Can We Learn From the Big 3?

Friends,

If you have heard me speak, or read my book (a great, well, a different Christmas gift for your favorite leader), you know that I believe that without vision and communication leadership is doomed. Boy have we seen that in the ongoing struggles of the Big 3 in Washington! What congressmen, journalists, and others have uttered as “obvious” and “well known,” and “everybody knows” about the Big 3’s weaknesses have often times been remarkably false.* “Gas-guzzling, shoddy cars that no one wants.”

Here’s the factual record from the past year:

 

Consumers Report put Ford at the top of their list for the number of “top safety picks” – with sixteen models. Toyota and GM had eight.

 

JD Powers’ 2008 “survey of initial quality” ranked Porsche as the only 5-star. At 4-stars, Mercury was tied with Mercedes, Infiniti, Lexus, and Toyota. Next behind: Ford, Chevy, Pontiac, Lincoln all tied with Acura and Honda. What were the top 3 quality cars? Chevy Malibu, Mitsubishi Galant, and Ford Fusion. Is there really a huge quality gap?

 

The # 1 selling vehicle in America? Despite the truism that American automakers “don’t make products that consumers want,” The Ford F-150 remains the best-selling vehicle not just in America but in the world.

 

Motor Trend’s Car of the Year? Cadillac CTS.

 

While Toyota has 8 cars that average 30 mpg or more, Chevy has 7. The 2009 Malibu Hybrid gets nearly 40 MPG. While GM, Ford, Honda, and Toyota ALL introduced hybrids in California in the late ‘90s, it wasn’t just GM’s EV1 that was taken out of production: They all failed commercially and were retired. “What consumers want” – which congressmen and coastal journalists speak of as though it is as obvious as the faces on Mount Rushmore – remains mightily hard to name with any precise foresight.

So, here’s the point: Perhaps the greatest failing of – and greatest challenge for – domestic automakers is their inability to articulate clear, factual and relevant messages. No wonder they’re in the trouble they’re in when people are still thinking they are building the cars of the 80s. Of course there’s plenty of room for improvement, but there is clearly a monster gap between perceptions and realities.

And, here’s the message for us “everyday leaders”: How do WE get our messages out in what someone called a “culture of permanent attention deficit disorder?” (my own ADD prevents me from quoting that person by name). For instance, what’s the central message you were trying to communicate to your kids and staff this year? What is the core message going forward? Can you say the central facts about your organization’s identity (e.g., the Michigan government is about excellence, integrity, teamwork, and inclusion)? Can you put it on a matchbook? Do you have a core message for your children or grandchildren about the value and meaning of these holidays? Or could they miss the point and miss the facts, just as the vast majority of this country has done when it comes to the last 15 years perceiving the domestic car business?

With all the noise out there, think: post-it, note card, matchbook. Keep it simple, repeat it a lot, and

Lead with your best self,

Dan

26 responses to “Can We Learn From the Big 3?

  1. The Big Three’s sins have not been what kind of cars they’re building, but their resistance to accepting the public’s desire for more fuel efficiency, their bloated pension plans and their tone deafness.
    When the president of a failing company defends his $21 million salary, it hardly matters howo good his product really is.

  2. Dan,
    I don’t think that the American public has perception # 1 being related to quality and fuel mileage ratings. I think it is better equated to upper eschelons reaping inordinate compensation (but heck, just like Wall Street and profssional athletes; EGOS MUST BE FED), closely followed by the UAW’s stranglehold on effective (cost and efficiency, right along with moral ethics….I’ll extrapolate on that from my first hand experience as a Chrysler employee/UAW member)and reasonable expectations and job productivity results.
    I worked at a large regional Chrysler distribution center. I was a stockman, in ordinary terms, I put parts into inventory bins throughout our very large building. Th UAW had “negotiated” with management to accept a level of productivity as being sufficient that, on any given day, I could reach my “quota” within four or five hours. If I continued to work diligently (I’m NOT talking about running around like a madman on amphetamines either!) throughout the day, expanding the “accepted” productivity margins by any considerable count, I was chastised by the union rep. His advice to me was to make myself scarce, in ways such as, “go find that safe place in the upper storage bins where there has been made a clandestine lounge/sleep area, or go into the bathroom, put a few layers of cardbard over a commode, grab a magazine or newspaper, and kick up your feet and relax……”
    It is precisely those two aspects of the Big Three, aligned with the UAW that gives the public, along with Washington D.C. politico/collusionists, a desire to not give them a handout. As the saying goes, you only get one chance at making a first impression……the three individual corporate jets landing at Reagan Int’l Airport a month or so ago, along with empty hands (palms up) instead of a detailed plan for recovery, IS that first and lasting impression.
    That said; as a patriot, I have always driven a Ford truck, and a Harley Davidson motorcycle…..for better or worse….sort of like a marriage vow.
    On a larger scale, the country, consisting of Main Street Joe Citizens are tired and angry over the socialist bailout plans directed at, for the sole benefit of…… the rich and infamous…….at the txpayers expense, without any benefit relationship.

