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G.M.’s biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment.
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“Until the 1960s, innovation was part of G.M.’s DNA,” said John Casesa, a veteran industry analyst with the Casesa Shapiro Group. “Now, it’s a matter of trying to play catch-up.”
. . .
Mr. Casesa said that pattern stemmed from the fact that so many of the company’s top executives had a background in finance, not in engineering and designing cars and trucks.
For the last half-century, virtually all of G.M.’s chief executives, including Mr. Wagoner, have come from its financial side, which has judged most initiatives based on whether they will be profitable.
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I worked at General Electric for 13 years and resigned four times. The first three times, they removed the barriers to innovation that led me to looking for a new opportunity. The last time, I wanted to stay in Huntsville AL for my wife's happiness (I still have my wife.) Three weeks later, GE laid off 34 'senior' engineers (curious it wasn't 35!) and six months later, closed the Huntsville plant and moved it to Florida. Many of us think that move increased the average IQ of both states (Will Rogers joke.)
But I saw the GE culture change from one based upon technical innovation to one driven by 'profits' and the amazing ability of financial types to be seduced by outside claims. If someone's job is built upon buying and selling stuff, they lose the ability to 'make stuff,' or much less, how to invent stuff.
I don't fault GM for suffering from a malaise that has infected nearly all USA companies. That doesn't mean I have to like it but any engineer worthy of the title must not ignore it. But how do you tell?
The answer is Deming. If your management PRACTICES Deming, there won't be great profits but innovation will be there. Financial types have absolutely no idea what he taught nor how to apply it. They are back-stabbing <insert appropriate epitaph> with no loyalty to the customer, much less their fellow co-workers. They try to 'buy their friends' and that is not sustainable.
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Last edited by bwilson4web; 12-08-2008 at 12:15 PM.
As a current "financial type", I'd have to begrudgingly agree with you. (Except the back-stabbing, friend buying parts)
I started my career as a mechanical engineer in a machine shop. I'm now an accountant.
Everything I learned was a huge benefit to my financial career. Prototyping, project management, levels of precision & tolerances, etc. It's just not taught in finance. The teaching is a little too focused on averting risk. It bases future planning & decisions too strongly on historical performance or even assumed performance.
Every finance student should get the experience of being chewed out for ordering a metal plate cover from a fabricator that cost an extra $500 because he ran the tolerance out too many decimal places.
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Re: At G.M., Innovation Sacrified to Profits
Deming! I can only wish more companies and management took his teachings seriously. Most never heard of the man, sadly.
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