On Management Take 2: GM does the shuffle

Today’s announcement of new roles for a series of senior leadership personnel at GM is the first view of what Ed W had in mind when he said – we need younger managers in place. He is getting some of that (Bob Lutz is still around) and we are excited to see Mark Reuss and Steve Girsky getting bigger roles. They both get it.

Now the key question is how does this translate deeper down into the organization and culture? Will Mark be able to change the insular environment? Will the people he inherit all of a sudden make bolder recommendations? Will he and the rest of GM finally realize that they will not return to being the dominant player and that that is okay?

I hope so. Despite sounding bearish on GM most of the time, I, like everyone else in the industry want them to get better.

Filed under: Automotive , Automotive, GM

On Management – Why GM Needs New People

by Peter Sorgenfrei

Running a car company (or any company for that matter) is not easy. Add a board with strong personalities who seek to solidify their legacy and government oversight and you have the makings of a perfect storm. In the case of GM, it was more like a category 5 hurricane.

Fritz Henderson was not the right man for the job from the start it seemed. He has had great experience, is known as the ‘turn-around expert’ at GM, but was too ingrained in the culture of GM that caused the problems they are in now.  At the time he was tapped the board did not have that many choices and I doubt many outsiders would have taken a look at the job so Fritz got the gig.

Now what happens? Ed Whitacre certainly does not mind being in charge, and the search for an outsider is likely to take a while. With the pay restrictions in place, the board composition and the government oversight, our bet is the right candidates are not interested.

We say right candidates because there are probably a fair amount of people who want the job – the chance to attempt revival of one of the largest companies in the world is alluring, but the person who will succeed in this job is already sitting in another CEO chair, being well compensated and with less tape to deal with. Why would she/he take the position?

The person the board is likely to get under the current circumstances will not have the gravitas required to drive the kind of change needed at GM. And it is not just about the CEO’s office, several layers deep in the organization change (as in personnel change) has to happen.

Someone at the board level (and as incoming CEO) has to say. Enough! The only way this company will be able to repay the government(s) is to completely revamp the system. And unfortunately that involves human change. We as humans don’t really change. We might want to change, but fundamentally we like habits and stick to what we know (which is what we have done in the past).

It is not about consultants coming in and showing the team matrix after matrix of what needs to be done. It is about a group of people (CEO through Directors) that are completely focused on taking care of the customer and the company. It is also about a corporate culture that rewards risks, does not punish strong personalities and constantly reinforces the focus on product and customer.

The combination of management and corporate culture is not in place at GM today.  GM has dedicated, intelligent and passionate employees for sure but if you lived in a state with 15% unemployment and had children to support, would you stand up and rock the boat?  Probably not.

GM will get a new CEO but in order to get the right person for the job, they need to attract someone that is adept in corporate cultural change as well as financial management.

Filed under: Automotive , Automotive, Cars, Consumers, GM, Psychology

Ad Age: GM’s appointment of Lutz shows no respect for marketing

Can’t say we disagree with this commentary from ad age:

General Motors’ new advertising and marketing czar is Bob Lutz, who until April of this year headed global product development. According to CEO Fritz Henderson: “Bob’s responsibilities beyond creative design will include brands, marketing, advertising and communications.” (I can visualize Bob at his first meeting with one of GM’s agencies: “I’m not a marketing expert, but I did stay at a Holiday Inn Express last night.”)

Has respect for marketing fallen so low that the most difficult job in the profession (getting GM out of the ditch) can be given to someone with so little experience in marketing?

I’m afraid so. The fact is that most companies do not assign much value to the marketing function. Nor do they compensate marketing people at the same level as they do financial, legal and other functional occupations.

Full article

Filed under: Marketing , Advertising, Automotive, Cars, Consumers, GM, Marketing

GM and Segway’s P.U.M.A

General Motors and Segway will today announce that the companies have teamed up to create a new prototype electric vehicle designed for urban transportation.

