Comments

JAPAN INC subsidy flourishes Toyota / Honda [while Nissan / Mitsubishi flog] ... makes it tough for GM / Ford when they have pure free enterprise only - & 0 subsidy tax and otherwise + CEO abuse & mega "healthcare" & big union payouts.

BEST REVENGE - may be to be so super healthful that big Pharma is a tiny memory - and big FOSSIL fuel is a Dino fossil former playground [have no major solution ideas here since OIL is such a worldwide ADDICTION - and it ripples into INFLATion provoking scank as we "speak"].

Posted by Sean at July 10, 2006 12:25 PM

PS: Bean online only - catalog return - save the trees!

Posted by Sean at July 10, 2006 12:27 PM

The Renault-Nissan-GM deal is a hedge against the fallout if Delphi goes under. In that case GM can use the Renault-Nissan buying alliance to cut costs of spareparts and components.

Besides GM is cheap right now. Just 16 billion in equity. Hell GOOGLE could buy GM!

Anyways guys! All it takes is one car to save a company isn't it? I mean you guys are old enough to remember the Minivan from Chrysler?

Maybe the alliance can uproot the creatives from all three companies and throw them all together in a "virtual skunkworks" and tell them to come up with really edgy cars!

I have a wishlist:
1) Must be a biodiesel/hybrid car
2) Must look cool.
3) Must be able to change the body of the car at a really low price
4) Must be able to "work and play" in the car.
5) Get Burt Rutan of Scaled Composites to help design part of it.

That's the end of my summer rant... :-)

Posted by Arun Sadhashivan at July 10, 2006 1:13 PM

GM would be wise to take a lesson from the Daimler-Benz and Chrysler Corp merger: combining corporate cultures is tough enough, but blending international corporate cultures is really hard. Or they could learn from their own experiences, like when they paid $2 billion to end their failed alliance with Fiat. Maybe Kerkorian hopes to give his GM stock a boost. Or perhaps he's looking for yet another way to annoy Wagoner. In either case, he'd be better off exploring a GM/Ford combination.

Posted by George Brymer at July 10, 2006 1:44 PM

Or something really crazy--disband the company and sell the assets to Honda.

Posted by tom peters at July 10, 2006 2:33 PM

The hospital-strategy "put two ill people in one bed and hope a healthy person awakes" never worked out. One needs to put "both people" into a "gym", not "hospital" to boost them up.

Posted by Tobias at July 10, 2006 2:38 PM

In terms of broadband, we run the risk of not only the slower speeds, but the use of the Internet is choked off.

IPv6 is a critical technology that is the standard in China and Korea. IPv6 brings an entire new paradigm to the Internet and the U.S. has no concerted plan to deploy it. If not for the defence industry requirements to deploy IPv6, it may not have been available for years.

Posted by Paul Cox at July 10, 2006 4:27 PM

Paul, this is no place for an essay, but those of us, like me, who are proclaimed "free-market freaks" should indeed take note of the extraordinary role of defense research in stoking America;'s technological fires. Sure, of late, there's been a reverse flow of commercial inventions moving into the defense sphere--but it's a drop in the bucket compared to what's flowed in the opposite direction since at least the onset of the Cold War.

Posted by tom peters at July 10, 2006 5:05 PM

That is thankfully coming to an end now Tom. The technical innovation fire in America and abroad is now stoked by the new keymasters - micro-visionaries, mostly young, mostly male (at the moment). Time to market in the technology sector makes long R&D and bureaucracy obsolete - change occurs too quickly, forcing innovative players to stay lean or wither in overburdened process machines. Control of the technology developed is still driven by big pocket players, of course, but more and more of the innovation itself is thankfully derived from a passion for the game and chance to be king of the hill - for a few weeks - until the next innovation hits the headlines.

There are two interdependent innovation quests today: First to market (developers) and first to profitability (shareholders).

Defense might be one of the largest consumers of technology today, but they are no longer the largest contributors or developers of it. The system is still too full standards-driven specifications, waste and processes for innovation to flourish.

Posted by Tom O'Leary at July 10, 2006 11:57 PM

Glad to know about it.

Posted by Paul at July 11, 2006 2:12 AM

Good discussion. Big is NEVER beautiful.

I love your comments Tobias - you are 'spot on' about healthcare. This is what I wrote today on my own Blog.

