It’s been a while since I’ve posted a pure business-related post. Maybe because I’ve been bogged down in petty office politics lately, or maybe it’s just that I don’t have an active start-up I’m working on, but whatever the reason I’m compelled to write about what’s going on with Detroit.
I watched the Senate hearings with the Big 3 CEOs this evening. I don’t fully understand the auto industry; however, I think I have an opinion on what the U.S. automakers could do to regain their strength and begin to grow again.
Back in the day when Matt Thompson and I used to do The Cubicle Escape Pod, we talked a bit about the book, The 22 Immutable Laws of Branding. My favorite was the Law of Contraction. The law states, “a brand becomes stronger if you narrow its focus.”
I’ve been preaching this theory at work amid the credit crisis that directly affects our business. Our product line is too big, too confusing to customers and too difficult to sell. The cost of acquisition is way more than it needs to be. Everything involved in the pitch is twice as long or big as it should be–collateral, sales pitch, etc. I think the same holds true for the American auto manufacturers.
In the book, Chevrolet and Ford are case studies for the Law of Expansion–creating new brands to cross market segments. But what Ford, GM and Chrysler need to do is contract their brand. In short, stop making a million different models of cars with a billion options for each model. Not only is the brand diluted, but the quality of the cars has to be diluted as well.
I have a radical idea (and it most likely will never work)… Ford needs to reinvent itself by devolving. Go back to basics. Produce a single hybrid vehicle. I’d call it the Model H. Any color you want, as long as it’s black. Pour billions of dollars into creating a single, extremely energy efficient car with roof-mounted solar panels for small electronics and all the advanced technologies we’re seeing in luxury cars. My theory is, if all your R&D spending, production costs, marketing costs, etc. focus on a single brand and model, you can produce them inexpensively, and sell them way cheaper than Japanese and European cars and make it up on volume.
What do you do with fleet sales, trucks, etc.? Law of Expansion, my friends. Create new brands and deal with those market segments as entirely different subsidiaries.
Steve Jobs installed a similar strategy when he returned to Apple and look where Apple is now. Jobs looked at every product in the lineup, made the tough decisions, cutting confusing model lines (Performa, Quadra, Centra, blah, blah) slash popular cult-like products such as the Newton and boil it all down into the famous product quadrant–four products to rule them all. Apple turned itself around and then branched into consumer devices like the iPod.
Yes, this is a crazy idea that probably wouldn’t work with the complexities of the auto industry, but the bottom line is that the U.S. auto makers have to do something drastic and must act soon. These companies aren’t making products people want to buy anyway.
The taxpayers should not bail out these terribly ran companies in the auto and airline industries. We need to force these companies to become smarter by letting them stare down the barrel of failure. Every once in a while a business is faced with making big bold moves that changes the landscape of an industry. All three U.S. automakers are in a position to flip the model upside-down. Who will do it?
