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
Business Value and the Human Connection
What happens when you strip commerce down to its essence? In this thought-provoking conversation between industry veterans, we explore the fundamental truth that all business boils down to two people exchanging value—and everything else is just overhead.
Steve Clegg opens with a powerful framework: the economy only functions through human exchange, yet we've built towering hierarchies of "rent-seekers" atop these simple transactions. Through cryptocurrency and AI, he envisions a future where these layers disappear, returning power to buyers and sellers. His work with Zentoro has achieved remarkable 98% accuracy in predicting customer retention through transaction patterns, revealing that frequency matters far more than transaction value.
Venky Lakshminarayanan brings his expertise in value management, describing it as "orchestrating business functions to maximize customer value." He challenges listeners to question whether they truly understand what problems they're solving for customers. His insights on how value differs between enterprises (revenue, profits) and individuals (recognition, quality of life) provide a framework for aligning business objectives with human needs.
Nick Mavrick from Built Data completes the picture by exposing how poorly most organizations support their field personnel with actionable market intelligence. He describes a world where salespeople lack basic knowledge about customer prioritization and market coverage, resulting in missed opportunities and frustration on both sides of the transaction.
Among the most practical revelations is the "50-50 rule"—research showing that conversations where both parties speak equally are dramatically more likely to result in action. This golden ratio applies whether you're a doctor with patients, a manager with employees, or a salesperson with customers.
The discussion also touches on the legacy burden of enterprise systems like CRMs, which have become expensive obstacles rather than value creators. As AI enables more agile alternatives at a fraction of the cost, businesses face a critical decision point: continue with systems that deliver poor ROI, or embrace transformation?
Whether you're reconsidering your business model, evaluating technology investments, or simply trying to better understand customer behavior, this conversation offers clarity on what truly drives successful commerce in today's complex environment.
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 candid conversation. We're going to break some new ice today because we got a four-fer going on here. There's four of us here on which I will strictly be a conductor or moderator, but I've got three very bright guys who come from different perspectives, and I'm going to go from the youth up, which means I start with nick maverick even though he has the least hair on any of us, with his company built data, who ascribes to the theory that we have the ability, with data and analytics, to determine what action we should take. And then I'll move up to the Vinky, who's got a book out there on artificial intelligence, but it focuses on value management, which he calls the orchestration of business functions within the enterprise to maximize business value for customers and I want everybody to remember that for customers.
Speaker 1:And then leading the pack is Mr Clegg. Steve is in Chicago and Steve, we're going to focus on Steve's fundamental truth that all commerce is related to two people, a buyer and a seller, and anything other than that, which is a whole bunch of stuff, is just taking money out of the transaction and providing burden on those two actors. But I'm also going to ask him to bring cryptocurrency into it because we're in a world of change and with artificial intelligence, with robotics, with value management, with GPS, with built data, there's a lot going on. So, gentlemen, how about we start with you, steve, on the transaction between two people?
Speaker 2:Yeah, I think that the economy only works the extent that you have humans exchanging goods and services. Very much like nature, there's always an exchange taking place. In nature it tends to be an optimization of that exchange. The human element of this has over time evolved into a pyramid of people that are what I call exploitive or rent seekers. That sits on top of that transaction and it's central control or central systems, and initially there's a need for that as the commerce expanded. But it's still two people exchanging goods and services.
Speaker 2:The introduction of two things have really changed that, in addition to the advances in technology. But one of those changes is just the exchange itself and the store of value that you can use to make that exchange. And in the past you've had fiat currencies that are subject to the printing presses of the countries that produce them and it's been primarily a basis of if you want to do business with the United States or China, you're going to operate in that specific currency and subject yourself to, you know, whatever the irresponsible spending habits of that country are, like our country right now. The US is running a two trillion dollar deficit and we've got some printing presses that aren't recording all the money that's being printed, but with the introduction of crypto. Crypto and primarily in my view, that the two coins that are really providing the, the road or the, the pathway to this instant exchange, are xrp and xlm, you know, stellar and ripple. That allows you to take away all of the in-between and actually determine what the value is on the exchange of not only the transaction but commodities, information. Anything can be monetized on that structure and that's pretty critical.
Speaker 2:And the other thing is the introduction of artificial intelligence, which allows for the resources that are necessary to support that transaction versus exploit it.
Speaker 2:So it's removing all that layer of rent seekers that sit on top, putting the transaction of those two people on top of the pyramid with a support pyramid which I think, just looking at Venky's discussion, is what we're looking at is how do we support that event positively, where everyone benefits and ultimately the customer is satisfied, but it's also the customer and the seller benefits, and ultimately the customer is satisfied, but it's also the customer and the seller. And the beauty of this is that, rather than having this ever-growing hierarchy of support for an expanding ecosystem, with the technology that's available today you can pretty much set up a viable human economy with about 4,000 families. It doesn't matter where you are it could be inner city, it could be on Mars but you have a viable capability with energy batteries, storage of energy and if you're just using the raw materials that are available, really anywhere in the world or in this solar system, it would be possible to maintain a healthy economy where you've got participation of those two people versus exploitation.
Speaker 1:Yeah, and I think you're right to toss it to Venky essentially is taking continuous improvement, Six Sigma, 5S, all of the jargon elements and translating that into creating value in that upside down, all of the support functions between the buyer and the seller and the customer. And Venky, I don't want to put words in your mouth, but do you want to expand on that a little bit for us?
