Author: supermoxie

As I said in my last post on on the Stanford Student Who Tried to Work at Ford, I've been astounded by both the amount and quality of reactions to my post last Thursday on The Auto Industry Bailout. I argued that I am ambivalent about whether or not the bailout should happen, but if it does happen, part of the deal has to be a path to fundamental cultural and organizational change.  I argued that in particular GM seems to be designed to keep its executives as clueless as possible and that the company is poisoned with a "can't do" attitude — that their core competence is explaining why change isn't possible and (based on watching the hearings again)why NONE of the problems they face are management's fault. 

At the moment, Thursday's post has generated about 10,000 page views (about 20 times my average post) and 42 comments, plus I have received another 20 or so emails from people who prefer not to make public comments.  These comments are all thoughtful and some are so good that I think it is worthwhile reprinting them again as posts.  The first "reprint" was from that eager young engineer mentioned above who was dismayed by his experience at Ford.  Here is the second, which I find astounding.  My original post argued that one reason that leaders at GM were so clueless is that power dynamics in meetings (and other interactions) are deeply dysfunctional, with the highest status person in the group doing all the talking and none of the listening, regardless who has the most expertise in the room.  As a result, it seems to be a system designed to preserve the status of those at the top rather than to get the best information to the right people at the right time.

This conclusion resulted from observations (often measuring talking time) during meetings I have attended at GM over the past 30 years for diverse reasons.  Matthew E. May, who spent 8 years working full-time for Toyota University and is the author of The Elegant Solution: Toyota's Formula for Mastering Innovation, describes a trick he used in a meeting at GM to bring these dynamics to light and to show the damage that they can do. I guess they didn't learn lesson.  Here is Matthew's amazing story:

Thank you for a thoughtful and
insightful post. Everything you describe mirrors my experience with a
part of GM in the early 90s. I was doing some consulting with a division of
GM and told them the best ideas were not getting heard – in fact, no ideas were being heard. The managers to a person told me that wasn't their
culture. During an offside I had the opportunity to design part of the
program. It was an age-old prioritization game called Survival on the
Moon: you've crash landed on the moon, 200 clicks from the mother ship,
with 25 items you have to rank in the order of their importance in
surviving the trek to the ship. You do it individually, then as a
group, in order to make the point that "we" is smarter "me". (There is
a right order, provided by NASA.) I constructed the table rounds
cross-hierarchically, so one table might have a vp and a lowly staffer.
Then I played a dirty trick: I gave the lowest ranking person at each
table the answers ahead of time, saying that when it came time for the
group ranking, their job was to everything in their power to convince
the table they had the right ranking, short of revealing that I had
given them the answer. Not a single table (about 15 tables of 10) got
the right answer. Then I had the ringers stand up. Got to catch all the
managers red-faced.

I spent 8 years inside Toyota as a fully retained adviser to the
University of Toyota. It is the antithesis of everything you describe.

Matthew,thanks so much for sharing this story.  It holds lessons not just about where GM needs to change, but should serve as a cautionary tale for every boss. Matthew's trick would work in a lot of other organizations.  For example,it would work in hospitals where nurses are often afraid to speak-up when doctors make a mistake and ignored and belittled when they do (although some are getting better). And if you want to read about an organization that — at least for many years — suffered from the same dynamics, go to the official report written by the blue-ribbon committee that investigated the accident that destroyed the Columbia Space Shuttle.  It it is one of the best management books ever written and you can get it free online. 

In fact, this all raises an interesting question: If you are the boss, how do you stop these dysfunctional dynamics from happening? I recently wrote that getting out of the way for awhile (as John F. Kennedy did) is one solution.  Any other ideas?

I am a bit overwhelmed by both the quality and number of comments on the post that I put up Thursday on The Auto Industry Bailout, which focused on why I believe that GM executives are clueless and suffer from a "no we can't" mindset.  As of now, late Sunday afternoon, 37 people have written comments and about 5000 people have visited the post (about 2500 today, which is near an all-time high for Work Matters).  These comments are diverse and all are thoughtful — even they guy who took me to task for owning too many cars (I plead guilty, although I am doing my part to help the industry).  But there are a few that I would especially like to point to because they reveal the sick culture and work practices in the industry so clearly.  I will put up another two or three this week, but I wanted to start with this one from a Stanford student who had a lifelong dream of designing cars, but it was crushed when he tried to work in the industry.  I know this is obvious, but if the industry is so broken that it can't figure out how to use the talents of someone like "JLee," and instead treats people with his skills in ways that crushes his spirit and creativity, then the culture is in even deeper trouble than I thought.  Note that my remarks centered on GM as I know them best, but this was one of several comments that reveal a similar sickness at Ford.

