Getting Out of Neutral

What is the extent to which your company is interested in creating a discernable competitive advantage?

What is the extent to which your company is interested in creating a discernable competitive advantage? While you may not be able to answer that question directly (which is, in and of itself, a clue), ask yourself whether in the last six months you’ve received a message from management about: (a) Raising the bar in terms of some attribute of your firms offerings to the market or (b) Cutting costs, personnel, travel, overtime, etc. Chances are, the answer is (b). To be sure, cutting can be a good thing, particularly helpful if waste is involved. But fundamentally, that isn’t going to make you successful. Being waste-free and highly efficient doesn’t mean someone is going to want whatever it is that you’re producing with your lean production system. That is not what people buy. People buy products that appeal to them on metrics that are not always quantifiable. The cheapest product doesn’t always win. If it did, we’d all be walking around in some variant of burlap sacks with recycled tire sandals on our feet, eating some generic gruel, driving in something that isn’t greatly evolved from the Model T.

Successful companies pay attention to their costs. But that pay even greater attention to creating great products. And if it is necessary to spend a little more (or even a lot more) to get it right, then they get it right. If they screw up, then they fix it. Case in point in the auto industry is arguably BMW. And that argument is made with deftness and vigor by David Kiley in Driven: Inside BMW, the Most Admired Car Company in the World (John Wiley & Sons; $27.95). As Kiley puts it, “The companies with the best, most valuable brands don’t chase trends or bellow after customers. They remain true to what they are, and they attract people due to consistent trustworthiness and appeal.” To which I would add that they don’t attract all people—and that’s OK. Too often, companies are busy chasing everyone. While they may achieve economies of scale (which is driven by cost cutting), they may also have made their products so generic that there is a decreasing reason for someone to buy them. Economies of scale for what? While Kiley has evident admiration for BMW, there are some cases where things didn’t quite go so well, as is the case with the purchase of Rover (about which he quotes current BMW chairman Helmut Panke saying, “We made an extraordinary number of overestimations when we bought Rover.”). But all was not lost with the Rover adventure, it was not a colossal error: just think Mini.

Some people argue that the current 7 Series design is a colossal blunder, designer Chris Bangle’s bungle. On the subject of the 7 Series, Kiley quotes Panke as saying, in part, “And when you lead you don’t take everyone with you. There are those who don’t follow. But it doesn’t mean just because you don’t get everyone going with you that you stop leading.” Note that there is a forthright understanding of the fact that you’re going to alienate some people. What should probably be of greater concern to companies is when their product designs raise no passion whatsoever. Nowadays, there isn’t a whole lot of talk about “decontenting” vehicles. But I wonder: How much organizational decontenting is occurring? How many executives are trying to cut and consequently bland their way to success? And how many companies with the spirit, drive and focus of BMW are out there? My answers: Too much; too many; not nearly enough.