Chrysler and the Innovation Basement

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I mean how many times do you see ads and commercials touting a car's horsepower. Do you know your car's horsepower? Do you care? No—nobody knows unless they've lived in Detroit or worked in the auto industry. We spend most of our lives stuck in traffic jams going nowhere near the maximum speed of our vehicle. The innovations have to happen inside the car, in changes that improve our busy lives, make them more manageable, more comfortable. That's where the frontier is.

The minivan—a Chrysler invention—is a great example of a company responding to unmet customer needs. The company seems to have forgotten that lesson.

These guys are trying to focus on the same old market segments. It is just so tired. Every single company at every brand offers every single variant. I can get an SUV from Porsche, from BMW (BMW), from Cadillac (GM), from Mercury, from Ford, from Chevy, from Buick, I mean come on, guys. That only makes sense if you look at the industry from the vantage of a manufacturer. It only works if you think about the world in terms of factory efficiency. The industry knows nothing about the frontier needs of the consumers. Every time a team does work in that area, the managers say, "Yes well that is an interesting vehicle, but we wouldn't be able to produce it at a mass scale and so my manufacturing wouldn't be efficient."

The places the industry is being reinvented are in India and China where you can buy kit cars that you assemble yourself. They are more modular, more customizable, and easier to maintain. If I wanted to create a big winner for Chrysler, I would help them to devise an approach that is so different from the way the rest of the mainstream industry is behaving. Every industry and every company needs to learn from the periphery rather than the core. Change always happens at the periphery.

Which brings me back to Nardelli. He's a Six Sigma type, trained in command and control. Can he be the change agent that Chrysler needs?

Six Sigma fights innovation every time. It's about performance of known attributes in a known market. That's a very different approach than learning from the periphery. That would require getting some teams to travel to different parts of the world and getting them to see and understand people who don't own cars, who don't know how to drive a car. It also means recognizing that if all of those people started to own cars and adopt American driving habits, the planet is history. He has to take a Henry Ford approach of revolutionizing transportation. And again, I don't know how he can do that in a company on such a small leash to show improvement. This is at least an eight-quarter project.

So what should he do?

He should tell his team, "Guys—if you want to keep your jobs, here's what you have to tell me in three months. How can we produce vehicles that everywhere in the world people would be excited to own, that are relevant to the lives they are living rather than the nostalgic idea of American car ownership, that responds to their busy lives, their terrible traffic jams, etc. Tell me about cars that are so compelling that people everywhere would want them and be able to afford them."

Manufacturing cars that those consumers can afford will be no simple task for Chrysler.

That's the second thing his team needs to focus on—coming up with a radical new approach. So I would take him to see the Aryvund Eye and Ear hospital in India, where you can get Lasik surgery for $10 an eye. In the U.S., in contrast, the cost might be $1,500 an eye. Those are the kind of [business] models he should look at.

Can a team of insiders deliver on that challenge?

He should probably bring in talent from outside, just to get some fresh blood. But the biggest thing he can do is just get into the weeds with people who haven't ever owned a car.

Jessie Scanlon is the senior writer for Innovation & Design on BusinessWeek.com.