So GM put a bunch of defective switches into its cars and dragged its collective feet for a dozen years in launching a recall. “GM has reported 12 deaths and 31 crashes among the 1.6 million recalled cars.” “A study commissioned by the Center for Auto Safety found that 303 people were killed in crashes of now-recalled General Motors vehicles where the airbags did not deploy …” The truth is somewhere between the two – more than 12, less than 303. By comparison, when the dust settled it was determined that 5 people died as a result of Toyota’s much ballyhooed sudden acceleration problem a few years back. The point is not the comparison with Toyota; it is that this defect is a big deal – a really big deal.
Mark Graban Tweeted on the GM debacle today, bashing GM CEO Mary Barra for her statements that some processes needed to be reviewed. His point was that better than a dozen people don’t get killed; “the company said it first knew of flaws in its ignition switches as far back as 2001”; as a result of some processes in need of a tweak. That only happens when a company has a seriously defective culture. He is absolutely right. GM doesn’t need its employees to start focusing more on customers, as Mary Barra suggested. It needs a complete senior leadership mind, heart and soul transplant.
This is a glaring example of the difference between companies that manage by means – focus on the process – believe in the old Henry Ford adage that “Profit is the inevitable conclusion of work well done” – and those that manage by objectives – especially financial objectives.
The tunnel vision of GM on accounting dating back to the days of Donaldson Brown, the ‘Father of Modern Cost Accounting’ drives a culture that instills in everyone from top to bottom that anything goes as long as it is legal and improves profits. Only sometimes – Congressional investigations and Department of Justice probes into GM’s handling of the recall (or more accurately, GM’s complete sweeping under the rug of a blatant need for a recall) notwithstanding – establishing the criminal code as the baseline for determining acceptable managerial behavior in pursuit of profits comes back to haunt.
It is the common sickness of the big, publicly traded company; the supremacy of ‘maximize shareholder value’ over any other stakeholder’s values. GM – and so many other companies – need to stick the accountants in the closet and don’t let them out, rather than having them dominate every decision. It’s about the work, the whole enchilada processes stretching from end to end – not the stringing together of a sequence of operations each performed at the least cost with parts from the vendors who survived after being beaten down to their bare bones.
GM’s culture has not changed one iota from its pre-bankruptcy self. They are still an accounting and marketing firm that happens to make cars only because it has to in order for the accountants to have something to account for, and for the marketers to have something to market. Manufacturing – what should be their very core, and is the very core of Toyota and was the very core of early Ford when the ‘work well done’ mantra was coined – is a cost pit in the eyes of GM. A necessary evil defined by how cheaply it can be done.
The GM’s of the business world are very, very easy to spot. Simply ask ‘Who has more influence on major decisions? The CFO or the head of manufacturing? Who has more stringent metrics and CEO scrutiny? Manufacturing or marketing? Which department is under greater pressure to reduce itself, to reduce its budget, to do more with less? Production or marketing? Which suppliers are expected to reduce prices every year and are under the constant threat of having their work moved to Asia? The suppliers of critical components or the ad agencies?
Mary Barra telling employees to pay more attention to customers is irresponsible thinking and delusional thinking at the same time. It only happens when one has hung around corporate headquarters so long that one believes the nonsensical accounting reports and their precise calculations of margins on a product basis; or that advertising and brand management are critical strategic endeavors; rather than keenly understanding that all that really matters is designing and making products very, very well.
So kick the PR and lobbying machines into high gear, GM, and put heat on employees to start paying attention to customers, but “Laura Christian, the birth mother of 16-year-old Amber Marie Rose, who is among the 12 people G.M. acknowledges died in crashes related to the defect” is right. “I seriously doubt they are any more responsible,” she said in an interview. “They are just trying to get ahead of the massive issues that they already have.” I seriously doubt it too, Laura. And so does everyone else who knows the difference between customer driven manufacturing and management by financial objectives.