Come for the Politics, Stay for the Pathologies

Wednesday, June 10, 2009

GM’s New Boss: Edward E. Whitacre

Here’s his claim to fame: He knows nothing about cars!

Having worked at the executive level in business  (not auto) for many years, I’ve concluded that there are two things that will destroy your company. The first is a “bias for action” and the second is the belief that if you’re smart enough, you can do anything. Had Enough Therapy? pretty much covers the later. Don’t read it if you want to maintain a semblance of hope for GM’s future.

I’d like to address the former corporate malady. A “bias for action” was a buzz phrase du jour that popped up sometime in the late 80’s with the popularity of Tom Peter’s In Search of Excellence. Here’s a definition:

“Propensity to act or decide without customary analysis or sufficient information 'just do it' and contemplate later. Popularized by Tom Peters as a distinguishing feature of agile firms.”

Don’t misunderstand: a bias for business-as-usual is equally deadly to an organization. But the enthusiasm with which the action bias was adopted became carte blanche for sloppiness in all aspects of business discipline – from purchasing decisions to  critical financial analysis.

In the years of easy credit and fast tracked IPO’s, you nearly couldn’t grow your business fast enough. Wall Street demanded quarter to quarter growth at a pace that was,  frankly, unsustainable. In order to generate that kind of growth many companies grew through mergers and acquisitions. Some employed dicey accounting. Some, like Enron, did both. But  if you weren’t on track to make next quarter’s numbers, well, a bias for action might persuade you that an acquisition that makes no economic sense in a world that isn’t quite as biased, had the potential for a tremendous return on investment. You just had to assume a few things, and figure out how to make them happen later.

Until recently, the one thing we could depend on was that Washington did not have a bias for action. That was about the only good thing that you could say about Government bureaucracy. That, and a balance of power,  generally prevented Congress from moving quickly.

Now, that’s not true. Not only do we have no check and balance system in play, we have a very naive Chief Executive dictating  a very determined agenda with a most severe bias for action.   Chief of Staff, Rahm Emmanuel made his “let no good crisis go to waste” mentality perfectly clear.

So we have now endured the “urgency” of  bailing out the financial sector (thanks GWB) and effectively nationalizing some of the largest banks in the country, passing the Porkulus Stimulus bill that has thus far had no positive impact on any sector of the economy, and addressing the emergency need to push Chrysler and GM into bankruptcy and Government control – after wasting billions of taxpayer dollars to bail them out. All this with nary a whimper from our fawning Congress or a serious question from the even more fawning media.

And now we’re told that we have little time left to save the healthcare “system” of this country by nationalizing that as well. And even less time to implement new tax schemes to fund it: we have to start with taxing the rich more, but we need to move swiftly to adopt a Value Added Tax as well. And lest we forget the urgency of saving the planet, there are all these green initiatives that require instant implementation (all of which will add dollars to the resulting product you will have to buy). And last but not least: there’s the granddaddy of them all: Crap and Tax. Everything has to be done by the end of the year, or the world will end. So get to work. Oh, and we need Sotomayor on the bench by October. Trust me. She’s the best Latina for the job.

My old company? Long gone, the victim of it’s own bias for action. It was consumed in a “merger of equals” if by “merger” you mean “take over” and by “equals” you mean “loser.”