A few days ago, I met with the top executives of a Fortune 100 company. (These executives were very busy as you might imagine.) It was not easy for them to devote an entire day to step back and examine what I call “The New Big Picture” and the rapidly emerging risks and opportunities associated with seeing it.
I started out by asking them if they thought the big three auto executives and all of their direct reports had been very busy the past five years. They all laughed as they agreed. Being too busy to think strategically about future risk and opportunity is often at the center of our biggest problems.
It seems the big three auto executives weren’t thinking when they all flew separately to Washington in private jets. Driving to Washington in each of their company’s most fuel-efficient car might have sent more of a “we’re working on it” message.
Not having a detailed spending plan for the billions of dollars they were requesting was another example of not thinking. Having a detailed plan as to how they would spend the money would have at the very least provided confidence.
Not connecting the rapid increase in automobile ownership in both China and India to the resulting increase in the demand and price of fuel was another amazing mistake. The irony in this becomes clear when you consider all of them were actually selling cars in those markets and were excited about the unprecedented increase in demand for cars. More cars mean more fuel, who would have thought of that?
The point is that being busy and not thinking can get you into big trouble.
During my meeting, one of the executives posed the following question. “If our government was to give the automakers the money, what do you think they should do with it?”
I suggested that everyone was focused on the wrong problem. The reason for the bailout was to prevent massive layoffs. The reason people aren’t buying the big three’s cars isn’t because the big three is low on cash. It is because the majority of the cars they make are gas hogs and many of the people who want to buy a car can’t get loans because of the financial crisis. Giving the big three money won’t solve the financial crisis and it will take years to redesign and build fuel-efficient cars. In other words, they will still have to lay off masses of people. It would be better for the government to give anyone who wants to buy a car a subsidy reducing the price of the car by up to $10,000, less for lower end cars. This would keep cars selling and workers working.
I know you are all very busy doing a lot of things as we face a growing recession. Let’s make sure we take the time to think about the risks and the opportunities, the present and the future before we do too much.