Sunday, February 12, 2006
Waterfalls begin as raindrops
Avalanches begin as snowflakes
Bankruptcies begin with poor decisions
General Motors' current difficulties are the direct result of decades of poor decision making. Many blame Roger Smith for today's troubles. Certainly Mr. Smith made very costly mistakes. He invested roughly $40 Billion on technology such as robotics. F. Alan Smith (no relation), who was chief financial officer, claimed that for the same amount we could have bought Toyota and Honda. Now the reverse is true, they can buy us! Yes, Roger Smith had failings, he attempted to replace human relations with automation, and in hindsight that was foolish.
These days, poor decision making continues. Spinning off GMAC, cutting wages and benefits, alienating dealers, and disastrous marketing can all be squarely blamed on a lack of leadership at the top. In order to reverse course, the shareholders and Board of Directors must focus on the Corporation's leadership structure. GM is far too large for any one person to occupy multiple positions of responsibility. The Chairman should be a financial expert who creates the long term vision and direction for the company. This individual needs to be separate from the President who is in charge of world wide operations. Under said President should be an executive with primary responsibility for North America, and this individual needs to be a "car guy". Currently General Motors has one man, Mr Wagoner, who is attempting to carry out all three of these tasks. It is easy to see why he is doing a lousy job at each of them. GM does need to restructure, but at the very top where it matters most. It is impossible for one person to function effectively as Chairman, President, and Chief Operating Officer.
Once a realignment of leadership occurs, GM has a chance to rebound in the marketplace. That resurgence will begin through implementing better decisions. We must go back to the basics of selling cars and the best way to accomplish positive results is to place one person firmly in charge of just North America and hold that person accountable. The future viability of GM and the good of our country hangs in the balance.