John Andersen and Ron talk about the changes in information and technology and how it fits into the challenges facing equipment dealers and business system providers with the ultimate end user – the customer.

And that's a fresh haircut.

And you can go a little lower on the top, you know. The helicopter flies a little lower now. We started down a path a while back with... Open AI, artificial intelligence, and chat GPT and how that was changing things. And in the interim, we've had a rather significant change in business systems in the industry with the emphasis on CDK essentially becoming one. Yesterday, I was chatting with Metz Kramer, who's created a business system for small industry, and we were talking about... things facing the industry. So that is a background. I'm starting to feel concerned that technology is moving faster and faster. And we in the construction equipment industry, the capital goods industries are stuck in a rut, not doing anything, and we're going to be left behind. Have you got any observations on that?

One of the things that was interesting when Mets and I were chatting, one of my early days mentors, his name was Larry Noe. He worked for Caterpillar. He was one of the founders of Caterpillar's dealer data processing, which was in about 1965. And that package, all batch, all humongous IBM data processing machines. Dealers sent paper into the factory. The factory key punched it. They gave reports and sent them back. Larry's comment was it took between 200 and 300 man years to build the package. Call it 1965. Metz, Kramer, has created a package in three man years using current programming database technology. I took... data processing, computer science as a minor in university in the 60s. It might have been the 1860s, we're going to say, because we learned assembler language, COBOL, FORTRAN, all the stuff, all today, which is useless. And I remember laughing about it.

I used to sit with my butt against the printer and read assembler language programs coming off the printer to 1,100 lines a minute and thought I was hot stuff. And there are people today, younger people, albeit, which is cool, that are excited as heck. about all the tools they've got. Everybody thinks about the young people, they're gamers. Well, they're on computers a lot. And they've learned how to do a whole bunch of stuff with computers today. Those of us in my generation call it the boomers. We're dead meat. We can learn it, but we're also slower to learn things, slower to absorb things and retain things. We need to get out of the way and let younger people take over. But your comment about the end user, the customer, is precisely the point. Customer retention. Data analytics and artificial intelligence allows us to be able to evaluate that.

Most dealers don't look at a customer retention report or a defection report even more, or changing buying patterns, which is actually what we should be looking at. Those kinds of things are the mother's milk of the business. If you don't keep your customers, you're dead.

Well, you open up another can of worms, John. When we first started talking about ChatGPD was in February. And it was announced in December and it hit a million people after a week or something. The fastest growth of any piece of software that's ever been out there. And your comment that we all learned from the dealers because dealers were giving us what was necessary. Today, The dealers don't have those people anymore. They've got people that are tools in a toolbox that are doing a job that the company recognized needed to be done, but nobody internally is involved in process improvement. In the 80s, here comes Deming and Duran and all of these things. General Electric takes it on and everybody became interested in Six Sigma and Black Belts. But process improvement has died. Nobody is doing anything about it. Not the business systems, not the dealerships, not industry as a whole. We're in a rut.

Sarah Hanks, she's an engineer who is a Six Sigma from General Electric. She ran a manufacturing plant. She's out on her own now doing process improvement. And the other day, and she's got a blog we're posting tonight about some of the challenges for those people that are the innovators, not the inventors, the innovators. that are changing process and changing things. Steve Clegg, who's another one with Zintoro and data analytics, and John Carlson with effective, it's a university evaluation of skills of people. All of these things are coming together, but the dealership audience, they don't have people inside that can evaluate it anymore. They got people that process orders. They got people that pull wrenches. They got people that talk to customers, take them to lunch. But nobody's saying, well, gee, retention is directly impacted by the distance that the job site is from the dealer location. Well, duh.

It's fundamentally true, but nobody's looking at that anymore. Here's how we do things. That's the end of it. Here's your customers, John. There's the 75 people. It represents the biggest customers you've got. And 80% of the customers nobody touches anymore. This is nuts.

