Free Advice for GM

If you are interested in organization design, you should read Beyond Detroit in the 17.06 issue of Wired magazine. Chris Anderson offers a great introduction arguing that a new era of global business (long heralded) is really here.

Despite the deep malaise in the auto industry and the lackluster efforts by the federal government, articles like this show there is light at the end of the tunnel with practical ideas and solid advice.

So I thought I’d join the fray with a few ideas of my own about how the auto industry could look as it emerges from the current crisis. Let me be super-clear, I’m not claiming to be an expert in this industry and have never worked closely with an auto company on anything. At IDEO we call this the “naïve mind” and that might qualify me for a few good ideas, but not as an authority.

Awhile back I shared a framework for organization design inspired by the animal kingdom. Let’s use it to imagine some interesting new organization structures for General Motors. The enemy of a sustainable organization is homogeneity. And GM is the poster child of homogeneity.

Changing circumstances require entities to evolve and adapt or they will die. And evolution is about letting an existing trait emerge and thrive when new conditions emerge and demand it. While GM has had dozens of brands and even some difference in their range of businesses, they have sought to keep everything operating on the same model and use scale as a lever to create efficiencies. This strategy caused them to lose Saturn, one of their best hopes for survival and to create undifferentiated and poorly aligned products across their portfolio.

So how could they use organization design to increase diversity and get out of this mess? Let’s look at their brands and plot them on the “organization archetype” model for insights. Based on their unique brand attributes and the demands of the market and consumers of those brands, each of the companies could be structured and operate quite differently.

Chevrolet

Let’s start with Chevrolet, because it’s the closest to GM’s current situation. Restructuring is not simple; take this as a high-level sketch of one organization design option, not a comprehensive plan of action.

To me, Chevy is Americana. This is the car that represents the American Dream, value, performance, and accessibility. Chevy should help people get their first car, the family car, and have a competitive truck option. This market means head-to-head competition with Toyota and Honda, so it has to be efficient and cost competitive and produce top quality, reliable, desirable vehicles.

Key traits of the new Chevrolet organization:

1. Efficient hierarchical structure. Clean lines of authority provide clear direction, efficient decision-making, speed to market, and drive focus on customer needs as the basis for every action. This market is not about sexy cars, it’s about helping people feel good while they get places safely and manage household costs.

2. Make each model a business. Get past the silos of design, engineering, marketing, etc. and organize each model around a General Manager, with a P&L outcome with a target consumer to drive functional integration. Fidelity Investments organizes this way, and it works really well. Develop a rabid consumer orientation as a rallying point, rather than being fractured by functional expertise.

3. Restructure the supply chain. As pointed out by Charles Mann in Beyond Detroit, source great parts from the best suppliers by developing a modular platform. Don’t try to own everything, focus on total design, build, and sell.

4. Engage employees. Focus on great leadership and build pride (See Jon Katzenbach). The days of management v. labor must be left behind. This organization needs every single person engaged in a mission to deliver cost competitive, high quality vehicles. Organize production around manufacturing teams and provide job rotations to help employees learn, grow, and develop as a natural component of work. Use the portfolio of models to allow employees career movement.

5. Reward performance. Pay individuals, teams, and business units more when they meet performance goals in revenue, quality, and costs. Create healthy internal competition between the businesses.