By Peter M. De Lorenzo
Detroit. Given the upbeat forecasts and serious cash money being generated by the car companies based in the not-so-friendly confines of the Motor City, you would think that "Happy Days Are Here Again" would be piped into the hallways on a continuous loop. Well, maybe not so much at the Silver Silos hard by the Detroit River - what with the ignition recall mess and all - but generally speaking, the good times and the optimism are back for the automakers in this town.
Factories are humming, sales are up, dealer bitching is being kept to a dull roar (because after all, when cars and trucks are selling dealers don’t really have time to focus on the negativity), bonuses are back and things just can’t get any better. Or so it seems.
But for the people who have been around here long enough, especially for the seasoned executives who have been to this auto circus more than a few times and have experienced the gut-wrenching lows, this is the most dangerous period for the Detroit-based automakers that there is.
Why?
There are a number of reasons for it but the short answer is that collectively the automakers based here in the Motor City can’t handle prosperity. At all. They ride the boom hard and fast, like they’re riding a rocket that will never run out of juice. And then they crash hard with a giant thud, leaving a trail of collateral damage that is breathtaking to behold. This boom-and-bust cycle is repeated time after time, too, to the point that seasoned observers can be heard wondering out loud if anything has been learned or if anything will ever change. (I’ll answer that one for you: No. And, no.)
There are definitive signs that it is already happening - again. In the dark days when the collective backs of the auto companies were against the wall, the sense of urgency was palpable. The meetings were fewer and shorter, decisions came quicker and the inevitable hand-wringing was kept to a bare minimum. There was no time for wavering or indecision, because the clock was ticking, loudly. And the true leaders emerged to push the organization forward.
But then that urgency and focus on the product that served these companies so well in the dark days begin to slip almost imperceptibly. Distractions are everywhere, especially the distractions that come with taking the victory laps for the products that have already been introduced. That’s almost a full-time cottage industry for these executives, in fact. The awards. The auto shows. The genuflecting by the media. The constant talking about what's here now while they have to figure out what's coming next behind the scenes. No wonder the focus gets lost.
And then because of all of that the tone and tenor of the enterprise subtly but inevitably changes. And that’s when the slide begins. That laser-like focus on the product is replaced by a dark dance whereupon the process takes on a greater importance than the actual product itself. Meetings multiply, the hand-wringing ramps up, decisions get kicked down the road to another meeting and then the point gets blurred and eventually lost altogether.
And then, complacency sets in.
As a matter of fact, complacency is the single biggest fear of any visionary auto executive CEO – yes, there are still a few of those left – because once it sets in it spreads throughout the enterprise like a virulent disease that is almost impossible to stop once it gets cranked up. As you can imagine, this is a swirling maelstrom of Not Good.
Add to all of this the “arrogance creep” that permeates an organization after consecutive quarters of sales increases and you have a recipe for disaster, and the beginnings of another bust.
(What is “arrogance creep” exactly? I’ll give you a couple of examples of it: it’s when an executive has the audacity to think that having a nine-hour meeting so that he can impart his wisdom to the poor, downtrodden wretches in the media is perfectly acceptable behavior. Or, it’s when an executive starts taking victory laps even though they’re new to the job and haven’t done anything to deserve that kind of attention. Those are just two, needless to say there are many, many more.)
Yes, certainly economic factors contribute mightily to these boom-and-bust cycles, but make no mistake, when these car companies go off the rails they only have themselves to blame. Because if they dig deep and do some serious soul searching they will realize that they not only allowed it to happen, they willingly participated in it every step of the way.
But then again this is how it works in the Motor City. It’s part of the culture, pure and simple. You ride the big rocket for all it’s worth, and then you go down in flames in spectacular fashion.
In other words, it’s all good until it isn’t.
Is there any chance any of this will smooth out and this business as practiced here will evolve into an even flow of gradual increases and nice profits in a sustained growth pattern?
Not even.
For the collective car companies that toil under the moniker “Detroit, Inc.” the rocket ride of boom and bust punctuated by hand-wringing and complacency is the Devil they know intimately.
As a matter of fact, they couldn’t do it any other way.
And that’s the High-Octane Truth for this week.