Speaker 3:Yes, certainly, ron, and I'm glad you asked Steve to open this for us, because Steve did what we would call in the business of value management. And although this language is used in the world of enterprise technology and you know this is although this language is used in enterprise, in the world of enterprise technology and software, what Steve just did is really dreaming big, with art, of the possible, and it is equivalent to creating value out of nowhere. But it doesn't come out of nowhere, it comes from a deeply latent potential, and I think what fascinated me was the simplicity of the definition that it's two people exchanging something that is of value to each other. And we've all been in any number of discussions with people who have business ideas. You know, hey, I have an idea, I'd like to provide a service, I'd like to, you know, create a product, develop a product, and they rush into talking about I would like to do this, I'd like my product to have these features speeds and feeds and whatnot and somewhere down the road somebody asked them a question uh, hey, what are we solving for? And that happens to be something related to the customer. And so, you know, I take away from Steve's very elegant definition of, you know two people exchanging something that's value to each other, and that's where the economy starts right, and I think that is very core to what we call value management as well. In fact, you know, it seems like it's some kind of sophisticated practice. It's actually not. It's fairly simple.
Speaker 3:And before we start with this recording, ron, you said something very interesting too, which is can we do something, can we organize ourselves in a way that we can provide, be of value to the other? And that's the basic question that I think we all ask ourselves as we set out to. You know, do a business, develop a product, provide a service or even get to work? The other person is talking to you because in a daily conversation, because they're looking for value, and so it's a good idea to ask the question if somebody has a product to launch, why does anybody even care that your product needs to be there and go from there? And so the other one I wanted to just touch upon is just express admiration for Steve's beautiful. You know it is actually a wonderful example. You know, you bring 4,000 families together, you can get an economy going, and that is so wonderful because it is not just about when everybody is getting value. You know there is an economy that thrives on collective value and that pours back into the system.
Speaker 1:So I think there's lots to explore there, yeah, and I'm going to throw it to you nick, because I'm going to build on steve's transaction between two people and venky's, making it efficient to take some of the layers out and what you do with built data, which I'm going to suggest is analytics exposing how poorly we cover a market, how poorly we cover our customers.
Speaker 4:Can you pick it up from there? I hope to. I want to start off by saying you know, steve is probably one of the smartest people, as are you, ron, of course you Venky, steve is one of the brightest people I've ever met.
Speaker 2:How much did that cost Steve?
Speaker 4:I paid him five bucks. Well, it happens to be true and you could say he's a vast student. But amazing life story. I came in through a slightly different lens, which ties to my answer. A lot of my life was growing from a worker to a manager, to a vice president and having to influence people in very pedestrian terms, and I learned it the hard way. It doesn't come to me naturally and nor was I seeking to speak to people in terms that they would consider esoteric, but the person in the field, whether it's a rental salesperson or a territory manager, are extremely bright people. They may not have grown up behind a computer, they may not know behavioral math theories, and I also think companies say look, we're hiring you, mr or Mrs Expensive Salesperson, and you're on your own, and they support them with tools that largely make management feel good about what's in the so-called pipeline is the boss doesn't understand the challenges of the person that they've hired and presumably paid a lot. Two parties get frustrated and sometimes that relationship breaks.
Speaker 4:What we've come out with BuildData is helping break down, joining what we call a unified data set and completing the picture and, most importantly, supporting the person in the field so they have actionable buyer information, and that involves a lot of very simple things, not as complex as the type of work Steve has done or Ron you've done, or Venky that you've done. But we spend a tremendous amount of time establishing proportionality in a market, tremendous amount of time establishing proportionality in a market. We do that not because and oftentimes in a market, 10% of the buyers create 70% of the outcomes the fleet they own, the rental products they consume, the parts and service they consume. That's not always the right position to start in. It may be the second group Oftentimes in this industry and we're climbing on the shoulders of people.
Speaker 4:So I hate to sound critical, but when it comes to buyer intelligence data, I believe, we believe, that salespeople and organizations are under-supported with low-level junk food, and so a salesperson doesn't know where to begin his day, nor can the manager partner with that person to telling them where to begin their day and take care of the best buyers in the market. So there's a fair amount of lack of discipline around pricing. Steve talks heavily about the transaction and the notion of so. Do you, ron, about the transaction is what matters, and what you can see in a lot of the transactional analysis is short-term thinking they're not looking at the buyer holistically. So we aim to aggregate that information so they have a holistic picture of the buyer. Once you know that, you can bring in what they're working on, what their prospects are for growth. I could go on, but I hope that licks a little bit of the foundation.
Speaker 1:Let me use that as a springboard, steve, over to Zinterro and your data analytics relative to retention and transaction values and et cetera, because what you've been doing is absolutely wonderful, and so has what Nick has done, but you're putting a motorcycle under where I think Steve's at this point with a bicycle. Tell us what you do with Zentoro.
Speaker 2:So for a lot of years, having bought a lot of companies and financed them, and also for different things I've done. I built models to forecast and usually it was, you know, looking at historical data, trying to apply that, going forward with, you know, reasonable success, but generally looking backwards and giving excuses on why some forecast or plan didn't work and making excuses and trying not to blame anybody but myself. But the temptation for everybody is to you know, we didn't make the numbers, who screwed up and who can I blame? And what I've always tried to do is if you really want to lead, you have to be able to look forward. So with Zentoro, especially with AI, initially we started with doing the forecast and then we could front run the forecast with customer satisfaction up for like three or four months. We could anticipate the retention rate with some degree of accuracy. We could anticipate the retention rate with some degree of accuracy. But once we introduced AI, the last several years we've been running at about a 98% accuracy and driven on transactions and customer retention engagement.
