As I read The Smartest Guys In the Room, one of the things that popped out immediately was Enron’s corporate culture. Former executives described the culture under Skilling as
“You always had to look out for someone stabbing you in the back because the prize was so big. If you made money at the expense of other business units, it was good.”
I cannot think of any organization where a culture like this could be conducive for success. Most organizations foster and encourage teamwork. In this case, especially through its compensation packages, Enron seemed to pit its employees against each other. By doing so, Enron employees only worried about closing the deal and overlooked many logistics or sold contracts to poorly researched investments. This kind of culture has to come from the top of the organization and the C-suite was directly responsible. I know that personally I would never be able to work in such an environment, probably because I do not excel in cutthroat situations with the guy in the cubicle next to me. But hey, that’s just me.
Culture is, therefore, a very important aspect of a company’s success. Fast-forwarding to the present day, GM has asked for another $16.6 billion dollars of bailout money from the Federal Government (why I wasn’t asked is beyond me), for a grand total of $30 billion. That is more than the GDP of North Korea. Although, I feel that the auto-industry needs this money as it employs/directly affects 2 million Americans, there needs to be a change it the industry’s culture.
Rob Klienbaum, a former GM executive and consultant has issued a report about the corporate culture of GM. The gist of the report is that GM’s culture is static opposed to progressive. Klienbaum points these culture problems as one of the causes of a failure of the company.
GM’s current response seems to reflect its fundamental beliefs about the way the world works and it is almost identical to what it has been doing for the last 30 years: cut “structural costs,” wait for future products to bring salvation, and count on cash from the other regions (and, now, the government) to help prop things up in the meantime, but make no truly fundamental change in the business, its structure or people running it, as they are clearly the best and brightest, know how to manage things in a serious way and have a sound plan. The proposed changes are touted as “profound” and “fundamental” but are really the minimum change from status quo the company believes it can get away with. There is a profound reluctance to make hard decisions that would cause short term pain but would lead to fixing the problem in the long run; instead there is a continual compromise of action that leads to too little too late but defers immediate catastrophe.”
Klienbaum also mentions that GM is still resting on the laurels of its past victories and has deep flaws in its decesion making process.
GM’s decision making processes need serious revamping. Despite improvements, most meetings are still exercises in procrastination, rubber stamping or idea killing, without anything that would pass for genuine debate and dialogue. Dealing with complex issues requires genuine discussion, feedback, and intellectual engagement. Changing the people, along with the structure, should help enable this key cultural change but there must also be a conscious choice among the leadership that they want to make this transformation.
In this sense, GM’s culture has parallels to that of Enron’s (minus most of the illegal part). Ken Lay gave approval to almost any project that one of his subordinates proposed as he had too much faith or naivete to do otherwise. Many of Enron’s investments were not fully thought through.
GM needs to reevalute its culture. They are allowed to look back at its past to see what made them successful, but they must take that history and apply it to tomorrow and instead of patting itself on the back. The culture of GM needs to change to allow it to make good decesions with the taxpayer’s money. Although I am not a huge fan of government intervention, I feel the US government may need to select GM’s board or upper leadership to instill this sense of urgency and change. Otherwise, GM will again fall back on US piggy bank.
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