Ain't it the truth....

[Steve Hoffman]

What Detroit Can Teach Silicon Valley

PATRICK L. ANDERSON
WSJ 12/29/97


My father-in-law's 1989 Buick still toils in the San Jose, Calif.,
sun, with 130,000 miles on its odometer. While I was visiting him
recently, we had it repaired at a corner gas station. Meanwhile, his
1993 personal computer sits almost unusable, ready for the scrap heap.
No hardware or software manufacturer will repair it. Who better
satisfies the customer, the computer industry or the auto industry?
The future of Silicon Valley will depend heavily on the answer.

A computer engineer might be tempted to scoff at the comparison
between a car and a PC, noting the rapid technological advances in
computers. Indeed, rapid obsolescence alone may be a sign of progress,
if the newer models provide substantial new functionality, better
reliability, ease of use and repair, and lower costs. Newer PC's do
indeed have two of these features--better functions and lower
costs--but their reliability and ease of use and repair still lag
woefully behind that of almost every other common consumer and
business product.

In a context of poor customer service, technology alone cannot carry a
company very far. I had a state-of-the art Intel motherboard--the
chassis of a PC--turn up defective not long ago. I pored over the
manual, looked at the board itself and explored Intel's Internet site,
and found not a single phone number for customers to call. Indeed, it
took a personal letter to Intel's chief operating officer to generate
a sheepish call from an engineer, who pronounced that production run
obsolete and unrepairable: no warranty, no replacement, no
satisfaction for the customer. If a major automaker had the same
problem, it would have recalled all the models sold and repaired them
free.

Retelling the tale to a senior engineer at a large chip maker
produced the explanation: "We just don't understand end users." In
case you don't read the fine print of those license agreements that
accompany software, "end users" is valley-speak for you and me. In the
rest of the world, especially Detroit, we call them "customers."
Another senior engineer explained that, with all the components that
go into a PC, you just can't expect the manufacturer of one component
to stand behind it with the end user. Tell that to the automakers that
put together thousands of parts from around the world and then
warranty them all to work together for three years, in all kinds of
weather, at 70 miles an hour.

Even that comparison understates the difference in baseline customer
satisfaction between the two industries. Almost any adult can step
into any car sold today and competently drive it across the state. By
contrast, most adults--even sophisticated, computer-literate
folks--are frequently baffled by their PCs, and are made to feel
stupid by the attendant technobabble. It's no coincidence that the
most popular PC books go by names like "Windows for Dummies." Detroit
doesn't sell books like "Oldsmobiles for Idiots" or "A Foul-Up's Guide
to Fords."

Not understanding your "end users" is, in the long term, a death
sentence for any business. While the glamour and power of new
technology will capture some of the marketplace, it cannot and will
not replace customer satisfaction. Detroit relearned this lesson--the
hard way--in the 1980s. With Japanese producers gaining advantages in
both quality and cost, General Motors, Ford and Chrysler faced a
crisis. Warranty costs loomed large, and younger customers began
favoring made-in-Japan cars over their parents' "Detroit iron."

The key to the American auto industry's turnaround did not lie in
technology. New robots in new factories couldn't save GM, but a
renewed focus on customers, quality and disciplined management--the
same focus that sustained the industry through World War II--did.
Today, U.S. manufacturers produce the best cars and trucks in the
world in most classes. Nobody in Detroit calls drivers "end users,"
and nobody survives the withering competition by not understanding
them.

If the history of the automobile industry is a guide, the computer
companies that back up good technology with much-improved service will
prosper. Right now, the most successful PC manufacturers--Dell,
Gateway, and Compaq--are all outside California. Gateway even flashes
its humble Midwestern background with offbeat cow-patterned boxes and
goofy ads.

What will happen when these brands become more recognizable than the
components Silicon Valley's technological wizards produce? New
technology will simply be adopted by the winning companies, just as
antilock brakes, front wheel drive, fuel injection, low-emission
engines, and other technological innovations are now featured on
automobiles of every major make. But unless Silicon Valley companies
begin paying attention to their customers, they will fall behind the
companies that do.

There is much to admire in Silicon Valley: its entrepreneurial
culture, its tolerance, its astounding path of innovation that has
enriched us all. But unless its companies match innovation with
superior attention to customers, the happy times cannot last. In the
long run, the customer always wins.

Mr. Anderson is president of Anderson Economic Group, a consulting
firm in Lansing, Mich., that has worked for clients in the auto
industry. 
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