The last half decade has been an interesting one for General Motors (GM). Once a seemingly indestructible icon of American innovation and manufacturing, the organisation filed for Chapter 11 (reorganisation) bankruptcy in June 2009 and took a $50 billion federal bailout. The journey from that low point to once again being profitable and being the world's largest automaker is one filled with wrenching change and a renewed focus on being an industry leader.Days after GM went bankrupt, former AT&T CEO Ed Whitacre took over as chairman. What he found was an organisation with an unbelievable lack of urgency “…paralysed by old ways and seemingly unable to change”. Whitacre knew that getting GM back on track and re-engaging employees would require a clear and compelling vision. And to him, an important part of that vision was knowing how your business is organized. So, upon arriving at organisation headquarters, the first thing Whitacre did was ask the organisation's CEO Fritz Henderson for an organisational chart. Whitacre was told that GM had done away with them. Then, Whitacre asked about GM's business structure - specific jobs and responsibilities of the senior management team and how the various divisions were organized. And no clear answer could be given. But Henderson was quoted as saying, "Business as usual is over at GM. …Everyone at GM must realize this and be prepared to change, and fast." At Whitacre's first meeting with GM's board, he reported his first observations - the organisation was disorganized, and managers didn't know what they were doing or what anyone else was doing. After Henderson was given a specific time period to straighten things out - create a new organisation vision, change the organisational structure, hire new people, etc. - the decision was made by the board that he was not the person to lead the organisation turnaround. Despite Whitacre's reluctance to take on the CEO position, he finally agreed to do it on an interim basis. Four top executives were let go, 20 others reassigned, and seven outsiders were brought in to fill top jobs. Whitacre wanted a new vibe - nimble managers who could decide fast and correct mistakes faster. That last change was probably one of the biggest shocks to an "insular"organisation. Whitacre did admit that some solid performers who were loyal to the previous CEO were asked to leave. In addition, three days (yes - three days) after taking over, he reorganized the sales and marketing departments. Then, three months later, did another departmental reorganisation - "a restructuring of the restructuring!" Whitacre, who met just once a week with his 13-member executive team, identified six important performance measures: market share, revenue, operating profit, cash flow, quality, and customer satisfaction.After a year, Whitacre felt the organisation was ready to move on and so was he was replaced by the current CEO Dan Akerson. Akerson manages the organisation according to four principles: (1) design, build, and sell the world's best vehicles; (2) strengthen brand value; (3) grow profitably around the world: and (4) maintain a fortress balance sheet. This is an organisation on the move once again and hopefully with a better respect for the need to change. Answer this: Explain why GM needed to change.
6.2)
CASE STUDY:
The last half decade has been an interesting one for General Motors (GM). Once a seemingly indestructible icon of American innovation and manufacturing, the organisation filed for Chapter 11 (reorganisation) bankruptcy in June 2009 and took a $50 billion federal bailout.
The journey from that low point to once again being profitable and being the world's largest automaker is one filled with wrenching change and a renewed focus on being an industry leader.Days after GM went bankrupt, former AT&T CEO Ed Whitacre took over as chairman. What he
found was an organisation with an unbelievable lack of urgency “…paralysed by old ways and seemingly unable to change”.
Whitacre knew that getting GM back on track and re-engaging employees would require a clear and compelling vision. And to him, an important part of that vision was knowing how your business is organized. So, upon arriving at organisation headquarters, the first thing Whitacre
did was ask the organisation's CEO Fritz Henderson for an organisational chart. Whitacre was told that GM had done away with them. Then, Whitacre asked about GM's business structure - specific jobs and responsibilities of the senior management team and how the various divisions were organized. And no clear answer could be given. But Henderson was quoted as saying, "Business as usual is over at GM. …Everyone at GM must realize this and be prepared to change, and fast." At Whitacre's first meeting with GM's board, he reported his first observations - the organisation was disorganized, and managers didn't know what they were doing or what
anyone else was doing. After Henderson was given a specific time period to straighten things out - create a new organisation vision, change the organisational structure, hire new people, etc. - the decision was made by the board that he was not the person to lead the organisation
turnaround. Despite Whitacre's reluctance to take on the CEO position, he finally agreed to do it on an interim basis. Four top executives were let go, 20 others reassigned, and seven outsiders were brought in to
fill top jobs. Whitacre wanted a new vibe - nimble managers who could decide fast and correct mistakes faster. That last change was probably one of the biggest shocks to an "insular"organisation. Whitacre did admit that some solid performers who were loyal to the previous CEO were asked to leave. In addition, three days (yes - three days) after taking over, he
reorganized the sales and marketing departments. Then, three months later, did another departmental reorganisation - "a restructuring of the restructuring!" Whitacre, who met just once a week with his 13-member executive team, identified six important performance
measures: market share, revenue, operating profit, cash flow, quality, and customer satisfaction.After a year, Whitacre felt the organisation was ready to move on and so was he was replaced
by the current CEO Dan Akerson. Akerson manages the organisation according to four
principles: (1) design, build, and sell the world's best vehicles; (2) strengthen brand value; (3)
grow profitably around the world: and (4) maintain a fortress
change.
Answer this:
Explain why GM needed to change.
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