March 31, 2009

Sustainability

G.M.'s CEO Rick Wagoner leaves after 9 years of struggle. Under his leadership since 2000, G.M. stock has gone from $70 per share to $4. Their brand is perhaps tarnished beyond repair. In the New York Times article, "The Steady Optimist Who Oversaw G.M's Decline", Michelene Maynard describes Wagoner address to company employees just six months ago at G.M.'s 100 year celebration:

"Dressed in a gray suit and a yellow, blue and white striped tie, Mr. Wagoner said: “So, what’s our assignment for today and tomorrow? Above all, it’s to demonstrate to the world that we are more than a 100-year-old company. We’re a company that’s ready to lead for 100 years to come.”

So, he had the right idea - to build upon a great tradition and great hundred years of performance and to heed the lifeblood importance of leading for sustainability, so where did he go wrong? I can't help but feel sickened by the tremendous costs of mismanagement, no matter how well-intentioned that it was.

Were they paying attention?

Where was GM when the gas crunch of the 70s happened. You remember? The one where Toyota entered the market with the marveled Corolla? Even John Updike's hero Harry Angstom bought one. Didn't GM suspect that consumer preferences might be driven by gas prices then? GM seems to be really incapable at anticipating market trends and customer preferences and delivering products that satisfy need.

Did they value innovation?

I have always heard about all the great car innovations being worked on in Detroit but the roll out schedule is something like 5 years on a product. Markets change completely in that amount of time and for the life of me, I can't understand why they have always taken so long to get to market with a sexy, innovative, in current demand product. Innovation experts all agree: get a product to market fast and innovate after launch based on user feedback. Seems to me GM has a daddy-knows-best hubris in their product selection and no sense of urgency in putting desired new products out. In fact, seems like they would tweak a design, brand it, and expect customers to not notice that it was not that different from past models.

Can't they add?

I cannot understand how GM over the years has allowed their labor costs and their unfunded future liabilities to get SO out of control. They torpedoed the company. How sad and paradoxical for all the people pushing for those untenable wages and benefit packages because with G.M. broke, the jobs and pensions disappear. I am shocked at the self-interested and short-term thinking of all of the masterminds involved over the years.

Sustainability for G.M. is a joke because of the preponderance of issues that they keep solving in the same way as before. Re-considering and re-thinking all aspects of their business with a blue sky vengance is what they need. They are bound by a fixed, insular, corporate mindset that has strangled them.

Saving them? At what costs? Seriously, imagine the continued years of costs of carrying them for a 100 years into the future, especially if they don't change their thinking.

Hey G.M.: the market wants an affordable, efficient, green car with a sexy design and a pleasant sales experience that is respectful, honest, and transparent, and they want it yesterday.

Take note of the Fiat 500, Smart car Passion for Two, and Tata Motors little number. They can do it, why can't you? seriously?

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