Steve Spear, Senior Lecturer, MIT Sloan School of Management and Engineering Systems Division
From The Hill
General Motors (GM) shutting five factories and cutting 14,000 jobs reflects poorly on a legacy approach to managing. Big shots making transactional decisions — buy or sell this, open or close that, hire or fire them.
What is required is a dynamic approach of building capabilities to be agile and resilient, learning quickly how to bring value into the marketplace with speed and responsiveness.
CEO Mary Barra’s announcement set off a firestorm of criticism and praise. President Trump led the barrage, saying the company was making a “big mistake” and that GM “ought to stop making cars in China and make them here.”
Furthermore, he took Barra to task, saying he was “disappointed” in her. Similar outrage was voiced by those advocating for the clock-punching working class.
But other commentators praised her “hard decisions” in the face of declining demand. The stock market agreed, with GM’s shares rising 7 percent.
Apparently, if you’re do something poorly and you promise to do less, then your valuation increases. It’s like relatives who are lousy cooks. If they say, “I’m not preparing the next holiday meal,” you cheer.
General Motors CEO Mary Barra appeared before a Senate panel once again Thursday to discuss the company’s flawed ignition switches and vowed that GM will “do all it can to make certain that this does not happen again.”
In terms of damage control, much of what Barra and GM appear to be doing right now is positive: fessing up about product failures, bringing in outside investigators and firing employees that failed to take appropriate measures.
And while these are important steps, they amount only to a good, if somewhat belated, crisis management strategy. In fact, these efforts pale against the very real organizational challenges that lay ahead for GM and Barra. In order make good on her promise to Congress, Barra must prevent the kinds of engineering failures that caused the ignition problems in the first place and the organizational failures that propelled the problem to its current tragic magnitude. And that will mean changing the culture at GM.
Engineers like to be right. They like to prove that they have the correct answer.
Highly trained and highly motivated to solve problems, at the point of releasing a design or demonstrating a model or a prototype, everything in them is wired to prove that they’ve arrived at the right answer. The premium is so high on being “right” that even when data starts proving them wrong, they work to show that they are right somehow. They seek to explain what is happening is an exceptional outlier or an aberration; not that it is a sign of a problem. Read More »