Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
Rethinking Business Systems: Innovation and Adaptation for Success
Revolutionize your understanding of business systems with insights from Mets Kramer, a leading innovator in the capital goods industries. We challenge the status quo by questioning if traditional transactional systems are holding us back from true efficiency and innovation. This episode explores how aligning business operations with modern technology and user needs can be a game-changer, drawing parallels to historical shifts like the move from steam to electric engines. Discover why rethinking and not just iterating is crucial for success.
Join us as we tackle the complexities of updating business processes, especially in the context of fluctuating market shares and transactional trends. Through compelling real-world examples, we illustrate the need for flexible, adaptive systems that cater to specific industry demands, such as rental dealers in need of streamlined parts ordering. The episode delves into time management advancements for technicians, aiming to eliminate redundancies and improve workflow, while also addressing cultural barriers that often stifle technological progress.
Finally, we explore how businesses like McDonald's are setting the standard in adaptability by offering multiple customer interaction options. We underscore the importance of fostering a work environment where employees are encouraged to challenge traditional norms and think critically about their roles. From leveraging data for customer satisfaction to planning future collaborations, this episode promises to inspire you to rethink and reimagine your business systems for a competitive edge in today's fast-paced world.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Aloha and welcome to another podcast from Learning Without Scars. Today we're joined by Metz Kramer, and I want to have this be another edition of our Clouds Are Upside Down podcast series, which is basically looking at the world with fresh eyes eyes, Metz has been an innovator, a disruptor in the world of methods, processes, from the times he was at a dealership and in the last number of years, he started a software business that really gets us into the clouds are upside down. So with that as our starting point, Metz, what year did you start?
Speaker 2:Visibility- so I started consulting after I left Libre in 2017. And it was really during the first few years of just consulting and helping dealers that everything kept coming back to information systems and it's like a go-to area, a comfort zone. It's, you know, easy for me, and so I kept having to help people with data integration or how systems work, or help them find a tool to do something, and that's really where it came from. Eventually, a few dealers approached me and said we don't like what we have and can you build us a whole new system? And I said, yeah, I think that's possible. You know, with modern technology, it's if you know how the process is supposed to work, then, yeah, it's reasonable just to build a whole new dealer system.
Speaker 1:One of the things that you and I have talked about is the level of knowledge and understanding about business systems in this industry. It's not just this industry, it's everywhere. But in the capital goods industries automotive, construction equipment, cranes, material handling, marine forestry, mining, all of that stuff the people that use systems have never really been trained on systems.
Speaker 2:No, they were trained by the systems.
Speaker 1:And the people that trained them by the systems. And the people that trained them by the system were systems people. Yeah, and those systems people, although I love them to death, they don't understand the operation that they're applying a system to, typically Typically. Yeah, I'm going to build a system.
Speaker 1:I'm going to get a, an analyst, somebody who knows how to design systems. I'm going to get a programmer. I'm going to put code together so that I can run it on a machine and then I give it to the person who's going to use it and show them how they're supposed to use it, right or yeah, and it's a bit of a trap. I think we never ask the person who's doing the job what they'd like to see, what, what would make their life easier? How could they do that job easier? Am I fair in making that comment?
Speaker 2:I think so I think you know like a lot of these things start with people who are trying to do something or are currently executing something. You've called it out a lot of times with the paper-to-glass thing. If you ask someone, how do I make the software of what you're doing with all this paper and stuff, they're going to tell you what that paper is right. And I think that's maybe the generational shift in these kind of systems is that a lot of the old ones are really transactional systems and they were built to digitize a transaction and so they kind of stay structured.
Speaker 2:And if you look at some of the old systems, they really are purely structured around the information related to a transaction. Instead of bringing people back and saying, like, hey, what are you trying to do? It's payable, that's a transaction, that's a process. They're not asking, hey, what are you trying to do? Oh well, people send me this stuff and I got to make sure they get paid and I need to figure out who authorized this to happen. And that's what you're trying to get done, right.
Speaker 1:Yeah, yeah, I think you pointed out quite nicely. I've been saying we've been transaction driven for a long time. Now we need to be data driven and that transition confuses people. But if you go back to selling and the principles of selling what does the customer need or want is kind of, if you want to be successful at selling, you've got to find, find out what those things are, and then you've got to address them.
Speaker 1:And I don't think systems people right from the get-go. I mean I'm going back right to the beginning with machine language, coding, with having to overlay programs because we didn't have enough space to the expense of data and files. Like a hundred thousand dollars for a disk drive, for goodness sake, 50 years ago. Today it's a buck, yeah, and I don't know that. So my example has always been the steam engine to the electric engine, and that was the 80s, the 1880s, and that happened quickly because the tool was so much better all by itself, yeah, but the methods that the tool was applied to didn't change for a generation, 20 years, because it was almost too much for society to handle yeah, for most people.
Speaker 2:or to rethink it it's easier to iterate than it is to rethink right? It really is.
Speaker 1:I think you know my background with swimming and there's been some remarkable changes in swimming, and the first and most obvious one is the pool and water. And in the 60s the water prior to the water was cleaned with either chlorine or fluorine. After it was cleaned with ozone Right, the resistance of water with air bubbles in it is much less than it is without them. Right, Meaning the times were much faster. Oh, interesting.
Speaker 1:Yeah right, it's kind of obvious. But then the next one that came along was gutters. Do you remember swimming pools used to have gutters? Yeah, right on the edge, yep. And if you look at competitive pools used to have gutters. Yeah, right on the edge, like yep. And if you look at competitive pools, there are no gutters. With the weather, the water would hit the wall and would come back into the pool. Yeah, a wave, that was greater resistance. Take away the the edge and have the gutter gone and it's the top of the pool. Oh yeah, the water just slips off the side of the pool doesn't come back in.
