Tag: gm

  • 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.

  • How To Fix the Auto Industry: Federal Right to Work Laws

    This is my second idea: Pass a federal right to work law. (Idea #1)

    For anyone outside of the pretend world known as Detroit, this solution is a no-brainer. In order for Ford, GM, and Chrysler to move forward into the next 100 years of automaking they have to restructure how their labor is paid.

    One important element, the heaviest of them all, is to dump the UAW as the only labor force. With unemployment hovering near 10% in most of the Detroit area counties there is no better time to renegotiate with the unions. (In other words, if the unions refuse to comply simply replace those workers with unemployed people at new, lower wages.) Simply put, if the federal government is going to loan automakers $34 billion to get out of this mess, they should also pass a federal law making every shop in America an equal opportunity employer. As I wrote in January 2008, I think allowing employees to decide whether or not they will join a union is fair. But, today in America, in many states that choice is not allowed.

    More importantly, for the former Big 3 to survive they need to scale back wages to more reasonable levels across the board to compete on the open market.

    Yes, I am arguing that the Big 3 compensate their employees like other US-based automakers. Toyota, Honda, Nissan, and many other “Japanese” automakers pay their employees well, but still roughly half what the UAW demand as “fair.” And when the Big 3 made money hand over fist, who cared what they paid people? But if you’re going to mortgage our childrens future on bailing out these failed companies… let’s spend the American tax payers dollars wisely. Their pay should be based on what these other automakers pay their employees. Or perhaps, since this is federal money, they should be compensated like government employees?

    I’m not suggesting that we make unions illegal. I’m suggesting that it become illegal to force people to join them! Allow auto workers, state employees, teachers, and other unionized types of workers to chose for themselves if they want to be in a union or not. Isn’t that fair?

    It’s time to have all employees work together for the good of the Big 3. Again, if you haven’t been exposed to the auto industry you have no idea of some of the silliness. There are two separate classes of employees at an auto manufacturer. There is union labor and there is management labor. They have different pay structures, different disciplinary structures, different hiring practices, and even different parking areas! It’s time this all ended! We need the plant manager and the woman on the line to be on the same team. We need the executive and the janitor to have the same health care options, benefits structure, and vacation times. We need to completely kill the entitlement society that the unions create. No more 80% pay layoffs. No more pools of employees who get paid 100% of their salary to play cards. No more union stewards making what a plant manager makes. On and on.

    If Ford, GM, and Chrysler are going to take federal money it is time they started acting like 21st century companies. In other words, it is time the former Big 3 started acting like the companies who are kicking their butts.

    Learn more about the National Right to Work movement.

    Idea one: Change the car buying experience

    Idea two: Open the manufactoring to non-union employees

    Idea three: Coming soon…

  • How To Fix the Auto Industry: Get Rid of Dealerships

    Sometimes ideas are too simple to actually work. If the United States is going to give $34 billion to failing auto industry, I have a right to give my suggestions for how to fix things.

    In order to make it for the next 100 years you are going to have to radically innovate. It’s not going to be easy. It’s going to mean thinking about doing business differently than you ever have. To save the US Automakers, it’s going to mean sacrificing some of what has become sacred for the sake of making it work from here on out. Inside out top to bottom changes are what you need.

    This is my first idea:

    1. Starting immediately, your cars will only be purchased directly through you. No car buyer likes the dealership process so you need to kill fast Eddie’s business. You don’t buy a washing machine or a computer without knowing what the price really is, so why should you expect people to buy cars that way?

    2. Make car buying about the customer and not the dealer. This means you need to add a shopping cart, much like the one from Dell or Apple, to your website. For most buyers, getting a new car is either a very rare occurrence or they do it all the time. Make the website intuitive enough for the buyer to decide their buying experience. Instead of putting them on the defensive with a negotiation process that favors the professional, make the process about the buyer. The customer is your friend! Time to treat them that way.

