Here’s Why The GM Turnaround Is Failing
15 Feb 2012 Leave a Comment
Via Scoop.it – Secular Curated News & Views
Historical precedent offers strong reasons to worry that GM might continue to backslide. Though casual glosses usually present the company’s history as a steady decline from the mighty 1960s to the debacle of 2008, in fact, there were quite a few moments when GM—and Detroit more generally—appeared to have mended its ways. In 1994, during one of those moments, the reporter Paul Ingrassia published a book called “Comeback: The Fall and Rise of the American Automobile Industry.” In his 2010 book, “Crash Course,” he sounds older and wiser: Throughout the 1980s and 1990s, every time the Big Three and the UAW returned to prosperity, they would succumb to hubris and lapse back into their old bad habits. It was like a Biblical cycle of repentance, reform, and going astray, again and again, as Detroit was repeatedly lured by the golden calves of corporate excess and union overreach.
The cycle reached its peak at the beginning of the new millennium, when the Big Three plunged from record profits to breathtaking losses in just five years. Over the past few decades, GM’s ability to resist change has proved almost uncanny. Why did the company wait so long and do so little—not once, but time and again—before finally falling into bankruptcy? And what, if anything, does that portend for its future? The questions go beyond GM, a company that’s hardly unique. Why did Blockbuster idly watch Netflix destroy its business? Why did Kodak let digital cameras drive a once-mighty industrial giant into penny-stock territory?
Ask Jeff Stibel, and he’ll tell you: Because that’s what troubled companies do. Stibel, once an aspiring cognitive scientist in Brown’s graduate program, is now a serial entrepreneur who has led turnarounds at Web.com and Dun & Bradstreet Credibility Corp. “Once the human mind has set out to do something, or has gotten in the habit of doing something,” he told me, changing it is “very hard.” When you add group dynamics, it’s even harder. You don’t need to be a brain scientist, of course, to know that people resist change … and yet, even knowing that, you’d be surprised at how many firms keep driving toward inevitable disaster at top speed. GM’s record is very much the norm, not the exception.
Via www.businessinsider.com
