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Auto Industry “Problem” – Revisited

So what about the auto bailout?President-Elect Obama keeps stating this cannot be just a financial bailout but a solution that includes fixing “the problem”. Unless I have missed it, there appears to be little agreement on what is “the problem”. What do you think the probability of success will be when there does not appear to be an agreement to what the problem is, there is significant political grandstanding and an unrealistic time frame? The scary part is that at least General Motors understood the problem back in the early 1980s and spent billions of dollars attempting to solve the problem. It is ironic that the proposed solution is now a candidate for elimination.

In the mid-1980s General Motors started a project which I was lucky enough to work on as a consultant.In abbreviated terms it was to reinvent the auto industry or at least General Motors and how they would go to market. The key problems that management had identified were the changing marketplace and competing against smaller Japanese imports. In essence we were solving for what would be ideal mass consumer car of the future, how should it be built (where geographically, next-generation labor force, utilization of technology) and most importantly how should it be sold. It was on this last point that I had the opportunity to offer input.What was interesting was that the innovation team for sales and marketing could not see the product.This was to be all about finding a way to more successfully fulfill the consumer’s need. Remember we were addressing what the ideal would be.

If it is not apparent, this project was the conceptualization of what became Saturn. After looking at all the competition, segments and subsegments of consumers and doing our best at ignoring history and conventional wisdom we were able to identify some opportunities to work against.Women were being summarily ignored and ill treated at the dealerships.While some consumers thought you had to haggle on the price of cars many did not, especially women.Single women and first-time buyers (primarily women) would be a growing potential cohort.How cars were sold at dealerships only added to complexity and cost.Clearly there was a big opportunity to change the sales and marketing of automobiles.

While it is now shocking that Saturn is being considered for elimination that is not the issue.But it would be nice if somebody went back and did some analysis on why Saturn went from being the innovator in the automobile industry to just another unprofitable car brand?Someone should find and talk to Don Hudler who was the head of sales and marketing and the true innovator at the time.It would sure be nice to know what he thinks after having fought the war to try and fix “the problem”.The press has reported over and over again that the “Saturn solution” was a money-losing venture and always would be.Would it not be valuable to learn something from those lost billions of dollars? Especially before we invest more.

Listening and reading all of the rhetoric about accountability and the need to reinvent the automobile industry only talks to after-the-fact metrics and totally ignores any consideration to what needs to be done.Developing a reinvention plan requires the combination of analytical rigor with creative thinking.Why is it that Congress appears to be so dissatisfied with the “plans” that the automobile manufacturers have offered up?The answer is actually very simple; Congress got exactly what they asked for because they didn’t know what to ask for.Had they asked, what would the ideal American based automobile industry look like in 2018 and what would we have to do to get there, they would have gotten a very different plan.

From my limited exposure to the automobile industry which consists of working for two GM brands some time ago, one being Saturn the other Saab, I would suggest with confidence that more than enough information exists that would allow for the analytical rigor and creative thinking necessary to answer that question.If I were President-elect Obama, my request would be for an innovation team to determine what does the ideal industry look like.This team would consist of industry experts inside and outside the automobile industry as well as some people who have the proven skills to contribute to finding a solution.There are many companies that do this every day.The processes and skill sets required are proven.From experience I would guarantee a solution to the “problem” and it could be achieved in no more than 30 days.

Is it not about time we started to ask the right question and spend our money on a solution with a higher probability of success?

My associate Kevin Hoffberg has some additional thoughts worthy of consideration.

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