A Game Plan to Save General Motors

Tom Peters

Incentives for car buyers are now a 12-month-a-year affair. Yet
even the latest, 1.9 percent financing is not enough to shake
General Motors’ sluggishness. In fact, the once great firm has
become a sort of national embarrassment, a symbol of our
inability to compete.

I suggest that we make the revitalization of GM a national
priority. My plan may not be literally plausible, but it dead-
seriously addresses the sorts of staggering problems that GM, and
countless other former leading American firms, face.

1. Location. Detroit is an island. While recently making the 45-
minute drive from the Detroit airport to downtown, I counted only
three Japanese cars on the road. This is not the real world.
(For instance, GM’s market share in trend-setting California is
40 percent below its national market share.) I propose that GM
get out of town: Move the headquarters of the small-car division
to San Diego, the large-car division to Dallas, and transport a
trimmed-down corporate headquarters — about 250 instead of
today’s 6,000 — to Atlanta.

2. Organization. Instead of the U.S. imposing a five-year
sanction against Toshiba for its selling machining equipment to
the Soviets, we should ask Japan to send Soichiro Honda to act as
GM’s chairman for the next five years. Electronic Data Systems
founder and recently deposed GM board member H. Ross Perot should
be invited to return to the fold as chief executive officer. This
time he should be paid a $7.5 million bonus to criticize GM,
rather than be penalized by that amount every time he is critical
of the firm (one of the terms of his late 1986 surrender).

GM’s already-pruned middle management staff must be cut another
75 percent in the next five years, and 90 percent of those who
remain ought to be moved to the field — to parts and
distribution centers, sales offices and the like.

3. Perks. All officers should be given new Honda Acuras, rather
than the traditional GM vehicles. All officer bonuses ought to be
based 75 percent on relative quality improvement vis-a-vis all
competitors, domestic and foreign.

4. Design. Ford’s Taurus has been a smashing design success in
the U.S., but it is essentially a knock-off of sleek European
models. To instill more boldness and creativity in Detroit, GM’s
new chief designer position should report directly to the
chairman of the board; the post would be shared by Calvin Klein
and equally design-conscious Apple Computer founder Steve Jobs.
Both should have seats on the board. To acknowledge the role of
women in car purchasing decisions, more than half the design
department should be staffed by women by 1992.

5. Customers. Three dealers, with customer satisfaction scores
in the top 1 percent of all GM dealers (as measured by a third
party), should be given rotating seats on the board. All dealers
in the top 1 percent would be given $250-per-car rebates; those
in the top 10 percent would be given $125-per-car rebates. Those
in the bottom 2 percent each year would automatically lose their
dealership. Each General Motors manager, starting with the
chairman, must be required to work one week per year in a local
dealership.

Three senior customer-related positions ought to be created,
with board seats for each. Quality guru W. Edwards Deming would
become vice chairman of the board. Consumer activist Ralph Nader
would head a new office of the Chief Consumer Ombudsman and would
report directly to the chairman. And Les Wexner, the founder of
fleet-of-foot-retailer The Limited, would be made senior vice
president of distribution and customer-order fulfillment.

6. Workers. General Motors should offer a lifetime-employment
guarantee to 85 percent of its work force, in return for complete
elimination of currently narrow job jurisdictions and for
unstinting UAW acceptance of team-based organization of the sort
that has been so successful in the GM-Toyota joint venture. A
wage package should include a potential gainsharing incentive of
25 percent, based first upon quality improvement and second upon
productivity improvement. Finally, over a five-year period GM
should offer a one-time, $15,000- to-$20,000 per-employee
retraining pot (which would add up to about $5 billion), to
boldly shift its emphasis from “hardware” to “humans.”

7. “Half a Million in 1992.” The firm should declare its
strategic intent to sell 500,000 cars in Japan by 1992
(it sells 1,800 today). This would only be achieved, of course,
by providing superior product quality and heretofore-ignored
responsiveness to unique Japanese market needs.

8. Special consultant. One “victim” of this grand scheme
would surely be current chairman Roger Smith. I propose that he
be retained, with a salary of $1 million per year. However, he
would be placed on a rotating assignment, with six months as sales
manager in a Southern California Chevrolet-Toyota dealership,
then six months at the same dealership’s service department. He
would be offered an additional $1 million, one-time bonus if he
were to successfully complete a one-year Berlitz program in
Japanese, followed by a transfer until retirement to an overseas
leadership post in the “Half a Million in 1992” program for
Japan.

These ideas may sound outrageous, but when I recently presented
them to an audience that included several dozen GM “real people”
(middle managers and UAW reps), they responded with cheers. GM’s
workers acknowledge the need for audacious steps to resuscitate
the free-world’s largest industrial concern. When will GM’s top
dogs catch on?