Speaker 1:Okay, stop there just for a second. What do you mean by a transaction?
Speaker 2:Any exchange it could be. If someone does a consistent exchange of a dollar six or seven times, they become, you're retaining them, you've engaged them. It doesn't matter how many dollars they spend. The consumer and the. It's all about transactions and what that experience is.
Speaker 1:So the value of a transaction is less important than the number of transactions.
Speaker 2:The number of transactions drives that interchange. And when you think of the equipment industry, which is the industry is focused on equipment, well, equipment, new and used for this industry only represents 2% of the transactions. Use for this industry only represents 2% of the transactions. 98% of the transactions are parts serviced into a much lesser degree, rental. So it really is. You know, if I can get them to buy a filter four or five times a year and a couple of other things. I have established an account and they're 100 times more likely to buy from me the longer I retain them if I have other services and products to offer.
Speaker 1:Can I? Can I translate that in a different way? Can I say that what this is leading to is the importance of the relationship. You have a better relationship with more frequency of transactions than you do with less. Is that a fair comment?
Speaker 2:That's fair. And also what's starting to happen is people are moving back to people-to-people contact. They're being overwhelmed with all the noise in the system and it's coming back to who do you know? So the introduction and time to bring a customer on you're looking like in the equipment industry. Introduction and time to bring a customer on you're looking like in the equipment industry you're looking at it's always been like a five year to seven year period of slowly developing them. But once you get to a stable account and again it's just has nothing to do with revenue or how much money you're making. It's just based upon a series of things, which is that interaction, the frequency and consistency of that interaction, determines stable accounts and what the result of that is those stable accounts by 10 times more often spend anywhere from 6 to 20 times more than your average at-risk account, and most companies live on 10% to 20%. Usually when we start with them it's 10% and by refocusing we can move them up to 30% to 40% of their customer base will be stable and they triple their business.
Speaker 1:And that's relating back to what Nick does with built data identifying the transaction level. But I think, interestingly enough, now Venky comes in with a completely different background and I'm going to use my interpretation, venky, and then you correct me as I go on. I think you were very in deep in project management and systems at a time that the world lived with features and benefits I can fool you with oh, I got the best bandaid on the planet, I've got the best Coca-Cola on the planet. But that led you to the value management proposition, saying wait a second. Features and benefits aren't the real deal. The real deal is what Nick and Steve have been talking about the value that you're providing to that consumer or to that supplier. Am I right in explaining your background?
Speaker 3:Yes, ron, you're right, and Steve just talked about customer success without using those two words. It doesn. You know, it doesn't matter which domain or which business that you know, you're talking about the art and science of retaining a customer and landing and expanding. If you want to use that, you know much abused framing is actually cheaper to use that. You know much abused framing is actually cheaper to do that and to acquire new customers only if the business was aware of it. Number one and number two is the. You know Steve talked about increasing the points of contact, or little, medium and large services and products that you can sell related to your existing product and therefore kind of almost keeping in touch with the customer and what it does.
Speaker 3:In any industry it could be software, hardware or construction equipment. Your customer ends up using your product and what do they get when they use your product and utilize your product to the fullest extent? They get value, and so customer success and value management have a natural convergence and customer success is nothing but helping your customer achieve utilization and value, and sometimes it means you have to sell more than the product. Whether you sell it or you offer it free. You know if you sell an application, software application you have to provide training, whether you charge for it or you do it free, because it's in your vested interest and in the customer's interest that you provide that, so that the customer gets value. There's no point buying something and not using it, and in order to do that, there are many creative ways to engage the customer throughout the life cycle. But so when the time comes for renewal, you have an opportunity not just to renew but to cross sell upsell. So one of the things I followed with a lot of passion through my experience with value management is customer success, and so what steve is laying out is a is is broad, broadening the idea of customer success as it applies to other industries.
Speaker 3:In the world of software, for example, your North Star is 99% retention, and then you can see signs. How do you know when a customer is at risk? It's when, number one, you've not had many interactions. Number one, you've had some negative conversations. But the most telling sign of all, they're not using your product, and so if you don't have anything at that point to re-engage with a customer, you can be pretty sure. In fact, there are companies that made a lot of money by being able to predict the churn rate of companies? How likely are you to retain customers? So it's a fascinating area and you know it's been the story of the software industry for the last 15 years or more.
Speaker 1:Yeah, right from the beginning. Actually, venti, you know, in the early days the guys and gals were changing jobs every three or four months and getting 50% more income until that ran out of steam. But what I find intriguing is I'm chatting with a person yesterday who's in the systems business and I'm complaining about the employees that are working within companies that provide dealer management systems that they're now all software people. They don't know their client, they wouldn't know that. They're now all software people. They don't know their client, they wouldn't know them if they tripped over them. They don't know what they do, they don't know how to do it, but they're interested in elegant solutions. And her comment to me was you know, I don't have enough installers, I don't have enough customer support people. And I said well, when you make a sale, why don't you make a deal with that customer that you're going to hire one of their employees maybe two, depending on the size and they're going to work for you and they're going to be involved in installations and support with other dealers? And it's a win-win both ways. The dealer employee is going to get a much broader experience level and the system supplier is going to have a hell of a lot more practical application. And so that struck me.
