Detroit's Big Three refused to adopt the bottom up approach which Toyota, Nissan and other international manufacturers used to achieve success. The failure is even more egregious because GM, Ford and Chrysler management knew about the bottom-up secret to Japanese auto-making success and ignored it.
Time magazine describes, in an article, Is This Detroit's Last Winter? , the painful, lost opportunity the top down management mindset Henry Ford bequeathed to the Big three produced:
Of all Detroit's failures "" the failure to master small cars, failure to cut costs, failure to get tough with the UAW, failure to improve fuel efficiency "" the failure to learn, says MacDuffie, is perhaps its worst sin.
Experts point to GM's interaction with Toyota at the New United Motor Manufacturing Inc. (NUMMI) plant in Fremont, Calif., as emblematic of the industry's learning disability. NUMMI was established in 1984 as a joint venture between the two companies, using GM's plant, the Toyota production system and the UAW workers who were already there. The plant had been one of GM's worst; the Toyota system made it one of GM's best.
Time reports that Detroiters went to see the Fremont "miracle" at NUMM. Rather than embracing "what should have become a model for the industry," they dismissed it.
Toyota took a factory where workers were literally sabotaging the assembly line and turned it around, so workers loyally helped keep the system running, turning the factory into one of the top ones in the GM system. But GM's top-down management couldn't handle the idea of trusting workers, even though they clearly saw that it worked. This handed Toyota and other bottom-up embracing companies the lead in the automotive industry.
The NUMMI experience showed Detroit that bottom-up, worker-respecting management not only worked, it worked better. But GM rejected the concept. Perhaps the historic adversarial relationship with unions was an insurmountable obstacle.
The failure to adopt these bottom-up success strategies actually dates back 65 years. In 1943, GM gave legendary management expert Peter Drucker complete access to study all aspects of its, at the time, highly successful operations. For 18 months Drucker went wherever he wanted and did such a good job getting to understand the company, GM considered offering him a high level management job. Then, Drucker published his book, suggesting GM could be even more successful by decentralizing more, moving even further away from its top down hierarchical organizational structure. Drucker observed that GM had built some decentralization into its management , but failed to take a bottom up approach to marketing, getting customer feedback and using it , "empowering the customer as Sun, IBM and INTUIT would do decades later, the book THE STARFISH AND THE SPIDER, which describes the advantage of decentralized, bottom-up management reports. Drucker became a persona non grata at GM for his suggestions.
I discussed the possibility of replacing the big three managers with Ori Brafman, co-author of THE STARFISH AND THE SPIDER, asking about Big Three management. He observed,
"We should use this opportunity to enact some changes in management, making them more responsive to the people. I would argue that the recent election was all about someone finally listening to the people. I think that's why Obama had such a huge turnout and success. A lot of big corporations have not been listening. It's time for them to shift, not only for their own long term success, but for our competitive success as a country. We can't have an arrogant corporation just oblivious to the world.
I asked point blank if the big three CEOs should be fired,
"I don't think they've done a good job-- the CEOs-- and I don't know if it's a matter of getting rid of them altogether or whether it s a matter of forcing them and giving them incentive to actually listen to the market-- to actually implement bottom up approaches and to become competitive in terms of quality. "
"The question is-- is the management of the big three going to be capable of making the adjustments, the bottom-up change in mind and approach that's absolutely necessary for them to adapt and turn the companies around. "
The world has changed and the failed. Bottom-up approaches have delivTered success to Toyota, Honda and other manufacturers for decades. he Big three management is stuck with a petrified top-down mentality that's unable to provide the vision and leadership necessary for American auto manufacturing to succeed. Big Three leadership has set the US auto industry behind
Along with the automotive bail-out, it is time for a clear-out-- of most of the top managers. Even Senate Banking Committee Chairman Christopher Dodd of Connecticut said on CBS's "Face the Nation" that GM CEO Rick Wagoner "should move on."
While the US is spending tens of billions, they should spend a few hundred million stealing away top managers from Toyota, Nissan, Honda and other companies where leadership has been smart, inspired, visionary, bottom-up and successful . And forget about giving any of these Big Three losers any bonuses as the door hits their behinds.
