General Motors has seen its stock value grow almost 40% in the last 3 months. Why? Many analysts and investors believe that GM management has been Disrupted, and is moving into White Space for new solutions to its problems.
Is it for real? Well, first the Disruption. Kirk Kerkorian bought almost 10% of GM and then put his representative on the Board. As outsiders, they have been screaming for change in how management leads the company. And it has started making a difference, as GM has started doing several things differently.
GM has changed some of its approaches to workers. Its recent employee buyout was 30,000 oversubscribed indicating a successful tactic for both the company and labor. And, GM is working with Delphi (its largest parts supplier) and the union to create a unique solution to the bankrupt company’s problems. Lastly, GM leadership is now entering talks with Renault and Nissan to possibly create a new merged company.
Successful White Space requires (1) permission to discover new solutions outside the historical Lock-in. This seems to be happening in some of these fledgling projects. Successful White Space also requires (2) committed resources in advance to develop the new Success Formula. That we have not yet seen. While there is progress being made to sell GMAC and raise additional cash, we haven’t yet seen the commitment to actually invest in White Space and create a more competitive future. Until we see management internally Disrupt itself, following Mr. Kerkorian’s lead, we won’t likely see real investment or commitment to creating a new Success Formula.
If the outcome of negotiations with unions, and other companies, is just more cost reduction in support of the old Success Formula then Mr. Kerkorian’s Disruptions will be for nought. Combining GM, Renault and Nissan just to achieve additional "scale" will do no more to create value than combining KMart and Sears. What’s required is the creation of a new company that is more attuned to customers, designs cars better, gets them to market faster and creates more profit on smaller unit volume. And that will require lots of White Space projects with wide permission to change and extensive resources.