In my Organizational Development class we have a group project in which we have to pick a company that is in need or structural change and decided how we should fix it.

Since I sit on this board and love GM, I proposed to my group that we should go in this direction.

Basically, I’m stating:

-This is the Problem
-This is how it should be fixed

-And Why...using the OD principles we are learning.

Right now I’m just getting my thoughts together so I can present what we are facing to my group.

I’ve kind of hit a wall tonight mentally and I just thought I check my notes on here.

Are my premises right to why GM is in the situation they are in?

Any thoughts and correction will be very much appreciated.

When I get my paper and project together I’ll post up my thoughts
Should be an interesting conversation with the current situations at GM

 

Without giving away our ages, I think it's mandatory that you should also get Charlie and Doug's input, and I believe PacerXs as well since I know we all were well into adulthood in the 80s. We all have certain views on what happened to GM since then, and we all can fill in the blanks that come with not thinking about this stuff for years and years.



The 80s were the era of Roger Smith. On the good side, under him was perhaps the most innovative days GM had in memory. Factories were automated, GM bought other companies, GM made some bucks on Reagan's military buildup, Saturn was Smith's personal baby, and some of the good stuff that happened in the early 90s was created during the final days of Smith.

However, there was also some pretty bad stuff that resulted from him or his era. GM ruthlessly cut it's workforce (far more harsh than it is to workers today). GM also had it's "scrunched" 2nd round full size car downsizing. The FWD Camaro that virturally made it to the 12th hour befor it was cancelled. And finally (but by no ways the least) the roots of the problems GM has today.

Roger Smith retired in 1990, and engineer & car-guy, Bob Stempel, took over GM. Almost literally on the day he sat down in the CEO's chair, GM fell apart. Smith had gone on a spending spree throughout the 80s, and the chickens came home to roost. GM began shutting down a long series of new car programs, including the C5, the new W-bodies, and if I'm not mistaken, GM's full sized trucks. Stempel, who had zilch to do with GM's situation was out in less than 2 years. It was really a shame. Stempel IMO made some exceptional moves (naming engineers to top posts, fostering teamwork, and "GM's supplier policy forum which connected GM management to it's suppliers).

Jack Smith took over GM after the board forced Stempel into retirement, and only left GM in 2000. Serving as CEO from '92-00, president from '92-98, and chairman from '96-00. Saying he was influential at GM in the 90s would be obviously an understatement.

Noteworthy things that happened under his watch:

*GM's market share went from about 33% down to 28.
*A group of top managers was brought in from outside the car business.
*GM moved into brand management
*GM began streaching out the lifespans of their cars and trucks
*The Corvette "Died" (unless you read the book "All Corvettes are Red", you probally didn't know that, did ya?)
*GM killed off it's B-body cars
*GM insituted a painfully slow and self destructive approval process for new vehicles
*GM killed off the Holden based Buick Statesman & Chevrolet El Camino (yes, we've been here before)
*Ron Zarella (of all people) had to forcefully intervene to keep the CTS from being watered down.
*GM began dumping money into trucks and SUVs at the expense of cars
*GM made a decision to abandon RWD in cars except Corvettes and Cadillacs
*And finally.....GM reversed a $2.6 billion loss in 1992 to $2.5 billion profit in 1993, and spent the rest of the decade making money (highest: $6.9b in 1995, lowest: $600m in 2000).


To connect the dots:
1. Roger Smith spent boatloads of money during GM's "fat" years of the 80s.
2. Coincidentially, GM crashed as soon as he walked out the door, with massive debt and depleted funds.
3. The engineer who succeeded him put the attention on quality and improved manufacturing at a time the board felt that he should have acted faster making GM profitable.
4. GM's board brought in someone who's focus was on making profits 1st, and initated a series of events that made GM profitable, but at a cost to market share, quality, & new and noteworthy product.
5. Wagoner takes over from Zarella and Smith by 2002 and begins buying up top car-biz talent from everywhere he can, including Lutz and Nesbitt.
6. GM (already dependent on SUV sales) begins using SUV profits to finance replacing GM's neglected car lines. To keep the profit numbers looking good, GM does this in a very slow pace, that comes back and haunts them.
7. SUV sales collaspe and GM begins hemmoraging money since there is no competitive cars to count on to make up the difference.
8. GM is scrambling to fund these new cars, even at the expense of disasterous losses.

