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George Reed
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George Reed

A retired U.S. Army Colonel, George Reed is an associate professor in the Department of Leadership Studies within the School of Leadership and Education Sciences at the University of San Diego.

Prior success is a powerful narcotic

Question: After a well-chronicled, 30-year decline into bankruptcy, General Motors is now profitable again and going public. What does it say about its former executives, directors and union leaders that such a large, complex organization could be revived in less than two years? What factor best explains why leaders don't take the hard but obvious decisions necessary to prevent an impending disaster?

In his 15th Century treatise on leadership and political power, Niccolo Machiavelli sagely pointed out that:

It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, or more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries, who have the laws in their favour; and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.

Large, complex organizations become so in part because they are successful. The habits and mindsets that contribute to that success have a way of becoming ingrained in the people, processes and systems--such that even when there is clear evidence that a change is necessary, organizational inertia stands in the way. Sometimes it takes a clear threat to organizational survival to prompt a new way of doing business that is responsive to changes outside of the company. As we have seen with General Motors before the bankruptcy, sometimes even that is not enough. Prior success can be a powerful narcotic that dulls the motivation to engage in the hard work of change and innovation.

So how do we explain the rapid turnaround? Despite the obvious benefits of restructuring, an infusion of cash, a lean balance sheet and exciting new product lines, I suspect that General Motors has always had a deep reservoir of underlying talent and drive to succeed. Disruptive technologies, tough competition and a roller coaster economy served as the hammer, anvil and fire that may well have forged a better company. The changes we've seen were likely not at all much in opposition to the deeper organizational culture at General Motors. It was, after all, once a great company.

Let us acknowledge that the future is not yet certain for this venerable company. While they have accomplished much in the last two years that points to a brighter future, General Motors still has to continue to produce cars that consumers want to buy, demonstrate financial viability and regain the confidence of the investing public. It remains to be seen whether General Motors has made enough of the right kinds of changes to guarantee its long-term survival. If I had the ear of the executives of General Motors, I would advise them to keep the cork in the champagne bottle and keep those sleeves rolled up for the challenges that are sure to come.

By George Reed

 |  November 16, 2010; 10:02 AM ET
Category:  Accomplishing Goals , Corporate leadership , Crisis leadership , Failures , Leadership weaknesses , Making mistakes , Managing Crises , Organizational Culture Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: The 'mechanics' of leadership | Next: Mapping GM's decline

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Great perspective George! And I always like to go back to Machiavelli - his insights are always enlightening, if not always inspiring. And for all the reasons you say, I'm still not ready to buy a GM car. I'm not from Missouri, but I'm still in the 'show me' stage of judging their success. THey now have the opportunity to show us the good side of capitalism - they've already showed us some of the bad side. Thanks

Posted by: schoultz | November 17, 2010 1:44 PM
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