  3. Dan,

    As Charlie Wilson, CEO of GM, said in the 1960s, “What is good for GM is good for the USA” is the best slogan then and now.

    Unfortunately, in the 1970s when GM put accountants in the CEO position and this new accounting-driven leadership combined the styling and design departments, resulted in every GM car beginning to look alike. Not being able to easily tell a Buick from an Oldsmobile from a Pontiac soon ended the love affair between the consumer and GM. It was not until the early 2000s when one of those accountant CEOs convinced Bob Lutz to join the company that GM began to turnaround consumers by adding styling back into product.

    The lesson to be learned is that accountants count, they don’t strategize and market. Even today there are more economists in the GM marketing department than marketers.

    The key question is: When will the GM board of directors take the lead and get another Iacocca-type transformational leader to get GM back on track?

    1. Your last question is answered by (note cynicism)…..”hmmmm, should we just take our bailout money, if we are lucky enought to get it, and move to Dubai UAE, to hang out with our other uber-patriot citizens such as the CEO of HELLiburton?…..or should we try to do the right thing and act in accordance to the saying, when the going gets tough, the tough get going??”
      I’m banking on option # 1 as the route taken.
      My great uncle; R.G. LeTourneau, a remarkable man and industrial giant in American history, would be sadly disgusted with corporate America today.

    2. Before I retreat from my soapbox…..R.G. LeTourneau, as big of an industrialist and design engineer that he was in the heavy equipment/earth moving field, he was a polar opposie to the horde-mongering CEO’s of todays corporate culture.
      Mr. LeTourneau GAVE AWAY 90% of his PERSONAL and CORPORATE INCOME ANNUALLY…..to help those less fortunate than himself.
      An example that is not conducive to the lifestyle today of the big boys on Wall St, with their 60,000 sq. ft Grenwich CT. mansions et al…….ditto for Detroit Big # CEOs.

  4. Well, Peter, if you think this is about them not building vehicles Americans want to buy, why are pick-up trucks, by-far, the largest selling units – as well as SUV’s, until recently? As Dan profoundly points-out: “what consumers want…remains mightily hard to name with any precise foresight”.

  5. To add to your list of short messages…think of text messages or “tweets” on twitter. There is a new generation that receives messages limited to 140 characters or less. This is my new rule of thumb.

  6. Spot-on, Dan. It is utterly amazing that Detroit cannot do a better job pointing-out things like the stats you mention, and attempt to change the (illfound) perceptions. How often do you see a really substantive message from the Detroit 3’s advertising or other marketing efforts that have any real ‘beef’ on quality or other 3rd party endorsements (IIHTSA, JDPA, Consumer’s Reports, Harbour Report, etc.) Although a bit off point, it also puzzles me why the media and Detroit 3 are not hammering the hypocrisy of Sen. Shelby (AL) for the hundreds of millions (i.e. bailout) given to Hyundai, Mercedes, Honda & Toyota. Would he pontificate against government interference if the problems were with these manufacturers based-in his state?

  7. The leadership equation for GM and other automakers is about more than vision and communication; it derives from a sense of engagement at the governance and management levels – about the realities and dynamics of the marketplace, and the evolution of the company’s business model. The Big 3 have been slow to evolve. That condition is further exacerbated by a community of stakeholders who have been more adversarial than collaborative for the span of the last 50 years.

