Meltdown and the socialisation of losses

1. When things go wrong, it is definitely the time to look at processes and do introspection.
2. As per the Peter Principle, "Every Employee Tends to Rise to His Level of Incompetence." The top positions were occupied by a coterie that had retained its level of incompetency for too long. GM, I believe, has not made profits for several years in a row.
3. Another malaise is non - ownership. The top, although paid by the millions, does not look upon itself as the owner of the business. Else, atleast some of them would have sought demotion. Your point -why the scrambling today.
4. Perhaps none amongst the present lot is willing to lead from the front as did Lee Iacocca.
5. There is inherent inflexibility in large organisations. They occupy a large portion of the total available value space and have little room to maneuvre when times change. Large corporations should do some introspection on the appropriate size, vis a vis the industry size and not be carried away by unsatiated desire for growth. Harley Davidson is a shining example of clarity in this regard.
6. The big3 globalised too slow, too late.US is not the only market in the world. A japanese manufacturer also collapsed for similar reasons.
7. Yet another problem is that text book strategies give text book solutions. If the root cause of problems is Unions and the long term contracts, as is being made out by most people out here who have already answered your question, then you need another Lee Iacocca or someone like me who can think well out of the box. :). Jokes apart, I believe Porter has not exhausted all the options while enlisting generic strategies. There are atleast two more generic strategies. Contact me if you want to find out more about these strategies. One of them fits in beautifully into this scenario. If you cannot reach me, either you are not interested enough.
   
8. Organisational structure. To go far, organisations must be designed very much like multistage rockets, not monolithic, single stage rockets. You have to be able to shed a stage as and when required. Second, keep the structure as light as possible. All the time. For a long march, you have to carry unproductive payload for strategic reasons. But balance it properly. Please see Fritz's answer. $22 billion spend on R&D by Ford. I am sure if they had globalised R&D, they would have managed it in USD 5 billion -- USD 17 billion extra in cash!
9. Pls read Nobel Laureate Joseph Stieglitz's recent speech. He puts it very nicely as "the privatization of profits and socialisation of losses". He cautions against such trends and says that unless capitalism and its structures move away from making the rich richer and poor poorer, capitalism itself may be under threat.
10. USA, however, has much bigger problems to face up to, in right earnest, before it is too late. I guess the sums involved would not be less than USD 50 Trillion! I therefore believe the US Govt should save every penny for that eventuality. These are not the times to party.




Yadav Chandna