Wednesday, October 22, 2014

GM apparently didn't take management "quality culture" advice to heart

Corporate management dysfunction has been around for a long time. I recall the late 1970s and early 1980s when the U.S. domestic manufacturing base was in crisis. No longer were those famous brand names in electronics, appliances, heavy equipment, automobiles and the like dominating the world market. I remember when people laughed at those little Japanese cars trying to compete against the Big Three (Ford, GM, Chrysler) and its presumed well-oiled machine. Of course, little brother American Motors was making compact cars, but they were little more than  gimmick company better known for making the quarter-ton Jeep for the military. 

Nevertheless, the “energy crisis” of the 1970s had given some people the notion that compact cars with their lower fuel consumption was a more practical option for them. AMC wasn’t able to take advantage of this, eventually selling its Jeep division to pay off debts and then folding. But Japanese automakers were not having the same problem in their own market, and eventually they managed to create a niche in the U.S. market, and even a reputation from “cheap” to “reliable.” Electronics, heavy equipment and apparel soon followed, only to be overtaken by the Chinese in many of these arenas. 

The Reagan administration did nothing to revive domestic manufacturing—certainly not helped by its weakening of unions and beginning the trend of ever-widening income disparity between the rich and everyone else, thus lowering the ability of middle class consumers to maintain it. The Reagan administration tried to mask this weakness by launching into a massive military spending program (all of the hardware which had been under development during the prior administration). Of course, it wasn’t the middle and low-income consumers who were buying all those tanks and fighter jets. 

While the Big Three survived, they lost billions of dollars. Auto company executives, instead of looking at its own culture, decided that the problem was the quality of the cars that their assembly line employees were putting out. But industry analyst and troubleshooter W. Edwards Deming blamed the failures of the American auto companies on their management, asserting that their corporate culture was responsible for 85 percent of its problems. Taking Deming’s advice to heart, within a few years Ford was back in profitability, having created a “quality culture.”

A “quality culture” certainly did not “take” at GM, it seems. A recent TIME magazine cover proclaims that newly appointed General Motors chief, Mary Barra, will be the “mechanic” who is going “fix” the company in the wake of massive recalls, including that involving of faulty ignition switch. Of course, this is just more of the media’s gender politics hyperbole, but it safe to say that if that if GM recovers from this debacle, she will get all “due” credit.

What will certainly be discarded is any notion that Barra was part of the “faulty” management team that was behind ignition switch issue—despite the fact that she is an electrical engineer by training. She has been touted as one of the most “influential” women in the world. In what way—based on her elevated position? The whole point of Barra’s appointment itself seems to be more of public relations ploy by GM—based on the claim that she was completely ignorant of a potential issue that fell under her “expertise” that was known for a decade before it came to this point?

The point is that it is misleading to advance a political agenda on so little justification. Many people saw Phil Condit’s tenure at Boeing as a disaster, despite the fact he also had an in-house engineer’s background. 

Others are not so easily impressed as TIME. Former GM vice chairman Bob Lutz observed that "I didn't see her as one of the disruptive people in a meeting who would raise their hands and say, 'Excuse me, Bob, but I don't think, with all due respect, that's going to work.' She always came across to me as being non-confrontational." Nor did she did not make her “strong move” to initiate the recall unilaterally; within weeks of her elevation, she received a “surprise” message from another executive that the massive recalls would be necessary. I suspect that she was none too happy to be the front person for this debacle, but at least she is being a long leash by the media.  

Recalling 30 million cars over the past year seems like an over-the-top move, one of desperation. Supposedly this is justified by the “principle” of getting all the bad news out at once, and hope that rather than destroying the brand permanently, that supposed short-term memory of consumers will kick in. Barra has been credited with this “smart” crisis management strategy, although the reality is that it is one that has its risks. Having exploded the problem to far greater heights than people had previously imagined, why would anyone take a chance of buying any GM car now? 

Barra is also being credited with the decision to conduct an internal investigation on the who knew what, when and why of the ignition switch problem. Given that GM already commissioned an outside investigation with its shattering exposure, one wonders if this move is just more public relations window dressing; it has been noted that the internal investigation is being conducted by someone connected with one of GM’s legal firms—the one representing it in the settlement cases over the ignition switch problem. There is plainly a “strategy” here—to insure that this investigation’s findings do not stray too far from GM’s liability objectives.

To be “fair,” the ignition switch itself didn’t cause the fatalities it has been blamed for; motorists did that. The switch actually worked as it was supposed—only “too well.” Since some people had a bad habit of accidentally activating their air bags when the car was stationary or parked, an ignition switch was designed to “deactivate” power to the airbags when it was turned off. However, when on, the switch could momentarily “shut off” and cause a sensor that is supposed to deploy the airbags to malfunction. Thus the latest estimate of 29 deaths have been blamed on the airbags not deploying during an accident. Nevertheless, those aware of this issue apparently didn’t consider this a “serious” problem, possibly because it was less a “problem” than airbags being mistakenly deployed on the road—and then causing an accident.

Not recognizing the interconnection between symptoms, cause and effect, and failing to communicate concerns between company levels, is not uncommon, and can have disastrous consequences. The Challenger space shuttle disaster in 1986 (I happened to be watching this “routine” launch as it occurred on CNN) was allowed to happen despite years of fear of a “catastrophic” event after the discovery of a succession of “near miss” problems during launch, involving O-rings and burn-through. NASA management knew it would only add to the danger by launching the shuttle in near freezing temperatures, because the rubber O-rings would be too rigid to immediately “seal.” What happened was that almost immediately one of the rings was breached and failed to fully seal, allowing hot gases to eventually burn a hole into the external tank. 

Interestingly, the subsequent investigation into the accident found that inadequate funding and the hope that “minor” problems would not balloon into major problems resulted in a disconnect between concerns of engineers and the financial and scheduling concerns of management. This disconnect could also be blamed on what Baruch Fischhoff of Carnegie Mellon University called the inability of management types to “cope with the complexities of the technologies they are dealing with.” No doubt there is the “hope” that Barra as an engineer can have a better grasp of potential problems, but that isn’t a given.

The fact that Barra is claiming to know nothing about the switch problem—or any of the other problems requiring recall—has been put forward as a point in her favor; frankly, given the magnitude of the problem, a complete ignorance of the issue given that she is supposed to be an engineer—an electrical engineer at that—actually should be more troubling than what is being advertised. After all, she was Vice President of Global Manufacturing Engineering, and then Executive Vice President of Global Product Development with “responsibilities” involving design. Some of the recall vehicles obviously involve cars for the foreign market; and she knew nothing? The reality is that she was part of the “problem.” According to the TIME story, she wants to make GM cars the safest in the world. Well, who wants to be known as making the unsafest cars in the world?

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