One of the problems with the auto industry is that there tends to be an internal obsession. A tendency to look within. To do what the other guys are doing. Consequently, each company (I’m talking mainly here about the Big Three) follows the others. The argument sounds sound: “They’ve done X. We have to respond with X+.” Not that X+ is necessarily good for the company. But something must be done. Why that “something” tends to be nothing more than a variant on what the other guys have done and not something original is the question. “Lack of imagination” is an answer that presents itself. But I think that’s not it. There’s plenty of imagination in the industry. There’s just not a whole lot of application of imagination. One of the arguments that’s made for this risk aversion is that the stakes are very high. Make a mistake, and you’re talking about millions of dollars. And lots of jobs. So it is better to follow in the path that’s already been started than to venture out in a new direction.
In effect, it is like the old “Nobody was ever fired for buying IBM.” Which brings to mind a time in recent history where the Powers that Be—and in some instances, that verb should be in the past tense (i.e., “Were”)—looked elsewhere for ideas. They looked south, to Texas. To what Michael Dell, the man who started a company with a thousand bucks and a hell of an idea, was up to. They looked at the returns of investment (e.g., by 2000, Dell was selling $50-million per day on the Internet—per day, and no dealers). For some people, words from Dell’s presentation at the Economic Club of Detroit in November 1999 echoed in their ears: “There used to be value around inventory; now there’s value around information...Most businesses tie up a tremendous amount of assets anticipating things that may not actually happen.” And those auto execs thought about the assets that they had not only sitting unsold on dealer lots, but all of the should-be-in-process inventory that was sitting in their plants. As time went on, the Dell build-to-order model became the envy of Detroit. Direct from Dell was more of a bible than The Machine That Changed the World. People wanted to Be Like Mike. But for whatever reason, they were more likely to become like Michael Jordan than Michael Dell: and face it, most of them didn’t have game.
I’d like to suggest another place that the auto industry should look for some fresh thinking. Wal-Mart. Don’t scoff. Realize that it is the #1 company on the Fortune Global 500 list. GM is third; Ford fifth; DaimlerChrysler seventh. It is not a stretch between the premier discount retailer on the planet and the vehicle manufacturers—especially now that discounts and cash-back seem to be the primary approaches to the business taken in automotive. Here’s a clue about how Wal-Mart went from nowhere—OK, Bentonville, Arkansas (actually, the first Wal-Mart was established in nearby Rogers)—in 1962 to the top. As Robert Slater writes in The Wal-Mart Decade: How a New Generation of Leaders Turned Sam Walton’s Legacy into the World’s #1 Company (Portfolio; $25.95), a book that belongs on every exec’s bookshelf in Detroit, Dearborn, and Auburn Hills: “It is often noted that every retailer has essentially the same things: four walls, the shame shelves, the same merchandise, and the same colors. But where retailers differ from one another, where some excel and others fall down most ingloriously, is in the attitude the organization takes toward its customers and employees.” More concentration on that would serve this industry well. If you must copy, copy from the best, not the guys down the street.