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The scene at Ford's Field: Emblematic.

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April 06, 2009 – Comments (6) | RELATED TICKERS: GM , F

[The following was written December 4, 2008, and published here. Given all that has happened both in the financial world, AND (how ironically...) in the hoops world -- creating a rematch of these very same teams in the very same venue, but this time for the national championship! -- I decided to reprint in full. Nothing below has been tweaked or changed since publishing 4 months ago... even though the world has changed -- a bit!]

 

I saw something at Ford's Field tonight that struck me as so totally emblematic, I had to share it with you. I'll get to that scene in a second. First let me set things up:

In my Rule Breakers intro last month, I laid out the case for doubling up on your winners, not down on your losers. Taking cues from a lesson learned from great management-mind Peter Drucker, I advocated -- as I think I always will -- putting your time and resources into getting your A's to A+++'s, rather than your D- to a C. 

Do this most of the time as an investor, I wrote, and you'll be rewarded. Do this most of the time as often as you can in life and you and your family will be very richly rewarded.

Toward the end of the intro, I briefly turned my focus toward the American auto manufacturers, whom we should absolutely not bail out. It wasn't so much that I advocated this by standing on principle -- although you could, but that's not my point. It was more about how if you are as strapped for resources as the federal government is, if you were down to your last $100 billion or so, do you want to invest in losers? Or winners?

We've tried to manage our Motley Fool business the Drucker way for 15 years, too. Lemme ask you a question. I'm putting you in charge of your human resources group, in charge of your corporate culture, and you have two choices of how to spend $100,000 -- your call, here, Drucker or Anti-Drucker -- these are the two ways you can invest:

(a) a program to try to get D- employees up to a C, people who have motivational and/or social problems, toxicly bring down the teams they're on, and clearly aren't fit to be hired even by weak competitors in your field, or

(b) a program to invest in your stars -- invest in more training, outside experiences, and leadership opportunities for your best employees

How would you spend that money? You now know how we spend ours.

Same thing works for investors. In my first 20 years of investing, I've done far better investing extra money not in my losers (of which I've had many), but by adding it to my strongest winners -- strongest in every sense of the term: competitively, managerially, financially, stock performance, etc. It's called throwing good money after good. As you can see, this is a life principle.

And it should guide us as we try to right the capsized ship of our nation today.

Back to Ford's Field. (Please excuse some basketball references, non-sports fans, and please excuse any potential bias I have as a North Carolina fan, as I do not write the below in order to pump my alma mater.)

Tonight, in the heart of the Motor City, in front of an audience of 25,000 Michigan State fans, North Carolina beat the #12 team in the nation... by 35 points.

Lemme ask you again: If you have an extra $100,000 in your HR department, or an extra $100 billion in your money supply, are you going to invest in:

(a) North Carolina, undefeated, average victory margin of 30 points, average points per game 97, first team ever to be consensus #1 preseason pick by Associated Press, or

(b) The Home Team -- loses by 35, was never in the game, had its point guard crying on national TV with three minutes left

What do you say, Americans -- we only have this finite amount of money to invest -- shall we use it to bail out the Home Team? The Home Team playing at FORD'S FIELD? Playing in FORD'S FIELD, an ugly and overbuilt arena that itself could only muster enough fans tonight to fill one-third of its own capacity? (Reminds you of Ford factories...?)

Or do you want to throw good money after good? Do you want instead to back teams that know how to win, that not only create success for everything around them but also serve as great exemplars to other organizations of how to achieve consistent excellence?

Forget "North Carolina" and "Michigan State." This isn't about anyone's alma mater -- it's a ready metaphor for important decisions that we are making for our society's future. (And I didn't even mention the Lions, NFL fans.)

