GM Has a New Model for Change

"Change takes guts. It takes imagination. It takes commitment," declares John Taylor of General Motors's APEx team. APEx is designing radically new concept cars -- and changing the concept of change inside GM.

John Taylor never meant to make his colleague cry. But when Taylor, director of design strategies for General Motors's forward-thinking Advanced Portfolio Exploration Group (APEx), told one of Chevrolet's brand managers that it was time to rethink and redesign the Camaro -- a relic of an extinct consumer group that Taylor describes as "medallion men," with their unbuttoned shirts and exposed gold chains -- the manager literally broke down in tears.

Change is never easy -- especially in a vast, global organization like GM, which has been struggling with a change agenda for years. But having weathered an 18% dip in its U.S. market share over the last decade, a dip that's been partly due to the fact that many of the company's new vehicles don't seem to appeal to young buyers, GM finally understands that keeping its leadership position in the worldwide auto business demands deep-seated change.

"Change takes guts. It takes imagination. It takes commitment. This place has had so many life-threatening shocks over the years that the thought of even taking a risk has been considered too risky," says Taylor, 60, a sharp-witted Aussie who came to GM headquarters five years ago from Ruesselsheim, Germany, where he served as assistant director of design at Adam Opel AG. "But the upside is that when you finally do get a supertanker to turn around, shit happens."

APEx, a team of 40 designers, analysts, and engineers temporarily housed in the basement of GM's sprawling Technical Center in Warren, Michigan, is charged with imagining and developing bold new concept cars -- future vehicles that will, ideally, create the type of buzz and cultlike following that the Volkswagen Beetle and the slick Audi TT Roadster have generated. APEx is part of an idea-generating triumvirate inside GM that includes the Corporate Brand Character Center, a creative think tank that sharpens the images of GM's nine different vehicle divisions, and the Innovation Zone, a 12-person team that focuses on how to make gm's best new ideas an engineering reality.

Already, APEx's hand can be seen in gm's 2000 concept-car lineup, as well as in several on-the-market vehicles such as the new "funkstalgic" Chevrolet SSR, which is half-pickup, half-roadster, and which debuted to much fanfare during this year's auto show in Detroit.

How has APEx changed how GM generates ideas? First, it convinced the company that it had to break out of what APEx manager Bill Ochalek calls GM's "16-mile-road mentality."

"There's this idea that the world runs right around our technical center, that Warren is at the center of the universe," says Ochalek, a 23-year veteran of GM. "But being alone is not a good thing in our environment. It's too easy to talk yourself into the brilliance of your ideas."

The basic insight: You learn the most by interacting with people who are the least like you. But the reality of life inside GM -- and, to be fair, inside virtually all big companies -- is that you spend most of your time with people who are exactly like you. To counter this insularity, Ochalek, 43, lobbied to get his team out into the real world. Members of APEx went to work inside various car dealerships and visited with companies in different industries. They stopped attending auto shows and started going to Internet conferences, consumer-electronics trade shows, and toy fairs.

Another challenge for APEx was to get GM comfortable with the idea of "waste rates." Years of being drilled in "Crosby Quality" (after management guru Phil Crosby's motto: Do it right the first time) had made most GMers uncomfortable with the messiness that innovation requires. "Who in hell ever did anything great by getting it right the first time?" asks Taylor. "You can put a stamp on an envelope and get it right the first time, but when you're trying to create products for the future, you're going to make mistakes."

Taylor knew that for every 20 ideas that APEx generated, it was likely that only one would come to fruition. He presented his case to GM executives, explaining the importance of countering the company's "no-waste" mind-set, illustrating his point with examples of waste rates from different industries. In the pharmaceutical business, for instance, an idea waste rate of 5,000-to-1 is common. "If we had a 20-to-1 idea waste rate in a company that couldn't think of one idea, then that would be a hell of a revolution," says Taylor. "We knew that it would be a tough sell to talk waste rates to a manufacturing company. But it was imperative if we were going to create a fear-free, risk-taking workplace. Because if you're frightened of making a mistake, you won't make a thing."

That said, Taylor thinks that the real secret to APEx's creativity lies not in ideas like waste rates and risk taking, but somewhere else. "The secret to what we're doing is not in any process at all," he says. "The secret is in our people. What we're doing under the cover of 'processes' is reinvesting in people -- finding the right kind of talent to make great change."

Indeed, as APEx increased its impact on gm, more and more people started to take notice. It used to be that managers from the design center would call Ochalek when they had interviewed a great person who didn't really fit at the company. "So they'd send him or her to us!" Ochalek jokes. But two years ago, when Ochalek posted three analyst openings at APEx on GM's internal-hiring system, 400 people applied within a few days.

"I hope that down the line, APEx, as a group that you come visit down in the basement, will disappear," says Ochalek, "and that it will simply become a way of thinking and of doing business -- a networked system of people and connections that keeps innovation running continuously."

The early signs are positive, but both Ochalek and Taylor are clear that APEx and GM still have a long way to go. "The real triumph I've seen so far hasn't been in the products or the ideas that we've created. It's been in the minds of our people, and in the enthusiasm that we've been able to harvest," says Ochalek. "It's been in seeing a change from an iterative portfolio to an innovation-driven portfolio. This might seem like a little step, but for us, it's a huge triumph."

Contact Bill Ochalek by email (bill.ochalek@gm.com), or visit general Motors on the Web (www.gm.com).

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