'It's not about blame - it is about responsibility.'

The National Health Service has just announced a deficit of £512 million for the last financial year.

http://news.bbc.co.uk/1/hi/health/5055602.stm

Doctors are blaming Managers; Managers are blaming Government; Government is blaming Managers. The Audit Commission is blaming Managers.

Everyone is blaming someone else. Sounds a bit like life.

Speaking as a former NHS manager for 35 years I say it is not as simple as blaming one group of people.

I remember nine years ago and very early in the term of the Tony Blair Government there were loud calls from within the NHS from doctors, nurses and managers for more money to be ploughed into the service. A huge ‘listening exercise’ was carried out by NHS managers and politicians about what the problems were and the solutions needed.

The outcome was an acknowledgement by the Government that much more money needed to be ploughed into the NHS. This was done. I remember Mr Blair saying – and I paraphrase;

‘We have listened to what the professionals inside the NHS have had to say and we have acknowledged more money is needed. We are now giving that money to you in the NHS and we expect managers to make the best use of this money to carry out the improvement you have told us are needed.’

Without making a political point there is no doubt whatsoever more money has been invested into the NHS by this Government than any previous Government in history since the NHS was established in 1948.

The debate about who is to blame of this overspend is pointless. It is not about blame; it is about responsibility in my opinion.

I feel the government did all they should. They listened to professionals in the NHS and they provided the answer that the professionals wanted to hear.

The responsibility is within the NHS – the Government cannot just keep simply throwing millions of pounds every year into a hole while NHS managers sharpen their spades to dig that hole deeper.

I smile when I remember that every single one of the 35 years I worked in the NHS I remember Finance Managers telling me;

‘This is going to be the most difficult ever year.’

Managers like me always knew that finance folks kept reserves so it was a game of ‘bluff’ and managers as a result spent to the limit knowing the finance folks would always ‘bail them out.’

There is nothing complicated about that and it is human nature that if you know you have a ‘back stop’ you can afford to be ‘adventurous.’

There is a something of ‘the boy cried wolf’ and maybe now the chickens have come home to roost.

Posted by Trevor Gay at July 11, 2006 3:32 AM

Hey Tom, taking off on a slightly different tack, this is more about the first part of your post - about Vermont, than it's about big business. I'm currently reading Kay Redfield Jamison's wonderful book 'Exuberance'. In it she writes of an Exuberant Vermonter, Wilson Bentley, who made it his life's passion to photograph and capture the beauty of snowflakes - hundreds of thousands of snowflakes. And I was reminded of another Exuberant Vermonter who's made it his life's passion to capture the beauty and intricacies of orgaizations - small or big. Like Bentley brought snowflakes alive , you've helped bring organizations and their workings alive. Thank You.

Posted by Porus Munshi at July 11, 2006 4:37 AM

I agree with Graham. I have a friend and colleague who, whenever faced with an controversial issue with another department or even a customer, always takes the line – I want to understand because it could be I/we have not got something right here (and he says it with the humility that can only come from genuinely wanting to understand - this is no technique) . 99% of the time even the most difficult customer comes back with “actually, to be honest, there are some things we could have done better in this situation ourselves”.

As you can imagine the respect this man has around my organisation is huge.

Posted by PaulH at July 11, 2006 7:08 AM

STATE subsidy advantage ala Japan and China INC though make GM / Ford and others quake more than a bit.

Fairly soon CHINA vehicle hybrids @ radical competitive price point may flood free world markets.

Socialist free enterprise of UK and olde Europe are a distinct disadvantage with chronic high unemployment and inflated prices while population base shrinks.

BIG IS RADICALLY BEAUTIFUL FOR CHINDIA - ASIAN CENTURY BABY. Tom O' agree on innovation but the 1st to market 1st to profit seems too simplistic. And Trevor - you've lost the simple mantra with the huge BIG 30 line rambling sheer boredom of UK drival. :>} Agree olde Europe needs a tune up BIG time :>} ... [as does USA - except we ARE the world / and free market lead though too generous w new market intell perhaps].

Posted by Sean at July 11, 2006 9:10 AM

Ooops! sorry Sean - must improve! :-)

As my last school report said 'sets himself a low standard and fails to acheive it'

Posted by Trevor Gay at July 11, 2006 9:38 AM

" ... over promise & under deliver ... " == GM unions' / management / Sean / Iraq [combine Iran & Iraq = Irate ... a place for fascists to kill each other] coalition ... mantra to date.

