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#40 – The Data Dilemma

by | Sep 19, 2016

During the mid-80s, the internet was changing everything at an alarming speed. IBM had introduced the first personal computer in 1981. The Domain Name System had recently been created using .com, .org, and .net. Apple had introduced the Mac and Microsoft the DOS. 


TMC in Japan, the Lexus Japan staff, Dick Chitty, and the service department all wanted the latest and greatest in technology to support the Lexus customer care effort. The commercially available dealership data systems at the time were from ADP, Reynolds & Reynolds, and UCS. Their systems were expensive and did not include many of the capabilities they wanted for Lexus.


Lexus wanted to have the first satellite communications system that would connect all Lexus dealers to each other and to the national office. The system would be similar to that being used by a very successful big-box chain of stores called Wal-Mart. National parts inventories would be provided to each dealer with the ability to exchange parts for quicker fill rates and overnight parts delivery for increased customer satisfaction. A national customer database would provide each dealer and all the Lexus area offices with the latest updated information on each vehicle of our customers. A complete maintenance history of each Lexus would be kept at Lexus headquarters, and this service record would be made available to all Lexus dealers in the country. A state–of-the-art electronic parts catalog and electronic service repair publications would replace printed manuals. In addition, Lexus would develop a national video capability to broadcast to all its dealers and field offices.


Hughes Network Systems, Inc. was selected to use its 1.5-meter Personal Earth Station VSATs to support Lexus’ integrated data and video transmissions. IBM had just introduced a new and expensive AS/400 computer that each dealer would need, as well as personal terminals and network capabilities in their dealerships.


I had reservations. Depending on the size of the store, the cost per dealer would range between $150,000 and $250,000. This would be a huge financial burden to place on new dealers starting a new franchise. Why not just tap into the present communications system being used by Toyota? I believed this was an unnecessary added cost, and there would be headaches. This new technology was expensive, often becoming outdated soon after it was installed, and there was no guarantee that the systems would perform reliably.


I resisted but reluctantly gave in to the data experts. I was partly right. There were headaches. The new system would have technical issues and was not always reliable. The supplier who we used to develop the electronic parts catalog had a contract with another automotive company, and our contract was declared null and void just four months before launch. Lexus data had to scramble and quickly partner with IBM to develop our own in-house system.


But I was also wrong. I failed to recognize the huge impact the internet was having on our business. The new database system would become the foundation for Lexus to establish itself as a leader in customer care. This data-video communications system would later save Lexus in its darkest hour.   


“If you scorn wisdom, you will be the one to suffer.” Proverbs 9:12 (NLT)



The repercussions from the visit Jim Perkins and I had at LexisNexis were being felt throughout the company. Team One advertising was disbelieving and frustrated. Scott Gilbert asked if he could go and try to reason with Jack Simpson.


(To be continued in “Round 3: Team One Stonewalled”)