iPod of the car industry

Few years ago, when I saw iPod for the first time, like many, I was stunned for its design, simplicity and quality. I had at least 5-6 different cell phones in my life and each of the cell phone manual was around 150 pages and when I got the iPod few years ago, the manual for that iPod was 2 pages. When I brought up this to my close friends during my Sunday chat sessions, some of them argued with me that iPod  and cell phone functionalities are different and hence the significance in the manual size. Those friends were speech less when Apple came up with iPhone.

I was wondering, why Sony did not come up with something similar like iPod. They dominate this market for so long and why they were not the first one to come up with something similar to iPod.

After some study, as I understand, most of the Japanese companies use the Japanese management style in all strategic and operational management. The key approach, as I understand, Japanese management style is more on consensus building. If there are 5 members in a team, all of them HAS to agree on the direction, approach, next steps before an action is taken. It makes a fundamental assumptions that all the 5 members are subject matter expert and kind of have an idea of the future prediction through approximation.

Obviously this management style is to limit the agility, innovation and time consuming. Statistically, this style proven to produce better quality products. In other hand, quick to market approach management style is proven to be more innovative but lack quality.

In Walter Chrysler biography, Chrysler stated one of main reason for his success and innovation was: make quick decision ,observe the results and adapt instead of taking long time to make a decision and realize it was not the right decision. Historically Chrysler company proven to produce most innovative car product in the car industry. Walter Chrysler management style is other spectrum of Japanese management style.

It appears, based on the recent JD power survey and consumer reports, American cars quality have been improving a lot but long way to go. They are on the right track. Particularly, Ford has been producing high quality product with best fuel mileage in last year. Like Ford, if the other American car companies figure out a way to drastically improve the quality of their product AND keep the innovation which has been in their roots they are going to produce the iPod of the car industry.

I wonder, the Japanese car companies are making any adjustment to their management style to be more innovative to achieve what Sony failed to do so.

Bright Future for Auto-Industry

Simplifying a complex problem by breaking into small solvable parts and using knowledge learned in a driving school during a fatal accident are simplification and abstraction techniques widely used in a practical  world. Have you ever noticed the behavior of a person during  a fatal accident? During an accident, provided the person is not seriously injured and able to think to their capacity, the capacity (volume) and capability (strength) of the person is fully utilized to face and over come the situation. The capacity, capability and the effective utilization of it during the crisis or fatal accident increases exponentially.  If some one deeply think about why most of the people become effective during the crisis is due to extreme focus the brain forces itself to get over the situation. That is ultimatum for some of existing meditation techniques and the same reason why some of the adventures sports like rock climbing are very attractive. It is a kind of enforcement mind brings to mind itself. But at the same time, mind does not perform the strategic analysis  to its best during the crisis mode and that is the same reason why the best supreme court lawyer hires another lawyer when they face a crisis.

How this is relevant to current auto industry?

Well, GM and Chrysler both have had faced a separate fatal accidents.  Both are utilizing their capacity, capability and utilizing it effectively. When it comes to survival, as Maslow theory in the management suggests, your basic needs becomes top most priority and enlightenment are out of focus.  The decisions and execution made in last few weeks generally would have taken decades in their corporate culture. Executive management totally understand how to move forward. With assistance with auto task forces, concessions with unions, agreement with debtors ,reduction in  dealer network, dropping a brand, focus on fuel efficiency and quality  are good signs for a great recovery.

Why a great recovery waiting for them?

Four years ago, US market sold 17.5 Million units per year. This year, industry is struggling to sell 10 Million units. The average car age in America today is 9 years old.  Car purchase is the second biggest purchase a consumer would make after the American dream of owning a house.  Consumer confidence is the key and it is and it will continue to gain slowly for next 9 months and rapidly after that.  The credit market is far better than it was 6 months ago with enough capital infusion to credit market. Introducing better credit standards, oversight and governance, the credit market is stabilizing. The moment a person believes their jobs are safe, the consumer confidence in stock market, retail purchase, credit market will raise and the consumer is going to donate their 10 years old car to charity and buy the fuel efficient (Hybrid, Diesel, Electric) car. Both GM, Chrysler are making tough choices now and getting  ready to meet the huge market demand in 18 months.

Until then, sit tight and be part of the touch choices and move Detroit to new 2011++ future.

Yes I hear you.., I have not written a blog for almost a month.. that is mainly due to my last few weeks focus on completing  the graduate course on Linear Algebra. I had my finals yesterday and thinking about, should I take Dynamical Systems and Choas theory in summer. It will definetely help to model the current economical situation!!!