I continue to monitor the evolving General Motors situation.  This past week CEO Mary Barra testified before a Congressional Committee regarding the recall of millions of vehicles due to a faulty ignition switch that was the purported cause of dozens of injuries and 13 deaths.    She answered many questions that help us understand what happened in the company from a leadership perspective.  There are four learnings emerging:

Learning #1:  Transparency – The visibility of inputs relative to outputs is necessary to create tension within people to be efficient and effective.

 In responding to lawmakers questions about why the company did not fix the design of the faulty ignition switch when the information about the switch’s problems was known within the company for many years, CEO Mary Barra responded, “We have to do a better job of sifting through the information…I want our people to gain a better perspective and look for more clues, and we can only do that through better data analysis.”  What she wants is for accountable people to “feel the tension.”

The core of the issue is the behavior of the accountable person or teams within the organization.  They must be aware of and experience the tension of balancing inputs relative to outputs and vice versa.  It is the tension that is critical as these people are the gatekeepers for decisions and actions, and the information available to them must be real-time or at least current.  It is way too late in the enterprise cycle (Plan>Do>Report>Learn) if “someone in accounting” catches a problem (i.e., feels tension), or the CEO becomes aware of a problem when reading about it in a newspaper—which happens a lot.

Learning #2:  The selection of metrics in performance management is absolutely critical because the metrics will shape the identity, purpose, and long-term viability of the organization.

In responding to questions from lawmakers about why the company did not implement a 90 cent design change to the defective ignition switch ten years earlier, CEO Mary Barra said, “(It’s) not acceptable…in the past we had more of a cost culture, and now we have a customer culture that focuses on safety and quality.”

The issue suggested here is Goalodicy:  a syndrome that leads to unintended consequences when achieving a metric becomes a fixation, i.e., more than just hitting a target but a part of the identity of the organization and the people who work there.  The problem is that when evidence emerges that a metric is unwise, people will either not observe the evidence or ignore it because their identity is tied up in the metric.  The solution is to have a balanced score card of goals and objectives that keeps accountable people in the zone of attention on enabling tasks, while sustaining the identity, purpose, and long-term viability of an organization.

Learning #3: Conversation is the workhorse and invisible enabler of an organization.

It was stunning to watch the CEO of a company with $155 billion in revenues—sitting alone at a table before dumbfounded lawmakers—say that it was disturbing to her that people in one part of GM “didn’t recognize information that would be valuable in another part of the company.” She did not provide an elaborate technical explanation; rather, she inferred that people in the company did not have the conversations that would have enabled the sharing of critical information.

Although the criticality of conversations is invisible for most of our day to day lives— it becomes extremely visible when its absence causes problems.  It’s a leader’s job to ensure that teams within an organization are having effective conversations.  A basic truth espoused by communications expert Susan Scott is that conversation is the workhorse of an organization, “Business is fundamentally an extended conversation—with colleagues, customers, partners, and the unknown future emerging around us.”  It is difficult to grasp business as being about conversing with people.  We tend to think about business in terms of making something, a transaction of buying or selling, analyzing, hiring and firing, etc.—or the management of inputs and outputs.  The criticality of our conversations with others starts to become clearer when we consider the amount of time we spend in face-to-face conversations, or ones involving email, text messages, Facebook, LinkedIn, Twitter, and other online networking services.  Conversation guru Kim Krisco raises the profile even higher when he suggests that a manager who does not talk to his or her employees is not a leader:

• You don’t manage people, you have conversations that get them to do things.
• You don’t manage a department, you have conversations that provide direction.
• What you really manage, day in and day out, is conversation.

Conversation is in fact the key input and enabler of what happens in business and in most of our lives.  It forms the collective intelligence in an organization.

Learning #4:  Organization structure has a pervasive influence in an organization as it directly and/or indirectly impacts behavior, performance, motivation, teamwork, and cooperation. 

Through Mary Barra’s testimony a picture is emerging of a dysfunctional bureaucracy in which information was power and it was held in organizational silos.  There is not enough information available just now to assess this hypothesis.  There is a reference in the testimony that suggests a mechanistic structure where functional groups operated independently.  Functional organizations work well when the objective is specialization, innovation, best practice sharing or adoption, and performance monitoring.  The downside in a large company with customers and operations in multiple geographic regions, is that functions can lack awareness of political or cultural issues and can be blind to the need to adapt.  Also, functional identity can drive behaviors, and people will not observe evidence that conflicts with the goals of the function.  This is commonly seen in customer service, when the needs of the customers and users become secondary to the goal of functional excellence.  Lastly, functions can have difficulty effectively and efficiently serving the needs of multiple production lines and businesses.  The difficulties emerge in coordination issues, context understanding, and awareness and sensitivities to changing environments.

More to come on organization structure as the company’s internal investigation becomes available.
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