Speaker 1:So, again, time went down, and when I was doing it, we shaved our bodies. We wanted to be so much that sounds like fun. Our body. You know what the hell is this all about? Yeah, and it came back later.
Speaker 2:Now look at the bathing suits yeah, yeah, they've had that one bathing suit that was like like fisher shark skin or something and it was illegal because it was so much faster.
Speaker 1:Precisely it's legal yeah, and the times are so much faster. Then we go to things like the high jump. The pole vault used to be landed in a sand pit. Yeah, I'm not going to jump seven feet up. It's going to hurt the head like hell when I land on the ground. But you put a big fluffy pillow there. Yeah, ten feet, because it doesn't hurt. We've got the same thing with systems, but I don't think we've ever really gone up high enough in the helicopter to say what in the hell are we trying to do here? Until you came along, exap came along, microsoft came along, infor came along, a whole bunch of different people who just continue to do the same thing, and we have unbelievable screw-ups dealers that implement a new computer system that don't get financial statements out, don't get invoices out how the hell can that happen?
Speaker 2:I have no idea. I always wanted to get the back-end story on that one, like at what point does someone not try and print an invoice?
Speaker 1:Exactly what kind of testing?
Speaker 2:But even that, that's like a really interesting thing, like even that is sort of predicated on this idea that the only way to do this is to have this big monstrous go live right, and that everything is just sort of in stasis and in test and no one's really doing anything and it's just a bunch of systems, people, and then one day we're all going to go live, we're trained up, we're ready to go and it's this nightmare, you know, and and people don't look at like, is that really the only way?
Speaker 2:Like, isn't there ways that we can layer in the new platform? Are there functions that could be partially adopted, implemented in any new platform, before we we actually move, like the transactional connection that we change? That and that's like. This is why people are so terrified is because we've been taught like that's the only way. We don't, we don't rethink what is it we're really trying to do?
Speaker 2:And there's multiple things you're trying to do and it's usually driven by the one thing like oh, we need to change the accounting system. And it drives. It's driven by all of this data from all these operating components, and I think that's for anyone's business. It's more interesting to sometimes just say, okay, what is it we're trying to accomplish? Well, we're trying to accomplish getting better tools for our people and better process support. Better tools for our people, you know, in better process support, and then eventually it'd be nice if that also generated the financial transactions that we need. But people don't look at the business that way. I think that's why people hate systems is because they just they're forced to generate transactions. That's the only value is the end product instead of the front to generate transactions, that's.
Speaker 1:the only value is the end product instead of the front. You know, as I get older I'm not sure that I get wiser, but I sure have a lot more questions.
Speaker 2:That is wisdom, actually. I know Asking questions.
Speaker 1:I know, and that's you know, our teaching style is Socratic. We don't give answers, we ask questions and hopefully, through that evolution of questions, we come to an agreement staircase where we get the other end of that.
Speaker 1:Oh, that's okay, I understand that. So somebody calls in to the parts department and they want parts. And one of the things that I've always struggled with is asking people at the counter or on the phone or technicians when you call looking for parts, what's the first thing you want to know? And almost invariably everybody says have you got it? Yeah, I said okay. What's the second thing you want to know? How much is it? Yeah, okay. So then we look at systems and we've come a long way from the abacus. But the customer calls in, the technician calls in and the first thing that the parts department asks is who the hell are you? Yeah, and that's the first thing that they put into the computer.
Speaker 2:Right, because you've got to start in order.
Speaker 1:Yeah, we've got to get this going. Well, I don't want it, or I want to have you got it. Yeah, well, I've got to go through to get I. I got to see who you are to know whether I can let you have it or not. Where did that come from? That's baloney. It's really the same kind of thing. Here comes service. I think that's kind of where you started. Customer calls in. They got a complaint. The first thing we got to do is find out if the complaint is real or if it's a symptom, and that's pretty simple too. How do you do that? You inspect it, yeah. And so here comes technology. And we've got sensors, we've got GPS, we have a health check remotely, we can get alerts on our phone, on our computer all different manners. There's a problem with that machine. We still. Who are you?
Speaker 2:It's the first one. It's transactional, yeah.
Speaker 1:And over the years and this is where it gets distressing. When I started with the Caterpillar deal, you started with one too, in 69, the parts market share for Caterpillar, and they surveyed every customer in the world face-to-face Every five years, but you could still then. 1965 was the last time they did it. In 1970, they did 20% and they went to every five years. We'll get the full thing. But talk about important information. What do you like about doing business with us? Who do you go to if you don't buy from us? What do you like about doing business with them? Talk about valuable, valuable information. And now we've got a whole bunch of people. In 2025, the market share has gone from 83 to 38. And I say to people well, this is really cool, you've got another 50 years and you can lose another 10%, another half of your market share.
Speaker 1:What are you going to do about it? They don't even know. That's true, because we don't measure that. Yeah, not transaction, it's data.
Speaker 2:Yeah, that's different yeah.
Speaker 1:This whole thing gets complicated. So you came along with a new system, a brand new third, a new centennial opportunity to create a new system from scratch with all the software tools to make it happen. What's the biggest problem you've had in trying to build that system?
