Adventures In Cyberspace

IF CARS WERE LIKE COMPUTERS

What the auto industry can learn from tech firms.

March / April 2009 by E.J. Heresniak

I’ve had a lot of cars in my life. My first, a 1956 Pontiac, was built like a tank, with a front fender equal to a snowplow. I regularly hit things with the front end of this behemoth, and the old beast soldiered on unfazed, which is not something you could say about some of the vehicles I hit or the machines that pretend to be cars today. It took some tinkering to start my car since I had no money for professional attention, but when I needed it, the old Pontiac fired right up after sitting out in cold weather for days, surprising me, and impressing the kid who eventually bought it from me for fifty bucks.

I next got a Chevy Camaro, then a Ford station wagon, another Ford station wagon, a Beetle, another Beetle, five Hondas, a Subaru, a BMW . . . so I know something about cars. When planning my return to the States from China last year, I studied autos a lot. Gas at the time was near four bucks a gallon, so I got in line for a Prius, the Toyota gas/electric hybrid.

City, country, uphill, downhill—after accumulating nine thousand miles on my Prius, I still get about forty-eight miles per gallon on regular gas. No gloating; just the facts. The Prius wasn’t cheap, but it wasn’t out of line with a lot of other comfortable cars getting worse mileage. I think it looks funny, but I’m inside of it most of the time.

Meanwhile, we were told during the last election that the oil we use is controlled by folks who don’t like us very much and that energy independence is a national-security issue. All sides seemed to agree on this and said that even if gas prices dropped (which they did, of course), we’d still have to fix our addiction to oil. So why aren’t we all driving around with powerplants (the hybrid engines inside Priuses) that deliver forty-eight miles per gallon? And why is it still in the national interest to let people drive around in Hummers—today’s equivalent of my ’56 Pontiac? These have never been questions of technology. They were and remain questions of national will. Bad things can happen in a laissez-faire free-enterprise system in which slick marketing can make people do anything.

Remember Ross Perot? In his days on the board at GM, he was shooting real bullets. Here’s what he had to say about twenty years ago: “When you get down to the guys who actually have their hands on things, they know what to do. They can design, engineer, and build the best products in the world. My question is: Why haven’t we unleashed their potential? The answer is: the General Motors system. It’s like a blanket of fog that keeps these people from doing what they know needs to be done. I come from an environment where, if you see a snake, you kill it. At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes, and then you discuss it for a couple of years. The most likely course of action is—nothing. You figure, the snake hasn’t bitten anybody yet, so you just let him crawl around on the factory floor.”

Rick Wagoner, who has run GM for about a decade now, said this on the PBS NewsHour: “I’ve always felt like that you don’t get ahead in the world by not shooting straight, by not being credible. So I wouldn’t do what I’m doing if I didn’t have a high degree of confidence that we’re taking on the tough issues and we’re going to get the company turned around.”

“First and foremost,” he also said, “we are taking some big actions, not just to become profitable—which you want to do—but to really fundamentally restructure the company to be competitive in what is now a global auto industry and a global economy.”

The pity is that he said these things in April 2006.

Charley Fine, a professor at MIT’s school named after GM’s big guy, Alfred Sloan, wrote a book some years back called Clockspeed, in which he suggested that watching fast-cycling industries might be instructive for slower-moving industries. Fine thought that fast-movers worked like fruit flies and could show what worked and what didn’t work on an accelerated schedule. He used the example of “Intel Inside” in the fast-cycling technology industry to make the point that a component supplier might be more integral to a product’s success than the assembler of the product—in the way that engine-manufacturer Cummins supplies parts for big trucks.

In the computer business, a few specialized “engine” suppliers make the processors, hard drives, and memory chips for everybody else. Their designs determine the underlying capability of the systems of many manufacturers. Lack of competition is never a good thing, so this isn’t about monolithic suppliers of anything. But it seems to make sense that if there is a superior automotive powerplant, such as that of the Prius, it ought to be exploited with derivatives for other applications rather than be limited to a single application in one particular vehicle.

I’ve driven my Prius all over the place, and while my insight about how the hybrid engine actually works is limited to a cartoon on an LCD on the dashboard, I like the results, and it’s a proven technology. Honda has been using Toyota powerplants in its hybrids for a few years and now is developing its own. I think a couple of good, specialized engine companies could clean up in the automotive industry by beating the undercapitalized and duplicated engine development in myriad car companies. Of course, veteran car engineers will say that’s impossible, that their platforms are unique, that engines are highly prized, proprietary advantages, and that no common engine can meet the special requirements only they and their customers understand.

Baloney. Similar arguments about computer microprocessors went on for decades. (They still go on.) Intel versus Motorola; internally developed processors versus industry-standard, mass-produced microprocessors; complex, specialized, and very expensive processors versus simpler, mass-produced machines ganged together. But getting common designs and components was rarely about technical challenges and more often about engineering constituencies desperately clinging to ideas and jobs.

Besides, it seems to me that GM figured out how to fit Chevy engines into 1981 Oldsmobiles when it suited them and now uses Chinese-made engines in a couple of their current models. Why not outsource engines to the best of breed worldwide like the computer guys did with microprocessors?

Most cars, regular ones that carry people, would work perfectly fine with one well-designed engine that gets really good gas mileage and doesn’t pollute much. If you stare at enough cars long enough and get past the glitz, they look like commodities—essentially the same layout of four wheels, a box with seats, an engine and drivetrain of some sort, lighting system, brakes, and controls. Kind of like how some of us saw PCs and other computers years back, even though there were lots of proprietary designs and specialized parts. The savings from eliminating duplicate design, manufacturing, and interface complexities can be as substantial with cars as it was with computers. Of course, you don’t want one company alone doing this—maybe two or three, so they have to compete and fight to be the best, like GE, Rolls Royce, or Pratt & Whitney do with jet engines.

A restructuring of this sort, a real restructuring, will be fought tooth and nail by car-company veterans, especially the American leadership of what’s left of the U.S. auto industry, who will mimic the computer guys formerly with Digital, Data General, Wang, Burroughs, and even IBM. But it’s our last shot to get this right. “We need to build an environment where the first guy who sees the snake kills it.” Ross Perot said that, too. Whoever gets out in front of this thing with fresh eyes and a clean slate will make a killing.

Speaking of serious restructuring, this fine magazine is going through a little restructuring of its own. As a result, this will be my final “Adventures in Cyberspace” column, which has run now for more than a dozen years. I mean, what more can I say about computer stuff anyway? It’s the same story pretty much, just new paint and polish now and then. What I can say is thanks to the people at The Conference Board Review, the ones here now and their predecessors, and thanks, of course, to you.

 

E.J. HeresniakE.J. Heresniak consults for a variety of businesses, drawing on more than thirty years of experience with IBM, McGraw-Hill, Standard & Poor’s, and academia. Visit his website at www.gatestreetpartners.com or e-mail him at edheres@aol.com.