At Buckley Brinkman's Blog he asks the question "Can the auto industry be saved?" His posting gives a great overview of the complexities. I like his overview that "there are no safe, and few reasonable investments in this space."
Today a lot of people are asking, "how GM could be leading an industry that fell so far? How could all those managers, over all those years, end up doing so poorly? How could the collective wisdom of the last 30 years brought to the industry, including not only management but the union leadership and all the vendors seemingly let an entire industry, with companies the world's largest, end up in such a soup?"
A key to understanding the answer is offered by the recent Newsweek article "Saturn was supposed to save GM. Instead GM Crushed Saturn." This article underscores the dramatic actions taken by GM Chairman Roger Smith in the early 1980s to transform a floundering General Motors – including buying EDS and Hughes aircraft. And the unprecendented creation of a new auto division with a new union agreement to change the direction of American auto manufacturing.
Over the next few years, Saturn came onto the market as a successful division. It had unprecedented employee satisfaction, unprecedented loyalty for an American car brand, and unprecedented support by its new dealers. But what Saturn did NOT have was the support of GM. Nor even the union that helped create it. As the Newsweek article further details, inside GM there was no support for Saturn outside the Chairman's office. Management continually pushed the corporation to rob Saturn of resources, and even shut down the new division. Meanwhile, a new union leader took over the UAW, and he pushed for changing work rules back to the previous, contentious and frustrating relationship. To which GM quickly agreed preferring consistency over something that worked better.
Although Chairman Smith was dramatic in creating Saturn, he did not Disrupt GM. He never challenged the other division heads to recognize that they could not succeed with old practices. Chairman Smith never moved to place an EDS leader in a top position. In fact, to the contrary, he went along with special action to repurchase the GM shares traded to Ross Perot and remove him from the Board, on the basis that Mr. Perot was too Disruptive to GM. The very benefits Mr. Smith desired was epitomized in Mr. Perot, who pushed hard for big changes in GM management practices. But Mr. Smith was unwilling to actually Disrupt the history and hierarchy of GM. And the same was true for Hughes leadership. Instead of taking action to put a Hughes executive in charge of GM, to lead the way for change, GM leaders were backwatered and ignored in the halls of Detroit.
When you are unwilling to Disrupt, desired changes never "stick." Even with all the resources of the GM Chairman's office, without Disruption the Locked-In GM organization was more powerful and even better resourced. What was supposed to be White Space which would change GM made no difference, because GM was not Disrupted. So the organization kept Defending & Extending its Success Formula created in the 1940s. It didn't take long for the un-disrupted GM leaders to sell of both EDS and Hughes, using the profits to subsize the car business. And they converted Saturn into nothing more than another faceplate on just another GM car – nothing special at all – and widely despised by leaders who always felt Saturn had operated outside the Success Formula so needed to be closed.
Now the Chairman of GM that asked for billions of taxpayer money to save the company, Mr. Wagoner, has been fired. His approach continued to be pushing the same old Success Formula that is so obviously out of step with current market needs. So the banker of last resort asked for him to leave. Which is not so out of the ordinary. Any executive that would ask for investment in the dire straights of GM would expect the investors to make changes in the executive suite. It happens all the time. But the problem seems to be that after pushing Mr. Wagoner out, the U.S. government representatives as bankers haven't proposed a new slate.
The only way to "save" GM will require a wholesale restructuring of the company. Never have so many forces worked so hard to preserve an out of date Success Formula – from management to unions to vendors. It will take somebody of great will, and uncommon acumen, to kill off Chevrolet and the out-of-date parts of GM that simply have no future value. Because now, even more than in the 1980s, what GM needs is an enormous Disruption. Something that will cause the company, from the executive suite to the factory floor, to stop and say "wow, things really are going to be different around here." Only after that sort of Disruption will White Space be able to develop a new future for GM. As we've already seen, trying to do "more of the same" without an enormous Disruption will not save GM - in fact will not even substantially change it.