Speaker 2:Wow, the biggest problem I've had, you know honestly, is that what we were talking about is getting people to break away from the, the idea of how it should be done and what it does, you know, um, getting people to leave, to leave their assumptions of how transactions should work or how something should look, um, and and kind of rethink what they're really doing. And so I started by creating really all the real objects, right, instead of being transactional, create an ecosystem of all the objects that you come across, right, the people, the companies, the equipment, the you know all these things, and then sort of start connecting them in a natural way instead of focusing on the transaction, focusing on, like, what am I trying to do? And then you know the computer will take care of the transactional piece as much as possible. And so, like, we try and understand from people, I think one of the one of the ones I like the most was working with a rental dealer and they have different situations depending on the kind of machine, and you know who they're getting the parts for it from and what they stock and what they don't want to stock, and if the machine's in the shop or in the field, and so giving a dealer like that, different ways to execute that work or to order those parts. That isn't tied to the assumption of how a parts transaction should work. It's like what is the fastest way for a tech to say I need this stuff and I need it for you know this machine, and then we build the system to let them execute that faster, if it's possible, right?
Speaker 2:So like remember, in the cat world, you know every parts order had to be a parts document and it all had to go through the inventory and all of that stuff. But sometimes you don't need that right, and especially in a mixed fleet. Sometimes I just need a purchase order to buy those parts and I'm just going to write I'm just going to expense them anyway against the rental fleet. And so how can you then talk to people and get them to say like, oh, this is what I'm really trying to do? Is there a way I can skip this in this case? Like, yeah, we can make it skip that step in this situation or give you the choice to follow a more traditional path as well. You know, but that takes just looking at the basics of what you're trying to do and then being able to create interfaces that can easily be modified to support those.
Speaker 1:Take a simple thing like payroll, yeah, and apply that to a technician yeah, we have two needs for time with a technician One is to put it onto a work order so we can bill it, and one is to put it into the payroll system so we can get paid. So the way it kind of evolved is we started with time cards A hundred years ago. We filled out a piece of paper and we handed it in at the end of a week or a day or a month or whatever the hell it was, and had a piece of paper and we handed it in at the end of a week or a day or a month or whatever the hell it was, and had a bunch of people sitting down at the end of the day. Well, what did I do today? Yeah, and we're like looking out at the people that you're dealing with. How many of them have the technician enter his time directly, versus how many of them have two people involved one the technician and one somebody else to put it onto the computer?
Speaker 2:Yeah, I try and avoid that one. I mean to have two people touch it is kind of counterproductive. Yeah, time is an interesting thing because it's generated in more ways than the majority of the way's. It's generated by more, in more ways than the majority of the way that it's generated. The majority that we're all used to is I'm doing work on this work order, that's the majority. And then you get things like and we did this initially and now we're expanding that.
Speaker 2:Like I have time that doesn't belong in a work order, it it's just time. Well, in a lot of places you have to create a fake work order so that time goes to that work order because that's the transactional system. And so we're trying to break that down into the more object-related thing. Or they're just at work and they're not working, or they're doing an inspection because they're a yard guy, or they're whatever right. So like the object of time is just the object time. It doesn't have to be tied to one thing only and one method for collecting. But for the payroll side it's all the same. Time is time. It has to paid.
Speaker 1:What I found interesting is 1971, we put in ID cards for technicians and wands on the floor to book time. Then the first thing we had to do was create something that could be read by a wand that would represent what the technician was working on. So we created a card that had the work on it, the segment on it, the description on it, standard time on it, et cetera. So information for the technician as well as for us. But again, still transaction. So you had to get into the work order by wanting the card and then recognize it's you by wanting an ID card, and those two things then created the job.
Speaker 1:Well, that was a little better, because the technician didn't need to walk to order parts and the technician didn't need to think about, at the end of the day, what he was doing. And then we got a little smarter and said well, wait a second, we only need to have the guy sign on to a job. Yeah, we need to have them sign off, we can have them sign on to the next job, and that automatically signs them off. Well, gee, that's a little smarter. Yeah, and and and. Then we said well, why the hell do we need?
Speaker 2:a wand.
Speaker 1:Why can't we give the guy a keyboard and have him talk to the computer or put his own time in directly? And it started evolving. But if you look out, I bet you 50% of the dealers in the capital goods industries, whether that's automotive or marine or whatever the hell it is, still have two people involved in payroll Probably. Yeah, we don't understand continuous improvement. We again, I don't think we've trained employees to be critical about what they do. Is that a fair comment?
Speaker 2:yeah, I think like exactly what you described. There is just an iterative approach to different ways to enter the same thing, but you're getting only the same thing. You none of those changes, rethought what you were really doing.
Speaker 2:They're just trying to make it easier or change what you're trying to do. You know and that, and that's like you see it in places where people I love that we're on time, because it's so interesting places where people will sign in on a time clock and sign on a time clock and that's what runs their pay, and then they have service reports or a work order system that collects time that they spend on work orders, and then they always have a variance between the two systems that they have to try and sort out. You know, um and and it it just changing. Actually applying technology also has to rethink about what is it you're actually doing in each one of those steps, and then you can come up with a way to actually integrate the two instead of running variance reports and productivity reports from two different data sets. Systems that you interact with, like. You can go on facebook and facebook could do a perfect time analysis for you of what you'd spent your time doing, right, you're, you're working, you're looking at pictures of this, and then you read some news, and then you went over here and watched some videos and then you did stuff, and if you asked facebook, they tell you this is how your time broke down, right, but they embedded it because of the technology can track little things as you're moving around. They can apply that without having to have you do a separate time card of what you did on Facebook.
