Re-inventing GM: Moving Beyond a Bail-Out

Virtually all business performance indicators suggest that GM is in serious trouble. The company has lost $73 billion since the end of 2004, sales for 2008 are down by 20%, and market share of new car sales, excluding luxury brands like Saab, is below 10%.  Not surprising therefore that a variety of prescriptions are being offered to help restore GM to good health. 

Trying to restore GM to its previous levels of glory and market dominance is like trying to drive a car looking in the rear view mirror.  What we need today is windshield thinking; fresh forward-looking concepts that will help re-invent GM for new and emerging market, economic, and social realities.
 
The social, economic, and management forces that made GM a great car company have played themselves out. In the early 20's when GM was in its take-off stage of growth, American society was taking off as well.  People were moving from rural areas to urban areas, new highways and bridges were being built, and suburban USA was beginning to change the way America lived, shopped, worked, and played.  Sloan's brilliant insight into America's changing economic class structure - a car for every purse and purpose - helped millions of Americans establish their newly attained economic identities through the GM brand they drove.

Not surprising therefore that it was not just GM's economic assets that grew during this period.  Its symbolic assets grew as well.  GM came to be more than just a car company - it became a cultural and economic icon as well.  America had bought into what GM stood for; the company and its cars had become a means to an end, a means to upward economic and social mobility.

But that was yesterday.  Today's reality is different.  GM is no longer a part of America's iconic or symbolic consciousness.  CEO Rick Wagoner's assertion that the domestic auto business remains a path of upward mobility for millions of American families may be correct, but GM's contribution to that upward mobility has been shrinking for over three decades now.  In this context, urging GM to fix what is broken is only a partial solution.  All that it will do is temporarily stem the bleeding.  Good housekeeping may fix the plumbing leaks; it will not resolve the fundamental problems of an alienated customer base and an irrelevant iconic status.
 
To reverse the decline of its economic and symbolic value to America, GM needs to reinvent itself. 

Companies like IBM, Kodak, and Apple have demonstrated the superiority of reinvention over fixing.  They extricated themselves from shrinking sales and profits by reinventing their futures and finding different ways to shake hands with the market.
 
So how can GM reinvent itself?   
 
First, GM needs to cause itself more pain.  It needs to blow up its own memory banks, so that it can forget that it was once the world's most dominant car company.  To look at economic and social realities GM faces today with a fresh pair of eyes, will require giving up the car maker mentality.  Few companies suffer economic collapse due to memory failure; most do because they remember too much too long.   
 
Second, GM needs to find a new value-ecology to play in.  One of the fastest growing new angles lies at the intersection of transportation and energy.  A new ecosystem surrounding green technologies, alternative fuels, and emission free transportation is growing rapidly.  Entire cities, communities, and countries are already on board.  San Francisco recently unveiled ambitious plans to turn the Bay area into one of the world's leading centers for electric vehicles.  On the other side of the Atlantic, Sweden has made an astounding pledge to phase out fossil fuel usage by 2020.  Its citizens are already using buses and cars powered by methane made from garbage. 
 
Third, GM needs to rethink its markets and customers.  Markets and customers are not just those who consume GM's products and services.  Markets and customers should also include those who enable the consumption of GM's products and services - cities, governments, transit and public transport authorities, energy providers, and distributors.
 
Fourth, GM needs a new blueprint for drawing its own boundaries and determining who to partner with.  Trying to do everything yourself is yesterday's thinking, as is turning a blind eye to activities that lie outside a company's domain of primary operations.  In today's connected world, companies create value for their customers and for themselves by aligning with a carefully chosen set of collaborators.  Should GM collaborate with cities like San Francisco and invest in infrastructure projects for electric vehicles?  Or with companies involved in the production and distribution of alternate fuels?  Who GM decides to flock with in its new incarnation will significantly determine its future economic and iconic value.   
 
Fifth, GM must invest in a different set of eyes and ears - a set that promotes strategic sensitivity and vigilance.  GM lost its way because it lost touch with how its markets, consumers, and competition were changing.  Staying connected with the market, engaging customers in innovation conversations, and paying attention to changes taking place at the periphery before they become mainstream trends will help GM's reinvention efforts.

And finally, GM needs to rethink its approach to managing and management.  GM needs a management team that favors learning, investment, and innovation.  In the early part of the 20^th century, managing at GM was all about shaping markets and creating possibilities.  A combination of big ideas and business experimentation helped GM outpace its competitors.  Ideas, experimentation, and execution that create and shape markets are going to be at a premium in the first half of this century as well, not housekeeping fundamentals like quality and efficiency. 

Is GM capable of building a new organization in this century, the way it did in the last?  Is it capable of committing itself to a new risk?  That depends on what it values more - memories of bygone greatness, or the entrepreneurial excitement of a brand new economic and social journey, but with no guarantees of gold at the end of the rainbow.  Few companies get a second chance; even fewer use it wisely. 
 
Surprise us, GM.