    The challenge going forward is one that will draw from the really great things that are happening in the cluster of the Big 3, and the critical suppliers that serve the industry. Senators who grandstand and blather on about things beyond their experience will not help the cause. Regulatory advocates who cannot seem to appreciate the unintended consequences of their collective moves are part of the problem, and the solution. Labor, education, government and leaders at every level of industrial society have a stake in the success of the auto business. It is time to match our purpose and intent with our best efforts rather than a bunch of political noise that provides nothing of value. Nothing.

    In Prepared and Resolved, I write about the challenges of a vuca business environment – the realities that we face, surrounded by volatility, uncertainty, complexity and ambiguity. As soon as our industry leaders suck it up and get prepared and resolved to plan forward and make key changes, and as soon as our government gets in gear to be part of the solution, we will see the spark of readiness and sustainability that has been tough to discern for the last three decades.

    It takes way more than vision and communication. It takes a hardy set of minds with hearts and guts to get the mojo going. I am an optimist with serious practical grounding in strategy and governance. It’s time to crank-up the engagement of the leaders in the industry so they command their own change agenda. Government assurances are but a small piece of the puzzle.

    Daniel Wolf
    Dewar Sloan
    Author, Prepared and Resolved:
    The Strategic Agenda for Growth, Performance and Change

  8. Dear Dan,

    When you’ve had the kind of trouble I’ve had with AMERICAN MADE CARS….you would have chosen a Honda as well. When I was doing my homework prior to leasing a vehicle…I didn’t consult the consumer’s guide…I consulted the consumer themselves. What I learned was, EVERY individual I asked about their Honda/Toyota were confident that they could and actually have purchased vehicles from H&T at 100,000 miles and more because they KNEW they would get at least another 100,000 miles without needing MAJOR repairs. You don’t even want to hear of all my woes with AMERICAN vehicles, but I’ll tell you of just one! My brand new Chrysler LaBaron, after 24 times in the shop in just 10 months…sputtered it’s way in to the Chrysler Dealer for the last time (with me as owner) and the mechanics were STILL trying to fix it. It was, in fact, A LEMON!!! The sad thing is, that some poor soul probably had that LEMON sold to them!!! And, when I went to lease a vehicle 1 ½ years ago…I went first to Chrysler (my brother has worked for them 40 years), really because I wanted to show that I can be a sport. When I told the salesman of my dilemma (another problem I had consistently w/American made cars) that every Chrysler I owned had major difficulties with the air conditioning….very expensive to fix…at beginning 56,000 miles!! He said, “well, you don’t have to worry about that, you’ll only have it two years”. How confident did that make me feel?????

    You’re right! My husband always loved his Ford F150’s!! But, up until a few months ago…couldn’t afford to put gas in it! The big three could take some BIG tips from our neighbors in Japan and other countries who build their cars to last!!

    By the way, my Honda was made in Indiana!! Not one American person had to be put out of work at the expense of my CRV…which, I love!!

    Maureen Chabot,

    NO LONGER Dissatisfied American car owner!

  9. I have been purchasing or leasing Ford products since the early 1980’s. I am not surprised at the positive reiews their products have been receiving. I have felt for many years the vehicles I drove were not gas guzzlers and the driving experience was outstanding.

    Furthermore, I believe that the Big 3 have never made a better product than they do today.I have had the chance to drive domestic made cars and foreign made as well and in my opinion there is no comparison.

    If there is a shortcoming by the domestic manufacturers it was their failure to dilligently come up with a highly visible and proactive marketing plan to advertise the characteristics and features of American Made Cars. Like Dan commented if you say it often enough people will take note. The facts in my view are clear; The American auto manugacturers are making the products that compete with or are better than the foreign products. How is it the F-150 is the no. selling vehicle? It is what the consumer wants. But lets not overlook the passenger line up of all three American Car makers. Their gas mileage for cars comes near to or exceeds 30 mpg.