Speaker 2:I think that's the real advantage of modern systems is that there's a lot more capability inherently in the technology that you can then rethink about. I want to apply those things. You heard of something called Hotjar. It's like this software that basically watches users use something, so we could do interviews and be like okay, how does this work for you, how does this, you know, what did you do, what are you trying to do, et cetera. Or you can go and put something like Hotjar into your system and it will track what people are doing. You can watch how people use the system and where they're getting stuck or when they do something repetitive or when they do workarounds, because they won't tell you all that stuff in an interview. Yeah, but it's it's only because the technology now allows you to layer in a lot more complexity than just the transactional system itself yeah, yeah, and it the facebook illustration of how you used your time.
Speaker 1:or the cell phone, how you used your phone. You used it more this month than last month. Or Google Maps or whatever ways. Here's how many miles. Here's where the trips were, you know. Here's what you did, all of that stuff, and we're nowhere near that. That stuff, and we're nowhere near that. You know parts orders and I'm going to pick on the same thing between service and parts. 50% of the dealers I would bet you money, have the technician walk from their bay to the parts department to order parts and stand at the counter waiting their turn, if there's somebody there and then they talk to another person about the parts that I need to order for this repair and they knew what those parts were before they went.
Speaker 2:Yeah, this is cultural.
Speaker 1:Yeah. And so now I've got two people involved in that. Again, the same damn thing always Getting a quote for a machine, renting a machine, machines down in a field. Why don't we just replace the machine? Boy, that's expensive. Well, how expensive is it when the guy can't use his machine for three or four or five days? Yeah, that's expensive. Now, well, it's the income he's lost by not having his machine available. Yeah, yeah, that's expensive now, well, it's the income he's lost by not having his machine available. No, we don't think about that.
Speaker 1:This whole thing is heading for a train wreck. That's ominous. In fact, I think the dealer today Steve Day and I chatted about this about a week ago. The dealer today is at risk. Their market capture, their market share on parts and labor, which is where they make the money, is at the point that it's marginal. And what we've seen over the last 20 years the dealers have had trouble. The cost of equipment's gone up dramatically, cost of interest has gone up dramatically, wages of people are under severe stress. So how do they solve a profit problem? They get rid of people, and when they get rid of people, customers follow them out the door. So our customer retention goes down. Yeah, meaning our market share goes down. And here we go in that ever diminishing circle until you finally disappear up your fundamental orifice but I think that's like because people don't understand what's happening.
Speaker 2:And I think we've all sort of lived through this in the past and and not to drag on you know accountants too much, but you know account accountants have one way of looking at things, right. I I had a guy that worked for me and he was very expensive and he helped people with um, a very complicated type of machine and you know, to demo train support, whatever was included, whatever was required, and no one could understand why we were spending the kind of money on this person, because no one quantified the impact that he was having. Right, and he was really good. He explained it and said look, I'm saved five times my salary every year on warranty claims and sales goodwill, because I make sure that that guy, when he's operating that machine, doesn't tear it apart and come at you with warranty, which would be hard to argue isn't because it's only a hundred hour machine, but it's really actually how he's doing it and so but no, if you don't tie it together or you're not willing to look at what's really happening, and that's why I said earlier, like before we even got going like this idea, like if you were to start a business, a dealership over.
Speaker 2:Would you grab a group of people that understood what was what you were doing every day? You know, buy a bunch of pizzas and sit around and go, okay, we're starting a dealership from scratch. How do you want to set it up? What do you want to do? What do you want to focus on? How do you want to execute it? You know where, where is there things that we do that have real value and where are the things that are just like how we've always done them? And now that's, you know, like walking into a parts guy, into a, into a front parts room and having to sit in front of his desk and go through diagrams and find the parts. You know and who are you, so I can open the sales order first and you know, just sit down and like rethink, what do you really want to do?
Speaker 2:I want to sell parts. I don't care how I sell them, that's not the important part. I want to sell parts and I want people to get the parts they want the easiest way, so that they can fix their stuff, because Cause that's all they really care about, you know. And then start start from there. We just had like a young group of guys who started a new dealership contact us and started with working with me and they just want like when I showed them some of the things and we talked about some of the things you could do in a digital storefront're like we want it all. Like we want all of those things, we want it to go fully. Like they want doing things like escrow integration so that they can transact without any concerns and stuff and all fully secure. And no bank, no sending pieces of our pdfs in email that's insecure, with the wire transfer information that's been hacked a thousand times. So it's just like they're rethinking what they're doing. They they sell trucks and equipment, but they're starting from scratch yeah, I don't.
Speaker 1:I I agree with you, but and we're, we're heading to that place. If I use the US government as a model, which is not what I want to do, but just as an illustration, it's an interesting time to bring that one up.
Speaker 2:yeah, isn't it?
Speaker 1:though For two Canadians. That's right. I am Canadian, so I can be an equal opportunity abuser and dump on both governments. It's very empowering.
Speaker 1:The circumstance today in the United States is that 27% of our GDP goes to expenses for the federal government. Yeah, and if you take the last 20 years out and go back 230 years, the average was 20. How the hell did we get to 27? And I think it's the same thing that you were talking about. We keep adding, keep adding, keep adding.
Speaker 1:I start with a budget of a million bucks. Well, I need a million and a half next year and it just kind of happens and there's no cop at the door that says wait a second, I don't have any more money. What are you spending more money for? And now and I use this as an illustration, not trying to present anything either way politically here comes Trump and Elon Musk and the quote unquote the Department of Government Efficiency. Yeah, and look at the chaos that that's created in the last three to five days. Oh my God. Usaid oh my God. You're allowing people to withdraw and you're going to pay them eight months salary and benefits. What's going on here? We can't, whoa, slow down, stop. That's why you live in Hawaii.
