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Strategic Observations

Strategic Observations

• Mercedes and, to a lesser extent, BMW, have unravelled going “downscale.” Mercedes once made relatively few, relatively expensive, high margin models. Today, I can’t keep track of them all. Their belief was that everyone should be able to own a Mercedes, and they made that happen, with some models costing as little as $30,000. One result is that Mercedes service is now pretty awful, where once it was spectacular. (We have their big SUV that we’re returning next month.) There is no personalized contact, shoddy repairs, long waits. People once said, “We’re the Cadillac of our business.” Then they said, “We’re the Mercedes of our business.” Now they’re saying, “We’re the Bentley of our business,” You can’t be all things to all people. They forgot their ideal buyers.

• GE’s precipitous decline is evidence of the power of a strong leader. Say what you will about “Neutron Jack” Welch, the company was successful dealing in credit, light bulbs, appliances, locomotives, and so forth. The key was to be #1 or #2 in every market for the division to be retained. Exit Welch and you had a guy who demanded a second corporate jet fly behind the one he was in, just in case. GE’s decline is historic. The board’s obtuseness is startling.

• Sears is virtually out of business, a company that was an original disrupter, sending catalogs west on the newly completed rail system. People ordered by return rail and local general stores were often put out of business. But why didn’t Sears morph into Amazon? Because subsequent leaders decided to exploit profits and not reinvest in better stores (they became mausoleums) and continued innovation. When I walk into a Sears store it feels like the waiting room for death. (So does Macy’s.)

• Tesla, by Elon Musk’s own proclamation, “does no market research.” This is a man playing with other people’s money who wants to send a rocket to Mars but can’t reliably send a Tesla to California. His recent cyber-truck demonstration, with “break-proof” windows, shattered both windows, while he uttered an obscenity from the stage. When an expert demonstrated that his submarine plan for rescuing the kids in a Thai cave was just a publicity stunt, he called the man a “pedophile.” This company will not survive, it will be purchased. Musk, of course, will make a lot of money. But there isn’t a strategy here outside of personal ego and emotional instability.

I found out long ago that there were the same egos, political issues, emotional problems, and varying competence in the executive suite as on the front lines. It was just that the people in the executive suite were playing with a lot more money. And the same is true of elected officials.

Written by

Alan Weiss is a consultant, speaker, and author of over 60 books. His consulting firm, Summit Consulting Group, Inc., has attracted clients from over 500 leading organizations around the world.

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