Management Team Decision

Recharging a Company in Decline You and your management team face a tough road ahead, and your main task is to figure out just what kind of car can get you down that road. What's the problem? You're in charge of a major American automaker that has just gone bankrupt.

It's easy for you to blame the general economic downturn the United States-indeed, the entire world-is in, but you know it's not that simple. You take a moment to think about how you got into this. After all, your company was once on the leading edge of innovation in the auto industry.

You invented the electric starter, getting rid of those hand cranks for good. You even have a history of green innovation, since you gave the industry the catalytic converter, which substantially reduced tailpipe emissions. But a number of things seem to have gone wrong along the way. Low gas prices meant that consumer interest in alternative technologies was low. So you kept producing V-8 engines and put your efforts to develop new fuel cells on the back burner, even as Asian automakers invested heavily in hybrid technologies.

Once gas prices rose and regulatory pressure on emissions became more intense, you found yourself in a real bind because consumers no longer wanted your SUVs and you had no viable product to compete with the alternatives offered by your Asian competitors. In an effort to keep up, you marketed an electric car you had been developing. But, with only a 40-mile range between charges and a sticker price of $40,000 compared to the hybrids available at close to half the price, it's no wonder your efforts were not considered viable. Indeed, your alternative wasn't even ready for market.

But living in the past will not help your team pull the company out of bankruptcy. You face pretty big odds. The auto industry is shrinking, and signs are that the new company can't look the same as the old and expect to survive, let alone thrive. Consumers want smaller, cheaper cars, and there is less overall demand in a recession. Still, innovation may be the way out of this dilemma, not just for you, but for the entire American economy, since innovation is the key to creating new jobs and wealth. Indications suggest that the battery-powered car is the wave of the future.

Indeed, California 2014 ZEV standards will only be met by battery-powered cars. You can develop that battery technology you have in your pocket, especially with $2 billion in government grants and $25 billion in low-interest loans available for advanced battery technology and manufacturing green cars. But you are not alone. Whoever controls the battery industry may well control the car industry of the future. The Chinese are on the verge of a battery powered car, and companies like BMW and Renault Nissan are pushing to reduce the cost of batteries. You'll also need strategy as well as technological innovation. U

ntil you improve the technology, you've got to market a car with a long recharging time and a limited range.101 As you weigh your options, you think that the car battery may not be the only thing with a long recharging time. Still, the decision whether or not to plug in may make or break your company.

Questions

1. Where in the innovation stream is the auto industry? Which approach to managing innovation will you take at your company?

2. How can you establish a creative work environment at your company? Think about the various components of a creative work environment discussed in the text and ways you could implement them.