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Right culture, not size, is key to GM's market share
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Reuter’s reported board member, Stephen Girsky, saying that General Motors Co.'s turnaround plan assumes it can maintain slightly more than 19 percent of the U.S. market. I think someone should challenge that assumption, because the issue is not the market-share figure, but whether GM is right-sized and right-cultured at 19 percent.
Furthermore, is that 19 percent figure supposed to be new news? Not according to my investing research.
I know, I know. I’m supposed to report on auto technology. Well, without a viable corporate culture at GM there won't be enough free cash flow to support all that cool automotive technology much longer, especially after the government leaves them on their own to make money. Like the ole hot-rodder used to say, “Speed costs money. How fast do you want to go?”
Point is I discovered this market-share stat about two years ago before GM hit the bankruptcy chicane; and that stat did NOT come from within GM. Some Wall Street analyst mentioned, while GM was still trading just under $30 (remember that?) the company would make a ton of profit IF it was right-sized for an 18% market share. The operative word then was “right-sized,” but I was always thinking right-cultured at that size.
Did GM management listen? No! Did they ever listen? While youth may be wasted on the young, education is surely wasted on the arrogant. No, GM seldom listened. They placated their employees, their suppliers, their dealers and their customers by only talking, not walking change. Now CEO Fritz Henderson is quoted as saying “We are taking aggressive actions and moving quickly to transform our culture into one that is truly customer focused.”
What? Customer focused? Transform culture? Isn’t that what defined Saturn from the rest of GM? You have got to be kidding. If he was serious, he would have adopted Saturn as the keystone. Sounds like more of that rearranging deck chairs that Skip Le Fauve used to talk about.
Now GM has cut people, especially older employees, with almost reckless abandon, even to the point of brain drain; and now those experienced designers and engineers have taken their skills and knowledge with them.
Letting go of Saturn, though, was the heinous sin, in my opinion. It was the one division that had the snow-ball's chance in hell at selling cars to die-hard, foreign-car lovers. Combined with GMC's cutting-edge, truck line, it would have driven a way forward that would have made Ford salivate, and Toyota take notice.
Those Toyota and Honda buyers, after all, have not gone away; and their disdain for GM is no less subsided, no matter how many times Howie tells the “THEY“ crowd that they are misinformed.
Examiner Final Comments
Where GM is today is based on what they did and did not do ten to twenty years ago. Where they will be two years from now will be based on what they do and do not do today.
The golden opportunity for GM to right-size and right-culture was when they started Saturn. Just consider it opportunity lost. That was 1985 when the plan began, and 1991 when the first vehicle launched. Of course the original price of $9,995 could not stand either, because it made Chevrolet look bad.
So, Saturn had to get in line with the rest and act GM-ish, much like the Borg. After a grand upstart, GM management then starved it for product. Then they had the audacity to claim that Saturn never made a profit as the sole justification for cutting the wholly-owned subsidiary.
Truth is GM had already given up on the small-car market for making a decent profit. After all, they still had trucks, at least until Toyota decided it would compete in that arena, too. Nonetheless, Roger Smith, despite his lack of performance, at least had the right vision. He invested in a plant at Spring Hill, allowed the employees to determine process, take the risk and accept reward. Saturn even had a unique UAW agreement. Change was in the air.
Point is Saturn was right-sized, templated and positioned to change the GM culture. That, however did not happen, because those in charge after Roger wouldn‘t let it happen.
As I wrote in my first book, “Perfecting Corporate Character,” the greater the corporate orthodoxy the less real change actually occurs. That's what really drove GM into bankruptcy.
The problem this time: the people inside GM that are raised into their new positions of management seem to have the same mentality. How do I know? Their decisions. So, despite fewer deck chairs on the corporate promenade, that new coat of government-supplied varnish is just that - varnish over old wood. Trust your nose. Even I can smell it from here.
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