The Daily Incite - 6/1/09 - The GriM Reaper

Submitted by Mike Rothman on Mon, 2009-06-01 11:25.
Today's Daily Incite

June 1, 2009 - Volume 4, #26

Good Morning:
They say the Grim Reaper gets us all. Today . OK, not really Dr. Death, but his main henchman for business - Captain Bankruptcy. It's not like this wasn't expected, and (in my opinion) it will be healthy for the longer term viability for GM. It's hard to be competitive when a multi thousand dollar entitlement albatross what weighing down every car GM sold.
Not the kind of demo you want to see...
The idea is that bankruptcy will allow GM to sell assets, rewrite contracts (especially with the unions) and restructure to be competitive. As a guy who drives GM cars when I rent, but wouldn't buy one myself - I think the economic situation was one piece of it. They also need to be more nimble and build products that folks want to buy.

But the bigger issue here is the concept of periodic renewal. If you remember back to the mid-80's, the concept that GM would go bankrupt was absurd. But then foreign automakers came in and built a better product more efficiently. And 20 years later, GM is on the verge of going away, if they can't change things very quickly. Basically every company must fight to not get stale and doing the same things year after year breeds mildew.

It reminds me of when I was doing an internship at Mobil Oil (when Mobil still existed) back in college. I was living at home and taking a bus to a train into New York City. The commute took me about 90 minutes a day and amazingly enough some of the folks doing that same commute did so for 30+ years. 

These folks were tired and most seemed pretty beaten down to me. It's not hard to imagine that after 30 years of commuting 90 minutes each way, you'd be a bit stale. Now there are a lot of reasons that folks do the same stuff every day, but no one has a reason to let themselves get stale. In our business, where I can tell you the bad guys are anything but stale, complacency and losing vigilance will kill you.

So we can take a message from our friends in Detroit. If we aren't undertaking a process of constant renewal, things will get ugly and most of us don't have the option of a Government bail-out.

Have a great day.


Photo: "Demolition means progress" originally uploaded by churl
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Better and better every day, every week. Imagine that, an Incite for two weeks in a row and I'll be starting to embrace "social media" more effectively this week, that I think will be a good thing. Stay tuned for that.
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Submitted by kurt wismer (not verified) on Mon, 2009-06-01 23:20.

"Mining data you are gathering from the field is NOT predictive. It's reactive. The concept is that by having this data, you can see patterns emerging and draw conclusions FASTER. But that is not PREDICTING anything, is it?"

you must analyze data before you can synthesize new knowledge. if you are able to find the pattern then you can do prediction by looking at what the pattern dictates should happen next. that is as much a prediction as any weather (or financial) forecast.

Submitted by Mike Rothman on Mon, 2009-06-08 16:14.

I think the history of both meteorology and stock picking has shown the futility of trying to predict much of anything. These models work great, until they don't. Then you have Hurricane Katrina or the sub-prime mortgage crisis. Taleb's book called the Black Swan actually goes into the math behind it. You may or may not buy into it, but it's an interesting thought process nonetheless.

No one has a crystal ball, even though there is a lot of money spent by folks that have convinced other folks that they do.

 

Submitted by John Menerick (not verified) on Mon, 2009-06-08 15:57.
Delphi has been in bankruptcy well over 4 years.  For better or worse, GM is not going anywhere, anytime soon. 

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