THE GREAT AMERICAN AUTOMOBILE HARVEST

It is amazing to watch the three automobile CEO's sit before Congress and ask for the Federal Government to save them. The American Automobile companies are a classic case of a HARVEST strategy, which in simple terms they have sold off market share over several decades, reaped handsome profits and then collapsed.

Each of these three companies were once led by visionaries and strong leaders.

• Alfred Sloane was the leader in market segmentation and providing unique brands and autos for each segment. He led the idea of market migration...the first buyers purchased a Chevy, then migrated upward to the ultimate a CADDY.
  
• Henry Ford was the low cost, manufacturing genius, introducing the assembly line and offering one color BLACK.


• Chrysler focused on product innovation and differentiation and introduced many new ideas and concepts.
  

Each of the companies prospered until the early 1960s, when they all assumed that there would be FEW automobile companies and they could compete against themselves and ignore the new comers, Japanese automakers. In fact they allowed the Japanese to take control of the small, economy car segment because its margins were lower than the big, gas guzzler segments.They all moved to a manufacturing strategy and ignored the markets and the trends. They sacrificed quality and innovation for lower costs and then gave away the shop to the UNION, providing unreasonable benefits and increasing salaries. They sold the same cars under different brands and downgraded the quality of the high end, prestige brands, like Cadillac, Lincoln and Chrysler.

All of these companies instituted "cookie cutter" manpower and educational systems, so that all of the candidates looked alike and were "automobile" men.

Further all of them divested their non automobile subsidiaries to focus on just automobiles. For instance, General Motors sold its Frigidaire appliance business, its ALLISON division, its locomotive business and so on. All of which were market leaders, but didn't fit the automobile mentality

The reason that it has taken decades to put these companies on the edge of collapse is that they had very large share and were so big. It takes time to harvest giants, but ultimately they meet the same fate of smaller companies, they go out of business. This is the point they are today.

I have mixed emotions about whether to save them or not, but I do think that all of the current leaders, the company's Board of Directors SHOULD RESIGN now... but the problem is that because of their COOKIE CUTTER development systems, it is unlikely they have replacements that can do the surgery and competitive/ market based strategic thinking and development requried and unfortunately it has been demonstrated that bring in outsiders doesn't work either.
Further it is difficult to do creative strategic thinking when you are in the EMERGENCY room and just trying to stay alive. Strategy MUST Be DONE when you are healthy and have options and not when you are trying to survive.Sloane, Ford and Chrysler must be turning over in their graves.

Bill Rothschild, author of the book that shows why GE is different and hopefully will avoid the same mistakes as the Automobile companies...THE SECRET TO GE's SUCCESS and PUTTING IT ALL TOGETHER - a guide to strategic thinking and decision making.