Monday, November 17, 2008

How Your Car Might Re-Invent More Than Just The Auto Industry

Note: This is the first in a special series of daily articles being published this week on the topic of automotive innovation.

A few months ago, I reflected upon how the American taxpayer might see themselves in the mirror in the not too distant future as a result of the current global economic crisis. Today, I wish things looked even that good.

As the crisis has expanded (well beyond the financial sector), the word “unprecedented” has become a potentially lethal weapon at many business schools:
“Ok guys, every time Dylan or Maria says ‘unprecedented’, everyone take a drink – two if it’s Kudlow or Haines.”
Author’s note: Never do this.

Global industries have endured severe credit interruptions at the same time that product demand by their customers has fallen off of a proverbial cliff. One industry in exceptional distress that has seen generations of growth and value erased is the automobile industry. Today, in late 2008, we are literally facing a collapse of one or all of the “big three” American automakers - Ford, General Motors, and Chrysler.

Since its 100-year peak in April of 2000, the stock price of GM has fallen over 96% and is threatening to dip significantly below $3. Before April of 2000, you have to go back in GM’s history to about 1939 to have seen it trade at this (split-adjusted) level.

Ironically, 1939 was the year that GM was looking 20 years into the future, sponsoring the famous “Futurama” exhibition at the New York World’s Fair. GM of today can take a lesson from their exhibit of long ago, and recognize that the world of tomorrow cannot be reached by living in the past.

The future is born out of evolution and innovation. Evolutions of systems (natural, technical or social) are driven by organic and artificial influences. Regardless of who or what controls such influences, evolutions often create the very challenges and constraints that shape sudden leaps to next-generation systems. Innovations are often born out of constraints. In the cases of evolutionary constraints, the innovations that arise are revolutionary, and are often key to driving rapid, systemic transformation.

In his recent New York Times Op-Ed piece, “How to Fix a Flat”, Pulitzer Prize winning author Thomas Friedman, discussed his dismay with the automobile industry. The near demise of the industry, in his view, is a direct result of a multi-year lack of effective innovation. He opposes a public sector bailout of the industry ($25 billion is being considered just for GM) if the funds are used solely to preserve current business models. In an appearance on CNBC in which he discussed his article, Friedman said that the best kind of person to bring forward (and even fund) to fix the auto industry is one who “lives, breathes and thinks innovation every minute of the day”.

I facilitate innovation for a living. Every day I work with clients from different industries and help them create ideas in pursuit of revolutionary product design using software and methodologies. I see the constraints my clients face in their designs every day. I’ve seen first-hand how the deteriorating economic environment will impact my clients in the next 12 months, and I’ve told them why accelerating their innovation in 2009 should be a top priority, and how to go about doing it.

I’ve been thinking about the current problems facing the automobile industry and anyone who owns or drives a car. Over the next few days, I’d like to openly share some thoughts and ideas I’ve had for the benefit of anyone who has the entrepreneurial ability to leverage them.

Before you ask me why I’m giving away these ideas, I’ll have to ask you to bear with me and wait until the end of the final article in this series. I promise I’ll make my motives clear.

Tomorrow’s article: A Car Of Tomorrow, Driven Through TRIZ

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