Organizational barriers to change (from 1980s GM): Part 1

This is Part 1 of a two-part series that explores barriers to organizational change. The examples I highlight were observed in the 1980s when GM tried to transition their manufacturing plants to the Japanese manufacturing process. Yet, these qualities can also be seen in companies today that resist organizational transformation. Read the final part of the series here.

My last post “Bad employees or bad system? Ask 1984 GM.” discussed the employee transformation that took place in the ‘80s when GM and Toyota created a joint partnership to manufacture small cars. Toyota trained GM’s workforce in the Toyota manufacturing process, which emphasized teamwork and collaboration. They opened the NUMMI manufacturing plant together using this method in 1984.

Despite using most of the same employees from the troubled (and eventually closed) GM Fremont plant, the problems that plagued GM Fremont were absent at the NUMMI plant. Workers helped each other. They fixed problems rather than accept them (even when that meant stopping production to do so). People became proud of their jobs and of what they were making. (The story of this transformation was told on This American Life. It’s a great listen.)

Yet, it wasn’t all sunshine and rainbows. Despite its success, GM failed to replicate the success of NUMMI at any of their other manufacturing facilities. NUMMI itself was shuttered in 2010. What happened? GM’s failure to transform the rest of their company like they did at NUMMI is a cautionary tale. The resistance to change prevalent at GM in the 80’s is still present today at companies hesitant to adapt to better ways of doing things.

Barriers to change

Ostrich with head in sandAs detailed on This American Life, some themes emerged in GM’s failed attempts to transform their other plants to the team-based, collaborative Japanese manufacturing style. Here are the first four themes.

  1. Underestimating the competitive threat
  2. Believing the customer is wrong
  3. A culture of blame rather than continuous improvement
  4. Rewarding the wrong goals

Have you recognized any of these same qualities at your company?

1. Underestimating the competitive threat

Keep off the iceBefore becoming NUMMI, the GM Fremont plant was shut down due to persistent quality problems at the plant and many employees were laid off. When GM tried to convert their Van Nuys plant to the NUMMI model, workers resisted. However, Van Nuys had never been shut down; workers had never lost their jobs. They didn’t believe there was a competitive threat that warranted a change to their way of working. With no pressure to change, employees merely interpreted the new way of working as a threat to the status quo and resisted it.

Is your company riding on its laurels and squeezing whatever money they can from what used to be successful, or are they pouring money and talent into research and development? Do you and your teammates recognize that the way both employees and the company operate will have to adapt over time?

2. Believing the customer is wrong

The customer is always wrongAccording to This American Life, GM had 47% of the U.S. market share in the mid-70s. This declined to 35% ten years later. The belief among the big three auto makers was that customers were biased to Japanese car makers because of the Japanese perception of quality rather than an actual quality difference. Jeffrey Liker, who studied Japanese auto manufacturing since the 80s and authored the book The Toyota Way, explained that the automakers felt Consumer Reports was misleading consumers into believing there was a quality problem with their vehicles.

Do many people at your company believe “I know what’s best for our customers even if our customers don’t” without having explosive sales numbers to back that up? If customers are moving to competitors, your competitors are giving them something your company will not.

3. A culture of blame rather than continuous improvement

You will never reach higher ground if you are always pushing others down.An unfortunate side effect at GM of using the Japanese team-based manufacturing approach at NUMMI was that team members would sometimes turn on their peers and report them to management. Richard Aguilar, a vehicle inspector at GM, recalled on This American Life, “People now snitched on each other. You know, they’d point fingers…That’s what the company puts on them–that the only way you can protect your job [is] you have to keep the team strong. So [if] there’s a weak link, you’ve got to get rid of that weak link.”

That attitude missed the spirit of the Japanese manufacturing mindset: that the team members work to help each other. Helping out builds a stronger team. Therefore, the company as a whole benefits. Assigning blame is not always helpful when fixing problems.

Are people in your organization committed to improvement, even when that means they themselves need to change? Are team members open and honest about problems? Do people even admit their own mistakes to try to grow, or do they shift blame to others? Consider this quote by Jeffrey Benjamin: “You will never reach higher ground if you are always pushing others down.”

4. Rewarding the wrong goals

Tug of warA foundational component of the Toyota manufacturing process was the expectation that employees would address problems when they notice them, even if it meant stopping production. (Employees could pull an Andon cord along the assembly line to notify their team for help. If the problem could not be resolved soon, the assembly line would stop until a fix was found.)

This concept conflicted with the mentality ingrained at other GM plants: you don’t stop the line! Some managers opposed ever stopping the assembly line because their bonuses depended on the number of cars that were produced. Though GM had a quality issue, bonuses were paradoxically not tied to the quality of those cars coming of the assembly line but to how many cars were produced, regardless of their quality. The wrong goal was rewarded.

Imagine a world where companies internally published the bonus objectives for all employees. (Not necessarily bonus amounts, but the actual goals that must be hit to earn a bonus.) I suspect obsolete and even conflicting objectives among employees would be uncovered. This could be an enlightening experience about why multiple business units aren’t aligned and both moving toward the same goals.

To be continued…

Check out the final part of the series here to see my remaining list of organizational barriers to change as taught by 1980s GM, along with the silver lining to this story.

To Be Continued

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