    3. Have a simple pricing structure. Allow people to know how much the car costs you to produce. Then add a 5% profit and a 3% delivery free to that. Show the math. Allow customers to drill down into that invoice so they can see where every single part comes from and how much it costs. Not only will your prices be cheaper than the competition, your customers will know that they aren’t getting ripped off. All the shopping cart to add things one by one or by package. People are smart and they know what they like in a car… give them that ability.

    4. Eliminate the local finance office. This is the sleaziest part of the car buying experience. Allow people to buy the car through your finance company, or allow them to use a bank transfer, or even credit card to buy the car. Again, this is about giving your customer a fantastic buying experience instead of walking onto a dealer lot, with your brand on it, and getting screwed by someone representing you.

    5. Convert the local dealership into a delivery, customization, and repair shop. By getting rid of a sales and finance people will make the dealership more like the Apple Store. Change the name of these from dealerships to delivery locations. Instead of a sales force you will have genius’s and customer service agents.

    6. Only allow customers to come to the delivery center to buy accessories and receive customer care. Effective immediately, you will deliver the car where the customer wants it. Want a test drive, you can arrange to meet them somewhere. When it needs service, you’ll pick up the car free of charge.

    7. Every part of your cost should become open. This is about trust. You can make your money. Just be open about it. Customers will reward you for it.

    8. Allow customers to sell their used cars on your website. Have the local delivery office come to the customers house, create a listing, apply the proceeds to a future sale.

    9. No one in the sales, marketing, delivery process will be commissioned. Pay the people at the delivery centers well, but don’t overpay them. You want these people doing this job for love. A lot of people need jobs. If people at the new delivery centers quit… they will be easily replaced.

  • 10 random Monday thoughts

    It’s a holiday. And a holiday for me means that I tend to get strikingly little done. I may have some big plans for my day… but if I get 1-2 things actually done I’ll be satisfied. Here’s just a data dump of things on my mind.

    1. I’m definitely taking a bike ride today.
    2. It was supposed to rain today, but looking at the satellite I don’t think that’s likely.
    3. I stayed up until 2 AM playing Madden 08 for the Wii. It’s just OK.
    4. This morning I added a ton of people to my friends list on Facebook. Many of them I don’t know personally but are “fans” of YMX on Facebook.
    5. It was fun to head out to Metemora State Park last night to hang with the Fisher’s and Brinker’s. Each time we come home Kristen and I vow to take our kids camping. I don’t really know if that will happen or not. But I hope it will
    6. Everyone is asking us when our house will go on the market. Probably in a few weeks. We have some things we need to do first. We are oddly at peace about the process. We know it’s a good house and are hopeful it will sell at a good price. 
    7. Jimmy was clutch yesterday. I was very pleased with the services over all. I especially liked that he “de-cheesed” the Lee Greenwood song, “God Bless the U.S.A.” 
    8. It was a little weird being my “last day” at Romeo. At the same time, we’re back next week. It’s not like we’re moving right now. The most common question yesterday was, “When do you start your new job?” I start next week and my next trip out west in in a couple weeks. 
    9. I’m shopping for a digital SLR as my wife has broken both our cameras. How do you decide between Nikon and Canon?
    10. Mellen’s Market (the corner store across the street from us) is closing its doors and going out of business later this week. That’s a total bummer.
    11. Bonus random thought: Kristen and I are planning to sell our car and buy a new one when we get to San Diego. We are definitely looking for a small/tiny car that gets great mileage. (I may even get a scooter!) High on our list of cars to look into are the Prius and Civic Hybrid. (American cars) We are also considering some Korean made cars and Mexican cars made by Ford and GM. I just had to get that dig in since Romeo people still think that there is a delineation between “American cars” and “Foreign cars.” No one outside of Michigan has used terms like that since the 1980s… but you still hear and see it here on bumper stickers. Let’s translate that… by “foreign car” they really mean “non-union made car.”