Even well-run manufacturing companies periodically have product quality problems. The lifeblood of a manufacturing company is controlling its costs. Quality problems increase costs and ultimately reduce sales. As such, successful chief executive officers pay attention to product quality costs and causes which are readily available in monthly financial and operating reports.
Reports that the
General Motors’ CEO and senior officers did not have knowledge of this critical
and tragic ignition switch defect
points up a serious flaw in its management process and culture.
The cause of GM’s ineffective management process
As reported in a recent Bloomberg article, GM’s senior
management may not have learned of the ignition switch problem because: “… people didn’t want to push bad news
upward.”.
Depending on the culture, lower ranking employees may not come
to a chief executive officer’s office to reveal a problem. Some may not speak
up in a meeting with higher ranking officers. Even senior officers may remain
silent so as to not violate an unspoken pecking order, keeping vital
information from being considered.
If we are to believe that management was unaware of this
extremely serious defect for a decade, it raises the question of what other
hidden operating problems is GM’s CEO not aware of today that can affect its
performance and reputation.
General Motors has a correctable management process problem.
It apparently has a hidebound culture that isolates senior management from an
accurate and timely understanding of what goes on in its operations.
Correcting GM’s flawed
management process
CEOs and senior officers of successful companies accomplish
being fully aware of problems by using “random
walk” which results in “bottom to
top” communication – commonly referred to as “bubble up”.
I was given excellent advice on my first day running an
Emerson Electric division:
“Remember you are at the top of your division’s
organization pyramid. You will only know 10% of what is actually going on.
You must “submerge” yourself into the
lower levels of the organization to learn about problems. You cannot be office bound. “Randomly” walk your office hallways and the floors of your
manufacturing plants. Be visible. Ask questions. Listen. Relax. Smile. Do not
make friends or make decisions lower management should handle. If you don’t
have time to do this, you are working on the wrong priorities.”
Emerson Electric is considered an exceptionally well-run
manufacturing company. Management is never surprised. The management process
relies on hands-on, face-to-face cross-functional communication. No videoconferences
or telephone meetings.
When Chuck Knight was Emerson’s chief executive officer,
there were about 130 manufacturing plants. Knight carried a matrix with him
that listed every plant with the dates of his visits. His advice: “…make sure you are in your plants
frequently…go alone.” He was known for visiting plants unannounced and
alone. An example of a successful CEO seeking an accurate understanding of what
goes on in the company’s operations.
For GM to fix its process requires a change in its culture
with the development of “bottom to top”
communication. To make it work its CEO and senior officers must use “random walk”.
General Motors has about 10 final assembly plants in this
country. Its other 34 USA plants produce the components used in final assembly.
A brief 4 hour visit twice a year to each of its 10 USA final
assembly plants would require no more than 20 half days from a GM chief
executive officer’s 250 day annual schedule.
This is all that would be needed to learn what is going on
in GM’s operations.
GM’s CEO should go alone, without an entourage. Do not
notify the plant that the CEO is coming – make it a surprise visit. This will
avoid having the plant spending costly hours fixing and cleaning it. Walk
through the offices and manufacturing floor alone, without the plant
management.
After a few visits people will relax and talk to a CEO –
particularly if they see a rational, approachable person that can be trusted.
People will tell of problems, make suggestions, disagree with decisions or just
vent their concerns. The CEO should ask questions: “How are we doing? Do we
have any problems? How is our quality?”.
Once every three months randomly drop in unannounced and
alone to various GM committees particularly the ones cited in the Bloomberg article: "At the heart
of General Motors…slow response to fatally flawed ignition switches is a
committee culture that impeded the flow of information…to the corner
office.". Ask: “Do we have any quality issues? Any production
problems?”.
A General Motors CEO’s periodic random walks will breakdown
a dysfunctional management process and an inept culture. It will eventually
result in communication flowing from the very bottom of the organization to the
top.
Follow-up:
NY Times’ recent article: “G.M. Recalls Another 2.7 Million Vehicles”
Just two months after GM announced the recall of 1.6 million
cars with the ignition switch defect it announced an additional recall of 2.7
million vehicles. This raises the question of what other hidden operating
problems is GM not aware of today that can affect its performance and
reputation.
Bloomberg’s recent article, “Don’t Bail GM Out Again” is a helpful read noting that GM continues
to make poor quality cars which was one cause for its decline into bankruptcy. Its
earnings are currently slumping.
Another worthwhile article by the Wall Street Journal in
2012 “General Motors Is Headed ForBankruptcy – Again”
