Driving to the Future: Hyper, Global Competition Heats Up

The U.S. auto industry’s pleas to Washington for a bailout are a perfect illustration of the forces making management in the twenty-first century a hair-pulling exercise, writes Baseline columnist Faisal Hoque. We are witnessing a dizzying restructuring of a global industry, with new players popping up anywhere and everywhere, even given the high barriers to entry to the game of making automobiles

Meantime, 14 different brands of Chinese cars, trucks, and commercial vehicles are on sale in Chile - with more expected. Not to mention America’s “second auto industry” -- Japanese, European and Korean factories in the South, with newer technology and non-union workers following different work practices. Some 113,000 workers are involved.

This is what it looks like -- the hyper, global competition proclaimed in the management literature. It’s real, and it ain’t pretty. It’s the realization of Joseph Schumpeter’s prophecy of  “creative destruction” – the death of established companies and industries and the birth of new ones.

We see it in the hard-hit Rust Belt, where First Solar is expanding its Ohio plant where thin-film solar panels are made. German company Flabeg is building a factory outside Pittsburgh to manufacture parabolic solar mirrors for large-scale solar power plants. Already, Energy Conversion Devices is operating three thin-film factories in Michigan. They are all looking at the workforce that has until now made gasoline-powered cars.

What to do? Each firm must follow its own path. Don’t trust the herd. Each must embrace creative destruction internally – a continuous refining of what works, elimination of what doesn’t, and investment in the new. All of this must be guided by the shifting needs of the customer and the customer’s customer. Risk must be seen as far broader than the possibility of a tornado or an audit by the feds. Imagination must be nurtured.

This is twenty-first century management. Some companies, those we’ll be working for and talking about 10 years from now, will figure it out.

Faisal Hoque is chairman and CEO of BTM Corporation and author of a forthcoming book, The Convergence Scorecard, to be published by the Harvard Business Press. BTM innovates business models and enhances financial performance by converging business and technology with its unique products and intellectual property. 

© Faisal Hoque 2008