Team execution ... ... vs. revolutionary strategy.

Author:Seeds, Dennis G.
Position:Larger margin
 
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If you look deep enough into the recent speech General Motors President and COO Fritz Henderson gave to the Automotive Press Association, you will find some encouraging words.

The company, if you haven't heard, has racked up North America losses for nearly two years in a row--losing $38.7 billion last year. But since cutting down on operating costs and boosting sales overseas (59 percent of 2007 sales were in countries other than the United States), GM has made progress with this strategy.

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"This is not a business known for revolutionary strategy--it's about who executes best," Henderson said.

Few of us in today's automobile world were around to remember, but I would say the last revolutionary strategy put into practice in the auto industry was the assembly line in 1908. One hundred years ago, a couple of Ford Motor Co. employees put a Model T frame on skids, hitched a towrope to the front end and pulled the frame along until axles and wheels were put on. Then they rolled the chassis along the primitive assembly line in segments while parts were added. Some pieces, such as a radiator with its hoses, were assembled in the background and then installed at the appropriate time.

It all made sense, and over the next five years was perfected. The $825 Model T dropped to $575 by 1914. To put that in perspective, the purchasing power of $575 in 1914 is comparable to $12,303 today. That's still a sizeable slice of a consumer's income today, but in time, even that $575 price dropped.

When one starts to analyze this revolutionary strategy, it's obvious that it took time to properly execute the process. The engineers observed that complex parts needed longer time to be installed. Yet, the line had to keep in motion. Intervals were established to take this into account. This took considerable trial and error. There were no computers to design a virtual assembly line. Eventually, the supply of parts and the start-and-stop intervals along the line meshed into a synchronized operation.

It's amazing to think that 100 years later, automobiles are still manufactured the same way. Robotic machines are replacing manual labor, but the assembly process is still the same. Automation has been a method to make the assembly line more efficient, and can't really be considered a revolutionary strategy. Automation is, in effect, part...

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