Well, stay with that just for a second. And let me go off topic for a minute. Car manufacturers today that are involved in electric vehicles. are investing money in mining companies. They have no clue about how to run a mine, but they're trying to secure the supply chain, not recognizing that batteries are going to be replaced by hydrogen. It's already happening. So here comes Microsoft, data analytics, business BI, the dealerships of the world, who owns a particular field in a database? Oh, my, don't ask that question. Right? Because everybody can change it. So now we have the need for a hub, which in my terminology is a database. And that hub can be interacted with by a bunch of call programs, which is why Caterpillar got out of dealer business systems, because they had so many bolt-ons, they lost control of it. Now I've got, as an example, there's a product called CRM series, and let's take CDK as two operating systems.

They both have a customer profile. They both update their own customer profile. There's no two-way communications between those two systems. So I've got somebody updating one database. I've got another person updating the same database, same data information on another system. And which one is accurate? Sure. So with business BI, with Target, which is the product that CDK is out there with, which is a competitor, nobody's thinking it through because we don't have people that think it through. The systems people don't understand. The business and the business people don't care about the system.

Well, you know, when we first talked about chat GPT, you said one of the job functions that's going to be really exciting is who's going to ask the questions.

And, you know, it was interesting the other day, Mike Rowe, as you know, has said that, you know, unless you're building things with your hands, you're building things, your job is at risk to being replaced by a robot or artificial intelligence. And the other day, what came back was accountants are safe. Really? What the heck do I need an accountant for anymore? Everything's automatic. I use QuickBooks, QuickBooks Online. We use credit cards. It comes in, it gets consolidated, everything's done. I mean, we don't have to do anything. And guess what? Nothing's at more than a thousand bucks. Yep. And it's going to get even better. Households. Ian Sharp, back in the 60s, who were 70s, I guess, who was trying to recruit me, he had a software package that drove people's shopping lists by having inventory of what was in your fridge. and menus of what you ate, which now today is quite commonplace.

You can have a fridge that has that on the screen on the outside of its door. He was 50 years ahead of time. Well, anybody there to get it yet.

Well, better than that. You're using too much toilet paper. You need to get yourself a doctor. No, a toto. So you don't have to use toilet paper anymore. But stay there for a second. I used to tell people, I want to sell my oil filter for a buck because I want to know what their cycles are, how many hours they're using, so that I can start looking at lifecycle management. Come to today,2023, let's just go to 2025 to make it a little bit more anonymous. I can buy third-party software for any brand off the shelf. for electronic catalogs, for repair and maintenance instructions, for sensor diagnostics that are built into all of the componentry of equipment today. With telematics, I can be instantly updated with all of that. I can process an order that is delivered with a technician with it at 10 o 'clock tonight on your machine so-and-so to perform this event. It'll take an hour and a half and we'll be gone by so-and-so.

Please don't move that machine from where it's at today, which is this address. That's all there. Well, why do I need a dealer anymore? I can be independent of any brand. I can do this for every machine. Hello, Ford. You've heard me say this. Their chairman went out to Wall Street and said, okay, we're in the electronic vehicle business. We're going to have a different contract for the dealer. Any dealer order? It's going to be shipped from a factory. Mr. Dealer, you cannot have any inventory. Here's the price. You cannot change the price. And oh, by the way, here's the software developing that will allow the customer to spec a car online. We'll take a trade. We'll give them a value. We'll deliver them a test drive. We'll give them the financing, the whole thing. Where's the dealer in this?

What's really cool is the main street in Honolulu behind Waikiki that runs parallel to Waikiki is called Kalakaua. And there used to be an international marketplace that was built. A long time ago, there was tourist trap, tidbits, cheap stuff. Today, it's wonderful dining. It's got sacks. It's got some of the best. On the second floor is the Tesla dealership. And their showroom window is looking down on Calacabua at a light so everybody can see it as they go by. There's no service department. There's no parts department. There's just a place you can go in and buy cars, buy photovoltaic power suppliers. battery packs for your home. It's, you know, there's nothing there. And you walk in there and you talk to the people. Oh, my goodness. These people are not knowledgeable about product. They know about you. They know who you are. They know how to treat you. And they do it with nice open-ended questions and get you talking.