"Values - don't like my values - I'll change them 'til you do like them ..." = too generous USA citizens-clients.

Posted by Sean at July 11, 2006 10:45 AM

There just insn't enough rock climbing at most big car companies:
http://headrush.typepad.com/creating_passionate_users/2006/07/safe_is_risky_r.html

Posted by Stephen at July 11, 2006 12:25 PM

Stephen: But no shortage of rockheads. Smith-Stemple-Wagoner is pretty hard to believe.

Porus Munshi: I believee I maay have read every word that Kay Redfield Jamison has publicly written. She has had a strong influence on my life.

Posted by tom peters at July 11, 2006 2:42 PM

Hi Tom,

Having followed your work for some years, I see a familiar theme with the big = non-innovative. With a little background knowledge, history shows waves of mergers/acquisitions and then subsequent break ups (for some). Why do CEO's habitually desire larger and larger companies? Is it simple ego? Is it the stock options? Or do they truly believe of economies of scale? Can it ever work?

Greetings from a very sunny France,

Justin Levine

Posted by Justin Levine at July 12, 2006 2:33 AM

Justin

Do all bosses desire bigger companies? - I don't believe so but I suspect you don't hear about the ones who don't (especially if they are not public traded)

Posted by PaulH at July 12, 2006 3:48 AM

Paul,

I agree. There are many companies - Germany is a good example, that are satisfied with steady growth from existing business. However, I have had personal experience of running a medium sized company that was bought by a large PLC. The post-sale discussions were interesting..."we want you to grow". "In fact, we are prepared to invest, but only for double digit growth"...And then the discussion then turns to "who can we buy"... So from a personal perspective, I have seen the pressures Executives are under. But I wonder why common sense does not sometimes prevail?

Posted by Justin Levine at July 12, 2006 6:23 AM

There are several things at work, here, methinks.

First, bigness is seductive. To make things worse, it's easy to measure.

Second, all businesses start out by having to grow. You get in the habit of looking for growth and it's very hard to stop and ask the basic, "Why are we here?" questions.

Third, there are different kinds of growth. Organic growth is usually slower and easier to manage than growth by merger/acquisition. If you want to grow big, the temptation is to m/a, even though we know many of those deals don't work out. You always figure you'll be the one to succeed.

There's also what I call "stealth acquisition." You have a company that, on paper, looks like it's growing organically, but in reality, it's hiring key staff from other players in the industry.

My cynical view, after 30+ years in business is that lots of execs want to keep the pot boiling so there's always a way to avoid accountability. They're always making changes and then saying, "Well, we can't really be profitable just now, we're integrating the company we acquired," or "the market is down," or "we're reorganizing."

Posted by Wally Bock at July 12, 2006 7:15 AM

I guess one extra point - growing business organically is hard. Especially in over-saturated markets. Just look at the car market. My guess is that buying and merging companies is in some way much, much easier in the first stage - buy, report the earnings, job done. Making the combined business work in a way that does not ruin what you have just bought, now that is tricky.

Posted by Justin Levine at July 12, 2006 7:46 AM

Greed, ego, throwing up the Hail Mary in the end zone.....

Carlos Ghosn is already the CEO of Nissan and Renault and shuttles trans-globally in these dual ledership capacities. What's another stop in Detroit to line his pockets and stroke his self-image?

How the hell can anyone make such a gameplan work? Obviously, with Renault generally invisible in the marketplace (although, Tom, I've been with you long enough to remember your applause for their sticking with the Wingo!) and Nissan (which manufactures a quality car--my Maxima's more than a match in quality and engineering for my Honda Pilot though why they'd get into and then expand their position in the LARGE SUV and LARGE truck markets at a time like this is beyond me)running a distant third to Honda and Toyota, what the hell good do they do for GM??? I guess when hapless management is out of ideas, they try anything. At least no one can say they remained inert.

Last thought: anyone remember the GM/Opal alliance of the late Sixties, early Seventies? Anyone seen an Opal lately? Digesting them doesn't appear to have done GM a lick of good. I'll cross my fingers that Nissan's spared.

