Detroit’s Competitive Advantage…Or Lack Thereof

I’ve never blogged about Detroit and the dilemma that the American automakers are facing (mostly because I don’t like to get involved in politics), but this video of an interview from Hardball that a former colleague forwarded to me speaks volumes:

Needless to say, the real kicker of the interview is watching Gregory Meeks fumble Chris Matthews’ question on what sort of car he drives. But the question Matthews was poising, why should American taxpayers spend billions of dollars to bail out car companies that consumers have no confidence in buying, is a perfectly valid one.

So to put a CRM spin on things, when has Detroit ever had a competitive advantage in the past 20 to 30 years? The answer I believe lies in an interview I once conducted with James Power IV of JD Power and Associates about his book Satisfaction. During the course of the conversation, Power rehashed a story of when he presented at a Detroit auto conference in front of the C-level executives from the Big Three back in the late 1980’s, and was practically booed off stage when he warned them that in 10 years their market share will have taken a serious nosedive because they weren’t reading the consumer market correctly. True to his word, he was invited back ten years when his predictions were proven correct. The rest, as they say, is history.

But Power also made a point that I believe underscores the Hardball interview and the dilemma that the Big Three now find themselves in. Most companies never truly recognize their competitive advantage, or misalign it with the wrong factors. A competitive advantage is what differentiates a company from the competition when price is no longer a differentiator. Many times businesses wrongly associate competitive advantages with their company’s strengths, which aren’t always the same, especially in the rapidly evolving markets we live in today.

Which begs the question, what strengths and competitive advantages that Detroit held true to back in the 1970s still hold true to this day? And perhaps more importantly, what, if any, have changed?