Unless General Motors makes fundamental changes in its basic decision-making process, the company will be “back at the public trough again and again until the public finally grows weary and allows its demise.” That’s the view of Rob Kleinbaum, an auto industry business consultant who has worked or consulted for GM for the last 24 years.
Kleinbaum made his views known in a white paper titled “Retooling GM’s Culture,” which he published on Jan. 26 and sent to GM’s leadership. He received no response from the executives. That’s not surprising, considering that Kleinbaum calls for replacing “a significant number of people at the very top,” including members of the Board of Directors.
Kleinbaum points to GM’s culture—the company’s core attitudes and underlying assumptions—as the root cause of its predicament. He believes that no single vehicle or technology—including the much-heralded Chevrolet Volt plug-in hybrid, due out in late 2010—can save the company if the culture doesn’t change. “There’s no doubt in my mind, the Volt’s a real program and the people behind it are totally sincere,” he said, in an interview with HybridCars.com. “But they set it up to fail. The way they set it up as saving everything. There’s tremendous risk that it won’t meet expectations.” The Chevy Volt promises the ability for the typical daily commuter to drive exclusively on electricity, without using a drop of gasoline.
Back to DC
GM’s leadership—along with Chrysler executives—will return to Washington next week to present plans to restructure the company in the hope that the US Treasury will allow the companies to keep the $17.4 billion in loans already received, as well as to tap more of the $24.9 billion in loans committed by President Bush in December 2008.
Rick Wagoner, GM’s CEO, will explain how the company expects to obtain concessions from bondholders, labor unions, and others; as well as how GM will restructure to align capacity and products with market demand. Mr. Wagoner will also likely point to the Chevrolet Volt as evidence of the company’s forward-looking stance toward fuel efficiency.
Kleinbaum describes GM’s predicament and its reliance on the Volt as consistent with the company’s long-established pattern of behavior:
“GM ignores the external world, finds itself in trouble, and then reacts quickly by coming up with something they hope will save them, usually a future product, but introducing it in a way that seems poorly thought out and ill prepared. The idea is typically the brainstorm of a top guy, who ‘champions’ it through internal resistance. It is then presented to the public as the salvation that is coming shortly.”
Kleinbaum worries that by using the Volt to catch up, the company could substantially under invest in the rest of the product portfolio. He wrote, “Even if the Volt meets all its targets, GM will not survive unless the entire product line is well executed…GM has shown it can execute world-class products; they just cannot execute a broad portfolio of them.”
In the postscript of the white paper, Kleinbaum writes that going public with his views was motivated by “the deepest affection for the company.” Kleinbaum acknowledges that the white paper will probably kill his prospects for future consulting work at GM. “I’m walking away from a lot of money.” He concluded the paper with a call to action: “The people who do care about GM, and there are many, and who think a future is still possible need to stand up and try to make a difference, regardless of the short run costs.”