Data is the New Oil…or Soil
Blocking & Tackling
“Data explosion” is not too strong a term for the heavy-duty parts and service world today. The cosmic quantity of data being collected somewhere by someone doubles every 18 months.
Though immense, the only value this abundance of data has to your business is if you can capture what is relevant to create sustainable service separation – actionable information is different than data.
The old days of just accepting customer problems and thinking this was the independent distributors’ competitive edge are gone. This thinking has condemned the bottom 90 percent of heavy-duty distributors to make about one-sixth the pre-tax ROI of the top 10 percent.
Those 90 percent undoubtedly are working hard, but with flawed, unexamined success assumptions that leave them undifferentiated price-takers.
Meanwhile, the other 10 percent are not working six times harder. Using data, they work smarter at achieving and selling the best total service offering, tuned for one customer niche at a time.
The poor profits of the 90 percent are frustrating to all stakeholders. Shareholders in privately held companies are locked into a lousy investment, especially the minority owners. Meager reinvested profits can’t finance growth expectations.
The cycle repeats itself time after time. What’s the solution for the troubled 90 percent? How can a mediocre company become a champ while looking into the teeth of a recession?
There are several steps:
Get the right people – “A” people who can do “A+” work. It should surprise no one that with mediocre people, no strategy works.
Pick a strategic focus with which you can dominate your marketplace.
Generate a “stop-doing list” of projects that includes products and services that don’t fit the new plan focus.
Pick, promote and pursue values that your best people can get passionate about.
Determine the key economic metrics that will drive the entire organization.
Also, don’t make the biggest gaffe of them all – the ‘Do Better Program Du Jour!’ Great turnarounds I’ve worked with didn’t have one big transformational moment or formal change program. Instead, they all tired of being mediocre and evolved a new framework of success assumptions along with a data-focused strategy.
“Trying to save your way to a fortune will not work.”
In boom periods, it has been common to take up to four years to get everyone’s support. In an extended flat spot like that plaguing some truck parts and service markets, we can’t stop to change; it has to be done on the fly. Here are some specific ideas to utilize the five guidelines above:
To get the right “A” people, find the hidden ones who are already on the job! Are there some employees who have “A+” hobby energy and economic savvy that they are leaving at home? How do we induce them to turn it on in the shop? Create an environment that forces the people who can’t fit into a high-performance culture to weed themselves out.
To attract and keep your “A” people, you have to pay premium wages. Premium wages can only be afforded through premium productivity per employee. Premium productivity can only happen if every employee’s heart, mind and wallet are wired into the right success assumptions and productivity transformation plays.
Heavy-duty specialists are going to have to become much more customer-niche focused. Tune the total service offering to not just different niches, but different strata of customers within a niche. Every employee will have to know and strive for perfect service metrics for each niche, as well as be empowered to routinely make outstanding service encounters.
On the stop-doing list, identify the shape-up-or-move-out customers on which you lose money. For some companies, this can be 30 percent or more of their customer base.
How can a mediocre company become a champ even during a recession?
Values that heavy-duty parts and service employees can get passionate about? Try these: achieving, selling and getting paid for performing their best everyday; growing their value, wages and future career prospects; and being on a winning team where everyone respects and helps one another.
The economic number that will drive the transformation to high performance is net profit dollars generated annually per full-time employee.
How many of the 90 percent are tired of being mediocre and are willing to consider embracing a completely different analytic for success? Tough economies can be the best time to get all stakeholders to consider doing things differently.
Continuously trying to save your way to a fortune will ultimately not work.
Cutting back and working harder with flawed strategies and assumptions isn’t an option for long-term survival, just long-term frustration. Data-based plans are far more likely to have the right vision, tactics, tools and realistic economic assumptions.
And the bank will like them better too. n
Bill Wade recently has published a new book titled Aftermarket Innovation. He can be reached at www.wade-partners.com.
The views expressed in the Guest Editorial are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of Truck Parts & Service magazine.
