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» Automobile manufacturers that manufacture ideas, not automobiles from Business Innovation 2005
On his Edge Perspectives blog, John Hagel has posted a probing and (sure to be) controversial analysis of what ails Detroit's automobile industry. According to John, process innovation (while helpful) is no longer enough to save America's floundering c... [Read More]

» Automobile manufacturers that manufacture ideas, not automobiles from Business Innovation 2005
On his Edge Perspectives blog, John Hagel has posted a probing and (sure to be) controversial analysis of what ails Detroit's automobile industry. According to John, process innovation (while helpful) is no longer enough to save America's floundering c... [Read More]

» Chewy Chevy Muda from J. LeRoy
John Hagel has a nice blog entry on GM and Ford's abilities to retool. The subtext in this, and most articles about current Detroit, is that the cars themselves are unappealing. So all the advances in process and resource efficiency [Read More]

» Process innovation from Jiri's Notepad
'The days when competitive advantage is based on code are gone," he added, citing business processes and shared expertise as the true differentiators for any modern business.' -JP Rangaswami, CIO of DRKW as quoted at Loosely Coupled "[Predicted trend n... [Read More]

» New Economy Less About Immediate Gratification Than We Thought from Sundog
John Hagels Edge Perspectives blog provides some interesting insights into globalization and the impact of the Internet on the global economy. Among the problems he identifies in several posts is the tendency of companies to focus on short-... [Read More]

Comments

Juno888

The UAW played a key role in the 1980's and early 1990's in pushing for such innovations although the Union was reluctant to formally endorse the concept of teams

PaulSweeney

I previously worked in the supply side of the automotive industry (electronics), and did my masters in New Product Development and Buyer Supplier Relationships In The Automotive Industry. At the time I was trying to isolate the effect of "buyer supplier Closeness" and the effects of internal "excellence in NPD process". I don't think anyone has been able to statistically tie down the effect of buyer supplier closeness on NPD success. I also remember (now this is 1992 we are talking about here!) that a top tier journal carried an paper descibing how the way the buying and selling organisations shared information and "problem solved" was practically "symbolic interaction". It will be interesting to see how this one evolves given that the world is talking about the networked organisation.

Russ Eckel


On the issue of process innovation you are generally on target. And yes, Ford did take the early lead. The Ford Production System represents their attempt to creat an American version of lean production. The FPS emerged out of an experiment at the Ford Cleveland Engine Plant No. 2 in the early 1990's. This plant builds the Duratech engine and has received numberous guality awards. GM has no such single point of diffusion but has a number of lean assembly plants particularly in the South.

The UAW played a key role in the 1980's and early 1990's in pushing for such innovations although the Union was reluctant to formally endorse the concept of teams.

Both sides, management and the Union, abodoned the strategy of process innovation through joint labor/management initiatives in the mid-1990's largely I believe because they began to experience the riches of a market driven by trucks and sport utility vehicles. Both sides began to think that the Glory Days were back. The decade long shift towards collbaoration and innovation continued but with little or no leadership from the top of the corporations or the Union.

Evidence of this can be seen especially at the Ford Cleveland Engine plant, the launching pad of the Ford Production System. By the late '90's plant managment began to move away from its commitment to shop floor innovation and discontinued much of the best-practices training program conducted at the on-site Employee Development Center.

The current crisis continues to erode any residual support for the type of collaboration that was evidenced in the 1980's in particular at NUMMI and Saturn.

As to the idea that the traditional US assemblers should deconstruct themselves further into a decentralized federation of smaller scale manufacturers sounds much like the logic that spawned the sell off of American Axle, Visteon, and Delphi. In a word, how did that work out for Detroit? The Toyota model as you rightly point out still relies heavily on the centralized system which simultaneously produces increased enterprese capabilities and economies of scale. The global auto industry is still an industry marked by tremendous economies of scale. And while the idea of a radical decentralization may suggest some new economies based on speed and agility, the experience thus far with the spin off of most of the supplier plants suggests that the theoretical cost savings would not only not material but the costs of administration and coordination could soar.

It will be very difficult but perhaps a more realistic scenario is for all parties to return to the early vision of Al Warren and Donald Ephlin, innovators in the 19980's. Their vision saw an industry deeply commited to innovation through the full utilization of all of the human capital available to the firm. This included a deep committment to process innovation diffused widely and embedded deeply.

The political climate in Detroit will make this very difficult but there is at least precedent for this strategy. I would try this approach before I thought about turning GM and Ford into design studios. While we are on the subject, waht was the last memorable desing innovation to come out of Detroit's studios?

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