Wanted: Innovative Management for the Big Three

Michael Cusumano, a professor at the MIT Sloan School of Management who has studied the automotive industry, thinks a bailout is not what the automotive companies need.

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Executives from the Big Three U.S. automakers are in the news again for appearing before Congress once more this week, asking for financial assistance. But Michael Cusumano, a professor at the MIT Sloan School of Management who has studied the automotive industry, thinks a bailout is not what the automotive companies need. Instead, Cusumano, whose numerous publications in MIT Sloan Management Review include articles on platform leadership and how to achieve it,  observed recently  that U.S. automakers should file for Chapter 11 bankruptcy and reorganize.  (However, Cusumano added, the government could help the automakers by guaranteeing product warranties after a Chapter 11 filing.)  Cusumano noted that Chapter 11 would allow the Big Three to restructure too-generous labor contracts  — and that the companies also need new senior management.  As he put it,

They need to change the senior management teams and bring in people who anticipate the future rather than just try to change incrementally and react in a panic when things go bad. …We can’t rely on the managers in these companies to change the way they think and manage. It is best to force the companies to reorganize, change the management teams and labor leaders, and do it fast.

My biggest worry is that the U.S.

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Comment (1)
Views by Prof. Cusumano, who has researched the industry and strategies for long (incl. in Japan) are quite pragmatic. It is time for breakthrough after decades of incrementalism (not blaming anyone, as situation might have some less know root causes).

K. Momaya
Strategic Management Group
Department of Management Studies
Indian Institute of Technology (IIT)
Currently in Japan with Institute of Innovation Research, Hitotsubashi