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Monday, November 16, 2009

Detroit's Decline and Fall

by Rowan Gibson

Doorman TaxiIn March 2008, British Airways discontinued its decades-old daily service between London Heathrow and Detroit. Not exactly world-shattering news, you might think. But BA's decision was quite significant. They made it because passenger numbers had dwindled so pathetically low that the flights were no longer profitable. It's just one of a whole kaleidoscope of symptoms that signaled the Motor City's dismal decline. Then, Detroit's "Big Three" automakers were forced to beg for billions in bailout money to stave off bankruptcy (although Ford opted out). Yet, as far as I can see, not one of them seems to have a credible plan for long-term viability. All of which begs the burning question: How could such powerful car giants ever get in this sorry state?

Over twenty years ago, auto-industry analyst Maryann Keller wrote a book called "Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors". It recounts hair-raising stories of GM's arrogant excesses. One story involved a sales VP attending a regional sales meeting who insisted that his hotel room have a refrigerator filled with soft drinks. Since the hotel couldn't get the fridge up the stairs, GM's local people persuaded the hotel to take out the room's window and part of the wall, then use a crane to insert the fridge through the hole! Another story involved a junior GM staffer who was assigned to stand for ages outside a hotel in a snowstorm, just so he could be there to open the door for an assistant general sales manager who was flying in from Central Office. GM even bought one of the hotel elevators and blocked it off so that this manager would have his own private elevator to use. And, as if that wasn't enough, the kitchen staff was instructed to test his glass of morning orange juice with a thermometer because Mr. Important wanted it served at a particular temperature!

This was the kind of insane stuff that continued to go on while the Japanese were stealing percentage point after percentage point of GM's U.S. market share. Fast forward to today, and we found that the five best-selling automobiles in North America in 2008 were (in this order): the Toyota Camry, the Honda Accord, the Toyota Corolla, the Honda Civic, and the Nissan Altima. And, bailout or no bailout, the prognosis for Detroit was not looking good.

It seems the Big Three have taken an excessive, heavy-handed approach to almost everything they have touched over the last few decades. Including innovation. While Toyota, for example, took a careful, staged approach to building alternative powertrains (and scored big with its hybrid technology), GM famously blew billions of dollars on its massive but so far failed forays into electric and hydrogen-powered vehicles. In the late 1980s, Ford's top brass tried to push the company's engineers to be more innovative by setting up a high level "Committee for Creativity". Yet rather than making the cultural environment more conducive to innovation, this initiative actually had the reverse effect. When engineers were brought in to report to the committee, they found that they were being judged, criticized, and ordered to work on their boss's pet projects. It became just another example of the massive hand of authority imposing itself and intimidating people. Instead of fostering or facilitating creativity, the committee was trying to command and control it. No wonder the structure was eventually scrapped.

In 1994, I had a conversation with strategy guru Gary Hamel about the state of innovation in Motor City. His gripe was that 'there has not been one fundamental strategic innovation in the automobile industry in the last 40 to 50 years that has come out of Detroit'. A couple of years later, I related this to a former top manager at one of the Big Three. At first, his response seemed to contradict Hamel's view. He said, 'Rowan, some of the most important and innovative ideas in the auto industry came out of Detroit'. But then, with a look of deep frustration and despair, he added, 'Very few of them were implemented'. The reason? People couldn't get the resources, the investment and the support they needed to make their ideas happen. As The New York Times put it last year, 'GM's biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment.'

Of course, uncontrollable external events in the U.S. economy have rapidly worsened Detroit's woes over the past couple of years. But, let's be honest, the Big Three have been hemorrhaging billions of dollars for years. In 2006 and 2007 alone, Chrysler lost over $3 billion, Ford lost over $15 billion, and GM lost over $40 billion! Nobody can blame those numbers on the U.S. economy, because it was growing briskly for six straight years from 2001 through 2007, as were the sales figures of Detroit's Japanese and German competitors. Instead, the accusing finger is increasingly being pointed at the failure - particularly of GM - to successfully innovate; to continually come up with and commercialize new ideas (and new vehicles) that create meaningful value for customers.