Speaker 1:And then this morning I'm talking to a really good friend of mine I've known for a long time and he's brilliant and he's a software guy and he built an unbelievably good software package but he wasn't able to scale it because he didn't have enough money to be able to get sales people there. So what happened? He went out himself, he built the relationships with all the clients, and that's north america, that's europe, that's asia, that's south, it's all around the world. And I said, well, how the hell did you do that? He says, well, we don't have that many clients. I said, okay, so now it comes organizationally. He becomes part of a bigger organization, and that bigger organization they want to scale, but they can't without him.
Speaker 1:And now we end up with dependencies. So I'm going to go back to Nick for a second as an entry. Here comes CRM. Crm, when it was first sold in the market, was for sales managers to be able to know how many calls the guy is making, is he doing his job? And then Salesforce comes along and it gets a little fancier. But now we start seeing a breakdown because Salesforce has a profile and the dealer business system has a profile, and those profiles don't talk to each other. So now we end up with the dirty data dilemma that's going to be hard like heck to be able to overcome. Nick, am I saying it?
Speaker 4:your mic's off nick mic on, babe. Oh sorry, that's okay. Yeah, you said it correctly and you want me to comment on?
Speaker 1:that please, as you know, how do we get out of that trap?
Speaker 4:yeah, so great. You know, with steve and you and venky and I talk to Venky quite frequently With this fourth industrial revolution, with Steve's mind, your mind and Venky's mind, you can help companies redo. Crm has become a legacy system and let me start off with just two days ago I shared with Venky, spoke to a firm who has created something similar to CRM, created CRM from a market leader, and they can make a very good living at 80% less charging, and so these enterprise grade products are extremely expensive. They come with three-year contracts and annual price increases. Now talk about usage. In many respects, they've just become a management decision that is too embarrassing to rid themselves of. And now they have the opportunity that, with AI, they can. The opportunity that with ai, is they can and they should. They should do it immediately. And um, when it?
Speaker 4:When it comes to crm, I don't know how we got so far away from the notion of crm helping somebody manage relationships slash. Help me remember Steve's birthday or Ron's birthday October 13th, october 13th, so but help me remember I could have used CRM for that. Or help me remember the last transaction. Help me remember something so I can convey value when I'm talking to you. I've just heard more failures than successes, and I think these big Duran you and I talked about it the enterprise salespeople at Salesforce and Microsoft Dynamics and on and on and on, make really good. They make better livings than their clients do, and good. I don't want to say good for them because I think that's unfair. I think they should be not selling their product to somebody who can't afford to get lost further, and CRM, among many other systems, has caused more confusion. Recently, I met with a very large OEM dealer group who's just installing Microsoft Dynamics in 2025.
Speaker 1:Hello.
Speaker 4:They got consensus. Think about it. They had to get team consensus. God forbid somebody rejects it. They've got their training department spun up. They are so deep into this decision they're not going into this decision. They're not going to let go?
Speaker 2:No. Yes, I think that for a lot of years Bill Hewlett invested in a lot of the deals I did. So he was on the boards and stuff and his whole view of the world was that when they started they had a window of change. They could like the auto industry. They'd do fixed lines. You'd put a line in, you'd expect to last 20 years.
Speaker 1:It needed that long to make money didn't it, steve?
Speaker 2:It took that long to make the money and then they became variable manufacturing, which brought it down probably in the mid-80s, where it began to break even against a fixed line. That evolved and it moved down from start to finish design to a finished product. It's moved down to three years, then two years, then 18 months, but always, as Hill had said, you never make any money in the electronics business because if you're not investing in the R&D you'll go broke. So you're always broke. It's just this illusion.
Speaker 1:Just to interrupt for a quick second. 1970, I'm just going to put it that way. I'm just going to put it that way 55 years ago I was involved in putting in place the first parts and service sales team in the Caterpillar franchise worldwide and the qualifier for a salesman was their handwriting had to be neat. Number one. Number two that we were selling product and giving commissions on product that weren't even made by Caterpillar. They were outsourced Batteries, for instance, hose and fittings, that kind of stuff.
Speaker 1:It always struck me as funny, but the characterization that I gave to people was that was it. It was left to the dealer to figure out what to do. So I remember sitting with a guy that was going to go out into the field as a salesman who worked for me in the parts business, and I said okay, here's your customer list. He said okay, it's alphabetic, john, go through, you'll be able to recognize it. We did it by County. In those days it could have been 7,000 customers, for goodness sake. Here's the keys to the truck. It's outside in stall 14. And then I looked at him funny and I said there's the door. How come you haven't left yet? Get out there and sell. And that was the extent of the directions.
Speaker 1:So if you go forward, nick, to the CRM and then go further forward to sales forecast, I think most of you heard me say I talked to a lot of salespeople in the last couple of months, deliberately and saying what are you going to sell next year? Well, I don't know. I'm going to have to wait until it gets close to the end of the year. And I said well, wait a second. Haven't you got a fixed number of customers in your territory? Yeah, don't you know what equipment they own? Yeah, don't you know what they buy in parts and service? Yeah, don't you have a life cycle management and on that equipment? Yeah, well, how come you don't know who's going to buy what in April next year? And they look at me like I've grown another horn.
