The End of The Road For GM?

There really is not too much to say about GM that hasn’t been already said: it is a dead company. It reminds me of the famous Monty Python sketch about the parrot. As the great John Cleese said ‘if it hadn’t been nailed to the perch it would be pushing up the daisies’. In many ways GM has been nailed to its perch for years, a mere shadow of the company that dominated the auto industry for almost a century.

Here is the New York Times report: U.S. Sees a Smaller G.M. in the Future Than G.M. Does

The fact that the administration felt the need to push GM’s CEO, Rick Wagoner, out is telling. Clearly the President’s task force didn’t see the kind of urgency they wanted. This is no surprise. GM had turned into an inflexible and sclerotic bureaucracy long ago. It had far too many non-auto activities to divert management time and dilute its focus. It’s legacy costs were just one dead weight. It’s financing arm – GMAC – had been a problem before it was hived off, and too many of the auto divisions owed more to their historical role than to any market fit currently.

No one at GM seemed to be able to take the plunge and admit the long ride was over and that radical surgery was necessary. The company had become too involved in its own self importance and history.

Having said that: I imagine it must be extremely hard to re-imagine a proud company like GM as the world’s fourth or fifth largest auto maker. Sometimes external shocks, such as the collapse of the new car market last year, are the only way reality can be properly communicated into the fabric of management.

Already some commentators are criticizing Obama for being ‘hasty’. They argue that Wagoner was just turning things around. That misses the point. Wagoner had his chance. It was not the direction he was leading the company in that was wrong. It was the speed. The executives and directors of GM misjudged the amount of time they have to correct all their previous errors. And they failed to be decisive.

Now it looks very much as though GM will enter bankruptcy sometime in the next two or three months. I think that will be the cathartic moment when a new GM can be forged. Hopefully the company, as it emerges from reorganization, will be much smaller and more focused, with fewer brands and a clearer identity.

GM had become a dinosaur. Now it needs to become and agile mammal.