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Scooped by Deb Nystrom, REVELN!

Toyota's Relational Contracts and the Decline of General Motors — HBS Working Knowledge

Toyota's Relational Contracts and the Decline of General Motors — HBS Working Knowledge | Change Leadership Watch |
What led to General Motors' decline? Long regarded as one of the best managed and most successful firms in the world, its share of the US market fell from 62.6 to 19.8 percent between 1980 and 2009, and in 2009 the firm went bankrupt.

Toyota's practices were rooted in ...effective relational contracts-- ...based on subjective measures of performance ...enforced by the shadow of the future. 


The authors argue that the conventional explanations for GM's decline are seriously incomplete...and make the case that one of the reasons that GM began to struggle was because rival Toyota's practices were rooted in the widespread deployment of effective relational contracts-- agreements based on subjective measures of performance that could neither be fully specified beforehand nor verified after the fact and that were thus enforced by the shadow of the future.

GM's history, organizational structure, and managerial practices made it very difficult to maintain these kinds of agreements either within the firm or between the firm and its suppliers.

...Two aspects of GM's experience seem common to a wide range of firms.

First, past success often led to extended periods of denial: Indeed a pattern of denial following extended success appears to be a worldwide phenomenon.

Second, many large American manufacturers had difficulty adopting the bundle of practices pioneered by firms like Toyota. 
See a companion piece, also referencing GM in Deb's comments in Change Management Resources ScoopIt newsletter:  

Moving Beyond Hierarchy - What is Working Now to Lead Through Change?


Deb Nystrom, REVELN's insight:

Denial of change after a long success, and failure to adapt to the new?  The cited Harvard working paper by Susan Helper and Rebecca Henderson gives implications of GM's history in looking at efforts to revive American manufacturing.   

It may not be news, yet it may be a good reminder to anyone under 50 employed by a legacy company like GM based on years of success, followed by decline.  

By the way, I'll be presenting with Ron Koller at the Michigan Labor Management Association conference on April 10, 2014 

Michigan: What’s in it for Me? “Why WE Makes Sense”
The Michigan Labor Management Association (MLMA) Partners in Progress Conference
Kellogg Conference Center

More information is here on my speaking events page.  

~  Deb    

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Scooped by Deb Nystrom, REVELN!

Culture Eats Strategy for Breakfast | Katzenbach Foresight, Booz & Co.

Culture Eats Strategy for Breakfast | Katzenbach Foresight, Booz & Co. | Change Leadership Watch |

The “Culture Eats Strategy for Breakfast” webinar delivered on December 6, 2011, shares what Jon Katzenbach and Booz & Co. believe is the right approach for strategic success (Capabilities-Driven Strategy), why strong cultural support is essential, and how to work with and within your culture to execute your strategy. 

Jon Katzenbach is the author of the strategy+business article "Stop Blaming your Culture," and is featured on the video & in the webinar slides at this site.

The link also connects to the Foresight newsletter featuring:

  • Booz & Company’s seventh annual study of the world’s 1,000 largest corporate R&D spenders focuses on the ways strategic alignment and corporate culture facilitate innovation, and
  • How can you balance the logic of the formal with the magic of the informal?   The formal organization consists of analyses, strategies, structures, processes, and programs, all codified in memos and charts—tools that align decisions and actions.  The informal organization consists of emerging ideas, social networks, working norms, values, peer relationships, and communities of common interest—elements that are often hidden. It is in the informal world where magic happens. However, neither of the two organizations is likely to sustain peak performance without the other. 

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