December 2, 2008

The Three Amigos

No, not those guys. I'm referring, of course, to Rick, Bob and Al - the CEOs of GM, Chrysler and Ford. They've got shiny new recovery plans in their tin cups this time, which they're bringing to Congress today this week in hybrid cars instead of on corporate jets. And they're all prepared to take a 99.99999% pay cut, if that's what it takes to get government money. I'm sure it will be a bumpy ride.

As I said earlier, I don't have a particular prescription for the auto industry. Presumably some combination of building better, greener cars, getting smaller and improving management strategies will result from all this sturm und drang. Steve Benen at Washington Monthly has a good run-down on the best of the expert analysis on this subject.

But frankly, I think the best ideas for the car companies are the ones that consider radical new business plans - something that seems to be anathema to the US car companies. I learned early on during my time in the technology startup biz that some of the best innovation coming out of Silicon Valley, for example, wasn't technology per se, but rather in the development of alternative business methods and business plans - heck, in the case of Microsoft, that's the only kind of innovation they've ever had. Which is to say that it's a shame there's isn't a greater willingness on the part of the Big Three to embrace radical change. After all, the status quo isn't going so well for them.

What would a radical new business plan look like? Maybe like Shai Agassi's Better Place. Agassi is a tech wunderkind who left a top job at business software company SAP to try and remake the auto business. Wired Magazine explains:
Agassi reimagined the entire automotive ecosystem by proposing a new concept he called the Electric Recharge Grid Operator. It was an unorthodox mashup of the automotive and mobile phone industries. Instead of gas stations on every corner, the ERGO would blanket a country with a network of "smart" charge spots. Drivers could plug in anywhere, anytime, and would subscribe to a specific plan--unlimited miles, a maximum number of miles each month, or pay as you go--all for less than the equivalent cost for gas. They'd buy their car from the operator, who would offer steep discounts, perhaps even give the cars away. The profit would come from selling electricity--the minutes.
He has since partnered with Nissan to build the cars, is launching trials in Israel, Denmark, California [updated: and announced a statewide trial in Hawaii] - and just landed a $667 million deal to create a system of car charging stations in Australia. Gee, someone's having success in the auto business.

Meanwhile, the NYT points out that one of the biggest obstacles for the success of the Chevy Volt is the $15,000 battery that runs the car. Which begs the question: why should you have to buy the battery? Why not riff on Agassi such that you own the car but rent the battery? Could that be an answer?

I haven't the foggiest. But why isn't anyone else asking these sorts of questions? If we're going to remake the auto industry, I say we remake it. Let one hundred flowers bloom. Obviously, the Big Three make aircraft carriers look small - they're more like space stations the size of small moons - and turning them is beyond hard. But turn they must. And if you ask me, if they want to turn into something other than industrial roadkill, they better think not just outside the box, but in, through and beyond it.

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