Overview and Analysis of General Motors

OVERVIEW AND ANALYSIS OF GENERAL MOTORS

“General Motors has no bad years, only good years and better years” (Sloan, 1972). This mantra established in 1950 by former GM president Harlow H. Curtice may have been true at one point, but is called into question today by many, including Wall Street.

By many standards, General Motors is an extremely successful company, though an analysis of the corporation today uncovers many troubling issues. GM is and has been the world’s leader in automotive sales since 1931. (GM Website, 2004) By any corporate measurements, the company is a behemoth, operating across the globe with a 15% share of the world’s automobile market. The company also houses one of the world’s leading financial services companies, GMAC (GM Website, 2004). Though this giant company reports as a single entity, its two businesses are well separated. Our analysis will focus primarily on the automotive division.

The history of the automotive division is a novel one, spanning almost a hundred years with the incorporation of GM in 1908. William Durant, an innovative genius, founded the company by quickly joining together several leading car companies including Buick, Cadillac, and Oldsmobile. Durant's vision, however, was plagued by details and the legacy he passed on to future CEO’s was far from perfect. Alfred Sloan stated it best when he said, "General Motorshad then the makings of a great enterprise. But it was... unintegrated... uncoordinated; the expenditures... were terrific --some of them not to bring a return for a long time, if ever-- and they went up, and the cash went down. General Motors was heading for a crisis."(Sloan, p18) Durant's actions over 90 years ago set GM on its path, and led to both its huge success and current heartache. General Motors has always been a banding of "autonomous brands" leading to great invention, yet large duplication. As a former GM executive described, the advent of global competition after the 1970s dealt a crushing blow to this automotive giant. Its sheer size was a disadvantage as it competed with the more efficient Japanese firms. Today one of GM’s primary goals is to bring its brands together to act as a single global company (Interview, 2004).

LEADERSHIP

In order to align 325,000 employees with a single corporate vision, GM has required outstanding leadership. The list of GM’s eleven CEOs since the 1920s reveals a number of America’s best businessmen. (Please see Exhibit A for a full timeline of GM’s leadership.) GM’s first CEO was the famous Alfred Sloan who led the company for over twenty years. Described upon his retirement by the Board, “[Sloan’s] analysis and grasp of the problems of corporate management, his great vision and rare good judgment, laid the solid foundation which has made possible the growth and progress of General Motors over the years” (Sloan Foundation Website, 2004). Identifying credibility as the foundation of leadership, Sloan believed simply that “[leaders] do what they say they will do” (Sloan, 1972). One of his fundamental teachings was that leadership is not charisma and showmanship, but rather performance, consistency, and trustworthiness. Sloan was always a practitioner, leading by example.

Today, GM’s youngest CEO in history, Richard Wagoner is at the helm. Wagoner has turned GM around in the four short years he has held the CEO position, putting GM in the lead of the U.S. Big Three car companies (Welch & Kerwin, 2003). Though he has had little time to establish himself, it appears that Wagoner could be on his way to the fifth level in the Level 5 Leadership hierarchy: Executive (Collins, 2001). Wagoner’s combination of personal humility and professional will are quite apparent. He is also first to leave his ego at the door, “the first to tell you that his own future is up in the air. It all depends on whether he can save GM from its past” (Welch & Kerwin, 2003).

Saving GM from its past is an interesting dilemma. As mentioned earlier, GM had great financial success until the 1970s. Furthermore, its leaders were some of America’s best. Yet now, some say that the past is what troubles the automotive giant. In an interview with a former General Motors executive, GM’s sheer size as well as the sense of complacency developed after years of success was cited as the chief challenges GM would have to overcome (Interview, 2004). In a sense GM has been derailed, the strengths that once made it successful are the same forces that have led to its current flaws. (McCall, 1998) Thus, Wagoner is proposing to go against GM’s years of tradition and “Challenge the process.” This is not the only step in the CIEME model that Wagoner has acted on. (Kouzes & Posner, 1995) He has already