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Internet Speed My...

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My entry for hackneyed phrase of the new millennium? "Internet speed." It has become a crutch for automotive and supplier executives the world over as they try to convince the financial markets that the future is rosier than it first appears. Costs too high? Use the Internet to whipsaw suppliers into shape. Sales slow? Hey, the Internet can drive buyers to your vehicles. Customers waiting too long for their vehicles? Well...I'm not sure the Internet can help here. After all, it's the need to keep the lines running in a predictable fashion at a cost-effective line rate that will continue to drive this equation. It would take a fundamental change in the procurement and build processes to change this one, but you get the idea.

Doing things faster and cheaper may seem to be good—but it also may mean nothing more than the production of things nobody really wants at high speed. Which leads me to this question: If Internet speed isn't the answer, what is? Time and the effective use of human capital. The time to determine what product best fits the market. The time to plan for this generation of vehicle—and the next. The time to discuss the best way to reach your targets at the lowest cost and with the highest quality. And an empowered workforce ready and able to make decisions.

Many years ago, I had the chance to ask a Toyota engine designer how long it took his company to produce a new engine from a clean sheet of paper. "Five years," he said quickly. "The first 2.5 years are spent working with the platform teams to determine packaging needs, research legislative trends that could affect the design, study technologies we—or our suppliers—might have on the shelf that would work in this application, and to make provisions for new technologies that might reach production during its lifecycle. The next 2.5 years are spent executing this plan, reviewing both our progress and our assumptions along the way, and putting the engine into production." He assured me the same process was used by the vehicle platform team, though three years were spent developing the plan, and two years executing it. Is this the answer? No. Pay attention. This is just part of the answer. And a very small part at that. People make the real difference. Use them properly, and they can create time and money.

The effective use of human capital demands an extended enterprise view of the world in which each project is a series of concentric circles. Information flows out from the center, and ripples carry more detailed information back. Transparency lets everyone view all of the relevant information, and the flat structure helps keep politics and recrimination to a minimum. At its core this is a democratic system, messy but effective.

Granted, this grand old industry is loathe to change from its command-and-control roots. And it would never willingly embrace a philosophy—in whole or part—that put product before career. I say this because the writer of the book that first turned my head toward this management method, Ricardo Semler, has spoken to many companies in this industry (like Ford), and taken them on tours of Semco, the company he rebuilt in his native Brazil. His book, Maverick: The Success Story Behind the World's Most Unusual Workplace (Warner Books), is on bookshelves throughout the community (I'm responsible for more than a few of them getting there), yet his message is lost in the old way of doing things.

Why? My theory is that it is easier to spout empty phrases like "Internet speed" to impress Wall Street than it is to fundamentally change the way you do business and treat employees. Yet doing the latter frees much more capital—human and financial—than the Internet ever could by itself. The only problem is that the results take longer than one quarter to materialize, something that goes against the grain of this attention deficit disorder world we live in.

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