Tag: general motors

  • Don’t Promise, Deliver

    gm-logoIf you live in the United States, you are the proud owner of the second largest pool of retirees next to the federal government. And as a bonus you also get a small and dying breed of cars formally known as General Motors. We just spent over $80 billion to bailout a company that is only worth $7.3 billion. You can walk onto a dealers lot right now and participate in the largest liquidation of assets in the history of the world.

    And we still haven’t fixed the one thing that forced them into the red in the first place: 500,000 retirees.

    General Motors is the classic case of over promising.

    Over-promise #1: I remember talking to a GM executive about the business model as he gave me a tour of their Warren Tech Center. I asked him how often a customer was supposed to buy a new car according to the company? His answer made my jaw drop. They built their business model on the assumption that you would buy a brand new car every 3 years. No wonder their cars sucked! They only expected you to own it 36 months. No wonder they failed! No one in their right mind could afford to buy a brand new car every 3 years. They were absolutely lying to themselves. Their competitors built cars that lasted 10 years or more. Honda and Toyota owners hit 100,000 miles and knew that their cars will easily make 200,000 miles. Meanwhile, GM was building cars that were meant to be traded in at 36,000 miles.

    Over-promise #2: In the mid-1980s, when Toyota and Honda made it big in the United States market, GM was stupid to continue the retirement program. There was simply no way that they could afford to continue the program… but they lied to their employees and sold them the lie that if they took care of GM, GM would take care of them for life. The smart thing to do back then would have been to convert the program to 401k and make no promises of retiree health care. Instead, they oversold a promise they couldn’t keep. Worse yet, to deal with payroll issues they started early retirement programs which meant people in their mid-50s were walking away from GM with a “guaranteed” pension and health care. There are currently tens of thousands of people in the United States who have now been retired from GM longer than they worked for GM. No company can bear that burden. Companies struggle just to pay benefits for current employees… How did they think they could insure 500,000 non-wage earning retirees?

    My point isn’t really about GM, it’s about over-promising. Here are some ill-effects of over-promising.

    usedcarsalesman– Advertising becomes useless. It doesn’t matter how much money you spend on ads as people won’t believe you anymore.You can’t hype up a product launch or an event that you’ve oversold forever. When you don’t deliver you are just reminding customers how much you betrayed them.

    – Your word becomes useless. When you break promise after promise, soon people won’t trust that your on their side. They will see that you only want their money and you don’t care about them.

    – Your product becomes a joke. I was in a meeting yesterday about search engines and someone used the word Yahoo… everyone laughed. Yahoo has become a dinosaur of a search engine. The only thing memorable about Yahoo is that stupid song, Yaaahhoooooo. You can’t advertise and promise a web service, you can only deliver. This is the #1 reason you can’t trust Bing.com to be any good. If it was so good why are they spending $100,000,000 to advertise it?

    Shifting gears: The evangelical church has become a classic example of the over-promise. Part of the church becoming more about programs and business models is that it has fallen into the trap of needing marketing and advertising like the business models they copies. The result is a lot of over-promising. “Come to the marriage retreat, it’ll fundamentally change your marriage.” or “Sign up for our next church production, it’ll be awesome.” or “Bring your friends to the revival and they will get saved.” In a world where the awesome is so readily available churches do nothing but give away trust when they advertise promises they can’t deliver. I’ve seen church events marketed like they were going to be on par with Disney or Broadway or Oprah and deliver like a trip to the town carnival, a middle school play, or a cable access show. At the end of the day the church spent more effort marketing the event, production, or program than they did making the program awesome. It is a sick cycle that is killing thousands of churches.

    The better way: Wouldn’t it be refreshing if churches just delivered? Wouldn’t it be amazing if they didn’t sell themselves but just helped people? What if they invested in training their volunteers and staff so much that the church didn’t need to make promises, that their programs and ministries truly worked to change lives? You wouldn’t need to advertise a life-changing marriage retreat… because results would advertise themselves. You wouldn’t need to hold a revival because every church service, small group, and youth group meeting would see people come to know Jesus. You wouldn’t need to hire a killer band and create a worship experience because people were authentically worship Jesus. The best advertising a church could ever invest in is a changed life.

    If you are a church leader I want to challenge you to think about your programs. Think about how you talk about them. Think about how you market them. And remember:

    Don’t promise, deliver.

    Don’t hype, deliver.

    Don’t sell, deliver.

    Don’t measure, deliver.

    Don’t sub-contract, deliver.

    Don’t advertise, deliver.

    In a low trust, high expectation world the best way to succeed is to undersell and deliver.

  • Making Detroit Cool

    I think this was a great move by GM. Bring Conan O’Brien into the Detroit Auto Show and letting him have some fun. Self-deprecation is actually a great way to start changing the mood towards the former Big 3.

  • Don’t Bail Out US Automakers

    All of a sudden, the czar’s of the old guard Big 3 are interested in Washington again. (By Big 3 I mean Ford, GM, and Chrysler, not the real big 3 of Toyota, Honda, and Ford.) The news is full of stories of their CEO’s begging for federal bailout money to keep afloat. I can hear the words from here, “We only want $25 billion.” They probably each took their own corporate jets over there and are staying at $10,000 per night suites.

    Here’s why giving the Big 3 $25 billion is a bad idea:

    #1 Their problem isn’t bad loans, it’s bad labor contracts. I lived in Detroit for 5 years and I was totally sickened by labor practices. Over the last few generations an entitlement attitude has run rampant among workers. In short, until they can clean house and only keep the best workers regardless of union status or seniority any bailout will just be wasted on pouring more money into a broken vessel. Most people don’t know this, but they pay people not to work! They want federal dollars to keep paying people not to work! For $25 billion we need a federal right to work law. People should have a choice whether to join a union or not. Closed shops should be outlawed in every state… especially Michigan. Face a fact… unions were great at one point, but have helped bankrupt the auto industry.

    #2 Their problem isn’t bad loans, it’s over-generous retirement plans. In the last few year’s they have gotten wise and started buying people out. But the Big 3 are levied with a tax their competitors don’t pay… pensions. (Most have been structured on 401k plans since day one.) Until they can shed those pension problems the federal government shouldn’t give them a dime. I don’t think that they should just fore go the pensions. I think, once and for all, they should sell those debts off and let someone try to make a buck on distributing those dollars.

    #3 Their problem isn’t bad loans, it’s trying to sell cars people don’t want. Have you walked on a car lot lately? The Chrysler cars mostly look like space ships. The Ford ones look like Tonka trucks. The GM ones look like cars from the 1980s. I know that’s judgmental and I’m uneducated. But I was recently looking to buy a new car and literally laughed on most of the “U.S. Automaker” lots. For 20+ years they have whined about “foreign cars” on their market. The reason people aren’t buying them isn’t because they hate America, it’s because Honda, Nissan, Toyota, Volkswagen, and the rest are selling cars people want to drive.

    I have no doubt that the auto industry will get bailed out. They will become federally subsidized, just like the airline and farming industries. If it’s not the $25 billion today it’ll be $100 billion next week. My only hope is that in getting the money they will start to repair the damage.

    Meanwhile, I hope Michigan continues to look for a new economy. I hope they invest in the health care industry, technology, and financial industry. Michigan is full of amazingly brilliant people who want to succeed. Let’s hope that they get it sorted out soon!