And how do you like this while you're sitting in the vehicle or while you're looking? I mean, it's a completely different experience. It's a customer. friendly experience. Walk into a dealership, an equipment dealership. Where do you go? There's the parts counter over there. It's chest high, separating you and me. Go into Home Depot, go into Costco. You're walking through a warehouse to buy. Shopping cart, here we go. Why don't we do that? I mean, there's so many things, John, that we're so far behind in, it's almost anachronistic. And here comes this new generation that don't give a hoot about how we've done it. I used to ask, why do we do that? And they looked at me like I'd grown horns. That was 1969. Today, nobody even bothers the why do we do that? It doesn't make any sense what you're doing is the statement now. It's ridiculous. My grandson,17 years old, he's bored like hell in school.

State of Idaho offers $7,500 scholarships to kids in high school to take advanced placement in college classes while they're in high school. because the education system is failing the high school students because it's been dumbed down so far. SAT tests gone away. ACT, excellence is being ignored.

I don't think they're in the dealers. I think it's consultants or whatever we're going to call this, people like yourself who've got the scars from having been there, who a dealership that's wise enough will ask, John, do you want to come in and have a look at how we do things and see if there's anything that you think we could do better at? Which is what got me going in the 1980s when I started consulting. Being an ignorant guy, I'd call up somebody. I say, hey, John, why don't you have me come out and have a look at your business for a while? Because I know how to run it better than you do. And by the way, you're going to pay me to do that. It sounds arrogant as hell, but in essence, that's what I was doing. Nobody's doing that anymore.

Nobody, and I'll give you two examples. About 15,20 years ago, Caterpillar bought a financial package called Coda, which was a very, very good, sophisticated, ahead of its time, financial patents. They bought one for every dealer. And I got involved in implementing that with five or six cat dealers. Every single one of them had me put it together in such a way that they duplicated exactly what their financial reporting package already gave them. Something as simple as the chart of account number could have been a reporting device that would have been unbelievably magnificent. So there's one example about how a manufacturer was trying to lead them to the promised land, but nobody wanted to go there. The next one, I'm sitting in a meeting in Chicago with one of the largest software suppliers in the world. We had about 20 people in the room. I was the only one that didn't have a master's degree.

We had four or five doctorates, and we were connected to a country in Europe. where their IT people existed. So we've got this kind of Zoom call, if you will. And I said, your package is much too complicated. It's too big. You've made this giant. And the people in Europe said, Ron, it doesn't matter. Hardware is cheap. I said, you're missing the point. The package is so complicated, the people that are going to use it don't understand how to use it. And you don't have anybody to tell them. He said, well, that's how we make our money. We have a consulting business. And we'll do whatever the heck the dealer wants. Well, when you don't have anybody at the dealer that knows what to do other than what they have been doing, in parts, it's an order processing factory. In service, it's a time and material repair shop like a blacksmith. In sales, it's the guy that I like to have lunch with.

And everybody's happy because sales have gone up, not recognizing that the number of dealers that are competing in the marketplace is down by 75%. If your sales aren't going up, you've got a real serious problem, right? In Canada, when I started in 1969, there were 10 Caterpillar dealers. Today, there's two. I can't tell you how many John Deere dealers. Today, there's one. I can't tell you how many Volvo dealers because Volvo didn't exist then. There's today two. Komatsu, there's two. So think about that. I got eight dealers in Canada, the whole damn country with the four largest brands. What in the heck's going on? If your business isn't, if your sales revenue isn't good and that's the metric they're using, sales per employee. In a gross domestic product sense, the U.S. economy and European economies are growing because fewer people are doing more units of work.

In the parts business, sales per employee has been a metric that has reduced the number of people. The bigger the number, the more profit they make. The bigger the number, the less customer service they provide. The less customer service they provide, the higher the defection rate. Hello?

Okay. Do it to me.

