The Motor Industry: Bureaucracy (In) Action

Nov 18, 2008

The US motor car manufacturing industry (that is, GM, Ford and Chrysler – I’m exempting minor players such as Tesla) is a classic example of an industry caught in the The Big Rut stage of the Predictable Success® lifecycle.

The predominant characteristic of an organization (or an entire industry) in The Big Rut is its inability to perform any useful or transformative self-diagnosis.

In fact, this is the key differentiator between Treadmill and The Big Rut – in Treadmill, even while the organization is becoming sclerotic, management recognizes the problem and battles against it: in The Big Rut, there is both an overt acceptance that the organization is arthritic and a perverse ‘Alice in Wonderland’ belief that all the (to everyone else) obvious disadvantages of size are in fact competitive advantages.

Nothing could describe the US car industry more accurately.

Here’s a mutli-billion dollar industry, employing tens of thousands of people (and supporting hundreds of thousands in its supply chain), the senior management of which appear never to have undertaken any serious scenario planning about two of its most basic trading assumptions:

1. The likely effect of the price of oil sky-rocketing; and / or
2. The likely effect of an intense consumer spending freeze.

What Predictable Success teaches us is that the management of an organization in The Big Rut cannot self-diagnose (and therefore fix) its underlying problems – they’re the very reason the organization slid from Treadmill into The Big Rut in the first place. If they knew how to fix it, they would.

Time and again we’ve seen that the only way an organization in The Big Rut (or in this case an entire industry) can avoid sliding into Death Rattle is by way of a massive external intervention.

There are loud arguments being made that the US Government should provide just such a massive external intervention by way of (yet another) financial bailout for the industry.

Should it? Would doing so reverse the decline to Death Rattle and send the industry back to Predictable Success?

Sadly, there is no reason to believe it will, and one compelling reason to believe it won’t. Injecting funding alone is not the intervention an organization in The Big Rut requires. Cash is not the problem here – it is just a symptom (albeit it a large and painful one).

Injecting large amounts of cash will only delay the slide into Death Rattle – it will not prevent it.

The underlying problem for an organization in The Big Rut (especially one as close to Death Rattle as the motor industry is) is a catastrophic failure of leadership.

What needs overhauled is the industry’s leadership, not its cash flow. And I’m not talking about one, ten, or even 100 people ‘at the top’ here: while they’re included, and are clearly where the primary changes need to occur, the leadership problem in the industry – as in any The Big Rut – is systemic and reaches down throughout the entire organization.

So, how do you radically (and quickly) transform the leadership of an entire industry? Thoughts for another day.