The Race to Learn from GM's Failure

In the past, we’ve urged executives to understand and avoid the blunders committed by multiple generations of American automaker execs (no, Rick Wagoner didn’t get us here all by his lonesome). What we haven’t highlighted—but which should be intuitive—is that a much larger class of professionals is studying precisely the same thing: Graduate school enrollment has risen significantly as college kids opt to forego an unpromising job search process and laid-off professionals decide to add skills while awaiting the bull’s return. This means that the stream of workers with executive aspirations will only continue to grow. And you can bet that they’ll be keenly familiar with GM’s structural and product-minded resistance to innovation—the “organizational and cultural rigidities” former GM exec Elmer Johnson derided in a 1988 internal memo that was clearly ignored by the powers that were.

It’s common knowledge that instability is an intrinsic and accepted quality of the executive job description, a fact of which we’re reminded constantly in volatile times such as these—in 2008, six CEOs left their companies every business day. For those of you already on top, that’s an ominous piece of data. For those of you still climbing the ladder, that’s opportunity for promotion. Regardless of your position in the corporate food chain, though, the greatest threat to your long-term career prospects may lurk below: The nation’s burgeoning mass of grad students is an academic generation that will benefit from the ability to study a chosen field full-time during a period of market upheaval few current executives have experienced in their professional lifetimes.

While there are relatively few companies that rival GM in terms of payroll size and organizational breadth, a basic truth derived from the company’s failure applies to every realized and aspiring exec: The approach that worked before may not work forever. Most of you have the luxury of overseeing an operation that is considerably smaller than GM—that is to say, one whose turning radius (pardon the pun) is significantly tighter than that of GM (as poor ol’ Elmer learned the hard way). Now is the time to scrutinize your company’s culture, practices and approach to product innovation and compare them to those of GM. Are you and your employees vigilant in monitoring the pulse of your market? Do you aggressively pursue opportunities to improve and reinvent? More tellingly, would you or your executive colleagues have a problem with fundamentally changing the way your company functions should the need arise?

These aren’t questions to be dismissed with one-word answers; as with any study involving a variety of personalities, your queries should yield conclusions packed with nuance. But ask them you must. GM didn’t; thanks in large part to that, today’s MBA grads will.