GM and You

The unthinkable happens today.  GM declares bankruptcy.  All of my U.S. readers will jointly own over 70% of what’s left of it.  And “our” management will be cutting deeper and deeper, making the company smaller and smaller, hopefully leading it back to a new life and a new prosperity.  As is always the case, I’m wondering:  What’s the lesson for the “everyday leader” – manager, parent, pastor, worker?  And if you’re new to Reading for Leading, trust me, the answer isn’t “Rick Wagoner’s an idiot.”  I’d say instead three things:

 

  1. Corporations – from the Latin, corpus, or “body” – like humans, get sick and die.  And like all living beings they tend to be slow to react to subtle environmental changes, and they have great capacity for denial.  So, we would all do well to keep a ruthless eye on outside factors, and a skeptical outlook on our own extraordinary capacity for denial and wishful thinking about those threats.  GM and the other big autos (Toyota recently said they have only $18.5 billion in cash reserves – about the same amount as Ford – and they expect to lose money this year) are suffering from the “perfect storm:” gas prices that killed their lucrative market, crashing demand, over-capacity, frozen capital markets, and an inability to change rapidly enough.  The perfect storm could hit you:  whether you’re leading teenagers, retail workers, or a not-for-profit.  It would behoove you to coldly and analytically assess the realities and the threats on your horizon. 
  2. There is zero room for internal friction in the engines of our organizations, because change is coming too darned fast and competition is too strong.  Labor and management alike need to shift from zero-sum internal battles to the opportunities in synergy and cooperation.  Cultures must learn to encourage creativity and risk-taking and then learn from mistakes.  Internal political squabbles have to end.  Egos have to be managed; they are tremendous fuel sources, but they burn with great inefficiency by generating unnecessary and destructive internal differences.  So, find the lubricants for your churches, teams, offices, and even homes.  Use a lot of appropriate praise and generate candor so that mistakes can be talked about and differences brought into the open.
  3. Everyone’s got to contribute.  The job banks – where laid off workers remained on payroll – were the most egregious example of a luxury the American economy can no longer support.  But more importantly, we all have to generate a culture where people feel like they belong, own a sense of accountability and are looking to contribute every day.  Jennifer and I were so excited to hear Kate’s enthusiasm as a “lowly” worker at the delicatessen she’s working at this summer.  She said: “I love it there.  Their motto is ‘great food, great service, great finance,’ and we are all expected to contribute to the business.”  She’s worked other places and made more money, but I’ve never seen her so geeked, because she matters there; they think she makes a difference and she wants to try to do just that. 

 

What can you do today to:  be open-eyed about risk, lubricate the system you’re in, and promote total involvement by everyone in the system?  Do those things, and you’ll decidedly

 

Lead with your best self,

 

Dan

17 responses to “GM and You

  1. Good advice for us all. I hope that we develop into an organization that can be proud of success but not married to one idea, thought, or outcome. We need to understand that the world changes at warp speed. What worked may need tweaking or overhauling to be appropriate in the future.

  2. As “Engine Charlie” Wilson, CEO of GM back in the last ’50s & early ’60s, said “What’s good for GM is good for the U.S.A.” Today, GM is very much the U.S.A. through an undesirable 70% ownership.

    The GM corporate problems began in the early ’70s when accountants began running the company. Accountant CEOs in their “bean counting” wisdom, combined the styling and design departments in the ’70s making a Buick look like a Chevy, a Pontiac look like a Chevy and an Oldsmobile look like a Chevy. Since these Accountant CEOs wanted people in command positions who thought the way they did about “harvesting” the company’s assets, they hired marketing executives with economics degrees (i.e. who had become educated economists because they didn’t have enough client-oriented personality to become accountants).

    When things went from bad to worse at the beginning of the 21st Century, the last accountant CEO finally hired Bob Lutz to put some WOW! back into the styling of GM cars. Unfortunately, it was too little too late.

    Poor GM, poor Michigan, poor U.S.A. taxpayer. The only question left is, “Will we learn from GM leadership’s mistakes?”

  3. I printed off today’s Reading for Leading (sorry for the non-green action) because your comments were right on with what I’m going in to at 10:00 this morning – our business planning and budget development meeting. Thank you!

  4. Hi Dan:

    Kathi copied me on this.
    I do have an observation.

    Ir seems to me that whenever we feel that change is happening “so fast” or “too fast” – what we are really saying is that we are behind the curve – not the ones out front, creating the change or the future.