GM candidly admitted this for the first time in a one-page advertisement that ran a year ago in Automotive News. In this open letter, entitled "GM's Commitment to the American People", the company frankly acknowledged that it had "disappointed" and sometimes even "betrayed" U.S. consumers with its lackluster products. Instead of innovating in response to shifts in the marketplace (come on, guys, the writing has been on the wall since the 1973 oil crisis, for crying out loud!), GM has been impossibly slow at adapting its cars to changing customer needs.

If, then, it's essentially an ineptitude at innovation that has driven Detroit's once-great industry leaders down the toilet, I would argue that companies of all shapes and sizes should sit up, take note and, more importantly, take action to make innovation happen inside their own organizations.



Rowan GibsonRowan Gibson is widely recognized as one of the world's leading experts on enterprise innovation. He is co-author of the bestseller "Innovation to the Core" and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.

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Sunday, November 15, 2009

Detroit, D.C.

by Steve McKee

Crysler and GM Perceived QualityNot a day goes by without more news about Detroit's beleaguered automakers. While each new development is notable in and of itself, I find it more telling to take a few steps back and look at the big picture.

Below are a few clips from selected Wall Street Journal articles I've run across over just the last few days. Take a minute and scroll through them. They tell a fascinating tale.

First, GM continues its inability to focus, revealing a growing lack of consensus between management and the board:

"In a dramatic change of course, General Motors Co. backed out of a deal to sell the company's European operations to car-parts supplier Magna International Inc., and now plans to spend billions to restructure the money-losing business itself."

"The decision...was made at a board meeting Tuesday in which the company's directors strayed from the plan of Chief Executive Frederick "Fritz" Henderson, who had spent months negotiating the Magna agreement."

"The Opel deal is the second major transaction to fall apart for Mr. Henderson in little over a month."

"Whereas Mr. Henderson's predecessor, Rick Wagoner, had often won in the boardroom by relying on the support of long-serving directors, Mr. Henderson appears to be tiptoeing through land mines of strong opinions by adjusting his game plan."

"Carl-Peter Forster, who worked for GM for more than nine years, is quitting as chief executive of GM Europe. The decision follows a vote by the company's board of directors on Tuesday to scrap a plan to sell control of the German Opel unit..."

"Despite his dissent of late, Mr. Forster was long viewed as a strong asset on GM's executive roster and his departure serves another blow to Mr. Henderson, who has seen his management bench shorten since the company's exit from bankruptcy."


Across town, Chrysler is making fairy-tale sales and market share predictions to try to convince investors (that means you, taxpayer) that it will repay the $9 billion it owes us by 2014:

"The company said it is counting on a slew of new models to spark a surge in sales over the next five years and drive its revival."

"Chrysler - which has seen its sales plunge by half in the last few years - predicted revenue will rise about 20% a year, from $42.5 billion in 2010 to $67.5 billion in 2014, and said it would break even in 2011."

"To hit its financial targets, Chrysler expects to double its world-wide sales, from 1.3 million cars and trucks in 2009 to 2.8 million in 2014, and predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014."


Meanwhile, Detroit's only private automotive company, Ford, has gone about regaining its focus, finding its nerve and sticking to its game plan.

"Last week Consumer Reports gave the company quality ratings comparable to those of Honda and Toyota."

"On Monday, Ford reported its second consecutive quarterly profit - and more impressively, a swing from a $7.7 billion cash burn a year earlier to positive cash flow of $1.3 billion in the just-ended third quarter..."

"The company gained a percentage of market share in the first 10 months of this year, no easy feat in an ultra-competitive market."

"The company's turnaround actually began three years ago with decisions that amounted to zagging every time that General Motors zigged, which was remarkable for a company whose strategy for decades was to follow GM."

"While GM kept its unwieldy assortment of eight brands, Ford sold Jaguar and Land Rover, cutting its brand lineup down to a manageable size."

"What's more, shedding brands and shunning the mortgage business has helped Ford focus on quality, where it had slipped badly early in this decade."

"Consumer Reports said last week that 90% of Fords, Mercurys and Lincolns rate average or better in quality, right up there with Honda and Toyota."

"When the economy recovers and car sales increase, Ford could be in great shape."


The automotive business is complex, but it doesn't have to be that hard. Focus, nerve, consistency, consensus - no matter the industry, all tend to diminish when growth stalls. And all are essential to getting it back.

At the moment, Ford is the only one of the Big 3 to be paying attention.