And I don't think you're missing the boat. And I don't know how. We can influence it other than podcasts like this, blogs, communications with people. But I get a lot of, you've heard my comment, I'm a mule in a tin barn brain. I make a lot of noise. Nobody pays any attention. I've got a lot of people that I talk to that are my contemporaries. And you know, I still teach. So I like the younger people because they keep me young. energized because of the things they ask and where they want to go. And my generation, the boomers, they all agree with me. We got to do something about it. And I say, well, what would you suggest for your company? He said, well, I'm so busy. I don't really have time to take it on. I said, okay, why don't you hire somebody? And I give them people. First thing they say to me is, well, I don't know what to hire. I said, I'll find them for you. And I put people in front of them. And it's a shock.

The sticker price is high because these people are very few. There's great demand. Chief technology officers, chief information officers, whatever you want to call it. And it just dies on the vine. One of the other interesting things that I've heard in the last three or four years, more than I've heard in a long time, is there's a standard for how much we want to spend on IT. information technology, data processing, whatever you want to call it, services. And I say, okay, where do you get the standard? And it's typically associations. And I say, okay, where do the associations get the standard? Well, dealers provide data to the associations that we put out or the manufacturers that we put out as a report. John Deere does it, Caterpillar does it, Comatsu does it, everybody does it. AED does it, AEM does it, everybody does it. How many people participate and provide that information?

When I was at the Caterpillar family, we were told don't participate in those things. Why do we want to tell them what the best in the class do? Why do we want to make their ability to compete with us better? So there's a conflict here. But the number that comes back is 1.5% of sales is what you should be spending on information technology, data processing. So if I've got $100 million business, you're supposed to spend $1.5 million. Why isn't it 5 million? If the tools are that retrograde, if I'm driving a Fred Flintstone car where my engine is my feet through the floorboard and I've got a Ferrari parked in the next garage that can go 180 miles an hour down the road without anybody driving it, something's wrong.

it is two paths you're absolutely right to take it there but

Okay, so come back. For those that don't know you, when did you start with PFW? What year was that?

Okay, so that's 35 years ago, let me call it. Yeah. And PFW was founded by three guys who worked for a John Deere dealer, correct?

And they created this package because they didn't see anything in the street that was going to solve their problems. Also correct? Correct. And then what year did ADP buy PFW?

So let's say it was 15.

Because you're not that good a judge of it.

Okay. And the job that you held when that took place was, the title was what?

Okay. So, CDK, PFW, became part of ADP, then was created to be CDK, and now is merged with E-Emphasis over a period of, let's call it,25 years. Those five iterations. Is there a chief evangelist anymore?

Is there anybody whose life depends on the development of the software package to make it and keep it current?

can take that, John. I just use them as an example because that's your background or that's your history. I can do exactly the same thing with every software supplier out there that serves this industry this way and get the same response. Whether it's SAP or JD Edwards or Oracle or Xapt or Microsoft or DIS or whoever it is, I got the same problem. Nobody's life depends on that business system, that tool satisfying the need of the end user, the customer who owns the machine, or the operator of the machine on a rental machine. Nobody's life depends on that. And unless that's true, I can't get traction with somebody. My granddaughter's taking her master's in animal science here. She's smart like hell. She works like hell. It's a fascinating subject. My grandson's going into the Navy, starting in the nuke program, which is fascinating stuff. He's smart like hell. He works like hell. That's terrific.

Where's those people in the John Deere family, the Kubota family, the Mahindra family? Where are they? They aren't there. We're not hiring them.

I was talking about me. I was talking about you.

I'm going to take you to a different place. And let's go back to January 2020. And that's a marker. the end of the old world and the beginning of the new world with the arrival of COVID and how society got manipulated by leadership. I don't want to call them politicians because it was all brands, whether it's medical or business or whatever. I always and continue to believe that people want to do a good job. People want to do worthwhile work. They don't want their life to be a waste. They want to make a mark on something. And I also believe that we as people, and me particularly, because I'm on the other, probably the second to last chapter, we have three pieces of our life. We have our career, we have our family, and we have ourselves. And let's say that the balance should be a third, a third, a third. Over my work life, the thing that has had the least attention from me is me, my health.