Here is the comment, unedited:

Ever since I was a kid, my
childhood dream was to design cars. I showed a natural proficiency for
mechanics, so I majored in mechanical engineering and received
undergraduate and graduate degrees at MIT and Stanford respectively.
While at Stanford, I signed up for a summer internship with Ford at one
of their plastics plants in Ohio. The recruiter told me I would get a
full hands-on experience in manufacturing. Instead, I spent 3 months
being the group’s typist because I could type documents on a computer
at 4x the rate of the other old boys there. That’s how they used an
eager engineering grad student. Still determined to chase my childhood
dream, I decided to extend my internship another 3 months when I found
a position to work at Ford’s HQ in Dearborn in their chassis
engineering group. There, I saw the reality of the culture. White
collar workers who are there purely for a paycheck, not to make
something great. The thought of working late was inconceivable, because
work can always wait, but their need to veg out at home could not.
There was no concept of actually having better quality than the
Japanese and no emotional response to always being ranked below a
competitor. To sum it up, everyone was completely satisfied and
comfortable with mediocrity.

Union workers felt that having relatively high pay, low skill jobs
(where pay was based purely on seniority and not on ability) was a
right, not a privilege or reward. When I was testing brake rotors, I
was told I may not touch any tools or perform any work myself, as this
would threaten job security of union workers, so I ended up doing a lot
of waiting for someone to turn a few bolts.

I also quickly realized that there was no path towards promotion for me
as an American born Asian. When I was introduced to someone, I could
see the stress in their face for fear that they would not understand
how to pronounce my name or understand my thick accent. Then relief to
find out my name is “Joe” and I have no accent.

I went back to Stanford to complete my master’s degree, and have been
working for high tech companies in Silicon Valley ever since I
graduated. My original childhood dream was crushed by the reality of
Detroit, but I have since found great satisfaction working at companies
that have created technologies that are in computer and consumer
electronics products that you are probably using every day to make your
life easier, more productive and more enjoyable.

To anticipate some who may say that all big organizations do this newbies, I politely disagree. I've seen what happens at P&G, McKinsey, Google, Facebook, HP (at least in the old days), and, yes, Wal-Mart.  It odesn;t need to be like this in a healthy company. 

Thoughts? Do you really believe that the current group of executives have the will or skill — let alone the power — to build a place where an engineer like Joe can flourish?

I
am ambivalent about whether the auto industry should receive the 25 billion
dollars that they are begging and pleading for from the U.S. taxpayers.  On the one hand, I realize that millions of
jobs depend on the industry and that saving these jobs is not only a humane
thing — it also may help the country(and even the rest of the world) from
sliding into a deeper recession in the long-term.  On the other hand, I worry that it will be a
waste because the industry has lost so much money and so many jobs in recent
years that these firms are in a death
spiral that is impossible to stop (GM alone lost 39 billion last quarter). I
also believe it will be a waste because the leaders of these firms (at least
GM, which I know best) are so backward and misguided that the thought of giving
these bozos any of my tax money turns my stomach – which is pretty much the
same point made by observers ranging from ultra-capitalist Mitt Romney to near-socialist documentary
filmmaker Michael Moore.  Recall that Moore made the famous film that attacked GM, Roger and Me. 