Steve McKeeSteve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

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Monday, October 26, 2009

Removing Risk from Bold Aspirations

by Rowan Gibson

De-risking innovationThe conventional wisdom about innovation is that companies should be less risk-averse. If this means they should try to increase their share of courageous employees who are willing to stand up and fight for ideas, then I would agree. However, when we move from the individual level to the corporate level, the challenge becomes quite different. After all, do we really think companies should be taking more risks? If anything, many firms have been far too willing to make big, risky bets on ventures that ended up losing billions of dollars - GM's ill-fated EV1 project and Motorola's Iridium phone are two examples that come to mind. I would argue, therefore, that the real challenge for organizations is not how to take more risks but how to derisk bold aspirations.

One way to do that is to work from the future back. At the outset, an innovation goal might be so big and outrageous that it almost seems impossible. You need to break it down into a stepwise migration path that begins to make the impossible seem do-able. Ask yourself: What is it going to take to reach that goal? What specific kinds of knowledge, experience, and skills do we need to acquire? And how do we stage our way there by building and acquiring these competencies in a sequential manner? Search for the last few steps needed to get where you want to go, and then fold the future successively back into the present, working out a series of realistic checkpoints for tackling these challenges one at a time.

An analogy I often use is John F. Kennedy's goal to "land a man on the moon and return him safely to the earth by the end of the decade." We may take it for granted today, but in the early 1960s that was an enormously bold aspiration which involved really huge risks. The only way for NASA to take Kennedy's ambition and make it reality was to stage the whole program in a series of mission-critical steps, working from the future backward. Through the Mercury program, followed by the Gemini program, and ultimately the Apollo program, NASA successively tested human spaceflight, earth orbiting, long-duration space missions, how weightlessness affected humans, how to dock two vehicles successfully in space, the Saturn V rocket launch vehicle, the Apollo command module (first in Earth orbit then in lunar orbit), and finally the lunar module. Along the way, they also created, tested and perfected a space suit that would allow an astronaut to get out of the pressurized landing craft and survive in the lunar environment. Only after applying all the learning from these preliminary missions did NASA launch Apollo 11, which put Neil Armstrong and Buzz Aldrin on the moon and brought them back safely back to earth, just a few months before the end of the decade.

In other words, NASA turned the "race to the moon" into a multi-stage experimentation process, de-risking it at every step, learning from the successes and failures of each experiment and consolidating the progress, all the time making the end goal less and less daunting.

It's the same approach many Olympic athletes follow when mapping out their four-year training path to a record-breaking gold medal. And it's exactly the same process you need to follow in business, when pursuing seemingly unattainable and potentially high-risk innovation goals.

Take, Toyota, one of the world's undeniable innovation champions. As Hirotaka Takeuchi, Emi Osono, and Norihiko Shimizu point out in their book "Extreme Toyota", the Japanese automobile giant has found that the way to achieve near-impossible goals is to "think deeply but take small steps" - breaking down a big goal into manageable challenges. This, for example, is how Toyota approached their hybrid motor project in the early part of this decade, eventually resulting in them stealing the show in environmentally-friendly cars.

What we learn here is that to achieve revolutionary goals, you need to take a series of evolutionary steps. That's an important way to minimize the risk associated with radical innovation.



Rowan GibsonRowan Gibson is widely recognized as one of the world's leading experts on enterprise innovation. He is co-author of the bestseller "Innovation to the Core" and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.

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Tuesday, September 15, 2009

Which is Heavier? - Car or Soft Drink Shipments?

by Stephen Shapiro

Last week I had a fantastic meeting with the CEO of a mid-sized energy company. We had a number of fascinating conversations ranging from Personality Poker, Open Innovation, and alternative energy.

In the meeting, I was drinking my "caffeine in a can" - a diet cola.

The CEO pointed at my soft drink and said that it was one of the worst energy hogs.

He pointed out that years ago, Coke was sold as syrup (in fact, it was originally sold for medicinal purposes). The carbonated water was added at the point of sale (e.g., the pharmacy or soda shop). Less energy was expended in the packaging process. Less material was used for the packaging itself. But more importantly, less energy was used in shipping.

After doing some digging, I found that, according to one website, 500ml of syrup makes the equivalent of 12 liters. That means that a can of cola contains <5% syrup and over 95% carbonated water. According to one study, nearly 300 billion liters of soft drinks are sold a year. Hoovers research shows that only 35% of that is from fountain sales.

