I am going to break my self-imposed rule against further comment on the automotive industry in general, even though it is more commentary about current events than it has to do with the Toyota Production System.
In physics, a black hole is a singularity – a point where time and space are collapsed to a zero-dimensional point. Any singularity in space has, at some distance, an “event horizon.” This is a point of no return. Once anything crosses the event horizon, it cannot escape. Not even light. Everything will end up being sucked into the singularity… eventually. Thus, no information about what is inside the event horizon can ever be known outside it. Because of this information blackout, the term “singularity” has a meaning in general language to define a point in time through which the past cannot be extrapolated to a prediction of the future. Such is Monday, June 1, 2009 for General Motors.
I don’t think there was any doubt to anyone some months ago (except, perhaps, Rick Wagoner and the board of directors) that Monday’s events were inevitable – the “event horizon” had been crossed.
The question is: When was the point when there is nothing they could have done?
I am asking because I look at Jim Collins’ model of collapse, and it is clear to me that GM followed the model, but it took decades, not just a few years.
This article in Business Week Online, How Rick Wagoner Lost GM is pretty damming of several CEOs, back to Roger Smith, and perhaps further. But Rick Wagoner is particularly called out. In the end:
Wagoner continually went before the American public and Congress unprepared and angry, demanding taxpayer support without ever being able to articulate why he wanted $25 billion, how the company would use the money, and what GM’s vision was for a future viable enterprise.
But the last few months’ theatrics aside, up to what point could they have pulled it out?
While our “lean” community has been busy comparing GM to Toyota, I want to suggest a different, more comparable, model: Ford.
Both companies dealt with exactly the same political landscape, the same union issues, the same cost structures. Their range of products was comparable, and by and large, over the years, they made many of the same mistakes.
But right now, Ford continues. Sure, they are hurting, but they don’t seem to be mortally wounded. When did Ford say “Hey! This isn’t working anymore” or more precisely “Hey! If this continues, we are going to be out of business!” In other words, when did Ford get off the Denial track? And more importantly, are they beginning to develop a fact-based learning culture? It’s too early to tell, to be sure, how all of this is going to play out.
However, I predict that it will be no easier for Barak Obama to get-in-get-it-done-and-get-out of GM than it was for George W. Bush to do so in Iraq. Both jumped based on rationalized emotional justifications, with inadequate resources and no clear exit strategy . (And there, to be sure, the parallels end.)
The political quagmire is only just beginning. Whether anyone likes it or not, because “the people” are majority shareholders, the U.S. Congress is the de-facto board of directors. No matter what the President wishes about maintaining “hands off” management, that isn’t going to happen once the corporate constituents realize they can use all of their lobbying tools to influence corporate decisions. I hope I’m wrong about all of that.