Why GM Could Never Reach Out to Customers (and Why It’s Likely to Fail Again)

If you had to describe what felled GM in a single phrase, how would you describe it? Waited too long to build quality cars? Deaf to customers? Dated car designs? Legacy employee health care costs? Management arrogance? All did contribute to GM’s demise. But IMHO, supported by an excellent Business Week article by David Welch (now available on the web), the over-arching problem was:

“Inside-out” thinking

Sure GM took in a modicum of outside input that conditioned some decisions. But at heart – business strategies, marketing strategies, vehicle design, manufacturing process, front and back office process, you name it – all were based on what GM management wanted. And when it came to planning around customers, GM started with GM preferences and tried to work its way out to customers. Only it couldn’t reach them. Impossible. And to make matters worse, GM suffered from an extreme case of inside-out myopia caused by working from the specific to the general – better known as “can’t see the forest through the trees.”

This may sound simplistic, but customer-responsive business strategies start with the customer and work their way in – first aligning strategies with customers, then aligning process with strategies, and finally aligning technology with process. On the process side of things, we call this:

“Outside-in” thinking

Actually, “outside-in” has two complimentary meanings: 1.) Starting with the customer and working in; and 2.) Starting with the general and working towards the specific. Both are mandatory for achieving customer-centricity.

Back to the process side, discussion threads in Linkedin business process groups are awash with mentions of the importance of designing process around customers. But it means different things to different people.

Most understand the progression from customer alignment to process alignment to technology alignment. But some, notably those that practice “inside-out” process approaches such as Six Sigma and Lean, believe you can condition process to meet customer needs/preferences – without customers driving strategy which drives process which drives technology.

Several spats have broken out recently between the two groups. They sort of ended last week when Steve Towers, a towering figure in the process world (no pun intended :-), took on the Six Sigmies and the Leaners. After that, they sort of disappeared. Just like GM. But only sort of.

So how did the new GM start its rise from the ashes? With an ad campaign extolling the new GM, of course. The same old “inside-out” thinking. Anyone placing (or taking) bets on whether GM can make its way back – without a thought process transplant, that is, and without new CEO Fritz Henderson being a magician.