Speaker 1:We haven't got thinking outside this routine. So when, when we talk I think you've all heard my grade 10 year old example we all go to school, we're 10 years old and we do tests for the first two or three hours. Then we go home and we come back and we're assigned a grade from grade 3 to grade 9 based on our skills and ability. We don't do that anymore. And, steve, you get to your 98%, 99%. It's wonderful. You and I talked about this.
Speaker 2:That's because the dealer doesn't change anything Doesn, because the dealer doesn't change. Anything Doesn't change. So this is what's going to happen if nothing changes. And like equipment sales and I went through this earlier a year or so ago I told everybody do not take the offers of the manufacturers. They're going to push equipment out on you and dump it into your yards and you guys run the risk of going bankrupt. You don't have a balance sheet that could sustain that type of burden and that's why this industry has all these failures.
Speaker 2:So sure enough, these clowns decide they know better and I think we're off, I mean on actual unit sales for almost all the dealers. We got over 120 equipment dealers on Zintoro. We got over 120 equipment dealers on Zentoro. We were projecting that they'd sell 1,400 machines. They came in at 1,406.
Speaker 2:I mean, the world doesn't change. They can have all these plans, but you're moving an army forward and it takes years to build that foundation. It's already existing in the customers you've got and all we're doing is monitoring that interaction, looking at how far they are from a source of service and a bunch of other factors. And also we benchmarked the expectations. So I mean simple things like if people expect to get parts in 24 hours and you don't tell them.
Speaker 2:That's the number one reason for losing the customer. But for every new customer coming in they call up and say, um, you know I need this part, and you tell them you know it's going to be, you know, five days from now. Your close rate on that drops dramatically with every day. It exponentially decreases the likelihood of them purchasing. It's the same thing if, if you have a time line on purchases, if every month that goes by it exponentially increases likelihood of them not buying again if they don't purchase within that window. So if you don't have a customer and this is where Nick comes in that is buying and has a capability of buying relatively frequently and again it doesn't matter how many dollars they spend you're not going to retain them. And it takes three, four, five years at a minimum for most of these customers to switch their machines, to switch their support fully to you as an equipment dealer.
Speaker 1:Let me take that a little further, on the basis that inventory management, whether it's machines, rentals or parts or labor, has always been predicated on the investment. It's the wrong end of the horse to be looking at. The only thing that's important is the part you don't have, and nobody is focused on making sure that. One of the principal rules that I've employed my whole life is every part everybody orders. Today, I'm going to find where it is somewhere on the planet and I'm going to let them know.
Speaker 2:And how much?
Speaker 1:Well, how much at that point is it's immaterial when we're talking about equipment. That's 20, 30 million dollars and I can't get a tire to keep the truck running. You know that's a problem.
Speaker 2:You know they never. They. We track this and we monitor the phone calls. We do this for AT&T I think we're the only ones inside their firewall, so we're monitoring on the calls. So if you don't manage their expectations, it's their expectations over rural everything. And price is never asked 's what for this industry? It's do you have it? And then is it within the window and then becomes when can I get it? And only four percent of the people actually ask for the price. Yeah, I often likely the parts department or the guy goes don't you want to know the price? And you I had one guy which we taped said hell, no, give me the fucking part.
Speaker 1:The other side of that is I say price is only important when every other element of the transaction is the same Right and you being involved in the transaction, it'll never be the same. Vinky, doesn't this fit right down your sweet spot? Isn't this that yeah?
Speaker 3:It does. Ron, just picking up a thread from Nick's book and, steve, your thoughts. Data can uncover truths like nothing else. You gave wonderful examples of that. I was once in a workshop when the conductor of that workshop was saying, hey, please tell us, uh, your strategy for your product, what do you want to be good at? And we all wrote down one, two, three, four, five, six, seven, whatever number of things. And then she said, uh, what do you want to be bad at? And there are many that didn't enter anything.
Speaker 3:I don't want to be bad at anything I want to be bad at, and there are many that didn't enter anything. I don't want to be bad at anything, I want to be the best. And then she landed the truth on us that intentionally being good in something and intentionally being bad as in when you say bad it means it's not important is the secret. And what Steve just explained is to be able to get to that point and ron, you gave that example too. So it's almost counterintuitive that walmart's a success and apple is a success and I'm just rewinding a little bit. You know, in the history they've been successes, right, but what apple is good at, walmart is not, and what Walmart is good at, apple isn't. And that's because that is your game plan and that is your strategy.
Speaker 3:And how do you take those decisions? You take those decisions based on data, and so the investment in uncovering data first requires systems that can measure it, systems that can aggregate it and systems that can put it together and tell you, like how Steve said, you know what. These are the variables that matter to you. If you delay or part delivery by just four days, you're going to lose most of your business. But what have you been working on. It's not in your list of what you want to be good at. You want to say, hey, you know I'm going to discount my product so nicely and you know I keep wondering why it isn't working and I'm going to keep building my relationship. But I keep wondering why it isn't working. And then maybe my sales guy is bad and I have to fire him.
Speaker 1:So let me interrupt for a second. Everybody, think about what he just said. Think about what he just said If I can deliver 100% of my parts in four days, congratulations. You're going to lose all your business.
