A top executive at General Motors described the corporation's dramatic turnaround in a speech at the Fuqua School of Business Tuesday.
Richard Wagoner, president of North American Operations for GM and Trinity '75 graduate, said that GM had been a "victim of 50 years of unparalleled success in the automotive world," which caused executives to have too much of an inward focus, rather than trying to compete with other companies.
The formation of an NAO strategy board in February of 1992 has been key in financially reviving the company and "basically turn[ing] the company upside down in the last two and a half years."
Just three years ago, GM faced severe losses and a weak share of the automobile market, but since then it has seen profits improve by $2 billion annually. Wagoner said the board addressed GM's three critical weaknesses: a complicated management structure, an excessive cost structure and non-competitive products.
The board has also brought together executives and workers from different factions into a more collaborating, "basket-weaved" corporate structure, resulting in a more collective sense of responsibility, Wagoner said.
"No longer can some guy in marketing complain that if we're doing bad, it's all the engineers' fault, and vice versa. Having the board and having people talk face to face lessened people's tendencies to blame others so quickly."
In the first year of the turnaround, GM executives aimed to "stop the bleeding" and address immediate problems before examining long-range plans. For example, GM ended its practice of pouring money into developing vehicles before deciding whether such a product should be put on the market, allowing engineers to focus on those cars that the company would manufacture.
"We put a lot of muscle into putting our quality into the vehicles," Wagoner said. "You have to increase the focus of your resources, asking yourself, `What products can you be number one in? With which of your products can you most satisfy your customers?"' Wagoner said.
The turnaround has also caused executives to become less satisfied by incremental profits.
"A $4 billion or $5 billion sales figure looks good to unions and to the press, but when your total sales are $130 billion, you've got to look at things differently. We talk less about record sales now and more in relative terms."
To further its financial growth and increase its cost competitiveness, GM is currently trying to develop manufacturing methods that lessen the amount of time for assembly line processes, Wagoner said.
Wagoner applauded Fuqua's emphasis on global perspectives in its curriculum, noting that GM continually strives to improve itself in overseas markets.
"Globalization is the way the world's going in more and more businesses," he said.
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