The author talks about innovation and the auto industry’s dire straits.

Question: How can we inspire innovation in corporate culture?

Miller:    I think one of the biggest spurs to innovation is competition, and, you know, one of the paradoxes of business life, not just here but everywhere, is that everybody pays lip service to loving competition, but the truth is business strategy is really the art and science of creating little monopolies.  You’re always trying to find a niche that you’ve got that you can exploit and profit from before other people plug the gap, and the way markets work is eventually other people get drawn in.  You have to move on to the next thing, but there’s no question for economies as a whole, competitive markets drive that sense of in a need for constant entrepreneurial innovation, and societies that make themselves safe for entrepreneurs and don’t lock in old incumbents, [remember] like Japan used to have rules that you couldn’t have retailers that were bigger than a certain size so that, you know, 20 years after Toys “R” Us was doing that kind of thing in the US, you still had only mom and pop toy shops in Japan, and that means Japanese consumers were paying three times as much for toys as they needed to.  Unlocking that stuff, which is politically difficult because the entrenched businesses have power is really the key to renewing an economy over and over again.  Now, the flipside of that is that creates lots of insecurity because real competition means you always got to look over your shoulder.  Andrew Grove, the famous long time leader of Intel, wrote a book called “Only the Paranoid Survive,” and there’s something to that, which means it’s only the fear of competition and, you know, in his high tech industry, the incredible pace of change, you’ve got to be on your toes or, you know, you find yourself wiped out.  That’s not an easy life to lead, but there’s no question that for society as a whole, the more competitively fueled innovation you have, the higher living standards become over time. 

Question: Has the auto industry streamlined itself out of existence?

Miller:    I don’t want to see the American auto industry to go away.  I don't think, and, again, I’m not an auto expert, but you know that a lot of the foreign transplants, Toyota, Hyundai and others, are, while they’re suffering also like everyone is, they’re still doing much better economically, and I think that we’re not going to get where we need to go without new management, without revisiting a lot of the crazy rules, all these things that requires, every state requires a certain number of dealers, you know, everybody’s got sort of protection in the auto industry.  The workers have some protections, the dealers have some protections, that if you’re trying to run these things, it’s like you’ve got three hands tied behind your back.  So I think unless we have, whatever it’s called, unless we have what ends up being de facto, a kind of bankruptcy workout, that brings every stakeholder to table and revisits all these stuff, I don't think just sort of pouring more money in will do it, and I think, you know, Bush, for political reasons you can imagine, wanted to kick the can to Obama, and so, he wasn’t going to let, after so many other things happened, he wasn’t going to let the Big Three collapse at Christmas on his watch, as the last act of the Bush presidency.  But I think the Obama team now has a very, you know, a very challenging set of issues to deal with.