"Why GM executives are clueless"

Fascinating insight from Stanford management professor Bob Sutton on the problems with GM. It’s worth quoting at length:

I could list hundreds of management, cultural, and operational reasons why I believe that GM is such a flawed organization, but to me, a pair of root causes standout: Most of the senior executives — and many of the managers — are (1) clueless about what matters most and (2) suffer from a “no we can’t” mindset.

The culture and work practices at  GM almost seem designed to create executives who are clueless about what kinds of cars people want to buy and what kind of experiences that car owners want to have — and about a lot of other important things as well. The executives were criticized for being so insensitive and clueless that they flew corporate jets to Washington to beg for money;unfortunately, that is just the tip of a dangerous iceberg. For starters, my experience with GM is that – more so than any company I have dealt with – the norm in meetings is that the highest status person in the room does all or most of the talking. Plus, more so than any organization I have ever dealt with, employees are expected to express agreement with their bosses. Why didn’t anyone have the guts to tell the executives that taking a private plane to beg for a bailout was a bad idea? I suspect that it is just standard operating procedure: GM is a culture where subordinates are expected to shut-up and kiss-up when the boss is around. I can think of a few exceptions, one manager I’ve met recently in particular. But on the whole it is as if the system is designed to prevent the upward flow of information. At first, when I was in graduate school, I thought this was a personality characteristic of the first few GM executives I met. But then I started keeping track of what happened when managers and executives arrived and left meetings. To entertain myself as the top dog droned on, I would measure talking time. Regardless of the subject (and who had the greatest expertise in the room), the highest status person would blab away – and when he or she left the room, the next highest ranking person would then demonstrate GM’s blabbermouth pattern of leadership. Note I have been seen this pattern for almost 30 years at GM – the cars have changed but the yakking pattern has not.

Not only are managers and executives insulated from learning what goes in their company because they generally talk rather than listen, they are also insulated from experiencing what it is like to buy and own a car. GM has a perk for managers down to fairly low levels where all are given a GM car to drive – they rotate from one car to another. I am not sure of the exact details, but answers to the questions I’ve asked over the years suggest it goes something like this: the lowest level managers have to buy their own cars, the ones at somewhat higher levels get a new car to drive every six months or so but have to do some servicing, the managers who are somewhat higher-up get somewhat fancier cars and are freed from any servicing (gas is even put in the cars of some executives so they don’t have to go to the service station), and the highest level executives get a car and a driver.

In other words, this system effectively insulates people in management – especially those in senior management — from experiencing what it is like to shop for, bargain for, purchase, service, and sell a car. They only get the driving experience. Well, except for the most senior executives, who don’t even get that experience — they watch a person in the front seat drive a big car. Now, it is true, that the most senior executives do own GM cars for personal use, but it is my understanding that when a car is delivered to a senior executive, special attention is devoted to the car – even during the production process –to make sure the top brass aren’t exposed to a car with any flaws. Wouldn’t that be nice?

So there you have it, a system that seems designed to isolate executives from reality. They talk instead of listen and are protected from the experience of owning car. I might be exaggerating some, but not much.

It really is worth reading the whole thing. The detail is pretty depressing, but provides a valuable picture of how rotten a company’s management can get.

2 thoughts on “"Why GM executives are clueless"

  1. Bob Massie

    I also dealt with GM many times at a high level when I was the executive director of Ceres. I found that there was deep schizophrenia in the company – when asked about some international issues they showed some foresight, but when asked about anything going on the US, they exhibited all the traits of arrogance and absurdity that were described. Whenever I think of what it means for a corporation to have a “culture,” in fact, I think of GM becomes it was absolutely pervasive – the way problems were discussed, the “Can’t Do” mentality (which I used to call “American No-How”) – the absurdity of appointing Bob Lutz, the sadly aging super-macho, MG flying, 1950s muscle car guy to a company that needed churn out 21st century cars (and who blocked hybrids for years, still intimidates everyone around him, and continues to affirm that climate change is “crap”). What would it take to get you fired in this company? Apparently you could run naked down the hall lighting fire to the furniture and to shareholder value, but as long as you maintained the self-delusional speeches, you would be backed up. Think of what this company could have done if it had 1)learned from the 1970s experience with Japan 2) fought for national health insurance for the last 20 years thus lowering the unit cost of production per car 3) recognized the science of climate change at the time of McKibben or Gore’s books 4) put real advocates for change on its board 5) given the hydrogen fuel cell car as much support as the Hummer division 6) pushed for infrastructure changes under Clinton and Bush or fired Lutz and Wagoner years ago. They made every possible mistake, lost $72 billion in the last few years and 90% of shareholder value in the last few months and who do they blame? The workers. Enough is enough. Break up the company, fire the top brass, and bail them out with new leadership and partial government ownership committed to reversing their grotesque years of missed opportunity and outright failure.

    Reply
  2. Pingback: Davos Newbies » Blog Archive » GM: hoisted from the comments

Leave a Reply to Bob Massie Cancel reply

Your email address will not be published. Required fields are marked *