Posted tagged ‘business malaise’

Automotive Sickness

April 26, 2009

The current drama, no it is a tragedy, that is playing out with the US automotive industry is extremely sad to see.  You may be reacting and thinking that these companies more than deserve their fates.  You may be thinking that the dinosaurs had their chance to evolve but did not.  In the past they sold lousy cars and ignored the new entries from Japan even though Americas were buying these “small and inexpensive” cars in volumes.

The sickness, I think, is more dangerous and wider spread than we would think.  I would described it as the combination of success coupled with management getting too full of itself.  Here’s how it works.  An earlier company management generation, through both hard work and technical or procedural innovation, gradually built the company into a position of success.  Time passes and a new generation of senior leaders take charge.  The fatal mistake occurs when these new leaders attribute their business success to their personal contributions without giving adequate recognition to the contributions of early management teams.  (You know, times have changed and new times call for new ways).

Unless the company is fortunate to have been built on rock solid principles and values which are centered on the customer and respect for all employees, the new management team will focus upon the need of shareholders and their personal wealth accumulation.  You can see this pattern in the desolation that once was the American rail industry and the American steel industry, as well as the current situation with the automotive industry, and large banks and investments firms.  (It is true that the banks and investment industries have been down this path before and may be chronically susceptible to greed.)

It is important to understand this illness because the good life Americans lead came from someplace.  If we forget, or loose the moral compass that leads to innovation and productivity, we will certainly seal our children’s future with the prospect of a lower standard of living.