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Government Takeover Bad for GM Sales?

The U.S. government is now the major shareholder at General Motors. Is this good or bad for sales of GM cars? Before answering, please watch this 9 second video:

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Anybody who thinks that the government takeover of GM is bad for GM's car sales is putting ideology ahead of common sense.

Let's start with the basics.

Selling is everything. If sales don't take place you don't have a business. So making sure that sales takes place is the single most important role for EVERYBODY in the corporation. If you don't agree with this statement then you're so seriously screwed up that you might as not bother reading the rest of this post.

GM's one problem and only problem was that sales weren't taking place. And the reason was simple: instead of making cars that people wanted to buy, they were busy building brands that people didn't care about. The story of GM is the story of the overwhelming victory of brand marketing over needs of the sales. I've written about this problem at GM repeatedly. (See "What Killed GM? Brand Marketing!" and "Insider: Yes, Branding Killed GM!").

Anybody with an ounce of sense knows exactly what is need at GM:

  1. Stop the brand marketing insanity. The "brand marketing" koolaid keeps the company focused on the marketing when the problem is the product.
  2. Clean out top management. Even after years of operating at a loss, constant layoffs of the rank and file, and even as the company entered bankruptcy, GM's never fired any of its 1,300 executives.
  3. Focus on salable product. If you're lucky enough to have a product that people actually want to buy, put lots of energy behind it.
None of the above brain surgery. I'll bet that EVERY sales associate on every car lot in the country understands this completely. Unfortunately, GM has a broken corporate culture that can't make those changes on it's own.

How broken? The company has HUNDREDS of vice presidents, and each of those drones -- even the most obscure -- has a personal PR/marketing guy.

Making the obvious and necessary changes required to serve the needs of the sales team essentially means the end of the careers and future of most the executives who have been running GM. And that's not going to happen under normal circumstances.

So, then, what's happened since the government took over GM?

  1. The government forced GM to pare its brands and rid itself of the massive overhead required to do all that brand marketing and product rollout.
  2. The government fired GM's CEO and last week forced the company to lay off 400 of those 1,300 executives, presumably along with their parasitical staff members.
  3. The government is forcing the company to focus on products that people might want to buy in the future, like the Chevy Volt. The rank-and-file has already gotten the message and is throwing its energy behind the first really cool car that's come out of GM for decades: the new Camero, which is moving off the car lots as quickly as GM can deliver them.
Based upon what's actually happened, the government takeover of GM is probably the best thing that could have happened for GM as a company. Not because it was the government that took it over, but because SOMEBODY had to come from outside the company and force it to change.

GM's culture was impervious to real change. It needed the shock of some kind of massive intervention.

Does this mean that government can always run things better than businesses? Of course not.

But the idea that "government is the problem" when it comes to fixing ailing industries and companies is just plain stupid, because (here's the important part) some businesses are run so poorly and stupidly that your typical government bureaucracy looks, by comparison, like a model of efficiency and sanity.

Now, one could argue that it would have been wiser simply to let GM die. Maybe so. But if you are going to keep it alive, the moves that the Obama administration has been forcing on GM are EXACTLY what's required to serve the needs of sales.

Because selling is everything.

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