Why GM is like Toyota

GM the need for Change Management

I’ve been watching the unfolding GM ignition switch problem with some interest. The reason for this is not only is it becoming a real human interest story, but also is providing real clues as to management responsibilities in any crisis.

GM’s CEO, Mary Barra testified to Congress on April 1 that she had not known about the ignition switch problems (that are suspected to have causes at least 13 deaths) until very recently. Yet, according to CNBC, documents recently released show that she knew about related problems as long ago as at least 2011.

Back in 2011, I wrote about how Toyota’s problems – it had then recently issued a recall for thousands of vehicles – had potentially destroyed its reputation for quality. More, I argued that its failures were rooted in three evils:

  • The complete focus on rapid growth
  • Previous lack of market focus
  • The failure of management to promote a communicative organisation

Let’s look at each of these in turn, comparing them to GM’s current woes.

When the need for rapid growth becomes destructive

A few years ago, GM was one of America’s most respected companies. It was making large profits, distributing good dividends to shareholders, and selling cars by the truck load.

Then the financial crisis hit, and GM’s parlous financial state was thrown into the spotlight. It wasn’t making money from selling cars, but from administering the finance packages on its sales. GM needed a huge bailout from the US taxpayer simply to stay afloat.

Since then, it has chased profits again. Only this time, not only for its shareholders but also to repay the taxpayers it owed. That process has now been completed and it has begun distributing dividends again.

But in its race to create this nirvana, it has become clear that it has ignored quality and safety issues.

Years of innovative failure drive mistakes

Back in 2009, the Ivy Business School argued that GM’s problems had been building for some time. It blamed GM taking its eye of the ball and lacking ‘market focus’. It had reacted to competition (ironically the Ivy report cites Toyota) by producing ever increasing numbers of styles, colours, and models.

Its market focus was centred on providing more choice for consumers, but slowly its offerings suffered from a lack of innovation. While other manufacturers were giving customers better in car entertainment, integrated Sat Navs, and more, GM was giving a dozen shades of crimson.

Simply put, GM thought it knew its customers. By the time it realised it didn’t, it had a lot of catching up to do.

When management cuts off the communicative channel, disaster will strike

Perhaps the biggest of GM’s crimes is in its culture. If it’s true that Barra was told about problems with GM models all the way back in 2011, then it’s also clear that nothing was done about them.

When this happens, middle management begin to feel neglected, overlooked, and undervalued. GM’s middle managers are not alone here. A survey in 2011, showed that only 11% felt valued and prepared to face responsibilities. Failing operational transparency led to the Space Shuttle disaster (information about poor performance of sealers was never passed up the line, despite being flagged by middle managers).

Senior managers often ‘punish’ middle managers when they convey bad news. Eventually, middle managers stop communicating in efforts of self-protection.

The answer begins at the top

Whether Barra knew about the ignition problems at the time they occurred first is irrelevant. The solution to GM’s woes stands squarely at her feet. She must be held accountable, if not for the problems, for the way the company has failed to address them.

First, the company needs to remove itself from pushing for rapid growth. As Jack Welch once said, “to ‘maximise shareholder value’ is not a useful guide to executive action.”

Second, Barra must make it her aim to promote a more innovative culture with focus on the customer. There will be a period –possibly very long – where brand has to be rebuilt, and that can only be achieved by refocussing on the customer and creating a culture of transparency that goes hand–in-hand with a culture of innovation.

Developmental errors can only be addressed if they are communicated and listened to.

Third, it may be too late for Barra. She can claim she knew nothing of the problems, but the fact remains she has been part of the senior management of GM for a long time.

Fail to communicate, and you communicate your failure

As Colin Powell wrote, “The day the soldiers stop bringing you their problems is the day you stopped leading them. They have either lost confidence that you can help them or concluded that you do not care.”

Either way, when that happens, the CEO may have no other option but to fall on his or her sword.

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principles of change management

Approach change as if it were a diet              

Some executives think that managing this change requires an explosive change in attitudes, with real progress only possible through the creation of a myriad of external partnerships.

While overnight change is possible, it may not have the long lasting effects desired. How many people do you know that have gone on a crash diet, achieved their target weight quickly and then just a few short months later have bloated to twice their original size?

Often, explosive change does not produce lasting change.

It is far better to work from the inside out, and make continuous change on the way to a more innovative future. Before I look at the four principles of internal change, I want to look at a couple of examples where these principles have been put into action.

Examples of innovation and change on the inside

Babakl Forutanpour began something not only innovative but also inventive at Qualcomm. He had an idea to create an organisation-wide innovative culture, and began by holding a lunch meeting with seven of his managers who were prepared to be up-front and open. These were people who all had an experimental nature and were prepared to question, discuss, and solve. Forutanpour called this FLUX – Forward Looking User Experience.

This process spread across the company, with at least 10% of all staff involved and empowered to be innovative.

At IBM, social an internal social media network is used to promote collaboration and innovation. Its Connections network allows people from all different backgrounds and around the world to communicate and discuss ideas and solutions, with lists of the most popular and useful ideas maintained and used by the company as a base for improvements in processes, procedures, and products.

Innovation is a continuous process

Innovation is not about the one-off life changing invention, but rather about a series of smaller improvements that add up to a massive benefit. Innovation doesn’t have to be owned by R&D and directed at products alone, but should be ingrained as an attitude of all.

Change manage your organisation to greater innovation with these guiding principles

  • Lead Innovation and change to spot your next leaders

Good leaders understand their organisation, and where their understanding is lacking they actively seek to learn. Only then can real leadership be given, as leaders coach the development of skills and principles down the line.

