Tuesday, August 09, 2005

The GM Model

There are two things in this story in today’s New York Times that caught my interest.

The first thing was the development of the $5,000 minivans that GM is manufacturing and selling in China. Called Wuling Sunshine, these minivans give 43 miles to the gallon in city driving. Not too shabby. Of course, they aren’t as comfortable as the cars GM sells in this country so Americans may not go for these cars here.

However, could GM build small cars that give 43 miles to the gallon but are a little more comfortable and sell for $15,000? Probably. Will They? Probably not.

The second item of interest in this story is that of the man who actually discovered the market for these cars and his fate. Philip F. Murtaugh who is a native of Ohio and currently lives in a small town in Kentucky. He realized that the growing affluence in China presented an opportunity for small and inexpensive cars. Since production costs in the country are very low, he was able to develop these cars and they have now become a big hit.

Here’s the thing though. Like any other maverick and successful executive, he does not toe the line. So GM, being the big behemoth that it is and not caring about the success that this guy brought to the company, decided to limit his autonomy. So he resigned and now lives in Kentucky.

Wither innovation, long live the status quo.


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