Quote:
Originally Posted by xoxoxoBruce
The government scrambled to save some of the big players on Wall Street. Why? What do we need them for?
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Necessary is to first establish a few principles. Fundamental in business - the company's survival. Why? The existence and structure of a company - that makes possible products and the resulting jobs - takes years and decades to create. To do the number one purpose of a company - its products - a company must survive. So, how do we fix defective companies? Fix the reasons for the defect. That means always going after a #1 reason for the problem - top management. No destroying the symptoms of our economic enemy - the resulting corporation.
A company that makes buggy whips does not make automobile turn signals for only one reason. Top management was stifling the innovators who were promoting new products and markets.
HP made the sine wave oscillators that, for example, make the weird sounds in Disney's Fantasia. So why did HP make so many electronic test equipment and critical hospital medial equipment? Why did HP make wrist watches and calculators? Why did HP eventually replace IBM (and the seven dwarfs) as a world leader in computer? See Clayton Christensen's Innovator's Dilemma.
Innovation makes companies. But existing companies that replace business school rhetoric with innovation morph into the greatest advocates of the only thing that made America great.
Bankruptcy is another American innovation. Had GM been in bankruptcy in 1991, then GM would not had destroyed so many American jobs and required government bridge loans 20 years later. Because bankruptcy loomed, then 1979 Chrysler, 1981 Ford and 2007 Toyota all started to fix themselves. Yes, 2007 Toyota. When Toyoda took over his great grandfather's legacy, he said there are five stages to a company's destruction. And Toyota was already at level 3.
You saw Toyota fixing itself when the legacy of those problems appeared in stuck accelerators some years later.
A company must survive. That means its number 1) reason for failures - top management - must be fixed. If not, then 2) a company must fire employees. If still not done, then 3) bankruptcy forces necessary (see Wagoner as the classic reasons why this would not happen - denial) changes. To either force restructuring. Or to sell assets to others who are more American patriotic. Who do not fear innovation.
A company that meets its survival requirements never need get past above point 1 - as Toyoda has done. A company that was one of the most anti-American companies was doing everything wrong because they did not do point 1) 30 years ago. GM has been that that destructive to the American economy for that long.
Because Ford only started fixing its problems in 2000, then we are only just beginning to see Ford advancing the American economy. The company was saved. Therefore innovation (the most important thing that every company does) could be made available to the economy.