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June 2009
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Possibly the Ultimate Case for Reinvention

Danny Devito, playing a takeover executive in “Other People’s Money” is speaking to the workers/owners of a business he wants to buy so as to sell off the assets – “folks what you don’t understand is the company is already bankrupt, you just haven’t run out of money yet.” Truer words have never been spoken.

In the aftermath of General Motor’s bankruptcy filing there have been numerous articles about when did GM really go bankrupt and what could have been done. I will leave it to the pundits and the academics to speculate but for me the answer is simple and instructive.

In a previous post I mentioned having worked on Saturn before there was a physical car. For those who need a timeline we are talking about early 1980s. I am not sure when the Saturn concept was first hatched but a good bet the need to reinvent GM, the beginning of the end, was anticipated well over 20 years ago. It took General Motors over two decades to run out of money. One would think that would be enough time to reinvent themselves.

In fact, as mentioned in an earlier post, they tried. Saturn was the proof and poster child for what needed to be done but they made Saturn into GM instead of making GM into Saturn. They (GM management) have tried a number of times. For example, Ron Zarrella who was brought in at the end of 1994, reorganized their brands and brought in experienced marketing people who had proven their marketing and innovative skills at companies like P&G. One of his early initiatives was to establish a brand management system to bring focus and uniqueness to each brand. He lasted all of seven years (half some would say as a figurehead CMO) and most of the marketers were gone in under three. No one ever knew whether sales or marketing was responsible for building the brands and driving sales. The facts appear to be neither – it was the dealer networks.

The failure of GM should not be a surprise to anyone. Suggesting that it was a lack of strong focused management might be over simplistic but in my opinion that appears to be the case. It is said that when no one is in charge everyone is in charge. It has also been said that a strong CEO must be the brand owner. Not the CMO but empower the CMO because he or she must be the voice of the consumer. To say that marketing was a stepchild at GM would be an understatement.

The lessons that should be evident with the GM case is if your ultimate customer is a consumer then the consumer’s representative must be the brand (business) owner. Period. Marketing must be (the brand owner and strategist) and must be empowered by the CEO – no confusion as to who is in charge. The executional side of marketing (advertising, promotion, pricing, etc.) cannot be confused with the strategic side (brand ownership). The concept of a sustainable competitive advantage is bogus. There are only temporary advantages and if a brand does not allocate resources to continuous reinvention it will be replaced. It is just a matter of time.

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