Home > Articles > Information Technology

Breaking the Mold: Preparing Your Company for Innovation and Change

  • Print
  • + Share This
It isn't always easy to break the management momentum, but sometimes a change is needed. Using Chrysler as an example, this chapter will help you to prepare your company for major changes.
This chapter is from the book

There Has to Be a Better Way

All the powers of management at the Chrysler Corporation were seated in the massive leather chairs of the Executive Conference Room1 on that still morning in 1990. The senior operating and administrative members of the company sat around the oval table, while various staff members eager to watch the show from safe positions (the peanut gallery, in company jargon) sat in chairs along the walls. At the head of the table was Bob Lutz, then president of Chrysler, who used this weekly meeting of his staff and others to review the operational and financial issues affecting the company in the short run. In short, this meeting was intended to cajole the functional areas under his command to update and inform each other on what was happening in their respective areas, even though information sharing was not an item that the Chrysler culture had previously encouraged. Lutz had arrived at Chrysler several years earlier from Ford, where he had been well schooled in the politics of command and control. At Chrysler, Lutz used his energy and personal enthusiasm to break down the silos of the separate functions and was beginning to build the team with which he would run the company successfully for the next eight years.

Jim Donlon, the corporate controller, who was not a part of the regular operating team but occasionally attended the meetings as an observer, had something urgent to say today. He rose from his seat in the hush to announce that the competition had launched a deadly new cost-reduction program that required an immediate response to keep Chrysler from losing ground.

It was a time of severely depressed demand and profitability for the "Big Three" manufacturers in the domestic auto industry, and Chrysler was perennially the weakest and most threatened of the bunch. The sit-up-in-your-chair heart of Donlon's report was that Ford was rumored to be implementing a forced mandatory price-reduction action on all its suppliers. The auto industry in Detroit is closely knit and the supply base members (and executive teams) were constantly comparing notes among themselves, so there were few secrets in town. Certainly, an action as drastic as this one could not be kept quiet for long.

Ford had electronically modified all its existing production purchase orders with its thousands of suppliers to pay only 95 percent of what had been previously negotiated with them. All invoices that the suppliers sent were factored to 95 percent of their value, and Ford sent the reduced amount as full payment. This action was both unorthodox and highly effective. Instead of having to negotiate with each of the thousands of suppliers and arrive at a potentially different answer with each, this mechanical method merely changed the prices at the push of a button, saving Ford millions in purchases. It also severely upset the supply base members. Because they were extremely fragmented and separate, they had no ability to resist as a collective group. Each firm was left to individually decide either to resist by not shipping and risk losing all revenue instantly, or to continue to ship and accept the new terms. The action was unpopular and created major issues in the press. But Ford used its own financial crisis to justify the action.

The Chrysler finance team's suggestion was that the company should take similar action immediately because the automotive supply base was very common across the Big Three manufacturers. If the supply base members conceded to the Ford action, Chrysler and GM would be at a competitive disadvantage unless they took similar actions.

At the time, I was heading up procurement and supply, as executive vice president at Chrysler. I took the floor and expressed the opinion that, although the Ford action was effective in the short term from their position, it would create more tension with the supply base in an already difficult atmosphere. It was unexpected in its timing, but not from its source; Ford had traditionally ranked low in surveys from suppliers for collaborative policies. Many of us had come from Ford to Chrysler during the dark days of the 1980 Federal Loan Guarantee Program, and we were familiar with the culture and attitude there that could produce such an unpopular and arbitrary action. I felt that if Chrysler were to follow, we would be endorsing a policy that seemed completely against the unique one we had been trying to build.

Fortunately, Lutz sided that day with my recommendation to break out on a different path, and we refused to follow Ford's action. We responded with a unique system built on mutual negotiation and shared savings that became a decade-long program at Chrysler. Known as the Extended Enterprise, it became a unique way to reduce costs and improve supplier relations at the same time. But on that day in 1990, it would be an understatement to say we had a few disbelievers in the finance office who wanted us to take the same short-term action that Ford had done to boost our earnings. The program we developed worked, though, and showed not only Chrysler, but also the rest of the industry, that following what appear to be industry trends doesn't always produce the best answer.

This book analyzes the predominant way business managers handle relationships with other companies in their daily operation. It is almost impossible to find a company of any size that can exist solely by itself. Our economy operates in a web of related actions. You will see how the manner in which companies deal with these important interrelationships is not always logical and that there are many different approaches. It becomes a question of whether to stay the course and take predictable and accepted actions, or to try something different. Often it also involves the struggle for control and domination that has come to characterize many business dealings.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020