Here is a chart in this morning’s Wall Street Journal that lays out GM’s long steady slide to irrelevance rather starkly. You can see it here.
GM might want to take a lesson in basic problem solving from the mechanics who work on their cars. Any of them will tell GM’s CEO Mary Bara that if the car has an electrical problem and you replace the alternator, but it doesn’t resolve the problem, then it is quite clear that the alternator wasn’t the cause. You need to try something else.
Mary should apply the same logic. In the Rick Wagoner era GM blamed their problem on legacy costs – old union deals and employees getting too much money. Even our old friend Jim Womack bought into this explanation, saying, “GM knows how to run a lean business. But the consequence of doing this, in a situation of declining sales and market share, is quickly shedding a tremendous amount labor in existing operations while dealing with legacy costs they will never be able to bear. GM may fail in the months or years ahead, but not because they didn’t know what to do and not because they didn’t do it anywhere. They just couldn’t do it in their mature markets before it was too late.”
But we all anted up so the taxpayers could get GM off the hook for all of those legacy costs but, guess what? The downward slide has continued unabated. Like that mechanic who couldn’t solve the problem by replacing the alternator, the one thing we know is that this was obviously not the source of the problem. Seems Jim was wrong. GM doesn’t, in fact, know how to run a lean business.
In like manner, GM CEO’s have launched strategies to solve the problem that included replacing thousands of people with robots, bludgeoning suppliers and building plants in cheap labor countries; and none of them have corrected the basic problem. As the chart indicates, none of them got at the root of the problem.
The latest definition of the problem, according to both Ms. Bara and the Wall Street Journal, is GM’s culture. “’I hate the word culture,’ she says. ‘Culture is really just how we all behave.’ Now, Ms. Barra says, all GM employees need to behave differently, starting with herself.” True enough, but then she says, “In the past…I was too nice.” And misses the point entirely.
Niceness has just about nothing to do with culture, and her changing from nice to not-nice is hardly the solution. Ms. Bara says she doesn’t want GM employees to go home complaining “I had to go climb Mt. Stupid today to try and get the right thing done.” – not Mt. Mean, not Mt. Not-nice.
If that’s what they are saying (and I would imagine that is the cleaned up version of what they are saying) then the starting point would be for her to acknowledge that she must be the one sitting on top of Mt Stupid. And in the wise words of Forest – Forest Gump – ‘stupid is as stupid does’.
“Culture is really just how we all behave,” Bara says. Well, she is kind of right. Culture – the set of shared norms and values – drives employee behavior, and it is defined by leadership behavior. If GM’s culture can be described at Mt. Stupid then that culture has been set in place by senior management behavior.
What kind of senior management behavior creates a culture of Mt. Stupid? The kind that leads to passages like this:
“By January 2013, Cadillac and its dealers had 147 days’ supply of new ATS sedans in stock. By January 2014, supplies of the old and new CTS had ballooned to 183 days’ worth, according to data from WardsAuto Infobank, while ATS stocks had swollen to 204 days’ worth.
Such high inventories undermined Cadillac’s efforts to defend its effort to charge higher prices and boost resale values, which are critical to offering competitively priced leases.
Who was responsible for letting Cadillac inventories get out of hand? ‘I would say it’s unclear,’ says Dan Ammann, GM’s president.”
Six or seven months’ worth of Cadillac inventory and GM’s president says it is “unclear” as to who is responsible? It is absolutely no mystery to anyone outside of GM as to why people working under such leadership think working for GM is a daily trudge up Mt. Stupid.
It is not at all unclear why Cadillac has an absurd inventory level. And it is not unclear why GM’s culture is so dysfunctional. And it is not unclear why Gm blamed and abused suppliers and hourly labor for their problems and missed the mark in doing so. And it is not unclear why GM employees think Mary Bara rules from atop Mt. Stupid.
How senior management behaves is defined by blind devotion to misleading and just plain stupid accounting … accounting that says six or seven months of Cadillac inventory is an asset and that building that asset enabled GM to look better in the short term to Wall Street … accounting that points fingers at value adding labor and suppliers but no insight whatsoever as to where non-value adding costs lie … accounting that is completely separated from real money.
The management behavior Mary should concern herself is not about niceness but about the stupidity that ensues from driving every decision from the basis of stupid accounting.