As the world has watched GM fall into bankruptcy, I’ve awaited the folks on the sidelines offering their pithy insights into the whole debacle. The most ludicrous claim I’ve seen yet comes from a June 2, 2009, Wall Street Journal article titled “A Saga of Decline and Denial:”
GM set the standard of how a company should be run, how utilitarian products could be made cool and how they should be sold. It helped win a world war, driver American prosperity and reinvigorate business-school curricula.
In the end, GM was a victim of it’s own success–its path to bankruptcy paved with the very management, marketing and labor practices that made it the world’s largest and most profitable company for much of the 20th century. Strategies that had once been deemed innovative “became a millstone on the whole company,” said Mr. (Gerald) Meyers (former chief executive of American Motors Corp.).
A victim of its own success? How about a victim of its own blindness to seeing that for almost 30 years, GM senior management and the board had bought into what was an unsustainable business model bleeding red ink.
Recently, my father asked me to help a restaurant owner look at her business. She claimed that the dip in the economy was making her business unprofitable and that she was waiting for the economy to rebound so her business would return to its prior level (of mediocrity). I showed her how there were real systemic issues in her business that indicated that she might not benefit from a rebound in the economy unless she took action to correct the deficiencies.
Unlike the restaurant owner, GM has vast quantities of expertise and knowledge at its beckon call. The GM insiders had to know long ago that what they were pursuing was not sustainable. For example, the GM automobile market share had declined from over 50% in the mid-70′s to less than 20% in today’s economy. Hello! What’s wrong with that picture? If you’re not growing, you’re dying.
There are many systemic issues facing GM in the months and years ahead. Can they reinvent themselves?
Unless there is a fresh look at the business model and leadership that believes there are no sacred cows–that everything about the business is up for debate and questioning–my sense is that the thinking that got them to where they are today won’t get them to where they need to be. If GM were to get a leader like a Jack Welch or Lou Gerstner, they might have a chance. If they stay with inbred leadership, I don’t think they have a prayer.
What do you think?
Dave Gardner, Gardner & Associates Consulting