I tried to respond to the demands of the committee members that such issues be placed on its agenda, but their often critical comments and suggestions tended to be ignored by Smith and those executives who did his bidding. This only increased the committee's frustration and hostility toward management, while the background papers prepared by various GM staffs became increasingly defensive. And on subjects that were appropriately within the committee's purview, members sent numerous signals, through me, of their dissatisfaction with some of the company's policies. Don't undermine your credibility on CAFE, they warned, by overstating its negative aspects. Regarding safety, they asked, why didn't the other GM divisions follow Cadillac's lead in advertising safety, and why was the company so slow in introducing safety innovations into its products? I began to feel like a marriage counselor, trying to get each side to understand the other's position and prevent the tensions from erupting into open warfare.
The company's deteriorating situation in the second half of the 1980s cried out for innovations that would extend the reach of our public affairs mandate. The most urgent one, to my mind, came out of GM's announcement, toward the end of 1986, that it would be closing several plants in the near future. To soften the devastating effects that such closings were sure to have on the communities in which these plants were often the largest employer would require pulling together and coordinating all the relevant knowledge, expertise, and decision-making ability that was scattered throughout the company.
I did it by championing the creation of a Corporate Community Transition Team (CCTT), with representatives from various corporate staffs, as well as the major business units. This group had no role in deciding which plants would be closed or when, nor did we focus on layoff or relocation arrangements for GM employees, most of whom were covered by union contracts. Our concern was with alleviating the impacts on families and communities that Michael Moore had caricatured so devastatingly in Roger and Me.
One of the worst aspects of the situation was that the size of GM's contribution to the United Way charitable organization in each plant city was keyed to the number of people it employed there. If this rule had been applied to communities where plants were completely shuttered, GM's corporate contributions would have ended at exactly the time when laid-off employees' personal contributions were also plummeting, while the need for United Way services shot up. Instead, the CCTT persuaded the company to cushion the shock by phasing out its contributions over several years, a policy that has since been adopted by other large companies in communities where they shut down operations, including the pharmaceutical giant Pfizer when it closed its research facilities in my hometown of Ann Arbor.
The efforts of the CCTT couldn't dispel the bitterness created by plant closings. Although GM did win several lawsuits for “breach of contract” brought by affected communities, it became a poster child for many of the ills that befell communities heavily reliant on old-line manufacturing. One of the most emotionally wrenching encounters in my role as chairman of that committee was a meeting with the mayor of one of the cities strung northward from Detroit along the I-75 corridor—cities like Pontiac and Flint and Saginaw. In each of these cities, the GM plant was the biggest employer in town and, when the plants were built and expanded, they had attracted a large northward migration of African Americans from the rural South, drawn by the prospect of good wages for men with little formal education. Over the decades, the children and grandchildren of some of these original migrants rose to positions of responsibility in their communities; by 1986, several of the I-75 cities had elected black mayors, and these officials bore the brunt of coping with the social and economic repercussions of plant closings.
The unhappy mayor came to talk to me soon after the plant closings in his community were announced. The formality of his dress and manner matched the formality of my office, and he sat stiffly in one of its elegant chairs. He was unfailingly polite and soft spoken, but what he said made me sit bolt upright. That many of his constituents were angry and frustrated, and were venting their fury on him as a handy target, was no surprise. But, he added, many of them believed that the fact that their cities had been targeted for plant closings reflected GM's hostility toward African Americans and the cities where they were now leaders. That did shake me up.
I assured him that nothing could be further from the truth, that far from wishing its minority employees, suppliers, and dealers ill, GM had a variety of programs to encourage their participation in its business. But because so many of the workers in our Michigan plants were African American, this group was particularly vulnerable when shrinking plant capacity became essential to the company's survival. I recalled that when I first joined the company, one of the briefers plying me with facts about my new employer had told me, with evident pride, that GM accounted for some 98 percent of the manufacturing employment in Flint. “Good Lord,” I thought to myself then, “that's a catastrophe waiting to happen.” But, deep down, I knew that the mayor I tried to explain all this to left without feeling he was taking with him a story that could dispel his constituents' suspicions, and I felt embarrassed and helpless.
I found myself in this painful position because I had moved up just as GM's fortunes plunged. When I was promoted to the Public Affairs job in 1985, the firm had appeared to be in great shape, having earned record profits and claimed 44 percent of all US car sales the previous year. In reality, though, it was perched at the edge of a cliff. In the words of two longtime observers of the industry at the Wall Street Journal, “On the three measures of success that mattered—quality, manufacturing efficiency, and new product design—GM by 1985 was dead last in the industry.”5 It didn't take these failings long to hit GM's bottom line: the very next year operating profits and cash reserves plunged, the company lost nearly five points of market share, and Ford out-earned GM for the first time since the Great Depression.
