Monday, April 07, 2014

The innovation worm turns at GM

There's been a lot of coverage in the US about GM and it's latest quality fiasco, the faulty ignition switch.  As is the case in many corporate investigations, the people now taking the heat were probably uninvolved or unaware of the dangers, and the executives who made the decisions are comfortably retired.  Hopefully, through this investigation, the people who were injured will receive some compensation, and GM and other companies will learn how to value human safety over profits.

But in the story I read, what may be a "throw away" line from GM's new CEO Mary Barra was all but missed.  However, that line, "..moved from cost culture after the bankruptcy to a customer culture" may be the most important factor in GM's survival, and something that every large firm needs to understand.  Focus on cost and efficiency has been paramount for 30 years, as trade barriers fell, competition increased and customers had more choices and became better consumers.  Large corporations have focused on driving out costs, eliminating inefficiencies and reducing risk and uncertainty.  Decisions and timelines have shortened.  Many corporate managers simply cannot will themselves to think beyond the next 90 days.  But in one short sentence, Barra has signaled that she gets it - efficiency is vital, but customer intimacy and the engagement and innovation that will emerge from understanding and focusing on customers is what will sustain corporations in the near future.

Sure, GM has some special advantages.  Bankruptcy allowed it to shed underperforming assets and many debts, to emerge as a more healthy and hopefully a more vital company.  But through that process did it shed its culture and thinking models?  That remains to be seen.  Barra's statement, just one in a short news article and probably one of many she had made, could be the signal that the worm will turn.  That finally larger organizations will begin to understand that customers and their needs matter, and that by gathering and understanding those needs, they can build better products and services.

Now, the skeptics among you will note that Barra is using this as a liferaft, claiming to value the customer because customer appreciation to a company in GM's predicament is paramount, in the same way that patriotism is the last refuge of a scoundrel.  Time will tell.  I think - I hope, that is, that Barra and others like her will recognize that the operating models, timeframes and decision making capabilities of their organizations need to change.  That cost conscious companies inevitably make barely acceptable products that no customers love, and that competitors easily copy or replace.  To win customers and retain them, new insights driven by true customer research and deep understanding are vital.  These insights should lead to new ideas, and onward to new products or new features on existing products.  And to me, that sounds a lot like innovation.

Has the worm turned?  Or will Barra identify the importance of a "customer culture" only to return to efficiency and cost controls?  Does Barra think that signaling remorse to customers creates a "customer culture" or will she work to put the customer at the center of GM's focus, in place of the bottom line which has clearly been the central driving factor.  I think Barra and others may find that placing the customer at the center, and using the insights that come from doing that effectively through innovation may enhance, not reduce the bottom line.  Is GM trying to make cheap cars, or cars that meet customer needs but are inexpensive?  There is a difference.
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posted by Jeffrey Phillips at 5:52 AM


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