Guest Editorial: Retooling GM's Culture, Part One

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

[Editor’s Note: This is part one of a four-part series. The author writes: I have been a consultant for GM for 15 years and an employee for 9 years prior to that, and have worked at one time or another in almost every region and function. This paper has not been endorsed or supported in any way by anyone at GM; I suspect it will be harshly rejected (or simply ignored) at the senior levels but will strike a deep chord a few levels down. This is written out of the deepest affection for the company and it is an attempt to deal with a fundamental issue that has kept the company from success and is now critical to its long term viability. The people who do care about GMthere are manyand who think a future is still possible need to stand up and try to make a difference, regardless of the short run costs.]

GM has developed a plan, currently before Congress, which is supposed to demonstrate its long run viability. The company is looking at its products, brands, manufacturing footprint and capacity, health care, and “structural costs,” while negotiating with the UAW to further reduce labor costs. All this is well and good but it is almost certain that GM is not addressing an issue that, in the long run, could be more important than all these others: its culture.

Mentioning the “C” word makes eyes roll, as it is seen as too “soft” to deal with in a meaningful way and does not matter anyway once the “real” stuff has been taken care. But to a long-run observer of the company, it is apparent that unless GM’s culture is fundamentally changed, especially in North America (its true heart), GM will likely be back at the public trough again and again until the public finally grows weary and allows its demise. It is unlikely to achieve sustained profitability unless it fixes its culture and it may even be true that once the culture is fixed the business will take care of itself.

Culture means the “values, attitudes, beliefs, and underlying assumptions.” 1 The importance of culture is that it forms the foundation of the business logic brought to any specific decision or problem; there is little chance something will be done that violates the culture, as it would mean contradicting fundamental beliefs. The success of many companies, including McKinsey, P&G, and Pixar, is attributed to their cultures, and a recent study of Toyota concluded its success is due as much to its culture as the Toyota Production System. 2 Sometimes societies may change their culture in response to a major disruption, as Germany and Japan did after World War II; and companies have as well, such as GE, IBM and Alberto-Culver 3, after their own near-death experiences.

But in all of these cases there was a consensus among the leadership that the culture needed to change and serious efforts were put in place to implement those changes. It is fairly apparent from their behavior and statements that GM’s leaders in North America do not believe there is anything fundamentally wrong with the company’s culture; indeed, they seem firmly convinced that they were well on their way to recovery but were overtaken by events beyond their control (specifically the large spike in energy prices and the collapse of the credit markets) that have led to the current recession.

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.

[To be continued . . . In Part Two, the author discusses the traits that characterize progressive cultures and how these traits (or lack thereof) affect General Motors.]

Join the conversation
2 of 60 comments
  • Blastman Blastman on Feb 19, 2009
    White men are responsible for the great majority of decisions made within these companies. Of course they were, but I think this is a myopic view of the situation -- and it doesn’t mean AA is not a problem. Something like AA is a top down company wide directive that managers have to go along with. And if all these AA people are hired, the company has to do something with them -- put them somewhere to do a job. And if they don't perform these jobs well, it affects your products. If the manager of the new Ford Freestar development program is told he has to put a whole group of AA hired women on his minivan project -- he does it. So you give the group 500 million for the new minivan project and after 4 years you have a product. The problem is the product will largely reflect the general competency level of the design engineers working on it. The manger, even if he is a top-notch manager will have to essentially take whatever the engineering/design team manages to produce after 4 years. He can't micromanage every aspect of the project and has to let the hired people do their jobs. So after 4 years they produce a minivan and it's a lousy product -- what's the manager going to do? Give them another 200 million and another 2 years to revamp it? Hardly, you'll likely just end up with a 700 million dollar minivan that is just as lousy that looks different and is 2 years late to market. The manager needs better people to produce a better minivan (product). And what do you think is going to happen to a company that does AA for 20 years? The problem with poorly thought out aspects of products happens more and more and becomes a systemic company wide problem. I'm sure there are likely many other examples of poor product development at GM that have been affected by this, from the poor design of interiors of GM products in the 1990's (woman in charge of interiors) to poor products like the Chevrolet Cavalier (give the new AA hires a chance to do a product and get their feet wet). These types of AA programs can also have a poisonous affect on the moral of the company. If a person works their butt off and produces excellence, but gets overlooked for political reasons, he will say to himself -- why should I work so hard and produce excellence results when this company doesn't give a hoot about excellence. So I don't really care that much either.
  • Blowfish Blowfish on Feb 19, 2009

    The consequences of Wall Street's reckless brilliance in many ways parallel modern-day engineering disasters. If you travel through Italy, you can't help but notice the many Roman bridges that still stretch across that nation's waterways. How is it that the Romans could build bridges that would last thousands of years, while the ones we build today collapse after a few decades?,pubID.29405/pub_detail.asp Talked about a parallel The transmission in the earlier Chrysler magic wagon, I heard had trans that failed before W expired, so they made the 2 dollar bearing slightly thicker so it would last beyond W period. Now with computers designers, Engineers et al can simulate when exactly the thing would blew up, either 5 mins before or after midnight. Is that technology is so marvellous these days. Another real story is a fnd who owns one found out the hard way is there somekind of heater valve helps to transfer the engine heat if fails the head would have excess heat build up so it looks like the head is gone. he paid dearly for a few new heads and only to sell the wagen dirt cheap. Another bloke got it figured out and motor along happily ever after. The rad doesnt dissipate enuf heat on a hot day withA/C on, the worse scenario if u drive the hilly scenic routes too. The best way is no A/C roll down windows , cranked up heater full, as to transform the excess heat into the cabin, is better u cook or the engine cook! We wont die in excess heat right. Unless u're Eskimos. Newer cars that deleted the Temp gauge is also a big fault, as when the red light shows up, U're doomed already, up the creek w/out any paddles.

  • Zang You just proved me right lol. dont worry, outside ttac people dont value your opinion either.
  • Fred Mean while, 2 people dies last night because of DUI Just saying EDIT: Just saw that id a woman whose Tesla crashed into a pole, but she was driving.
  • MaintenanceCosts If you are going to buy anything Hellcat or 392 equipped, you better have a garage with steel doors, high-security locks, and some reinforcement for the walls. These things are catnip for thieves, including some with markedly higher levels of skill than Kia Boyz.
  • Fie on Fiasler "Pedestrian" is often a euphemism for "homeless," especially in blue cities.
  • Oberkanone Too slow! Need a Trackhawk.