October 30th is the day that signaled the end of the sea change from a management style that captured the fancy of many industrial leaders. In its place the back-to-basics approach was reinstated. That is, when Jacques Nasser was fired, it was a signal that the industry returned to the fundamentals of building vehicles and would forego its efforts to follow the recently retired CEO of GE, Jack Welch. Similar to the boom of the 1980s, this industry spent the boom of the ‘90s expanding away from vehicles and into areas that sounded good to some, but which inevitably distracted from the ultimate challenge of building an extremely complex product. In what was a strange coincidence, the same day as the man who extolled the virtues of “e” and of becoming a “consumer products company” was let go from Ford, General Motors sold off one of the last vestiges of the ‘80s diversification drive, Hughes Electronics.
Under Nasser’s guidance, Ford Motor switched its focus from being a manufacturing company to becoming a “consumer company.” This was an obvious attempt by Nasser to follow in the footsteps of both the dot-com hype and the Jack Welch model. Unfortunately for Nasser, the dot-com phenomenon was a blatant hoax played on the country by a bunch of twenty-somethings (many of whom are now back living off their parents), and the Welch strategies may not necessarily be applicable to all corporations.
All the worse, it looks as though pipe dreams of some within Ford’s leadership took away vital focus from the thing that the company used to do so well: design, engineer, and build great cars. The company now sits at the bottom of the big players in quality ratings. There has not been a glitch-free launch at the company in recent memory. The Thunderbird, a car that could have re-established the company as a maker of good-looking, well-engineered vehicles, has become a sad joke among industry observers. Many within the company blame lack of focus by management for the collapse. I think it is critical for the company that one of the first things Bill Ford, Jr., said upon taking office was that the company would need to “get back to basics.” That’s both an important and hopeful statement of priorities.
It is well known that Nasser’s diversity mission had angered many within the company—and even brought a lawsuit against the company. Several years ago I spent time at a GM plant that was struggling with the launch of a new vehicle. Being on the floor with the people giving their best to deliver the vehicle shed some light in some of the problems faced by Ford. Many at this GM plant blamed the poor launch not on the ability of the people in charge of the launch, but instead on the brain drain created by the mass retirements that occurred prior to the launch. As they said, there were some bright people trying to do something they’d never done before, so how could they be expected to do it well the first time? Nasser’s diversity program has had a similar effect. The people in charge are likely to be capable, bright leaders in time, but many have little experience in delivering a vehicle. It is interesting that a few days after taking office, Bill Ford took steps to settle the age discrimination lawsuit.
The Hughes deal is an interesting contrast. Hughes was one of those ‘80s investments that seemed to develop a niche in the General’s portfolio—and seemed poised to become a supplier of a critical technology and knowledge for the companies move to alternative-powered vehicles. Hughes’ expertise in power electronics could have given GM an outstanding advantage over many in the industry that are struggling to gain that knowledge.
After several years of hearing about how the Detroit manufacturers wanted to be more known as more than a car company, it is refreshing to hear them talk about getting back to basics.