Speaker 2:So the tsunami won't reach you. What's going on here? We can't whoa slow down, stop. That's why you live in Hawaii, so the tsunami won't reach you.
Speaker 1:That's right, that friend of mine before I got here. He says you're going to love it here, Ron. You're 2,500 miles away from all the BS. It's really true. So we, we, we come around again. I think it. I think this generation that we're at now, 2025, where we're at now, is our education system, I think, has failed. We're not generating out of our school system, whether it's grade school, technical school, university or wherever we're not creating work ready people that can sustain our society. They don't have the skills, and one of our contributors, Ed Gordon, who's got a pretty sharp guy, a couple of PhDs, one in history, one in economics says by 2030, 50% of the American workforce, which happens to be around 75 million people, will not have the skills to be employable. Isn't?
Speaker 2:that fascinating when you think that the huge focus of most educational institutions has been task-focused and real-world job-focused. It's a pretty ironic statement that you're making that people are less prepared. They make fun of, like classical education of just you know, basic knowledge and thinking and all those things and focus on job specific task training and we're less prepared you opened up a magic word called thinking.
Speaker 1:I don't think we have people going through school that are thinking as much as they're being brainwashed. You know, think about how we learn addition and any any mathematics. It's the number series. One plus one is two. You know Well what about. One plus one is 11? You know you put that in front of a young person, they get confused. No one plus one is two. Well, there's no two anywhere there, but there's two ones. Why isn't it 11? Now they're stuck because they don't think and I don't know.
Speaker 2:So, you're going to advocate for classical education. I really would.
Speaker 1:I'd like to go back to what education was in the 1800s, you know, until the president of Harvard in the 30s decided he wanted to make more money. The model that we had in America was the classic education out of England, oxford, and reading, writing, arithmetic, kind of thing. Yeah. And he said in the 30s this is a fact you can verify we can make a hell of a lot more money if we start adding some classes. Yeah, it didn't matter whether that was going to be contributing to societal gain. It's going to be good for you. You're going to learn a lot. So we have studies like women's studies. I'm not going to pick on that. But okay, tell me how that contributes to betterment of society. It makes you better as a person. You're smarter and better rounded. But what does that do for society? And then you know, here comes the magic bullet. How did we get to? My grandson wanted to be a nuclear engineer, so we applied to Purdue, which is where he got in. And he comes back at me when he's 17 years old, says 350,000, bobby, I can't do that. Even with all my scholarships, it's still 170 grand. I can't do that either. How the hell do you get to a place that education costs that much? That's a whole other topic, ron, is it ever? But it's all related to the same damn thing we don't think about what we're doing. We don't have people that are thinkers.
Speaker 1:Continuous improvement, edward, denning and Juran back in the 1980s. It was really exciting. Then it dissipated. We don't have any staying power. So we came to Six Sigma oh, that didn't work. Then we went to 5S oh, that didn't work. We re-labeled it, charged more. What's it?
Speaker 2:called now Because I'm out of the loop. Anything.
Speaker 1:Oh, I forgot. We have casual dress days now. Oh, we can work from home. Now this all becomes interesting. On the counter is an example in parts. Or technical advice. Why don't I have a bunch of people on the phone? Customer wants some help with technical advice. Should we give it or not?
Speaker 2:that's an interesting one.
Speaker 1:I always think yes and then here comes the right to repair. Should you share your technical information, your engineering information, with me or not?
Speaker 2:that's another interesting one isn't it but I it, that's like.
Speaker 2:I like that one because it's the, the defensive approach to your business, or the being the preferred choice approach, right, so you can either try and defend your business by making you know it hard for your customer to leave, or creating a dependency out of in an unavailability of information, like they're all ways to defend by, by preventing right, instead of being the, the business or vendor of choice. By choice, because like well, I called this guy and he helped me with this. I really don't have time to do it, but I know they know how to do it because they explained it to me last time. I'm going to send it to them to do it right. Like I don't, I've never understood, um, why people try and keep things captive. I it first started like when I was in the thing with um, like maintenance contracts, capturing the business with maintenance contracts. You know all these, yeah, all of these strategies like even the early, prevent your customer from leaving instead of incentivizing or working with your customer in such a way that they don't want to leave, no matter what. Like if you jack up the price, they'll be like that's fine, like everything else is so good, but instead they're like you jack up the price and you make it hard to do business on some things. And if someone says, like, can I have information, how to do this repair myself? My tech is up in Sudbury and you can't get someone there, and you say, no, we can't do that, and like, well, now you're just a jerk and you know you're expensive. You know software companies do it with data. Can I get my data into this thing? Because I've got this idea. I'd like to try. No, do you like to try? No, like the data, the data has to stay in, or you don't have access, or you have to pay more to get the data out that way. And like how is that? Like, that's that's a defensive strategy for retaining people instead of being like yeah, we can do that, see, like. And that customer says, oh, I love working with these guys because I can do things I want to try and do and they support me in doing that and that's why I would never leave them, because that makes my life, my ability to morph my business and adjust to my customers' needs so much easier.
Speaker 2:I never understood the defense of things like contracts on software. If it doesn't work, it doesn't work. You know, in in maintenance contracts at dealerships. When you go a 10-year contract on a 980 and and five years in, people are like this just isn't working for us to have your text do everything and stuff there isn't. I don't think there's a deal that says, well tough, you're stuck for 10 years. Like okay, well, let's look at where we stand, right, like you're we're up with this, allowing this, and like we're like five grand apart on just walking away from it, okay, we'll pay five grand and okay, great. And then next monday they probably still call anyway hey, can you send a tech to fix that machine? That's no longer under contract, but we'll still have you fix it. Like I don't understand defensive strategies in in business because they just really just piss your customers off.
