Well I suppose if you're tenure in charge sees a drop in U.S. market from 32% to 18% you can't complain if you are shown the door. Rick Wagoner is out as GM chief. The action is not that surprising – the company lost $80 billion in the past four year, but the timing might be questionable.
The benefits of pushing Wagoner out might include:
1) It sends a very strong message to GM partners – employees, shareholders, suppliers (God help them), customers that things must change fast
2) The Obama administration is SEEN to play hardball. If nothing else (and there is a lot more) this is a great PR move
3) Improved strategy. This one is a bit more questionable. GM has a relatively good strategy plan geared towards fuel efficient vehicles which are built well. The problem has been the speed with which it moved. The government is obviously forcing a faster pace but GM is as much an ocean liner as the economy that Obama spoke about last week
4) It forces change in the boardroom. One of the real mysteries of the whole GM story is how the board did not ask for change at the top some time ago. Wagoner may be a very competent, intelligent (obviously persuasive) manager, but there are few industries where a CEO with his results would have maintained board confidence.
There are a number of ironies.
GM’s Chevy Malibu is rated by most auto journalists as comparable to the best selling Toyota Camry. It is a very good car but one that just does not have the brand credibility of anything from the magnificent Toyota stable. So Wagoner at least leaves with the satisfaction of knowing GM can produce good cars.
The drive to fuel efficient vehicles might cause GM even greater problems. To succeed in the long term, fuel efficient vehicles must be priced competitively and must be profitable for the manufacturer. Even with the Toyota Prius neither of these elements apply. The Prius is a relatively expensive vehicle and there is much industry skepticism that it generates anything but minimal profits for Toyota.
GM’s major play on the electric car – the Chevy Volt, is a huge investment and an even bigger gamble. The car likely will command a $3-5,000 premium over a regular vehicle with comparable features. The regular consumer will not pay that premium until gas hits $4-5 again. However, you can be sure that the government focus will be on this type of vehicle. Despite all the hype about fuel efficiency, consumers are not buying these vehicles in large numbers.
Toyota sold 143,000 Prius last year. Vehicles that outsold it include, Camry, Civic, Corolla, Altima, Impala, Honda CR-V. In fact, hybrids account for less than 5% of total vehicles sold in the U.S. Some of this is due to limited supply but the real reason is that the consumer is not as interested in these vehicles (at current prices) as government and media would like us to believe.
A final word on Wagoner. Industry sources suggest he is a genuinely OK guy. Today he is just one more number added to those in job search. No matter how financially well off you are, getting the bullet is not easy. I wish him well. Given his knowledge of restructuring and cost cutting, he may well be a great resource to other companies.
Showing posts with label GM. Show all posts
Showing posts with label GM. Show all posts
Monday, March 30, 2009
Monday, November 24, 2008
Presentation Skills 101 for the Big 3 (Correction: Not Very Big 3)
Can the Not Very Big 3 get anything right? Actually, they are getting quite a few things right – especially Ford – but it is taking far too long. But let’s not damn them with faint praise.
So there they are in Washington, making probably the most important sales pitch of their business lives and they blew it – Big Time. The best way to put this is that if any of their respective executive made a presentation of this quality to Rick Wagoner, Alan Mulally or Bob Nardelli, they would probably have kicked them out the door and told them never to return – and rightly so.
Their supplications were amateurish and ill-rehearsed. The executives of the Not Very Big 3 need to go back to basics about presentations. Here are a few tips for them
1) Know Your Audience
This is basic. Your message must be crafted so your audience can understand it, relate to it and buy into it. A few things our Detroit friends did not seem to appreciate. The audience was a group of publicity hungry politicians with a two-fold objective – a) Determine if a bailout was appropriate and, b) Look good to their constituents. I would not dream of suggesting which objective is more important to the wise inquisitors. Thus the Motor City men should have been aware that the politicians would throw cheap shots and be just as haughty and arrogant as they claimed the car men are.