I remember sitting on a cruise on a treadmill looking out at the ocean, and I went every morning for an hour, hour and a half on the treadmill and said, you know, this is the only time I've done this for me in X number of years. And I was embarrassed and ashamed of myself saying, oh, I got to get back. When I get home, I'm going to do this. And it took me about three or four days, and I'm back to the same thing. Something happens at work. So I sacrificed myself and I'm left with two pieces. And the balance between those two pieces is influenced by, oh, geez, I got a challenge at work. I got to pay attention to that. And the family drops off. And you've experienced this yourself. And we get on that treadmill and here comes COVID, January 2020. And all of a sudden we had time to sit and think about. Remember Peggy Lee's song, Is That All There Is? So let's keep dancing. Let's just keep this thing going. So people started working from home.

And the statistic came out this morning,42% of the people are continuing to work from home. And given the choice, wow, this is nice. The other day, somebody went out in the afternoon. It was Tuesday afternoon. And there's a bunch of people out there mowing their lawn. It's 3 o 'clock in the afternoon. What the hell are they doing? They're working from home. This is cool. So some folks. have reevaluated their lives. And we call it the great resignation. Musical chairs, people are changing jobs. Why? And the surveys have come back on that. Nobody asked their opinion anymore. Nobody pays any attention to what the needs and wants are of the employees. And the needs and wants of the employees directly affect the needs and wants of the customer, directly affect the loyalty of the customer. And we're talking about it today saying, where the hell is the champion of change? Where's the voice of the customer? Oh, we do that in surveys.

Oh, who does the survey? Oh, a clerk somewhere. They call up and ask questions. What questions? The questions we give them. How do they respond when the customer gives them this answer? Oh, well, they just move to the next question. Hello?

Well, it's the fundamental, John. You know, I talk to a lot of people like you do. What's your biggest expense? Oh, personnel. What's your biggest asset? inventory. What should be your biggest asset? People.

What's your biggest expense? I don't care. Because we can pare that down. We can make it effective. We can make it efficient. But we can't do that with people. There's a capacity thing. I have a little exercise I do with dealers called five things. And I used to do it in a classroom. And I would ask service management, product support salespeople, parts management, whatever. Okay, take a couple of minutes and write down five things that if you could wave a wand would make your life easier at the job. So we go through that. Okay, another piece of paper. Write down five things. Turn the page. I don't want you to look at it anymore. Turn the page and write down five things that are a pain in the butt to do. Roll over the paper. Now write down five things that if you could do would improve. the service to your customers.

So then we take those three pieces of paper and they holler them out and I put it on a whiteboard or a flip chart or a blackboard, green board, whatever the hell the terminology is you want to use. And we get rid of the duplicates and we get rid of the jargon. So we've got five clean things that would make my life easier, that are a pain in the butt, and that would make the process more effective for the end user. And we look at them and I ask a stupid question. Is there anything up here that's on all three lists? And of course there is. And then my next question is what? What are you going to do about it? If it's a pain in the butt for you to do, it would make your life easier and it makes the experience for the customer better. Why aren't we doing it? And everybody kind of has that goldfish look. You know, it's ridiculous. And that goes with everything. And you've heard my little gig.

I start every single classroom when I'm in front of the class. with, give me some definitions here. They're going to be really simple. What's the definition of ignorance? And, you know, people typically at that time have never met me before, so they don't know what the heck I'm looking at or thinking about or anything. So there's not a lot of vocal outwards. And I say, well, ignorance is not knowing what to do, right? Oh, yeah, that makes sense. Okay. What's the definition of stupidity? Now there's some voices, because now they get a little, they want to play. And they bounce all over the place. No, stupidity is knowing what to do and not doing it. Okay. Third definition. What's the definition of insanity? And whether it's Mark Twain or Albert Einstein, continue to do what you've always done, expecting different results is insane. They said, okay, fine.