Speaker 2:Yes, that's what happened. We had this client.
Speaker 1:Wrong darn focus Right.
Speaker 2:Vicky. Yeah, absolutely, thank you. We had this client and they owned in the office products market. They owned Staples and OfficeMax Office Depot. They pretty much dominated the shelves and they couldn't get into 60% to 70% of the business, which were these independent office products suppliers, and so we looked at this and we did two benchmarks.
Speaker 2:We looked at first the dealer and then we looked at the end buyer.
Speaker 2:So starting with the end buyer, the end buyer, no matter how big the company was, whoever was buying was buying, usually for about 40 people within a radius of an office and a copy machine.
Speaker 2:And the person buying it didn't matter what their title was. It was the most reliable person in that group, it could be the janitor, it could be the CEO, and the average order very tight, variable was $250. And because they had limited storage, so the frequency of purchase was determined by what their use was, so they could be buying $250 every day or every other day or every week or month, but it was $250. So we dug in. Then we started asking the, we benchmarked the dealers, the independent dealers, and we found out that they only carried four days of inventory and they only carried things that they could roll in four days, so everything else they were purchasing from other sources and that was so. It turned out that the end user, it turned out that the end user, the trigger for the purchase, was copy paper and toner, and this company, it was the largest purchaser of finished paper in the world.
Speaker 2:And they did not have a copy paper line. Imagine. So we got them into selling a good, better, best on copy paper and they finally penetrated. But they couldn't get into the market because the fastest they could deliver out of their warehouses was seven weeks. The independent dealer was expecting delivery within 24 hours.
Speaker 1:Yeah, one of the things that Benke said and I don't want us to forget it is that data uncovers truth and everything that we are doing today, all of us is predicated on good data and I'm scared to death of the quality of the data that I'm dealing with.
Speaker 1:If we, if we look at everything that's been going on, from physical plant to the cloud, from somebody ear telling us what's going on versus sensors, even so far as thermometers and the fluids on the, on the metal, all of the things that have been going on we have less than 50% of the dealer management systems that are employed in the equipment world is actually used, and that's what Nick was talking about that at some point in time, if you don't get a critical mass of the software, you're out of there. There's no value to you anymore, and that goes right down the throat of what vinky's talking about. What are we trying to do? And steve just exposed it. Nobody knew what that problem was because we weren't analyzing the problem. We just continued to do what we've always done and everybody's happy and everyone's got an opinion.
Speaker 2:Everyone's got an opinion and opinions overrule. I mean, I tell people that you know, opinions are like some other appendage, I know, and it's worthless and I really don't really want to hear someone's opinion. I'd like to know what the customer thinks is important and then weight that and generally, when you look at we did this with you know people interviews. We videoed a whole bunch of manager and employee. You know interviews. They wanted them to do something and then we tracked to see did they actually do it? Did they make a change? And so everyone's got all these opinions on what does it take to make a change when you're talking to somebody? And the only thing that really mattered I could call them all sorts of names, they could call me all sorts of names or whatever. It didn't make any difference. The only thing that mattered was a 50-50 talk track. The closer they were to 50% talking, the more likely that that employee would actually do what you're trying to get them to do.
Speaker 1:Yeah, and one of the things that's interesting for me is my belief on management is that we've got to. Everybody has to understand what we're trying to do, and then everybody has to agree that what we're trying to do is the right thing to do, but we miss the element of allowing the fight to take place. I don't agree with you. That isn't the right thing to do and we don't let that fight take place.
Speaker 2:As a result of that, we get a lot of people nodding their heads saying, well, they just go along with it and walk away saying that idiot, that's exactly right. But we did this for Merck on doctors. They wanted to know why certain doctors had all the patients and had the patients follow whatever drug protocol they're prescribing. So we looked at the doctors and they're trying to figure out where should we put our money. Should we put it in videos? Should we put it in brochures, posters on the wall? What made the difference?
Speaker 2:Why did these doctors have a lot of patients and why were they so successful at getting people to follow whatever they're prescribing? And so what we found was the average doctor in the session would talk. Usually it was 20 minutes and two minutes was really spent by the patient. The patient was usually over 55. They had a language barrier, they were stressed out, a bunch of other factors and the doctor would talk for 18 minutes. Wonderful, it turns out the doctors that were successful all used anatomical models, so they had this anatomical model. So it wasn't me talking to you or pointing something, it was here's your condition and this is what we're going to fix it. So we got Merck to go out and sell anatomical, give away anatomical models to all the doctors, thinking that that was the answer. But once we did this employee new manager thing we realized the anatomical model gave the doctor and the patient the opportunity to talk closer to the 50-50 golden exchange.
Speaker 1:Yeah, yeah, you see that You've been involved in systems to one way or another for most of your life, haven't you, Venky?
Speaker 3:Yes, and Steve, that you know, ron, that golden balance that Steve is talking about, I think we spoke about in our podcast in a few days ago, which is the importance of seeking to understand before seeking to be understood. And you know, value is exchanged in conversation too, not just, you know, when you know a product is exchanged for money and there's, you know, there's something that Nick has, I think, on his LinkedIn page Nick, I probably let you say it the saying about data. You know, everybody has bring data. I'll let you, you know, talk about that. But you know, in a conversation where you are truly curious, you are, you know, letting the other person have engagement. You know, present ideas, have discussions. You know, even to the earlier thread of discussion where you know there's company objectives and priorities and you just simply roll it out and you tell people that this is what we're going to do. They're more likely to do it if they understand that it makes sense, if they understand that there is personal value for them in doing that. So one of the things we do in the book is to talk about what value means to different people.
