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By Root 904 0

The so-called “needs” and “emerging segments” analysis system, I think put in by Vince Barabba, may also have “brought order” and I believe it brings a certain rational aspect that is necessary. But it is far too “user segment” focused and not enough “fashion trends” oriented. In other words, the system will identify “large sport-utility,” but it won’t identify “the Hummer H1 and the Schwarzenegger mystique may be telling us that there could be a market for a more producible derivative.” The system will identify increasing interest in T-car-sized monovans, but it won’t come up with “growing interest in funky, retro-styled, high-cube sedans á la PT Cruiser.” And it could find “highpackage, high-performance small car,” but won’t find “BMW Mini.” The trouble is, we’re analyzing segment, and sub-segment and sub-sub-segment growth without understanding what taste trends are causing those segments to grow in the first place. In the U.S., the PT Cruiser, through design, is making the segment.

I went on:

As I told Larry (basically, “I don’t like all aspects of the system, but I do like you”), the process has the advantage of being just that: a repeatable and predictable way of generating data that is useful as one input. But it can’t, by itself, drive the portfolio, or we’ll proliferate ourselves to death with more and more 50,000-unit/year “needs fulfillers” and less and less 300,000-unit/year home runs.

I’m thinking of ways to improve this and to find a parallel creative process, but I’m not there yet. In other words, I’m describing a problem without yet proposing a solution. Suggestions are welcome!

I also promulgated a set of what I called “strongly held beliefs.” I didn’t want to call them “rules” because that would imply a claim to absolute correctness, which is way more than I want to claim for my opinions, generally. So, the list is really a compendium of accumulated experience in four automobile companies, plus a strong jigger of medicine for what I thought ailed GM.Addressees were all my direct reports.

Strongly Held Beliefs

1. The best corporate culture is the one that produces, over time, the best results for shareholders. Happy, contented employees, and an environment where nobody argues or disagrees, and everyone compromises because the other person has goals, is usually not the culture that produces great shareholder value. A performance-driven culture is often a difficult place to work, and it certainly isn’t “democratic.” Democracy and excessive consensus-building slow the process and result in lowest-common-denominator decisions. As Larry Bossidy, former CEO of Allied Signal, so aptly said, “Tension and conflict are necessary ingredients of a successful organization.”

2. Product portfolio creation is partly disciplined planning, but partly spontaneous, inspired, all-new thinking. A good planning process can be an excellent baseline tool, a means of generating solid data. But it cannot robotically create a good future portfolio. It will generate bunts, singles, walks, and the occasional double. But triples and home runs come from people who say,“Hey, I’ve got an idea!! Listen to this!” Needs-segment analysis can find a “small monovan” niche. It can’t find a PT Cruiser, or a new Mini, or an H2!

3. There are no significant, unfilled “Consumer Needs” in the U.S. car and truck market (except in the commercial arena). What there are are “consumer turn-ons” that research alone won’t find.

4. The VLEs must be the tough gatekeepers on program cost, content, and investment levels. After (and maybe before) contract, requests for “priceable” content (it never works out that way, anyway) or “volume-improving” content can no longer be honored without offset. The VLE needs a program contingency, to be reserved for last-minute fixes or enhancements (and maybe I need one, too). But the VLEs must evolve into often-unpopular “benevolent dictators” when it comes to protecting their cost position. It must be inviolable. Programs that miss their cost targets cannot be tolerated.

5. Much