As went the company's fortunes, so went the reputation of its chairman. Roger Smith had appeared on the cover of the New York Times Magazine with the title “The Innovator: The Creative Mind of Roger Smith” in 1985;6 by 1987, he was seen as the “archvillain” of American industry. Eventually, I was able to give my own balanced evaluation of him as neither hero nor villain, and thereby did him a favor he never knew about. When Roger was about to retire, I received a call from a childhood friend who was then a dean at the University of Michigan and chairman of the committee that nominated its honorary degree recipients. The university wanted to award an honorary degree to Roger Smith, one of its most notable graduates and, it was hoped, a potentially generous donor. But the faculty and student members of the committee, with the image of Roger and Me fresh in their in their minds, were firmly opposed. Could I write a letter, the dean asked, that might turn the views of some of them around?
Finding words to describe Roger in the best possible light while remaining honest took careful thought. In the letter I wrote, I described him as a corporate visionary, admitting that “His vision is not perfect (he himself has discussed what he would do differently…), he has not always communicated it as broadly and effectively as he might, and the returns are not yet in.” I tackled head-on the fact that the film Roger and Me had, not surprisingly, engendered some lively discussion regarding his suitability to receive the University of Michigan's highest honor. “[He] has struggled with two major issues,” I wrote. “One is how to respond to the dislocations that occur when Schumpeter's ‘gales of creative destruction’ blow through. The second is how GM can best balance its commitments to its multiple stakeholders…Each one of us, second-guessing Roger Smith's leadership in handling these overwhelming questions, would undoubtedly disagree with some aspect of his response or his balancing of claims. But one must recognize the magnitude and the seriousness of his effort.”7 That April, Roger Smith received an honorary degree from his alma mater.
I tried to put a brave face on the sudden shifts in GM's fortunes and reputation, telling a reporter, “I thought I was going to work f
or a big company in a stable industry, but it's been a real roller-coaster ride, and I wouldn't have missed it for the world.”8 As time passed, though, and the roller-coaster kept heading downward, I began to find the ride more emotionally wearing than exhilarating. Just how low GM had sunk, in reputation, competitive position, and financial results, became crystal clear to the eight hundred executives gathered for the company's triennial executive conference in 1986. These three-day gatherings of the company's elite were traditionally held at the luxurious Greenbrier resort in West Virginia, with participants' time divided between self-congratulatory presentations on the company's state of affairs and every possible form of outdoor recreation, led by golf and fishing. My chief memory of the first such event I attended, in 1979, was my red-faced embarrassment when I managed to crack my two front teeth with my own tennis racket, playing at the first GM Greenbrier event that included a woman.
The 1986 meeting couldn't have been more different. It was moved from the Greenbrier to the workaday environment of GM's Technical Center in Warren, Michigan, despite a huge expenditure in cancellation costs, when it became clear that meeting in the lap of luxury would infuriate our employees and shareholders alike. The tone of the “Techbrier,” as it was instantly dubbed, was somber in the extreme, with one top executive after another outlining the various dimensions of our difficulties and the steepness of the hill we had to climb to return to profitability.
President Jim McDonald spoke words never before uttered in a GM executive conference when he told the group, “I don't really feel that I can say I'm proud of you, because we have not accomplished what we set out to do here.” Executive vice president Alan Smith detailed the gloomy financial picture, telling the group, “From 1980 to 1985, GM spent $45 billion in capital investment, yet increased its worldwide market share by only 1 percentage point, to 22 percent…For the same amount of money, we could buy Toyota and Nissan outright, instantly increasing the market share to 40 percent.”9
Once the direness of the situation was finally recognized, the company's top leadership concluded that we couldn't wait the full three years for another executive conference. So in June of 1988 another one was held, this time at a resort in Traverse City, Michigan, far less luxurious than the Greenbrier but still a pleasant contrast to our everyday environment. There was plenty of outdoor recreation available, but the meeting sessions were so long and intense that few participants had the time or energy for play. This conference, so dramatically different in both format and substance from its predecessors, was shaped by the intersection of two initiatives that had been developing during the time between the Techbrier and Traverse City meetings.
One was the creation of the Group of 18, the executive vice presidents and group executives, who had begun meeting to establish priorities and build a strategic plan for the company's turnaround. The process had begun informally, growing out of a suggestion of mine over the lunch table that we group executives might want to take a look at each other's group business plans and try to see where they interacted and how they might be fitted together. One of my colleagues supported the idea, saying, “Gosh, Marina, you may just be new enough around here and dumb enough not to know that you can't do that, and actually get it done.” Here was my chance, I said to myself, to be a player in bringing about the cultural change GM so desperately needed.
Mike Naylor, who had been preaching the gospel of strategic planning at GM for two decades, became the facilitator for a series of meetings where the group executives began to flesh out an integrated planning process for the company, incorporating a long-range vision, critical priorities, and plans for effective interaction to create a whole greater than the sum of its parts. After we had made some progress, we invited Bob Stempel and Alan Smith, both members of the Executive Committee, to lead our efforts, and they accepted.