Speaker 1:I don't like defensive strategies, period, and I think part of that I attribute to the fact that I grew up in a competitive swimming world and I learned very quickly that it's not me competing with other people, it's me competing with myself. Good point If I can be the best that I can be and it's not good enough, so be it. But if, by being the best I can be, I become the winner, fantastic. And I used to say to people there's eight people in a race, you get up on the block and you finish last, but you beat your best time, you won, you won. It just didn't happen today the way you want to. So we get this whole thing again. We're defensive, I want to protect that, but our actions decry that.
Speaker 1:I have technicians and that guy that goes out and did all of that magic that reduced the warranty costs and he was expensive. And the company is saying, well, gee, you're costing me money. When are we going to get to the point that we look at Amazon in the 1990s, in the 1990s, and here we are, let's say, 30 years later. Just to put a funny on, it might be 32, might be 28, doesn't matter, and they're the largest retailer in the world. Yeah, and what did they do? They made it easy for the customer, yep, and they did it with systems. Oh my Lord, imagine that. And they did it with systems. Oh my lord, imagine that. And that's those guys sitting in the kitchen that you're talking about. You got six or eight or ten guys and we open a couple of beers and and start well, how would we like to do this if we were starting from scratch? Yeah, we don't have very many people that have that kind of knowledge.
Speaker 2:I don't think that's true. I just don't. I think that's the problem. It's, like you know, we don't take our people out to really think about it. We do corporate retreats and that, but I've been in a whole lot of them and none of them actually sit down and make you rethink the business properly, and none of them actually sit down and make you rethink the business properly. But I think the problem is we never sit down and rethink what it is we're trying to do right, like why do you keep having to increase your budget in a department because the one thing you won't touch is the core way of doing things, because you think that's untouchable, instead of saying like, well, this is a, you know, maybe this isn't the right way to do it anymore, considering all the other options we have for how to do it.
Speaker 2:You know, you know, mcdonald's was kind of an interesting one that way. I mean I hate those boards where you go now and you order your own food. I still like going up to the person and ask, but I mean they didn't get stuck on the idea. Like no, the only way to order a hamburger is to walk up to the counter and ask the teenager behind the counter for the hamburger. You know, and, and you can still and this is interesting to do you can still do it. You can still go up to the counter and order it. You can go to the board and order it, you and order it.
Speaker 1:You can do your app and order it and you can go to the drive-thru and order it. Four ways you can order from McDonald's and each one fits someone, and how they want to deal with McDonald's and the trick is that keyboard. I'm going to call it a kiosk, just to use a different term. If I only had. It's a walk-in situation. I'm walking in, I'm not driving in, I'm walking into a McDonald's and I want something. And I've got two channel opportunities One's with a person, one's without a person. Yeah, I wonder, if you did an experiment for a week, what the customer would choose the kiosk or the person?
Speaker 2:It depends on the customer would choose the kiosk or the person. It's. It depends on the customer. Look at, look at the grocery store with your self-checkout and your cat and someone who checks you out. You know, some people like talking to someone or not having to do it. Some people like being able to go through the kiosk and if the lineups to go through a person are wrong, you'll go and check out yourself because today you just want to get out of there and you'll do the thing you don't like to do. It's just, it's options, right.
Speaker 1:I'm with you, so let's go to that. The line for the person is long. Yeah, the line for the kiosk is long. What is the solution to shortening the line People?
Speaker 2:And your resource right. Yeah, only at that point, I guess, yeah.
Speaker 1:Add another person or add another kiosk, which is the most cost-effective way to do that.
Speaker 2:But I think that's what grocery stores are finding to some degree in this thing is that there's a mix and there are times when they should add one of those and there times when they should add those and one is more flexible than others. Right you? You can't on on saturday morning at 10 realizing that everyone's coming in for groceries, add a bunch of self-checkout systems.
Speaker 1:they take a long time to install right, and so they just add a bunch of people so and again, I'm, I'm with you, but but I don't think we are looking critically at how we operate a dealership and I think that's going to lead to the demise of the dealership. I think we're already seeing it in Canada. Now there's two Caterpillar dealers. When I started, there were 10. When you started, there were 10. When I started, you know, there were 10 provinces and two territories Northwest Territories and the Yukon. How many are there today? More. And the United States has 50 states, until such time as Trudeau becomes the governor of the 51st state. Who would have thought you know? I mean, we get all of this stuff, but nobody. I'm in Moscow, matt. When were you in?
Speaker 2:Moscow. Huh, when were you in Moscow?
Speaker 1:Oh, I've been in Moscow often. I trained there for had training classes for eight years, nine years up there, and I did a lot of consulting work there. So I'm with a dealership. I'm talking to one of the leaders who's got an MBA, he's married and has three children. He's 45-ish years old and I asked him you know, if you could wave a wand, what would you change here that would make your life easier and be better for the company? His response floored me. He said don't do that to me, Just tell me what you want me to do. I was floored, Didn't want to think, and so I came back. And this is 25 or more years ago and I came back.
Speaker 1:I started doing the same thing here with different managers. If you had a wand, what would be the first thing you'd change to make your life easier here at work? That would also be a benefit to the company. And I get a whole bunch of glossed over eyeballs. Yeah, Hadn't really thought about that. What the hell is the purpose of a leader? But to help the employee be better at what they do, to help satisfy the customer with more of their needs, to help make more money for their employer, to provide a safe environment and they're not looking at how they do the work. What is this crap?
