Wednesday, October 07, 2009

Space oddity - in the long run we're all dead

I have less sympathy for GM than for Blacks. Some crimes of strategy are less forgivable than others. The latest part of GM to break is Saturn which is closing down. My original impression of Saturn was formed not as a car buyer, but as a marketing case study - an example of a skunkworks project, which were rather trendy at the time (10+ years ago). Turns out not to have been such a smart idea in this case since not only were the cars not awfully good, they sold at a loss.

There's a very simple lesson here. It may (or may not) be smart to isolate little groups of innovators in order to break the corporate cultural assumptions about what might or should be done. The jury's out, but my judgement tells me there are times this is very smart indeed. What is clearly - inexcusably - dumb is to build a completely parallel production capability (so sacrificing all your efficiencies of scale), and to stick the new products out in a separate brand so that if there's any equity to be gained, you fail to capture it where you need it. The threat from Japan was to GM itself. A retailation brand (which is all Saturn was) was doomed. The arrival of Japanese manufacturers was the first big unheeded warning that the whole of Detroit needed to revamp its capabilities and its offer.

This mistake took so long to play out that Roger Smith, on whose watch it happened, didn't live to see the wheels finally come off. A small personal mercy. I hope I die too, before my mistakes get found out.

2 comments:

Anonymous said...

I don't think that Saturn was necessarily a bad idea; it was just badly executed.

The whole point of skunkworks is to fuel the passion and enthusiasm at the heart of the brand. They're a great way to discover tangential value that would otherwise have been lost - twitter is a great demonstration.

Critically, skunkworks help to stop a brand becoming stale by ensuring that people aren't stuck in the same rut and mindset day in, day out.

Unfortunately, it seems that GM missed the point entirely. Spinning Saturn off as a separate entity simply removed the innovative thinkers, and stifled value for both Saturn and GM in the process.

Above all, it looks like the passion has gone; while I'm sure that there are still plenty of people on the factory floor that love and believe in the GM brand, that energy seems to evaporate as you get closer to the top.

I get the feeling that's what happened to the US automotive industry in general. Management got itself into the 'watch' mentality you mention, and the commitment and drive disappeared. And as soon as it's 'just a job', it's a downward spiral to disappointment, for employees and the brand alike.

A number of brands do get the concept right though - Google's '20%' initiative, and Stefan Sagmeister's 7-year sabbatical (which he explains in his TED talk) are good examples, even if they're not really skunkworks.

Alex Bicknell @ Tomorrow:AM said...

Hi eskimon

I agree. Detroit needed a shot in the arm, but because they never got one, in the end they got a shot in the head.

I have no problem with skunk works as a tool of innovation. The single biggest drag factor on established companies is often their established assumptions and established ways of doing things.

But GM needed to revitalise its existing brands, not spin off a new one.