GM Goes Meta (Maybe)

April 14, 2014

General Motors, the largest car company in the world, is face-to-face with what may be its most serious problem ever: a wicked problem so huge, so complex and so potentially damaging that it deserves to be called a Super Wicked Problem!. In fact, this problem could serve as a poster child for all wicked problems in all organizations.

WHAT IS THE PROBLEM?

GM has to replace a small number of faulty ignition switches, estimated to be between 500 and 5000, in 2.6 million automobiles, mostly Cobalts, plus other small cars.  Their “solution” to this problem is to recall every car they can and replace every switch, defective or not.  It will not be cheap.  Their first estimate of cost – $300 million – has now risen to $1.3 billion for the first quarter, with estimates of another $1.5 billion in the fourth quarter, and $1 billion in 2015.

HOW SERIOUS IS IT?

By the middle of April, 2014, the recall problem had gone beyond the 2.6 million recalled Cobalts and small cars, and had risen to 7 million GM autos with a whole range of defects. On March 29, The New York Times called it “one of the gravest safety crises in the company’s history.”

Diana DeGette, a Republican member of the House, said on March 29, “This ignition problem is terrifying, and I think people should stop driving them until they could be fixed.” On April 3 Senator Richard Blumenthal from Connecticut went further: “The more I learn about what happened…the more I am convinced that GM has a real exposure to criminal liability and in fact, I think it is likely and appropriate that GM will face prosecution.” Senator Kelly Ayotte of New Hampshire agreed: “I don’t see this as anything but criminal.”

Clarie McCaskill, senator from Missouri accused GM of creating a “culture of coverup.”

There is no doubt that GM is in deep trouble. On April 10,an experienced attorney with white-collar criminal cases was quoted in the Wall Street Journal as predicting “Everyone in government is going to be competing to out-tough each other, and GM is going to be the piñata.”

WHAT IS THE REAL PROBLEM?

Recalling 2.6 million small cars in order to replace less than 5000 defective switches, while serious, is not the REAL problem. What GM is facing is a meta-level problem: It is the way GM makes automobiles. Consider the following brief history of the Cobalt ignition switches:

– In 2001 GM knew that the ignition switch was defective.

– In 2002, a new switch design was approved by GM even though testing showed that it did not meet GM’s specifications.

– In 2004 GM began installing the defective switch in new Cobalts.

– In February, 2005, quality engineers suggested that the flawed part be fixed. In March, 2005, they heard back from their superiors: “The lead time for all the solutions is too long. The tooling costs and piece prices are too high. None of the solutions seem to fully countermeasure the possibility of the key being turned [off] during driving. Thus none of the solutions represents an acceptable business practice.” In other words, “we’ll do nothing!”

– In 2005 GM sent out a technical bulletin to its dealers warning that because of a problem with the ignition switch, the engine could be accidentally shut off. The bulletin was updated in 2006, but no investigations were opened nor were any Cobalts recalled.

– In 2006, a new switch was designed and installed in new cars. However, contrary to accepted practice, the part number of the switch remained the same, an omission that on April 8, New York Times writer Joe Nocera called a “shocking violation of
engineering protocol.”

– Evidently, no senior executive in GM was ever aware of any of this until Mary Barra, newly named CEO was informed onJanuary 31, 2014 that there was a problem, over thirteen years since the problem was first identified.

– In February of 2014, Alan Batey, president of General Motors North America, summed it all up .  Referring to  GM’s 10 year investigation of the ignition defect, he said “It was not as robust as it should have been.”

WILL GM FIX THE COBALT PROBLEM?

GM is on its way to replacing as many of the faulty switches as they can find. Here is GM spokesman Greg A. Martin: “At this time our full focus is on taking care of current Cobalt customers and repairing their cars as quickly as possible.”  In a video to all employees, CEO Mary Barra said “..we will do everything we can to support the customer. We will get these vehicles fixed…we are taking no chances with safety.”

WHAT ABOUT THE META-PROBLEM?

But what about the “real” problem, the way GM makes automobiles? Here is spokesman Greg Martin again: “We have…initiated an unsparing internal review of the circumstances that let to this recall and we will hold ourselves accountable.”

Mary Barra went even further. In a March 18 press conference she said to the press “Our goal is to make sure that something like this never happens again,” and in a March 19 video she said to all GM employees that “we will be better because of this tragic situation if we seize the opportunity.”

WILL GM TAKE ON THE META-PROBLEM?

Mary Barra and others seem to be Talking the Talk. But this problem is going to take more than talk! What is involved is not just fixing a defect problem, but changing the culture. Not only has the culture of GM been a “cover-up” culture, but also a “recall culture.” Consider  the recent history of recalls in the automobile industry and in GM:

– Earlier this year the National Highway Safety Administration reported that during the past seven years in the automobile industry, there have been 929 recalls of over 55 million vehicles.

– In 2012, the automobile industry recalled more cars with defects, over 16 million, than new cars that were sold.

– During the first three months of 2014 GM recalled over 6.3 million cars.

What this suggests is that the manufacturing processes of all automobile companies are based upon the practice of building in just enough quality to get the cars into the showroom and sold, and then, when enough defects are reported with a particular model, recalling and fixing them, usually under pressure of consumers or the government.

Why would companies do this? The most feasible answer seem to be cost: it would simply be too expensive to build cars so that the defects that lead to recalls could be greatly reduced or even eliminated.

Given this reality, will Mary Berra and GM be able to Walk the Walk, making sure to live up to their promise to “seize the opportunity” and make sure that “something like this will never happen again?” It is doubtful. Attempting to make massive changes in the manufacturing culture would require a complete reworking of its “acceptable business practices.” It would be hugely disruptive, would sharply reduce efficiency, and result in large increases in costs. Unless the entire automobile industry participated in changing the way that automobiles are manufactured, GM’s autos would be priced out of the market.

Even more serious, it may be that CEO Mary Barra has no idea what would be involved if serious attempts to change the culture were initiated. When accused by Bruce Braley, House Republican from Iowa, that GM seems to have lost its focus upon safety, Berra demurred. “All I can tell you” she answered, “is that we’ve changed our core values.”

Could Barra be serious? Could she possibly believe that during two months of crisis, the core values of a huge, bureaucratic company could be changed, and that its focus upon safety be restored, simply because the CEO said that it would be done? If so, then GM not only has a serious problem with replacing defective switches, and a much more serious, meta-problem in the way that GM cars are manufactured, but an additional wicked problem, one that is perhaps the most serious of all: They think that culture change is quick and easy! If this is what Barra and others in GM believe, they are in for a rude surprise – and more “white water” to come.