It’s the product, stupid!

So, today (4-DEC-08) on WLS AM890 one of Illinois’s congress
critters (I didn’t catch which one) is being interviewed on the big
three bailout. He says their plans lack anything about how to increase
sales. The plans are about how they need loans and make cuts and how to
get through another year as if people will magically start buying
cars.  The fact that banks didn’t have a plan at all doesn’t seem to
have even registered with him or most in congress, but I digress.

The
reason the plans of the big three executives neglect ways
to increase sales is because they aren’t product people. I noticed in
my work long ago that those at the top of the companies I’ve worked at
disregarded product. Everything was about finance. Sure they talked
about product now and then, but ultimately it was in a financial sense.
That’s how they viewed everything.

Now some are thinking, of
course it’s about finance, it’s about making money. And yes it is. But,
product is about making something people want to buy. That’s where the
disconnection is. To the executives, who have been trained in
‘business’ or ‘finance’ or maybe ‘economics’ see it as people not
buying product, sales not selling product, not that the product itself
is faulty. People just aren’t buying. They need a change in conditions
such that people will buy or a way to make it cost less or something
else that over looks that people just plain don’t want it.

That’s
where the big three are. The same economic nonsense that the
government, the federal reserve, and many others believe. It’s just
that people aren’t buying. The economy needs to be ‘stimulated’. There
needs to be loan to get the companies through until people start buying again. What
about product? It’s not part of the Keynesian language apparently.
Those in the Austrian school clearly see it is about providing
something that people want, to the Keynesian,  the problem is people
aren’t buying. It is clearly the later that these executives were
taught.

It’s about product. Make a good product people want that is a value for their money and it will sell if buyers know about it.

“Let them fail; let everybody fail! I made my fortune when I had
nothing to start with, by myself and my own ideas. Let other people do
the same thing. If I lose everything in the collapse of our financial
structure, I will start in at the beginning and build it up again.”
-Henry Ford February 11, 1934

Henry
Ford could say that because he was about product, even though all the
ideas were not entirely his, it was still about the product. He had
good ideas and bad ideas but it was about product. When you care about
product you don’t need a bailout. If your product fails you try again.

Today’s company executives are all too caught up in costs and
finances and not the product. The product really does not matter to
them and hasn’t for many decades. The UAW simply costs way too much for
Detroit’s automakers to make many of the products people want to buy at
the price they want to pay. Instead of doing something about that, the
automakers decided to take cost out of the vehicles and not in a good
way.The UAW didn’t want anyone losing a job so it wasn’t that the cost
came out by more efficient design that reduced the number of people
required, the cost came right out of the materials and otherwise cheapening the parts.
The cost came out by not revising and replacing designs for engines and
transmissions as often. The cost came out in ways that had a negative
effect on the product. 

Eventually this put many products from US automakers so far below
the competition few people would buy them. Only where they could get
high margins did the US automakers do well. Those vehicles happened to
be SUVs. They did well on those vehicles because they did not have to
sacrifice the vehicle itself. When the market shifted away from SUVs
they were put into a world of hurt.

A bailout isn’t going to help them. Not unless they can build higher
priced vehicles that people want to buy.The market segments that are
selling appear to be lower priced vehicles.The Detroit automakers can’t
make those competitively with UAW labor and can’t sell most of the ones they make
without UAW labor in the US.

It’s about the product. If they can’t put out product people want to
buy and be profitable at the price buyers want to pay, they will fail.

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