When Innovation Dies: General Motors

A recent article in the New York Times gives some insight into how companies take their eye off the ball and slow down their innovation. In this piece Micheline Maynard argues that the Chrysler automotive company decided to listen more to the accountants than the staff who were tasked to drive the company into the future:

G.M.’s biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment.

The two views were rarely in sync — in effect, fighting over the steering wheel that controlled G.M.’s direction — and the internal battles distracted G.M. from spotting shifts in the marketplace.

Time and again over the last 30 years, G.M. has spent billions of dollars on innovative ideas like its Saturn small-car company in the 1980s and the EV1 electric vehicle in the 1990s, only to then deprive those projects of further financing because money was needed elsewhere or because they were not delivering enough profit.

…For those willing to gamble and to follow through on their bets — like Chrysler did with minivans, like Toyota did with Prius and as Honda has done with its focus on fuel efficiency even when gas was cheap — the payoff in sales and reputation can be enormous.

But G.M., despite its tradition of fostering innovation, has often been impatient for profits to emerge.

At G.M., Innovation Often Suffers for Profits – NYTimes.com