Speaker 2:That's like it. It it takes training, it, you know. That's why I say go on saturday. You buy pizza and sit around and talk. It takes training to get people to think and look at that. If you look at lean manufacturing environments, you know they have repetitive weekly meetings to talk about how the process works. It becomes part of the culture to look at what's not working or what could work better and try and implement that on a regular basis. We don't do that at dealerships. Yeah, there's no, it's just keep transacting, keep transacting, keep transacting. And it's interesting.
Speaker 2:You made me think like, um, the the death of the dealership, and we've seen all of this consolidation over the last years and I've always thought like a big driver of that is the, the capital requirements of a dealership. Like a lot of people can't stomach the capital requirements of a big dealership. They're hard to sell because of the capital requirements and the amount of assets they have on the balance sheet. But to some of you made me think like do you think that the reason there's it we have this capital problem is because the dealership keeps trying to operate in a model, like an old model that requires all this inventory and stock and and all this capital, you know all the bricks and mortar. And all this capital, all the bricks and mortar and stuff, is it the old model that's driving the capital requirements and killing dealers?
Speaker 1:I would say yes, but I think that's an excuse. If the industry made enough money as a return on assets, the cost of the asset wouldn't matter a damn. I'm going to make 350% return on assets. Or I'm a rental company. I'm Sunbelt, I get 50% return on assets, totally macro baby. Oh, I only do $4 billion a year. You get $2 billion net taxable pre-tax income. Holy crap, baby, doesn't matter how much the machine is. I'm getting to the holy jeez. You can't do that other than with illegal drugs. I don't think that's the problem. I think the problem is people. Example why do I need to have a journey mechanic do a 250-hour or a 500-hour preventative maintenance service? Why do I have a guy who's got 20 years experience every training school that I've ever sent anybody to that I pay 45 bucks an hour to?
Speaker 1:why, do I want to have him doing maintenance? Well, in fact I don't. And my assistants tell the market I'm not interested in doing maintenance. Because the market can go out and hire somebody at half the price of the journeyman and do the maintenance, because they redefine maintenance as changing filters and fluids. That's not what maintenance is. How do we let them get away with that? Because the cost per operating hour should be the driver for the customer. You can reduce the cost per operating hour should be the driver for the customer. You can reduce the cost per operating hour by doing maintenance properly. Period. It's been proven everywhere and we're stuck. So all of that. I believe that there will be parts dealers who will sell parts to machine owners that they purchased from the guy who made the part, who sold it to the equipment assembler, the OEM, and they just took out a level of the supply chain.
Speaker 2:Well, I think that's yeah inevitable and it's been happening.
Speaker 1:Yeah, and that's why Amazon has become so successful. Yeah, so if the parts business is going to go away because I can start up a company, you and I can start up a company and we'll create it. We'll call it a Kappa construction area parts availability instead of NAPA. We'll carry 3,000 to 5,000 part numbers all the fast movers and we'll buy them directly from the people that sell it to the OEMs and we'll sell it for half the price that the OEM does.
Speaker 1:Yeah, Is there anything that's standing in the way from that happening in your view?
Speaker 2:I don't think so. I mean, once you have the information, like it's being tested. There's people out there like Gearflow and some other companies that are heading that way, but I think, in my opinion, it's a symptom of the fact that there's a demand to do it that way, rather than the traditional people who already own the relationships and own the supply lines, creating methods for executing what the customer wants. They're pushing themselves people away into these new channels of doing things the way modern people want to do it, and I think they're missing the data that says that they're not collecting the data for the people that aren't there. Right, it's like the classic problem of a dealership owner that says, well, I talked to all my customers and they all like having my guy come by with donuts, like, yeah, but you only talk to the people who like getting donuts and everyone else has left your business. So, yeah, it's a confirmation bias problem. And if you, if you say that, oh, I, you know all my customers like coming into the parts department and sitting with the parts guy, yeah, those are the ones that are coming and doing that, but then they don't represent the majority of the potential customers. And if you don't collect that information you know, like, then you just don't know.
Speaker 2:It's one of the reasons that Amazon tries so hard to track what you looked at, remind you what you looked at and what you thought you were going to buy and hope to buy is because it tells them exactly. You know. If they only looked at their sales, they would say, oh, we only have this, this is all we sell. But they look at all this other data that says, oh, but all these people are interested in this stuff. Like, why aren't they buying that? And they'll figure it out and they'll get you to start buying it when they fix that problem. But if they don't collect the information on what else you're looking at, then they don't even know.
Speaker 1:I'm in a small apartment where I live. It's around 1800 square feet, two bedroom, two bathroom nothing fantastic, but I've got four Alexa devices, do you, and wherever I go, I get notifications, and it's all related to exactly what you just the other day you looked at such and such.
Speaker 1:We have something in your shopping cart you're looking for that has a special price. Here's what it is and how much you're saving. Would you like me to add it to your order now? Yeah, and and. Again, it's relating back to making things easy and simple for customers to conduct their business. I need soap, I need a pill, a subscription renewed All of these things are predictable. Yeah, my $500 service. It's predictable. My engine is overheating. I'm told that through a diagnostic, through a sensor, and I call the dealer and I call the customer back and say Mr Customer, your engine is overheating. We would like you to shut it down so that you can stop problems. Or gee, you really bought that part for that hydraulic repair from George.
Speaker 2:Where do you get the part?