Speaker 3:If I'm a company enterprise, value is revenue, profits, reduced cost, productivity, all of that stuff. If you are an individual, value is financial reward, recognition, you have a better quality of life, all of that, have a better quality of life and all of that. And this very simple understanding. If it is a small group of people maybe it's a department within a company they're looking for a set of goals. That is a subset of the enterprise goal. So the enterprise, functional and personal value, if you are aware of it.
Speaker 3:And when you are talking to a vice president, you will be. And who's the vice president who is worried that you know he's going to make he or she is going to make a $10 million investment in the technology that you're selling to them and they're worried that you know if this fails, I'm going to lose my job. You want to talk to that anxiety and concern. You don't want to say, hey, you know I'm going to deliver these benefits, look at all this amazing value and not address that primary concern. No matter what, Nick, you as a senior director in this company, you're going to become vice president if this project succeeds. And then Nick is like, yeah, I want to do this. So, just, this is simple.
Speaker 3:This is actually not complex at all, but so much, so often in the conversation, whether it's between a customer and a vendor, or between two people working in a company or even in life in general, there is no clarity of value. Generally taking, as Steve, you said, either presenting opinions not backed by data or taking shots in the dark, saying maybe we'll pray and pray and one of these things will work, or you use authority to say, hey, this is what you would do, and then tomorrow, when it's not done, you don't even know why it didn't work. So a lot of value management again. You know the term sounds like it's a very sophisticated practice. It's about common sense.
Speaker 2:And it's just like you're saying, venky, that if you just ask somebody here's 10 things, what's most important to you, and weight them. We did this for one of the big hazardous waste companies and they were thinking it was a barrel the cheapest price at at the dock, when in fact the biggest concern was am I going to go to jail if someone in this line of handling dumps the toxic waste in some inappropriate place? So what they really were selling was keep me from going to jail. And yet the sales team thought they're selling barrels of processing hazardous waste off at the end of a dock. It was just, I mean, nice, good example. Yeah, yeah, like it was just.
Speaker 1:I mean Nice good example, yeah yeah. And the other side of that whole thing if we're very skilled at what we do and I'm going to put it into a sales context, it could be leadership management, whatever If we're really good at selling, the customer buys. We don't sell Right because we leave them in discussions with questions listening 50%. Yeah, there we go, that golden thing. And, nick, you're looking down that throat all the time. And your customers, the dealers? They're not even conscious of it until you expose them to it, am I right?
Speaker 4:I don't want to overplay what we do because you know it's easy to climb on the shoulders of greats and real entrepreneurs that are risking capital and these are tough decisions and I, you know, I can say I have the luxury if our team does of looking in from the outside. We see some huge chess pieces being moved. We're going to strip off some of these names not to be coy, but this is an example. We all know the data center spend is huge as a percent of construction. Let's say it's 3% of all construction spending. Give or take you can argue the numbers. We know it's going going to double, triple in the next few years. It's huge. The, the companies, um, at dinner with, uh, the gentleman responsible for I'm gonna say a large company and forgive me, just I'm stripping things out because it would be clear he's going to present to. He's one of two companies presenting to the call it the biggest creators of these data centers. The game is close to being locked up and if you have to radically cut your costs, you'd have to radically embrace AI. You know, steve Swarcastle, ron, your training programs, jay Lucas', bring in the Talent is. There are some major players who are, in essence, are going to control the growth sectors, at least for the near-term outlook. However, that's defined five, ten years.
Speaker 4:Data centers plus energy. The rest of the market that this person also addressed is extremely volatile, seemingly cyclical. Of course it varies by geography, but that market is incredibly price sensitive. We know there's a fair amount of. There's zero hour new equipment slash, used equipment being sold. There's a glut of inventory. The market is in a significant state of distress. So how do you plan for radical change? I don't know. I mean, I know they can be done with the three of distress. So how do you plan for radical change? I don't know. I mean I know they can be done with the three of you.
Speaker 1:Well, we've got to be careful. Radical change. I love the term and I call it revolutionary reform. Every single aspect of our life needs revolutionary reform. Every single aspect, continuously, and as we age, going from infancy to preschool, to grade school, to middle school, to high school, to technical school, to university, blah, blah, blah. Our perception changes, our needs change, our appetite changes, and then, in the midst of that, life interjects itself. Yeah, now we're back to the two people.
Speaker 1:You fall in love with somebody and and that begets other people, which is kind of it. All of a sudden, you need a house and now you got debt. Oh, wait, a second. I gotta get a car to drive to work, because I'm in the suburbs, because that's the only place I can afford to buy. Whoa, wait a second. Interest rates are too high. I can't do that anymore. So life becomes difficult and this radical change nick. The number of people on the planet that could conceivably create radical change. That's so few people. Look at Elon Musk by himself. Look at Charlie Munger, look at Jeff Bezos, look at, you know, sam Walton. I mean all of these guys are.
Speaker 2:It wasn't radical either. It took them exactly right Two years. And that's the. You know, when I was at the Air Force Academy, I said how come a lot of these innovations haven't been introduced in an aircraft? Because we were doing advanced aerodynamics, you know, we had the only really viable wind tunnels for the industry. So all the major scientists came out to the academy.
