MFG 2.0

How GM Committed Suicide By Degrees And How To Avoid The Same Fate

Wanted to call attention to an interesting two-post series on the WSJ's Management 2.0 blog. Author Gary Hamel breaks down why he thinks GM ended up where it is today -- just this side of solvency, amputating brands and cutting costs to the bone in the hopes of stopping the rot and getting some healthy growth to return.

Both part one and part two are worth a read; I'll just call out a quick couple of points that made sense to me:

In business as in biology, big things grow slower.
In the long-run there are no growth companies.
For many companies, well-informed customers are now a bigger threat to margins than well-armed competitors.
...most businesses were never built to changethey were built to do one thing exceedingly well and highly efficientlyforever.
Years of continuous improvement produce an ultra-efficient business systemone that's highly optimized, and also highly inflexible.
Long-tenured executives develop a deep base of industry experience and find it hard to question cherished beliefs.

Each of these points is plucked out of context here, but over the course of the article, you get a sense of how a lack of vision and complacency caused GM to lose its mojo, one quarter at a time. Here's a representative paragraph:

Ever since I can remember, GM's defenders have been arguing that the company was making progress; and they were right. GM has been getting better for a very long timebut it's been 40 years since it was the best. The Chevrolet Malibu and Corvette ZR1, the Buick Enclave and Cadillac CTS-V: these are exceptional cars by anyone's standards. Problem is, they are even more exceptional when judged against the persistent ordinariness of GM's other products. For years, excellence at GM has been an occasional aberration, rather than an all-consuming passion.

As much as I agree with Hamel on the macro trends and his characterization of GM's last half-century of business as a type of reverse punctuated equilibrium, I'm going to have to respectfully disagree on the Enclave. Not a fan.

(Here's a shot of the Corvette ZR-1 instead.)

TAGS: Innovation
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