November 13, 2008

So is Jobs going to go run GM and build an iCar?

A 2006 Chevrolet Trailblazer SS. Photo taken a...Image via Wikipedia
Such is the question that Friedman is asking in this great piece if the us government should save detroit Op-Ed Columnist - How to Fix a Flat - NYTimes.com. The lack of money to do innovation is what is causing Detroit's demise that's what the auto industry is saying anyway. Not so Mr. Friedman says, it's just that they don't know how to innovate altogether. They should innovate less on the marketing gimmicks like 1.99$-a-gallon gasoline for a year and more on building fuel efficient cars for a start. Looking back it's not as if we haven't known about peak oil for a while, so it's inxcusable on GM and Detroit in general to not have been more serious about it. So it goes. On the other hand remembering the book Innovator's Dilemma it's logical why GM for example would not be more serious about fuel efficient cars. How so Fred? Well the theory of this book is that in most companies what drives innovation is the need of your customers, not the need to the blue ocean, the non consummers. So what - well existing customers have their own needs in mind, and GM's golden goose was SUV, and as such they innovated to sell more SUVs, because their consummers were demanding innovation in SUV. Had they stopped and looked at the non consummers of SUV, they would have found something else, potentially much bigger and better aligned with our time - but no they rode the wave as much and as long as they could. GM never made it to a radically new product because their best people were busy innovating on the product with an end in sight but making money the SUV. They never floored the pedal to the metal on the electric cars, or fuel cells because the SUV money was so good.
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4 comments:

adam hartung said...

Odd as your proposition sounds, that's just what is needed. New management willing to break out of the Lock-in that keeps the auto companies losing money. Read more at http://www.thephoenixprinciple.com

Frederic Boulanger said...

I agree with you Adam, and this is in fact what Friedman is suggesting to. Your write up is on the money.

Jason Mawdsley said...

I agree, GM, Ford and all the rest created bigger and better SUVs and trucks because that is what the customer wanted.

I remember in the 2006 federal election in Canada, pollesters were telling us that the environment was the biggest concern for the electorate. Too bad the electorate were buying trucks and SUVs like gangbusters.

No one predicted that oil would raise so far so fast, and when people were paying 1.30 a litre, they stopped buying big vehicles. Now gas is back below 80 cents a litre, I am curious what will happen to truck and SUV sales once again.

It is easy to see why innovation was focused on the trucks and SUVs, the trucks and SUVs were their most profitable line of vehicles for the North American manufacturers. People were buying SUVs for personal transportation or instead of "manhood destroying minivans" for taking the kids to soccer practice.

There are only 3 N.A. models of minivans right now, and yes, I destroyed my manhood with a Dodge Minivan. :)

Matt Hately said...

Having chatted with some folks that work in an advanced product dev lab at GM, I realized that one of the issues is not that GM is not innovating, is that their product lead times are so long. There's lots of innovation going on inside GM, but it's taking years to see the light of day. The new Camaro is shaping up to be an amazing car, but they are too late to the muscle car party - 5 years after the successful Mustang and 2 years after the Challenger. The Volt is exactly what GM needs right now, but they are running to catch-up with Toyota.

Having grown up around Motor City Canada (Oshawa), I sure hope GM pulls through. I don't agree with Friedman's idea that a bailout needs to come with new management - I think Lutz is the right guy for the job and is changing the culture for the better. I do think that the best case scenario for GM is that they come out this leaner, meaner, and faster.