Top competitors can loose their edge

June 15, 2009

As I was driving to my office this morning, I heard that Michael Phelps failed to win 2 races at a swim competition in Santa Clara, California, over the weekend. He came in second in two of his races.

I’d call that pretty stunning news from a guy who, having won 8 Olympic gold medals only a few months ago, was considered unbeatable .

It made me think about how many companies are taking “time off” due to the economic conditions and, like Michael Phelps, will have trouble getting back in peak competitive form?

Did Michael Phelps’ competitors take time off after the Olympics?  Or, were they hoping to exploit a weakness in the person who used to be their top competitor?

Just today, the head of Boeing’s commercial aircraft division, Scott Carson, said, “Are we down in the dumps about the status of this industry? Have we allowed the current economic situation to overwhelm us and discourage us from the path ahead? The answer is absolutely no.”

I like Scott’s attitude.  Boeing’s not taking time off and neither should you!

Dave Gardner Gardner & Associates Consulting

http://www.gardnerandassoc.com

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WSJ Article Claim about GM is ludicrous

June 8, 2009

As the world has watched GM fall into bankruptcy, I’ve awaited the folks on the sidelines offering their pithy insights into the whole debacle. The most ludicrous claim I’ve seen yet comes from a June 2, 2009, Wall Street Journal article titled “A Saga of Decline and Denial:”

GM set the standard of how a company should be run, how utilitarian products could be made cool and how they should be sold.  It helped win a world war, driver American prosperity and reinvigorate business-school curricula.

In the end, GM was a victim of it’s own success–its path to bankruptcy paved with the very management, marketing and labor practices that made it the world’s largest and most profitable company for much of the 20th century.  Strategies that had once been deemed innovative “became a millstone on the whole company,” said Mr. (Gerald) Meyers (former chief executive of American Motors Corp.).

A victim of its own success?  How about a victim of its own blindness to seeing that for almost 30 years, GM senior management and the board had bought into what was an unsustainable business model bleeding red ink.

Recently, my father asked me to help a restaurant owner look at her business.  She claimed that the dip in the economy was making her business unprofitable and that she was waiting for the economy to rebound so her business would return to its prior level (of mediocrity).   I showed her how there were real systemic issues in her business that indicated that she might not benefit from a rebound in the economy unless she took action to correct the deficiencies.

Unlike the restaurant owner, GM has vast quantities of expertise and knowledge at its beckon call.  The GM insiders had to know long ago that what they were pursuing was not sustainable.   For example, the GM automobile market share had declined from over 50% in the mid-70’s to less than 20% in today’s economy.  Hello!  What’s wrong with that picture?  If you’re not growing, you’re dying.

There are many systemic issues facing GM in the months and years ahead.  Can they reinvent themselves?

Unless there is a fresh look at the business model and leadership that believes there are no sacred cows–that everything about the business is up for debate and questioning–my sense is that the thinking that got them to where they are today won’t get them to where they need to be.  If GM were to get a leader like a Jack Welch or Lou Gerstner, they might have a chance.  If they stay with inbred leadership, I don’t think they have a prayer.

What do you think?

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com