Friday, February 20, 2009

GM Culture

I have been over at The Truth About Cars, reading the first three installments of Dr. Rob Kleinbaum's analysis of General Motor's corporate culture. I have touched on this subject in my a piece about Grandpa Gord, and of course it was impossible to watch even a little bit of the Big Three's performance before Congress without asking "Who the heck do these people think they are?"

Part two of Dr. Kleinbaum's series gives us a clue:
In progressive societies, merit is central to advancement but in static ones it is family and connections. On this point, GM probably gets mixed to negative reviews. The sense is that one must be part of the club to advance, which usually means the right degree from the right school, the right path, and knowing the top guys, who are your mentors. Twenty years ago, GM would have been completely in the static dimension on this attribute, but there has been substantial progress in reaching out to groups that had been excluded in the past and advancing them on their merits.

Unfortunately, this has been much truer for GM’s operations outside of North America and Western Europe than for these two core regions. In North America, the tradition is to pick high IQ people with the right background at an early age and then to rotate them through a series of “developmental” assignments. The consequence is that the people who rise to the very top are very smart with broad experience, but they are almost never people who have truly accomplished anything; who have built something from scratch or grown a business from small to large or turned around a losing operation into a profitable one.
Progressive cultures are secular, with limited influence of religious culture and a high degree of tolerance of heterodoxy and dissent. GM scores fairly low on this attribute. There is little tolerance of strong dissent from the prevailing opinion, although there is substantial subversion and passive-aggressive resistance. In discussions about setting direction, much more attention is given to wondering what the senior leadership will think than to figuring out the right path and trying to make it happen. The very senior people are often spoken of in tones of reverence and are seldom debated in any meaningful way.
That first congressional hearing was funny, in a sad sort of way. It was clear that Wagoner, especially, could not quite get his head around the idea that there were people who would actually question his pronouncements and challenge him to support his conclusions with anything more than the sound of his own voice.

This stuff is not just a spectator sport here in Michigan. Last night I spoke with our township supervisor. His business is in auto parts manufacturing; he had just come back from a meeting in Grand Rapids where he had announced a 15% pay cut to all of his salaried employees. Here in northern Michigan we see parts manufacturers laying off or shutting their doors almost weekly. Our tourism business is highly dependent on the automakers as well.

In Detroit a few weeks ago, I stayed at the Renaissance Center, home of GM headquarters. Amusing myself between meetings, I took a tour of the ground floor, which was set up as a museum/showroom for all of GM's cars. Seeing them all at once was weird. They were all so large and clunky, too big for my garage. They all looked the same to my untrained eye. Bored, I started looking at the window stickers, trying to find a vehicle or two that got MPG similar to my 1996 Corolla. When I finally found a car I would consider driving, I glanced inside the driver's window. The steering wheel was cranked to the right, exposing the bottom of the center plate. The center plate had been indifferently installed so that the wiring for the horn and the airbag and everything else was just sitting out there for all the world to see. It was a sight that stays with me, the moment when the Emperor had no clothes.

I had another vision last week, a vision of what it would take to save the GM, and to save Michigan's manufacturing sector. What if they stopped thinking of themselves as a car company and started thinking of themselves as the consumer energy solution company? There's a lot of talk about plug in hybrids. what if GM made a plug in hybrid car that was designed to be charged with GM brand wind generators and GM brand photovoltaics? What if there were GM charging stations at work and a GM motorbike, charging from the same GM home system, for short trips? What if your GM charging system or plug in hybrid could also function as emergency power in case of a blackout? What if.......

Then I woke up. I saw the restructuring plan that they just showed to Congress. As Dr. Kleinbaum put it:
GM’s current response seems to reflect its fundamental beliefs about the way the world works and it’s almost identical to what it has been doing for the last 30 years: cut “structural costs,” wait for future products to bring salvation, and count on cash from the other regions (and, now, the government) to help prop things up in the meantime. But they effect no truly fundamental changes in the business, its structure or the people running it (as they are clearly the best and brightest, know how to manage things in a serious way, and have a sound plan).

The proposed changes are touted as “profound” and “fundamental” but are really the minimum change from status quo the company believes it can get away with. There is a profound reluctance to make hard decisions that would cause short term pain but would lead to fixing the problem in the long run; instead there is a continual compromise of action that leads to “too little, too late” but defers immediate catastrophe. This is reflected in every aspect of the enterprise, from decisions on manufacturing, which never bring capacity into line with market realities, to people, where almost no one is ever fired for poor performance. This has not worked before and it is difficult to believe it will work now.
Part four will be published tomorrow.

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