Auto-makers and Management Fads

In the thirty-five years since the first “energy crisis,” have Chrysler, Ford, or GM avoided a single management fad?

Have their collective managements through the years embraced of any single fad that led to sustainable improvements anywhere?

Now, it is true that many fads–and we are using that word pejoratively–contain useful recommendations and are consistent with effective and efficient management.  However, that’s only if such policies and techniques are thoughtfully applied to one’s particularly organization and situation, and that is a big, bold IF. 

Spending vast amounts of time and energy trying to get apply the inapplicable might be hard and expensive work and might require creativity and ingenuity, but it is almost always worthless, regardless of the satisfaction felt by completing a difficult project.

It’s our view that the thoughtful application of sound business policies and practices precludes the necessity for such fads in the first place.  A different perspective and specialized expertise are benefits that some consultants offer, but the wholesale revamping of only certain functions is usually myopic and often as senseless as fitting square pegs in round holes.  The fact that XYZ worked for firm RST in industry LMN means very little for firm ABC in industry DEF unless there are direct analogues.

Likewise, that fact that RST’s market value increased when it implemented XYZ means very little for firm ABC.  For example, one could ask: how were equity markets and industry indices moving in general during that the time of the implementation?  As we have all read many, many times, correlation is not causation, and correlation based upon a sample of one generally doesn’t mean much, either.

In every functional area–production, finance, sales, human resources–from quality circles and total quality management to supply-chain management and just-in-time inventories to process engineering–even robotics–to activity-based costing to EVA™ to knowledge management et cetera, et cetera, did the car-makers avoid or ignore a single one of them?    (We’ve actually forgotten many older fads or the list could have been longer.  We think that quality circles were after disco, but our memory fails.)

Were any faddish techniques thoughtfully applied?  Was the wheat, so-to-speak, ever separated from the marketing chaff? Did the success of the implementation (of a previous fad) preclude the adoption of a new one?  Were any of the programs true management innovations?

We wonder how much have the “Big Three” spent on large consulting firms that were marketing such fads and implementations during those thirty-five years?  To what benefit, and who measured the benefit?  The consulting company?

Was the downfall of the big three inevitable?  We don’t think so. 

Was the time to collapse lengthened or hastened by the purchase of those fads?  Could anything have been substituted for in place of those fads that could have provided longer, more persistent benefits?  Say, something like thoughtful, disciplined management with a solid understanding of the business of designing, manufacturing, and selling automobiles?

We doubt that one person could possess all of the requisite knowledge to master and directly control all operations and functions of a large auto manufacturer, but that’s not the point.  If senior management does not have the personal knowledge to design, build, and sell cars, then it needs the managerial knowledge and discipline to organize and control activities of those who do.  That’s not to be outsourced through a sequence of fads.

Without managerial knowledge and discipline, what hope–other than good fortune–does a firm, its employees, and its shareholders have to (1) avoid wasteful fads and other missteps in the short-term or (2) survive in the long-term?  This certainly seems to be true for firms with 60% market share in the late 1960s, and 50% market share in 1980, and 35% as recently as fifteen years, ago, and about 20% today.  (Of course, we’re speaking of GM, the big three still had nearly 60% of the domestic market as recently as 2003.)

What hope does a government bailout offer for institutions that have squandered so much?

Does anyone else imagine that Henry Ford is spinning in his grave?

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