The irony was rich, and sad. Think of the combination of silliness and arrogance of naming the ugly overbuilt stadium "Ford's Field" when you couldn't afford it in the first place. Think of the company and its peers exhibiting everything that is wrong with America today, from a terminal inability to evolve, to a labor force that has priced itself out of its own existence. Picture these companies' final chapter now (I hope), going to the feds with hats in hand and locked arm-in-arm with their lackluster peers -- all that money they spent adverising their bad products at you in countless TV ads, their names still on the stadiums, sitting before Congress.... And asking for what? All of them asking for YOUR money. That's what the bailout is, dear Fools, as I'm sure you know -- it's your future savings they're asking your elected representatives for -- there's nothing subtle about it.  

You want to back that? That's how you want to invest? That's how you want our nation to light its future path?

Poor Drucker, turning in his grave.

I don't think I really have any control over how gullible or politically twisted our Congress is -- I have no real say in what happens to GM and Chrysler and FORD'S FIELD. And neither do you. But you know what we do have, as individuals? As long as we have resources left -- the portion we get to keep after Congress raises our taxes -- we can in our own lives continue consistently to double up on our winners, in our investments and our business and life choices. I'll continue to make tons of mistakes. We, all of us, always will. But so long as you train yourself as master of your OWN domain to be the Drucker, not the Anti-Drucker, so long as you consistently inject fresh additional precious resources into what is WORKING, rather than what is moribund and inept, you will prevail.

When the bailouts come, you'll be doing the bailing. Bailing, but prevailing.

Next time you hear the phrase "Ford's Field" mentioned -- and basketball's March Madness Final Four will conclude there in early April 2009 -- appreciate, and yes feel some contempt for, the irony. 

6 Comments – Post Your Own

#1) On April 06, 2009 at 10:54 AM, anncardus wrote:

Ford hasn't taken US taxpayer money, GM and Chrysler have.

Chrysler have 30 days to agree merger.buyout with Fiat.

GM have 60 days to significantly restructure or there will be no more bailout funding available.

Ford has and is restructuring.  Ford has a plan, and at the moment, it has cash too.

Understand though that the demise of GM or Chrysler will  affect most automakers because they all share a supply base.  A supply base will be hit if GM or Chrysler go under.  If the supply base is damaged then cars cannot be made and more businesses will go to the wall.  Hundreds of thousands will be out of work and the recession will deepen.

Nobody in the auto business wants to see GM or Chrysler fail, but there's nobody that expects Ford to be the first to fall.

Manufacturing is the backbone of an economy.  Does the US really want to lose it's spine?

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#2) On April 06, 2009 at 2:22 PM, TMFSpiffyPop (99.37) wrote:

I agree with you on Ford, of course. I'm glad that the company didn't take the money -- and at the time I wrote the above it was all in doubt. That is one thing that has changed, since the piece was writ. In a way, Ford deserves a bit more credit... even though the company has still been a failure by almost any financial measure except "number of American jobs" for years, now. Thanks for the comment. --David

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#3) On April 06, 2009 at 2:30 PM, TMFSpiffyPop (99.37) wrote:

On a side note, a continuing interplay here is whether "Ford Field" should be called that; there's a consistent thread through American sports over the past decade of companies that can't afford it blowing their dollars on stadium naming rights -- to me, just that they chose to pay that money is also emblematic, even if Ford is slightly more fiscally responsible than its even-lower-quality peers. --D

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#4) On April 06, 2009 at 2:43 PM, anncardus wrote:

In December it was very clear that Ford had no intention of taking any money, certainly to those who had taken the time to review the situation.

As to the success or otherwise of the company I would recommend looking to Europe for the company's product strengths.

For operational efficiency the company needs to improve but has taken significant cost out, and more is yet to come.

Ford's management is strong and has direction.  There is a plan.  GM seem to be all at sea and struggling to act quickly.  Chrysler are penned into a corner. 

Watch the GM brands.  Not all will survive.  Place your bets on which will still exist in 6 or 12 months time.

Chrysler is a question mark.  How will Chrysler and Fiat work together? 

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#5) On April 07, 2009 at 1:02 PM, TMFSpiffyPop (99.37) wrote:

A deeply satisfying conclusion. --David

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#6) On April 30, 2009 at 10:24 AM, TMFSpiffyPop (99.37) wrote:

Chrysler bankrupt: 

 

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/30/AR2009043001639.html 

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