While many people see a bailout as the only solution to solve the liquidity crisis for the automotive Big 3, others believe the real problems rest deep within the white collar ranks, where a lack of visibility across\ncompany operations has created enormous inefficiencies and risks. Phil Gilbert, president of business process management firm Lombardi Software, is known as an efficiency expert sought by CEOs, CFOs and CIOs to help cut fat, at companies including Ford, Honda, AFLAC and Hasbro. In this opinion piece, Gilbert argues that the real problem facing the automotive industry has more to do with the lack of visibility and process efficiencies across all parts of the company, and less to do with runaway salaries and lack of technology innovation.Blue collar workers aren't killing Detroit, white collar workers are.\nAnd since the entire service economy is built on white collar work, what\nhappened in Detroit over the past thirty years and happened to banks in\nthe last 10, will happen to everything else in the next three.\n\nIn fact, everything in the American economy is driven by service economy\nworkers ("white collar workers"). But the model upon which this economy\nis built is broken. It is based on the unscalable heroics of artisan\nworkers, who largely work outside the limelight. In the worst cases,\nthey work outside any light at all. To prevent another industry\nmeltdown, business leaders need a set of white-collar principles based\non the bedrock of visibility. \n\n\nWhile Congress debated over a historic bailout of the Big 3 car\nmanufacturers everyone became an expert on what needs to change.\nAccording to one opinion in the Wall Street Journal the problems start\nwith the big, bad unions and stop only if you\n can "gut" them. According\nto the Beltway folks, we're in this mess because the car manufacturers\ndidn't produce enough hybrids or, in the vernacular, they "didn't build\nthe cars America wanted." \n\n\nNeither is right. \n\n\nOne of the three (Ford) is in demonstrably better shape than the other\ntwo, and it's no mystery why. Two years ago, when he took the reins of\nFord, Alan Mulally identified two things that needed to change: parts\ncosts have to go down, and engineering productivity must go up. \n\n\nGet it? The white collar workers who design the cars have to move from\nartisan to engineer, and they need to work together across all the\ncompany's platforms to use common parts. \n\n\nWhile cutting healthcare benefits and union concessions might help\nconserve another month or two of cash, neither would address the causal\ndifferences between old school manufacturers and those from a new school\nfocused on white collar efficiency and cross-process visibility. \n\n\nBut this type of change doesn't come on the cheap. It requires\nimagination and determination. Imagination to re-think the details of\nwhat we do and how it's measured. Determination to take on the\nentrenched interests inside our companies and drive change right down to\nthe desktop of every white collar worker. So far, these failures\nhaven't only resulted in the Big 3 crisis and all the related\nmanufacturing meltdowns over the last 30 years, they've also caused the\nmess on Wall Street. \n\n\nIn Michael Lewis' terrific article in Portfolio.com, "The End Of Wall\nStreet's Boom," he highlights the two key drivers of the banking\nmeltdown. First was the huge, unseen risk of leverage in the new\nfinancial products that were being developed. Second, in the article's\nmoney quote, John Gutfreund , the former Solomon CEO, reflected on the\nrole of CEOs across all of today's megabanks. He said, "I didn't\nunderstand all the product lines, and they don't either." Lewis writes\n"the Wall Street C.E.O. [has] no real ability to keep track of the\nfrantic innovation occurring inside his firm." \n\n\nCEOs and everyone below them must have a common understanding and\nvisibility into the processes needed to establish new efficiencies. As\nan example, it's rumored that Toyota's engineers spend more than half\ntheir time "doing engineering." In Detroit, it's half that. And as\nLewis points out, few people anywhere knew that a single mortgage was\nleveraged up to 10x through the various CDOs and credit swaps. \n\n\nIn both of these seemingly diverse industries, decisions about parts,\nrisks and returns are made in the vacuum of virtually unchecked\ndarkness. In companies today there's no direct linkage between the tasks\nyour people are doing and the goals of the organization. \n\n\nThis isn't a lack of automation It's a lack of visibility. Regardless\nof industry, the world's largest companies are houses of cards, built on\ndarkness and risk. \n\n\nThis should scare all of us. \n\nIronically, the off-shoring, which was the first response to the\nsymptoms of the artisan-economy-on-steroids, served to increase risk and\ndarkness even as it hid behind the allure of cost savings. \n\n\nBecause the growth in the service workforce was not easily scalable\n(costs went up in a linear fashion as heads were added), CEOs found it\neasier to fire local workers and hire distant ones who were paid a\nfraction of their U.S. counterparts. These executives took the easy way\nout, often-times they actually added headcount to an already-unwieldy\nprocess and boasted about their "savings." \n\n\nSo now our U.S. companies are in increased peril: white collar tasks\nare more opaque than ever, while customer and product risks are on the\nrise. \n\n\nToday, leading edge companies across the manufacturing and services\nspectrum are working on new ways to reduce risk, and increase\nvisibility. The technical bits are fairly easy, but the cultural change\nneeded inside the white collar parts of the organization is massive. \n\n\nThere needs to be a revolution in implementation of processes that bring\ngreater visibility and less risk to all aspects of our businesses. It is\nno longer acceptable that senior management remain ignorant of the\ngoings-on at even the deepest depths of the organization. \n\n\nTechnology can play a key role in providing this linkage and visibility.\nBut before this can help, we need leadership at the top that doesn't\nfail to imagine and is determined to make their people work differently.\nThis isn't about taking on the popular bogeymen of the past. It's about\nfundamentally changing our culture and our capabilities. \n\n\nThe old manufacturing and service economies can be saved, but they both\nneed to be rebuilt upon the bedrock of visibility. \n\n\nWe need a new service-enabled economy that lowers business risks, lowers\nbusiness costs and increases the number of local jobs. \n \n\nBut it requires imagination and determination from the very top of the\ntree. It requires driving change throughout the upper, middle and\nbottom of the white collar parts of your organization. \nPhil Gilbert is president Lombardi Software in Austin, Texas.