Sunday, November 23, 2008

Should the US Government help the struggling auto industry?

Last week the CEOs of the Big 3 auto makers testified before Congress, asking for government funding to save their companies. Unconvinced, Congress told them to explain, by December 2, how any government money will be used.

The Bush administration remains opposed to using any of the $700-billion in Federal funding already approved to address the credit crisis. Treasury Secretary Henry Paulson said that would not lead to the necessary changes to sustain the industry for the long term. However, he also stated that bankruptcy would not be good, especially with the economy in recession.

Perhaps unfairly, US auto makers seem to be the poster children for an industry that has not served the market very well. The Japanese pioneered small, fuel-efficient vehicles in the 1970s and 80s and, more recently, hybrids. However, to give the US car makers some credit, they did invent the minivan and were satisfying the considerable demand for SUVs and Hummers until gas prices rose to $4 a gallon. Unfortunately, the industry was vulnerable: overly dependent on these large, gas-guzzling vehicles without the ability to respond quickly to changes in market demand.

Now the US industry is reeling. Sales are off dramatically. Auto makers are losing money and burning cash at an unsustainable rate. GM's stock price has cratered to just a tenth of its value a year ago.

In his testimony before Congress last week, Rick Wagoner, the CEO of GM, argued that GM has taken the steps to position the company for long-term success. He wants government funding as a bridge to weather the current recession, claiming per-capital auto sales are the lowest since World War II. He also stated that if the industry fails, 3-million jobs representing $150-billion in people’s incomes will be lost in the first year.

Should the US Government help the struggling auto industry?

My initial reaction was “no.” In our capitalist system, companies compete to identify the market’s needs and develop products and services that offer the best value. Those that do, win our business. Those that don’t are usually not as profitable and are often acquired or may even fail as the market matures or the economy dips into recession. That’s just the life cycle of companies.  We may be at the point where the US can’t support the number of companies that are manufacturing cars. So why not let the market take its course, even if the Big 3 shrink to one or two survisors?

However, my free-market view is tempered a bit by the argument that these companies are too big to fail. I’ve heard that five people support every auto employee. You have the suppliers, dealers, transportation companies, and financing firms that are directly involved in the production and sale of cars, as well as the barbers and grocers and waitresses and doctors who serve those who work in the industry.
If we’re risking entire communities being impacted by any of these companies going under, then I wonder if there’s not a more humane and graceful way to deal with this crisis: a bankruptcy that would allow GM, Chrysler, or Ford to keep operating while restructuring. That’s what happened in the airline industry after 9-11: Delta, United, and US Airways kept flying.
Given the frozen credit markets today, GM, Chrysler, or Ford may not be able to secure private financing to carry them through bankruptcy reorganization. That’s where Government funding would be appropriate, to allow them to keep operating while building a bridge to the future. However, I would not feel comfortable with the Government simply handing over $25-billion with no defined expectations or accountability.

That’s probably not going to happen, though. More likely, the Congress will want to become too involved in the operation and strategy of these companies, which I equally oppose.

One last suggestion: The next time the Big 3 CEOs come to Washington, they should drive all night from Detroit in their most fuel-efficient vehicles, rather than flying in their respective corporate jets. That will play much better to the nation’s current mood of populism and sacrifice.

Sunday, October 26, 2008

How can social media help public radio?

WBUR, one of Boston's public radio stations and nationally recognized, has embarked on an experiment to build community through social media. Notwithstanding their enthusiasm and a growing group of loyal social media advocates, this is uncharted territory, metaphorically akin to Lewis and Clark setting out to explore the great American west.

Ken George recently lamented in a Tweet that the General Manager (GM) of WBUR doesn't see the value in Twitter:
Had a conversation earlier this morning w/CEO who is Twitter skeptic. Cites relatively small numbers & lack of "Joe Six Packs." 10:54 AM Oct 15th
This skepticism of Twitter and, presumably, other social media poses interesting questions, which I recently spent some time contemplating on a cross-country plane flight. I started with the mission of WBUR, as posted on the station's web site:

“As the leading producer of news and information in New England...WBUR's highest ideal is to contribute meaningfully to an informed, engaged and caring citizenry.”

Given the mission, how might the station accomplish it?
  • Provide FM listeners in the Boston area with news and information generated by WBUR and the world's leading radio news providers (e.g., NPR, PRI, BBC);
  • Increase the served audience (i.e., listener hours) by supplementing the main FM broadcast signal with additional broadcast (FM, AM, HD) and Internet (streaming and podcast) channels;
  • Syndicate WBUR produced programs for distribution through other public radio channels that are outside of WBUR's broadcast and Internet footprint; and
  • Raise sufficient funding through listener membership, organizational underwriting, government grants, program fees, and other sources to enable WBUR's mission.
Now, how might the GM measure the station's success?
  • The number of WBUR listeners via broadcast and Internet;
  • The number of syndicated programs, stations carrying these programs, and associated listeners;
  • The number of members and average pledge per member;
  • Income and expenses (income should obviously exceed expenses);
  • Image in the community among listeners, businesses, government, and journalistic peers.
With this traditional framework, it's logical for the GM to evaluate a new program, technology, or other investment of station resources from the perspective of its impact upon the mission, strategy, and success of the organization. Does social media, collectively and in its various individual forms, help the station to accomplish its mission and succeed?

I think those of us who use Twitter, Utterli, Facebook, etc. and who also are WBUR's social media community would agree that we are increasingly loyal to the station. In response, the GM might reasonably ask what loyalty means: are more of us becoming members? Are we increasing our pledges? Are we volunteering? Can social media increase the number of listeners and pledges to WBUR? And how else is the social media community benefiting the station?

What may not be fully appreciated or easily measured by the GM is how social media creates an opportunity to have conversations with listeners, conversations about how well the station is serving the community. Consumer companies spend untold millions on focus groups to gauge customer preferences and behavior. Social media can offer relatively inexpensive and intimate insight into what listeners value as quality news and information. Only the listeners can answer whether they are better informed, fully engaged, and more caring because of WBUR. And if not, only the listeners can provide a sounding board and guidance on how to achieve these goals.

The GM is right that we in the social media community are, today, relatively small in number and don't really fall in the Joe Six Pack demographic. I suspect we would probably describe ourselves as early adopters, rather than Joe Six Packs. That should be an advantage: Early adopters help to discern the future, what will be and – equally as important – what won't be. Having spent my career in technology, I would jump at the opportunity to have a willing community of early adopters advise and inform my company's strategy and provide feedback on performance.

In the 1980s, U.S. industry began losing significant market share to Japanese competitors, because of lower quality. U.S. companies responded by redefining the American paradigm and approach to quality. In one of the first quality courses I took, Joseph Juran, dry and bow-tied, admonished us to translate quality into the language of management. By that, he meant money.

This lesson is still appropriate. One of the responsibilities of a social media evangelist is to translate the lexicon, tools, and experience of the community into the language of management. If we can articulate how we can help WBUR achieve its ideal of an informed, engaged, and caring citizenry — even how to measure our impact — the GM will listen and, most likely, join us.


After I posted this, Ken George clarified that the CEO he referred to in his Tweet was not the GM of WBUR. So let me correct that error before I get Ken into trouble with his management!

Nonetheless, I think the point of engaging social media with the mission and strategy of WBUR (and, by extension, other public radio media) remains valid.