Thursday, December 24, 2009

Big Mistakes

Was listening to PRI and BBC Radio about state of the economy. Heard many things but the one that catch me off guard was Saab is shutting down. I thought to myself first Saturn now Saab.

Saturn because they could not figure out how to turn a profit in that division and Saab because no one would buy it. I thought to myself what happened and where did they possibly go wrong. It occurred to me as with most big business the confuse standardization with uniformity and in tight times they focus on the bottom line instead of innovation and customer service and in good they do not reinvest in company instead the try to maximize profits by lowering expenses and paying large bonuses.

Lets start with standardization - it is not always or simply saving money by using the same parts in everything - it is taking the best practice processes that adapting those that work in other businesses while retaining your unique characteristics.Sometimes that means using different parts but adopting the processes to assemble effectively. Nature does better when there is a diverse ecosystem so does business although limiting that is what most people do to make it easy to manage.

Lets look at innovation - how involved are the employees in the production and manufacturing and design process? How involved are the customers and clients in the design process? What about bonus structure - is it based solely on company monitary performance with no validation customer service and satisfaction levels having no impact on executive salary and do you take teh money during good times and reinvest in maintaing and upgrading infrastructure or do you spend it on excessive bonuses and large compensation?

Next lets look at company structure - is the company set up so that the focus is on producing products and services to meet and or exceed the customer's expectation or is it designed to perpetuate a system of processes that maintain the status quo?

I have other thoughts but would like to know what you think?

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