American Auto Industry: Where were your Values?
Monday, July 28th, 2008
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In recent months, the American automobile industry has been stunned by quarterly losses in the billions. But, should they have been?

From what I’ve learned while producing the documentary Leading with Kindness, it seems to me that if the big three automakers (and other major American companies too) had been guided by values rather than profits, all this pain and suffering might have been avoided.

The companies we’ve been profiling all put a strong emphasis on values. In other words, their first priority is to make the world a better place. They’re convinced that profits will follow. To many in the business world this may seem Pollyannaish, but for these companies, at least, this strategy seems to be working very very well.

Were the big American auto manufacturers working for the betterment of mankind? It’s hard to imagine how. For the past 15 years they’ve been focusing on building big SUVs and trucks, which they knew were dangerous to drive and bad for the environment. They were also highly profitable. It’s too bad this anti-values policy may have doomed these companies to failure.

Perhaps they would have fared better if management had acted more like their values-focused counterparts. At the wildly successful Google they have a policy of “Do No Evil.” (Granted they’re not always perfect.) And the management of the quickly growing Mitchell’s clothing stores believes in doing everything they can to help the community.

Ken Pollak, CFO of the women’s clothing manufacturer Eileen Fisher, says in his experience values-focused management really does work. “At the end of the day, you have to look at the results. You have to look at the profitability, the success of the company. And the success of the company is not only due to the product, but also I believe our culture.”

Eileen Fisher has experienced 12 percent compounded growth over its 25 years of existence with some long spurts of 30 percent. These companies are all doing well, even in these difficult economic times. Could it be that a focus on values could be even more effective when times get tough?

  • David

    I don’t disagree but for an old line well established company like Ford, moving from their traditional profit focused approach to non traditional values approach has to be a daunting challenge. Are there any well established companies who have done this ?

  • Ankur

    GM had been in the process of making a number of green changes which themselves couldn’t have been cheap. They’ve been touting their attempt to move to fuel cells for several years, starting with fuel cell busses already estabished in some markets on the west coast. They were spearheading the cross-over market and then there was the very non-profitable Chevy Volt. This may all have been greenwashing while they offered thousands of dollars worth of cash-back incentives for their biggest SUVs, but at least they were diversifying.

  • Tom

    There are many reasons why a corporation decides to offer a specific product mix to the marketplace. Usually its a combination of greed, government regulation, labor, competition and the consumer. Its great to see young companies like Google taking a more value approach to the marketplace early on in its development. I don’t think Henry Ford thought about a value approach to setting up the Ford Motor Co. product mix when he started out. Quick change will only come to capital intensive manufacturing companies like the auto industry through economic melt downs like we are going through today. Even then it won’t happen unless the government and the consumer demand a new product mix. If not they will continue to milk the cash cow that will provide them the highest share price.

  • Ernest Greene, Jr.

    When Henry Ford started his company, one of the first things he realized was that:
    1. He needed to make the auto affordable so that a greater number of people could buy them.
    2. He knew that he would have to put people to work at a decent wage.
    There was not a great concern about stockholders and mergers, etc. That all came about when large shareholders became greedier…
    When the Big Three began to compete for profit (for their major stockholders) they brought in automation, laid off most its workforce (a large part of its consumer base when you consider total participation), began to mismanage, blaming the unions (which accounted for 10-15% of vehicle cost) and proceeded to go down hill from there.
    Has anyone besides me noticed that robots (automation) don’t purchase the products they make??
    People do… Unless they are laid off and now have no or low income. Which is why Toyota and others gained ground on the B-3. When or if they realize this and put people back to work at the aforementioned decent wage. Then they will regain their “glory”.

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Kindness in Action
  • Five Worst No-No’s
  • Top 10 Tips to Motivate Employees
  • American Auto Industry: Where were your Values?
  • The Power of Kindness
  • The Counter-Intuitiveness of Leading with Kindness