Marginal: Fast, Fresh & Smart

What are the key ingredients for market success? Try those three.

When he was just two weeks into his job at Chrysler LLC as vice chairman and president, Jim Press, who was previously president and COO, Toyota Motors North America and senior managing director, Toyota Motor Corp., talked about “velocity.” About the need to make rapid changes.

When he was just two weeks into his job at Chrysler LLC as vice chairman and president, Jim Press, who was previously president and COO, Toyota Motors North America and senior managing director, Toyota Motor Corp., talked about “velocity.” About the need to make rapid changes. He said Chrysler is making over 200 changes to vehicles that are currently in production. Making changes to make them more appealing. To make them more oriented toward consumer wants and needs. To make these cars and trucks better. When’s the last time you heard about a company that is proactively going in and making improvements to existing products rather than waiting until there is some sort of scheduled refresh or overhaul? So far as I know, that’s a rarity in the auto industry unless the vehicles in question have some sort of catastrophic fault or giant warts or something—and even then it seems as though the changes are made but grudgingly. But that’s not sufficient anymore for companies that want to be competitive. And Chrysler wants to become more competitive.

(I’ve often wondered about executives who talk about reducing the time to market for their vehicles from the standpoint of how many of them have ever thought about reducing the time in market for some of these cars and trucks. To be sure, reducing time to market is advantageous from the standpoint of being at least somewhat closer to what the market actually wants which, ideally, means that they’ll be interested in buying the vehicle. But let’s face it: some products don’t pan out nearly as well as they are projected to, and by keeping them in market, companies have to subsidize their sales. It not only costs present money but reduces future revenue inasmuch as those vehicles essentially undercut the reputation of the brand in the market. Presently, most companies capacitize for an optimistic number and then buy the expensive tooling that is needed to produce that number. When the vehicle doesn’t sell they are, in effect, financially forced to continue to produce it in order to amortize the tooling. If as much time, effort and attention were paid to truly creating flexible, cost-effective manufacturing systems—including more economical tooling—there would be the wherewithal to get products out of the market faster.)

There is another form of velocity. Which is, in a sense, stopping, not moving. Or stopping to move. That is, I asked Frank Klegon, executive vp of Product Development at Chrysler, about whether there have been changes in their PD operations or methods since the company has new ownership and management. He said that they are continuing to using the stage-gate Chrysler Development System for PD, but that the difference is that when there is a meeting about a program initiation, the decision is made up or down: do it or don’t, period. This is said to be one of the benefits of a private equity ownership. By having crisper decision making, things can get done more quickly.

But it is not all about doing things now. Press said that they are looking at where “the market is going relative to where we want to go,” and that they are trying to “come up with not just a quick answer, but a long-term strategic vision of what the company’s portfolio should look like 5, 6, or 10 years from now.” Yes, this undoubtedly means the addition of products in marketspaces that may be growing, but also the elimination of products that either are competitive with other products in Chrysler LLC showrooms or that don’t fully reflect the brand image. (For example, one could well imagine the elimination of the Jeep Compass, as it isn’t exactly the sort of vehicle that one thinks about when one thinks “Jeep.”) Perhaps there is a certain advantage to having new people in place as they can provide a fresh perspective. Too often we all become acclimated to what we are doing and if it isn’t egregiously wrong, it generally feels right. This can be a trap in that we continue to do what we’ve always been doing, and the problem is that the rest of the world is changing and we aren’t. We can be working hard, smart and fast, but if we don’t consider the external changes, we are working our way into irrelevance. And we may be doing so posthaste.

Chrysler is an on-going interesting case study in organizational transformation. The design and engineering chops that the company has been known for for years may come to the fore, unleashed in a way such that the relevance and competitiveness of the consequent products are second to none in the industry. Which, of course, is what everyone hopes to do—don’t they? The difference here may be that there are fresh perspectives (Trevor Creed, senior vp of Design told me that Bob Nardelli, Chrysler chairman and CEO, has asked some very customer-centric relevant questions about product designs: while many of us in the industry are all hung up on the importance of “car guys” in the industry, we sometimes forget that the market largely consists of people for whom cars and trucks are not the center of the universe and car companies that overlook that do so at their peril).