Called project P.U.M.A (short for Personal Urban Mobility and Accessibility) the two-wheeled vehicle uses the same dynamic stabilization technology found in the current Segway, but is large enough to carry two people and can reach decidedly non-Segwaylike speeds of up to 35 mph and run an hour on top speed on a single charge.

The 300-lb. experimental vehicle, which will be demonstrated to the press this morning, has a semi-enclosed cockpit with two seats, but according to Larry Burns, GM vice-president of research and development, the idea is to eventually develop a closed-cockpit vehicle that can be driven through adverse weather conditions.

Filed under: Automotive, Innovation, Marketing , Automotive, GM, Innovation, PUMA, Segway

GMAC gets $6B bailout

Hopefully they will do as they say and turn around and indeed lend more money on better terms to consumers:

From the WSJ: The federal government Monday deepened its involvement in the U.S. automotive industry by committing $6 billion to stabilize GMAC LLC, a financing company vital to the future of struggling car maker General Motors Corp.

In response, GMAC said Tuesday that it will immediately resume auto financing for “a broader spectrum of U.S. customers.”

The company said it will modify its credit criteria to include retail financing for customers with a credit bureau score of 621 or above, compared with the 700 minimum score it put in place two months ago as its troubles deepened. The median US consumer credit score is 723.

“The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers,” said GMAC President Bill Muir said in a prepared statement. Full article

Filed under: Automotive , Automotive, Bailout, GM

GM: Perceptions vs Reality

We got a lot of comments on the Fareed Zakaria story last week. We think this article deserves attention to, so here we go: Warren Brown at the Washington Post starts out:

Perception is everything, or almost everything.

If anything is to be learned from Detroit’s beg-fest on Capitol Hill, it’s at least that much.

Perception influences reality.

Thus we have the General Motors “confession,” its “commitment to the American people” published on the second page of the Dec. 8 edition of Automotive News, an industry trade journal. It presents an object lesson in perception versus reality.

Reality: The “confession” is a rehash of sins committed by a GM that existed 20 years ago, stupidities so enormous — pathetic product quality, dismal marketing techniques, all trumped by corporate arrogance — they opened the ports to foreign competition and paved the way for defections of generations of American consumers to Toyota, Nissan and Honda.

But you should really read the entire article – especially if you commented on the post about Fareed. Warren goes on with ten or so “Perceptions vs Reality.” Some of them might surprise you.

Full article

Filed under: Automotive, Information , Automotive, Bailout, GM

Extreme cost cuts or just sound practices?

A story in the Wall Street Journal outlines some of the cost cutting measures at GM as they face the worst crisis in their history.

The story starts out with wall clocks that now have the wrong time or stop working since GM has stopped replacing batteries to save cost of replacement and disposal (Insert: “How many union workers does it take to replace a battery?” joke here).

While not replacing batteries might seem extreme, some of the other measures GM is now employing (reducing number of copiers, stopping escalators at a certain hour, not using voice mail) have for a long time been part of standard operating procedure at many companies we have come in contact with. Successful companies – rich companies.

The point is – being thoughtful of cost should been part of your DNA from day one whether you are GM or Susan’s Bakery down the street. Saving money is much easier than making it for the simple reason you have more control.

Preview of article:
Over the past several weeks, engineers and technicians working at General Motors Corp.’s sprawling proving grounds west of Detroit started noticing a curiosity: an increasing number of wall clocks had the wrong time, or stopped working altogether.

The reason: As part of a drive to cut $15 billion in costs, GM is no longer keeping the 562 clocks in working order, which will eliminate the expense of replacing and disposing of the clock’s batteries and the cost of resetting them twice a year for daylight-saving time.

It’s not the only new measure GM is taking to save every last nickel. In its Renaissance Center headquarters, employees working late have to climb stairs when navigating its labyrinth of lower floors — the company now stops the escalators at 7 p.m. In designated cleanup areas of certain offices, the company has changed the type of wipe-up towels it buys. In a memo to employees, a staffer explained this will lower GM’s “cost per wipe.”

Rest on wsj.com

Filed under: Automotive, Information , Automotive, Cost, Crisis, GM