Thursday, November 20, 2008

Reaping the harvest of the seeds we sow...

The economy continues to rear it's uglier side,and one of the actors in our unfolding crisis is the auto industry. Having been a victim of multiple layoffs in my career I definitely feel for the pain that the workers of the big three automakers are going through. But also seeing the incredibly self centered decisions management made in the companies that failed I cannot say it wasn't unexpected. Every day we go to work placing our faith in our bosses to act in everyone's interest not only their own. Sadly the auto industry in the U.S. seemed to be more focused on executive compensation, which then fed the anger of the unions to get their cut that in this critical industry we cut off our nose to spite our face. We milked old technologies for mega profits when the fashion lasted, but when the tides changed our muscles of innovation had become fat and flabby that they weren't able to adapt since they hadn't planned or prepared. Given that so little planning happened, a sense of justice seems to be to let the big 3 fail or consolidate.

Now contrast that to the car companies that are weathering the storm better are engineering cultures focused on making things more efficient in order to reap the higher profits. Is it any accident that the car companies that are doing well, their executives have much smaller compensation packages. It does bring into question whether more moeny means more quality. Not in this case. Toyota invested in hybrid technologies and is on pace to surpass GM as the largest auto manufacturer in the world, despite spending vast amounts on research and development. This old Forbes story on Honda's engineering culture is that some of the problems they focus on are not directly related to cars, but to reducing waste and hence reducing the impact on the environment. Consider the following:

Of all the bizarre subsidiaries that big companies can find themselves with, Harmony Agricultural Products, founded and owned by Honda Motor, is one of the strangest. This small company near Marysville, Ohio produces soybeans for tofu. Soybeans? Honda couldn't brook the sight of the shipping containers that brought parts from Japan to its nearby auto factories returning empty. So Harmony now ships 33,000 pounds of soybeans to Japan.

Wow, that's thinking of using things effectively. And it's not limited to Japanese companies. In Europe, German car companies have focused on making diesel engines more effective and environmentally viable. This different world view on the investment of knowledge and experimentation has led to better results.

As we enter a new era of leadership, we need to make sure that our definition of leadership is not too small. Innovation will come from a many time horizon way of looking at the world. The big three are asking for help, but without real change it's more of the same. It's time to invest in those that have proven innovation matters, and perhaps invest in foreign companies to build engineering and manufacturing in the U.S. Since in the remedies provided, I have not heard anything except platitudes, let's start finding companies who practice what they preach, before they are asked to be heard.


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