Yesterday I was watching CNBC report on the huge gains in the Dow and the panel was talking about how the market could spike so high even in the wake of the GM Bankruptcy News. A panelist then remarked the GM story is over. They are in bankruptcy and being reorganized. It is old news! The market has already factored in this issue long ago.
I agree! The issue today is no longer GM. It is how to avoid another GM from happening. Don’t get me wrong. Many people are being adversely affected by the bankruptcy filing and there is a great deal of work to be done on saving GM and as many people’s jobs as possible. But there are hundreds if not thousands of experts giving their advice on how to do this. What I want to concentrate on are the lessons learned and what business owners today can do to avoid a similar fate.There are three key issues we should all be thinking about in helping to avoid GM’s fate.
1) Build it and they will come – We have all heard this famous line from the movie Field of Dreams. In sales and business, this is so true. Build products that will meet both the needs and desires of your customers. Build a favorable customer experience so people look forward to coming into your business and buying a new product. The US Auto Industry failed miserably in these two areas. For years, the cars they built were not what the market wanted and the foreign competitors took over. As for the customer experience, my question is what experience? I remember buying my first car 30 years ago and the sleaze ball tactics they used to close the deal. Asking for my credit card to show the manager I was serious before making their “final offer”. Understand we all train our customers on how to buy from us. Granted, the old sleaze ball tactics of the auto industry are for the most part over. But think of all the distrust the auto makers have built up over the years and how that negatively affected their image.
Add to this the depressed attitudes in the showrooms today over the current conditions and you don’t have to think too hard why people are not coming in. For GM to survive, they have to build the right products and create the right experience to bring their customers back.
2) Performance Based Compensation- I am sorry. But no one deserves a lifetime guarantee of income even if they are not working. That may have worked several decades ago, but not today when competition is intense. Saddling one’s pricing structure with huge overhead unrelated to current productivity makes no sense. Want a check? Perform a function of value. If you retire, enjoy your retirement plan. Health care benefits for life? They are nice. If affordable, yes, it can be your differentiating factor. If not, you should not bring a company down with the huge costs associated. Employees should always work on becoming less dependent on their employers and do what they can to protect themselves. The days of having a job for life are over. Employment should be based on performance. Same goes for the company itself. Customers will only buy if they feel your products and services are performing for them.
You need to maximize productivity and drive cost out of the system as much as possible without sacrificing quality and service. This is the tight rope both individuals and companies must walk on a daily basis as they compete globally. If cost is not an issue, then build value that people are willing to pay for.
3) Brand Your Core Competencies—- GM has 8 Brands and 40 models. Toyota, on the other hand, sells most of their models under the same roof with the exception of their luxury Lexus line. News has it that they will spin off the Prius into a separate brand with three models in 2011. FYI, GM spent 1.245 billion dollars vs. Toyota’s 999 million dollars Jan –July 2009. Less money and less cars to hawk. Who do you think did the better job? Six decades ago, GM’s model worked. Today, it is too cumbersome and costly to operate. GM did not change with the times. It simply tried to keep on doing the same old thing and force the market to accept its model. As Sellers, we must remember this: No one entity has the power to force the market to do anything it doesn’t want to do. As for the question of whether or not the Obama administration is making the right moves with its involvement, history will determine that answer. My question is why did it have to come to this? Listen to your market and make the right course corrections. The bottom line is nothing counts if no one buys.