Disruption in the Automotive Industry
Three people are sitting on the marble steps outside a conference (Womack, 3). The recognize that a business problem, a big business problem, isn't getting the attention it deserves. They resolve to examine the problem and report on it. Simple enough so far. What happened next was what was interesting. Rather than begin their research, they approached the subjects of their interest and asked them to fund their endeavor. They didn't ask for a pittance; they asked for five million dollars (in 1984 dollars) and said the work would take more than three years. All their targets bought. My suspicion is that they actually didn't ask for enough in the first place. Nice story so far. Who was the target?
The target was the automotive industry. In 1984 or so, like most other sensible people, the conference attendees realized that American auto manufacturers had a problem. The problem was, however, that the manufacturers either couldn't - or wouldn't - take action to fix their problems. They needed a nudge. Thus the book.
Their final tome came out in 1990. It summarized lots of scholarly articles that had come before. They had visited with all the major auto manufacturers and visited maybe not all, but nearly all, the manufacturing sites in the world. They really knew what the problems were. They sketched the history of automobile manufacturing from a craft industry, through Ford's mass manufacturing, through the Japanese introduction of just-in-time manufacturing, and its final iteration, lean manufacturing. They even keyed in on the atmospheric warming effects of all the carbon spewed by millions of car's exhaust. Everything was there.
Some people listened. Ford got on board early in the eighties and began and evolution toward lean manufacturing. GM took a lot longer. Basically, however, no one listened. This wasn't a research problem, nor was it a writing or editing problem. The book is great. I'll bet however, that only ten-thousand or so volumes were actually published. Everyone yawned and did, essentially, nothing. Who's to blame. Why blame, you say? Think of the lost investments in the automotive business, and the growth of the Japanese industry.
So, all this boils down to a marketing problem. It's easy to say "The authors should have made a bigger stink." After all, these were MIT professors, the best in the automotive business. No one listened. Were they to blame? Nope they weren't, not really.
Even though the book pointed out all the problems in the automotive industry, it forgot to realize that, really, there was nothing the industry could to for itself. Everyone was so set in their ways and that real change was very hard to accomplish. Ford started and the others followed along, but, basically, they were far too late. The automobile industry had "sailed" without them - to Japan.
So, who could have solved the American auto industry's problems? Entrepreneurs, that's who. The auto makers were following a "sustain" strategy of making incremental changes each year without ever rocking the boat with real innovation. After all, everyone knew that the unions and suppliers, not to mention the auto manufacturers themselves, would never make substantive change. Entrepreneurs missed the opportunity of the century when they didn't step in with a disruptive strategy the focused, initially, on a simple car that was easy to manufacture, that the customer wanted, and, most importantly, was profitable after a few short years. No one did anything. OK, there was some action in the time period. The Delorean was a great car but it wasn't enough to stem the tide of the migration of a great industry from America to Japan. The Japanese had been disruptive for years, what with their cheap, simple cars early on, and later with their highly sophisticated offerings made in a lean way that the Americans didn't catch on to - or ignored - for decades.
Who's to blame for all this? Well, it's not really the Big Three's fault. They did what any other manufacturer would do. They just made little changes each year and ignored what was going on around them. The real problem, or shall we call it opportunity, was for entrepreneurs to take advantage and create a simple, American-made automobile using the lean manufacturing system. We'll see how this all shakes out, obviously, as time goes on. For now, there still are opportunities available (that the Japanese, Chinese, et al are taking advantage of in such sectors as hybrid and electric autos), but American entrepreneurs have to move quickly. Now. The opportunity is there.
Womack, James P., Daniel T. Jones and Daniel Roos. The Machine That Changed the World. Based On the Massachusetts Institute of Technology 5-Million-Dollar Study On the Future of the Automobile. Rawson Associates. 1990.