I
don’t claim to have comprehensive information about the industry, but I have
had pretty regular interactions with GM in various capacities over the past 30
years.  I completed my Ph.D in Michigan
and had a fair amount of direct contact with GM managers as a student and a lot
of indirect contact because my dissertation was on organizational death.   GM
closed a lot plants during that time, so I talked with many GM executives, mangers,
and workers.  I also have had numerous
contacts since as a researcher and occasionally as a speaker at GM events over
the past 25 years since I moved to California – for example, Jeff Pfeffer and I
spent several days doing interviews at Saturn in Tennessee and with GM
executives in Detroit to gather material for The Knowing-Doing Gap.  I hesitate to speak out as I have contacts
there who would not be happy to know that I am speaking my mind, but I feel
compelled to do so because I feel that GM’s problems are best described as
suicide rather than homicide (despite their executives’ claims to the contrary –
they seemed to refuse to take any personal responsibility at all during the
congressional hearings).   And I feel that if we are going to give them billions
of dollars, I should do my small part to identify some problems and potential
solutions that may help a bit in this uphill struggle for survival.

I
could list hundreds of management, cultural, and operational reasons why I
believe that GM is such a flawed organization, but to me, a pair of root causes
standout:  Most of the senior executives  — and many of the managers — are (1) clueless about
what matters most and (2) suffer from  a “no
we can’t” mindset.  

The
culture and work practices at  GM almost seem designed to create executives who are
clueless about what kinds of cars people want to buy and what kind of
experiences that car owners want to have — and about a lot of other important things as well. 
The executives were criticized for being so insensitive and clueless that
they flew corporate jets to Washington to beg for money;unfortunately, that is just the tip
of a dangerous iceberg.  For starters, my
experience with GM is that – more so than any company I have dealt with – the norm
in meetings is that the highest status person in the room does all or most of
the talking.   Plus, more so than any organization
I have ever dealt with, employees are expected to express agreement with their
bosses.  Why didn’t anyone have the guts
to tell the executives that taking a private plane to beg for a bailout was a
bad idea? I suspect that it is just standard operating procedure: GM is a culture where subordinates are
expected to shut-up and kiss-up when the boss is around.  I can think of a few exceptions, one manager I’ve
met recently in particular.  But on the
whole it is as if the system is designed to prevent the upward flow of
information.  At first, when I was in
graduate school, I thought this was a personality characteristic of the first few GM executives I met.  But then I
started keeping track of what happened when managers and executives arrived and
left meetings.  To entertain myself as
the top dog droned on, I would measure talking time.  Regardless of the subject (and who had the
greatest expertise in the room), the highest status person would blab away –
and when he or she left the room, the next highest ranking person would
then demonstrate GM’s blabbermouth pattern of leadership.  Note I have been seen this pattern for almost
30 years at GM – the cars have changed but the yakking pattern has not.

Not
only are managers and executives insulated from learning what goes in their
company because they generally talk rather than listen, they are also insulated
from experiencing what it is like to buy and own a car.   GM has a perk for managers down to fairly
low levels where all are given a GM car to drive – they rotate from one car to
another.  I am not sure of the exact details,
but answers to the questions I’ve asked over the years  suggest it goes something like this: the
lowest level managers have to buy their own cars, the ones at somewhat higher
levels get a new car to drive every six months or so but have to do some
servicing, the managers who are somewhat higher-up get somewhat fancier cars and are freed from any servicing (gas
is even put in the cars of some executives so they don’t have to go to the
service station), and the highest level executives get a car and a driver.

In other words, this system effectively
insulates people in management – especially those in senior management — from
experiencing what it is like to shop for, bargain for, purchase, service, and
sell a car. They only get the driving experience. Well, except for the most
senior executives, who don’t even get that experience — they watch a person in
the front seat drive a big car.  Now, it
is true, that the most senior executives do own GM cars for personal use, but
it is my understanding that when a car is delivered to a senior executive,
special attention is devoted to the car – even during the production process –to
make sure the top brass aren’t exposed to a car with any flaws. Wouldn’t that
be nice?

So
there you have it, a system that seems designed to isolate executives from
reality.  They talk instead of listen and
are protected from the experience of owning car.   I might be exaggerating some, but not much.   Whether the current crop of GM executives are
fired or not, it seems to me that some major changes need to made, perhaps
including:

          1.  
A limit on the percentage of time that the highest status GM manager or
executive can talk during a meeting.  Perhaps
25% of the time is a realistic goal?   

          2. 
Only managers who know how to ask questions and to actually listen to
people who have less formal power will be hired and promoted.  Failure to demonstrate these skills will be
grounds for dismissal.

