The Smartest Guys Go Vroom!

Calvin Trillin has a funny New York Times op-ed today about how Wall Street, once complacent and underachieving, was done in by a deadly influx of smarts. The bottom third of the class was overwhelmed by the top third, exotic structured financial products ensued, and the whole thing came crashing down last year.

The same dynamic is now happening in the auto industry. Actually, it’s not even the auto industry anymore: It’s “transportation” or “mobility.” When the auto industry in the United States was stronger and contributing to the national reputation in meaningful ways, it also attracted workers who just wanted to work, engineers who’d gotten their start in high school shop classes and under the hood of some old Dodge in the garage, and designers who spent geometry class furiously doodling their vision of the next Camaro. The really smart kinds didn’t dream of going to Detroit and disappearing into General Motors (MTLQQ). And that was fine, because it kept GM in reasonable touch with its customers and their needs.

Toyota envy was the thing that upset this sensible balance. Japanese management theory (“They have a theory?”)  appeared to have created cars that never had any problems, so the executive layer in Detroit flocked to learn Toyota’s secrets. Meanwhile, everyone who had majored in business was getting an MBA, so Detroit was inundated with executives of pedigree, rather than execs who had scrapped their way up through various company divisions, perhaps even starting at an actual car dealership, selling actual cars to actual customers.

The new saviors of the mobility auto industry are going to be Silicon Valley-based startup electric car companies. As you probably know, you’re not allowed anywhere near Silicon Valley unless you can prove you’re smart. There are various ways of doing this, including having sold a software company for at least $100 million (preferably to Google [GOOG]) or having written an important iPhone app. The governing idea is that the car has been dumb for far too long. Vertically integrated Midwestern manufacturing culture might be fine for ensuring generations of middle-class prosperity, but in the future disruptive innovation will rule the day. Ideally, the engineering should come from Stanford, the management from Harvard, and the batteries from MIT. If Michigan has a role to play, it’s to provide tax breaks. The electricity should be generated in a “smart” grid. Ultimately, the cars should drive themselves on “smart” roads.

Of course, if Silicon Valley’s new Detroit is anything like Silicon Valley itself, the new age of smart mobility will have a profitability problem. At which point smart will do what it typically does under those circumstances: try to sell itself to someone big, old, and dumb.