Ed Whitacre may not of had car expertise. but he sure had the management expertise and common sense
that GM'smanagement team needed. And he applied his management skills quite effectively. Ed Whitacre
was able to understandGM's problems from day one. Ed's book Is very honest and forthright about the
internal workings of GM, leading up to the time of bankruptcy. His description of GM's internal
situation when he arrived as "organizational chaos," was spot on.
When Whitacre took over the GM Chairman's position, the cartoon that had been circulating around GM
for the last two decades finally came true, "The Only Difference Between GM And The Titanic, Was The
Titanic Had A Band."
To Ed, It was obvious from day one, GM was not competitive. GM did not have an organizational
strategic plan nor even an organizational chart. GM was run using a Matrix Management System, where
the employee reporting structure is very complex, with an employee having more then one boss and is
on loan for each given work assignment.
I have always said, "A great corporation is never conquered by the competition, until it has first
destroyed itself from within." And that is what EXACTLY happened to GM. With the Matrix System of
management, GM's downfall became a foregone conclusion. Ed soon found that all of GM's executives
were all busy, being busy, but not accomplishing much.
An example of GM's executives being busy, is best described by my son's statement when he was just
two years old. He was playing in a pile of sand that was just dropped off in the yard. When I asked
him what he was making , he said "I'M DOING, DOING!" And that sums up what is happening in GM's
Matrix Management system, everyone is busy, but not focused or accomplishing much, JUST DOING,
DOING!. This was the old Matrix system that Ed Whitacre inherited, and was trying to get rid of,
and is still apart of GM's problems today.
Many former employees could see GM's upcoming downfall, leading to bankruptcy. Over the last 40
years General Motors has sold countless Allied Divisions, worth almost 100 BILLION DOLLARS. GM
sold those Allied Divisions as the news releases said, "TO FOCUS ON THE CORE BUSINESS." But GM
used the cash to give the impression GM was a going business operation. In actuality, GM's sale
of money making Allied Divisions was actually a Ponzi Scheme, just to stay afloat.
AMERICAN TURNAROUND was a monumental task that seemed unachievable at the time when Ed Whitacre
stepped forward to take on the challenge. After reading the book, everyone had a better
understanding of Ed's background. Only a person of Ed's humble beginnings, and being a self-made
man, could understand the importance of people in an organizational structure. Financial people
have a very myopic view of employees, they only look at employees as burden that must be reduced
at all costs, not as contributors.
Ed's ethics and honesty are a product of a different generation. Ed is man of his word and his
word is his bond, something that the business world badly needs today.
When Ed Whitacre stepped in, GM was on life support from Washington and very few GM people
realized that the U.S. automaker was now under government control, based on the Federal Government
action. Most people thought TARP was a loan with a few strings. Only some in management ranks today,
fully understand all of the TARP rules as they apply to GM, and the relation to the UAW. There still
exists an air of arrogance within the GM Management structure that Ed tried to break down.
As Ed Whitacre soon discovered, GM had no Strategic Planning Department, and he was shocked.
Those of us who worked at GM, all knew that GM was not relying on any input from anyone in
Strategic Planning for the last four decades.
For example, as far back as 1973 during the Oil Embargo, a key GM Strategic Planner said "GM was
being run like a Third Generation Shoe Store."
They inherited the business. They have goods on the shelf.
They have goods going out the door. But, no one had the faintest idea
how the business was ever created, and how to react.
In 1975, General Motors was being run by finance people who arrogantly thought just by going to
New York Bankers, they would give GM a 5 Billion Dollar loan, just because they were GM. A box of
light-weight structural fiberglass chassis components was shipped to the New York bankers. When
the GM Financial people put the light-weight structural fiberglass chassis components on the table,
they got approval for the 5 Billion loan instantaneously. In reality, the NY Bankers wanted to be
shown what GM was going to do to make their vehicles lighter and improve their vehicle MPG. The
NY Bankers wanted proof of what GM could do, they did not trust their word.
Ed's major goal was to get the employees involved. In GM's executive culture, ED was a true breath
of fresh air. In over the past 40 years, he was one of the first straight shooters in GM's top
Executive ranks. Ed Whitacre understands people, and their wanting to contribute to the success
of the company.
In the late 1980's, one of the General Motors internal newsletters stated, "At General Motors,
People are Our Most Important Asset." Most of the lower levels of management and employees did
not believe it. Many felt the hollow statement was all hot air.
Many people feel that GM will continue to flounder, until another visionary leader, of Ed
Whitacre's stature, would come again to unite the customer base and work force, by using a
vision of what GM can be - a great corporation.
There has to be visceral feeling that GM want's to go forward and become a people company like
it was in the 50's and 60's. Only by having a creativity program that feeds off the employees
and a customer base, that can contribute to uniting the work force to help turn the company
around, will the healing process begin. In the past, GM lead by the creativity of it's employees,
the former Allied Divisions, fed the automaker with new products to make GM the industry leader.
Today, with the product innovation coming from outside suppliers, every manufacture all have
the same options - there is less differentiation between the various manufactures vehicle
offerings.
No one in GM seems to know how to change the feelings of the U.S citizens who lost thousands
of dollars when GM declared bankruptcy. Only to have the U.S. Government bail out GM, and then
have GM put some new facilities in China. With the production of only 30% of GM vehicles built
in North America, is still being expressed with indignation today by potential U.S. customers
who were stung by GM's bankruptcy.
GM has burnt many people with bankruptcy, and Ed glossed over that very important issue. Many
GM Stock and Bond holders who lost hundreds of thousands of dollars when GM declared bankruptcy
are reluctant to step-up and purchase another GM product. In Ed's defense, he was at GM a short
period of time and he was acting like the Little Dutch Boy, trying to plug all of the holes in
the dike with his fingers. Ed tried to delegate responsibility and break-up GM's Matrix
Management System.
Many of the people who suffered a substantial loss with GM's bankruptcy were surprised to see
GM emerge from bankruptcy in just 40 days. And everyone but Rick Wagoner, kept their Job. Whitacre
needed to clean house, and according to GM people on the inside, Ed only got one half of the
job done, because many insiders feel way too many non performers still remain.
There is no way GM or any other industrial manufacturing operation can live up to their full
economic potential. Due to his short time at GM, Ed Whitacre was unable to address the major
industrial problem, that is the high Cost Of Doing Business (CODB) in the United States. All
of industry is operating under an imposed high tax
burden required to provide revenue demanded by Federal, State, and Local Governments.
Today many domestic industries are now skirting the high CODB issue in the United States by
manufacturing overseas and shipping in finished goods. To better understand the high CODB, all
of industry needs to understand Enginomics, a word coined by Harvey Stump, to explain the tax
structure and improve the current business situation.
Ed Whitacre's book, AMERICAN TURNAROUND, is a totally honest and insightful read that will be
enjoyed by everyone who wished Ed had stayed at GM a little longer. All of the insiders say,
Ed did an OUTSTANDING JOB in the short time he was with General Motors, and is greatly missed.
Del C. Schroeder - A 1994 Retired GM Engineering Executive
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