Saturday, December 13, 2008

I come to bury Car Czar, not to bail him:

I come to this party a little late, but I want to complain about the idea of a “car czar”, because you can rule this silly idea out on purely managerial grounds.

The American automobile companies are large companies. Companies. I'm emphasizing this for a reason. They each have a fairly hierarchical structure that enables them to make decisions with an audit trail for responsibility. As everyone who has studied companies knows, it's important to avoid kicking decision-making high up the ladder. Empowering lower level managers enables the people who understand the problems to solve them efficiently. If the leader of your company (or division) makes all the important decisions, then the whole company (or division) cannot advance faster than the work of that single manager. Requests for decisions pile up and the company plods along like a tortoise.

Now you may be asking, what about the president of each company? Doesn't the buck stop with him? (Or, outside the American auto industry: her?) No, most of the bucks stop way below the top. For example, Peter Drucker has said that the job of the president of a large company is to decide what that company should be doing in five or ten years. That's plenty of work right there.

If we have a car czar, then some of the most important decisions of the three large companies will get stuck waiting for his or her attention. These won't be simple decisions requiring a quick flip of the coin, either. The Car Czar is likely to give each issue the attention it deserves, plus the coming-up-to-speed that it deserves. You can pretty much guarantee that any auto company waiting for the car czar will fall far behind the rest of the industry.

1 comment:

Anonymous said...

Bastiat, Hayek, Drucker and Shakespeare! I love it!

That said, I find myself less opposed than P.B., probably because I presume a different role. Rather than managing the company, I would expect the C. C. to do things like:

1) combing 10,000 pages of tax code (and other regulations) to find those that contribute to the current situation adversely

2) coordinating with highway and infrastructure departments to plan for what the future of those departments should be

3) coordinating academics to help understand what brought us to this point (bad management, CAFE standards, UAW, etc.)

great post!

JG Fellow