GM is in trouble. Yesterday’s announcement of layoffs, plant closings and cut back merely confirmed that fact. While everyone now understands the seriousness of the situation, the discussion continues as to why. Some are stunned at the layoffs. Just like Delphi, which got in trouble despite the fact that it won innovation awards, GM plants are being closed despite their best efforts. As the head of the local UAW at one of the to-be-closed plants said: “We’re one of the best, most efficient press plants in the country. We won many J.D. Power awards. It don’t make sense.”
He is right, from an industrial age perspective. But the efficiency is no longer the deciding factor.
There are many culprits in this story, all probably playing a part. The over reliance on the SUV, especially at a time of rising gasoline prices is the newest villain of the piece. Already on stage are the perennial problems of the so-called legacy costs: health care and pensions. But, one of the major problems – the 800 pound gorilla sitting in the corner that now one really wants to talk about – is the products themselves. As The Economist reports:
Indeed, after the company’s annual meeting, [GM CEO Rick] Wagoner conceded: “If we had a chance to rerun the last five years, we probably would have done a little more thinking about making sure that each product was distinctive and had a chance to be successful.”
“Distinctive and had a chance to be successful” — what a novel concept.
The late Peter Drucker has been quoted saying that his study of GM (The Concept of the Corporation, “had an immediate impact on American business, on public service institutions, on government agencies–and none on General Motors.”
Apparently, that is still true today. GM appears to have forgotten Drucker’s famous dictum that the purpose of a business is to create customers.
And unless the company as a whole creates customers, the efficiency efforts of the front-line production workers will be for naught.
We need to go beyond the earlier definitions of “high-performance work organizations” to involve the creative skills of the front line workers not only in improving the production process but also in improving the product itself. Our earlier concerns focused on bringing the front-line workforce into the process improvement activities through self-managed work teams, job rotation, quality circles and total quality management. [For more on high-performance work organizations, see Paul Osterman, Securing Prosperity: The American Labor Market: How It Has Changed and What to Do about It.]
In the I-Cubed Economy, with its relentless focus on innovation, the workforce needs to be engaged in all parts of a seamless design and innovation process.
As Richard Florida has said, our next task is ensuring that all workers are creative workers. That includes my old high-school buddies who are finishing up their 30 years on the GM assembly lines — and more importantly, their kids who are facing layoffs.
The industrial age paradigm is rapidly disappearing. We need to prepare for the new.