Ok, so let's do some math.

A liter of soft drink weights approximately 1 kilogram. This means that a liter is over 2.1 pounds of water, and .1 pounds of syrup. At 65% bottle/cans (excluding the 35% fountain sales), this is over 400 billion pounds of carbonated water needlessly shipped with the syrup. Let's not forget the weight of the cans/bottles. To put this in context, this is the weight of 100 million cars. In 2007, 16 million cars, SUVs and trucks were sold in the US. Every car sold in the United States over the past 6 years weighs less than the weight of the excess water shipped EVERY year with bottled soft drinks.

Enough of the math. I could attempt to calculate the average distance the bottles travel and the amount of fuel required for transportation, but I just don't have the time. And I suspect you get the idea.

What do you do about it?
  • Of course advocates are trying to reduce the amount of soft drinks we consume. But so far nothing points to that being a successful strategy.

  • Encourage people to buy and use soda machines. There are several companies that provide this type of product. You buy the machine, the syrup and the gas cartridges.

  • Another option might be to find a solution similar to Crystal Light "On-the Go." The challenge is adding carbonation to a powder. While eating Pop Rocks Candy the other day, I realized that there must be a way of addressing this.

Crystal Light to GoOf course there are many more possible solutions. But the solution is not the point of this article.

Innovation is about asking better question. It is about surfacing the hidden assumptions. When looking at issues (environmental, business, or personal), sometimes you need to question everything...even the can of soda in your hand.

P.S. Soft drinks account for the largest percentage of the "liquid refreshment beverage" market. This article did not even include the oft-maligned bottled water industry, which is smaller in size. Do you want to know how far your bottled water traveled to go to you? Check out this article.

P.P.S. I am not suggesting we eliminate soft drinks. My consumption of diet cola - especially first thing in the morning - is one of my guilty pleasures!



Innovation and ImprovisationStephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

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Friday, July 31, 2009

When Innovation Fails

"Innovation can never be risk-free, but you can certainly make sure you look before you leap."

Ever since innovation became the buzzword du Jour, a lot of people seem to have lost their ability to tell smart ideas from stupid ones. Case in point: the financial "innovations" (read: stunningly stupid loan products) that kicked off the trillion-dollar economic meltdown mess we're currently in. The simplistic notion that "new equals good" has often been a recipe for grand-scale disaster, just as it was in the dotcom debacle at the turn of the millennium. And when the doo-doo inevitably hits the fan, it's all too easy to level the blame at innovation per se rather than admit to being a bonehead. Here's why many ideas that are labeled "innovations" are just plain stupidity.

Simply put, innovation goes wrong (sometimes big time) when an organization over-commits to an idea before validating the key assumptions on which it is based. Let's take the infamous sub-prime mortgage. The assumption here was that a jobless, homeless person who is just out of jail and doesn't even have a bank account can afford to make mortgage repayments of any description, let alone horrendously overpriced ones.

The idea of selling mortgages to poor people with bad credit was clearly "new" given that banks have traditionally offered 30-year, fixed-rate amortizing home loans to people who looked like they could actually pay the money back. But going after this risky, low-end market segment with a ripoff financial product wasn't exactly what C.K. Prahalad had in mind when he talked about "the fortune at the bottom of the pyramid." And it turns out - duh! - that this particular "financial innovation" wasn't a very smart one (to put it mildly), and even less smart when used as the cornerstone for a multitrillion dollar house-of-cards based on endless derivatives of derivatives.

It's precisely big boondoggles like this one that give innovation a bad name. In fact, columnist Paul Krugman wrote in the New York Times that "financial innovation" is a phase that "should, from now on, strike fear into investors' hearts." Yet should the financial services industry - or any industry for that matter - now decide to "throw the baby out with the bathwater" when it comes to innovation?

Absolutely not. It's worth remembering that over the last couple of decades, innovation has given us a string of success stories in financial services:
  • Charles Schwab's online equity trading

  • Commerce Bank's open-all-day, seven-days-a-week business model

  • First Direct's branchless banking

  • Grameen Bank's micro-credit lending concept

  • PayPal's user-friendly, online-payment service

  • Umpqua Bank's people-centered retail environments

The difference with these opportunities is that they were all based on very solid assumptions about the viability and sustainability of the business model; they were not built on proverbial sand. That's why these innovations have created significant new value and wealth, instead of destroying it.