    However, it has become apparent to me that those forces in the legislative chambers of of the U.S. congress who derailed the bridge loan clearly have an agenda. How else can one come to such a conclusion? If those Senators who kept repeating that we don’t make a highly competitve and qauality product actually believe what they are saying then one has to ask what does Congress do all day? Praise to the Michigan Delegation both Republican and Democrat who took the challenge of leading with their best self and formed a coalition to defend the Domestic car industry and the United Auto Workres Union. The UAW leadership took the responsibility and stepped up to reduce their pay and benefits which is more than I can say about the Senators who gave the Banking industry the revenue from our taxes with no acountability. Frankly, as a taxpayer who sends in his dues to help the country function I resent the fact the taxes I pay eventually finds its way to Alabama in the form of revenue sharing that ultimately allows that state to give huge tax concessions to the transplants.

    1. Don’t forget to mention that the Congress just voted for a pay raise for themselves……and probably are getting overtime pay now hat they are in session when they normally take a couple of month hiatus around the holidays!!
      Washington is part of the problem, and as yet, not shown themselves to be part of the solution!!

  10. We all need to know what our mission in life is, and to speak it often to ourselves as well as others. Laurie Beth Jones has an excellent book, “The Path” to help develop them. While the process results in a bit longer than I prefer but an excellent tool.

    I like vision statements that are short and sweet. Chevy’s “Like a Rock” tells me how they build trucks.

  11. Well, about five years ago, I purchased my first foriegn vechile (used, 2 yrs old) because it offered an incrediable 44 miles per gallon of fuel effiency. (Diesel in a small car. You should see the looks I get occassionally at truck stops!) At the time, the best the hybrids could offer was 36 MPG Highway/37 MPG city. I have over an hour one way commute, and also didn’t want the HUGE expense of replacing batteries later. Besides, diesel at the time was far cheaper than gasoline.

    All my other cars new and used (Ford and or/Mercury) all lasted over 100K miles and were in excess of 10 years old before they were retired. (My Mercury Monteray was 17 years old, my Ford Escort was 10, as was my Taurus and Mercury Villager.) Most of them were retired due to the body damage of snow/salt, Engines were fine. I had to replace only one transmission in all that time due to a road hazard.

    This current car has over 245K miles on it, and the engine is great. However, I had to replace the automatic tranmission at 180K, which I am still paying for, although the car is paid off.) Additionally, the electrial system has had many, many problems. I have never had wires corrode EVER with any of my domestic cars. This car is a 2002 model, and I had to replace the motherboard, the airbag wiring twice, and the wiring harness to the glowp plugs!(The airbag wires need to be replaced a third time, but I have decided to let it go.) As repairs for foreign cars is pretty pricy, and my income has not gone up as quickly as the fuel prices. BTW: What is taking Diesel so long to come down? Ridiculous!

    What was upsetting to me, was discovering that FORD does make small diesel cars, but in EUROPE! Not here, as people weren’t buying them enough to make it profitiable for Ford. I for one, am waiting for the domestic automakers to make small diesel cars and will be first in line to get one when they do!

    1. Hi Nancy,

      You’re right, diesel cars have some advantages over gasoline engines, even hybrids. While hybrids use much less gasoline than non-hybrid gasoline engines, they require large battery packs that usually take up trunk space, force emergency response teams to use special methods to avoid severe electrical shock after accidents, and sometimes have to be replaced at a cost of a few thousand dollars. In addition, it takes a lot less energy to refine a gallon of diesel fuel than a gallon of gasoline, and a gallon of diesel fuel yields much more energy than a gallon of gasoline. In addition, it’s not unusual to be able to drive 200,000 miles or more on a diesel engine without a rebuild.

