Academic journal article Research-Technology Management

Adapting GM Research to a New Corporate Strategy: GM's R&D Organization Was Totally Restructured in 1998 in Order to Support the Auto Company's Strategy of Business Innovation and Growth. (Managers at Work)

Academic journal article Research-Technology Management

Adapting GM Research to a New Corporate Strategy: GM's R&D Organization Was Totally Restructured in 1998 in Order to Support the Auto Company's Strategy of Business Innovation and Growth. (Managers at Work)

Article excerpt

During the middle part of the 20th century, U.S. industry was characterized by large economies of scale and stable markets. Most business segments were dominated by a few large corporations, as was the case in the automotive industry. The management focus and market strategy during these times was, quite simply, to maintain stability. There was very little new competition.

For example, in 1970, GM's sales volume represented more than 50 percent of the U.S. automobile market and, in fact, the company was being threatened with a breakup by the federal government. At that time, the major challenges to the industry were technical, resulting from the introduction of a series of federal regulations on safety and emissions.

What did GM Research do during these times of stable markets? GM R&D had a long history of technical innovation dating to the electric starter and the organization's founding by Charles F. Kettering in 1920. Most of the work was focused on incremental improvement to existing products and processes. There were two notable exceptions, and although they were not what we would call business innovation today, they required technical innovation.

The first was a series of contributions GM R&D made in the areas of safety and emissions. This involved the development of many industry firsts, including the catalytic converter, the collapsible steering column, and crash injury criteria. In fact, during the 1970s and into the 1980s, GM Research devoted more than 60 percent of its resources to safety and emissions technology. We even created new research units such as a Biomedical Science Department in order to attract the talent we needed. This was important work for that period. GM could not have met government regulations without its Research Labs. For the researchers, it was a double high--not only were they helping the company, they were doing research that would benefit society and save lives.

The second important GM Research contribution that began in the 1970s was the development of methods for designing and analyzing vehicles and vehicle manufacturing processes on the computer. It took many years to insert these tools into the product development process appropriately, but they came into their own at an important time, as will be discussed later in this article.

The stability enjoyed by corporate America began to evaporate as early as the late 1970s. In the auto industry, foreign competitors began making inroads into the U.S. market, starting with small cars. Because the Japanese products had been of poor quality earlier, the U.S. auto industry initially underestimated the competitive threat.

Chrysler and Ford stumbled first, but the impact of foreign competition finally caught up with General Motors in the early 1990s. What was a mild recession for most was very serious for GM. The company was caught in a situation in which we could not reduce capacity as fast as we were losing market share and, as a result, our structural costs were not sustainable. GM lost more money in the first years of the 1990s than any company before then.

"All Hands to the Pump"

Because of the financial crisis, GM's corporate strategy became simply to survive and only then to get competitive in cost and quality. At GM R&D, we initiated a program called "all hands to the pump." We stopped all advanced work and focused on projects that supported current vehicle programs. As GM's financial situation stabilized, we again shifted to doing more advanced work, but still aimed at continuous improvement.

As an example, GM initiated a major corporate program intended to speed up product development. An important contributor to reducing cycle time was the application of computer analysis methods for vehicle structural design, crash simulation and sheet metal forming--methods that had been under development in the R&D organization since the 1970s. …

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