Posted by Ed Di Gangi at July 12, 2006 10:06 AM

I believe that everybody knows that big companies haven't done real R&D for many years. They get their R&D by buying small innovative companies.

Does anyone remember when the accounting rules allowed companies to capitalize R&D costs rather than expensing them as they're now required? I believe back then we had considerably higher levels of R&D investments.

There were problems with that too, but perhaps the time is right to think creatively about incentivizing something around R&D.

Posted by Ken Mulcahy at July 12, 2006 11:35 AM

In the interests of brevity Sean :-)

Fabulous discussion – a quick story.

I once wanted to be a Chief Executive in healthcare. THEN I GREW UP.

It was all about ‘what is expected of the rising middle manager.’ In the UK, the bigger the NHS organisation, the more kudos you get for being the CEO. What crap that really is. It's nothing to do with size and everything to do with talent.

I realised a few years back I would never become a CEO because I like things to be simple. All big organisations make simple things complicated – so merging two complicated organisations will certainly not DECREASE the complexity. I wrote something called 'Professional Speak – Guaranteed Protection’ and we all know that is what it is about if we are perfectly honest.

Posted by Trevor Gay at July 12, 2006 12:29 PM

1. The entire GM/Renault/Nissan deal was put up by Kirk Kerkorian, whose company owns about 10% GM's stock--NOT by GM management. Stop skewering GM management for this idea because not only did Wagoner and Company not come up with it, they aren't very enthused about it either. Please pay closer attention before ranting in comments.

2. So big mergers and big companies never work? It's pretty easy for all the self-proclaimed experts herein to say so and back it up with some Wall Street numbers (which you use when they agree with your ideas, but ignore when they don't). That's all pretty useless to those of us on the front lines in these companies trying to make them work. You see, we are the ones who have to find the 'synergies' and try to mold two cultures into one--with a profit at the end of the day. So, either offer advice on how to make it happen or shut up. Just saying "you're wrong" is an easy cop out.

Posted by Mike at July 13, 2006 6:37 AM

Mike, the only reason Kerkorian is in a position to do what he is doing is because of 30+ years, going back to the first gas crisis, of Gross Incompetence by GM top management. Only last year, Rick Wagoner said in public that he had market research that us bozos-on-the-street didn't have access to that proved that consumers didn't care two hoots about gas prices--thence he continued to be "SUV man." Last night I had dinner with my local Chevvy dealer--he can't give the damn things away (and that's almost the literal truth). (The person who runs my speaking business is trying to trade her SUV for a more gas-efficient car--and despite its youth and mint condition she is being offered less than half bluebook as trade value.)

Practical idea? If you are crunched by a mega-merger or outfit run by repeatedly demonstrated incompetents, quit and get a job at a modest size company where you can actually make a difference to yourself and to the consumers you serve.

Look Mike, I'm not the totally heartless insensitive jerk you may think I am, but the fact is that you've had 30 years' warning that GM couldn't bat its way out of a wet paper bag in a monsoon. I'm past the point of admiring your "gumption." To stay at GM is a fool's errand. Period. And that's more true if you have 4 children, ages 4,6,8,10, than if you're unencumbered.

Posted by tom peters at July 13, 2006 9:18 AM

I don't work for GM. I work for another company that is going through a merger, and for what I consider a good reason. My point is that it is too easy for people to stand on the outside and say "that won't work." It's worse when they make it some sort of speaking and consulting premise. Quit my job and work for someone else? Why? Just because I'm in a position where I have to try to help make a merger work? When the going gets tough, quit, huh? Sorry, that's not my style. I prefer to change things for the better and build something lasting (another idea you hate--built-to-last) than cut and run. I just don't like the "mergers are all bad ideas" bandwagon. Mergers are like anything else--something done by people. If they fail, it's probably because of the people involved. They didn't know how or didn't care to work at it. If you want to practice what your website preaches, stop just saying "they don't work" and offer some ideas of how to make them work. The fact is, mergers and acquisitions are part of modern business and aren't going away. viagra australia paypal

I don't really care whether you are correct about GM or not, but the facts are the facts: Kerkorian made the suggestion for the merger, not Rick Wagoner (who is pretty cold to the idea). Both GM and Tracinda stock climbed due to the proposal, which was very possibly Kerkorian's whole scheme in the first place.

Posted by Mike at July 13, 2006 10:49 AM