Thursday, May 26, 2005

My letter re. Ford & GM published in "The Economist"

I must take issue with the conclusion of your leader on Ford and General Motors (“Deal or bust?”, May 14th). You say their problems lie not in the factory, nor in the design shop, but in the $1,500 per car additional overhead for pensions and health care. However, you also state that both companies offer up to $3,000 per car in discounts. This is roughly $2,000 more than Japanese carmakers offer, yet Ford and GM's sales are still declining. Frankly, I believe that the problem Ford and GM face is that they are producing cars which nobody wants to buy and their marketing is poor—about a third of their sales are to fleets at even lower prices.

Why are more companies using consultants?

Over the past thirty years the consulting industry has grown at double digit rates in most years. In that time more managers have MBAs and companies have brought in better training and evaluation tools. However, business activity has peaks and valleys. Thirty years ago, companies staffed for the peaks, and managers had time to think or create projects. Today, companies staff for the valleys and managers spend more time in meetings and dealing with email, i.e. they spend a higher proportion of their time communicationg. Furthermore, as consulting firms have grown in size and prestige, they have been able to recruit more talented people. So today, a company which never or rarely uses consultansts is probably suboptimizing.

Tuesday, May 10, 2005

Are most people willing to die rather than change?

The most recent issue of "Fast Company" magazine pointed out that nine out of ten people would die rather than make simple changes. It went on to say that
Bain & Co had found that in a study of 21 successful turnarounds, they had succeeeded by replacing most of top management.

London cabbies have overdeveloped hippocampuses to ma nage the complex geographical knowledge required and flutists have very developed parts of the brain which control fingers, lips and tongue. So do businesspeople have overdeveloped parts of the brain to do what they need to do. When the need changes, the people don't.

Similarly, Otto Rohwedder spent 16 years with strong opposition to perfect sliced bread. The inventors of frozen food, the revolver, Monopoly and the windshield wiper, each had to fight against strong opposition to achieve success. As the environment changes more rapidly, but we live and owrk longer, the need to develop a curiosiy and drive for learning becomes more important. People have to learn and change continually.