          3. 
GM managers – and especially top executives – will be required to buy,
service, and drive their own cars.  That
way, they will experience what it means to own a car.  Now, I feel badly for all the drivers who
will lose their jobs at GM (although I am very curious to know how many executives
have drivers – that is a place where I bet we can save a few million dollars in
bail out money – and if they sell the private jets like Sara Palin did in Alaska,
that is more millions).

          4. 
There are good things and bad things about GM cars (My family has one,
along with three others as we have two teenagers who drive) – indeed, after
years of trailing the Japanese in quality, they have nearly caught-up.  But only owning a GM car does not provide any
information about the competition.  As such, if GM does insist on still buying cars for
all those executives and managers going forward, at least 50% of those cars
should be from competitors so that decision-makers can experience what it is
like to drive – and buy and service – a wide range of cars.   I am sure that GM executives would be horrified
to have all those Toyotas and the like in their parking lot (an auto executive
once made my wife park her Nissan around the corner when we lived in Michigan,
as he was horrified when she parked it in front of his fancy house in Bloomfield Hills).  But they might actually learn something.

Do
I believe that that the current crop of executives could transform the GM culture
to include these and other practices that will increase their awareness of what
is going in their company and in the marketplace? No.  It is partly because they are so
entrenched.  But it is also because I
sometimes believe that the core competence of GM managers and executives is
explaining why they are powerless to make sensible changes.  It pains me to say this because the company
has a higher percentage of nice people than most other big organizations
(except perhaps for P&G), but the “No we can’t” mindset is something that pervades
the place.  And, unfortunately, when
people believe that organizational change is impossible, it becomes a
self-fulfilling prophecy.

If
you watched the executives testify to congress the other day, their sense of
powerlessness was hinted at in their refusal to take even a token amount of
blame for their firms’ troubles – smart and empowered executives believe and
talk like there is a link between their actions and performance, even when bad
things happen and even when events are very hard to control (see this contrary example).   But this “can’t do” mentality is pervasive.  Consider the case of the free GM cars.  This isn’t a new problem.  Many other observers have commented on it
before me.  I commented about it very
forcefully about to some GM managers a few years back. I argued that they
needed to abolish the program because it caused the whole top of the company to
be out of touch with the car ownership experience. They answered that GM
couldn’t possibly get rid of the program because they had negotiated such a
great tax deal with the state of Michigan (much better than Ford, they bragged)
and because it was one of the few perks left for white collar employees.  I was not very nice, I argued that this
mentality was one of the reasons that the company was in trouble and would get
in more trouble. They treated me like I was insane. 

You
could also see the “no we can’t mentality” in the answer GM gave about why they
had to fly the private jet to Washington – “our rules require it for safety reasons.”
Huh?  I know lots of CEOs of big
companies who fly commercial.  And you may
recall that when John McCain’s campaign was in trouble, he flew commercial for
about a year – it seems to me that he was more at risk than some unrecognizable
big guy from Detroit.   Couldn’t they
change the rules?  I bet the board of
directors of GM would be convinced by the argument “we need to get rid of these
planes, we need the money and it looks terrible to congress.”   I suspect that they are working on this
change right now or at least considering it (Update: Looks like they are getting rid of them.). 
But, of course, they were so clueless and isolated that it never occurred
to them that keeping and flying the private planes were a dumb idea.  

Or
consider another example — a really big cause of their problems. GM has way
too many brands. Toyota has, I think, just Toyota and Lexus.  GM has – if I can remember them all –
Pontiac, Chevy, Hummer, Saturn, GMC, Cadillac, and Buick – and I guess now
Saab.   There are so many GM models that
buyers are bewildered by the differences and – especially among Chevy, Pontiac,
and Buick – there is little if any distinct brand identity.  I have asked multiple GM managers and
executives why they don’t just get rid of most these, trimming back to say,
Chevy, Saturn, and Cadillac.  This not
only would reduce brand confusion it would lead to many efficiencies in
advertising, manufacturing, distribution and so on.   They answer, of course, is “no we can’t.”  My answer is that, with all due respect to the
dealers, sticking to this business model has created a tragedy of the commons
that is bringing everyone down. 