Speaker 1:Oh my.
Speaker 2:So you know Kelly Johnson, all the guys who were designing all the aircraft at that time, and so I can't remember who it was. But he said I said, how come it takes so long before this stuff is introduced? And he said, well, we have to wait till all the engineers die off before you could change. It takes 20 years, so you always have. I mean, it's shorter, that's what Bill Hewlett was saying. It's gotten shorter, shorter, that's what Bill Hewlett was saying. It's gotten shorter. But the technology itself, the idea of flexible manufacturing, existed years and years before that. It was just not implemented. It's the same thing. When I got into steel, the technology for continuous casting was developed in the United States back in 1954. And in the late 70s I researched this and I went out. I bought a bolt company and then transformed one of their plants into a continuous cast operation Kankakee, illinois and then went out and converted a bunch of other plants. We ended up taking over 25% of the rebar market in North America.
Speaker 1:That's not exactly a small step.
Speaker 2:But the technology was there in 1954.
Speaker 1:Yep, and my illustration on that same thing is from the steam engine to the electric engine, it takes 20 years for the generation of management to go away that are stuck in. The old and the younger people come in, and what I'm seeing today is this transition of leadership has been delayed by about 10 years. So people that would rightfully be leading companies today that are in a 60-65 range, 55-60 range they're leaving because their boss, the people above them, aren't changing. They're not going away, they're still in place.
Speaker 2:They're living longer, and also where you always had somebody that you're training, the apprentice type of approach, that's all gone. There's no entry-level jobs, so it's like bringing somebody up a silo and saying, okay, now you know how to load luggage, now go to the cockpit and fly this plane. You need a new book, thank you.
Speaker 3:Yeah, no, I mean, there is plenty of ideas in this room to share as a book. You know, steve, you reminded me of one of the many conversations either. In the technology industry, which has grown more rapidly than people can learn the ability to manage, people are thrust with glory and they get pushed to the top, and I'm not pointing a finger at anybody else. I, you know, partook of this. You know the fortune of being in the technology industry, and before I knew, I was a senior person in the company and I think I was too young to I wasn't ready. So my manager, who'd spent, you know, for a greater number of years, he said you know, congratulations, this is great.
Speaker 3:And you know the thing is, anybody who was in the right place at the right time could have gotten to where I got. That's really the honest truth. I'm not trying to be overly humble or modest, because I realized this. Because when my manager asked me, like hey, how many difficult years have you had in these 10 years, I said no, you know, it's all been. You know great, because the industry is booming. And so, you know, all of us and it's not just me, many others succeeded along with me as well. And he said you've not had the opportunity to grow with challenges. Right, you guys have been like pushed glory and, sure enough, the next 10 years was full of challenges and thank god I had the opportunity to learn, but yeah, and then you know, you learn all the lessons all over again, and you know you need a bit more of an open mind.
Speaker 3:But, steve, to your point, one of the conversations I had with a C-suite executive I was working with, I said you know, hey, what do you want from your leadership team? You know they're, all you know, working very hard and you know they seem to, you know, be passionate about what they do. She said, oh, you know my answer is going to be really boring, but I think it's the right answer. I need them to be general managers, and nobody's trained them to be general managers. Nobody's taught them the ability to coach, the ability to challenge their team, the ability to lead with priorities and teaching each other to say no to things that look very attractive to do but are not aligned with priorities and any number of things, and so it is lacking. In the technology world, you find a lot of people who are very creative, who are very productive, who can do a lot of things, build a lot of things, but expertise and leadership are two different dimensions.
Speaker 2:Also, entrepreneurs are not. So Ron and I, along with David Jensen and Reflective Performance, we've been looking at personalities reflective performance, carlson We've been looking at personalities and it turns out at least so far the research we've done it clearly identifies that to have a successful management team you have to have three people and they have to respect one another. One of them has to be the drill sergeant over my dead body. Is this going to be a change? This is the way we do it and just pounding away. Then you have to have somebody who's open to change, but generally that person cannot be the CEO because they're too eager to jump to the next thing and not willing to put in the structure to support it. The manager has to be in the middle.
Speaker 2:It's just as you're saying, keith, that you've got to have somebody who is a general manager that's open to change but also value structure and can integrate those two personalities and generally requires these three people. So when we ran this against one of the big dealers that Ron's familiar with, we said, okay, let's take the profiles of these management teams, the top five that we think and we'll take the top five performers as far as customer retention, stable accounts and a couple of other central metrics and we're five for five. It was 100% accurate.
Speaker 1:So let me put a bow on it there, because I think we're going to have people that need to go to the bathroom that are listening, and this obviously needs to be followed up again with another discussion. But I think everybody gets the idea that data is going to lead us to truth, the relationship that you have between the buyer and the seller is the critical element, and that you got to have everything aligned such that it all aims at customer satisfaction, such that it all aims at customer satisfaction.
Speaker 2:Did I say it right guys? Yes, and knowing what their expectations are and managing to that is critical, and that's where people miss.
Speaker 1:So, gentlemen, thank you very much. Thank you, steve Nick, and thank everybody who's been listening. I hope you got a lot out of it. Listen to this a couple of times, because there's a lot of content here. Thank you very much for attending and I look forward to having you at another Candid Conversation, mahalo.
