When Better Customer Service is Seen as…Anticompetitive?

NJ Governor Chris Christie has banned Tesla’s direct sales model in NJ. Now, I understand completely why an auto manufacturer would want to use franchise dealerships rather than tying up all that capital themselves — they can focus on what they do best. I have absolutely no idea, however, how one could argue that the decision to sell directly is anti-competitive. Selling electric cars is extremely complicated — it takes way more effort and education than selling traditional vehicles. There’s plenty of evidence that salespeople at traditional dealerships are not equipped to (nor interested in) investing the extra effort it takes to pitch electric cars. (Imagine your car salesman explaining how you get a city permit to install a 220 volt charger in your garage and you start to get the idea…) Thus there’s a strong case for Tesla deciding to run the dealerships themselves. They want to make the experience smooth, slick, and iPhone like. And when someone goes into a Tesla dealership, it’s not because they were hoping the salesperson would compare the Tesla’s benefits with those of the Volt or Leaf, so where is the harm to competition?

Christie, what gives? Did NJ ban GM Saturn dealerships in the 1990s? Strange move for a Republican…

http://www.forbes.com/sites/michelinemaynard/2014/03/11/new-jersey-to-tesla-youre-outta-here/

New Jersey To Tesla: You’re Outta Here

Tesla Motors TSLA -1.77% is being courted by four Southwestern states for its $5 billiongigafactory, but there’s another state that is kissing Tesla goodbye.

The New Jersey Motor Vehicle Commission voted Tuesday to ban the direct sale of vehicles in the state, becoming the third state in the nation to prevent Tesla from selling to consumers. That would force Tesla, founded by billionaire Elon Musk, to sell its cars through dealers.

Instead, Tesla will stop selling cars in New Jersey on April 1, according to Dow Jones. That means the auto company won’t have access to one of the nation’s most lucrative markets for luxury vehicles, while well-heeled New Jerseyites will have to pick up their Teslas somewhere else.

The commission’s vote followed month of discussions between Tesla and members of Gov. Chris Christie’s administration, according to a post on Tesla’s blog. The auto company said it thought that the commission and the administration were working to help it in the face of opposition from the New Jersey Coalition of Automotive Retailers.

Like many other dealer groups across the country, New Jersey dealers did not want Tesla to be able to sell cars directly to customers. On Monday, Tesla said it learned that “Governor Christie’s administration has gone back on its word to delay a proposed anti-Tesla regulation so that the matter could be handled through a fair process in the Legislature.”

Tesla said it had already been issued two licenses to open dealerships in New Jersey. “This is an issue that affects not just Tesla customers, but also New Jersey citizens at large, because Tesla would be unable to create new jobs or participate in New Jersey’s economic revival,” the Tesla blog said.

Meanwhile, a spokesman for Gov. Christie said Tesla officials would need to convince the state legislature to reverse the New Jersey ban on direct sales.

Christie spokesman Kevin Roberts said,  “Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law. This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation, and Tesla has been aware of this position since the beginning.”

English: Headquarters of Tesla Motors Inc., lo...

Tesla Motors and New Jersey are not perfect together. (Photo credit: Wikipedia)

The other two states to have banned Tesla from direct sales are Arizona and Texas. Coincidentally, both states are on Tesla’s consideration list for its massive battery factory. The other states in the running are New Mexico and Nevada.

Texas’ auto dealers have said they would still fight to keep the company from being able to sell directly to customers, even though the $5 billion plant is considered one of the biggest industrial prizes ever.

The New Jersey action comes after the Tesla Model S was named the top car for 2014 by Consumer Reports magazine.

 
 

Tesla Model S

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Photos courtesy Tesla MotorsTesla Model S


Say It Ain’t So–Baseball Hero and “Small Government” Fan Turns Failed Crony Capitalist

Over at Reason.com they have interesting text and video on the sad tale of 38Studios, New England baseball hero Curt Schillng’s collapsed videogame venture that attracted nary an independent private investor but sucked up $100 million from Rhode Island taxpayers. Some takeaways from the story:

1) When inexperienced and undermanaged quasi-public economic development corporations go chasing glamour ventures to try to cover up their state’s abysmal business climate, bad things are likely to happen.

2) When the glamour venture is headed by a star athlete with zero experience or expertise in his chosen field, and appears to have no experienced management at all, the odds go down.

3) When a venture making a totally conventional product, such as a massive multiplayer game, can’t get any private investors, there’s probably no conceivable public policy justification for a subsidy.

4) People like Schilling who claim to be against big government but then reach their hands into the taxpayers’ pockets to fund their own dreams are, at best, intellectually stunted.

5) Schillings’s pro-Bush political views may helped save the taxpayers of Massachusetts, because Democratic governor Deval Patrick turned Schilling down flat even though the pitcher is an immensely popular legend among Boston Red Sox fans.


Laundering the University of California’s Past

Apparently the University of California system decided it needed to update its image, so they cooked up this. Here are the old and the new side by side:

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When I see the old  logo, I think of quaint values like learning and truth. When I see the new logo, I imagine little enzymes acting like keys to unlock the stains in my laundry.

UPDATE: The UC bureaucracy folds up like a tent a mere five days after this was posted. Maybe the new logo should say vox populi somewhere. (H/t David Hoopes in the comments.)


David Stern and the Aging Emperor-CEO Syndrome

NBA Commissioner David Stern recently fined the San Antonio Spurs $250,000 and severely chastised them for the decision by Gregg Popovich, their near-legendary coach, to rest his aging stars at home rather than fly them to Miami for a meaningless (but nationally televised) tilt with the defending-champion Miami Heat. Is Stern losing his grip? Does he need an intervention and/or a forced retirement as he reaches his managerial dotage? While I haven’t heard of Commissioner Queeg–whoops, Stern–clicking steel balls in his hand or searching for the keys to the strawberries, a Caine Mutiny scenario may be approaching if he continues to deteriorate. Other firms with long-term, successful “emperor” CEOs have found their later years to be problematic. See Eisner, Michael (Disney) or Olson, Kenneth (Digital Equipment Corporation) or maybe Cizik, Robert (Cooper Industries).

Read the rest of this entry »


A Bad Day at the Lectern

Ever teach one of those classes where you’re off a beat, forget points you want to make, and ramble a little bit? Maybe your preparation wasn’t up to its usual standard. Fortunately, there isn’t an opponent in the room compounding the problem by trying to make you look bad. Barack Obama did not have that luxury tonight.

I had fun watching the president’s discomfiture, but I sure wish Romney had a better five points on the economy and that he would explain why cutting the growth of entitlements is not an optional choice. (Although his Spain remark wasn’t bad.)


Is the Resource-Based View (RBV) Useful? Yes.

I am visiting Lund University this week – and they have conclusively shown that the Resource Based View indeed is useful.  Useful for what?  As a door stop to their conference room.  (I also sent the proof/picture to Jay, one of the originators of the theory.)


Motivation Trumps IQ. What now?

An article recently posted in Slate reviews research showing that a significant portion of the variation in IQ tests is attributable to motivation rather than ability. In one striking study researchers measured the children’s IQ and split them into High, Average, and Low groups. They reran the test offering the low group an M&M for every correct answer. As a result of this simple incentive, the low group’s score went from 79 to 97 – on par with the average group.

Ok, so incentives work. Perhaps not a big surprise on many levels.

On the other hand, there is a large OB/HRM literature invested in the conclusion that performance increases are associated with hiring employees with a higher IQ. The assumption there is that IQ measures ability as opposed to motivation.

This raises a critical question for strategy scholars. Is motivation an immutable attribute of human capital Read the rest of this entry »


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