GM is in The Big Rut

Jul 27, 2010

It doesn’t look like General Motors is going to get out of The Big Rut any time soon.The recent announcement that they would buy financing giant AmeriCredit Corp. for $3.5 billion is exactly the sort of monolithic, ROI-based move that will strengthen, not weaken, GM’s enthrallment to bureaucratic over-systematization.

When Ed Whitacre was first appointed to the position of chairman and CEO, it seemed unlikely that his background (a lifetime in AT&T, essentially) would bring the entrepreneurial changes that are so desperately needed to reintroduce the creativity and risk-taking necessary to take the lumbering organization back to Treadmill (let alone back to Predictable Success), and so it has proved. Although Mr Whitacre has developed a good rep internally for being open, accessible and transparent, this isn’t in itself enough to turn the company around.

De-personalizing the issue away from GM and Mr Whitacre for a moment, the fact is that for any organization to recover from The Big Rut (something that is incredibly difficult to do), big-splash, highly resource-heavy, marquee acquisitions are not only a distraction, but they are in fact amplifiers of the very thing that put the organization there in the first place – lumbering bureaucracy.

For signs that GM is back on the right track – by reversing its decline – look out for:

– Many smaller, light-weight, flexible, entrepreneurial acquisitions;

– Frequent announcements of bijou, boutique creative developments from throughout the organization;

– New, strong voices arising in all functional areas, providing a richness and diversity of thought;

– A lot of trial and error, and frequent mistakes, as entrepreneurial risk-taking is encouraged and rewarded;

– Many legacy activities being cancelled as a result of a serious re-appraisal of old processes and systems.

These things may yet happen – just don’t expect to see it anytime soon.