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Reinventing the Automobile: GM & Ford vs. Startup Guy

By Shlomo  Maital   



  “In the ring, weighing in at about four ounces, is Silicon Valey startup guy Paul Elio.  Facing him, weighing in at 24,382 tons, is …General Motors, Ford, and VW.  12 rounds for the innovation championship in motor cars.”

    No contest.  A startup to make cars?    Non-starter, right?  Well, Paul Elio has done it.   There is a long LONG waiting list to buy the Elio automobile, a 3-wheeler, that gets…84 miles per gallon!  (Beats even the hybrids!).  The car is American made!   And its cost?  $6800.   (About the cost of 2.5  high-end Armani backpacks).   Here is what the Elio website says:

   “A few short years ago, automotive enthusiast Paul Elio sized up the prevailing status quo of personal transportation. He saw the soaring costs of the vehicles we drive. He saw fuel prices spike to record highs almost daily. He saw Americans struggling with an economy that was taking too much and giving back too little. Paul Elio decided that the world was ready for something radically new. The result? A three-wheeled masterpiece of automotive brilliance that bears his name.”    Elio’s vision?  “To provide a fun-to-drive, super-economical personal transportation alternative, that’s affordable, safe, and environmentally friendly. We are committed to the American dream, creating American jobs, and bringing American automotive ingenuity to every vehicle we build. This is, and will remain our mission at Elio.”

          The boxing match has begun.  It ends as soon as it begins.  Elio knocks out the automobile giants.  Why?   Big companies cannot innovate.  By definition.  They would never let a car like the Elio get past the drawing board.  Low margins.  Etc. 

        Elio Motors might yet fail. But like Tesla,  it could spur the car companies to actually try something innovative.   Innovation comes from rebels.  And rebellion is the last thing big companies seek or even allow. 

        Kudos to Paul Elio!   And Big Oil?    Think about trying another business.  

Mary Barra at GM: First Sure Steps

“Don’t Confuse Progress with Winning”

By Shlomo  Maital      


    I’m following new GM CEO Mary T. Barra closely, after she took over the company on Jan. 15 from Daniel Akerson.  Akerson was appointed by the U.S. Government, which bailed out GM, and saved it from bankruptcy, then sold its GM shares at a profit.  Akerson spent his four years as CEO “cajoling the company to shed its hidebound culture”, according to  Bill Vlasic, New York Times (Jan. 25-26, p. 11).  But Mary Barra has a different message. Speaking to top GM executives at a two-day meeting, her message struck just the right tone. 

   “There is no destination here, this is a continuous improvement journey.  Don’t confuse progress with winning.”

    Barra is a trained engineer and brings shop floor experience to the CEO job.  And she ‘get’s it!’.  The car business is all about building beautiful, sexy, powerful, appealing, attractive, safe, cost-effective fuel-efficient cars and trucks.  It’s not a sport. 

  “Even when you’re leading in a segment, that’s only for the moment,” she cautions.  “You have to continually keep raising the bar for yourself.”

   That’s a powerful message for GM.  It is doing well in the U.S. and China.  U.S. sales rose 7.3 per cent last year, but the car industry itself overall grew by 7.6 per cent.   GM has an 18 per cent market share in the U.S. and has struggled to maintain it.  It lost the global lead to Toyota, which sold 10 m. vehicles last year, more than any other company. 

    Barra is far far less standoffish than her predecessors.  She travels the world, holds small ‘town meetings’ with GM employees, and she is a good listener.  She is also tough.  “If you have a problem you better solve it. Because if you don’t, you won’t be here or the company won’t be here,”  she says.  She has set two ambitious goals for GM – 10 per cent net pre-tax profit margin in North America and breakeven in GM’s losing European operations,  both by 2015. 

     My parents once bought a beautiful coral Oldsmobile with a white vinyl hardtop. It was a beautiful car that not only a mother could love.  GM lost its way when it was led by a series of beancounters who cared nothing about cars.  Can it reinvent itself, and its culture, under Barra?   Could be.  It’s fun to watch her in action.   The future may indeed belong to women managers… see how Marissa Mayer has turned around Yahoo’s fortunes!  And Janet Yellen, who will decide the fate of the dollar, and the U.S. economy.  

Blog entries written by Prof. Shlomo Maital

Shlomo Maital