      You probably know that diesel cars actually were more popular in the U.S. at one time, but fell into disfavor because they really were sooty, smelly, and loud. However, in 2006, the EPA required diesel fuel to be lower in sulfur in order to minimize air pollution. Diesel engines have also been greatly improved. So we’ll be seeing a lot more diesel models in the U.S. in the next two years. Here’s a good article about them: http://www.forbesautos.com/news/headlines/2008/october/fdc-10-diesel-cars-driving.html

      Europe’s Ford Mondeo (featured in the Bond movie Casino Royale) has a diesel option that is rated between 47-51 mpg on the highway. It’s a great car:
      http://www.autoblog.com/2008/02/14/geneva-2008-ford-gives-mondeo-s-max-new-diesel-more-options/

      Good news: The all-new 2010 Ford Taurus (to be sold in the U.S.) has a lot of the same design characteristics as the Mondeo. There’s speculation that Ford will soon offer more diesel powerplants in the U.S., in models such as the Taurus and Fusion.

      1. I wasin attendance at a Moto-GP motorcycle race in Estoril, Portugal lat fall. I blieve 60%-70% of the vehicles on the road in Europe are diesel powered. While riding my motorcycle around the Lisbon area for the two eeks that I was there, I was in the usual (somehat) congested traffic. Never did I get the impression that I was about to choke to death on diesel exhaust fumes. in fact, it was difficult to tell that there were that many diesl vehicles on the road…..and remember, I was riding a motorcycle, not sitting inside an air conditioned car. I believe that the EPA and the BIG OIL companies don’t want diesel vehicles in operation here.

        1. Mark,

          Given that diesel fuel takes a lot less energy to produce than gasoline, but that the current price of diesel fuel is so much higher than gasoline, your comment about the big oil companies not wanting diesel vehicles in the U.S. may have merit.

          By the way, have the big oil companies, which have had record profits in the last three years, offered to help the Big Three? (I didn’t think so.)

          Tony

        2. Tony,

          BIG OIL hasn’t offer to help, despite record profits the last three years….most likely because GWB and Dick Cheney don’t want to see the trickle down effect adversely affect their personal wealth portfolios. More likely looking to become neighbors to HELLiburton in Dubai very soon.

  12. I have owned GM products for many years, including 4 pick-ups since 2000. While I agree that many increases in both gas mileage and quality have occurred over the past 10 years, I had to scratch my head when my 2008 Colorado gets poorer gas mileage than my 2004 model. For the good of America and the earth’s resources, one of the top priorities should be to increase gas mileage–not slide backwards.

    /tom

    1. Tom,

      I agree completely. And frankly, even though I believe that a bridge loan to the U.S. manufacturers is absolutely essential to the U.S. economy, I’ve voiced my share of disappointment over the years that the Big Three execs were going backward in terms of fuel economy. The 1999 Pontiac Montana van that my wife drives gets well over 30 mpg on the highway. (That’s no exaggeration, and owners of the GM minivans through 2004 know that to be the case.) However, in 2005, GM replaced that engine with one rated in the 25-26 mpg range. That’s still comparable with what the Honda and Toyota minivans get, but at one point, we showed that we could do better.

      A major shift toward greener vehicles right now — a shift that should include Detroit — would do a lot to jump-start the national economy.

      Tony

  13. How do WE get our message out?

    WE don’t.

    WE listen so hard that beads of sweat form on our foreheads, that’s how we get our message out.

    Learn than from President Elect Obama, the CEO of Ford, our Governor and just about every great leader civilization has had the luxury of experiencing.

    Learn and communicate through listening.

    1. Chuck,

      I’m reading through all the comments. They are well-articulated and round out the picture – both the rightful criticisms of the Big 3, and some of the legitimate defenses. Of course, this was the bulk of what I wrote – the example that is more than example, but a huge moment in our American, and of course Detroit/Michigan experience.

      Still, I had to get to your comment to find the WE part. It’s always amazing to me how well we are all able to dissect others’ issues – especially their weaknesses – but how difficult it is for us to bring it on home.

      I agree that there is a dynamic process between great leaders and those they engage to move forward. They must not only speak but listen hard and often. As a Detroit columnist loves to say about me; there is a “tin ear” sometimes on the part of institutional leaders who continue to hold on and defend.

      I appreciate your balancing out today’s RFL and responses both in terms of the WE and not just the THEY, and by focusing us on the importance of listening as part of both vision and communication.

      Thanks!