Many would have taken extreme satisfaction in seeing Nardelli in particular being quizzed aggressively. The last time he had to endure something like this was when he was Home Depot Chairman. Famously at a company AGM, he was the only director to turn up, refused to answer questions from the floor, and closed questioning within 30 minutes. Despite the bad rap he got when ousted by Home Depot, taking $210m in payout, he did increase profitability, he did reduce costs. In other words, while he will never win a popularity contest, he probably is the right man for Chrysler. He just didn’t bother to take the time to know his audience at Capitol Hill or for that matter when he was at Home Depot.
2) Know Your Message
There is almost universal consensus that the Not Very Big 3 executives were not very convincing at the hearings. Part of the problem is that they failed to lay out what they are going to do, but even more say, they failed to identify clearly and repeatedly what they have done to date.
Ford in particular has a pretty good case to make. Product quality is improving, design is good and the company even made a small profit earlier this year. How many people are aware that Mulally made the following statement in his testimony? "Tomorrow at the Los Angeles Auto Show, we unveil two all-new hybrids, the Ford Fusion Hybrid and the Mercury Milan Hybrid. Both beat the Toyota Camry Hybrid in fuel efficiency by at least five miles per gallon. The conventional versions of these new vehicles also beat the Camry in fuel economy."
As for GM, how many people know that the 2009 Chevy Malibu is rated higher than the 2009 Toyota Camry on Overall Initial Quality and Overall Performance and Design by J.D. Power and Associates? This and other information on substantial improvement made by the automakers should have been clearly and loudly presented to Congress and repeated, repeated, repeated every time they had the microphone. The clear message should have been, “We are making real progress, we are cutting costs, we are improving quality – look at the data Mr. & Mrs. Politician and we will continue to do so. This is how we will continue to do it, when and where.”
3) Practice, Practice, Practice and when you are finished - Practice again.
These guys should have run their presentations by the best consultants who know the ways of Washington, been beaten up by them and then run their presentations again. Then they should have been beaten up by them again before they presented again. Instead, they went into the ring, like some fat flabby overweight boxer who thinks he knows it all. As they should probably know by now, those boxers tend to get beaten up.
As a Chicago based Irish keynote speaker, I really try to live the basic messages outlined above. I will not present to my best if I have not researched my audience, developed a clear cohesive message and practiced it numerous times. Hopefully, Wagoner, Mulally and Nardelli will get that message so that they can present their message in a persuasive manner.
So there they are in Washington, making probably the most important sales pitch of their business lives and they blew it – Big Time. The best way to put this is that if any of their respective executive made a presentation of this quality to Rick Wagoner, Alan Mulally or Bob Nardelli, they would probably have kicked them out the door and told them never to return – and rightly so.
Their supplications were amateurish and ill-rehearsed. The executives of the Not Very Big 3 need to go back to basics about presentations. Here are a few tips for them
1) Know Your Audience
This is basic. Your message must be crafted so your audience can understand it, relate to it and buy into it. A few things our Detroit friends did not seem to appreciate. The audience was a group of publicity hungry politicians with a two-fold objective – a) Determine if a bailout was appropriate and, b) Look good to their constituents. I would not dream of suggesting which objective is more important to the wise inquisitors. Thus the Motor City men should have been aware that the politicians would throw cheap shots and be just as haughty and arrogant as they claimed the car men are.
Many would have taken extreme satisfaction in seeing Nardelli in particular being quizzed aggressively. The last time he had to endure something like this was when he was Home Depot Chairman. Famously at a company AGM, he was the only director to turn up, refused to answer questions from the floor, and closed questioning within 30 minutes. Despite the bad rap he got when ousted by Home Depot, taking $210m in payout, he did increase profitability, he did reduce costs. In other words, while he will never win a popularity contest, he probably is the right man for Chrysler. He just didn’t bother to take the time to know his audience at Capitol Hill or for that matter when he was at Home Depot.
