Wednesday, April 8, 2009

The Past and Future of General Motors

By Clayton M. Christensen; Professor, Harvard Business School; The Huffington Post, April 8, 2009 04:26 PM (EST)

Washington has forced General Motors Chairman Rick Wagoner to resign as a condition of providing the next injection of capital that GM needs to get back on its feet. Finding a "sacrificial lamb" on whom to tag blame for complicated problems is an important instrument in the toolkit of politicians, because it deflects blame for the nation's economic woes away from their own regulatory lapses, economic mismanagement and coddling to labor unions. We've seen it before and we'll see it again. In this case, however, they have cast aside a remarkable executive who already has presided successfully over many of the most difficult elements of the rescue of General Motors in a way that is rare in the history of business. [full article]


For an understanding of how economic competition works and for a real life explanation of Schumpeter’s concept of “creative destruction" please read this article.

To summarize the balance of the article: Wagoner was doing a good job and GM was not mismanaged. GM’s was challenged for its market share by foreign competition but was meeting the challenge. GM was doing a lot of things right. Companies often loose market position and have their ups and downs and it is not necessarily due to poor management.

With Obama having a Nation to manage, does anyone think he also ought to also be selecting the CEO of General Motors, determining what cars they are to build and which plants to close? His adoring fans think he is superman or the messiah and can do it all and will always get it right; I have my doubts. I think he is overreaching and killing the goose that laid the golden egg in the process.

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  1. No one will convince me that the government has the right to fire any one from the private sector.

    That being said, while he fired Wagoner why didn't the president fire Gettlefinger the UAW President?

    Two words: Campaign Contributions

  2. I tend to agree with CrackedWorld. I was ready and willing to accept the new administration and the new president with the hope that things would get better. What I find is that we are veering scarily into socialism.

    If they felt the need to make the CEO of GM step down, why not make the CEO of AIG step down? Seems to me that AIG has screwed the pooch more than once.