General Motors has a long and rich history, and at one point in time, led the world in making automobiles. In fact, it could be said that there is an entire GM subculture in the auto industry today. So where did things go wrong?
Perhaps, GM is failing because it is too, well, GM.
Alex Taylor III, senior editor of Fortune magazine, charts the history of General Motors from a journalistic perspective over the last three decade, gives an up close account of the challenges the company had to face, and the foibles that have doomed it.
Taylor vividly describes how GM had a conformist culture where rebellion, or perhaps creativity, was frowned upon. As Taylor recounts, John Z. DeLorean, founder of the movie-famous car, was a GM executive who was eventually pushed out for flaunting the rules. The General Motors History Project pointed out that in the Eighties, GM was still making decisions the way it did 50 years ago.
Worse, its growth made the company cumbersome and unwieldy as they reached 853,000 employees worldwide in 1980. A lack of proper execution made downsizing model lines necessary, which led to the sharing of parts between brands. This blurred the distinctiveness of its various brands ala “badge engineering”, not to mention engineering problems springing up like weeds. GM also failed to make permanent peace with the United Auto Workers, letting expensive strikes plague it repeatedly over the years.
Our take? Sigh. By Taylor’s report, it seems that General Motors has had a long line of mediocre, or inept chief executives working the tiller. If conformity was, and still is, quintessential, then at the very least the company heads are cut from the same cloth.
However, not all GM executives shared this failing. Taylor notably mentioned Roger Smith, the previous CEO before the current Rick Wagoner, who started the restructuring and downsizing to become a more efficient, cohesive unit. Wagoner has taken on Smith’s mantle, and Taylor also applauds Wagoner for doing away with Oldsmobile and pushing the disparate elements that make up GM closer together, while persuading the United Auto Workers that GM was in deep trouble and convincing them to lift the expensive worker/retiree health care benefits that was a back breaking boulder. Wagoner also managed to bring on Bob Lultz, who has managed to reinvigorate the design and engineering for some of GM’s models.
But, as Taylor emphasized, GM is always one step behind everyone else. It made massive profits with SUVs and trucks, but they were already playing catch-up. When crossovers came into existence, GM also lagged behind the industry. Now the need for fuel efficient vehicles has completely blindsided the company, pushing them towards the closing chapter.
Even now, when Wagoner was asked if GM should be more like Toyota, he responded, “We’re playing our own game – taking advantage of our own unique heritage and strengths.”
Well, these supposed strengths have brought the company to the point where its market cap is only one fiftieth that of Toyota’s. Keep working those dumbbells, fellas.