Why did GM Fail to Capitalize on the Successful Changes it implemented at NUMMI?
Despite having sufficient managerial evidence and strategy about improving the quality
of their cars and achieving its organizational goals, GM did not capitalize on the changes it
implemented at NUMMI because its leadership, corporate culture, and strategy were not
conducive. The former automotive leader in the U.S was forced to abandon a promising venture
due to its internal deficiencies that could be attributed to managerial ineptitudes. GM did not
address the transformational changes that were needed to prosper in good time. Also, its
management lacked the strategic leadership skills needed to promote efficiency and productivity
at the workplace. Further, GM tolerated a destructive organizational culture that facilitated laxity
and complacency, which, in turn, encouraged low-quality products and a negative working
environment. This paper will rely on leadership, culture, and strategy concepts to answer the
question posed above. Managerial failures in GM's operations frustrated the company's chance of
implementing a strategy that would have transformed its operations to achieve profitability and
organizational goals.
When GM and Toyota formed NUMMI, they anticipated a win-win situation where
Toyota would help GM manufacture profitable small cars by adopting the Toyota Way, and
Toyota would get the chance to enter the U.S automobile industry ("NUMMI," 2010). This was a
sound strategy given that it highlighted the essential elements of a good strategy (Lecture 3,
February 13). For instance, informed by the need to transform the production process and
improve the quality of the cars they produced, GM sent its employees to Japan to learn Toyota’s
manufacturing process first-hand ("NUMMI," 2010). Moreover, GM was willing to change its
weak organizational culture to match Toyota’s, which had demonstrated its strength and
capabilities to motivate employees and achieve the corporation’s goals. Toyota promoted
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teamwork more than individual effort, which helped colleagues solve problems collectively for
better performance. Conversely, the culture in GM was primarily combative and comprised
individual effort, which made the working process relatively harder than the Japanese
("NUMMI," 2010). Similarly, unlike Toyota, GM’s leadership lacked the essential traits that
characterize effective leadership in an organization. It was deficient in inspiration, motivation,
communication, and setting the tone for organizational behavior, which are critical elements of
competent leaders (Lecture 6, March 6). The concepts highlighted above are useful in assessing
GM’s failure in adopting the strategy it learned at NUMMI, which would have been a turning
point in its organizational performance and success.
These concepts will help to address the question posed above because they relate to the
key contributors to GM's failure in the NUMMI scenario. For instance, concerning the strategy
aspect, GM and Toyota entered into the NUMMI deal for strategic reasons, and each took steps
to address the arenas, vehicles, differentiators, staging, and economic logic elements of the
strategy (Lecture 3, February 13). However, Toyota was relatively more successful than GM
mainly because GM’s staging process was slower. The company took nearly 30 years to
implement the lessons learned at NUMMI, and as one of the former executives remarked, “if you
take 30 years to figure it out, chances are you're going to get run over” ("NUMMI," 2010).
Similarly, the leadership concept featured prominently in GM's failure. As this course has taught,
leaders ought to be the influencers of an organization towards its goals (Topic 6, March 6). The
leadership in GM failed to set a good example for the employees, particularly concerning the
organizational culture. They promoted laxity and contentment with the operations at the
corporation even though things did not run well ("NUMMI," 2010). Lastly, this question will
rely on concepts derived from organizational culture. The corporate culture at GM impeded
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change and progress. It was rife with immorality and unethical behavior that created a hostile
working environment that was not conducive for transformation or performance. For instance,
employees would deliberately derail the working process, as a former executive explained;
“Everything was a fight. They spent more time on grievances and on things like that than they
did on producing cars" ("NUMMI," 2010). GMs leadership’s failure to act accordingly when
needed caused the weak corporate culture. GM's failure in implementing the changes it learned at
NUMMI are directly related to managerial shortcomings. This assessment is premised on the fact
that the management of any organization influences the culture, strategy, and leadership, which
help propel the corporation forward.
GM could have addressed the managerial inefficiencies that led to the implementation
failures of the NUMMI changes by adopting some of the recommendations offered below. First,
the management should have been better strategic thinkers in their leadership. According to
Schoemaker, Krupp and Howland, strategic thinking in leadership enables the administration to
"anticipate, challenge, interpret, decide, align, and learn" ("Strategic Leadership: The Essential
Skills," 2013). GM's approach was deficient in all the aspects apart from the learning part.
Furthermore, GM failed to clarify and communicate the NUMMI strategy to mid-level
management, which caused conflicts during implementation. For instance, one of the executives
sent to transform the plants was asked to leave by the plant manager because “they were not
interested in what I had to sell" ("NUMMI," 2010). This demonstrates that the execution of the
changes learned at NUMMI lacked strategic leadership, clarity and effective communication.
Secondly, GM could have addressed the weak corporate culture by taking bolder steps towards
remedying poor performance. As noted above, the environment in GM was primarily combative.
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This could have been changed by rewarding positive contributions and performance and
punishing negativity at the workplace.
Managerial failures at GM led to the company’s failure in implementing a strategy that
would have transformed the company. The senior management did not address the strategy,
leadership, and corporate culture concerns that were instrumental in the execution of the changes
learned at NUMMI. However, if GMs management were better strategic leaders and addressed
the weak corporate culture, the company would have been as successful with implementing the
strategy as Toyota was.
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References
Schoemaker, P., Krupp, S., & Howland, S. (2013). Strategic leadership: The essential skills.
Harvard Business Review. Retrieved from https://hbr.org/2013/01/strategic-leadership-the-
esssential-skills
This American Life. (2010). NUMMI [TV programme]. 403.