THEN: In 1954, GM’s U.S. auto market share reached 54%; in 1979, their number of worldwide employees hit 853,000, and in 1984 earning peak at $5.4 billion.
NOW: In 2007, U.S. market share stands at 23.7% and GM loses $38.7 billion; by 2008 employment is down to 266,000.
(Associated Press, “A Brief History of General Motors Corp., September 14, 2008)
Fortune Magazine, 8 December 2008, reports that “It was a great American Company when I started covering it three decades ago. But by clinging to the attributes that made it an icon, General Motors drove itself to ruin.”
GM clung to its past and “drove itself to ruin”—they weren’t nimble (maybe due to their size, but mostly due to their culture). In the end, GM was not able to architect a way ahead—they were unable to change from what they were (their baseline) to what they needed to be (their target).
“But in working for the largest company in the industry for so long, they became comfortable, insular, self-referential, and too wedded to the status quo—traits that persist even now, when GM is on the precipice.”
The result of their stasis—their inability to plan for change and implement change—“GM has been losing market share in the U.S. since the 1960’s destroying capital for years, and returning no share price appreciation to investors.”
GM’s share price is now the lowest in 58 years.
When the CEO of GM, Rick Wagoner, is asked why GM isn’t more like Toyota (the most successful auto company is the world with a market cap of $103.6 billion to GM’s $1.8 billion), his reply?
“We’re playing our own game—taking advantage of our own unique heritage and strengths.”
Yes, GM is playing their own game and living in their own unique heritage. “Heritage” instead of vision. “Playing their own game” instead of effectively competing in the global market—all the opposite of enterprise architecture!!
GM has been asphyxiated by their stubbornness, arrogance, resistance to change and finally their high costs.
“ GM’s high fixed costs…no cap on cost-of-living adjustments to wages, full retirement after 30 years regardless of age, and increases in already lavish health benefits. Detroiters referred to the company as ‘Generous Motors.’ The cost of these benefits would bedevil GM for the next 35 years.”
GM’s cost structure has been over-the-top and even though they have been in “perpetual turnaround,” they have unable to change their profligate business model.
Too many models, too many look-alike cars, and too high a cost structure—GM “has lost more than $72 billion in the past four years” and the result is? Are heads rolling?
The article says no—“you can count on one hand the number of executives who have been reassigned or lost their jobs”
“At GM, conformity was everything, and rebellion was frowned on.” Obviously, this is not a successful enterprise architecture strategy.
Frankly, I cannot understand GM’s intransience to create a true vision and lead. Or if they couldn’t innovate, why not at least imitate their Japanese market leader brethren?
It’s reminds me of the story of the Exodus from Egypt in the bible. Moses goes to Pharaoh time and again and implores him to “let my people go” and even after G-d smites the Egyptians with plague after plague, he is still unmovable.
Well we know how that story ended up for the Egyptians and it doesn’t bode well for GM.
The bottom line, if the enterprise isn’t open to genuine growth and change, nothing can save them from themselves.