The quick-fix myth.

"Irrational exuberance" had the entire U.S. economy rocking two years ago, flush with cash and confidence. Things change--enormously. U.S. automotive OEMs face a tough present and future. And the information technology (IT) vendors serving them have fallen on hard times, as well. Under such conditions, great companies fall back on their real assets: great product-development systems and manufacturing. These are the "machines" that keep a company strong in both good and hard times.

Unfortunately, the U.S. OEMs continue to look to big vehicle launches in an analogous way to the way music companies look for the "hit single." What is needed is not a single isolated hit, but a "hit factory," as Motown Records had in its heyday. That is, OEMs need to have a veritable launch "machine," one able to bring successful, new vehicles to market consistently. IT has contributed to launch inconsistency. For example, it inadvertently let the OEMs lose focus and neglect long-term process improvement in some cases. (But it isn't the only culprit.)

IT vendors, unfortunately, have undermined to some extent the long-term, system-building strategy that the OEMs have worked to perfect. To win deals they argue fur radical overhauls to the OEM's product-development process. The new, vendor-sponsored approach obviously plays to that vendor's strengths. In many cases, the vendor's proposed new, sweeping "architecture" is notoriously simplistic. It often neglects the accumulated wisdom of product knowledge in the OEM. Furthermore, the new IT system may unwittingly enable "complexity creep" into the new vehicle-development process. This occurs when an engineering IT system, for instance, allows anything to happen at any time in any sequence. "Flexibility" in a product life-cycle management (PLM) system can encourage deadly inconsistency, for example.

Instead of opening all doors and possibilities, IT instead should focus product-development personnel on the straight and narrow course. Doing so gets the product out expeditiously and in a straight-line path. Driving the ever-improving product-development process must be the engineers and designers doing the hands-on development. IT is not the only contributor to a short-term mentality that treats each launch as an isolated event. Financial expectations have auto executives overly beholden to Wall Street and its demands for this to be a great year financially. Enormous external, financial pressures lead executives to sacrifice long-term company building. Instead, they hyper-focus on making only their current launch a "home run." A recent example is Ford's F-Series truck relaunch.

Management consultants likewise feed the quick-hit mentality. They offer blockbuster, trendy, management ideas. These purportedly enable an OEM to leapfrog its competitors such as via business process reengineering (BPR) or the Dell model. At its worst, they have the OEM to always scramble to the "flavor-of-the-month" launch strategy.

Altogether these factors lead to an absence of a consistent, product-development process and a corporate culture always perfecting that single model. Without these, OEMs excessively turn to strong personalities and charismatic leadership. These executives attempt to pull off a successful launch relying more on shear will power than sound, underlying systems. In contrast "great CEOs build organizations that thrive long after they're gone, making it impossible to judge their performance until they've been out of office at least 10 years," observes Jim Collins, author of Good to Great.

The dot.com wave fostered exactly the opposite kind of thinking. Dot-com firms told auto companies that their processes were obsolete. Combined with Wall Street pressure, the allure of fast, dot-com "solutions" distracted the auto industry at a critical time--when it still had substantial resources and some breathing room. The dot-com era left an unfortunate "legacy" still haunting information systems departments. This is the auto industry's insistence on extremely short payback times for any new IT proposals. Such thinking will not address the much more structural problems facing the industry.

Martin Piszczalski, Sextant Research

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