Detroit's Golden Opportunity

With One Wave of a Magic Wand, President Obama's automotive task force did what decades of cost-cutting and restructuring could not. It rid Detroit's auto makers of almost all their legacy costs.

For the first time in nearly 40 years, U.S. auto makers now have a golden opportunity to compete with the world's best on nearly equal footing. Time to get to work!

And yet, there are two major issues that could derail any comeback: Detroit's command-and-control ethos, and its loss of engineering talent.

Detroit's management culture was incubated nearly a century ago in a dog-eat-dog environment. The early auto pioneers were bull-headed entrepreneurs who came of age in the laissez-faire mindset of the 19th century.

They built their business model around vertical integration and Taylorism, a philosophy based on controlling every step involved in production and strictly dictating how employees do their jobs.

After World War II, fresh from their military experience, the business school “whiz kids” took this command-and-control management style and drove it deeper into every aspect of the automotive industry. They put finance in charge, a practice that later would result in “bean-counter specials” — vehicles that met all the cost targets but could only be sold with generous sales incentives.

Their modern equivalents put the purchasing function nearly level with finance, because this completes the control they exert over suppliers.

Unless or until they embrace and nurture a more collaborative culture, the Detroit Three are likely to revert to their past practices and never emerge as vibrant competitors.

Nowhere is this more apparent than in product development. In the last year, GM and Chrysler have decimated their engineering ranks, and Ford has made major cuts. The problem will be masked for a while because they still have products in the pipeline that were designed and developed before they axed thousands of engineers.

In about two years, we're going to see the results of this brain drain. And the impact will be felt more severely because the new 2016 corporate average fuel-economy standards are going to force them to re-do their entire lineups in a short time.

This would have been tough enough with their old staffing levels. Now, with depleted engineering ranks, it will be next to impossible. If they do it the old way, that is.

Back to the point about culture. Detroit's auto makers must drop their command-and-control approach, no matter how much they think this is the key to efficiency. They need to adopt a culture of cooperation as it involves suppliers, retailers and especially employees.

Collaborative product creation is really catching on in other industries, and Detroit could learn a lot from those efforts.

There's a new science called complex adaptive thinking that could pave the way to a new mindset and new culture. It uses goals and guidelines to direct an organization, not commands and controls.

This could unlock the incredible potential that still exists in Detroit, even in its decimated state, and start the long road back to rebuilding an industry that used to be the best in the world.

John McElroy is editorial director of Blue Sky Productions and producer of “Autoline” for WTVS-Channel 56, Detroit and “Autoline Daily” the online video newscast.