August 19, 2006
Planning For The 20th Century
Evidently, officials at Ford -- the company that yesterday announced drastic cuts in auto production -- have been working hard over the past several years planning for success in the 20th century through betting on cheap interest rates and low gasoline prices to support a product line featuring SUVs. We are, of course, smack in the middle of 2006. But, on Friday, Ford officials contended that "no one in the industry could have anticipated that gasoline prices would remain so high".
In the industry.
Or, did they mean, "No one at Ford"?
Actually, no one ought to be surprised by the Ford production cuts. They are a natural consequence of me too, inside the boxplanning aimed squarely at solving strategic problems defined through the rear view mirror.
The auto industry has been aware of the core dimensions of the shifting strategic landscape for well over a decade -- arguably two decades. These shifts are profound. They inevitably call for a fundamentally different business model -- one that demands innovation and deep, behavior and skill change. Those, in turn, have always -- always -- meant that the solutions would require trading off today's profits, shareholder value, jobs, benefits and salaries (both union and executives) for tomorrow's sustainability.
Those at Ford, GM and elsewhere have confronted the question, "Are we willing to take real risks -- risks that might upset the financial markets, the unions and our executives?"
"Or, can we somehow find a way toward a viable future through luck and incremental, deck-chair (I mean, parking spot) rearranging?"
These are not easy questions. The executives, unions and other decision makers deserve our sympathy for the difficulty they find themselves in. But in choosing the incrementalist approach, those involved have wreaked real world damage on tens of thousands of families and, in part, they have done so out of obeisance to shareholder value fundamentalism.
They have picked short term value over a blended values approach that includes, but does not worship as false idol, value itself.