Lessons in Corporate Culture From General Motors

The beginning of the end came with the installation of Rick Wagoner, a GM lifer, as CEO in 1990. Rick was even more clueless than his predecessors and his administration led the company down the path to a further shrinking of market share by perpetuating the manufacture of boring similar-looking cars with outmoded engines and transmissions, unstylish interiors, and poor fit and finishes. Under Wagoner, GM missed trend after trend and was late to hybrids, small SUVs, and crossovers. Instead of creating exciting cars, GM was more intent on cutting costs.

Wagoner was terminated as CEO as a condition of the bankruptcy terms in 2009.

Ross Perot, who was on the GM Board briefly during this time, said that “at GM, the focus is not on getting results and winning, but on fostering the bureaucracy.”

“The first question is, How can there be a
new GM when all the players from the old
GM that created the dysfunctional culture … are still there?”

This era has been described as the “old GM” and replaced with the “new GM” motto by the series of new CEOs who have taken over in the last five years. Fritz Henderson, another GM lifer, took over as CEO after Wagoner and only lasted six months before he resigned. He was replaced with Ed Whitacre, retired from AT&T, who knew nothing about the automobile business. Whitacre lasted a year and was replaced by Dan Ackerman, an ex-Naval Officer and private equity investor who likewise knew nothing about the car business either. During his three years as CEO, Ackerman openly criticized GM’s intransigent culture. Mary Barra, another GM lifer, is the current CEO. Barra has worked at GM for 33 years.

So the first question is, How can there be a new GM when all the players from the old GM that created the dysfunctional culture that is ingrained in the company are still there? The real culprit here is the risk-averse culture that has historically squelched even a hint of bad news.

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Robert M. Donnelly is CMO of Flo-Tite Valves & Controls, a U.S. based supplier of valves and components to the process control industry in North America. A coach, educator, and advisor to founders/CEOs of growing firms, he is a serial entrepreneur, having started, grown and sold several technology based businesses. Previously he held executive positions at IBM, Pfizer and Exxon.