We have a lot of misquotes that we like to quote to prove our points in arguments and discussions.
One arose when Charles E. Wilson was appointed by President Eisenhower as Secretary of Defense. Wilson was the President of General Motors and his position triggered intense questioning during his confirmation hearing. When he was asked if he could, as Secretary of Defense, make a decision that would be bad for GM, he said he could although he could not think of such a situation happening because “for years I thought what was good for our country was good for General Motors and vice versa.”
Through the years his statement has been turned into the rather arrogant and erroneous quote that “What’s good for General Motors is good for the U.S.” It came to mind recently when GM announced layoffs and plant closures affecting thousands of workers in the United States and Canada.
The President has threatened GM with various penalties if it doesn’t reverse course and keep running factories and keep employing people making vehicles that consumers aren’t buying in enough quantity to justify their continued production.
It’s the equivalent of President Woodrow Wilson in 1915 ordering the thirteen-thousand manufacturers of wagons and buggies and their supporting industries (horseshoes, harnesses, buggy whips) to maintain production while people drove by their factories in Model T’s.
Paul Turner has recalled in his Adaptive Insights Blog that there were 4,600 carriage manufacturers in 1914, the year after Henry Ford fired up his first production line. About a decade later there were only 150 of those companies and just 88 in 1929. “Companies that tried to hang on to the past, or simply apply old world skills and technology to the new world simply failed to exist,” he wrote. One company that recognized the future and embraced the idea that it was not in the business of making wagons and buggies, but was in the transportation business was Studebaker. But changing economics, market demands, and public taste eventually drove Studebaker out of business, along with its late partner, Packard.
Think of the badges that have disappeared in recent years—Plymouth, Oldsmobile, Saturn, Mercury. We let them slip away with some minor mourning, not paying as much attention as we might have to what their disappearance meant. But now Ford has announced it’s getting out of the passenger car business because of changing public demand. And General Motors has ignited public awareness dramatically with its announcement that the products it makes, while good products, are not what the public wants in enough numbers to justify continued production and before GM becomes another Studebaker-Packard, it has to reprogram itself for what tomorrow’s consumer wants. And tomorrow’s consumer appears to be leaning more toward being a rider than a driver and increasingly turning attention to electricity rather than gasoline.
We have lived through numerous non-weather climate changes and that is happening with the auto industry—worldwide—might just be the most eye-catching example. The sprouting of big windmills and wind farms is an unmistakable indication that the way we get our energy in ten years will be much different from the way we get it today. A former Sierra Club CEO, Carl Pope is quoted by Theenergymix.com saying “Real markets are poised to savagely strand assets, upset expectations, overturn long-established livelihoods, and leave a trail of wreckage behind them.”
Some will see the words “Sierra Club” and immediately dismiss Pope’s observations as drivel. But remember how quickly the wagon makers and their extensive support industries that employed thousands of people disappeared. Pope wrote in 2015, just three years ago of, “fossil fuels, with coal companies declaring bankruptcy at the rate of one per month, stock exchanges delisting their stocks, and oil and gas beginning to lose market value.”
Woodrow Wilson probably could have gotten a lot of votes in some places if he promised to revitalize the horse-drawn wagon industry. But by then, Lydston Hornsted had driven his 200 hp Benz faster than 124 mph, pretty well proving one horsepower was not the future of transportation.
Change is not coming in transportation and energy alone, it is here and it is gaining momentum.
Paul Turner set forth three lessons from the transition to the car:
- “Only those who embrace creative destruction will make the shift…The carriage makers that didn’t invest in retooling their production failed. Most were too busy protecting their existing, dying, revenue streams. The same holds true today….”
- “The transition is much faster than anyone expects.” He cites the death of the wagon industry 1914-1929 and remarks, “That’s akin to a staple of the year 2000 sliding into the dust today—or perhaps today’s cars essentially being replaced by self-driving cars by the mid-2020’s. The pace of change can be disconcerting. Those that have spent their entire careers in a single industry invariably underestimate the breadth, depth, and speed of change. The speed of disruption and the unwillingness to put aside antiquated technology is a potent combination capable of bringing organizations to their knees much faster than thought possible. Innovators like Google with a self-driving vehicle, and Tesla Motors with an electric vehicle designed from the ground up understand this, while the old automakers do not.”
- “New innovators emerge out of nowhere, faster than the old world leaders expect.” Forty-six hundred carriage makers were in business in 1914. A dozen years later there were 3.7-million cars and trucks on the roads, some of them driving past a lot of shuttered carriage factories.
He concludes, “Holding on to the past is more risky than embracing the future.”
The Twelfth Century English Historian Henry of Huntingdon told of King Canute setting his throne by the seashore and commanding the tide to stop before it wet his chair and his robes. Moments later the wet king rose and turned to his followers and told them, “Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws.”
The tide is here and it is going to keep coming and General Motors is the latest “king” to realize sitting still is to become submerged by the future. There is pain in change but history tells us that ignoring change or ordering us to ignore that change is asking for a mouth of salt water at best, drowning at worst.