CHRYSLER BOARD OF DIRECTORS MEETING
Detroit, July 12, 1990

Talk given by Jerry Ralph Curry
Major General, U.S. Army, Retired
Administrator, The National Highway Traffic Safety Administration

  
(This talk was given nearly twenty years ago. I post it to the blog because many things said then are applicable to world affairs and to America’s auto industry today. Had Chrysler’s Board paid attention to the warning concerning the dangers of disastrous mergers with foreign companies it might not have plunged into its ruinous merger with Daimler from which it has yet to recover. The speech forecasts the breakup of the Soviet Union and Japan’s losing its future super power aura which twenty years ago was taken as a given. It also points out some of the unresolved contradictions, especially military, in Japanese society and suggests that Chrysler proceed with caution in all its foreign undertakings.) 

THINGS ARE NOT WHAT THEY SEEM

Someone once said that when soldiers die, and in war some must, you cannot manage them to their deaths, you must lead them there. The point is that in addition to day to day management mastery, you board leaders of industry must also master the art of leadership in the sense of getting labor unions and your corporate bureaucracy to do what they may not want to do. Though you do not deal in war, you do deal in the life and death of companies and, as in war, things may not always be what they seem.

Today many are wondering about the possible break-up of the Soviet Union which became a super power by contrivance, by building up its military power. The United States, on the other hand, is by nature a super power. No one sat down in Washington and drew up and implemented a plan to make the U.S. into a super power as did the leaders of the Soviet Union.

So what will happen if the Soviets forswear a foreign policy dominated and driven by its huge military might? Many expect that at best the Soviet Union will become a second class world power.

Are there any candidates that could replace the Soviet Union as a super power? Some mention a united Europe or possibly Japan. With a sigh of relief I leave Europe to be dealt with another day by someone else, and focus my few remarks this afternoon on Japan.

Is Japan a super power? Militarily no, but economically through prioritization of competitive effort they possibly could assume a kind of super power status. By concentrating only on designated areas such as photographic equipment, television, automobiles, computers and electronics of all types, Japan gives the appearance of having an across-the-board super power economy, but does it? Is its economy as broad based as it appears?

Japan’s agriculture system is beset with problems. It has difficulty providing desirable housing for its people. Consumer goods available to the Japanese people are not competitively priced. Today I make no effort to deal with all these problems.  My focus is much narrower, deliberately limited to my own observations and experience.

Let be begin by viewing Japan from an historical perspective. The national Japanese religion is Shinto. Shinto ritual and customs surround worship of the sun goddess who in Japanese mythology was believed to be the divine ancestor of the emperors in the land of the Rising Sun. Shinto’s tenants include Buddhism and Confucianism, and it venerates worship of the Emperor and ancestors, though today the emperor is no longer considered divine.

In mythology Japan and the Japanese people were considered to be the center of divine blessing and divine presence in the world. All other peoples such as the Chinese, Koreans, Americans and Europeans were considered to be inferior. Mr. Ishihara in the booklet, The Japan that can say “no”, rhetorically asks the key question, “But can we go on now, as we are, thinking we are the chosen people?”

In 1957 John Kenneth Galbraith defined the phrase “conventional wisdom” as the public’s propensity to believe something to be true even when the facts support an opposite conclusion.” Just for the sake of discussion let’s look at some conventional wisdom as it relates to Japan.

The Japanese tell us much about their romance with nature. They say that man, machine and nature are capable of harmonizing. The beauties of their “Infinity” automobile ads are a good example of such conventional wisdom.

But those of us who visit Japan from time to time know that much of Tokyo’s business section is drab and gray and more reminiscent of Eastern Europe than a city of eternal beauty and harmony. Perhaps things may not be what they seem. Evidently modern Japanese business architecture is not as much a loving work of nature’s beauty being harmonized with man made structures as one would expect. On the other hand, the modern Japanese gardens are clearly built to be places of serenity and beauty similar to their ancient gardens.

So is the Japanese claim of appreciating beauty and nature merely a shadow of things that once were, but now exist mostly in the mind?  I don’t really know. I only point out that something doesn’t quite add up here. That is, things may not be what they appear.

Here is another apparent contradiction. Japan’s constitution renounces war as an instrument of policy for all times. Yet young Japanese male children march back and forth to school wearing what we in the west call military uniforms and singing what sounds to us like military songs. Be careful. I’m not trying to draw some sinister conclusion. I do not believe for a moment that the Japanese are involved in some grand deception. It’s just that there appears to be a contradiction. Are things what they seem to be, or is a martial spirit in their genes? If so, how long can it be held at bay?

Another personal observation, there is much talk of Japanese corporate consensus decisions. But to get to consensus there must first be a sort of Socratic presentation of opposing views: thesis and antithesis leading to a kind of consensus. Who has seen a chairman or president of a Japanese corporation contradicted or disagreed with by a subordinate? Japanese consensus decision-making seems to work fine on the factory production floor, but is it really part of the executive suite? Or is the leadership style more authoritarian, than consensus building?

Were I working in Chrysler today instead of for the federal government I might ask myself, in a business sense, where is Japan likely to be, how is it likely to act and what will it look like twenty years from now? And I would ask this before I went too far down the road of a joint venture with a Japanese company.

Dr. Michael Porter of Harvard Business School in his book The Competition of Nations says,  “However compelling the case for competition may sound, the United States faces countries that do not play by its rules … the U.S. must shift course accordingly, or risk seeing industry after industry wiped out by foreign competition. Ultimately ... U.S. prosperity depends on keeping these industries alive and well within the national borders.”

Mr. Ishihara makes the same point when he writes, “When it comes to economics among the free world countries, the basis for existence is economic warfare, or, if that is too harsh a word, in economic competition. It is probably natural, therefore, that various cheerleading groups of the other party will rough you up by calling you unfair, but we cannot stand still and be defeated just because our adversary is making a lot of noise.”

What is the nature of business competition in the worldwide auto industry today?  For nations like the U.S., it is much like playing in an international super bowl. One team wins, another loses and if someone is injured, it is unintentional. When the whistle blows, we simply pick up the pieces and begin all over again.

However, other foreign competitors may be playing by different rules, planning to take Chrysler out of the game permanently. That is, the loser is carried off the field never able to mend and compete again, and there is no rematch and no points for second or third place.

So if Chrysler enters a joint venture with any foreign company, Chrysler needs to be certain that it clearly understands the nature, implications, goals and rules of engagement of its future partner, plus Chrysler must have a firm idea of how the venture will eventually play out, what the stakes are, and are they acceptable?

For example, will one company remain an independent, profitable automobile manufacturer? Will the other become only an empty shell, merely a distributor, or a parts assembler whose profitability is controlled by the dominant company? Which could mean that the U.S. partner ends up exploited and subservient to its foreign partner? Is it the long range plan that the U.S. partner stays healthy only so long as it is useful to, and fits in with its foreign partner’s long range plans?

The purpose of my talk today is merely to provide food for thought, not to propose a course of action. And I acknowledge that I see only a tiny piece of the puzzle. Only you Chrysler board members know where and what the other pieces are for Chrysler and how they fit together.

In closing, a word of caution. I think it is imperative that you, some of the most important industrial leaders in America, carefully examine and factor in each element of your business relationships with foreign joint venture partners -- be they European, Korean, Japanese or others.

Remember, things may not be what they seem. You are Chrysler’s corporate leaders and Chrysler’s stock holders and employees are counting on you, your perspicacity and your wisdom. But most of all, they are counting on your leadership. I wish you, your employees and your stockholders well.