Which brings us to today where GM is racing against the clock to find ways to keep the cash flowing to the series of cars that's destined to save General Motors.... or sink them.

 

excellent post.

 

In simplistic terms, it's all about corporate culture, human nature and the path of least resistance.

When you're doing well, it's easy to put off change until later. It's easy to create obligations that will come due in 20 years....especially if the decision makers who create those obligations are retiring in 3 years.

It's hard to change a corporate culture, so for most people, the inclination is, why bother. Why fall on the sword and look like a heretic....when I've got my career and family to worry about?

And no one wants to hear criticism - even constructive criticism. It was so much easier for the GM Board to write a 3 BILLION dollar check to Ross Perot, than it was to listen to him whine incessantly about quality and GM being the best.

You want to know something? A massive culture like GM needs to take a peek into the abyss...as it is doing now...to have even the slightest chance of change.

I hope it all works out.

 

Thanks Charlie!

And that’s where my class comes in….well to a certain extent….

Organizational Development is basically about making a company flexible to meet the current needs of the market. (very general description) That is why I picked GM, they stood stagnant in a sense for so many years.

Great post btw Guy, that will help me greatly in my research, I’ll use you as a source

And by all means if anyone else has some input on the topic of how GM got to their current situation please don’t hold back.

I’m excited about this project. I’m going to start writing the paper and putting the presentation together with my group this weekend. Like I said, I’ll post up our results as a group to see what y’all think. I just hope I’m able to describe the situation to my group so as they don’t water down the solution into something monotonous and too broad.

 

anyone else?

 

I always thought of the 80's as when GM began to take the hit in terms of thier quality rep.

 

No. It was the '70s. And it was worse for Chrysler than for GM or Ford.

I remember the battle one of my neighbors had everyday starting his new 1974 Plymouth. He'd crank it to life after about 10 seconds. Then it would die. Another 10 seconds of cranking, followed by about 15 seconds of racing the engine to keep it running. Put it into gear. Then it would die again. I recall the whol process going on for about two or three minutes before he'd drive away.

But GM had their share of troubles, including Vegas whose engines self-destructed. It was in the 1970s when the Japanese imports really started getting a foothold. At least in California.

 

Actually Branden's right. GM's quality did start taking serious hits in the 1980s.

The 70s was Chrysler. At the turn of the decade it was Ford. Chrysler needed the government to sign loan guarantees to keep Chrysler afloat. Anyone around in 1980-81 remembers that Ford came close to disintegrating. Lee Iacocca and the relatively well made K-car (Reliant & Aries) saved Chrysler. Ford's "Quality is Job 1" campaign, the Taurus, and Don Peterson saved Ford.

Meanwhile, GM's quality of the 70s (meaning fit & finish, and a solid well made interior) went to pieces in the 80s. Ford raked in so much money in the 80s that it took dumb avoidable fiascoes over a decade later in the early millinium (ironically, from greed resulting from cut corners) that their funds started getting depleted.

As a whole and to their credit, GM's quality went back up in the 90s. It's just that everyone elses went up more..... save Chrysler. But at least Chrysler's looked "fresh".

 

Another problem GM struggled with since the 80s - and continues to struggle with, is unending reorganizations and division shuffles. Each new chairman that took the helm starting with Smith embroiled the company in sweeping reorganizations, some of which were undone only to be re-done later on and undone again. Nothing kills morale and focus like uncertainty bred from confusion. GM is huge now? It was absolutely massive in the mid-80s with about 866,000 employees world-wide. In comparison, it is much, much smaller now although impossibly slow to move (maybe even more so now), given what has already been posted in this thread.

