"Change or Die" Watch: General Motors' bankruptcy

Anyone who's wondering how a company that it had so dominant in its field, as General Motors once was, could wind up declaring bankruptcy, as GM did today, might want to read the sections about GM in my book "Change or Die" (Collins, 2007). Here's one passage from the book describing the "denial" of GM's executives about their problems going back a half century:

In its heyday GM had been had been extraordinarily dominant in its business. It captured 60 percent of the U.S. car market in 1960, selling twice as many cars as Ford and Chrysler combined and six times as many as the imported brands. But GM's executives developed a superiority complex, and for decades they remained in denial about their cars' quality problems.

They had the facts from the beginning. In 1960 GM's engineers came up with a 100-point scale for comparing the quality of cars produced by the company's many factories. A perfect car would score one hundred. Every defect would knock off a point from the total. It turned out that many of GM's plants typically made cars with forty or more defects. They posted scores of sixty or below. That was embarrassing, since everyone remembered their own schools days, when a sixty was an F, a failing grade. They didn't improve the quality of the cars--they didn't know how. Besides, their cars weren't any worse than their competition's. Instead, they recalibrated the scale so 145 would represent a perfect score. This way, all of GM's plants would score one hundred or higher. A-plus! When a plant scored 130, employees would throw a celebration even though the cars still averaged fifteen defects. No customer would celebrate buying that car.

Of course GM ultimately closed the quality gap, but its top executives remained in denial about the crisis that confronted its industry beginning in the 1970s. Instead of learning lessons from the '70s oil shock, they went right back to relying on big gas-guzzling vehicles for their profits while Toyota got a crucial head start of several years in developing the technology and the market for fuel-efficient hybrids. GM has been in crisis since the '70s, but crisis does not actually inspire change, contrary to the conventional wisdom.

Faced for decades with a "change or die" scenario, GM didn't change.

Now Geneal Motors is going to survive only because of the federal government's role. But from what I hear, the Detroit auto executives are still in denial, even now. For months they've felt that U.S. has been ungrateful for everything they've done for this country, as evidenced by the feds' refusal to bail out Detroit to the extent that it bailed out Wall Street, instead forcing the automakers into bankruptcy and GM into nationalization.

Never underestimate the power of denial.

"Walk the Walk" Watch: Laura Chenel

Even though my new book, Walk the Walk: The #1 Rule for Real Leaders, won't be published until September 17th, it's too late for me to add new material: the text is already edited and the advance copies ("galleys") have been printed and we've received endorsements (for the back cover) from some truly remarkable people. So of course I've been discovering even more examples of leaders who actually "walk the walk" and would have fit perfectly for the book.

One of those leaders is Laura Chenel, a pioneer in the delicious revolution in American food, who back in 1979 became the first person in the U.S. to make a real business out of producing goat cheese. I've enjoyed her cheese for the past two decades, but it was only recently that I understood why it was so good. I found a New York Times profile of Chenel (published October 18, 2006) that talked about how much love and attention she gives to her five hundred goats in Sonoma, California. She names every goat. She gets to know the goats so well that her business and life partner, John Van Dyke, said: "I know right where I stand. I am number 503, after her 500 goats and her two cats."

Now that's passion and commitment! The Times story was about Chenel, at age 57, selling her cheese business to a French company. But she would keep her 500 named goats and supply the new owners with the milk for the superb cheese that bears her own name, Laura Chenel Chevre.

"Walk the Walk" Watch: Obama and the Rule of Law

"We reject as false the choice between our safety and our ideals."
--President Obama, inaugural address, January 20, 2009

"Transparency and the rule of law will be the touchstones of this presidency."
--President Obama, January 21, 2009

"President Obama's proposal for a new legal system in which terrorism suspects could be held in 'prolonged detention' inside the United States without trial would be a departure from the way the country sees itself, as a place where people in the grip of government either face criminal charges or walk free.
--The New York Times, page one, May 23, 2009

I still believe that President Obama has the potential and the historic opportunity to be a truly great leader, but he's got to walk the walk, especially when it comes to the highest values he has articulated for his administration. His detention plan as well as his move to block the release of the torture photos clearly undermine what he said would be the "touchstone" of his presidency.

Unsung Leaders in Every Organization

Last week I heard an intriguing presentation by Rob Cross, a professor of management at the University of Virginia, at a conference on "knowledge management." Professor Cross maps the informal but crucial social ties within companies: His research looks at which individuals seek out which other individuals when they need information and advice to get their work accomplished. He said that only 3 to 5 percent of people account for 25 to 30% of the "value-added ties," but half the time the company's official "leaders" don't know who these 3 to 5 percent actually are. And sometimes the official "leaders" are largely out of the loop themselves. The organization's real "leaders" are likely to be those people in the well-connected 3 to 5 percent, even if they're lower down in the organization chart. They're the ones who have real influence. Meanwhile, the reach of the nominal "leaders" is often remarkably limited. Professor Cross says that 60 to 70 percent of their ties go right back to the people in the fiefdom from which they've come. They usually fail to establish the vital ties that they need throughout every part of the organization.

I was also fascinated when Professor Cross said that only 1 to 3 percent of the population succeeds by building large social networks. These are the so-called "connectors" described in Malcolm Gladwell's famous "Six Degrees of Lois Weisberg" artice in the New Yorker magazine, later incorporated into his book "The Tipping Point." But Professor Cross says that most "high performers," the top 20 percent in an organization, build quality relationships rather than large social networks. They don't know everyone, but the people they know, they know very well, and they invest in relationships before they'll actually need them to get their work accomplished.

Professor Cross was only one of many thought-provoking speakers at the conference, which was sponsored by the APQC (formerly the American Productivity & Quality Center) in Houston.

Preview of "Walk the Walk," the book, is up on my website

An image of the cover of my upcoming book, "Walk the Walk: The #1 Rule for Real Leaders," is posted on the homepage of my newly redesigned website, www.alandeutschman.com, along with a brief preview of the book's contents. Check it out. The book will debut in stores on September 17, 2009.

The First 30 Days

Soon after publishing my book "Change or Die," I came across another writer who shares my passionate conviction that people are capable of making extraordinary changes in how they think, feel, and act, but that we need a better understanding of the underlying psychology of what creates change. She's Ariane de Bonvoisin, and her eminently useful book, The First 30 Days: Your Guide to Making Any Change Easier, has just been published in paperback. I particularly like Ariane's concept of the "change muscle"--the idea that we can develop a knack for change by doing it again and again in our lives. The idea comes from those brilliant neuroscientists, of course, but Ariane has her own knack for making ideas more memorable and vivid and thus more useful to us.

Leadership and emotional intelligence -- a new survey

Joshua Friedman at the Six Seconds consulting firm is an insightful analyst of the role of emotional intelligence in leadership. His organization is conducting an interesting survey about the bigguest issues that people perceive at work--and how they see emotional intelligence as part of the solution. You can take part in the survey by clicking here.

So far the results have been provocative. Here's what they show (based on rought calculations up to this point):

89% say employee’s feelings are “important” or “essential” to solving the issues the organization faces
91% report that “emotional intelligence” skills are “important” or “essential” to solving the issues the organization faces
The “people issues” are perceived to be about 63% more significant than “technical issues”

Only 9% report that they’ve received training to effectively deal with the issues they’re facing
And by about a 20% margin, “mentoring” is perceived as the most effective way for people to develop what they need.