Is Business Sick?

This question is, I suppose, the premise to this entire blog. Why would one need a counselor if there was nothing wrong? If business is sick, should we even be concerned? Is there anything we can do to help or, like the common cold, should we just get some rest, eat chicken soup and mope around the house for a day or two? If we believe we can help we must determine what business is suffering from and what we can prescribe to cure its ails.

While the recent ‘occupy’ protests would argue that the sickness is systemic and terminal, this is a rather daunting premise to admit that our entire way of life is flawed. However, given the impetus of these protests and the past 4 years of economic turmoil, anyone who says that the body of business is a picture of health may need some therapy themselves. Instead, I would argue that we observe business illnesses in the same way we regard those of people (we do, after all, give businesses many of the same rights as people). Each business, as each person, must be evaluated and approached on an individual basis. In certain cases, we can collectively group together illnesses among common groups or industries.

Take the example of the US auto industry. While healers much wiser and more experienced than I are currently trying a cocktail of different treatments to fix the industry, one has to wonder how the situation became so dire. With the benefit of hindsight, nearly anyone can see that the auto industry was suffering from some archaic ailment which should have been identified and cured long ago; a kind of corporate smallpox where everyone is shocked that this would happen in our modern age. By the time symptoms began to show, it was almost too late: dealerships were closed, plants shutdown, GM became government property, Chrysler was bought by Fiat and the United Auto Union. These companies had been operating on 50 year old business models, producing cars that people didn’t really want and manufacturing parts at ridiculous costs under iron-tight union contracts. Meanwhile, foreign automakers had been eating away massive market shares from the Big Three.

I read an article in the fall (which for the life of me I cannot find) that made a drastic proposal for the auto industry. The article suggested that auto manufacturers should focus on their core competencies – designing, marketing and selling cars – and shed the distractions they are engaged in, such as manufacturing parts. What? A car company that doesn’t manufacture anything? How would that be possible? That idea is almost as crazy as a computer company that doesn’t create any electronics.

Say what you will about big blue, but IBM is one company who truly believes the old adage ‘adapt or die.’ In the early 80s if you wanted to buy a personal computer, your decision was pretty much down to Mac or IBM (note, not PC, but IBM). However, IBM had the foresight to see that hardware was going to eventually be a commodity and that they would have difficulty competing with foreign electronics suppliers who benefited from labour savings (sound familiar?). Enter the PC clone. IBM didn’t stop making computers (not just yet at least), but for the most part, they became an assembler. Beyond this, they standardized PC design and parts and not just allowed, but collaborated with companies such as HP and Compaq who created PC clones. IBM still got their cut by licensing versions of MS-DOS which was arguably their true core competency at the time.

Imagine a world where Ford did nothing but design and sell cars. They could set the standard for parts which would be integrated into Ford cars and allow the market to take care of making parts at the lowest possible cost. So long as those basic criteria were met, companies around the world could optimize part design and create standard parts that could fit across not just one, but a wide range of vehicles. Cars would be modular, and brought together in an infinite number of configurations. Much like building a custom desktop from Dell, people could design and customize their own new car which would be exactly as they want it. Exhausts and mirrors and frames could even be specified from different suppliers much like choosing Kingston RAM over generic or a Seagate hard drive.

But I digress. This is simply one of many ailments facing the corporate world today. Each Friday I will attempt to (and likely fail to) tackle an issue which plagues modern businesses, be they individual organizations, industries, or business as a whole. Your feedback, comments and questions are always welcome: I love a good chat.

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