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Can the GM recall crisis teach us about corporate cultural change?

GM is struggling to contain the damage to both it’s finances and reputation arising from faulty ignition switches, that it appears were known in the engineering organization as long as ten years ago. Mary Barra, the new CEO, has said that she and other top executives were unaware of the issue until last December, and she has vowed to get to the bottom of the problem, on three fronts:

  • recalling the cars with defective ignition switches as soon as they can be manufactured, and installing them,
  • determining who knew what when, and sharing that information in a transparent fashion, and
  • changing the culture at GM so that customer safety becomes the central principle of the firm.

We are going to be able to watch the story unfold over the weeks and months ahead. Only a few days ago, GM returned to bankruptcy court, seeking to have Judge Robert E. Gerber of the Federal Bankruptcy Court, who presided of the company’s Chapter 11 reorganization, enforce the provision of the bankruptcy that shields it from lawsuits for injuries that occurred prior to the bankruptcy date.

However, what I want to touch on is the third point: cultural change. Lou Gerstner said about his time at IBM’s CEO,

I came to see in my time at IBM that culture isn’t just one aspect of the game – it is the game. In the end an organization is nothing more than the collective capacity of its people to create value.

Cultures change slowly. In fact, culture resists change at a fundamental level, and directs members of the culture to continue to behave in established and accepted ways.

Stephen Billings once wrote,

If culture is a phenomenon that emerges from myriad interactions amongst organisational members, then it cannot be managed from outside as a whole. Instead, the top managers can only influence culture from within their own participation in interactions with others. Senior managers cannot design the culture that they want, nor can they engage other specialists to design the desired culture. They can only influence culture through their interactions with others.

And Jon Katzenbach wrote a piece for the Harvard Business Review called There’s No Such Thing as a Culture Turnaround, in which he makes that case that most efforts to quickly change culture fail. The companies either declare victory too soon, before deep cultural change has occurred, or they abandon the effort in frustration.

I’ve taken Katzenbach’s recommendations, and respun them into the context for GM:

  1. Find a theme — Mary Barra has had her theme forced upon her: putting customer safety first, and opening up the silos and dark places in the company so that all information related to safety is accessible. She has started to tell that story, although her congressional testimony didn’t go over well. She has fired the executive who was supposed to run interference there, Selim Bingol, G.M.’s senior vice president for global communications and public policy. Also gone is Melissa Howell, senior vice president for global human resources, who was allegedly slow to make HR policy more in line with Barra’s new goals. She’ll need coherence in her messaging, and a new team to tell that story.
  2. Don’t claim victory too soon — My bet is this turnaround could take five years or more, and might involve hundreds of departures of senior and mid-level executives at the company. She’ll have to leverage company pride, and other core beliefs that are still relevant, but work slowly to make whistle-blowing acceptable, so that anyone can say ‘we can’t do X because it will increase risk for the customer’.
  3. Enlist the help of informal leaders — Barra has to find the ‘positive deviants’ in the organization — those that are already displaying the behaviors that should be dominant in the company but aren’t yet — and she needs to enlist their help in turning the company around (see How ‘positive deviants’ help a culture change itself, and Cultural change is really complex contagion). One option is to try to leverage technology at all levels and locations, so that these people can a/ be found, and b/ connect to each other. Many reports from former GMers say that the company doesn’t communicate well internally.
  4. Remember that cultural forces don’t go away — Focusing on the behaviors that you want won’t eliminate the one you don’t. What you need to do is get people to adopt the new behaviors so that the new values are put into place, the right questions and being asked, and the right decisions get made.
  5. Start now — Barra cannot let other pressing issues take priority over her efforts to change the culture at GM. A series of lawsuits are going to be very costly and time-consuming: she should delegate the blocking and tackling there to a COO or SVP. But she can’t afford to delegate the cultural change that is needed for GM. And she seems to be doing that. Jeff Bennett reported in Amid Recall Crisis, GM’s Barra Quickens Pace:

Last month, she gave a pep talk at an internal meeting for about 1,000 GM employees at its Warren, Mich., technical center. To back up her message that GM must do a better job of serving its customers, Ms. Barra has sat with employees at the company’s call centers.

Getting up close and personal with a wide and diverse group of GMers, and reaching out to informal leaders (‘positive deviants’) to join her new movement within the company should be Barra’s highest priority. She just announced an internal whistle blower program called Speak Up for Safety, writing on the GM Fastlane blog

Last week, I announced a new Speak Up for Safety program to recognize employees for submitting ideas aimed at making GM vehicles safer, and for speaking up when they see something that could impact customer safety. I am excited to take this step to push safety even further to the forefront of our employee culture.

We are, at heart, the sum of our employees – their creativity, their dedication, and their commitment to excellence. GM employees have always been encouraged to raise safety concerns, whether openly or anonymously, and are empowered to be persistent. With the creation of the Speak Up for Safety program, we will have the opportunity to publicly thank and recognize them for their courage and openness. And importantly, we also promise accountability from our senior leadership back to these employees that we will take action or close each issue in a timely fashion.

This program is an important step toward embedding the customer- and safety-centered culture in every aspect of our business. It underpins much of what all GM employees committed to in 2013 when we adopted our new vision and values. These core values – Our customers are our compass, Relationships matter, and Individual excellence is crucial – are more than just words on paper.

We are building an organization that lives these words, day in and day out – not only because it’s what our employees want, but because it’s what our customers deserve. We will learn from our recent experience, and it will make us better.

Mary

So, I’ll be watching GM’s efforts in the weeks and months ahead to see if they stay the course, and keep the momentum necessary for the long haul, because it’s going to take years. I will also try to swim upstream into the company to find what sorts of technologies they are using or acquiring to increase internal communications.