Understanding and misunderstanding the auto industry

Yesterday David Brooks did a column in the New York Times on the auto industry. He got the big picture question right -- but made a number of statements that undermine his position. He was right in that GM needs a cultural change. It is about organization - which is why I liked the original mission of Saturn.

But I found some of his comments absolutely puzzling. He states that "First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors." What? For the past few decades the role of activist investors has been to push short term payoffs - at the expense of long term thinking and innovation. Yes, fresh thinking "could" come from private investors. But, then again, if they had wings pigs could fly.

Next he critiques the role of the unions as part of the ancien régime. True, the unions resisted change in the past. But that was the organizational role they were forced into. In their new role as part owners, they will have to behave differently. In addition, there will be no chance for organizational change if the unions don't buy into the process in the very beginning. Decades of research on organizational change have shown that. Apparently Brooks hasn't bothered to look into the topic.

I could go on - but there is little point. Organizational change will be hard enough - for GM and other companies like it. But organizational change is the price of survival in the I-Cubed Economy. Too bad that too many people think that organizational can be imposed from the top down -- and simply mean firing a bunch of workers and giving big bonuses to the executives.

To be successful it has to come form both the top and the bottom - and meet in the middle. When Brooks worries that the new plan will create an "ever-thickening set of relationships" among stakeholders, some of us who have studies organizational change draw the conclusion that this might actually work.

There are lots of reasons why the "new" GM might fail -- and might fail to carry out the needed organizational change. But they are not necessarily the one's pundits seem to be worried about.