Imaginary Management at GM

January 3rd, 2009

drunkdriving-sheltonIt’s kind of like driving drunk: You think you’re doing just fine, and bam, you’re pulled over (or you hit the wall). From everything I know, GM leadership has been so insulated, so obtuse, so drunk, if you will, that they finally hit the brick wall. And like any good drunk, they denied everything and refused the breathalyzer test.

Here’s why they got bailed out without having to spend even one night in jail:

In April 2008, General Motors ranked as the world’s ninth-largest public company [my emphasis] by revenue, according to the Forbes Global 2000 list. GM’s revenues outpaced every company in the world except for eight, and every car company in the world save Toyota. Yet, GM finished at #573 in the overall rankings. And for the same year, GM lost a net of nearly $40 billion—ranking dead last among the world’s public companies. From this cursory view, it would appear that GM’s products are selling just fine—second-place in its industry, and 9th across all industries—and instead that GM’s troubles run deeper than just products.

In this piece, Forrester researcher Chris Townsend points out the lack of systemic innovation behind GM’s fall. Well, sure, we all can recognize that. But what is it about the company’s failed management that stifled innovation and produced its “fortress mentality”? When its market stopped expanding in the early ‘70s, why did it fail to adjust? Why did it continue drinking the same old booze?

Bob Sutton, a researcher who has studied GM over the years, has some answers. They reveal a management out of touch with its competition, with its employees, with its customers, and with its market. These are people who imagined they were doing their jobs while the world changed around them.

Foremost in Sutton’s indictment is the top-down, kiss-ass culture at GM:

The norm in meetings is that the highest status person in the room does all or most of the talking. Plus, more so than any organization I have ever dealt with, employees are expected to express agreement with their bosses. Why didn’t anyone have the guts to tell the executives that taking a private plane to beg for a bailout was a bad idea? I suspect that it is just standard operating procedure: GM is a culture where subordinates are expected to shut-up and kiss-up when the boss is around.

Also, managers get cars as perks (some with drivers), but their cars are handpicked off the line, and the system sees to it that maintenance is taken care of. Naturally, these folks don’t go through the arduous process of dealing with dealers for shopping, purchase, service, or sale of a car. In other words, they are totally insulated from the realities of car ownership. Nor do they EVER drive a competitor’s car.

Thus, GM people are managing in a bubble, in a woozy dreamworld where they become victims rather than actors, where no one steps up to the plate, where the answer is usually “no, we can’t” when innovations are suggested.

The fact is that their bankruptcy has been going on for years. Sutton says that GM’s failure makes him sick: “I saw the pain that people were experiencing in Flint in the early 1980s, the depressed workers and former managers, the ripple effects on businesses, and the helplessness. It is all much worse now. I don’t know if the U.S. auto industry can be saved.”

None of us knows. But we do know that the binge is over. When a DUI behaves this badly, you take away his license.

Fire all top levels of GM management: Yes or No?

–jgoods

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  1. January 14th, 2009 at 00:01 | #1

    GM’s management is a systemic problem. The company is truly designed to exit the industry. My blog examines the track record of Rick Wagoner. It begs to question why does he still have his job?

    http://dontgiverickadime.blogspot.com

  2. jgoods
    January 3rd, 2009 at 20:31 | #2

    You know, they have been doing this for a while and the workers have proposed some real cost-saving things. Management seem to have recognized that the union is really their biggest stakeholder, but that hasn’t kept them from continuing to drive drunk. I think all their top management has to go, and there is plenty of unemployed auto talent in Michigan and elsewhere to replace them.

    The problem of course goes beyond management to the very structure of the industry and the fact that finally we are all stakeholders in this disaster.

    Thanks for the kind words, TG!

  3. tgriffith
    January 3rd, 2009 at 17:16 | #3

    Here’s a better idea than firing top management: Promote the employees who have been forced to kiss-ass all these years. Open the meetings to them… no doubt that the true innovative ideas lie within the people who build the cars. Bring the line workers into the board meetings.
    I think this blog is perhaps the best analysis of the GM’s state that I’ve seen.

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