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JON WALDEN COMMENT: Death of an icon

Date: 15 June 2009

Jon Walden

Three decades of decline have taken their toll on General Motors, but it now has an opportunity create a bright future for itself if it dares to be bold, writes Jon Walden

The economic crisis has brought with it the demise of General Motors in America. Of course, this company has been dying for 30 years, and the credit crunch only accelerated what would have happened anyway.

It is hard for any car person not to feel sorry at this news. GM was an icon. Its management system was behind the rise of the modern corporation that brought prosperity to Western economies, while its products liberated people to travel freely and widely. For many years it was the largest company in the world.

The symptoms of its decline were varied. Poor quality, a confused range and branding, an over-dependency in latter years on high margin trucks that then went out of fashion, poor cash flow, a belief US consumers would come back one day when all the evidence suggested that younger people were deserting in droves to imports.

But the root cause was management. The much-heralded system that gave GM leadership in its early years became ossified. Bunkered down in Detroit, ageing, bureaucratic and out of touch, it refused to face up to reality and take drastic action. The ultimate ignominy must have been being told by Washington recently that its plans were not bold enough and that more radical action on brands and plants was needed.

What does all this mean for the company's businesses in Europe? It looks like they will survive in the short term due to Government support. To survive in the long term it will need to rip up the old GM playbook, and with its leadership liberated this is possible.

More specifically this means producing great products, getting closer to its customers, ensuring dealers make good profits so they can reinvest with confidence and above all getting rid of the bureaucracy that slows down big firms. If they are bold they can do it.

Jon Walden is the former boss of Lex