The second initiative was a program called Leadership Now, a training program for executives designed to change not the structure but the culture of the company, stressing the importance of openness, mutual trust, and empowerment—a combination of sensitivity training and personal empowerment the likes of which GM had never seen before. The need for a program to root out the company's traditional culture had first been voiced by John Stewart, a tall, lean New Englander with a patrician bearing, a brilliant analytical mind, and a no-nonsense manner. One of the McKinsey consulting firm's most senior consultants, he had been trying for years to push GM in the directions it needed to go, including making a clear-eyed assessment of its deteriorating competitive position and drastically streamlining its decision-making processes.
The Leadership Now trainer assigned to work with GM couldn't have been more different from Stewart. Mark Sarkady was a casually dressed, boyish-looking man with an unruly mop of black hair whose excitable manner undoubtedly stemmed from his Hungarian background. Executives who went through his training program, reported one observer, “seemed to have undergone—for the short term, anyway—some sort of religious conversion.”10 Despite their sharply different styles, both men had the same goal—to bring about change at GM dramatic enough to ensure its long-term viability—and neither underestimated the difficulty of the task.
The Traverse City conference was shaped by a combination of the Group of 18's work and the Leadership Now training program. We, the group executives, took the lead in laying out the company's most urgent priorities. I had been arguing for some time that this list should embody a broader vision for GM, extending beyond the vehicles themselves to being a leader as a “total transportation organization,” reviving the slogan that GM had showcased but never implemented twenty years earlier at Transpo ′72. Saturn was already demonstrating the attractions of its unique no-haggle purchasing experience, and anecdotes abounded about why the quality and convenience of post-purchase relationships with the dealer were important to decisions about what car to buy. I also tried to arouse enthusiasm for experimenting with a fleet of city cars that could be rented by the hour and picked up and dropped off at convenient locations around town—another idea that had surfaced at Transpo ′72. But I couldn't drum up support, and “great cars and trucks” remained the embodiment of GM's vision of how to attract and hold customers.
The traditional speeches from top management to a passive audience of executives sitting in straight rows of chairs were replaced with an interactive workshop format in which everybody present was involved in sharing ideas. At the end of the conference, Roger Smith wound things up by proclaiming, “A corporation, like any living thing, must change if it is to survive. You see, we—that's you and I—have the vision to point the way for change. And we—that's you and I—have the courage to change.”11 At that moment Smith, wearing a casual brown sweater rather than his usual suit and tie, appeared more human than he ever had before, and many of those who heard him dared to hope that we were experiencing the birth of a fundamental change in GM's culture.
My own reaction combined hope with caution: “We are all very conscious of the fact that we raised expectations at Traverse City. There was an immediate afterglow and there will be an immediate letdown, because the world is not going to change overnight. But even the letdown will leave us at a higher level than we were before.”12 But Roger Smith's conversion couldn't conquer his domineering style, and the dramatic changes the Group of 18 had hoped to initiate didn't happen. Once again, the GM culture of inertia prevailed over efforts to dislodge it.
When Roger Smith retired as CEO in mid-1990, the world both inside and outside GM breathed a collective sigh of relief. Both GM's reputation and its financial condition were at an all-time low, and Roger was seen as the man responsible. The board's choice as Roger's successor, Robert Stempel, offered many reasons for optimism. An automotive engineer who had risen through the ranks to become GM's president, he had a string of successes under his belt and was widely regarded as a shining example of engineering talent. Stempel broke the long-standing tradition of a finance man as CEO; now the guys who designed and built cars an
d trucks had one of their own at the top. A huge man with a booming voice, a firm handshake, and an inclusive manner as he took copious notes on what other people said in meetings and conversations, he would have won any companywide popularity contest for the top position.
The man Stempel designated as president, Lloyd Reuss, was another matter. He was also an engineer, but there the resemblance ended. A small, taut, wiry man with an aggressive manner and zero tolerance for bad news or dissenting opinions, Reuss had as many failures behind him in his GM career as Stempel had successes, but he had somehow managed to leave them behind as he was promoted to the next level. The board neither understood nor was comfortable with Stempel's choice, but it acquiesced to his stubborn insistence that Reuss was the man he wanted as president.
Stempel's timing couldn't have been worse. He became GM's chairman and CEO on August 1, 1990; on August 2, Iraq invaded Kuwait, creating a climate of uncertainty devastating to car and truck sales. Furthermore, Roger Smith had used creative (though legal) accounting methods to push the bow wave of disaster ahead of him, to ensure that it crashed over the head of his successor rather than his own. The result was that Stempel, a smart, decent man who might have become a successful chief executive in more “normal” times, was overwhelmed. His horror of confrontation and his belief in incremental rather than radical change rendered him unequal to a situation that cried out for both. By early 1992, GM was on the edge of bankruptcy.
Martian's Daughter: A Memoir Page 33