MTV's popular reality television show, Pimp My Ride, where a lucky owner gets his car totally customized to fit his own particular tastes, should be the business model for GM, Volkswagen, as well as many others in a variety of industries. It could certainly make it interesting for their competitors.

Competition can be a wonderful thing. It provides the basis to measure performance, accelerate improvements, and importantly, a source for the best practices information many of you profess as the Holy Grail. To be fair, measuring yourself against others isn't necessarily a bad thing, unless you also want to be like them, albeit a little better for sure.

The problem is fairly simple: in the absence of a compelling way to differentiate themselves in the market, many companies are relying on being the same as their competition, only better if they can, to attract increasingly demanding and fickle customers. Meanwhile, margins shrink because cost reductions haven't kept up with price reductions. Industry Week reports the average return on capital invested for US manufacturers is around 13%. As an investor who considers risk, you would almost be better off putting your money in treasury bonds.

Unfortunately, this problem isn't confined to any one industry. AutoWeek reports that ArvinMeritor is following the lead of two of its competitors by dropping the parts division to concentrate on its "core" business. McKinsey reports the German Telecom industry has suffered a tremendous reduction in margins across the industry as almost every business followed the lead of a deep discounter in the mid 90's. The list can go on. Having been in over a hundred manufacturing facilities in the past few years, I believe the problem is epidemic. Add to this the challenge faced by US manufacturers from the increasing capabilities of Chinese manufacturers and it spells trouble, unless….

US manufacturers need to find a way to differentiate themselves in the customers' minds and refocus their strategic thinking in support of that differentiation. O.K., everyone knows that, you say. You're right, but not everyone acts on it. Those that do, do well. Think Dell and Toyota. However, even there, as competition tries to be more like them, the race of the diminishing margins starts.

What do customers want? Everyone from Alvin Toffler to Faith Popcorn has been telling us, for the last twenty years or so, that the customer wants what he/she wants, not necessarily what somebody else wants. Plus, he/she doesn't want to pay more money for it than the perceived value and he/she doesn't want to wait to get it. The market of one is growing and manufacturers who have found a way to supply it quickly are seeing their businesses benefit. Think JC Penney and Lowes. In fact, there are a lot of businesses, large and small, with the potential to do extremely well in the market of one. Job shops which are in tune, physically and emotionally, with their customers are examples. Theirs is a visionary strategy suited for the twenty-first century.

Henry Mintzberg* wrote about it in his book, The Rise and Fall of Strategic Planning, (The Free Press, 1994). He feels the visionary approach to strategy implementation is a more flexible way to deal with an uncertain world. Vision sets the broad outlines of a strategy, while leaving the specific details to be worked out. So, when the unexpected happens, assuming the vision is sufficiently robust, the organization can adapt; it learns. With a specified plan of "me to-ism", in contrast, serious adaptation becomes much more difficult. Thus, changes that appear turbulent to organizations that rely heavily on incremental improvements may appear normal, and even be welcomed, by organizations that prefer the visionary or learning approach.

Mintzberg places heavy emphasis on flexibility and responsiveness to changing conditions. He feels this is accomplished by projecting a common vision to all parts of the organization, energizing those closest to the process to form strategies that help achieve the vision, and learning from the adjustments that are a natural part of business life in today's market place. He offers this definition, "We believe the strategy making process is better characterized as a process of learning-formation in place of formulation, if you like. People act in order to think, and they think in order to act."

After a hundred years of production-centered mass production, first batch then lean, the customer is finally influential enough to say to organizations, "This is what I want and if you don't have it I'll punish you" (by forcing price cuts, discounts and incentives, or buying elsewhere). Wise management will hear this message. A flexible and responsive business rapidly adjusting to today's market place becomes the new Holy Grail. Maybe they could get Xzibit, Pimp My Ride's host, to be their spokesperson.