In
short, my view is that if GM can’t figure out ways to get their managers and
executives to understand the experience of owning a car for the average person,
if they can’t get rid of those jets, and if they can’t reduce the number of
brands, and if they can’t make a host of other changes required to make them competitive,
than my answer is “no, you can’t have our money.”  

I
don’t usually write such long blogs and don’t usually rant so much. But GM’s predicament
just makes me sick. I saw the pain that people were experiencing in Flint in
the early 1980s, the depressed workers and former managers, the ripple effects
on businesses, and the helplessness.  It
is all much worse now.  I don’t know if
the U.S. auto industry can be saved.  I
hope it can and if we are spending 700 billion to bail out the banks, well,
then perhaps another 25 billion is worth the risk.  But I can’t see how things can change with
the current bunch of clowns in charge.  I
know that changing the leaders and the culture may not be enough to save GM,
but I also believe that without these changes, there is little if any hope at
all. Getting rid of them and instituting an intense program of cultural and
organizational change strikes me as the best way to save the company.  Mitt Romney
argued today in The New York Times that bankruptcy was the best path for GM and the others.  Perhaps he is right, that
creative destruction is only way out of this mess.

Am
I being too harsh?  Am I too biased?  Do you have more and better ideas?  Let me know. 

 

 

I thought it would be instructive to list the euphemisms
for layoffs generated by my last
post. Thanks so much for all the great — and troubling — contributions.  It is quite a testimony to the
human ability for self-deception and obfuscation.  Here they are:   

Adjusting
to shifts in demand

Corporate
outplacing

Cost
improvement plans

Fitness
plan

"He
got the box."

Made
redundant

"Non-essential"
employees

Offboarded

Rationalizing

Rebalancing  the level of human capital

Re-engineering
plan

Reduction
in force

Rightsizing

Simplified

Smartsizing

Special forces philosophy

Streamlining

"We've
decided to go in another direction"

I
especially liked this contrast between management and employee language about
how the process is carried out:

Management:

We're letting you go

We're terminating your position 

Your position is redundant

Employees:

He
was shit-canned.

He got whacked.

He
got walked to the door

I am also taken with “Special forces philosophy” because it
suggests that someone at Tesla (where this was used) is suffering from a
serious case of self-delusion. The someone, by the way, is Chairman Elon Musk.  Check out the link to his announcement.  His statement is troubling because, although the language is obfuscated, he is implying that the people he is letting go are the weaker ones, even though many of Tesla's problems clearly stem from errors made by senior management (including Musk) and from the the economic environment.  Note the statement, "One of the steps I will be taking is
raising the performance bar at Tesla to a very high level, which will
result in a modest reduction in near term headcount. To be clear, this doesn’t mean that the
people that depart Tesla for this reason wouldn’t be considered good
performers at most companies – almost all would. However, I believe
Tesla must adhere more closely to a special forces philosophy at this
stage of its life if we aspire to become one of the great car companies
of the 21st century."  This reminds of a case study I did years ago of the layoffs at Atari, when after the first round of layoffs, the CEO told everyone something like, "The company is strong now, we got rid of all the bad people."

And I liked Mike’s comment that “Euphemisms aside, the
bigger issue is not how to handle layoffs, but rather how to avoid them.”
Check out his post
where he points out, and questions why, “Reducing headcount in an economic
downturn is almost a Pavlovian response for many executives.”

P.S. Sim's comment is intriguing and scary  I'm in the middle of
"synergy-related headcount restructuring" which also sounds pretty cute
– until you get hit on the head with it.

I was interviewed by Fortune for this story, Laid off? No, you've been simplified, which is about the euphemisms that executives use to describe employee layoffs.  I discuss some of the reasons that so many executives can't bring themselves to use clear language — one reason is that it allows them to create emotional distance between the rather nasty things that they are doing to people (albeit, in many cases, there are not other options) and another reason is that (although often a delusion) it conveys to themselves and others that they are rational people making proper business decisions.

What are some of your favorite euphemisms? 

Why do some many other wise reasonable leaders talk this way?

P.S. I've blogged quite a bit about layoffs and my early research was in the area of organizational decline and death — see posts here, here, and here at Harvard Online.