I read a very interesting article in Forbes Magazine a couple of weeks ago about why Saturn, a GM company that had great promise in the early 1990’s, ultimately failed in this decade because senior GM leaders couldn’t see the benefits of new ways of doing things nor the value of a new kind of organizational culture. Just in case you didn’t know, Saturn, the 1990’s success story, stopped production in October last year, and is expected to completely shut down before 2010 is over. The Forbes’ article is authored by David Hanna, a HR consultant who worked with Saturn’s leadership team in the mid-1990’s and thus can offer some first-hand insights. The overall message lies in the article’s sub-title: a lesson at how to win at innovation in even the most traditional company – and then how to crush that innovation. If you want to read the complete article, you can access it here, but in a nutshell, here are the key points I took away from it.
- In the beginning, Saturn was wildly successful – customers loved the “different kind of car” and the distinctive retail sales model (the no-dicker price) – so much so that the cars were consistently rated among the top three in owner satisfaction; and retailers were chronically short of vehicles in the first five years of production;
- But in this last decade, Saturn’s success took a nosedive. According to Hanna, there were just two underlying forces behind this demise: one, GM’s absolute insistence that all divisions in the company be managed centrally, consistently, with absolute control and no deviations. And two, demand by the leadership at both GM and the United Auto Workers (the union at all GM divisions except Saturn) that Saturn return to the traditional way of doing things.
- Once the original champions of the Saturn model (Roger Smith, GM’s CEO and Don Ephlin, head of the UAW) left the organization, subsequent GM senior management considered all the things that made Saturn unique (the power train, the polymer body panels, the sand-cast aluminum engine block, the no-hassle no-dicker retail sales experience) to be merely “nice experiments”. In reality, these weren’t just nice experiments, they were also big thorns in their sides because they weren’t really the “GM way”.
- Saturn employees, who were non-unionized and initially (in the 1990s) free of central control, saw themselves as a separate organizational culture. They didn’t think of themselves as GM subordinates or UAW card carriers. They saw themselves as Saturn team members with a common mission. But that bothered the heck out of both GM senior management and UAW executives in the 2000s. So as the 1990s slid into the 21st century, production was taken out of Saturn’s plant in Spring Hill Tennessee and divided among other GM plants. In 2004, the plant became part of General Motors, and Saturn’s workers became part of the larger GM workforce in their new locations and subject to the UAW International contract. Consistency was achieved. Tradition was protected. And everyone was back in line.
- Last year, Saturn stopped production. After this year, it will become just another memory and the stuff of car nostalgia.
Wow! What a case study for success … and failure! Clearly, it IS possible to create a different kind of company and a world-class product. Saturn proved it. But unfortunately, Saturn also went on to demonstrate that it is possible to squelch and destroy innovation and accomplishment.
What’s happening in your organization right now that is innovative and creative and deserves to be encouraged? And perhaps more importantly, who’s doing what to stifle and kill it?
Saturn employees were always UAW members. However, they did not work under the same GM-UAW agreement as other GM workers until later. After many years of GM’s “innovative” team management style at Saturn, workers voted to reject the Saturn-UAW agreement and opted for the traditional GM labor agreement.
By the way, the Saturn venture did not produce GM’s highest quality cars, nor did it return a profit on investment. GM could have enacted much the same innovative methods with a new Pontiac or Oldsmobile model platform and saved billions.
Thanks for the additional information MEH. It’s always good to hear an alternate perspective. Were/are you an “insider”?