Changing the General Culture of General Motors

It was another brutal day on Capitol Hill for Mary Barra, the CEO of General Motors.

Thumped by lawmakers this week in both the House and Senate, Barra has had to apologize for the actions of her predecessors while treading carefully with regard to admitting culpability. It’s a tricky dance: Despite having known internally of faulty ignition switches in its cars, GM long failed to recall the vehicles and replace the parts, possibly leading to 13 deaths over the past decade.

Now, says Barra, GM is a changed, or at least a rapidly changing, organization. “I am trying really hard to communicate that we have made great strides to reduce the bureaucracy within GM,” she told The Wall Street Journal. At yesterday’s hearing, she added, “We’ve moved from a cost culture to a customer culture.”

Peter Drucker was an advocate of taming bureaucracy, which he thought would invariably “exist in big business, in big government, in big education, in any big institution.”

GM was no exception. “Musing about the problems of General Motors, Alfred P. Sloan commented: ‘In practically all of our activities, we seem to suffer from the inertia resulting from our great size,’” Drucker recounted.

But Drucker would have been wary of blaming “bureaucracy” for all of GM’s sins. (In fact, back in 1991, while recognizing bloat as an issue, he wrote that the “root of Detroit’s problems go much deeper.”) Bigger troubles would have included the failure to anticipate impacts and a failure to ask, constantly, who in the company needs what information—a practice that Drucker termed “information responsibility.”

Indeed, Barra acknowledged to lawmakers that, when it came to the faulty switches, people in one part of GM “didn’t recognize information that would be valuable in another part of the company.”

As for a cultural makeover of GM, Drucker would have been skeptical. As we’ve noted, Drucker considered culture to be “singularly persistent.” This is why he counseled harnessing existing culture—what everyone knows is right, but has had trouble putting into practice—rather than trying to change it.

To get there, Drucker advised, “senior management asks again and again, ‘What do we . . . do that helps you to produce the results that all of us are agreed are the necessary ones?’ And: ‘What do we do that hampers you in concentrating on these necessary results?’

“People who successfully managed to get old and entrenched organizations to do the needed new things,” Drucker added, “ask these questions at every single meeting with their associates—and take immediate action on what they hear.”

Do you think Mary Barra is likely to succeed in changing GM’s habits sufficiently to restore its standing?