Management by committee

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Een schoolvoorbeeld van een managementmethode die zonder zelfkritiek in
stand blijft, desnoods 10-tallen jaren lang.
Nu de scholen nog waar dit nu nog steeds onderwezen wordt?

Groet / Cees

http://www.nytimes.com/2009/11/13/business/13auto.htm
November 13, 2009
After Bankruptcy, G.M. Struggles to Shed a Legendary Bureaucracy
By BILL VLASIC
DETROIT — In the old General Motors, employees were evaluated according
to a “performance measurement process” that could fill a three-ring
binder.

In Terry Woychowski’s case, for example, his job as director of G.M.’s
vehicle engineers was spelled out in exhaustive detail, and evaluated
every three months.

But in his new job as vice president — a promotion he was given 20 days
after G.M. emerged from bankruptcy — his performance review will be
boiled down to a single page, something he had never seen in his 29
years with the company.

Mr. Woychowski said he felt the grip of G.M.’s legendary bureaucracy
start to loosen, something he never imagined possible. Now, such reviews
are being scaled down and simplified across the company.

“We measured ourselves ten ways from Sunday,” he said. “But as soon as
everything is important, nothing is important.”

For all its financial troubles and shortcomings as an automaker, no
aspect of G.M. has confounded its critics as much as its hidebound,
command-and-control corporate culture.

When G.M. collapsed last year and turned to the government for an
emergency bailout, its century-old way of conducting business was laid
bare, with all its flaws in plain sight. Decisions were made, if at all,
at a glacial pace, bogged down by endless committees, reports and
reviews that astonished members of President Obama’s auto task force.

“Everyone knew Detroit’s reputation for insular, slow-moving cultures,”
Steven Rattner, head of the task force, wrote recently in Fortune
magazine. “Even by that low standard, I was shocked by the stunningly
poor management that we found.”

G.M. will present its first postbankruptcy scorecard on Monday, when the
company reports third-quarter earnings and its cash reserves. The
company said on Nov. 3 that its financial health had “improved
significantly” in recent months.

Even as it labors to change its culture, G.M. must convince consumers
that it is building better cars. One sign of its challenge: Fewer than a
dozen of the company’s models were recommended in a recent Consumer
Reports survey.

But instead of playing down the survey, as G.M. might have in the past,
its chief executive, Fritz Henderson, ordered it sent to every employee
in the company.

“Have we made some missteps? Yes,” said Susan Docherty, who last month
was promoted to head of United States sales. “Are we going to slip back
to our old ways? No.”

G.M. emerged from bankruptcy this summer as a much smaller company, 60
percent owned by American taxpayers and free from much of the debt and
health care obligations that had crippled its balance sheet.

But its cultural change is a work in progress. G.M.’s new chairman,
Edward Whitacre Jr., and directors have prodded G.M. to cut layers of
bureaucracy, slash its executive ranks by a third, and give broad, new
responsibilities to a cadre of younger managers.

Replacing a binder full of job expectations with a one-page set of goals
is just one sign of the fresh start, said Mr. Woychowski.

“You know there’s not much good that comes out of a bankruptcy,” he
said. “But it is a force that helps you change a culture.”

Mr. Henderson, said he was aware the company was being scrutinized to
prove it had learned from its mistakes. “Above all, we need to be
faster,” Mr. Henderson said in a recent interview.

Speed has never been G.M.’s forte. In 1988, when G.M. still dominated
the United States market, a senior executive named Elmer Johnson wrote a
stinging internal memo that summed up the company’s biggest problem.

“We have not achieved the success that we must because of severe
limitations on our organization’s ability to execute in a timely
manner,” wrote Mr. Johnson.

The memo fell on deaf ears, mostly because G.M.’s top executives prized
consensus over debate, and rarely questioned its elaborate planning
processes. A former G.M. executive and consultant, Rob Kleinbaum, said
the culture emphasized past glories and current market share, rather
than focusing on the future.

“Those values were driven from the top on down,” said Mr. Kleinbaum.
“And anybody inside who protested that attitude was buried.”

But the shock of bankruptcy has prompted changes that would have been
unheard-of in the old G.M.

In the first week of August, Mr. Henderson told Jon Lauckner, the new
head of global product planning, to scrap G.M.’s organizational chart
for vehicle reviews and start over.

