He’s Not Perfect

In the last few days, several news articles have detailed the problems at the US auto companies. One quoted a financial analyst speculating that Chrysler would have to either sell parts of its business or declare bankruptcy. Others reported that GM was facing a liquidity problem (i.e, “We have no cash we need to run this company.”). Some articles also focused on Toyota. They noted that like its American competitors, it too had failed to predict the quick rise in oil prices and the consequent impact on the demand for its biggest, heaviest vehicle, the Tundra.

Though I can appreciate that the media might be under pressure to present a “balanced” view, the situations of the US auto companies and that of Toyota are simply not comparable. The US companies are reeling; for long I have posited that they must change how they manage, not simply reduce their costs, in order to thrive. In contrast , while Toyota stumbled, it quickly announced that it would move the production of the Prius from Japan to the US to replace the planned Tundra production.

The articles reminded of a scene from one of the best movies ever made, Lawrence of Arabia. Lawrence had tricked the Beduoin leader Auda abu Tayi into helping him conquer Akaba, by promising him that a (non-existent) chest of gold lay in that town. After achieving victory, Lawrence promised Auda that he would bring back from Cairo gold from the British coffers. In the Middle East of that era, someone who delivered victory in war had to be respected, not disparaged. So, Auda expressed his frustration to Prince Faisal, “He lied. He is not perfect.”

The hallmark of a great company is not whether it guesses the future correctly, but how quickly it recognizes its error and how effortlessly it adapts. Toyota is not perfect; I can live with that – and so can its employees, partners and shareholders. In contrast, sadly, employees, partners, communities and shareholders will pay dearly for the inability of the US auto industry to adapt to their changing environment.

Category: Company Performance Comment »

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