So a couple of days from now, you're not going to be ignorant anymore because I'm going to tell you what to do. I'm going to give you a choice of being stupid or insane. Which do you want to be? And that's how we start. So now they're on notice. Pay attention because I'm going to be involved with you. Right. And it's, you know, and I had it. The number I mean, it's fascinating. And that's what, like you said, you learn from the audience. If you have half a brain, hear what other people are saying and process it. They have great ideas because they do it all day long, all their life. and they know what needs to be done, but nobody's paying attention to them. And it's really true today. Your skills no longer fit. That's okay. Thanks very much. I appreciate your work. Here's your gold watch. Goodbye. I bring in another tool and I train them how to do exactly what you did before you left. How do we get out of those ruts?

That's where we are with business systems. That's where we are with businesses. That's where we are with schools. That's where we are with every aspect of our lives. And like you and I can disagree passionately, But we don't stop talking. We don't get mad at each other. You do, but I don't. You know, so we have this ability to listen and debate. It used to be a subject you were taught in school, how to debate. And it didn't matter which side of the debate you were on. You had to learn to defend it. We don't have that anymore. If you aren't in conformity or if you aren't involved with me and you don't do what I tell you to do. You're the enemy. I will mold you. I will create a team that's homogenous. Everybody thinks and does the same thing the same way all the time. Tough case. What's the first question somebody calling into the parts department wants to get answered?

Have you got it? And how much is it? What's the first thing the person that answers the phone asks? Who the hell are you?

Now, with... you know, caller ID, et cetera. We got a little bit of a hint, but if you're calling from a company, it's a switchboard. So you just got a general company. I don't know who the heck you are. I don't even know what department you're with. So, you know, how does the person that answers the phone know how to treat you? Do we have any indication on the screen to say what kind of customer this is? They're one of my best parts customers that don't buy any labor. They buy a lot of labor. They don't buy any parts. They only rent machines. They don't buy machines. They pay in 90 days. And they've been with me 30 years.

Yeah. I don't have the shopping gene. My wife does. I have the buying gene. So why do I have a facility? Why do I need anything? That's where we're going. So we're going to be closing a chapter and opening a new one for the next discussion. Data analytics, technology, and I use data analytics. I didn't use information. We got a lot of data. We don't have a lot of good information. Yep. We got a lot of technology. We got a lot of people that are doing work that are thirsting for ways to do things better. But leadership in the business community, leadership in the technology community, leadership in the data community is not helping us.

Well, I, you know, that's, I'm going to leave that to them because I've been involved in too many of those and they ain't easy. I promise you. Merching two cultures is really difficult if it's possible. But on that, put a, put a bow on this, wrap this up for us.

You bring it up in the software business. We've had mergers and acquisitions in the dealership world for a longer period of time. And, you know, Tormund and Finning being the two dealers in Caterpillar. Angus is gone. Hewitt's gone. Crothers is gone. Kramer is gone. All of these folks. And having worked at two of those large organizations, creating a culture of customer service is very difficult. And not very many people succeed at it. So I think that's where the next piece goes. You've become a runner. You've lost a lot of weight. It required a lot of discipline, self-discipline. It required a motivation that was in you. You had to have a need to do something. I don't think our industry nor our business system providers have got to that place where they need to do something. And that. That continues to be, I think, some of our mission of trying to make them change.

I didn't want to say that, but the dealership need to do it is so they don't go out of business.

And I'd like to close it this way, and I'd like to thank you, John, for all the time this morning and everybody who's been listening. But one of the things that I want to leave everybody with, passionate people perform. We have to create the environment where people can be passionate about what it is that they're doing. So thanks for your attention and look forward to you being with another candid conversation in the near future. Mahalo. Thank you for listening to our podcast. We appreciate your support. Should you have any thoughts or comments, please don't hesitate to contact us at www. learningwithoutscars. com. The time is now. Mahalo.