    As a culture this a largely due to our nation’s having down-graded the areas of education and teaching. How can we be world leaders when we know so little about the rest of the world?

    This “dumbing down of America” began about 30 years ago – perhaps longer. The results are a “momentary”, pop-oriented culture that lacks depth and therefore imagination. Short term greed has won out over long term vision.

    A sad assessment considering the immense potential of this country which is basically young at heart and hard working.

    A national commitment can change that around-but we have probably lost several generations.

    Best-

    David Winkler

  5. We are experimenting with a new way of doing our leadership meetings beginning today. So, great timing for these three bits of good advice. Thanks Dan.

    By the way, I was so proud of myself for showing my support of GM by buying their stock when it dropped to $5/share. I feel a little silly about that now, but still want to salute the mighty GM which has done so much to improve my hometown.

  6. Dan,
    I like the analogy of a perfect storm. The Big Three catastrophe has been the main topic of many of my recent discussions. And no matter what take a person has on the topic – the conversations are passionate and heated. There’s blame for everyone – the clueless management at the top, the greedy UAW, the underqualified, overpaid workers, the fictitious global warming issue, the off-the-mark cafe standards, the unqualified federal government running a corporation and dictating to an industry…. no matter what perspective a person has – they have them and they are strong.
    Your observations for our own organizations hit the mark! We must be always vigilent on the external environment and with an eye on the future, manage our internal relationships for optimization of resources, ideas, and diversity of thinking and engage everyone in the success of the organization. Thanks for the timely and relevant post.
    Sandi N

  7. All the things which make up the perfect strom you describe were predictable, and even well known to be coming the way everyone in Los Angelas knows the big earthquake is coming. Gas prices had gone sky high in previous decades, and those in the know, knew the banking/ investement crisis was coming. One second tier executive at Bear Sterns went to a top tier executive, and asked the top guy, “Don’t you know that what we are setting up with derivatives, Credit Default Swaps and the like, is creating a disaster, that the whole thing is going to collapse?” The top guy smiled and answered, “Yes, but as long as the music is playing, I’ve got to dance.”

    Lack of long term planning, and greed did in the automakers. Economic efficiency is becoming the bane of our time. The poor guy who dedicated himself to GM and did all the nice things you write about is losing his job, or if retired, part of his benefits, like dental and optical, and what next? And that company stock he bought, because he believed in the company is worth a whole lot less.

    The legacy costs should be of no concern, if the automakers had sent aside the money for the obligations all along, and kept it completely separate from corporate fingers.

    There is something more than attitude, communications, and respect of individuals involved.

    With the automation and computers we have know, labor is cheap part of manufacturing anymore. The jobs banks were justified and remain justified, and if the people who planning and scheduling were looking ahead, these should have not been a problem.

    We need to talk more about the outrageous pay of executives. Has anyone calculated the cost of executives per automobile? Why is it always calculating the cost of the rank and file?

    We need greater shareholder rights, so that shareholders can have a say in issues like executive pay. With the Internet and computers there is no reason why we could not have regular votes by shareholders on major issues, like whether an exective gets a big bonus for driving the company into bankruptcy. Corporations are like governments, where the owners / voters have almost no power. In a way it is amazing how well that system works, but when we see failures, we inderstand the weak points of this.

    I remember Lou Rukesyer PBS television show WALL STREET WEEK with LOUIS RUKEYSER. When Roger Smith retired Lou spoke about the big retirement package Smith received. Lou said that at the start of Smith’s time at GM, the company had 2/3 market share. At the end of Smith’s career, GW had 1/3 market share. Then Lou asked, “Imagine the retirement package Roger Smith would have gotten had he driven the company totally into the ground.” Mark John Hunter – Alpena

  8. MaryZ, don’t feel silly at all about investing in GM. I first invested in both GM and Ford (and 2-3 other Michigan-based companies) about a year ago, while they were both on the way down. At this point, Ford still looks like a good deal to me, and the jury may still be out on GM.

    And while I’m not a financial wizard by any means — I won’t give you any advice — note that you’ll sell GM at a loss if you do sell now, but that so far this morning, their stock is up 15-20% from its Friday close. Evidently, there must be other folks who think that with GM’s restructuring, the company’s fortunes may rise again.