      Dan

  14. In her posting on this site earlier today, Maureen Chabot described the problems she’s had with American cars. In the interest of fairness, I estimate that my family has driven roughly 750,000 miles since I first started driving in 1972, all in American vehicles … and without a single major problem. And yes, we usually keep our cars for more than 10 years, and put anywhere from 120,000 to 140,000 miles on them. I wonder how many other folks have similar stories that we don’t hear about?

    Also in the interest of fairness, I think Gov. Granholm did a great job yesterday on Meet the Press in trying to counter some of the misinformation that continues to exist regarding the American automakers. I had hoped that Gov. Granholm and Mitt Romney would have been the only two participants, instead of allowing a few other super-wealthy participants (including Carly Fiorina and the CEO of Wal-Mart) to provide some additional misleading statements. Having only Gov. Granholm and Romney participate would have allowed David Gregory to ask more follow-up questions of Romney, such as,”Why are you still using the figure of $72 per hour plus benefits for an American autoworker when it can be verified that the $72 includes benefits, plus payments to retirees, and that the figure is decreasing.”

    The CEO of Wal-Mart said that Wal-Mart continues to focus on its customers and be fiscally sound. However, he did not say anything about the fact that the American taxpayer forks over $1.37 billion per year for insurance benefits for Wal-Mart employees and their families, because Wal-Mart doesn’t pay them. (That’s $1.37 each year and growing, not a one-time loan like the one being discussed for the Big Three.) And as of last year four of the wealthiest 10 Americans were members of the Walton family.

    Similarly, former HP CEO Carly Fiorina took a few not-so-subtle jabs at Michigan and its workers. She also said that America needs to focus less on helping big businesses and more on helping small businesses. A fair point as far as it goes, but she didn’t say anything about the hundreds of thousands of small businesses that will disappear because they’re largely supported by employees of the Big Three.

    As Dan suggests, it helps to do our research. And remember that by honestly conveying the message that the Big Three are back in the ballgame … by producing some of the safest, highest-quality, most economically priced, and even most fuel-efficient automobiles in the world, we help America, Michigan, our communities, and ourselves.

  15. The answer is in innovation. We need something new and different that we’ve never seen before to get us into a buying frenzie again. Remember the minvan craze that lasted from 83-90? What did the economy look like then? It was rockin!

    Then it was the SUV craze from 91-2001…what did the economy look like then? Rockin!

    The only reason the bottom didn’t drop out in January of 2001 is because the feds saw the DOW starting to fall and they freaked out and dropped intrest rates and relaxed mortgage requirements to spur on a spending spree on housing. A new house was the cool new thing over the past 7 years and look what the economy was doing then? In the end that was a horrible idea.

    Back way up now…1919-1930…Simply the car craze. It was new and different and everyone had to have one. Ever heard of the roaring 20’s?

    Simply put…we’re bored with what’s out there. Nothing is new and different(I’m not talking about the inside of the car) Nothing COOL and Different that we all think we NEED to have. Nothing out there that makes us want to “keep up with the Jones'” And keeping up with the Jones’ always has and always will drive the US Economy.

    Until one of these auto companies comes up with something new and different..The US Economy will continue to spiral down, down, down. Why? Because the number of families that are directly effected by the auto industry stretches much further than the 3million they keep talking about in the papers. Remember..those 3million have to buy groceries, get haircuts, buy gas, tip waitresses and on and on. Take 3million families out of the market place and we crumble folks.

  16. Dan, you are absolutely right- the average American has NO IDEA what the average American wants- how could the automakers. Along with all the good news about fuel efficiency and quality here are a few points that I make with folks-1. The US automakers are the arsenal of Democracy– if we (God forbid) get into WWIII it won’t be Toyota shutting down car production to make tanks , bombers and other vehicles and materials for war- it will be GM, Ford & Chrysler. 2. Foreign auto makers have federally funded healthcare- a big ticket item for our companies. 3. I am proud to say I have driven Fords all of my life starting with a used 1965 Fairlane coup 3 speed on the column to my 2008 Escape 4WD, which replaced my 1998 Explorer Sport-no problems. My huband is still driving the Explorer with over 200,000 miles and we have a 1999 F150 for the farm with over 200,000 miles! Quality!

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