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My 2003 Chevy Suburban was made from junk, but then again, so was GM

June 2, 2009

Of course, like most people in this country, I’ve heard of GM’s transformation into the Old GM and the New GM.  Been done before with the Thrifts, now with the Banks and even with AIG, and it seemed like a proven mechanism until the big juxtaposition machine in the sky went into action.

The first juxtaposition is an article in today’s NY Times Business Section showing New GM being led by a 20+ year company veteran, a Finance specialist, not a car guy, who has only worked at GM his entire career. He’s the shinny factory reconditioned model from the culture-factory that ran this company into the ground. He was collecting his success bonuses when Chevy built my 2003 Suburban (my 3rd), where the paint was about as translucent as the leather seat trim, the power steering pump went out at 36,000 miles, and the interior fasteners were only painted on with a Sharpie.  Still, it was better than my 1995 Suburban which, unbeknownst to me, had the dominant chromosomes for rust.

The second is the bad Old GM being led by a proven and skilled turnaround specialist, a Vice Chair of AlixPartners, one of the Country’s preeminent specialist firms.

And the third occurred on this morning’s CBS Early Show, when a host was interviewing the New GM’s leader who, of course, was blathering on about how his new company was now customer focused, has a secret buyer for Hummer, and so on until the ‘it moment’ occurred.  An ‘it moment’ is an outside undeniable event (a concept we’ve discussed in a previous posting) that shatters all the PR flack’s prep work and leaves you in a distinct “hummina” moment. The host said CBS had called 20 Saturn dealers in the NY and NJ area, saying they had a car needing service and only 4 dealers said “bring that baby in for some love”. New GM’s leader mumbled something about “we have work to do”.

Put the three examples together and it becomes readily apparent New GM and the Old GM should swap leaders.  Let the insider who knows where every penny was taken out of car content, where every over the top labor agreement has flaws, who was an early protégé of Roger Smith, oft cited as one of the worst CEOs in American history (and who once said GM was a finance, and not a car, company) take over the mess he helped create – Old GM.  Let the turnaround specialist, who can come in with clean eyes, no political agendas, no friends inside to protect and with no legacy to justify, turn New GM into a world class competitor. The turnaround leader can perform all Greenfielding, letting a new Board form that would then have the time to conduct intelligent CEO and President searches.

While he’s’ at it, he should close the GM building in Detroit.  Not sure what to do with it, but here we have to give the high-five to Chrysler.  When they built their HQ in the 1980’s, the company was dicey and so that structure can be converted, at reasonable cost, to a mall.  GM’s HQ may not be flexible, which if it was the embodiment of their inbred culture, must have a rigid floor plan, resisting radical changes.  Let the New GM’s staff live outside the bubble, where politics means less and innovation linked to deep market awareness means more. In fact, they should move to a space 75% smaller, forcing them to cut HQ staff.  Instead of being thrilled he moved into the ‘big guy’s corner suite’, he should feel uncomfortable and move to a cube as a show of intent.

New GM should also break with the past culture, where diminishing resources and a feeling of creeping inferiority turned even radical new designs, such as that infamous Chevy retro pickup, into an underpowered disappointment.  Going back to an example from 20 years ago, GM’s standard radios were pretty bad and factory upgrades were ridiculously expensive, so customers went aftermarket.  Not wanting to loose money on radio upgrades, GM Management developed a new size audio unit which, for many years, was nearly impossible to replace by the aftermarket without looking terrible.  See, no reason to listen to customers, make those idiots bend to our will.  And the current New GM leader is a product of those years.

As bad as our economy is, our nation cannot pull out of this recession in a new and healthy light unless we stop re-promoting the very people who caused us to fail.  The Federal Government should bring in a stable of turnaround specialists into these Bailedout companies and let them build viable go-forward entities for turnover to new leadership teams.  Just because these companies are ‘too big to fail’ does not mean the leaders who ran them into the ground should be considered similarly.

There must have been a reason why Titanic’s surviving officers were never given a command of their own larger than a coastal patrol boat.  If only, 97 years later, we could remember that reasoning…

Rich Eichen is a Managing Principal of Return on Efficiency, LLC, who’s website is and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years experience reshaping companies and key initiatives as well as operating units of Global organizations. He can be reached at

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