2) Know Your Message
There is almost universal consensus that the Not Very Big 3 executives were not very convincing at the hearings. Part of the problem is that they failed to lay out what they are going to do, but even more say, they failed to identify clearly and repeatedly what they have done to date.
Ford in particular has a pretty good case to make. Product quality is improving, design is good and the company even made a small profit earlier this year. How many people are aware that Mulally made the following statement in his testimony? "Tomorrow at the Los Angeles Auto Show, we unveil two all-new hybrids, the Ford Fusion Hybrid and the Mercury Milan Hybrid. Both beat the Toyota Camry Hybrid in fuel efficiency by at least five miles per gallon. The conventional versions of these new vehicles also beat the Camry in fuel economy."
As for GM, how many people know that the 2009 Chevy Malibu is rated higher than the 2009 Toyota Camry on Overall Initial Quality and Overall Performance and Design by J.D. Power and Associates? This and other information on substantial improvement made by the automakers should have been clearly and loudly presented to Congress and repeated, repeated, repeated every time they had the microphone. The clear message should have been, “We are making real progress, we are cutting costs, we are improving quality – look at the data Mr. & Mrs. Politician and we will continue to do so. This is how we will continue to do it, when and where.”
3) Practice, Practice, Practice and when you are finished - Practice again.
These guys should have run their presentations by the best consultants who know the ways of Washington, been beaten up by them and then run their presentations again. Then they should have been beaten up by them again before they presented again. Instead, they went into the ring, like some fat flabby overweight boxer who thinks he knows it all. As they should probably know by now, those boxers tend to get beaten up.
As a Chicago based Irish keynote speaker, I really try to live the basic messages outlined above. I will not present to my best if I have not researched my audience, developed a clear cohesive message and practiced it numerous times. Hopefully, Wagoner, Mulally and Nardelli will get that message so that they can present their message in a persuasive manner.
Thursday, November 13, 2008
Friedman Is Wrong on Detroit
New York Times columnist Thomas L. Friedman is getting a lot of air time re his commentary on the Detroit auto mess. I no longer calling it the “US auto mess,” because Toyota, Honda, Nissan ARE profitable and manufacture product (good, reliable, cost effective product) in the United States. Toyota for instance produced 1.3m cars in the US last year which is about 10% of this year’s projected market. Friedman blames Michigan politicians as much as anyone for protecting the Decimated 3 (maybe I won’t call them the Detroit 3 anymore), an argument that has some merit.
I rarely disagree with Friedman who is a superb writer (The World is Flat is awesome) on world issues – economic and political, but to suggest that the answer to the D3 woes is fire all management and impose a government mandated seer is not something that stands well to examination.
Like many other observers, I am gob-smacked at the poor sales and market share performance of Detroit over the last 40 years. I mean these companies have recruited some of the best and brightest marketing, sales, development people in the US over the years with little success. Ford and Chrysler have had management makeovers in the past two years. Chrysler most obviously has brought in Bob Nardelli, a very effective if unpopular executive, recruited respected Toyota veteran Jim Press to head up sales and poached a number of other executives from the Japanese car companies. Chrysler seems to be getting the right people on the bus, just as it is veering off the cliff.
Ford’s recruitment of Alan Mulally appears to be a good move and this company whose market share was 50% higher than its current 16% at the start of the decade is getting its act together in terms of product design and quality.
GM management is GM management which must be part of the problem. This company needs a giant kick in the butt with a major change in marketing and production mindset. For instance Bob Lutz, GM vice-chairman recently told journalists that “global warming is a crock of shit.” How can that mentality still exist in a car company? How can that mentality drive eco-friendly, green, low consumption vehicles. Change in GM is unlikely to happen without serious outside involvement. Of course, if the government does bail out D3, it will be tied to uncompetitive executive compensation which IS a crock! GM and others need the likes of Nissan’s Carlos Ghosn to give them some chance. He ain’t gonna take a job like that for peanuts!
