How should business leaders learn from GM's latest turning point?

In this weeks Harvard Business School Working Knowledge Newsletter several faculty members write about GM: What Went Wrong and What's Next. Nancy F. Koehn, Professor of Business Administration, highlights same fundamental leadership and management issues I have been blogging about earlier.

General Motors was formed in 1908, the same year Henry Ford brought out the first Model T. Ford Motor Company became the undisputed leader of this young market and by the early 1920s, it was producing 60 percent of all the motor vehicles manufactured in the United States and half of those made worldwide. All of these automobiles were Model Ts, offered in one color: black.

Beginning in the mid 1920s, GM staged an astounding victory against Ford Motor Company. Alfred Sloan, Pierre Du Pont, and other GM executives placed a series of important bets on what American consumers wanted (different makes, models and prices; cars that were status symbols and identity holders as well as transportation sources) and they did so with careful, consistent attention to what the competition was—and was not—doing. As company leaders rolled out this daring strategy, they also created an organizational structure and culture developed to support a multi-product, vertically integrated enterprise. By the mid 1930s, GM's market share had risen to 42 percent while Ford's had fallen to 21 percent.

In this context, it is interesting to consider the root causes of General Motor's decline, which has been under way for 30 years. Although there are many factors that contributed to the company's long, slow bleed, the three fundamental issues are management's consistent failure to do the very things that made the business so successful initially.

1. First, pay close attention to what is happening to consumers' lives in the context of the larger environment—not only their stated preferences, but their hopes, dreams, wallets, lifestyles, and values.


2. Second, keep an equally close eye on the competition. (Look close at the picture above and you will see a hybrid Prius among the pick up's and SUV's.)


3. And third, understand how a company's structure and culture relate to its strategy. Use all this understanding to place innovative bets. This is what the early leaders of GM did. And this is what several generations of executives—beginning in the 1970s with the first oil shocks and the entrance of Japanese imports—have consistently failed to do.

It has been a failure of leadership as astounding and momentous (and ironic) as the company's early achievement, Professor Koehn concludes.

In my earlier post Link Between Strategy, Culture, Change and Leadership I quoted Edgar Schein from The Corporate Culture Survival Guide:

The organization clings to whatever made it a success. The very culture that created the success makes it difficult for members of the organization to perceive changes in the environment that require new responses. Culture becomes a constraint on strategy.

This is what happened to GM. At the moment GM is changing their strategy and structure dramatically. Their survival will depend on wether they are able to change also their culture - and that requires a lot of leadership and quite some time. But there is hope – the same thing happened to Ford (in the 1920s) yet today they are the only US car manufacturer not needing government bailout.

Change Your Thinking > To Change Your Results!

Today I found another good manifesto from ChangeThis. It is based on concepts discussed in Tony Jeary’s latest book, Strategic Acceleration: Succeed at the Speed of Life

He is on spot writing how business as usual is unrealistic in our current economic climate. Leaders must accept the fact that success is likely to become a moving target and their organizations must become faster, leaner and better equipped to compete and change quickly.

He determines three basic strategic concepts that directly impact achieving superior results. The concepts are Clarity, Focus and Execution. These are the keys to achieving superior results on both professional and personal fronts. These three keys also reflect a new way of thinking you need to embrace, to better frame your strategy building process. Here is a quick description of each of these strategic concepts.

Clarity:
You must be clear about your vision and what you really want!

Focus:
You must focus on high-leverage activities that will move your results needle!

Execution:
You must execute by elevating your ability to persuade and influence others!

Clarity, Focus and Execution must become the foundational framework for all that you do.

This is the new action template he is suggesting for your mind. Get Clear! Get Focused! Execute! When you are committed to this approach, the next step is to wrap them in a powerful concept that can transform your life and work. The concept he refers to is this: Always exceed expectations!

Good leadership is required to put all these pieces together. For a vision to be executed, it must be understood and supported by the business as a whole. There must be unity and there must be clarity. All of this comes together with one primary goal: To get results! In the most basic terms, that is what leadership is about: Creating organizational environments capable of getting superior results. To get results there must be a high level of organizational energy.

Tom lists seven things for a leader to do NOW to change results
1. Recognize that “Business As Usual” is not an option.
2. Create strategies based on what can actually be seen.
3. Reevaluate the Value and Purpose of your Vision.
4. Identify and disrupt organizational comfort zones.
5. Conduct Quarterly More-Of-Less-Of Reviews.
6. Commit to exceeding expectations and providing value.
7. Abandon activities that won’t move the strategic results needle.

In other words stop doing what is comfortable but not necessary, and start doing what is necessary even if it feels uncomfortable in the beginning.



