Guest Editorial: Retooling GM's Culture, Part Two

Rob Kleinbaum
by Rob Kleinbaum
guest editorial retooling gm s culture part two

[Editor’s Note: This is the second of a four-part series by Dr. Rob Kleinbaum. Read the first part here.]

The scholars Lawrence Harrison, Samuel Huntington and their colleagues have addressed the fundamental question of whether culture “matters” in how societies develop and make a compelling case that it matters a great deal. They have also outlined the specific traits that lead a society to progress or prevent it from doing so and their work provides a rigorous way to think about culture that is based on substantial evidence. These traits seem applicable to a private enterprise, especially one that is larger and older than many countries.

Progressive cultures emphasize the future; static cultures emphasize the present or past. GM, unfortunately, lives in its past glory, as there were always better times in days gone by. Like the UK before Thatcherism, there is a deep sense that their value is their heritage, not what they are going to do tomorrow. While there have been pockets that have looked forward, and serious investments in fuel cells, there is little belief that the future is theirs to make.

Work is central to the good life in progressive cultures but a burden in static cultures. This is a mixed story for GM as there is generally a very strong work ethic but it is confined to the elites more than the rank and file, whether union or company. For the white- and blue-collar workers, there is much more emphasis on leisure and “the good life” than the value of hard work. So you will find certain groups working 70 hour weeks routinely but others who will get angry if you even suggest working over a weekend or a vacation. And somewhat perversely, the groups that do work very long hours are driven to it by a few leaders who think that it is a constant requirement with the consequence that work becomes inefficient and fills the required time rather than being driven by sensible needs to do whatever it takes to win.

Frugality and investment are valued in progressive societies but seen as a threat in static cultures. GM seems to have redefined the notion of investment as cost cutting. For some reason, time after time, the company believes it can reduce its capital investment in products whenever times get bad without having to pay for it in consequences of compromised characteristics and lower share and price. The company also seems willing to save $1 in capital even if it costs $100 in incentives. For a company run by finance people, they seem to have lost all notion of what investment means, in product or people. Further, when they have made investments that were different and quite successful, such as NUMMI, Saturn, and then later OnStar and Hummer, they were made reluctantly and never really embraced by the organization, but seen as threats or outsiders. GMDAT, its Korean joint venture, has been a tremendous and unanticipated success, but is viewed with condescension and even deeply resented by many.

Education is critically important to progressive cultures, but only marginally important in static ones, except to elites. GM is squarely in the static camp. It talks about all the training it does, but in fact it is almost all peripheral; GM University, which was launched with soaring rhetoric, is of little to no importance, unlike Crottonville for GE. Sure, the managers all have MBA’s and the standard path is still an undergraduate engineering degree from GMI and a Harvard MBA, but there is little emphasis placed on ongoing education and most of the programs that were in existence were among the first casualties of “structural cost reductions.”

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.

In progressive cultures, people identify with groups well beyond the family and into society at large. GM falls directly into the static side. Despite substantial effort to create “one company”, GM is still surprisingly full of provincialism, based on both function and geography. Very few GM employees see themselves as truly belonging to the global enterprise; almost all identify themselves with their function and then the local business unit; viewing others as ignorant meddlers and sometimes outright adversaries. While many companies have embraced the notion of the “extended enterprise” and successfully manage complex alliance relationships, GM’s investments in major alliances; Fuji, Suzuki, Isuzu, and Fiat; were all great disappointments and had little if any return.

Of all GM’s cultural problems, this might be the most crippling as it perpetuates an inward focus that is largely responsible for its hostile relations with its dealers and suppliers and, most troubling, with consumers. As a consequence of its insularity, the company has repeatedly displayed behavior that shows it to be tone deaf to society at large and much of the external world has written off the company.

Ethical codes are more important in progressive cultures. Here GM gets high marks. There have been few corruption scandals, sexual harassment is not permitted, there is strict adherence to the Foreign Corrupt Practices Act, and the company will not let itself be associated with “shady” characters or businesses. While any company of its size and scope will have incidents, the ethical codes at GM are high and enforced.

Authority tends to be horizontal and decentralized in progressive cultures and centralized and vertical in static cultures. Authority at GM is centralized and probably becoming more so as the company “globalizes” by creating strong, centrally controlled global functions which further weakens regional autonomy. While there are regional and functional strategy boards that have the appearance of dispersing authority, in fact they are all controlled by the same few people. One of the perverse outcomes of globalizing functions is that authority is becoming “horizontal” and strongly centralized, as global functions that are all run from Detroit become the main lines of authority and undercut the business units.

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.

Altogether, this is a fairly depressing picture. GM’s has been explicit about its cultural priorities; “One Company, Stretch, Sense of Urgency, and Product and Customer Focus”; but there has been little attention to making these real beyond re-iterating them at quarterly meetings.

[End of Part Two. To be continued . . . .]

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  • GS650G GS650G on Feb 19, 2009

    This is all good and academic but they still can't make a decent small hybrid car we can live with.

  • Blowfish Blowfish on Feb 19, 2009

    Modern days car makers have to decide whether to build them to last long time or good time but not long time. Last too long nobody will buy another one real soon. Then more often cars were designed for good times but not long time. Another issues added to the equation is Japs car makers seem to have mix long time and good time together, so suddenly the big 3 started to look inadequate. Now with more electronic Gremlins, it didnt help them to last long at all. Excessive heat under hood also kill the electrical insulations. Seems to be a norm for 4 cyls build by Big3s have weak head gaskets. A fnd has a 90s Pontiac Sunbird, it needs oil &amp water pump , engine & trans mounts, shocks. newer Parts he found on the junk yards were much inferior to the ones on his car. One thing u know the bean counters are very good at costs cutting. While a mid or early 80s Jap or German car can still be functioning without great deal of parts replacement and break down. The Big 3s had been digging their own graves for very long time, finally it has reach the bottom now. So as mercedes build cars after mid 90s, they greatly water down the quality parts, and end up with a lot of repairs, recalls, died on the road. Lately they kind of saw the deep spiral trend kind of bothersome too.

  • JamesGarfield What charging network does the Polestar use?
  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.
  • Dartdude Lorenzo, the reason for low manual transmission here is that most dealers won't stock them. I wanted a 2012 Kia Koup with manual tranny it was available, but no dealers ordered any from the factory hence there was none available. Go on any car manufacture's web site and price and build and build your model and you would be lucky if the model existed and was available.
  • The Oracle Good news is that based on the model years many of these have already been junked or experienced terminal engine failure.