Wednesday, November 12, 2008

Steve Jobs and the Auto Industry

Tom Friedman is livid at the prospect of bailing out U.S. automakers:
Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?
Friedman goes on to suggest conditions for federal help, including asking Steve Jobs to run a car company for a year. It's an intriguing thought, but as unworkable as asking Jobs to run Microsoft (once described as the GM of software) for a year.
Consider what happened when Jobs came back to Apple after his exile. He came to a company that still had people used to innovating, even though the company's products had lost some of their pizazz. GM, Ford and Chrysler have precious few people who have launched innovative products. As Business Week reported earlier this year, GM CEO Bob Lutz
was shot down when he tried to raise the issue of building an electric car back in 2005.
Jobs also got Apple to buy his company Next, which provided the DNA for the operating system for a new generation of Macs. It would be like building a new generation of cars with an entirely new drive train provided by a startup company.
My advice to Steve Jobs, if he's interested in building cars, would be to start over from scratch, as
the New York Times reported a year ago:
A generation of digital-era Henry Fords, unabashed and brimming with confidence, has emerged. Born of Silicon Valley and the dot-com culture, they are trying to apply to carmaking the same entrepreneurial spirit that built the information superhighway.
Most of the inventors are not carmakers by background or training. But they are cocksure, backed by millions of dollars in venture capital and cloaked in the righteousness of environmentalism. To their critics, they are flying at high speed around a blind curve, destined to become reality-check crash-test dummies.
Cars on the market or in development include the $100,000 all-electric Tesla Roadster, the $190,000 Wrightspeed production super car, an electric pickup truck called the Phoenix, the low-cost diminutive Th!nk car and the Bangalore-made Reva.
The large-scale impact of the collapse of the U.S. auto industry may be too horrible to contemplate. But, as Friedman and many others are suggesting, the companies can not and must not try to keep going as though nothing happened. The not-so-big-three may not be as nimble as the startups, and change may be wrenching. But one approach that could accelerate innovation would be for the automakers to buy new technology from the startups, just as Jobs brought in a new operating system from outside.
GM, Ford and Chrysler may be bleeding money, but they can still attract more capital than the small innovators. If the federal government is going to sink money into U.S. automakers, it should go to developing future technology, not propping up past failures.


Anonymous Anonymous said...

GM needs new leadership that is not committed to old Lock-ins if it is going to ever be a viable competitor. Only someone from outside the industry will be able to implement necessary Disruptions and create White Space that will allow GM (or Ford or Chrysler) to address long-term shortcomings. I don't know why Jobs would take the job, but someone who is Jobs-like is necessary. Read more at

4:05 PM, November 16, 2008  

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