What Happened to GM?. GM History 1950’s - Half of all cars in the US.
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Transcript of What Happened to GM?. GM History 1950’s - Half of all cars in the US.
1st Q 2009Passenger cars
Toyota 19.4% GM 15% Honda 12.4% Nissan 10.2% Ford 10.0% Hyundai 6.2% Chrysler 5.2% Mazda 3.4% BMW 3.2% VW 3.2% Kia 2.6% Subaru 2.6%
Volvo 0.8% Saab 0.2%
JD Power Top 10 Reliability 2004 Buick145 Lexus 145 Cadillac 162 Mercury 168 Honda 169 Toyota 178 BMW 182 Lincoln 182 Subaru 192 Jaguar 197
Focus On What MattersBMW
“We don’t make automobiles [we make] moving works of art that express the drivers love of quality.”
Bureaucracy & the Status Quo Risk taker to Risk avoidance Cash poor to Cash comfortable Contribution to Playing favorites Opportunities to Problems Marketing & sales to Finance & bean-counting Momentum to Inertia Working to Meetings END
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1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Strategic Investments
0%
10%
Market Value
Market Value versus Cumulated Strategic Investments at General
Motors$167 Billion or $332 Billion
Ross Perot on the Subject From 1980 to 1985 GM spent $45 billion in
capital investments but only increased worldwide market share by 1%.......
"For the same amount of money, we could buy Toyota and Nissan outright, instantly increasing market share to 40%.”
Gorilla dust
GM Highlights Planned obsolescence (lack of real competition)
“No money” in small cars (calculate with certainty)
Fuel economy legislation in 80s (unintended consequence)
Same design centers (status quo and lack of diverse opinion)
Competition between design departments Competition is the best motivator (beliefs)
Avoid failure Bring in “paid renegade”
De Lorean fired at GM Iacocca fired at Ford
Focus on financing cars (avoiding difficult issues)
GM Highlights Corporate Culture
Car guys and bean counters– no marketing Stability over conflict Continuity over disorder Status quo over change
50 year old decision making structure Conformity over rebellion
Caught unprepared at the oil crisis of ‘73 Robot automation
Now Lost 72 billion in last 4 years – no heads
rolled Bob Lutz to save the day – global product
development Tom Stephens, who runs the company's power-train unit Carl-Peter Forster London, Germany and Greece BMW, Opel
Market Cap November 2008 GM = 1.2 Billion Toyota + Honda = $146.3 Billion
Ask Rick Wagoner why GM isn’t more like Toyota. (69/70)
“We’re playing our own game – taking advantage of our own unique heritage and strengths.”
Critical Thinking In ActionEntrepreneur Bureaucrat1. Adapt & Change - Status quo and rules2. Risk taker - Status quo and rules3. Contrarian - Follow the herd4. Focus on what matters - Doing my job
1. Bias toward action - Keep your head down2. Customer focus - Internal focus3. Problem solver - Problems?? What
problems ?5. Emphasis on big picture - Doing my job
1. Start at the end6. Spread the wealth - Conserve the wealth
1. Big pie thinking7. Lead with personality - Lead with position &
policy8. Benefits of conflict - Avoid conflict play
politicsEND
Fighting the Status Quo Easiest Things To Do in Business
Witch hunts Cut costs Beat up dealers/suppliers Have meetings Protect turf Avoid mistakes by avoiding action Random acts of management
Fighting the Status Quo Bad Rules
Rules do not create ethical organizations Salary limitations
No raises over 10% Can’t go above pay grade 16 without supervising people $40,000 commission dispute The new inventory stickers
Minimum order $100 Across the board budget cuts Approve capital purchases Control vs. incentives
Risk Taking Total US Stock Market
1982 value = $1.2 Trillion Return 1982 to 2007 13.3% Theoretical 2007 value $28.2 Trillion Actual value $18.7 Trillion Lost to market timing $9.5 Trillion
NASDAQ 9.6% Return 1973 – 2002 4.3% Actual average return to NASDAQ investor
Zweig, Jason, Money Magazine, December 2007, page 76
Contrarian
Michael Bloomberg
“Luck is preparation meeting opportunity.”
“To a contrarian like me, constant advice not to do something almost always starts me down the risky unpopular path.”
Focus On What Matters In 1998 Daimler bought Chrysler
for $36 Billion
Nine years later they paid $680 Million for some one to take it
Focus On What MattersBias Toward Action
Daimler concentrated on cost cutting and production
Daimler Committees, meetings, and binders Competing kingdoms Overlapping models Long lead times Dealers pitted against Chrysler and each other Too much cost cutting
Focus On What MattersBias Toward Action
Private equity takes over Chrysler Private equity concentrated on marketing and
quality CEO reviews cars and barks out orders — no
more binders or meetings 7 days to fix quality problems Old CEO took a demotion to stay Attracted talent from Lexus and Toyota Cut 4th quarter 2007 production by 14%
100,000 fewer vehicles $1 billion lost cash flow 7 minute phone call with the owners
Private equity takes over Chrysler Customer focus
Hired “Chief Customer Officer” Dealer is customer too Stopped pitting dealer against dealer Tripled goodwill allowance to dealers
Lexus dealers are the most profitable
Focus On What MattersBias Toward Action
Lead With Personality Influence Skills
“It doesn’t matter what you say– it matters how you make people feel.”
Message needs to motivate– change thought and behavior
“Our mission is to unlock shareholder value.” Cranium: CHIFF, Clever, High-quality, Innovative,
Friendly & Fun BP: “No dry holes.”
Lead With Personality De-motivation
Lou Holtz at Notre Dame, “It’s not my job to motivate my players…”
Should you treat everyone equally?
Conflict Is Underrated
“Where all think alike, no one thinks very much.”
Walter Lipman
Need for diversity
Run off renegades
Applications Learn to start with the end in mind and work
backward to ensure that all efforts are productively applied.
Rage against bureaucracy and the status quo. Examine decisions and analysis from the
contrarian point of view. Make work fun. Facilitate creativity. Ensure a “share the wealth” organizational
attitude. END
ApplicationsJack Welch Bureaucracy Busting
Leader sets the tone Problems
Processes Titles Avoid conflict Presentations– one-way
communication Unsafe to take a chance