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Kenneth W. Keller: The mission to rescue General Motors

Inside Business

Posted: February 24, 2009 11:46 p.m.
Updated: February 25, 2009 4:55 a.m.
 
Nearly everyone who follows business in America has an opinion about what needs to be done with the automotive industry, specifically with General Motors.

I am questioning whether or not this formerly great organization can be saved from itself.

From poor leadership, from poor management, from employees who refuse to understand the dire situation the company faces.

While it is true that the company has been losing massive amounts of money, product lines have been trimmed because they were not profitable and thousands of jobs have disappeared, all of this has been happening for years.

Back in 2005 the company lost $10.6 billion and Jerry York, one of the leaders, announced at that time he had a plan to “turn things around.” That was four years ago and the company is still singing the balance-sheet blues. 

York’s plan started with the idea that everyone involved with the company having an understanding of what the situation really is. In the best-selling book “Good to Great,” author Jim Collins would call this ‘facing the brutal facts.’

GM lacks alignment. This means that the marketing department with multimillion dollar advertising budgets is not out trying to gain market share by dropping prices and offering low cost financing at the current time.

This means that company personnel understand that asking for a raise is not a great idea at this time. People have to get their collective heads out of the sand and wakeup to the fact that they are operating in a world that is far different than it was just a few years ago. This needs to be translated into a very simple phrase that everyone can understand: Stabilize sales and stop the bleeding.

Pennies, every one of them, start to add up.

This is a company that went to Congress in December 2008 and again this month for billions of dollars. Do they even have a handle on their cash flow needs? 

Like most companies, GM should have done this analysis a long time ago. Too many companies never take the time to do this kind of review; they look at the gross revenue (sales) and then never look to see how much is actually being contributed to the profit line on the income statement.

At GM, the final step, if they make it that far, should be to take out a clean piece of paper and start fresh. Those in charge will most not likely use a “no sacred cows” approach to determine the future course of the company when it is required. Despite a possible visit to bankruptcy, when the company exits, it is likely to be more of the same.

Does GM have what it takes to get tough to avoid falling back into the same old company with the same bad habits? It will require a new discipline, new habits and reinventing a culture focused on the future not caught up in the past.

Such is the fate of many companies who fail to change when the world around them changes.

Kenneth Keller is president of Renaissance Executive Forums, which brings business owners together in facilitated peer advisory boards. His column represents his own views and not necessarily those of The Signal.

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