Profit vs. Innovation? Hmm.

It's been a long time coming, like the song says, and its been a long time gone. It, in this case, is our blog. And we apologize for the lag in postings. With our growing business and an economy "on the brink," we, like everyone else, have gotten mildly (!) distracted. Thank you all for your patience.

That said, one of the most important issues on every one's minds these days is the current and future state of the the automotive industry. Despite industry protestations, there seems to be little debate in the rest of the world that they brought this on themselves. The question, however is not if, but how. In a recent New York Times article, entitled At G.M., Innovation Sacrificed to Profits, the most telling comment came from General Motors board member, former Kodak CEO and Chairman, George M.C. Fisher.

"We were late on hybrids," Mr. Fisher is quoted as saying. "Why were we late? We made a business decision as opposed to a marketing decision. That's probably a mistake in retrospect." [emphasis added]

Wait a minute! Did he just that marketing isn't business? Hold that thought, because here's another one: As much as the article lambastes the the company for lack of vision, the story's headline implies, whether intentional or not, that profits and innovation are at odds. That's absurd. Nothing could be further from the truth. However, innovation usually means longer-term profits through fulfilling a business strategy. The real headline should read, "Innovation Sacrificed to Short-Term Profits."

So, if G.M.'s executive leadership team considers marketing as something separate from business, and has traded long term growth for short term transactions, what does that say about the company? Well, it tells us at Cinterim that General Motors, the quintessential American automotive company, is riddled with a fear of marketing. It's really not all that surprising in an industry that was birthed with Henry Ford's infamous comment, "I'll give them any color they want, so long as it's black." When get right down to it, after all, the auto industry is technology driven.

The importance of corporate culture in the fulfillment of business objectives has never been more apparent than it is today in the clear dysfunction within General Motors. In an industry that was built on making accessible a product that advanced consumer's lives; in an industry that was predicated on the assumption that accessibility was enough, there is no culture of listening to the voice of the customer. Listening to the customer is called marketing, which General Motors didn't consider a good business measure to make decisions. In light of Henry Ford's comment, it's a small step to see that the automotive industry has a historical "disaffiliation" with their customers. It has taken a century -- G.M.'s market share has slid consistently since the early 60s -- and an economic crisis to bring it to bear, but the results are clear. In this context, it is clear from Mr. Fisher's statement that G.M has pursued short-term profits at the expense of long term business objectives.

This is what we call a marketing dysfunction. The tell tale signs? Shutting down the voice of the market, in this case the car buying consumer; innovating features instead of products. How many different ways can you make a heater function, or make headlights or a radio work? And then there the issue of fuel economy: 35 years have passed, 3-1/2 decades since the first gas crisis erupted in 1973. It seems to us that there was more than sufficient time between then and now to build fuel-efficient engines. It's our belief that these issues are based in the disconnection the company has with it's customers. But this marketing dysfunction is not happening within the marketing discipline. It's a dysfunctional relationship within technology companies. Separating out marketing from business is ludicrous: Marketing is business. In fact, what Mr. Fisher admitted was that the company simply didn't see the need to listen to the voice of its customer. Now General Motors, and the industry as a whole, is paying the price and dragging the rest of us in its wake.

At his first appearance before congress several weeks ago, G.M. CEO Rick Wagoner said, "What exposes us to failure now is not our product lineup, or our business strategy, or our long-term strategy." He blamed it solely on the economy. Without a doubt, the economy is playing a key role here. But G.M. has been losing market share for over 40 years. Mr. Wagoner returned to Congress last week, hat in hand, promising innovation. From the sounds of it, he's talking about innovating process and streamlining the company, both of which are sorely needed. Other than pairing down product lines, there doesn't seem to be much talk about innovating new products that customers crave! (Remember the customer, Rick?)

The thing about the fear of marketing is that it is myopic. Those that have it are inherently focused inward, not on the customer. If G.M. doesn't heed the voice of its buyers, then any bailout is only slowing down the company's eventual demise. In this economy, or any other, General Motors needs to face and eradicate its fear of marketing, reinvent its process and culture and, in doing so, reinvent its business.

That's our opinion. What do you think?