The current issue of Wired contains a fascinating article by Carl Hoffman entitled, "Teardown Artists." The piece is not yet available online, but the magazine promises it will be on February 3rd.
In the article, Hoffman briefly explores a GM chopshop, delicately known as GM's Vehicle Assessment and Benchmarking Activity center. Here, GM engineers dismantle competitive vehicles, reverse-engineer manufacturing processes, weigh parts, and generally explore the innards of roughly 40 vehicles a year.
Interesting. But the bit that caught my eye was a slug headline on an article-continuation page. You know, one of those column-spanning extracted-quotes that immediately lets you know you've found the right article when you've turned to page xxx after completing the article's teaser pages?
This slug read as follows:
GM's STRATEGY: LEAPFROG HYBRIDS - GO DIRECTLY FROM GASOLINE TO FUEL CELLS.
This was interesting for a few reasons. First, I'm intrigued by any strategy that claims to be a "leapfrog." The term, of course, has gained much currency since the cell phone brought telephony to the Third World: many countries quickly went from no phones to cell phones without bothering with all those nasty wires and poles. Skipping generations of technology or modes of conventional thinking presents considerable opportunity for competitive advantages.
Second, I'm particularly interested in seeing the words "GM" and "leapfrog" in the same sentence! I think the objective among us would be hard-pressed to recite too many recent examples of GM innovation that would earn that label.
This piece demonstrated that it's one thing to say you're going to leapfrog, and something else entirely to actually do it. GM's premise regarding the hybrid is as follows: hybrid cars utilize complex, expensive technology and do not provide adequate return on that investment in fuel efficiency/economy. Eventually, Toyota (the hybrid leader) will come clean and acknowledge that hybrids are more about "cool" than "cheap." Better, GM says, to dabble in hybrids and put the big bet into fuel cells, which, they say, are simpler and significantly more efficient. (Somehow, GM always manages to miss the concept of "green.")
GM's logic reveals the inherent structure of a leapfrog situation. Competitors only attempt a "leapfrog" when they are behind. By definition, when thinking of leapfrogging, one is saying, "OK, you've invested in some innovations that I have missed. I could try to copy your approach, or, I could look for something else that puts me in front of the game instead of trying to play catch-up. Because you're likely to keep moving forward as I try to catch up, I'm going to make lemonade of the lemons of being behind, and try to jump ahead using a new approach."
So, the bet is usually between tried-and-true and untried-but-promising. In the case of the cell phone, the bet was relatively safe: people love to talk to one another and all you needed to do (not to trivialize the challenge) was to enable them to do so with a proven technology.
In the hybrid/fuel cell example, however, the lines are less clear. Hoffman quotes industry analyst Maryann Keller who says that fuel cells are every bit as complicated as hybrids, if not more so: "You're talking about a completely different propulsion system! No one can even repair or drive one!" Instead of trying to leap this frog, Keller suggests GM try raising some of their own:
Hybrids are complex and expensive, but you'll never figure out how to make them better and cheaper until you put the technology into real-world cars. I say, 'Why wait? What do you have to sell me today?'
So. Is GM about to leap the frog, or jump the shark with its fuel cell bet? Only time, of course, will tell.
But I have to wonder if GM isn't in the same circumstance as Bangladesh was with telephony just a few years ago. No infrastructure. No money. No time to waste.
In Bangladesh's case, Muhammad Yunus (the visionary whom I had the great pleasure of hearing at last year's TED Global conference) established Grameen Bank to enable the development of a cell phone network.
Like Grameen, the fuel cell leapfrog might work. But you have to wonder that if GM jumps the fuel cell shark, it might just be their last big bet.
It probably would make more sense if objective firms rather than car makers explored alternative technologies for powering our cars. Car makers are so often so attached to the status quo that it seems like it is difficult for them to think "outside the box."
Posted by: thebizofknowledge | August 31, 2006 at 12:34 PM