doing a website run, there's a certain specialty there.

You know, that same person can't repair a piece of equipment, you know, but the person splitting a tractor, you know, may be different than the guy who worked on electronics. Yeah. Because the old, you know, the older guy can still split the tractor. The new guy didn't learn that in school. You know, but he understands that the electronics on it, he can hook a computer up to it where the other won't. So, I mean, I think we're going to continue to see specialists. And that, I think, is an edge for a business when they have this. But that's that's the human capital. That's the investment in in people, the training, the evolution. I mean, the growth. And we can't have high turnover and we have to be able to retain that knowledge, you know, and we have to. the melding of this boomer and depression era people to the generation Xs and Ys and Zs. We got to connect that and there's companies doing that, you know, very successfully.

But in the equipment space, you know, marine is like light years behind, you know, all that trucking is still behind the construction market. You know, automotive is ahead in the consolidation compared to the agricultural side, but there's numerous models and similarities there. Many say, oh, there's not. You know, so there's patterns that we can look at across markets that give us indications. But I don't think one market follows another one so clearly, but you're going to have to find those. That's where I always thought the Malcolm Baldrige Award did such a good job. They identified businesses within certain markets that were just doing exceptional jobs. And it wasn't all of them doing the same thing, but it was somebody doing an exceptional job based upon the bulging criteria. And I always thought that was, you know, very impressive, you know.

And if you can get that award, that's better than being on the front of your trade magazine, you know. Because I still remember seeing dealerships on the front of trade magazine, and hell, they were terrible operations. I mean, they weren't, you know.

And the next question is why?

Yeah, yeah, yeah. I think that's, I agree, Ron. I think that's when they, the ability for the organizations to really move forward. When they have a market coming at them, they have to really understand their business model in relation to that market. But they need to understand their business model in relation to business in general. It's not just to your market. Because diversification of your product categories, you know, can become part of that. Because, you know, who's to say that you're going to be selling the same products down the line than what you're selling today? You're probably not. Now, those that are tied into the OEMs as we know them, right, whether it's, you know, whatever brand it is, you know, those companies, I think, are asking the same questions, you know, that we're asking today. You know, I don't think there's any doubt. John Deere just revamped their whole vision, you know, and put that out there.

And I thought they did a very good job. You know, they hit the things that I would think, but they hit 10 times more. And I mean, they're a Caterpillar does a good job. I mean, some of these companies that have been at this for a while, you know, they get it. You know, I still remember when Bob Lane stood up at a division meeting and said, you know, we're no longer a family oriented business. And, you know, we're a high performance machine. And oh, my gosh, I mean, that's a negative, you know, throughout. But from that segment in the marketplace, I mean, there's been more millionaires made, you know, than than others and all the capital goods side. So I think that's, you know.

This pandemic. The COVID has, we've talked about this from an educational perspective, that it's accelerated some of the trends that were, you know, moving along. But all of a sudden, this was like, you know, it got hit by a freight train. It was like, boom, tomorrow morning, it all changed. I think we're seeing that today. We would go back to having automotive lots with a thousand cars, you know, sitting on the lot. Will we go back to having your selection of combines? Will we go back to a selection of backwoods? Will we go back to having these high inventories? There's an opportunity here inside the manufacturer side because consumers have now, all of us, whatever we're buying, we've kind of got adjusted again to this short supply model. Well, from a manufacturer standpoint, you know, thousands of machines sitting on a lot ready for shipping, you know, that's a lot of money.

So, I mean, it could very well be that in the future, we're going to see everything pre-ordered, you know, that's on a retail level. You know, we're starting to see that in the automotive side, you know, big time. We see that in the arena side. We see that in the trucking. We see that, you know, I mean, anybody that's producing goods and services, you know, now. If we're talking about making pens, you know, cost of that is different. But we're talking about thousands and tens of thousands of dollars for product lines. You know, it may be that in the future, we still see the at the dealership level, they become more proactive in bolt on attachments because the manufacturer makes less lines and allows that dealership network to do more bolt ons. That could very well be. We see some of that now, you know, but can the manufacturer make everything for every application and make it all the time?

You know, those inputs might not allow that for them to be able to drive their bottom line. So, you know, that could change that whole distribution network from raw material, you know, all the way through the manufacturing and down to the consumer, you know, as we are.

I think you're further ahead of that than you give yourself credit for.

Oh, I think the important thing is to look ahead and define what you want to be. Then compare that to other successful companies inside your industry and out. And look at it and identify what you do well and identify what you need to make improvements on. collaborate and communicate, you know, get that, get your people involved, you know, let them become a part of it, get really good at the definition of 10 questions, you know, the 10 questions you need to ask yourself to redefine your organization, you know, and then as you go underneath that, you know, they've got to be able to provide the process to support it because you can't fake this. It has to be. You know, that value agenda, you know, the mission, the vision, that value underneath there, that's where the purpose comes from, Ron. That's where people buy in. That's where people go, all right, I believe this is the right thing because we value this customer.

We value, and that's why I made that decision, you know, because sometimes decisions won't be correct. Sometimes they're going to be at fault, but then someone's going to come back and say, this is why I think this is the right decision, and then we have to change again. I think that would be a, you know, change is happening whether you want it to or not. So it's influencing it and helping to shape it to the direction that allows the outcomes to be what you want for the company. I think from a business owner standpoint and then creating that value chain for your employees, because, you know, who's more important? You know, the employees are, you know, we have to be able to keep these good people and allow them to. have their opportunities to exchange ideas. And, you know, I still struggle. I just had a guy yesterday to tell me, he said, well, we don't have time to have meetings, Floyd.

We were on Zoom and he said, oh, Floyd, he said, you know, I can see you roll your eyes. And I said, well, I'll try to control that. But, you know, you've got all these issues that simple communications would cure it. You know, just, and if you don't have. you know, three deep in place, then you need to start having each of these managers just need to have somebody that can kind of take over for them where they're gone for a little bit. I mean, if that manager can't even take a vacation, my gosh, Ron, that's just, you know, and if they're gone and their desk gets piled up with stuff and they, well, they're, you know, they never relax. That's not, that's not, we can't burn people out, you know, because that burnout, just like, as you said, in the very beginning, Ron. It didn't matter how much money they offered you. You know, it was more about how to reduce my pressures. How do I increase the value down the chain that I'm working on?

Because I want to see success. I don't see it. You know, I'm frustrated. I can't get it all done. And then they come back. It's almost like it's a very disrespectful thing to offer more money. You know, then it came back and said, listen. We want to add four more people to your department. We want you to decide how those people need to be allocated, what they need to be doing. We want to lengthen that timeline that we put you on. We want to give you another 60 days. What would you have said then, Rob?

So how long were you with them, Ron?

10 years.

No matter what.

I hope the games are good.