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GM Fallout: The Unexpected Impact of 5 Little Words

Here's why GM is focused on precisely the wrong thing at this crucial time in their history.
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There's been quite a kerfuffle in the past week about the $35 million fine slapped on GM for safety violations.

Notwithstanding the fact that the amount is less than a day's revenue for the massive corporation, the fine has received a lot of attention in the press. This isn't just because it's the largest sum ever imposed by the National Highway Traffic Safety Administration (which, frankly, says more about the NHTSA than it does about GM), but also because the accompanying statements (on both sides) pried the door open even further on the widening internal issues faced by GM, and added additional perspective on the likelihood of GM's long-term survival as a relevant, thriving business.

Let's be clear: the main issue at stake here is justice and closure for the hundreds of families whose lives have been devastated by the alleged safety flaws in GM's cars. But GM's continued survival is a not-inconsequential factor in that process, as is the company's global economic impact. With over 200,000 employees in 360 locations on six continents, and literally millions of people dependent on its downstream supply chain, any threat to GM's long-term survival is not merely an academic matter--it would have real, and severe, effects world-wide.

Unfortunately, the omens are not good. Before the influx of $49.5bn in TARP funding, GM was undoubtedly in long-term decline--a stage I refer to as The Big Rut. Throw enough money at anything and it will show signs of recovery, and for a while everyone was talking about GM as a recovery story.

Beyond Money

Recovery for an organization takes more than throwing money at it, however--even when it's more than $150 from every man, woman and child in the US. For a massive, arthritic, lumbering bureaucracy (which is what GM had become), the key change required to turn things around isn't financial--it's attitudinal. GM can only--will only--recover if and when it reintroduces entrepreneurial vibrancy, creativity, initiative, controlled risk-taking and genuine, deep innovation. Only by doing so can it hope to hire and retain great talent and drive out the ossified, geriatric culture that has got it into this mess to begin with.

Which is why GM CEO Mary Barra's statement on foot of the recent fine is so disturbingly telling. Here's that quote, in full:

"GM's ultimate goal is to create an exemplary process and produce the safest cars for our customers--they deserve no less."

Now, press releases from Fortune 500 companies--especially when they lead with a quote directly attributed to the CEO--aren't thrown together lightly. They get drafted and redrafted, pored over and parsed, approved and amended. They go to many heads of department to be signed off, including legal and HR. Finally, someone takes a look at it from a PR and marketing perspective--what does this document, this quote, say about us as a company?

It's in the Words

And what does this much-labored over quote from GM's CEO say about GM as a company? It's right there in the first sentence:

"GM's ultimate goal is to create an exemplary process." There it is, plain and simple. GM's ultimate goal, their key focus, the be-all and end-all, the thing they want you and I to know is what they're most spending time on, is...process. And not just any process--an exemplary process.

As anyone who knows GM will tell you, the last thing GM needs is more process. Despite the way in which the press, politicians and the NHTSA have attempted to portray it, GM's safety issues didn't occur because of a lack of process--they occurred because of the bureaucratic, ass-covering, mealy-mouthed way in which those processes were managed. There's nothing in any of the reporting of the whole sorry recall saga to suggest that GM didn't collect the underlying data efficiently, or lacked the means to analyze and act on that data--it's simply that they chose to do so in a way that served GM's interests rather than that of their customers.

And it's precisely that attitude that needs to change, not the processes underlying it. GM needs to become brutally, painfully, do-it-at-all-costs, customer-focused. Instead, they are doubling down on process--and Barra's statement emphasizes this right off the bat.

In fact, it's only when we excise those five words about process from her statement that we get to anything customer facing. Here's Barra's quote without the emphasis on process:

"GM's ultimate goal is to...produce the safest cars for our customers--they deserve no less."

Now that's a statement from a confident, vibrant customer-facing organization. Barra's statement is one, sadly, from a riven, confused management team trapped in a defensive crouch, and who, most tellingly of all, now believe that the answer to their bureaucratic problems is...more systems. My gut, and the smoke signals coming from GM HQ leads me to believe that they are focused on precisely the wrong thing at this crucial time in their history.

Ensure that your organization is being led in a successful direction. Download a free chapter from the author's book, "Do Lead: Share your vision. Inspire others. Work towards a common goal." to learn the secrets behind true leadership and the mindset, tools and techniques necessary to cultivate it in yourself and others.

Last updated: May 20, 2014

LES MCKEOWN | Columnist

Les McKeown is the President & CEO of Predictable Success, a leading adviser on accelerated business growth. He has started more than 40 companies and was the founding partner of an incubation consulting company.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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