Birth of the New

It will be interesting to follow GM as it emerges from bankruptcy. This article indicates that the individual who has been selected by the government to run the “new GM” is someone who has been a successful businessman in the telecommunications field but admits he knows nothing about building cars. This article indicates, on the other hand, that the new boss is a savvy political operator who had the foresight to set up a sweetheart business deal that resulted in enormous profit to Rahm Emanuel, the President’s Chief of Staff.

The first article linked to above suggests that everyone is eager to get on with a “new GM” — one that is not so dependent on actually building cars. Excuse me, but isn’t that the fact that GM is a large car manufacturer the reason the government decided that taxpayer money should be used to bail out GM in the first place? The argument has been that the domestic auto industry is so important to our economy, employing so many people to build cars and buying supplies from so many other companies that employ still more workers, that it cannot be allowed to fail. If the “new GM” that emerges from bankruptcy doesn’t focus exclusively on building cars, and instead focuses in large part on, say, financial services, the taxpayers aren’t going to get much bang for their buck. Of course, the nature of the arrangement with the United Auto Workers may make it difficult for GM to change too much.

I understand that business is business, but I also think companies and their leaders need to have a good understanding of their industries and their consumers. If GM’s new boss doesn’t know anything about building cars, I hope that he learns something about it pronto. Cars aren’t like cell phones. They are more expensive to buy and more expensive to repair. They are both a practical transportation device and an aspirational item that people often use to help define their personas. There is a romantic component to cars that you don’t find with other consumer goods. People don’t write songs about their cell phones or computers, but they do write songs about their vehicles. If “new GM” is going to be successful — and I’m not really sure that is possible — it is going to need capable people who understand the complex, multi-faceted nature of the process by which consumers make their car-buying decisions and who can create cars that are designed to appeal to those consumers. Sweetheart deals and savvy political maneuvering can’t hurt, but unless the “new GM” can build attractive, high-quality cars that it can sell for competitive prices it is doomed.

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