Unfortunately, there are all too many cases where companies have overcommitted to an idea that wouldn't even pass the sanity test. These tend to be ideas where the customer benefit is unclear or unimportant to people, or where the technology is not yet up to the task, or where the market is just not there, or where the business model is so stupid that it's dead on arrival. Instead of first checking the validity of critical assumptions on which the idea is based, sometimes a company (or even a whole industry) decides to jump from 10,000 feet without a spare parachute, hoping against hope that the thing will somehow work.

Take Iridium, Motorola's failed satellite telephone venture, which was built on a fundamentally flawed assumption about the size of the target market. Basically, Motorola totally underestimated the speed at which cellular coverage would spread. Their premise was that there would be huge regional gaps in the global network - parts of the world that would have no mobile phone coverage for a long time to come. That would have made Iridium the perfect answer. It turned out quite quickly that those regions would be very few and far between (you would practically have to be an Arctic explorer to need an Iridium phone!), so the target market soon shrank to insignificance. This is something Motorola should have known better.

Or take Webvan, the "oh-so-dotcom" online grocery business that burned through a billion dollars and went belly-up. There was nothing fundamentally flawed about the idea of online grocery shopping, as a host of other retailers have since proven. Rather, Webvan's massive failure was based on a whole series of flawed and untested assumptions around the customer value proposition, the economic engine, the value of partnerships, and the product and service offering.

Business history is full of such examples: from Coca-cola's infamous "New Coke", to GM's all-electric EV-1 project (which cost a billion dollars and sold only 700 vehicles), to all those other empty dot-com business models in the late 1990s - like Pets.com - that quickly disappeared. The lesson from all these disasters is to look before you leap. A company should first reduce the uncertainty surrounding critical project assumptions before committing irreversible and non-recoverable resources to an idea. The greater the uncertainty surrounding these assumptions, the greater the risk associated with any new opportunity. Therefore, the focus of an innovation project should initially be on learning rather than earning. It should be on launching experiments to test whether a business model makes sense or not, or whether a new technology will work or not, or whether customers would value the new service, or what they would be willing to pay for it, or which product configuration would work best, or which distribution channels would be most effective, and so on.

Clearly, innovation can never be risk-free. But the process of validating or invalidating these critical project assumptions should stop you from ever completely misreading the basic economics of an opportunity. It will make sure that hubris never gets the better of humility.



Rowan Gibson is a global business strategist, a bestselling author and an expert on radical innovation.

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Thursday, December 18, 2008

Get on the Bus to Flexibility

Article on Innovation FlexibilitySnow in Seattle today. It will be interesting to see how many of my current clients make it to their office today. I for one am taking the bus and despite it being a bendy bus, it looks like it will manage to make it downtown. It had to go out and around a jack-knifed bus to make it up and over the bridge out of my neighborhood, but it made it.

Forecasters were sure we would get snow Tuesday night, but we didn't, nor did we get snow yesterday despite their predictions all day that we would. Snow didn't come to Seattle until last night. Most schools even announced closures based on these forecasts rather than waking up early to see if it had actually snowed. Forecasters blamed it on a "donut effect" meaning that the mountains to the west and east of Seattle took all the snow.

This Seattle snow fiasco is a good lesson in risk management. Is there really such a thing as 100% probability? While it is important to have a risk management strategy to protect yourself against events of low probability and high impact and every other combination, the key aspect of any such strategy is flexibility.

What if Costco or Nordstrom's had decided to close all of their stores based purely on the weather forecast? What would the unnecessary financial losses have been?

Flexibility is key. Flexibility in everything you do, from human resources to manufacturing to risk management. Without flexibility any strategy, policy, or process is doomed to have some snowless "snow" days.

Look at GM. Underinvestment in flexibility when times were good has left GM on life support and begging for money from the federal goverment because they only are capable of producing cars people don't want at a cost structure they can't sustain.

So when you are building any business or policy or process, look at whether or not you are designing it with the necessary flexibility.

After all nobody wants to get snowed under.

What do you think?