    Having said that, I’ll be saying a prayer today for all of those GM workers over the years who sweated and toiled, and built equipment to defend our great country through a World War and other attacks on our country. And I’ll certainly be thinking about all of those who work in the plants that’ll be closing.

  9. You newsletter today is particularly significant for the reasons you have shared. There is no doubt that we are at what Andy Grove, former Intel C.E.O., calls an “inflection point” the point where things are changing dramatically. Miss that point and what it means and you can cease to exist. One could argue GM missed the point years ago and this is the result. One could also argue that this filing is also one that MANY other organizations need to recognize as such and learn how they need to change.

    In your second point below, you share ” Cultures must learn to encourage creativity and risk-taking and then learn from mistakes. Internal political squabbles have to end. Egos have to be managed; they are tremendous fuel sources, but they burn with great inefficiency by generating unnecessary and destructive internal differences.” Well stated and so on target.

    We are working hard to get that message in front of companies and potential clients. We can make a difference.

  10. Dan,

    We need to take a closer look at Kate and their generation.

    To them it is all about being valued and appreciated. I think that if people realized what a great difference each of us can and do make; that our economic recovery will be quicker and more sustainable. ~The TIP Lady

  11. Dan, I feel sorry for the workers and their unions. Unions are being assaulted daily and without unions we will have no middle class and a democracy. Unions have given us the middle class. My father-in-law had worked for GM and for years we bought GM cars. Personally, they have been building a terrible product for many years. Bankruptcy hurts unions, their families, the communities, and the neighborhoods and not GM executives. Executives will still receive their high salaries and lavish bonuses.

  12. From Mick McKellar (who always writes so well) – and with apologies to others who have gotten messages that their posts are “spam.” We’re working on it. Here’s Mick’s eloquent personal take:

    Dan,

    Complacency is a drug and I am addicted to it. I was so comfortable and warm, there with my head stuck squarely in the sand…and believe me, I am NOT alone.

    I started working at age 15 (McDonalds in Garden City, MI) and was never laid off, never fired from a job, and never without one until, without warning, on a warm August morning in 2004 — I was asked for my keys and my ID card, and was given 15 minutes to grab what I could and vacate my office. The clues were all there: The warnings about financial problems, the less-than-subtle shifting of responsibilities, and the odd looks on my coworkers’ faces. Yet, in my smug complacency and arrogance I did not see it coming. I did not think it could happen to me and did nothing to prepare for unemployment.

    Dan, you are absolutely right about keeping out the “weather eye” for rough waters ahead. Yet, it can be tough if you are not the organizational leader to call the storm to the attention of a captain asleep at the wheel. My most recent experience on rough economic seas was a poor one. I heaved my share of the cargo, pulled the ropes to trim sail, and bailed like a madman — shoulder-to-shoulder with the rest of the crew (70+ hours per week). However, when we reached the eye of the storm and seas calmed momentarily, my captain did not hesitate to toss me overboard to lighten the load. It was “nothing personal,” they just needed my salary for “other projects.” Again, there was that terrible bite of harsh reality.

    However, this time — I saw it coming and prepared. My resume was in circulation a month before I walked the plank. Had a bit of bad timing with the recession and all, but with unemployment benefits and a little bit of substitute teaching, we’ve been able to hold things together. My family and I are in a leaky row boat, but we have all our oars in the water and we are rowing together for the shore. The disaster has become something of an adventure, albeit a scary one.

    The lesson for business leaders: It’s usually a combination of complacency and panic that scuttles your ship and you need all hands to man their stations. Jettison cargo if you must. Put passengers (and slackers) in lifeboats and send them on their way. You cannot run a ship without your crew, so find a way to keep them on board. Worry less about fixing the blame and concentrate on fixing the problems. GM is a huge ship and perhaps they should have remembered that the Titannic was also unsinkable — too big to fail and lacking lifeboats — the ultimate in arrogance and complacency.

