General Motors

Too often companies emphasize numbers over products and forecasting over customers. Such firms typically focus on short-term results over long-term value. This creates greater internal competition and encourages shorter-term supplier relationships rather than enhancing collaboration internally among functions and externally with business partners.

The relentless focus on numbers at the expense of domain expertise figures prominently in the book, Car Guys vs. Bean Counters (Portfolio, 2011) by Bob Lutz, former vice chairman of General Motors. Fifty years ago, GM products were the epitome of design. Over the last half century, though, the company’s products have steadily lost traction with customers. This decline culminated in the company’s reorganization under Chapter 11 in June of 2009. While many factors contributed to GM’s bankruptcy, short-sighted bean counting was undoubtedly one of them.

“It’s time to stop the dominance of the number crunchers, living in their perfect, predictable, financially projected world,” writes Bob, who specializes in getting people’s attention. I first encountered Bob early in my career when I was reporting on the auto industry and attending the introduction of the Jeep Grand Cherokee at the 1992 North American International Auto Show in Detroit. Bob exuded machismo as he drove the SUV through a plate-glass window into the hall, shocking me and other journalists awaiting the usual dull presentations. At the time, Bob was president of Chrysler.

Bob’s detractors consider him an old-school, shoot-from-the-hip executive who makes decisions based on his gut with little analysis. In reality, Bob understands the need for left brain and right brain driven people to collaborate regardless of their titles or functions. And he encourages more junior people to challenge him. In short, he values constructive confrontation, one of the ten cultural elements of collaboration I introduce in my book, The Culture of Collaboration. 

The former Marine Corps pilot insists that “car guys” should run auto companies, “supermarket guys” should run supermarkets, and “software guys” should run software companies. He concedes that these “guys” can be of either sex. Too often, as I noted in The Culture of Collaboration book, boards of directors and senior leaders believe that if they hire “star players” these supposed stars can and will achieve results regardless of their domain knowledge or industry experience. Some prominent management consulting firms reinforce this skewed logic. The so-called star players are typically numbers-driven MBA’s interested more in units rather than in products and in forecasting rather than in customers. The organization promotes these internally-competitive numbers crunchers and sidelines others who focus on improving products and interacting with customers.

Of course, quantitative analysis is critical to any business. The problem arises when quantitative analysis dominates and pervades every aspect of a business while designing awesome products and creating market stickiness take a back seat. As Lutz chronicles in his entertaining and informative book, once upon a time design dominated the auto industry. Think of the tail fin era of the late 1950’s which gave rise to cars including the 1957 Chevrolet and the 1959 Cadillac (see images, Chevy image courtesy Trekphiler). Designers originated products. By the 1970’s, General Motors had reigned in designers, made design “part of the system,” and assigned product origination to a department called Product Planning staffed by former finance people.

Neither the old design-driven General Motors nor the newer numbers-driven organization is a model of collaboration. In the 1960’s, when design and the designers were at their pinnacle, Lutz writes that  chief designers in well-tailored suits graced magazine covers. Essentially, designers had become stars and expected star status and treatment within GM and in society. Chief designers often silenced and sidelined people in other functions.

When GM reduced the role of designers, the organization empowered product planning to originate products in a vacuum. Handing plans off to designers with the instruction “go design this” hardly enhances collaboration. Ideally, designers would lead a design process with input from, engineering, manufacturing, marketing, sales and dealers. In a collaborative organization, people come together across departmental and functional barriers to share ideas and develop products and services in concert.

At least among senior leaders, GM more recently came closer to this ideal when it hatched the Chevrolet Volt, a hybrid electric/gas car introduced in December, 2010. Lutz, who had advocated an all-electric vehicle, describes how he sat across from Jon Lauckner, former GM vice president of product planning, as Lauckner sketched out the first drawing depicting the “sequential” hybrid technology of the Volt. This differs from the “parallel” hybrid technology of the Toyota Prius (The Volt is designed to go forty miles without using gasoline unlike the Prius which alternates between electric and gas). And almost immediately people Lutz dubs “unconventional thinkers” in design and product planning began collaborating.

Whether it’s skimping on ingredients in restaurant kitchens or using inferior paint in automobile assembly plants, focusing on numbers over products and forecasting over customers reinforces the wrong organizational values. In time, team members become comfortable sacrificing products and shortchanging customers. Ultimately, value evaporates.  More collaborative organizations use quantitative analysis as a tool rather than as the primary organizational focus.