By creating internal networks, not only are you providing a natural forum for communication and coaching, but you are providing a natural platform from which your next generation of leaders will emerge.

  • To become innovative, educate and support

Internal networks bring your people together in ways that rarely happen otherwise. Ideas, experiences, and knowledge are shared. This cross functional capability will help already found solutions to be less isolated, spreading across the organisation.

You can help this process by ensuring communication of improvements made, and ensuring that formalised training takes place in improvements discovered. This will become the backbone of your innovative structure, and improvements and ideas can then be taken externally, too. (Don’t forget, you can then use the same structure to evaluate external ideas and products.)

  • Empower your people and promote collaboration

Encourage your people to be problem solvers. There will be less time wasted by escalation of problems up-the-line, and problems will be solved more quickly. But don’t stop there. Once you have an army of problem solvers in place, hold cross departmental brainstorming sessions. Encourage people to share their experiences, discuss solutions, and cross functional impact. Then build back into your training programs.

  • Start small to build innovatively

In every organisation there will be workarounds to small problems that have become standard practice. Open your eyes, see these problems, and design new processes and procedures to produce real solutions. Get your people on board, discussing and solving together.

Be prepared for failures along the way, and accept them as part of the process of continuous improvement. As the confidence of your people increases, failures will decrease and larger problems can be tackled with real zest.

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This Week’s Best of the Rest: 19th April 2014

innovation and change management

As you can imagine, I spend a fair amount of time keeping up with changes and challenges faced by industry and business. So I’m constantly on the lookout for information and news that may impact behaviour and best practice across organisations.

Here’s a pick of what I’ve been attracted to this week:

Innovation News

Those are just a few of the projects receiving funding from the INNovation Fund, a collaboration between Knight Foundation and the Investigative News Network to support make non-profit and public media more sustainable.

As global leaders gather for the 2014 World Economic Forum on Africa in Abuja next month to discuss approaches to inclusive growth and job creation, the 2014 winners for Innovation Prize for Africa (IPA) will be announced.

Good Morning Innovators,. I just sorted the questions posted by those attending the webinar broadcast of the Innovation Engineering International Conference… 11% Need help with IDEAS. 27% Need help with Increasing …

UW CSE Ph.D. student Vincent Liu and UW EE Ph.D. student Vamsi Talla, working with UW CSE professor Shyam Gollakota and UW CSE+EE professor Josh Smith, are one of 9 teams to receive 2014 Qualcomm Innovation …

CountingPips forex news, trading apps & technical analysis including Currency trading blog, Metatrader 4 apps, interviews and financial market articles.

Change Management

After a change management process, translating the learning into decisive action is the ultimate way a for-purpose organisation goes from good to great. About Westpac Social Sector Banking: Westpac Social Sector Banking …

The product of work by the Australia-based Change Management Institute (CMI) and APMG-International, a leading Examination Institute, the CMBoK represents a new global standard in change management. It’s based on …

1. Project HUGO at LHSC: Leading Urgent Change in Healthcare The purpose of this assignment is to provide an opportunity to illustrate important concepts relevant to change management and healthcare management.

Isuzu Ute Australia is withdrawing a campaign and complementary promotion for its new D-Max ute following a petition started by The Collective Shout which. … As huge changes blow through the Australian media agency landscape Nikki Retallick argues the smaller more collaborative companies will be the ones to thrive. It’s a great time to be in the …. Assistant general manager for marketing & PR Dave Harding told Mumbrella the ad is being withdrawn. The car …

unless all of the Australian tax payers are shareholders of Telstra, your point is moot. Reply 2 … If they left the NBN (FTTP/FTTH) alone (ok maybe change management but still leave it as FTTP/FTTH) it wouldnt cost as much.

Where My Words Have Travelled

publish around the place from time to time. Here’s the latest:

I explain why effective change management only happens if leaders and executives at all levels are aligned.

And it’s on Video!

In 1987 Paul O’Neill became the CEO of Alcoa. Taking over the helm of a company usually means making grand statements about finances, about cutting costs, and change the investment priorities. But what O’Neill did at his first investor press conference was a little different.

To improve productivity in organizations you need only get leaders out in the field

The controversial Koch brothers wrote a book called the Science of Success (2007). I don’t recommend you read it as it’s one of those books that successful people write where they think they were successful because of these management techniques, whereas it’s more likely that because they were successful they could try out these management techniques (fads of the day?).

According to the ASTD’s 2013 State of the Industry Report, U.S. organizations spent $164.2 billion on employee learning and development in 2012. The report does a good job of categorizing and classifying expenditure. But what about ROI? How can managers structure training to ensure a positive ROI?

How often have you rolled out a new IT project that failed to deliver the desired benefits? Most projects fail to deliver benefits because of poor change management. Little to no attention is paid to the people side.

From the Vault

Innovation is more important than ever in a world of rapid change. Here’s three ways to exploit change rather than be a victim to it.

Unfortunately innovation is too often associated with technology. This is a shame because innovation applies to business models, such as the low cost airline models pioneered by Southwest Airlines and Ryanair, as well as processes on the frontline like self-serve checkouts at supermarkets.

Coaching without direct authority can be a challenge.  Using these three steps can help you achieve success. click to tweet

Over 76% of all managers have to coach and influence sales people that do not directly report to them. HR people have the phrase “Influence without direct authority”, otherwise known as: “Convincing someone to do something when they don’t have to do it.”  Most managers get it wrong with the cost of lost productivity every day.