  13. David Winkler and Mark Hunter both hit the nail squarely on its head. The “dumbing down of America” could not be more evident than when you observe the contestants in the national spelling bee contest. In the finals, it is predominantly represented by Indians/Pakistanis/Asians. Why, because the children’s parents still have placed a level of importance on education for their children, instead of throwing them in front of the Nickolodean tv set. Mark Hunter’s perspective of executive pay misproportioning is related to the collusion between these upper echelons, Wall St., and Washington DC, brought together by those loving lobbyist types. The complicity is a three or four pronged fork, not the sole impropriety of just the high level execs and their egregious compensation packages. Actually, stockholders allowed this tsunami to be created. The mindset of, as long as I get mine, I don’t care how much you get mentality, also known as common greed, is going to be the downfall. I’m glad that I live out of the mainstream, in my day to day life, and still have the enjoyment factor of smelling the spring flowers as I walk about my farm, ride my motorcycle, and genuinely lament the erosion of America. In an address to my community during an active time when the county gov’t was trying to burden us unjustly wih huge tax increases, I reminded the citizenry that as all civilizations go, there is a cycle that has repeated itelf…..and the bottom line is that apathy will lead one into bondage.

  14. I wasn’t going to post but after stewing on it over night I must.

    I’m a young professional but I worked in manufacturing plants during college.

    I have several thoughts mostly quick ramblings.

    1. Decisions need to be in touch with reality. The people that make the real decisions about manufacturing automobiles should do periodic tours of duty on the lines and in supply chain plants to gain perspective. I would suggest “under cover” elbow to elbow manufacturing stints for 3-6 month durations. Instead our auto power brokers may or may not do the red carpet tours occasionally. Historically when Henry Ford started the Assembly line ingenuity, he didn’t do it from his high rise office or lap top in the Caribbean. He was in touch with manufacturing and cars. He was on the manufacturing floor.
    2. GM gave up a good thing, and decided to waive the white flag a decade ago. GM had decent fuel economy with the GEO metro and Saturn SL series. Now 15 years later GM can’t break the 34 mpg barrier with out going hybrid. What happened to R&D? I drive a 00’ Saturn SL. It has been a wonderful car. For the 1st 100,000 miles I was achieving 38-46mpg. The 2nd 100,000 miles achieved 37-41mpg. I’m still working on the 3rd 100,000 miles but I’m still getting 35-40mpg. It is plastic so it will never rust and is lighter than standard metal cars. The car is 95% made in USA. We can make good cars domestically. I would buy another new 00’ Saturn SL in a heart beat today, but after 9yrs of R&D GM doesn’t offer a car with equivalent gas mileage.
    3. Commuter cars are in, enter the Yaris and Fit. The nifty/cool SSR, Thunderbird, Hummers etc. are limited luxury items and they won’t support a car company for long. People are trying to do more with less everywhere. It’s time we consider the stripped down people’s car, back to basic transportation.
    4. “I’m NOT expressing my identity through my auto. I just want to get around economically, ecologically, and reliably.” The 60’s and 70’s muscle cars represented real identity. This is a different age. I think people’s attitudes about cars are changing.

  15. Dan,

    A very good topic. I found some of the comments very interesting and with a perspective not unlike views I have.

    Roger Smith’s retirement package was and is an exammple of the dysfunctional management of corporate America. We continue to reward failre at the upper levels in corporations. It is not an over statement that there is a different standard that low level management and blue collar (hourly) workers have to adhere to if they fail to achieve. Where is the bold leadership at the top that leads by example? If my company does poorly why shoud I be exempt from the consequences is the question corporate leaders should be posing to themselves. For years the Roger Smith retirement and compensation pacakage has been followed and it illustrates the disconnect and lack of credibility big corporations have with the rest of the working populace.

    When you keep hearing the corporations say we are not competitve and that our hourly rated workers have to be brought in line with the wages of foreign competitors, there is not the same comparison of compensaton levels,in some cases, with the corporate heads of foreign companies.

    I agree with another comment that GM’s demise began when the company had bean counters run the company. Visionary leadership would have pursued a collaboration with car people, (engineers and designers) and marketing personnel to put aside territorial and egotistical conflicts to produce a good product.
    The stuff GM put out in the 70’s was terrible. Saturn was an excellent automobile when it was initiially manufactured but it appears the company abandoned the concepts that made that a good product because it is not the same automobile it was when it was first produced.

    GM’s product line has improved substantially and I don’t think it is a coincidence that this improvement has happened during the presence of Robert Lutz’s tenure with General Motors, who by the way is an automotive engineer.

  16. It raises the question to me…… “Why didn’t GM file for bankruptcy BEFORE they received $60B of taxpayer dollars?”
    Where was this money spent? Who brokered that deal, and what compensation did they receive?

    Bankruptcy following maybe a short sighted scheme to defraud and cheat their newest stockholders (the US citizenry), who don’t even get any collateral for their ‘loan”?

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