Roger Smith came from the bean counter side of things if I recall, Jack Smith, who replaced Stempel, came from GM Europe where he made a name for himself streamlining and cost-cutting which resulted in turning Opel around to profitability. You may recall his chief scalpel Ignacio Lopez(?, or something like that) who was absolutely ruthless with suppliers regarding costs defected to VW in the early-mid 90s and the hub-bub/paranoia surrounding trade secrets making their way from GM to VW.

 

Sidenote (didn't have time to address last night) Vega's engine problem wasn't related to quality, but design. Vega's alumunum engines were engineered as if they were iron or steel. Alunumum is soft metal, iron and steel are very hard. You can see problems with that. Today alumunum engines have steel or iron piston sleeves pressed or cast in. Vega's were entirely soft alumunum... not good for durability. Vega engine heads warped prematurely. The fact that cars and powertrains weren't tested as well back then as they are today didn't help.

Pontiac's indestructable "Iron Duke" ohV 4 bangers replaced the OHC Vega engines pretty much across GM's small car line till the Cavalier came out.

GM's other major gremlin of the 70s was the nortorious GM Hydro 250 transmission that worked fine on V6 and 305 V8s, but tended to have a short life in LM1 350s.


But the rest of GM's line up were very well made. The downsized B and G bodies were very solid pieces compared to later years. Chevy Monzas were very european in quality back then (and were actually a more expensive than comparable Camaros till the line moved into Vega's marketing position). I recall my dad's brand new 77 Caprice Classic being as smooth riding, quiet, and solid as my friend's dad's 78 Cadillac Coupe De'Ville, though I prefered my dad's cloth interior over their 'slippery' leather.

Dad still has that Caprice. For a 30 year old car that was never redone and garaged only the 1st 10-15 years, and subjected to Pittsburgh's 4 seasons, it's worn, but still in shockingly good condition.

 

GM since Roger Smith had the ***** to try the unthinkable has been trying to turn a holding company into a single global organization. It takes time but GM is almost there.

Don't forget that holding company once included a fully integrated supply chain that was inefficient and disorganized. Well now in Chapter 11, so maybe it still is! Don't forget all of those companies that were merged into DPH.

The Roger Smith re-organization attempted to take down a stone castle with a spoon. Over time it became easier and faster. Most of those 20+ years or reorganizations took as long as they did because ...they had to.

GM went from many to one. Say what you will about Holden and GME loosing their autonomy. Tuff $hit, it had to happen and in the long run will create a more streamiline organizational structure.

"In comparison, it is much, much smaller now although impossibly slow to move (maybe even more so now), given what has already been posted in this thread."

Not true - they are becoming very lean(er) now and their development process is on par with the rest of industry. There is a lot more to it than just say, lets build this clay model!

"Roger Smith came from the bean counter side of things if I recall, Jack Smith, who replaced Stempel, came from GM Europe where he made a name for himself streamlining and cost-cutting which resulted in turning Opel around to profitability. You may recall his chief scalpel Ignacio Lopez(?, or something like that) who was absolutely ruthless with suppliers regarding costs defected to VW in the early-mid 90s and the hub-bub/paranoia surrounding trade secrets making their way from GM to VW."

Stemple though an engineer by trade was a manager of Pontiac, Opel Chevrolet, BOC at one time before taking the help of GM. Stemple was the wrong man at the wrong time for GM.

Jack Smith made his rounds like everybody else.

As for Mr. Lopez, there was no hub-bub, he stole confidential document. No doubt about that. I personally spoke to a more recently retired GM VP about this issue.

 

I recall pretty clearly that even in the late 1970s, Toyotas and Hondas were considered higher quality than any domestic, and that people were complaining about more than GMs. Remember the Olds diesel came out in 1978. I also clearly remember a discussion in late 1984 where it was stated (by a coworker, not by me) that the quality of the domestics had recently improved a lot from what it was in the 70s.

 

GM's X Cars (Citation, Omega, Skylark) were the subject of dozens or possibly even hundreds of recalls in the late 70s/early 80s. The J Cars that replaced them (Cavailer, Sunbird, Cimmeron) were on the otherhand mearly crappy, not defective.

 

Hey, I liked my '80 Citation. One of the best and funnest cars I've owned, up there with the 2 LT1 SS and the 5.0.