Fixing GM

Yesterday The Detroit Free Press published a collection of comments from auto industry analysts and GM leaders in a piece titled “5 Ways to Fix GM

We’ve put a lot on the blog in recent months about the woes of Detroit based automakers. This is really nothing new, but there are a few key facts that really stand out in defining the severity of GM’s current position.

1) The sale of GMAC, GM’s financial services unit would give GM up to $12 billion in cash. No mention is made of how much revenue would be lost.

2) A strike at Delphi would cost GM $5 billion in cash each month workers are not on the job

3) GM is currently running through $24 million in cash daily

I really like the quote from Van Conway, a partner with corporate turnaround firm Conway, MacKenzie & Dunleavy headquartered in Birmingham Michigan. Conway is quoted at the conclusion of the article as saying, “They (GM) have to look at doing business differently than they did in the past. You can’t bully everybody everyday”.

Put in lean terms, Mr. Conway’s comments might read exactly as Management Principle 11 as listed in Liker’s “The Toyota Way”:

Respect your extended network of partners and suppliers by challenging them and helping them to improve.

I certainly agree there are tough solutions that need to be found and executed to resolve the top priority issues and immediate threats to GM’s survival. However, it’s going to take much more to be successful going forward to bring products to the market with a balanced value equation that meets customer needs and expectations.

One lesson here can be taken from Jamie Flinchbaugh & Andy Carlino’s recent book, “The Hitchhiker’s Guide to Lean.” I’m only about half way through but one concept that I’ve picked up on and have really been thinking about is the idea that managing issues or problems on ‘Top Ten’ lists will not help you to improve beyond solving the immediate problems at hand. The real opportunity (and challenge) is in learning how to engage the organization to use and develop processes that enable many more small problems to be recognized and effectively resolved BEFORE they ever have the chance to evolve and grow in complexity and severity.

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Luke Van Dongen

Luke, an auto industry engineering veteran, blogged here from 2005 to 2006.

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2 Comments on "Fixing GM"

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  1. Chuck Yorke says:

    Engaging the organization to effectively solve small problems, to constantly improve, and to learn is the purpose of Quick & Easy Kaizen. It’s a key point that Detroit’s automakers don’t get.

  2. Ralf says:

    Engaging people in problem solving will work IF there is a clear VISION to things only ONCE wrong;-)

    Solving the pop-uped problem (only the symptoms) immediately just doesn’t go that far and is for some people to show that they have done something (whether it is like a burning hay fire or lasting for the future;-(().

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