What was the most successful of the 1940s? Easy. GM. And the most
disappointing one of the 2000s? Easy again. GM
A company once held up as an example of how to compete in technology
and create new industrial giants, GM has been in steep decline -- a
point emphasized last year when it went bust.
And just as the companyís rise held lessons about how to succeed, its
downfall tells us much. GM rested too comfortably on its laurels. It
was never willing to re-invent its business, even if it meant
completely changing its products. It was never located at the heart of
the information technology industry, among competitors who might force
it to keep innovating. Other companies should study GMís fate to make
sure they donít repeat it.
A few decades ago, GM was the most successful business. It captured
the emerging market for mobile and built the industryís most powerful
Politicians lined up to praise the company as an example of how to
Reversal of Fortune
It doesnít look so good now. The news out of GM has only been bad. The
companyís brands, once the coolest in the world, is battered. In a
ranking of global brands by Millward Brown Optimor this year, GM
ranked No. 43, dropping 30 places. Average price of its cars and its
GM looks like a has-been. It misread the way the autoindustry was
merging with computing and social networking. It is probably now too
late to turn that around.
There are uncomfortable lessons here.
First, never rest on your laurels. GM got to the top of its industry
quickly. But once there, it became complacent in an industry where
laziness is fatal. It worried too much about hanging onto its market
share, rather than creating new products to excite customers.
Second, GM was unwilling to challenge itself. The company clung to the
model that cars were mainly about moving people. It failed to notice
that they were just as much about, finding a good restaurant nearby.
GM wasnít surrounded by Web companies or consumer-electronics
manufacturers. That meant it wasnít in the mix of innovative ideas,
which would have forced it to question its assumptions every day. The
company should have relocated to California. Sure, that would have
caused an outcry at home. But thatís better than watching its slow
decline into irrelevance.
It may be too late for GM to turn itself around.
They are all prone to similar missteps. Are the auto manufacturers
doing enough to prepare for the arrival of electric cars? Are the
drugs companies ready for the merging of computing and biotechnology?
Are banks positioned for a decade when debt is steadily reduced, not
increased? Probably not.
Politicians and business experts spent a lot of time praising GM and
trying to learn from its rise. They should devote as much time
studying the lessons of its downfall. If they donít, much of the rest
of industry will repeat its mistakes. And canít afford to lose many
more world leaders.