The Cost of Not Innovating

On one of the innovation-related blogs I read, I found a scathing article entitled, “Why Ford deserves to fail.” The article is almost a rant, indicting Ford Motors—and by extension General Motors and Chrysler—in light of their recent plea to Congress for a $25 billion bailout. The author argues that the big three deserve to fail for lack of innovation.

They have absolutely refused to innovate and come up with new ideas to stay competitive… US automakers have been so successful at resisting change that their vehicles get barely better gas mileage than in the 1970s.  In fact, the average mpgs have been going down in the last few years!

…Honestly, what has Ford done lately?  Everyone knows of their innovative assembly line–but that was nearly 100 years ago.

What have they done in the last 10 years that is remarkable?  What about the last 20?  Simply supersizing their vehicles does not count as innovation.  Anyone can make something bigger…(1)

I quoted this article so extensively to demonstrate that the cost of not innovating is twofold: it costs financially and it costs in terms of image and reputation. 

Detroit is failing financially because the big three failed to innovate. I’m old enough to remember the oil crisis back in the 1970s. I still wonder how and why that admittedly artificial oil shortage failed to raise major red flags in Detroit. I was only a teenager, yet at that time it was obvious to me that oil was a limited commodity and that we’d better do something about it. Yet in the 1980s and the 1990s, and into the new century I watched as the big three made vans, SUVs, and pickup trucks that seemed bigger and less fuel efficient every year. When the price of gasoline in the U.S. was over $4 a gallon, GM was (and is) still promoting the Hummer!

Small, fuel-efficient vehicles, hybrid technology, and electric cars appear to have bypassed Detroit. If the big three have been working on any kind of alternative energy solution, they have been hiding it very well from the public. (OK, So GM announced production of an electric car for 2010. Does anyone remember the EV1?)

The failure of Chrysler, GM, and Ford to innovate has not only put these companies in dire financial straits, it has done severe, perhaps irreparable damage to these companies’ images and reputations. The article I quoted is brimming with righteous indignation, and this blogger is not alone. Letters to the editor in newspapers such as the New York Times appear to be two to one against a government bailout for Detroit, because the automakers are perceived as making the bigger and less fuel efficient vehicles when they should have been innovating.

I hope we can all learn that innovation is not just the current hot topic, but necessary for both the positive image and financial health of any company. I personally agree with Leonard Greene, author of Inventorship: The Art of Innovation; Greene says that humans are born with an innate capacity to invent and be innovative. I think that we fail to be innovative when our allegedly tried and true business models fail to foster innovation, and fail to provide a process to see the best ideas through to fruition.

Now if only our Managing Innovation program was part of that bailout…

–Joel Kleinbaum

Added to note: Thomas Friedman wrote a similarly scathing op ed piece in yesterday’s New York Times  entitled “How to Fix a Flat.”

(1) “Why Ford Deserves to Fail” from getfreshminds.com by Katie Konrath