Challenging the rulebook keeps you moving
There is a need for continual innovation, update and renewal. As we wrote last week, few of us are decisive – we would like to be, but we often wait for others to make up their minds, while they wait for us to do the same. The result is paralysis. So, for any organisation to survive in the free market, it needs to be challenged frequently. We need to challenge ourselves, too. It can be harsh, but without pressure to change the way we work, our firms and our bureaucracies will calcify, stifling growth and innovation.
If ever there was a case of a large, bureaucratic organisation losing sight of its objectives, it was General Motors. GM was top of Fortune magazine’s list of leading American companies from the list’s creation in 1955 through to the 1970s. At its peak, GM had a 50% market share in the US, but dominance led to complacency. Buying a car is an emotional decision as much as an economic one, and GM surrendered its leading place by forgetting how to build appealing cars. Smaller and more nimble competitors innovated and produced edgier, better-designed, higher-quality alternatives.
By 2001, GM’s CEO, Rick Wagoner, realised something was going wrong and hired Bob Lutz to fix the company’s design issues. Lutz had previous successful stints at Ford, Chrysler and BMW. He chronicled his experiences at GM in his book Car Guys vs. Bean Counters. He argued that GM’s slow loss of market share was rooted in a shift from a “product-first” mentality to a “process-first” bureaucracy. The company had become consumed by internal turf wars and thousands of internal rules, all designed to minimise risk and maximise parts-sharing and profits. Inevitably, the rules lost any practical or economic meaning and eventually ensured that every new GM car design was dull.
There are many examples of how GM’s institutional inertia overwhelmed car design. For instance, across its whole range, GM used the same hard, scratch-proof interior plastic regardless of whether a car was an entry-level Chevrolet or a top-of-the-range Cadillac. Luxury soft-touch plastics, like those found in upmarket German or Japanese models, were not allowed. Another silly rule was that ashtrays, cup holders and CD trays had to be able to open at −40°C, which meant GM could not have smooth, oil-damped drawers in its cars. Only cheap spring-loaded trays were allowed; at −40°C, frozen fuel will be your biggest problem, not putting in a CD.
There were also rules that prevented GM from using sporty, low-profile tyres, because its cars were required to be able to hit a kerb at 40mph (something many competitors could not meet). Flared wheel arches were not allowed because of concerns about chipped paint; nor were flush side windows, which were more expensive to fit. Headlights were standardised across the range from Chevrolet to Cadillac, as were interior fascias and the size of the pillars. All this constrained GM designers so badly that it produced boxy, utilitarian cars with little emotional appeal or sales pull.
Lutz complained that GM had about 30 shades of beige when he joined. He meant this as a metaphor for GM’s safety-first approach, but it was also a symptom of the way different design teams were responsible for different parts of the car. Bodywork was one team, doors another, each with its own slightly mismatched interior colours. So, when a car was sold, even the plain interior colours did not quite match.
The most infamous casualty of this “design-by-committee” culture was the 2001 Pontiac Aztek SUV. Lutz cited the Aztek as a “distillation of institutionalised madness” and condemned it as looking like an “angry toaster”. Sales flopped and production ceased after only four years.
The 2005 Buick LaCrosse was another “safe” design, crafted by committee and rulebook. Lutz said it looked like a bar of melted soap. This version of the LaCrosse also disappeared after a short four-year production run, despite attempts to refresh its look with an early facelift.
Lutz managed to put some heart back into GM’s design. By 2010, the Buick LaCrosse had flared wheel arches, low-profile tyres, flush window panels and a sportier look. Lutz introduced his “Sez Who?” campaign, which questioned any rule that met one of three criteria: “heritage rules” (we’ve always done it that way); irrelevant “safety blanket rules”; and “silo rules”, which existed mainly so someone could go home at 4.30pm.
Bob Lutz’s story is a cautionary tale. In the private sector, organisations that fail to innovate and renew ultimately go bust and disappear. Governments and not-for-profits, by contrast, rarely face such existential discipline. If they are insulated from market forces, who truly holds them to account when systems ossify, costs rise and outcomes deteriorate? The current US administration’s flirtation with a Department of Government Efficiency may have been clumsy in execution, but the underlying objective is logical. All developed countries, particularly across Europe, would benefit from a robust, institutionalised “Sez Who?” challenge to regulation, spending and bureaucratic inertia if they are serious about escaping the low-growth trap. As things stand, electorates everywhere are increasingly willing to take a chance on untried and unconventional political alternatives. The UK’s local elections are a case in point – even Bob Lutz might struggle to improve the look of Labour’s current predicament.
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