Fashionable though it may be to ridicule decision-making at the "Old General Motors", the Corporation in fact was well able to act decisively—at least during its first sixty years, writes Karl Ludvigsen

"Outraged" is too modest a word for the way I feel after reading a piece in the November 12 issue of The New York Times about General Motors. Concentrating on the faults on this once-great company, its author said the following:

"For all its financial troubles and shortcomings as an automaker, no aspect of G.M. has confounded its critics as much as its hidebound, command-and-control corporate culture.

"When G.M. collapsed last year and turned to the U.S. government for an emergency bailout," the article continued, "its century-old way of conducting business was laid bare, with all its faults in plain sight. Decisions were made, if at all, at a glacial pace, bogged down by endless committees, reports and reviews that astonished members of President Barack Obama's auto task force."

This accusation can't go unanswered. Undeniably G.M. was the victim of an accumulated sclerosis which, toward the end of the 20th Century, deeply impaired its decision-making capacity and its responsiveness to the marketplace. This was no secret to knowledgeable observers of the industry who bewailed the Corporation's inability to get to grips with its problems. But to assert that this was G.M.'s culture throughout its 100-year history is just plain wrong.

The great strength of General Motors through its glory years was its system of strong independent operating divisions with shrewd central coordination. The individual divisions fought harder with each other than they did with their external rivals, creating a lively competitiveness that generated great products and strong dealer loyalty.

A G.M. divisional general manager commanded a complete car company, from engineering and manufacturing through marketing and sales. Within guidelines set centrally, he had autonomy over the way he managed his operations to achieve the best results. The result was fast market response and customer-pleasing diversity of product offerings.

The poster child for this style of operation was Pontiac's GTO. A late arrival in 1964's new Tempest range, the GTO version was technically an option so didn't need the approval of G.M.'s Engineering Policy Group. First of the so-called "muscle cars", it popped a 389-cubic-inch V8 under the hood of a light intermediate-sized car that went like stink. The decision to create it was made at the last minute entirely within Pontiac, which profited hugely from the GTO's quick marketplace acceptance.

Pontiac as a brand is now history. Today's General Motors had to be dragged kicking and screaming to the decision to delete it. It struggled similarly with the earlier loss of Oldsmobile. Decision-making in the much-ridiculed "Old G.M." was much quicker.

Following the lead of Cadillac's LaSalle, at the end of the 1920s other divisions introduced lower-priced "companion cars". Buick's was the Marquette, Oldsmobile's the Viking and Oakland's the Pontiac. When the Depression hit, no time was lost in axing these newcomers. By 1931 they were all gone, in Oakland's case giving way to Pontiac. And when near the end of the 1930s the LaSalle's face no longer fit, that was deleted as well.

How, you might ask, did the sluggish Old G.M. deal with the depths of the Depression? In 1933 it acted swiftly to merge the production operations of Chevrolet and Pontiac and similarly to combine production of Buick and Oldsmobile. Sales operations of Buick, Olds and Pontiac were married in a new BOP Division under the Corporation's best salesman, Richard H. Grant. "In effect," wrote Alfred P. Sloan, "from a management point of view, General Motors for a year and a half was reduced from five to three car divisions."

Revived and strengthened by the appointment of capable and experienced general managers, G.M.'s divisional structure continued to pay dividends. When in the summer of 1960 it was evident to Chevrolet that Ford had scored with its compact Falcon, the biggest General Motors division didn't hesitate. Even though it already had the Corvair, Chevrolet pushed the button on a Falcon-like product of its own that was ready in the fall of 1961 as the Chevy II for 1962. Slow decision-making and action? I don't think so.

So where did General Motors go wrong? Ironically, it was the view of John DeLorean that the blind-siding of G.M.'s Engineering Policy Group by himself and Pete Estes with the GTO had the effect of spurring that crucial body to demand greater detail on future product programs, slowing down the decision-making process. Gone were the days when Chevy's Ed Cole could get quick approval for a new big truck engine that soon appeared under the hoods of Impalas racing in NASCAR.

The divisional structure was gradually eroded at both top and bottom, the former by imposition of more committees and reports above and the latter by assignment of the divisions' manufacturing plants to the GM Assembly Division from 1969 to 1972. Soon one reorganization after another would take their toll of the decision-making process, neither Roger Smith nor John Smale escaping their share of the blame. G.M. was broken and no one had the vision to put it together again in the right way. Let's hope the "New G.M." is able to escape that trap.


- Karl Ludvigsen

Karl Ludvigsen is an award-winning author, historian and consultant who has worked in senior positions for GM, Fiat and Ford. In the 1980s and 1990s he ran the London-based motor-industry management consultancy, Ludvigsen Associates. He is currently an independent consultant and the author of more than three dozen books about cars and the motor industry, including Creating the Customer-Driven Car Company