GM: Epic failure of vision? Or culture?
Wednesday, June 10th, 2009 | commentary, product vision
Through the lens of product vision, I’ve been watching the devolution of GM for years. So when it declared bankruptcy last week I was ready to commemorate the occasion by pronouncing it an epic failure of product vision.
After all, they permitted the competition to consistently be superior in quality, not for a few quarters or years, but for a few decades. Their best efforts at innovation were directed not towards better cars, but the problem of preserving the status quo. And they willfully ignored the writing on the wall with respect to future oil crises and the latent demand for efficiency.
Did you know that, as a result of progressive legislation, GM had an early lead not just in electrical vehicles like the EV1, but in hybrids as well? As soon as lobbyists managed to squelch California’s strict emissions standards (with the aid of the White House at the time) GM yanked the plug on electrics.
The incredible postscript to this story is that it was America’s call-to-arms for efficient vehicles that panicked Honda and Toyota into action. The Japanese manufacturers invested heavily in hybrids, leading to Toyota’s years-long lead in hybrid vehicles and the birth of the Prius. While the American auto execs congratulated themselves for persuading government not to force it to invest in the inevitable future, Toyota went ahead and invented it. Hybrids “make no economic sense,” said GM vice-chairman Bob Lutz. Oops.
And so an epic failure of product vision it certainly was. But that is not the heart of the story, or its root cause. The root cause is a cancerous corporate culture.
It’s a corporate culture where dissenting opinion is marginalized and only the yes-men survive. (For a taste of this, check out the sycophantic employee comments at GM’s own blog.)
It’s a corporate culture that’s driven by PR rather than product. It’s a culture with a cynical view of customers that says that you don’t have to actually deliver the best products to them. You only have to convince customers that they are the best products. You don’t have to actually be a green company. Job #1 is to convince everybody that you’re green. The first act of a supposedly chastened GM? Yet another PR campaign stating (yet again) how it’s turned the corner. At GM, image follows product.
This culture neglects the fact that between what you say and the money you want to make, you actually have to provide significant value to customers. Making a lot of money in a sustainable fashion requires consistently satisfying important unmet customer needs.
GM’s is a corporate culture that resolves the cognitive dissonance between the claimed and actual quality by truly believing that they are delivering quality. A company that believes its own BS sets sail from the reality-based community. If it cannot be honest with itself, so loses its ability to self-correct and goes increasingly off-course.
GM’s is a corporate culture that is in denial about its own and failures and limitations, where everyone else is the scapegoat. No failure is admitted, except perhaps the failure to get their message across to the public.
“G.M., for all these decades, has been a ‘know-it-all’ company that had all the answers [..] I think it’s been proven that they really didn’t know it all.” – David Lewis
GM’s culture is a systemic cancer that is not easily cured.
That’s why I was not very hopeful that a new GM, radically cut back, would be much different than the old, bloated GM. The only hope of turning around a corporate culture around like this is by decapitation. The old leadership is simply too vested in their past decisions, too stewed in ancient assumptions and attitudes. For fundamental change, the company’s values, reward system and world view must be turned upside down. That is only possible with strong new leadership.
And that’s why it’s encouraging news that the shareholders of GM — i.e. us, the American public, as represented by our government — are replacing its leadership. Not just the CEO, but the entire board of directors, which somehow — someone please tell me how — tolerated the destruction of billions of dollars of value before their eyes over decades.
It won’t be easy to turn GM’s culture around. Old habits die hard, and remember, it’s the yes-men who survived at GM, not the innovative rebels. But at least now, with new leadership, it stands chance.
For the rest of us, GM’s insidious corporate culture is worth pondering and comparing against the institutions over which we have influence.
Update 6/10/09 nytimes has more on the challenges of reinventing GM’s culture.
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Philip Haine is principal of Product Vision Associates, a product innovation consultancy that helps product leaders and their teams envision new, breakthrough products and reboot older ones. To follow him on Twitter click here.
3 Comments to GM: Epic failure of vision? Or culture?
i like this post philip! for a long time i thought that companies like GM, practicing their form of PR-heavy product-non-evolution, have survived so long because the american consumer is so easily seduced into buying their poorly-designed products. just spend a few hours in the southern part of our state, and the large, old-school, non-green GM products are everywhere. bigger is better and for a long time it works. i think we are _just_ starting to see the trend change, and its a slow change: consumers are finally being a little more critical because other brands are saving them money. its sad that that might be the predominant reason (it should be that the next few generations may have to live in bubbles!). Our culture is so easily seduced by PR that isnt even that good – GM’s (as well as the other amarican car companies) lack of vision has been well-supported, heck, even encouraged by the general public for so long, what surprises me now is that consumers are just now waking up to it.
our car companies lack the ability to take any risk that might actually benefit the consumer and change the way we think about cars in the states – missing a really huge opportunity to become market leaders. we really need a cultural shift towards the automobile, and that has to start with the car companies
June 24, 2009
[...] I recently wrote about GM’s failure of product vision, and its even deeper failure of corporate culture. [...]
[...] I wrote about the need for fundamental cultural transformation at GM. We were cautiously optimistic that [...]
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June 23, 2009