Thursday, March 20, 2008

Enough Already - Where is the passion?

On Wednesday, Richard Wagoner, Chairman and CEO of GM, came to Harvard Business School to talk to a packed house of over 200 people leaving standing room only. During the talk, he stated in no uncertain manner that an automotive startup couldn’t make it. He used Tesla as the example, saying such things as such a startup cannot make it because it requires "large scale…crash testing…pollution, etc”.

These statements were an echo of his last visit to HBS in 2005, when he was interviewed and asked about his thoughts of new entrants into the US automotive industry. I was in the audience at that time, and in answer to those questions he brushed off the concern stating that making real cars was a business for grownup companies, that it was hard to do, and that he was not concerned that a startup could be successful.


Both of these events and statements are disappointing for a number of reasons. Are the US domestic automakers successful? Profitable? Considered good employers? Known for making exciting products? Most everyone can agree on these answers. "No". Yet the reason behind the answer cannot be that globally the industry is suffering alike. It is not. Many automakers are growing, profitable, and gaining market share in the face of the domestics' decline. Safe to say that something is wrong at GM, Ford, and Chrysler.

So if startups cannot be successful then, who is to rescue the ailing domestic industry? Are we destined to cede jobs, market share, history, brand, affection, memories, and growth in our economy to Korea, Germany, China, India, Bangladesh? I am by no means a globalization-a-phobe, but I see no reason to roll over and take an automotive beating when America defines itself as a country of high manufacturing productivity and creative business.

Or are we to believe that Richard Wagoner or GM will save the industry? It is not like they have not been trying.

GM has been losing jobs by the thousands and its workers have been suffering cuts of a thousand knives. Many of those workers have a deep passion for American cars and yet they have been forced to move on. Many of them dream of a day when US cars can once again be successful. If given a chance to work for another startup like Tesla, Carbon Motors, Local Motors, or others, many of them would jump at the chance to join up and give it a try. Wagoner does not speak for those hoards of disenfranchised workers anymore. How does he know what they will do with their time? He cannot assume that he alone is the reason for GM's ability to survive in the market. The success or failure of a startup is not pre-destined by the set of factors that Mr. Wagoner suggests. It is my belief that success is predicated on passion for cars more than any other single factor.

Bob Lutz did not make it to his position as the Vice Chairman of GM because he was a good bean counter. He loves cars and he sees to it that beautiful ones are made. We need more of that.

(courtesy GM and Business Week)


I find Wagoner's doubt in startups to be arrogant and short-sighted. I recognize as well as, or better than, most people that making cars in America is tough business, but starting a car company is not about crash testing, and pollution control, and large size. If it was, no one would start into it. It would be too boring. It is about passion. It is about beautiful cars that grab you by the gut and make you feel proud as you drive them down main street. It is about the exhilaration of commanding a car through the curves on a winding road. It is about going a little faster than the next guy off the line at a stoplight. It is about the feeling of elation when you first take charge of the keys of a vehicle you have dreamed about owning your entire life. Yes, the details of crash testing, pollution control, etc. are critical factors, but they do not keep you coming to work everyday when the going is tough.

The one thing that Mr. Wagoner discounts when he makes such prognostications is the passion to create a product that connects with customers directly. Starbucks had no chance in the face of Folgers and Maxwell house. Zara had no chance in the face of the Gap. Southwest had no chance in the face of American. Apple had no chance in the face of PCs. Dell had no chance in the face of IBM. But Schultz, Ortega, Kelleher, Jobs, and Dell were all passionate about their product. They like many others were unwilling to accept status quo.

Mr. Wagoner may be right that many start-ups will fail, but when he is wrong it will be because he forgot one critical term in his calculation of what it takes to succeed, and that is PASSION.

Spend a day with at Local Motors, and I guarantee you will get your fill.

(Courtesy Benjamin Louis, Charter Member, Local Motors)


Glenn Mercer said...

I completely agree that Mr. Wagoner is wrong when he asserts startups cannot work in automotive. With ya there, 100%. Though I must say in my personal opinion the startups (present company excluded!) err in the opposite direction when they (again, not Local) assert that the Detroit OEMs' problems are wholly the result of stupidity or inertia. I think Tesla has found this out in spades, especially when they started running their airbag conformation simulations. Because cars kill people (not "can" kill people, "will" kill people) the incumbents systematically under-estimate startups' chances, and the startups systematically under-estimate the challenges involved. Having been involved with three startups in this space, I found that to be the common denominator of their downfall: forgetting that making a cool new car is not like making a cool new MP3 player, but another game entirely. Local, with its strong automotive roots, will likely dodge this problem.

Last word in defense of Rick: if one ONLY goes by historical success rates, he is "right." Avanti is gone, the Italian coachbuilders struggle, Shelby falls apart, Chamco implodes, Softbank was stillborn in cars, ZAP spends more time in court than on the dyno, Scuderi seems to take forever, etc. I know I am very unfairly lumping together very different firms and summarizing their complex histories completely incorrectly, but from Rick's point of view he must feel like Brad Pitt in Troy after the opening scene showing his defeat of the champion: "Is there no one else?!!" (grin)

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