I visited the GM plant in Janesville, WI last year when things were still going relatively well. The people were quite simply nice and friendly. Now they and thousands of others are out of work with bleak futures. This whole thing is a complete mess and worst of all, no one seems to have a good answer.
I rarely disagree with Friedman who is a superb writer (The World is Flat is awesome) on world issues – economic and political, but to suggest that the answer to the D3 woes is fire all management and impose a government mandated seer is not something that stands well to examination.
Like many other observers, I am gob-smacked at the poor sales and market share performance of Detroit over the last 40 years. I mean these companies have recruited some of the best and brightest marketing, sales, development people in the US over the years with little success. Ford and Chrysler have had management makeovers in the past two years. Chrysler most obviously has brought in Bob Nardelli, a very effective if unpopular executive, recruited respected Toyota veteran Jim Press to head up sales and poached a number of other executives from the Japanese car companies. Chrysler seems to be getting the right people on the bus, just as it is veering off the cliff.
Ford’s recruitment of Alan Mulally appears to be a good move and this company whose market share was 50% higher than its current 16% at the start of the decade is getting its act together in terms of product design and quality.
GM management is GM management which must be part of the problem. This company needs a giant kick in the butt with a major change in marketing and production mindset. For instance Bob Lutz, GM vice-chairman recently told journalists that “global warming is a crock of shit.” How can that mentality still exist in a car company? How can that mentality drive eco-friendly, green, low consumption vehicles. Change in GM is unlikely to happen without serious outside involvement. Of course, if the government does bail out D3, it will be tied to uncompetitive executive compensation which IS a crock! GM and others need the likes of Nissan’s Carlos Ghosn to give them some chance. He ain’t gonna take a job like that for peanuts!
I visited the GM plant in Janesville, WI last year when things were still going relatively well. The people were quite simply nice and friendly. Now they and thousands of others are out of work with bleak futures. This whole thing is a complete mess and worst of all, no one seems to have a good answer.
Monday, November 10, 2008
What A Car Wreck!
Lordy Lord! GM's share price at a six decade low! No matter how bad you think it is going to get for the US auto industry, it just gets worse. GM’s announcement of a 45% drop in car sales for October is mind-boggling. Some might argue that the Toyota sales decline of 23% is even more astonishing given that the Japanese behemoth has apparently been able to walk on water over the past twenty years. (Their success of course had nothing to do with walking on water – Toyota implemented the shocking concept of making good products which consumers wanted.)
Can GM survive? Can Chrysler survive? Can Ford survive? I don’t know but Chrysler seems to be the one that is in the most precarious position. I find it astonishing that the current triumvirate at Chrysler – Nardelli, Press and LaSorda are still (correctly) decrying product quality. Chairman Nardelli and President Press can not really be blamed for the Chrysler quality reputation and performance given their relatively short period in the job, but the company’s quality performance is just amazingly bad. In its most recent survey on car reliability, the 2008 Consumer Reports survey suggests that almost two-thirds of Chrysler brands are rated below average. How can this happen after so many years of saying “we must improve our quality”?
It is not too surprising that the government is baulking at providing additional support for a GM/Chrysler merger. Politically, Obama will not be able to leave GM fail because of the job fallout, but the concern must be that it is throwing good money after bad. Many commentators have made the unions the whipping boys for the problems of the US auto manufacturers. While they can shoulder a lot of the blame, they were not responsible for (lack of) product development, design, supply chain, consumer understanding and much more. Not so long - early 1980s' - GM's US market share was hovering at 50%. Today, it is less than half that! How can so many high paid, intellectually bright people get it wrong for so long?
Once I've figured out how we all got suckered into this sub-prime fiasco, I'll let you know. Don't hold your breath though!
