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GM's Mess: The Deceptively Easy Path to Crisis

The immediate cause of GM's current woes is clear enough, but the underlying attitude that allowed this dreadful situation to occur can arise at any company.
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It may look to all the world as if the problems being experienced by General Motors (and it's relatively new-to-the-job CEO, Mary Barra) are typical only of a massive, bureaucratic organization.

After all, the numbers involved are immense, and the amount being spent on PR spin and lawyering up alone--before any settlement is reached--is mind-boggling.

Truth is, although GM is playing on a large stage--not many of us are likely to find ourselves in front of not one but two hearings in Congress in as many days--the underlying cause of GM's misfortune looms as a stark warning to every business, large or small.

The immediate cause of GM's woes is clear enough: a terribly mismanaged product failure, so badly handled that the company appears not only inept but callous in the extreme. But the underlying attitude that allowed this dreadful situation to occur can happen to any company.

It works like this:

You work hard building your business, having a lot of fun along the way. One day (or week, or quarter--it usually takes a while), you realize the success you've achieved has turned your little business into a big one, and if you want to scale any further, you need to put some systems and processes in place. After grappling with this for a while, you emerge with a strong foundation for future growth, and life is good once more. Maybe this sounds familiar.

It's the next stage that sets the scene for potential GM-like disaster to occur. Having put those systems and processes in place--and seen the benefits they bring in producing consistency, repeatability, and scalability--what's the natural next step? Why, put even more systems and processes in place.

Now we've gotten a bit creaky. Oversystematized. A little arthritic. We've now got so many systems and processes that it takes forever to get anything done. We're beginning to lose the ability to improvise, to create, to innovate.

Landing in Treadmill isn't in itself the problem--any organization worth its salt will oversystematize at some point. It's what happens next that matters: Will someone act like the canary in the mineshaft and raise the alarm, pointing out our increasingly bureaucratic, efficient but soulless ways, inject needed entrepreneurial zeal, and take us back to safe ground?

Or, as happened with GM (and Microsoft), will we begin to drink the systems-and-processes Kool-Aid, depending more and more on rinse-and-repeat compliance, eschewing (even penalizing) creative thought and genuine innovation, quashing internal dissent, and treating customers as afterthoughts?

That's the point of fatal inflection, right there.

The moment customers become the enemy, you're toast. Sure, you may have enough money in your war chest (and legacy customers locked into your arcane business model) that you'll coast along for quite a while (maybe even decades), but the direction is only one way--down.

So as you grimace while reading the latest in GM's attempts to extricate itself from the God-awful mess it has got itself in (short answer: it won't), think about this.

Are you using systems and processes to achieve scale? Or are your systems and processes slowly coming between you and doing what's right for your customer?

Because in the end, that's the only thing that counts.

Keep your organization on the right path. Download a free chapter from the author's WSJ bestseller, Predictable Success: Getting Your Organization on the Growth Track--and Keeping It There, to learn more about building a world-class culture that will rapidly accelerate the growth of your business.

IMAGE: Sayantan Chaudhuri / Flickr.com
Last updated: Apr 8, 2014




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