@innovate

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Friday, September 26, 2008

GM Followup - The Clouds Darken

As discussed in my previous post, GM is betting a lot on the Chevy Volt as a potential savior for the company. GM plans to deliver the Chevy Volt in November 2010.

However, yesterday, I came across two articles in the Seattle Times that cast additional doubt on whether the Chevy Volt will be the savior that GM thinks it will be. The first article was about how Chrysler is currently developing three electric or extended range electric vehicles for release in 2010. Chrysler did say however that it will probably only deliver one of the three vehicles on that timeline. But which one?

In a related article it was announced that Toyota plans to introduce a plug-in version of their Toyota Prius hybrid next year (2009), a full year before the debut of GM's Chevy Volt offering.

I had previously theorized that Toyota would get to market before GM, and now it looks like that will be the case. So, can GM still win if it gets to the publicly available plug-in party a year after Toyota?

What do you think?

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Friday, August 22, 2008

Ask the Consultant - Question #1

Brian Shields poses the following:

"Can you post/comment on what you think it will take to "fix" General Motors (GM)? I would very much appreciate your views on the subject."

Well, Brian, here you go:

GM has an extremely difficult challenge ahead, and continuing to follow Toyota will not get them out of the pickle they are in. GM lost $15.5 Billion last quarter and expect to bleed red ink every month for the foreseeable future. GM claims to be well capitalized and capable of operating through 2008 and 2009 without difficulty. However, GM's so-called conservative forecasts are likely to be optimistic as America's credit spigot is turned off and Americans are forced to live closer to their true means. The tightening of home lending standards will spread to auto lending standards (if it hasn't already), putting added pressure on auto sales. Finally to top it all off, GM faces higher than normal vehicle returns at the end of leases, with GM suffering losses in the resale of those vehicles.

So what is GM to do?

On the finance side they should, of course, continue to work to make themselves cost competitive with others producing on American soil and elsewhere, while also working with labor unions to identify ways to boost union worker productivity beyond what non-union workers are capable of. Reducing salaries is not the only way to reduce costs. For example, in an industry where most apparel is shipped over from China, American Apparel makes a tidy profit despite using American labor. Finally, I'm sure in their search to cut costs GM and others will continue to push the boundaries of what "Made in America" really means.

Operationally, GM should strive to endow all plants with flexibility as a core capability. Here Honda outperforms even Toyota (leading in part to their sales increases while others' sales fall), and GM would be well served to look at what Honda is doing and try to do them one better. At the same time, they should strive to endow all of their vehicles with modularity as a core capability. This will enable them to break out of the model year trap, and refresh their product line more frequently as improved battery (silver-zinc in 2009), engine, or hybrid drivetrain technology emerges from their design labs. Energy management hardware and software will become more important as the use of electricity increases, and vehicles should be designed to be easily updated as these key components improve. But where the real opportunity still lies in the auto industry is the part of the process that begins when a vehicle drives off the production line. Nobody has nailed that yet, so there is a huge opportunity to better optimize the sales channel.

Finally, on the design side, GM needs to enable customers to choose any vehicle with either their head or their heart (instead of just one or the other). Want a Chevrolet Malibu that gets good fuel economy, choose the head version. Want a Chevrolet Malibu that rockets off the line, choose the heart version. At the same time, trim levels should be sharply curtailed to limit manufacturing complexity, and design modularity should be extended via dealer-installed options and 3rd party partnerships. The end result for the customer should be easy, clear choices for most of us, and easy modification for those customers who require it. GM should consider creating joint production partnerships with 3rd party modification companies to enable GM to ship selected modification partners a mostly complete vehicle for them to customize, deliver, and warranty to the end customer.

Whether GM is up to the task, I'm not sure. I saw a Charlie Rose interview with GM CEO Rick Wagoner recently and I was disturbed that he felt GM should be able to charge a premium on the first round of Chevy Volts and that the government should subsidize it. The company has come up with a brilliant brand promise for the Chevy Volt, referring to it as a "fuel-free" vehicle at every opportunity, but it is really just a plug-in hybrid. Toyota has the lead here, having hybrid vehicles on the market since 2004 and plug-in hybrids nearly as long (through 3rd party mods like Hymotion), and will likely get its own version to market before GM. So, GM faces a stiff challenge, but they are moving in the right direction. They just need to push to get there faster and go farther, or they may come up short.

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