Following up on my previous post, I tried to read about Detroit's reinvention/rescue plans. Ford emerged as the only beacon of hope. While I must admit that I did not follow any rigorous research procedure to follow the trend, I'd be surprised to learn otherwise, even if I had.
Incremental improvements are just as important as breakthrough innovations. Ford seems to have gotten this straight in its approach toward addressing the current crisis. Needless to say, this approach can help any company to its better days, especially when operations are aligned with the right vision. While Ford's share may not reflect this promise, it is very much a promise today -- untested, but full of potential.
Ford Explorer's 2011 model is on a diet plan to shed more than 150 pounds, with lighter weight steel. The plan also involves an "Ecoboost" engine that leverages sophisticated software from the 21st century and fuel efficiency techniques that date back to 1940s. It seems that these technologies could allow Explorer to supercede Toyota's Highlander Hybrid in highway fuel economy.
Even the best hybrid cars come at a premium today, and the return on investment is not clearly superior to that of regular cars that are otherwise fuel efficient and of high quality. There is a lot of buzz about electric cars, but it would be wishful thinking to hope that we will somehow be able to leapfrog both the technology and the cost differential at the same time. Given that the average car-buyer will try to get the most bang for her [based on Mark Penn's comments on car-buying soccer moms who represent the majority of car-buyers in the US, from his book Microtrends] buck, and that she will do so in a time when global sustainability will be put to test, with rising demand for oil and other commodities across the world, the demand for a fuel efficient automobile should be on the rise. This should be the case, at least for the next decade, assuming that we will have cost effective options that are also fuel efficient, by then.
There is a demand, and Ford seems to be eager to supply. Will the sale happen? That is anybody's guess at this time. All I can say is that Ford is full of promise today.
Showing posts with label auto. Show all posts
Showing posts with label auto. Show all posts
Sunday, March 8, 2009
Sunday, February 1, 2009
Minding your own business
Jeff Jarvis argues in his book What Would Google Do? that Detroit should learn the power of collaboration and open design from Google. While there are challenges in implementing a cost-effective business model around collaborative automobile design and production, perceiving the concept with an end-of-the-pipeline mentality doesn't help either.
CarZen provides an excellent recommendation service that suggests cars that suit a buyer's needs. I was reminded of the innovative supply chain model that Dell pioneered during its initial days of glory -- letting customers make their own computer, and assembling the personalized computer through JIT inventory management. Detroit may not be eager to merge CarZen's recommendation service with Dell's personalized assembly line to make cars that serve unique customer needs.
Nevertheless, it is important that auto makers understand the business they're in. As Rishad Tobaccowala of ad giant Publicis points out, auto makers ironically are not in the business of making automobiles, but in the business of Navigation and Entertainment. Given that people need to navigate from point A to point B, and spend considerable time doing so, it should be a no-brainer that adding value in the process of fulfilling these needs should help differentiate and reap profits.
When McDonald's founder Ray Kroc asked a group of B-School graduates "What business do you think I'm in?", the graduates thought that he was just fooling around. Ray surprised them claiming that he was not in the business of flipping hamburgers, but in the business of real estate. He went on to detail that the focus of his business plan was to sell hamburger franchises, and that the location of those franchises was key to their success. We know that McDonald's doesn't make the best burgers in the world, nor does it provide the best dining experience. Yet, it takes some pondering to determine the actual business that a player is in. Recognition of the basics can be a profound experience, and can indeed be transformed into a black swan with the right execution strategies.
The idea of a personalized car may be romantic, to say the least, and may not be Detroit's silver bullet even in this era of personalization. Meeting energy efficiency goals stipulated through regulations screams "end-of-the-pipe" and may come at a cost [if not approached holistically]. It needs to be said that leaders identify themselves not by following the fads of the day, but by identifying their purpose for existence and by changing the way the world operates, not due to an urge to do so, but simply by following function.
CarZen provides an excellent recommendation service that suggests cars that suit a buyer's needs. I was reminded of the innovative supply chain model that Dell pioneered during its initial days of glory -- letting customers make their own computer, and assembling the personalized computer through JIT inventory management. Detroit may not be eager to merge CarZen's recommendation service with Dell's personalized assembly line to make cars that serve unique customer needs.
Nevertheless, it is important that auto makers understand the business they're in. As Rishad Tobaccowala of ad giant Publicis points out, auto makers ironically are not in the business of making automobiles, but in the business of Navigation and Entertainment. Given that people need to navigate from point A to point B, and spend considerable time doing so, it should be a no-brainer that adding value in the process of fulfilling these needs should help differentiate and reap profits.
When McDonald's founder Ray Kroc asked a group of B-School graduates "What business do you think I'm in?", the graduates thought that he was just fooling around. Ray surprised them claiming that he was not in the business of flipping hamburgers, but in the business of real estate. He went on to detail that the focus of his business plan was to sell hamburger franchises, and that the location of those franchises was key to their success. We know that McDonald's doesn't make the best burgers in the world, nor does it provide the best dining experience. Yet, it takes some pondering to determine the actual business that a player is in. Recognition of the basics can be a profound experience, and can indeed be transformed into a black swan with the right execution strategies.
The idea of a personalized car may be romantic, to say the least, and may not be Detroit's silver bullet even in this era of personalization. Meeting energy efficiency goals stipulated through regulations screams "end-of-the-pipe" and may come at a cost [if not approached holistically]. It needs to be said that leaders identify themselves not by following the fads of the day, but by identifying their purpose for existence and by changing the way the world operates, not due to an urge to do so, but simply by following function.
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