“During the hearing, a lawmaker read out an internal company e-mail saying that a 90-cent per-piece increase that would have fixed the flawed part wasn’t justified by the offsetting 10 cents to 15 cents in warranty savings. Barra, 52, said the GM she inherited three months ago would never condone executives opposing fixes that might have saved lives because they’re too expensive.”
We all know were the ‘cost culture’ has taken the ‘old’ GM: into the ground.
I’ll be blunt on this one. In fact it is not about minimizing the costs. That is not only rational but also natural. The real problems arise from ‘maximizing profits’, sometimes at “all costs”. Non financial costs that is. I.e. lives. Human lives in this case.
And this will keep on happening until we’ll finally understand that profits are good – inexorable even – but only as long they are an indicator for being on the right track towards long time survival (sustainable growth if you want to call it that way).
Allowing for the customers to get killed just for the sake of some pennies shaved from the costs is an extreme but compelling symptom of the present confusion. Short time profits, made at the expense of the customers, can be extremely dangerous.
Eventually they’ll kill the business itself, not just the customers.
PS Click on the highlighted quote, or here, and read the entire Bloomberg article. It’s worth it.