Post-industrial revolution: All bets are off

ON EXCELLENCE

November 16, 1992|By TOM PETERS

In 1819, when Thomas Blanchard began making interchangeable gunstocks at the Springfield Arsenal in Massachusetts, the American industrial revolution was born. On Oct. 26, 1992, in Detroit, when General Motors' board forced out Chairman Bob Stempel, it died.

In between, U.S. enterprise soared to unprecedented heights; then, in recent years, Japan, Germany and others caught up with us. Now, as the world economy changes dramatically, all bets are off; tomorrow's winners, individuals and companies and nations, are anybody's guess.

Though the current global recession probably won't last more than another 24 months, turmoil in the marketplace will undoubtedly continue for 20 to 40 years.

Does Mr. Stempel's firing (uh, resignation) really merit such wild speculation? Yup. The watershed event strips naked any lingering belief that huge industrial concerns will lead the charge into the 21st century, in America or elsewhere.

In the early 1970s, strong foreign competitors blossomed on the American scene. The outline of the information/telecommunications revolution took shape. Our biggest companies started to squirm, and average CEO tenure began to drop.

Then, in the 1980s, the chickens came home to roost. Depending on how you count, about 50 percent of 1980s Fortune 500 companies dropped off the list during the next 10 years, and Fortune 500 employment and share of GNP plummeted. For the first time in a century, average company size around the world shrank. Still, it was the rare giant firm that faced up to the radical changes necessary for success in a market demanding unprecedented speed, agility and constant reinvention.

But easy money began to turn the tide. Corporate raiders sent shivers through isolated boardrooms atop towering glass and marble monuments to an earlier age. Boone Pickens, Britain's Lord Hanson and others demanded executive and board accountability to shareholders.

It was a revolutionary idea. After all, America's reigning economic theorists had proclaimed the perfection of our way of organizing: behemoth companies run by a detached, technocratic elite. Most boards were filled with the chairman's cronies, and few top officers mortgaged their homes to buy company stock. Such silliness was left to the start-ups of Route 128 (Massachusetts), Silicon Valley and Redmond, Wash.

Ah, yes, Redmond, home to Microsoft. Though Stempel's public surrender captured our attention, perhaps the true end of the industrial revolution came in January 1992, when the stock market value of youthful, brain-based Microsoft shot past that of aging, brawn-based General Motors.

While I feel for Mr. Stempel, I am thrilled by the drama playing out in Detroit. I think -- nay, I hope and pray -- that this move will finally liberate all the chairmen of the Fortune 500.

Of course, new GM Chairman John Smale and his top team have a crystal-clear mandate for change, which should include selling to the public part of Saturn and financial arm GMAC, more of EDS and Hughes and perhaps all of the major components divisions. Cutting loose one or more of the big auto divisions, such as Olds, is also an option.

As important as such moves are, they're not where I'd begin. GM Wunderkind and new CEO Jack Smith performed a miracle at GM Europe in the 1980s. Perhaps his most important act was taking a pick-ax to corporate bureaucracy and moving headquarters out of stodgy Russelsheim, Germany. A flexible, aggressive, pan-European attitude ensued almost immediately after the 1986 march to Zurich.

Hence my advice to the new GM chiefs for getting off the dime: Get out of town! Take a new headquarters staff of no more than 150, at least 25 of whom should be from outside the industry, and move to (a) Atlanta, (b) Tampa or (c) Redmond.

Detroit served us well. The old GM model of organization served us well. But the world has changed. All hail the new economy -- and the new corporate accountability.

(Tom Peters' column is distributed by the Tribune Media Services Inc., 720 N. Orange Ave., Orlando, Fla. 32801; [407] 839-5600.)

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