In his analysis in the FT of General Motors’ failure, Professor John Kay says:

“The history of modern business is the history of GM, and vice versa … if the success of GM defined the management agenda for 20th century, then its failure defines the management agenda for the 21st.

The rash of commentary on GMs’ troubles is obviously linked to its iconic status; it represents a metaphor for the mighty fallen. There is shock that this could happen to an apparently invincible corporation.

One of the most productive plants in the US has been NUMMI (New United Motor Manufacturing, Inc.), a joint venture between GM and Toyota set up in 1984. According to Yochai Benkler, “as of the numbers last year, it continued to be one of the three most productive plants in the U.S.”

NUMMI emerged from the embers of a failed GM plant, which closed and the re-opened with the same people, same unions but different values and busines processes. I first came across NUMMI in an HBR article, Time and Motion Regained, by Paul Adler, when I was doing my doctoral research. I was intrigued by the account of what had happened at NUMMI, which was that a form of Taylorism had apparently been introduced and accepted.

A faculty member at Babson College in the US puts it well:

“In effect, they gave Taylorism to the workers. It taps into three sources of adult motivation -the desire for excellence, a mature sense of realism, and a positive response to respect and trust”

It’s Been A Long, A Long Time Coming

The joint venture was set up in 1984. That is 25 whole years ago. What exactly did GM learn from the joint venture? Not much it would seem. Yochai Benkler characterises GM as driven by management practices that monitor people below and incentivise people above, attempting to extract everything from relationships. Here is Gary Hamel’s assessment:

“GM’s failure isn’t the result of one spectacularly ill-conceived decision—the company didn’t jump off a cliff. Instead, it meandered into mediocrity, one small short-sighted step at a time. Like a two-pack a day smoker, GM committed suicide in degrees.”

In an excellent article, The New GM – a first look, in Automotive World, CEO Fritz Henderson is reported as as saying:

“the “New GM [will be] dedicated to building the very best cars and trucks – highly fuel efficient, world-class quality, green technology development and with truly outstanding design. Above all, the New GM will be re-dedicated in its entirety to our customers.”

The article pithily observes that “quite why this wasn’t the case with the old GM will no doubt become the subject of many books and academic theses to come”.

A Change Is Gonna Come

The business environment BC, that is before credit crunch, was already turbulent, with significant economic, structural, technological and demographic developments causing uncertainty. The global financial crisis has taken this existing uncertainty into another dimension. Businesses need urgently to review and adapt their working and management practices, to ensure their continued viability.

Organisational cultures and management practices can be extremely resistant to adaptation. GM gives us a powerful symbol of rigidity and a clear example of what can happens to the mightiest of companies. As I said in my last post:

“Decline is associated with inability to sense and respond to changes in the external environment. Path dependency strongly commits businesses to past decisions. “Sticking to the knitting”, one of Peters and Waterman’s eight indicators of excellence, as an exhortation to concentrate on core products and services might need clarifying and expanding on?”

Yes, change is gonna come -  one way or another. That doesn’t mean that it is going to come in ways that are advantageous to business.

P.S.

What about NUMMI? The Automotive World article says:

“A large question mark hangs over the future of GM’s 25-year old Californian joint venture with Toyota, New United Motor Manufacturing Inc (NUMMI). The operation builds the Pontiac Vibe, and the Toyota Tacoma and Corolla. The confirmation that the Pontiac brand will be wound down by the end of 2010 leaves GM’s role in the joint venture at best unclear; it is difficult to see the plant, and the joint venture, being of any relevance to a lean New GM.”