Thursday, December 12, 2002

Any colour you like, as long as it's black?

There's a view, widely held in government, that centralisation means "everything's the same". It's wrong, but it's not an easy thing to change. Back in 1908 when Ford started shipping the Model T, Henry figured out that the cheapest way to produce cars would be to standardise everything - over the next 20 years or so he shipped more than 15,000,000 proving his point, and rarely changing the design throughout its life. Alfred Sloan, at GM, realised that this wasn't really the point - that you could, in fact introduce changes in design at a minimal cost and that customers would actually be prepared to pay for those changes so that they could be different. Sloan developed a series of models using the same chassis, drive train, wheels and so on but offering all kinds of colours and shapes - and then charged customers 15-20% more than Ford was charging. The customers loved it. Still centralisation, but centralisation with differentiation. This is the essence of our theme of government websites being "consistently different". You know it's a GM car, you know that it's based around some pretty standard components, but you've chosen the colour, the shape, maybe the interior trim and you think you've got a car that is special to you and you alone. In 1924, the slogan "A car for every purse and purpose" was published in the GM annual report. By the way, there are some other firsts in the GM history - the first car designed by a "stylist" was in 1927, the GM Java office was opened in 1927 (beating Sun to the word by about 70 years). Today GM, is worth about 20% more than Ford - but is making a positive return on equity versus Ford's far worse negative return. More than 75 years ago, car manufacturers realised how to deliver economies of scale while giving customers differentiated products. I've heard it said (but I can't find the source that in the 20s there were 100,000 types of cars and 100,000 car companies. Now there are the same number of car models available but only about 35 manufacturers - whether those numbers are right or wrong, the order of magnitude is probably right. Today, government is grappling with how to deliver web services that are "consistently different", but that make economic sense, deliver value (to government and the consumer) and that make a real difference.

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