Icarus, Einstein & Commitments

“In 1991, General Motors posted a then-amazing, full-year loss of $4.45 billion, and 10 months later CEO Robert Stempel was out. Last week, GM reported a $15.5 billion loss for just one quarter, and GM's board this week reaffirmed its support for CEO Rick Wagoner. GM's loss easily eclipsed the quarterly loss of $8.7 billion announced by Ford just a week earlier. As for Chrysler, pick a number. The company is owned by private-equity firm Cerberus Capital Management, and thus its results aren't public…

“Should Detroit have seen this disaster coming? Yes. Gasoline prices have been climbing steadily for more than three years now...

“But the Detroit Three stuck with a business model based on leasing SUVs for way too long...

“Let's acknowledge that it's human nature to resist changing behavior that has been successful, as SUVs were for two decades. If Detroit is Exhibit A, then Exhibit B surely must be the newspaper and magazine industry. It has been equally clear for most of this decade that the business models of print publications, which are based on selling advertising, were becoming as obsolete as big SUVs…

“Not many journalists saw this sea change coming, much less acted on it, in their own business. The stock of McClatchy, one of the nation's largest newspaper chains, has plunged from nearly $75 a share to around $4 a share in the last three years, a 94% collapse that exceeds even the 89% nosedive in GM's stock since the beginning of this decade…

“Detroit's fight for survival doesn't threaten economic doomsday for America, but it's incredibly sad nonetheless. The three companies, and General Motors especially, once symbolized the bedrock strength of American capitalism….

“Motor City residents must be regretting the message on a T-shirt popular in their town for years – ‘Detroit. Where the Weak are Killed and Eaten.’ Let's hope it wasn't a prophecy about General Motors, Ford and Chrysler.”

(“Can America's Auto Makers Survive?” Paul Ingrassia. Wall Street Journal: August 7, 2008. pg. A.13)

ICARUS LEARNED TOO LATE that the very thing that allows us to soar can become the cause of our downfall and destruction.

Einstein noted that doing the same thing over and over again and expecting different results is insanity.

Liberation from a failing course of commitments requires a paradigm shift away from risk aversion, the enshrinement of consistency, and a culture of defensiveness toward trust in experimentation and learning that challenge orthodoxy. It requires genuine, reality-based humility.