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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 | Scoop.it
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.


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

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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
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8 Powerful Speaking Lessons from 57 Inaugural Speeches: The Good, The Bad, and The Ugly - Forbes

8 Powerful Speaking Lessons from 57 Inaugural Speeches:  The Good, The Bad, and The Ugly - Forbes | Change Leadership Watch | Scoop.it

"To date, there have been 44 United States presidents - on  January 21st Barack Obama delivered the 57th Inaurgural Address."



Here are excerpts from eight (8) lessons the author, Margaret M. Perlis, learned from the best and worst of the inaugural addresses including:


Excerpts:


Keep It Real:  James Buchanan, our 15th president, was one of the worst in American history, when the issues of slavery and secession were reaching a boiling point. While Buchanan rejected slavery...he refused to challenge the constitutional establishment...and states that were threatening secession.


...His inauguration speech ...diminish(es) the severity of impending conflicts by peppering it with words like “simple” or “happy.”


Know Your Audience, Understand Your Outcome:


Abraham Lincoln’s second inaugural address was delivered to a war-torn and weary nation.  ...Lincoln’s brief 600-word address, ....one of the most powerful in U.S. history ...spurned triumphalism, instead choosing a tone of magnanimity: “both sides read the same Bible and pray to the same God, and each invoked His aid against the other.” 


Read the full text here.


For examples of the power of story, see these two examples:

A personal and a human story of overcoming adversity via a classic from Deb's blog:

Several story & case study examples of how to build agility in a volatile business climate:
Deb Nystrom, REVELN's insight:

Via the highest office of the land, USA, change & progress is portrayed in ways that work and ways that do not, showing that storytelling and speeches are important to the leadership art of inspiration and influence.  ~  Deb


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