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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