Can GM survive? Can Chrysler survive? Can Ford survive? I don’t know but Chrysler seems to be the one that is in the most precarious position. I find it astonishing that the current triumvirate at Chrysler – Nardelli, Press and LaSorda are still (correctly) decrying product quality. Chairman Nardelli and President Press can not really be blamed for the Chrysler quality reputation and performance given their relatively short period in the job, but the company’s quality performance is just amazingly bad. In its most recent survey on car reliability, the 2008 Consumer Reports survey suggests that almost two-thirds of Chrysler brands are rated below average. How can this happen after so many years of saying “we must improve our quality”?
It is not too surprising that the government is baulking at providing additional support for a GM/Chrysler merger. Politically, Obama will not be able to leave GM fail because of the job fallout, but the concern must be that it is throwing good money after bad. Many commentators have made the unions the whipping boys for the problems of the US auto manufacturers. While they can shoulder a lot of the blame, they were not responsible for (lack of) product development, design, supply chain, consumer understanding and much more. Not so long - early 1980s' - GM's US market share was hovering at 50%. Today, it is less than half that! How can so many high paid, intellectually bright people get it wrong for so long?
Once I've figured out how we all got suckered into this sub-prime fiasco, I'll let you know. Don't hold your breath though!
Monday, August 04, 2008
Mamma - Why didn't we listen?
One of the most interesting books I’ve read in recent times is Satisfaction: How Every Great Company Listens to the Voice of the Customer by J.D. Power and Chris Denove. Power, founder of J. D. Power and Associates recalls a meeting he held with GM / Pontiac executives in January 1980 when he detailed the Japanese automakers emphasis on quality. Power told the geniuses then responsible for the Pontiac brand that unless they improved product quality, product reliability and fuel consumption, the GM market share would tumble. He predicted that the GM share of 48% would drop to 33% by the end of the decade. Not too surprisingly, some of the Pontiac / GM representatives did not take too kindly to the prediction.
I bet they wish they had paid attention now that GM has announced another whopping quarterly loss – $15.5 billion and its share value is less than when Power made his prediction only twenty-eight years ago!
To be fair to the GM execs, I would have probably discounted his apparently extreme forecast as well (in fact, the share decline he predicted took only eight years to occur), but you really have to ask, what have GM and Ford and Chrysler being doing over the past three decades? It is nothing short of incredible (sorry maybe that should read predictable) that GM’s share now hovers around twenty percent of the market, while Ford and Chrysler are close to life support.
The lesson for management I think is one I mention in my book Why Ireland Never Invaded America. It is ‘Do not believe your own blarney – do not take things for granted.’ Had these once profitable organizations paid real attention to what was happening in the market place and genuinely listened to the voice of the customer, they would not be in the position they are in today. Their one saving grace right now is that each of the once so-called Big Three does appear to have quality management – Wagoner (GM), Mullally (Ford), Nardelli (Chrysler), in the hot seat.
I bet they wish they had paid attention now that GM has announced another whopping quarterly loss – $15.5 billion and its share value is less than when Power made his prediction only twenty-eight years ago!
To be fair to the GM execs, I would have probably discounted his apparently extreme forecast as well (in fact, the share decline he predicted took only eight years to occur), but you really have to ask, what have GM and Ford and Chrysler being doing over the past three decades? It is nothing short of incredible (sorry maybe that should read predictable) that GM’s share now hovers around twenty percent of the market, while Ford and Chrysler are close to life support.
The lesson for management I think is one I mention in my book Why Ireland Never Invaded America. It is ‘Do not believe your own blarney – do not take things for granted.’ Had these once profitable organizations paid real attention to what was happening in the market place and genuinely listened to the voice of the customer, they would not be in the position they are in today. Their one saving grace right now is that each of the once so-called Big Three does appear to have quality management – Wagoner (GM), Mullally (Ford), Nardelli (Chrysler), in the hot seat.
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