In the old G.M., any changes to a product program would be reviewed by
as many as 70 executives, often taking two months for a decision to wind
its way through regional forums, then to a global committee, and finally
to the all-powerful automotive products board.

“I used to see the same presentation three times,” Mr. Lauckner said.
“The first time it was interesting, the second time less so, and the
third time it was just a transaction that needed to be done.”

Mr. Lauckner came up with a new schedule that funneled all product
decisions to weekly meetings of an executive committee run by Mr.
Henderson and Thomas Stephens, the company’s vice chairman for product
development.

The new system was tested on Oct. 23, when Mr. Woychowski and Mark
Reuss, the company’s new head of global engineering, asked the committee
for a three-month delay in introducing the Chevrolet Cruze compact car.

The delay, they argued, was needed to improve engine performance and the
quietness of the Cruze’s ride — important areas of comparison with the
segment-leading Honda Civic.

“In the past, we might not have had the guts to bring it up,” said Mr.
Reuss. “No one wanted to do anything wrong, or admit we needed to do a
better job.”

But to the relief of Mr. Reuss, the executive committee approved the
delay. Soon after, he and other senior engineers were putting the Cruze
through 80-mile-per-hour comparison tests with the Civic to close the
competitive gap.

In the past, G.M. rarely held back a product to add the extra touches
that would improve its chances in a fiercely competitive market.

“They used to have a budget and a time frame, and when it was exhausted,
that was the finished product,” said Joseph Phillippi, a principal in
the consulting firm Auto Trends Consulting. “I used to ask them, did you
run out of money before you completed the interior?”

G.M. executives used to take great offense to such remarks. Now, they
concede that the company did produce inferior products.

“I don’t even want to talk about what was ‘good enough’ anymore,” said
Mr. Stephens, a career engineer who took over G.M.’s top product job
last year. “You can’t win with good enough.”

For two months, Mr. Stephens has been leading meetings with staff
members called “pride builders.” The goal, he said, was to increase the
“emotional commitment” to building better cars and encourage people to
speak their minds.

“If everybody is afraid to do anything, do we have a chance of winning?”
Mr. Stephens said in one session last month.

G.M. veterans recalled how product meetings used to be run according to
a 50-page presentation that had already been read and approved in
advance.

At certain points, staff members were required to rate their assigned
tasks as green, yellow or red, depending on whether the job had been
completed, needed work, or should be frozen until a major problem was
corrected.

“If you had a red issue and stood up, it was very punitive,” said Mr.
Reuss. “We never had any debate. The vice president would say, ‘I got
here because I’m a better engineer than you, and now I’m going to tell
you how bad a job you did.’ ”

Mr. Reuss had been running G.M.’s Australia division when Mr. Henderson
summoned him to Detroit in July to take over global engineering. Last
month, he convened a two-day meeting with his top people from China,
India, Brazil and other G.M. engineering centers around the world.

They met at 6:30 a.m. on Oct. 15 in a parking lot at G.M.’s 4,000-acre
proving grounds in Milford, a small town west of Detroit. Nine of G.M.’s
newest vehicles were lined up for test drives to northern Michigan.

But first, Mr. Reuss, wearing a red-and-black leather racing jacket,
addressed the group.

“There has been fear in the organization, and people have been afraid
for their jobs,” he said. “But now we need to be open and transparent
and trust each other, and be honest about our strengths and weaknesses.”

As he drove north, Mr. Reuss, 45, reflected on his own career at G.M. He
started as a student intern in 1983, and worked his way up the
engineering ranks. One of his biggest assignments was serving as the
executive in charge of one of the most ridiculed cars in G.M. history,
the Pontiac Aztek.

The Aztek was half-car, half-van, and universally branded as one of the
ugliest vehicles to ever hit the market. Mr. Reuss had little to do with
the design, but his job required him to defend it as if it were a thing
of beauty.

It was brutal, he said during an interview as he drove, to grit his
teeth and pretend that the Aztek was something to be proud of.

“It was something that flame-hardened me personally,” he said. “I’m in
the ‘never again’ business. I wouldn’t wish that experience on anybody.”

Mr. Reuss is also motivated by a deep desire to restore the respect G.M.
has lost. His father, Lloyd Reuss, was fired in 1992 as G.M.’s president
in the biggest upheaval the company ever experienced — until this year’s
bankruptcy filing.

“This is an opportunity my dad never had,” Mr. Reuss said. “I don’t want
to waste it.”

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