The GM Solution

This is a guest post authored by John Maloney, you should check out all of his work …

Last month I agonized though a lofty lecture on “Change Management.” It was from a slick consultant who assured us with his shiny loafers and PhD. Problem was, it was positively identical to one I heard at Ford Motor in 1988 while participating in a senior management offsite. It was extremely painful, wrenching, and, well, foolish. Ironically, even after a generation, change management hasn’t changed!

Change management is the biggest management and development farce ever known to business. If you have ANY change management or often worse ‘cultural change’ programs in your organizations immediately kill them or resign your post. They won’t work and you will be badly victimized.

Here, for example, is GMs response to change. It is from the BW Article below, ‘The GM Solution: Life Boats, Not Life Support.’ http://tinyurl.com/5qpk7o

And in 2007, with over a million unsold cars in inventory, Mark LaNeve. GM’s head of North American sales and marketing, protested the need for change. “It’s not like we have some crisis,” he told the Wall Street Journal in its Feb. 9, 2007 edition.

If you ever hear the specious change management change mantra, ‘senior management sponsorship,’ run, don’t walk for the exits. If you hear the dopey, ‘change is the only constant’ calmly pick-up your notepad, pen and find a new role.

Change does not originate from the top or the middle. Please. These structures were specifically invented to eliminate change.

(Years ago I rallied against command and control. I was ostracized. GM is now headed to the ash heap of history on their confident rails of command and control.)

Begin to recognize loopy change management experts lament the failure of change management that THEY perpetuate! Woo-hoo! What a $$$ racket…

Here is how friend Shoshana Zuboff in says it in Business Week this week, exactly concerning GM.

“None of this is exactly “rational” behavior, but it tracks with what institutional economists have observed: The more a practice is institutionalized (history, legitimacy, interdependence, codification), the more it is taken for granted, the greater the energy that goes into maintaining it, and the more relentless the resistance to change. In 2006, GM’s CEO Rick Wagoner responded to the call for “new blood” in GM’s leadership with this screed in Newsweek: “These are sophisticated problems with historical tails that run back 80, 90 years. The chance of someone coming in and understanding our business…is absolutely microscopic.”

Today, business and economics is in a headlong flight to value networks and network intangibles.

Toyota, Nissan and Honda get it and helped invent it vis-à-vis TPS & Lean. See: http://valuenetworks.com/public/item/209498

The focus on value and network intangibles allows the new “Big 3” to account for 52% of the US car market. Flatly rejecting the vulgar UAW makes them produce products that are  enormously popular and profitable. Toyota’s annual profit is more that GMs market capitalization!

Here is a reinforcement of network intangibles from Shoshana.

The car is becoming an expression of identity, values, and personal control in ways that move far beyond traditional segmentation and branding. For example, fuel efficiency will be only one consideration for a socially responsible vehicle (SRV). What percent of the parts are recyclable? What is the vehicle’s total carbon footprint? Are there child labor inputs? Toxic paints, glues, or plastics? How transparent is the supply chain? Is the seller accountable for recycling? What methods are used? Are fair labor practices employed?

The new demands for an individualized driving experience at an affordable price require a fundamentally new business model—a discontinuous shift from economies of scale and push marketing to distributed networks of enterprises that cluster around individuals. The single most important factor for competitive advantage will be a brand’s ability to forge durable intimate relationships with customers based on trust, dialogue, and transparency. Similar skills will be needed at the enterprise level, as carmakers collaborate with other entities to support diverse customer needs.

Value networks and VNA are highly instrumental in defining this new business logic and putting in-place “…distributed networks of enterprises that cluster around individuals..”

Sure, it is possible to kick-back and not activate in value evolution of business and the economics of intangibles. That will only prolong and perpetuate our dire situation and put all solidly on the path to oblivion like GM.

Here is the article link. Please read and comment, here and at Business Week.

http://tinyurl.com/5qpk7o

Can’t really say ‘happy reading’ at the moment. Rather, it is time to act decisively.

(Note:  John, thank you for this guest post.  You are a real leader in this movement.  All - please go to the BusinessWeek article and add your comments. sincerely, Michael)

4 Responses to “The GM Solution”

  1. Martin Edic Says:

    As I noted in a comment elsewhere, this weekend I saw two national car spots back to back. The first, from Toyota, showed a car being fabricated from natural materials and then naturally returning those materials to the land, a metaphor. The second from Cadillac showed a huge (non-hybrid) Escalade roaring at high speed through a city and it offered the vehicle for only $57,000, a savings of over $12,000.
    The GM ad could not have been more tone deaf to the financial reality that its’ watchers are personally dealing with.

  2. Michael G. Cayley Says:

    Thanks Martin - great comment.

  3. Mark Montgomery Says:

    As an example of how the world works today- Both John and Shoshana are in my past private communications, and I’ve recently communicated with BW editors, but didn’t see this piece until it was referred in the Linkedin CKO group I recently joined…… better late than never… good stuff, thanks.

    Along these lines, readers might be interested in a white paper we just released- Unleash the innovation within

    http://www.kyield.com/publications.html

  4. Stephen Byrne Says:

    One of the most interesting things I’ve looked at recently was the notion of adaptive instability and how it relates to how this business sees itself. It’s one of the reasons why there is so much inertia within the US car industry (though we could probably say the same thing about most of the banking and finance industry).

    This institutional mindset is best demonstrated by US car makers such as General Motors with self label “the world’s largest automaker” and Chrysler with “we build cars and trucks” label themselves. One of the reasons they have moved very little in the past 50 years or so is that they contininue to focus on pure manufacturing labels rather than seeing themelves as offering broader “transport” options. The prescient Honda already self labels itself as a “mobility” company.

    It’s something that the oil companies have been doing for a while (obviously seeing the writing on the wall) and changing internal and external perspectives from single source energy producers to multi-source producers.

    If the oil companies have managed the transformation, complete with increasing profits, one wonders why car markers haven’t. Inertia was obviously the preferred option.

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