Still trying to process all of my objections to the current Afghan strategy into something moderately coherent, so I’ll start with a very different story: Fritz Henderson was rather suddenly and unceremoniously dismissed as CEO of GM.
General Motors Co. Chief Executive Officer Fritz Henderson resigned after eight months on the job as directors concluded he hadn’t done enough to fix GM’s finances and culture, people familiar with the matter said…Henderson’s exit caps a tenure that included aborted deals to sell the Saturn, Saab and Opel units, a struggle to replace top managers such as Chief Financial Officer Ray Young, and U.S. market-share losses.
I am all for firing GM managers. But I cannot help but suspect that the real reason Fritz was fired isn’t that the board wants change, but rather that this is the most change-looking thing they can do without really changing anything.
Let’s be clear: the love child of Steve Jobs and Napoleon Bonaparte couldn’t fix GM in a hundred days. So saying that Fritz failed to accomplish enough during his tenure is a bit ridiculous; he is probably still waiting for them to pull the RICK WAGONER stencil off his parking place.
And what of the terrible comedy of errors that is GM. The decision to sell Opel, followed by the hasty backtrack. The blowup of the Saturn and Saab deals. The continued loss of domestic market share.
That would be a lot easier to fix if anyone had any idea what the controlling shareholder wants, now wouldn’t it?
If the goal is to build a globally competitive auto company, sure, it would be silly to unload a solid, functioning European brand – Opel – for a modest price, especially when you know that two things are going to happen within a decade:
- GM will want to set up its own distribution network in Europe to avoid being shut out of the market;
- An independent Opel will follow Volkswagen into the US market with small, fuel-efficient cars and a German feel.
But if your goal were to be the best car company you could be, you would also have dropped all of the dealer contracts in bankruptcy and picked them back up one at a time on the terms of your choosing. You would have abrogated your UAW contract and health care obligations in one fell swoop, let the union strike your bankrupt estate, and either shut down for want of DIP financing or allowed your overseas facilities to sell into the US market. You would place all of your new facilities in the cheapest place possible, diversified to reduce exposure to any one government or union.
But that’s not what the owner wants. The owner wants production in the Great Lakes. And the owner isn’t exactly quiet about his desires. This means the CEO has to play cards-up; the UAW knows that he can’t go to the mattresses, the dealers get to cry to their congressmen, and every buyer of a foreign asset understands the pressure to repatriate cash.
After all that, you turn around and claim the guy isn’t running GM like enough of a business? That’s rich.
The problems holding GM back aren’t in the CEO’s office. More visionary CEOs might do better, but only by immediately crossing the red lines the government established. Playing by the rules, no one – not John Malone, not Richard Branson, not Sam Walton (even a living Sam Walton), no one gets the company to improve.
General Motors makes cars that are inferior in user experience to the competition, spends more money making and distributing them, and has to date failed to come up with a compelling reason for the consumer to buy them. A great CEO would build better cars for less money and give the brands a sense of purpose.
Building better cars takes a few years and billions of startup costs, and before any of that could even start the existing engineering and design teams would have to be purged. This would blow up the largest chunk of white-collar jobs remaining in Michigan.
Building cars more cheaply means either getting UAW workers to receive less money per unit of productivity or reducing the proportion of cars assembled by UAW workers. The UAW wouldn’t like that, and they vote.
Building a compelling brand identity is probably the longest and most difficult of the projects. GM’s brands are known; they are just known for being lousy, or at best indifferent. Each needs to be revitalized until it makes people outside the pickup truck market identify with the brand. Until someone is proud to drive a Buick.
These are difficult tasks. They are difficult because they offend large interest groups and contain a large risk of failure. Since the board didn’t want to do difficult, it chose “change” instead, banking on the fact that most people associate “change” with “dynamic” and “progress.” In this case, “change” means the path of least resistance; piss off one guy who has no constituency, and let everyone spend the next several months assuming that you’re on their team.
Sending more soldiers to Afghanistan doesn’t do anything to address our foreign policy, security, or geopolitical challenges. It costs more and gets a few more people killed, but the money is hard to track and the dead don’t vote. Mostly, it lets everyone run around talking about the need to give the “new” strategy time to play out, even though the new strategy is the old strategy in a different font. We celebrate the surge in Iraq, but we are just as stuck there as we were before we surged.
I have the sneaky suspicion Obama just punted on second down.