Speaker 1:Are you putting that $30,000 pump at risk because you saved three bucks on a part number? We don't have those discussions anymore and I think part of it is because we're defensive. We're protecting what we've got. Part of it is we're stuck in a model that doesn't work anymore. Part of it is we blame high cost, but the reality is low-skilled workers. All of that stuff is not sounding good. It doesn't sound good. I really believe that's coming now. There are wonderful opportunities for people that satisfy customer needs. Just like you say, I'll spend more money with those guys because they satisfy all my needs. Whenever I have something I want to get done, they do it. Yeah, and that's what worth something to me.
Speaker 2:Yeah, that that's what worth something to me. Yeah, that's, in the end and this is the funny thing I always find Like I love the people I work with in the IEDA right, and a lot of them ex-sales guys from big dealers who start their own dealerships and used equipment rentals whatever from big dealers who start their own dealerships and used equipment rentals whatever and, like, the reason they did it is because they realized that they could satisfy their customers better on their own and so they got in the business and they made a successful business out of it. So, pretty much, if you look back at everyone's business, there was something that they were focused on doing better that got them in the business, and the problem is we forget about what it is that we were doing that put us in the business right, like and and that's got to shift.
Speaker 1:You got to have that rethought so let me take that one as an illustration. I got tired of my customers being mad at me because my company would not do what I wanted the company to do.
Speaker 2:As a result of that.
Speaker 1:I left the company. I'm going to start doing it myself so that I can satisfy the customer the way that I want to satisfy the customer, and everything works, yeah, and that's what happened to independent mechanics as well. It's every single place. So I think I want to stop there. That's enough provocation for a lot of people to consider, to think of. How would you wrap up this discussion, what would you say would be the message you want to pass to people that you want them to consider?
Speaker 2:I, I think, just going off of the air, like I think people need to look at the thing they're not looking at. I think we have so much confirmation bias of what we're doing and that's the way to do it that and we've stopped looking in all the other areas of where we're not getting business from this person or that person, or not seeing information about this or that that you know. Like, like part sales is the same thing. You know. If you don't write down what a guy called for and you didn't have, you don't know that you should have had it. If you only look at the things you sold, you'll only stock the things you sold and not the things that the guy called for that he wanted. Like, start start figuring out ways to collect information about the things you sold. You'll only stock the things you sold and not the things that the guy called for that he wanted. Like, start start figuring out ways to collect information about the things that you don't see.
Speaker 2:And and the biggest one in all dealerships is the money that trickles through our fingers by, the hundreds of thousands of dollars for not tracking certain decision-making like why do you send that mechanic to do a 250 hour service? How much did it cost you to send an unexperienced guy to go diagnose it three times before he figured it out? Why do you not track that? You know? Why are you not? We don't, I don't. I think we don't have as big a shortage of mechanics as we have because we're not looking at the data of how we're using them and applying them properly to to you know, cut average repair time in half. If you applied people properly, it'd probably take half as many people to do the same amount of work. But I hear a guy goes out, does a job in two hours, another guy goes and does it eight hours Same thing. It's not a mechanic shortage, it's a planning information shortage.
Speaker 1:I agree with you 100% and you know an example of that is Alex Kraft and his company, heave, and we did a podcast recently and I said, well, how's it going? He said not bad, we just did a review of 2024. I said, oh, anything interesting? He said, yeah, a customer makes a request, needs repair or maintenance on his machine. Our average response is one minute. So from the customer request to somebody responding to that request, it's one minute. I said, wow, you do that for every single customer, yes, every single transaction, yes. I said, okay, what else? He said well, within five minutes, the customer has made a decision about who he wants to have do the job and the job is underway. I said, well, why aren't they buying it from the dealer?
Speaker 1:Well the dealer didn't give them a timeframe. That was good enough. What was the timeframe? Oh, three, three, four days If it's field, in a couple of weeks if it's shop. I said, okay, well, how long are these jobs? He said, well, the average job we did in 2024 was five hours, yeah, and the dealer is saying to the customer we want you to wait three hours for a repair that they can do in five hours, or three days for a repair in five hours? And the answer that came back from Alex is seems so. I said terrific. How many mechanics have you got signed up? He said, well, we've been at it for about a year now. I think we've got six, 700 technicians that are involved from zero. Yeah, so data defensiveness, model bias, all of this other stuff, it's not. It's not good. We got to get the the, the dealers, to look at the clouds are upside down and look at it differently, look at it with fresh eyes, or?
Speaker 2:their life is limited. Here's a great idea for any big dealer listening what why aren't you white labeling alex's platform to run service? Yep, be like, because alex has that business and he had to build it from scratch. He had to build the software, the tools, the billing, he had to find the mechanics and he had to find the customers and, like most big dealers have all of those advantages over him. They just didn't figure out how to deliver service in a modern way like he has. So call Alex up and ask about white labeling his product in your territory.
Speaker 1:Yeah, it's not meant to be a commercial for Alex, but it turns out that way, so that's it. I want to do this again in a couple of four months, a couple of four months, a couple of four months on this particular subject. I want to do something else with you on your software, so that we can start getting people to be more aware of that.
Speaker 2:I think we should do one live in about April Okay.
Speaker 1:I'll come to Hawaii. There you go, I'll get a special room just for you. Awesome, I'll put padding on the walls.
Speaker 2:Yeah, but I know I can order pizza from any room in your house with Alexa, that's right.
Speaker 1:That's right. That's right. So, Alex, thanks very much for your time and thanks to everybody who's been listening to this the Clouds Are Upside Down podcast. I look forward to seeing you again in the very new future. Mahalo.