Tony's text reminds me of two earlier manifestos I have been blogging about - Leadership in Hard Times and Achieving Business Excellence.

An Example of Elegance

I just finished Matt May's new book In Pursuit of Elegance: Why the Best Ideas Have Something Missing, which I had been waiting for.

Matt explores the elements of Elegance in innovations of different types - technological elegance, fast food elegance, architectural elegance, elegance in top athlete training, elegance in art, etc. This variety of fields covered makes it truly an interesting book and for a business book it talks very little about business.

He defines the key elements of Elegance being Symmetry, Seduction, Subtraction and Sustainability.

Symmetry helps us solve problems of structure, order and balance. We notice a lack of symmetry, which is why we can exploit it to our advantage. Elegant solutions can have part of the symmetry missing, and our brain fills it in to make it elegant.

Seduction captivates any attention and activates any imagination. By giving only partial information and leaving something to the imagination, open to temptation, and we are compelled to find answers.

Subtraction helps us solve the problem of economy. Doing less, working smarter. Stopping and thinking of what can be removed to solve a problem - in stead of adding more features and acting upon them.

Sustainability is about achieving and keeping the maximum effect with minimum effort. Sustainability can be achieved With just enough symmetry, seduction and subtraction. If you subtract (remove) too much, the solution will not be sustainable.

While I was finishing the book this morning I saw an ad that seduced me. It was an add by fashion house Gucci, but subtracted to contain a plain T-shirt and a canvas shopping bag. Gucci, along with other top brands, was promoting a movie by Yann Arthus-Bertrand, a master of elegance in photography capturing the symmetry and sustainability of our planet.

The movie will have a unique multi-platform release on June 5th - World Environment Day - in cinemas, on TV, on DVD and on the internet in 14 different languages and in public places like the Eiffel Tower, Paris and Central Park, New York.



I have seen his pictures in two exhibitions and in his books. I bet this movie will have all the Elements of Elegance - Symmetry of landscapes, Seduction to know more about where they are and what the surroundings are like, Subtraction of anything unnecessary to the visual beauty, and Sustainability of our planet, on World Environment Day, and for the years to come.

The Power of Being Organized

I visited two Japanese factories this week and I was impressed on how extremely organized their production lines where. This got me thinking about the Japanese manufacturing line, the Montessori classroom and Google - and the power of being organized.

One of the principles of Lean manufacturing is 5S, a philosophy and a way of organizing and managing the workspace, especially a shared workplace (like a shop floor or an office space), and work flow with the intent to improve efficiency by eliminating waste, improving flow and reducing process unevenness.

5S is comes from a list of five Japanese words which, transliterated and translated into English, start with the letter S:

Phase 1 - Seiri (整理) Sorting: Going through all the tools, materials, etc., in the plant and work area and keeping only essential items. Everything else is stored or discarded.

Phase 2 - Seiton (整頓) Straighten or Set in Order: Focuses on efficiency. Arranging the tools, equipment and parts in a manner that promotes work flow. For example, tools and equipment should be kept where they will be used (i.e. straighten the flow path), and the process should be set in an order that maximizes efficiency. For every thing there should be place and every thing should be in its place. (Demarcation and labeling of place.)

Phase 3 - Seisō (清掃) Sweeping or Shining or Cleanliness: Systematic Cleaning or the need to keep the workplace clean as well as neat. At the end of each shift, the work area is cleaned up and everything is restored to its place. The key point is that maintaining cleanliness should be part of the daily work - not an occasional activity initiated when things get too messy.

Phase 4 - Seiketsu (清潔) Standardizing: Standardized work practices or operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are to keep above 3S's.

Phase 5 - Shitsuke (躾) Sustaining the discipline: Refers to maintaining and reviewing standards. Once the previous 4S's have been established, they become the new way to operate. Maintain the focus on this new way of operating, and do not allow a gradual decline back to the old ways of operating.

Seeing this in implemented in Japanese production line, reminded me of some of the principles at the Montessori classroom. It is amazing how many similarities there are between them.

All materials in a Montessori classroom are kept in order.
1) There are only essential items.
2) For every thing there is place and every thing is kept in its place which is normally labeled.
3) At the end of each task, the learning area is cleaned up and everything is restored to its place.
4) The materials are standardized and have a way for the child to check their own work.
5) This clean, tidy, calm and child friendly environment is maintained in every classroom around the world.

But what does this have to do with Google? I can think of two things

1) Being organized:
Google's mission is to organize the world's information and make it universally accessible and useful.

2) The Montessori classroom:
Both of Google's founders Larry Page and Sergey Brin attended Montessori school in their childhood. My guess is the have learned something about the power of being organized then.


And I think I need to take a closer look at my office desk and our office space tomorrow...

Photo by Trenton Schulz