Management Turnover as Change Agent

Tuesday, July 15, 2008

CEO Watch List - (Recommended Reading) Rick Wagoner, GM, Update 6

As General Motors GM (NYSE) continues to bleed the company is finally sending out signals that it understands the difficulties it faces.  As is so often the case with GM the drastic measures it is now taking may still be too little and too late.  Rick Wagoner GM's CEO continues to insist he is on the right road and understands what he needs to do to right GM.  I remain skeptical as I have in my previous blog posts.  Alex Taylor III has written another fine story for Fortune outlining the new steps being undertaken by Wagoner and his team to turn GM around.   According to Taylor Tuesday's announcement of GM changes illustrate,
... GM is reacting to events instead of anticipating them. Nowhere in Tuesday's announcement is there any mention of the structural changes that will allow GM to compete with a smaller market share shorn of its high-profit light trucks. No product lines were killed, no brands were euthanized, no big budget items wiped off the books. GM still has too many dealers selling too many individual models - and now it has even less money than before to market them.

Wagoner likes to say that nobody could have foreseen the spike in oil prices that made GM's old business model in North America obsolete. But he might have picked up a report titled "In the Tank: How Oil Prices Threaten Automakers' Profits and Jobs" that was produced by research operations just a few miles from GM's headquarters, in cooperation with the Natural Resources Defense Council.

It predicted that "sales, profits, and American jobs are at risk if Detroit automakers continue with their current business strategy in the face of higher oil prices."

That report was published in July 2005 - exactly three years ago.
Wagoner may survive his position but at what continued cost.  As GM workers, shareholders and the U.S. economy suffer the U.S.' largest automobile company should really be planning for the future rather than just reacting to events.

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