Peter Drucker, considered the father of modern management, is famously credited with saying, “Culture eats strategy for breakfast.” Probably no better example of this is GM and how it has handled the problem with ignition switches in the Cobalt. Coming out of the government bailout the company had an excellent strategy: build high quality, fuel efficient cars that meet the needs of all segments of drivers. The only problem is the company culture has been a barrier to this strategy.
Now the culture seems to be changing under the leadership of GM's new CEO Mary Barra. Prior to her appointment the company was all about no-bad-news, a focus on cost-savings, and maximizing shareholder value at the expense of quality.
What it now needs to prove is that it makes cars that will cause us all to forget about the Cobalt. That’s when we’ll really know if it has changed.
I’m afraid that making great cars will help but it’s not the whole answer. In a business and product as complicated as an automobile, problems will continue to come up and it will be how GM responds that will tell us if the culture is truly changing. Will the company encourage employees to speak the truth? Will the company be transparent internally and externally?
Transparency is a cultural issue. When problems arise it often is because individuals with something to lose hide bad news from other people who could use that information against them. It may make an executive look bad if he speaks up about a problem so he keeps things to himself. Self-protection trumps organizational health.
The solution is not easy. The correction begins at the top. The CEO must hold herself accountable. Apology and amends will follow, but again these are initial steps. The cultural change must be instituted throughout the company. The CEO must become the public face of transparency that is, rooting out trouble and seeking remedies.
The crisis in GM presents Barra with an opportunity to accelerate movement towards a different culture. Editors of Crain’s Detroit Business write that Barra now has “…a powerful hammer to pound away at needed culture changes.” Let’s hope that not only Barra, but all of the leaders within GM recognize that it’s about culture, not strategy.
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