“During the 1960s and 1970s GM was lulled into a false sense of security by its dominance of the market. There was certainly a bottom-line mentality, but this mentality dictated that additional costs be passed on to consumers. There was little effort to control costs from within.
GM didn’t seem to understand that to achieve a high return on investment, the company must coordinate the design and production of its vehicles to that end. The corporate office set goals that it forced on the divisions, without also asking how to develop more efficient production systems. Cost-cutting measures were often penny-wise but pound-foolish.
The corporate offices of GM might have benefitted from the warning of an old Japanese saying: ‘Let not the work of creating a great mound fail for lack of one basket full of soil.’ Penny-pinching was the rule, but too often it was in ignorance of the big picture. For example, the attitude about defects in cars was to ignore them with the rationale that ‘business is business,’ and companies had to accept a certain number of defects. . . .
It is remarkable that the corporate rule-makers were blind to their own tunnel vision. GM’s entire strategy could be summed up this way: Pinch pennies and wait for the Japanese to go away. Blame the competition for your own failures. Live in the hope for a miraculous turnaround. It is revealing and somewhat sad that as late as 1991, when Japan held 30 percent of the American market share in vehicles, Bob Stempel was still telling the press that once the Japanese threat was gone General Motors would be great again.”
— Maryann Keller, Collision (1993, pp. 123-124)
RE:SOURCES
- Keller, Maryann; 1993. Collision: GM, Toyota, Volkswagen and the Race to Own the 21st Century. Currency Doubleday: pp. 123-124.
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- oldcarbrochures.org: Cadillac (1981)
Also see ‘Auto industry analyst Maryann Keller was a key critic of Detroit Mind’
Of course GM was lulled into a false sense of security in the 1960’s and 70’s (Maryann Keller) as were the other major industries in the United States including the steel industry. The U.S. was the dominant economy in the world; no one thought it would end. Long term strategic planning is very, very, difficult, random events add to the mix. Take a look at G.E. Greed, hubris, and being human makes it extremely hard to predict the future and react. However, all of that being true, G.M. in particular was poorly run and suffered from mismanagement from fools who put stock dividends above product quality and the customer. G.M. got their clock cleaned nicely by the Japanese who had a different take on putting the customer first. It is still happening out there everyday.
Roger B. Smith had a warning in 1985 and 1986 when H. Ross Perot went onto G.M.’s Board of Directors when G.M. purchased E.D.S. Perot told anybody who would listen that given Perot’s own personal research, G.M. at that time was out-of-control and hemorrhaging money. Nobody wanted to listen until it was too late in 1992. To add insult to injury, G.M., of course, had to pay Perot to go away !
Did anybody at G.M. ever constructively listen to Dr. W. Edwards Deming ? Certainly the Japanese did !
I suspect the costs of setting up Saturn and the W body program are two big causes of GM’s near bankruptcy in the early 1990’s. Chrysler did most of its downsizing on one platform – K. Ford did most of its downsizing on the Escort/Tempo and Taurus platforms, as well as luxury car derivatives of Fox. GM did X/A, F (which some say had some Vega foundations), J/L/N (which had some X components), E/K, C/H, W, and Saturn, which were all quite different from each other.
Other signs of hubris were using the THM200 with V8 engines, causing early transmission failure, the Oldsmobile Diesel V8, Cadillac’s HT4100, V8-6-4, and Northstar (though HT4100 and Northstar were later improved), head gasket failures on V6 engines in 1990’s, etc., and expecting public to accept such poorly developed vehicles.