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enzl

Outsiders & Detroit

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Good read! His perspective on outsiders is accurate IMO: Looking at a company as a set of assets that either perform or are to be sold/discontinued is what should be done, and these outside executives will do it because they don't have as many constituencies to answer to.

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So is that the result of what Japan Inc has brought to the auto world: customers and brands reduced to sales charts and binary codes?

Yet perhaps more than any other purchase, an automobile purchase is emotional. If there is one thing that Detroit (particularly GM) forgot in the '90s, it is that. There has to be an emotional connection between the buyer and the product. If one is merely buying a toaster, then who cares what color it is, whether it is attractive or not, or even if it lasts a long time (since it is about $35)? Perhaps it is because GM tried to run the company buy committee that it failed. When times were good, Wallstreet ignored Detroit. Now that times are bad, the tail is wagging the dog.

I'm not disagreeing with the author, I'm only pointing out that as companies grow too big and try to pigeon-hole the customer (as well as employees), they do so at their own peril. There is a certain amount of magic to the car business as there is science.

The Henry Fords and Walter Chryslers understood that.

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ah, you know, consumer electronics went this path.

dumb down the product and sell it cheap. don't go to specialized.

just market and sell it in many packages, in many places, and make sure its cheap enough so the inventory turns fast enough until they throw it away and get another. make it so we can make it anywhere, and produce it cheap. take the shortctus needed but make sure those ads are hip and glossy.

seriously, there are no audiophiles any more, and soon we'll have been stripped of carphiles too. the ecobangers, liberals, greenies, government, and car companies themsleves will make sure to reduce carmaking to sales charts and lowest common denominator. Cars as emotional investment will go away.

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So is that the result of what Japan Inc has brought to the auto world: customers and brands reduced to sales charts and binary codes?

Yet perhaps more than any other purchase, an automobile purchase is emotional. If there is one thing that Detroit (particularly GM) forgot in the '90s, it is that. There has to be an emotional connection between the buyer and the product. If one is merely buying a toaster, then who cares what color it is, whether it is attractive or not, or even if it lasts a long time (since it is about $35)? Perhaps it is because GM tried to run the company buy committee that it failed. When times were good, Wallstreet ignored Detroit. Now that times are bad, the tail is wagging the dog.

I'm not disagreeing with the author, I'm only pointing out that as companies grow too big and try to pigeon-hole the customer (as well as employees), they do so at their own peril. There is a certain amount of magic to the car business as there is science.

The Henry Fords and Walter Chryslers understood that.

The success or failure of any business, at any time and anywhere, translates into 'sales charts and binary codes'.

Regarding the emotional element, on a purely personal level I see and feel the same as you. But what I also see is that for most people safe, reliable and inexpensive transportation is just what they want, nothing more and nothing else. Where Japanese OEMs have succeeded is in recognizing and catering to those basic needs.

EDIT - to add something, it is in offering good design (i.e. reconnecting with that emotional element) on bread-and-butter cars that I see American OEMs' chance to win the game.

Edited by ZL-1
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I believe we are starting to see Big Business (and Big Government?) hit the proverbial Law of Diminishing Returns. As more and more MBAs try to justify their jobs (and cover their asses) by impressing everyone around them with pie charts and graphs, less and less work is actually getting done. There was a time (when America was successful, BTW) that engineers, entrepreneurs and other mavericks ran the country. Now, we are being strangled by red tape, BS and pie charts.

Why make a decision when you can send it off to a committee? How about we have a meeting tomorrow to discuss our next meeting? Let's text each other because I'd rather not have to deal with you face to face. You're getting two types of executives: 1) the type who tries to control everyone by having them file endless reports about every second of the day they breathe or 2) the type who wants to sit on the end of their dock at the cottage and run their company by remote. Neither type of executive is very productive.

Another mistake big business makes is consulting other management. Every time I see any big shots from Oshawa, they are always consulting with the dealer pricipal, General Manager, etc. Who says these guys have a clue what is going on? When was the last time they talked to a customer, other than maybe one who was threatening to sue? When I was managing stores for Rogers, I declared to my Zone Manager that if he wanted to really know what was going on at the store level, he needed to take the assisant managers out for lunch - they did all the actual work, and since they didn't get moved from post to post, they knew what actually worked and didn't work.

No Big Business prefers to surround itself with its own kind. I guess that is a natural human tendency. You are never going to learn about reality by mingling only with your own kind.

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I believe we are starting to see Big Business (and Big Government?) hit the proverbial Law of Diminishing Returns. As more and more MBAs try to justify their jobs (and cover their asses) by impressing everyone around them with pie charts and graphs, less and less work is actually getting done. There was a time (when America was successful, BTW) that engineers, entrepreneurs and other mavericks ran the country. Now, we are being strangled by red tape, BS and pie charts.

Why make a decision when you can send it off to a committee? How about we have a meeting tomorrow to discuss our next meeting? Let's text each other because I'd rather not have to deal with you face to face. You're getting two types of executives: 1) the type who tries to control everyone by having them file endless reports about every second of the day they breathe or 2) the type who wants to sit on the end of their dock at the cottage and run their company by remote. Neither type of executive is very productive.

Another mistake big business makes is consulting other management. Every time I see any big shots from Oshawa, they are always consulting with the dealer pricipal, General Manager, etc. Who says these guys have a clue what is going on? When was the last time they talked to a customer, other than maybe one who was threatening to sue? When I was managing stores for Rogers, I declared to my Zone Manager that if he wanted to really know what was going on at the store level, he needed to take the assisant managers out for lunch - they did all the actual work, and since they didn't get moved from post to post, they knew what actually worked and didn't work.

No Big Business prefers to surround itself with its own kind. I guess that is a natural human tendency. You are never going to learn about reality by mingling only with your own kind.

these are the people that need to be brought down a couple notches so things can get done in this country. let's start by whacking their exhorbitant pay.

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I think one of the big problems with Detroit is simple and that the same issue affects most publicly owned companies in this country:

Decisions seem to be made on the basis of making the shareholders happy, not necessarily the customer.

Even though making the shareholders and customers happy shouldn’t be mutually exclusive, they seem to be treated that way in Detroit. I think that is caused by two things:

- Americans are impatient investors. Much like everything else in American life, we want instant gratification and need results immediately. The Euro’s and Japanese have traditionally been much more patient and been willing to see short term losses provided there was a clear plan to get to long term gains.

- American companies have been a bit arrogant and blind to the impact globalization would have. This has obviously caused some hits to the bottom line and led to very shortsighted thinking to boost shareholder value without addressing long standing issues and long term profitability. They’ve been basically fighting a bunch of little fires all around them instead of putting out the big fire right in front of them.

It should be interesting to see how Chrysler does now that they are “privately” owned.

The customer should come first! You can't add shareholder value without customers. It seems simple. I guess the key is how do you make the customers happy and remain profitible? It shouldn't be too hard. Other companies seem to do it.

Edited by 2QuickZ's
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