What Happened to GM?
GM History

1950’s - Half of all cars in the US
I’m Not Piling On
GM History

1980 - 853,000 to 284,000 worldwide
1st Q 2009
Passenger cars














Toyota
GM
Honda
Nissan
Ford
Hyundai
Chrysler
Mazda
BMW
VW
Kia
Subaru
19.4%
15%
12.4%
10.2%
10.0%
6.2%
5.2%
3.4%
3.2%
3.2%
2.6%
2.6%
Volvo
Saab
0.8%
0.2%
JD Power Top 10 Reliability
2004










Buick
Lexus
Cadillac
Mercury
Honda
Toyota
BMW
Lincoln
Subaru
Jaguar
145
145
162
168
169
178
182
182
192
197
Focus On What Matters
BMW

“We don’t make automobiles [we make]
moving works of art that express the
drivers love of quality.”
Honest Design
World Cars






Porsche
VW Beetle
Volvo
BMW
Jeep
Benz
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
Market Value versus Cumulated Strategic
Investments at General Motors
$167 Billion or $332 Billion

100

50

0

1980
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
-50

-100

-150

-200

-250

-300

-350

-400

$ Billion

1981
Market Value
Strategic
 Investments



0%
10%
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



(beliefs)
Bring in “paid renegade”



Competition is the best motivator
Avoid failure
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
1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”
1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”
1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”
Sequel: Fuel Cell


9/2006 Due 2010
“Leapfrog the Japanese”
“A Game Changer”
Volt: Electric Car


12/2006
“A game changer”
“Beat the Japanese at their own game”
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.”
Does Bureaucracy Materialize
Out of Nowhere?
Critical Thinking In Action
Entrepreneur
1.
2.
3.
4.
5.
6.
7.
8.
END
Adapt & Change
Risk taker
Contrarian
Focus on what matters
1.
Bias toward action
2.
Customer focus
3.
Problem solver
Emphasis on big picture
1.
Start at the end
Spread the wealth
1.
Big pie thinking
Lead with personality
Benefits of conflict
-
Bureaucrat
Status quo and rules
Status quo and rules
Follow the herd
Doing my job
Keep your head down
Internal focus
Problems?? What problems?
Doing my job
-
Conserve the wealth
-
Lead with position & policy
Avoid conflict play politics
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






NASDAQ



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
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 Matters
Bias 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 Matters
Bias 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
Focus On What Matters
Bias Toward Action

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 Matters
Create Value

HR, Internal audit, Purchasing–
evaluated by external clients
Emphasis on Big Picture
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
Create Wealth vs. Maintain Wealth
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
Applications
Jack Welch
Bureaucracy Busting


Leader sets the tone
Problems





Processes
Titles
Avoid conflict
Presentations– one-way communication
Unsafe to take a chance
Applications
Jack Welch
Bureaucracy Busting

Be relentless and outrageous
Celebrate impassioned boundaryless
people
Love the people who hate meetings
Encourage managers swing for the
fences
Create a culture of excitement

END



