GM Goes Off-Road

Back in 1999, General Motors' market-research guru, Mike DiGiovanni, was standing in front of the company's all-powerful strategy board with three new ideas to offer. On the first two, the board quickly hit the reject button. So DiGiovanni tried the third idea: "Chunk." The gist was that GM should snag the marketing rights to Hummer, the military vehicle made famous during the Gulf War, from its manufacturer, AM General, and create "son of Hummer" -- aka H2 -- a smaller, friendlier version of the original.

The strategy board gave DiGiovanni the go-ahead -- with strings attached. Once known in Detroit as "Generous Motors," the new, stingier GM had almost no money, few people, and no factories to put behind Chunk. If GM pursued the Hummer idea, it would be on one of the skinniest budgets ever approved for a vehicle project.

As it turned out, what looked like an obstacle to Hummer's success turned into an unforeseen advantage. Hummer has become GM's hottest division, with October and November 2002 new-model sales topping Ford Motor Co.'s Lincoln Navigator. From its July launch through November, the H2 posted sales of over 15,000 units. Based on this performance, GM is considering adding an even smaller SUV, the H3, and a truck version of the H2 to the Hummer line -- all of which, DiGiovanni says, might put Hummer on track to be as big as Infiniti or Acura in the next few years.

But the real story behind Hummer isn't just the unanticipated success of the vehicle. It's the unanticipated lesson behind the vehicle's success: Winning in the auto industry is as much a matter of putting together the right team as it is putting together the right parts. In this case, GM benefited from the passion and personal commitment of an unlikely band of veterans. "I knew Hummer would never get out of the box without a good team," DiGiovanni says. "But I needed some cockiness, irreverence, and a belief that you could change the rules. I needed people who would constantly push each other out of their comfort zone."

A Different Kind of Car Division The way it usually goes, creating new vehicles is like preparing for war: Dump billions of dollars, several years, and thousands of people into the project; hand the leadership to a manager who has earned his stripes elsewhere; and drive up everyone's expectations for success.

But Hummer, it turns out, was more covert action than all-out war. "In the beginning, no one even thought of Hummer as a division," explains Ken Lindensmith, a 30-year GM veteran and Hummer's vehicle-line director. The first sign that Hummer was a far different project was the unusual agreement that was signed by AM General and GM. GM usually retains tight control over its manufacturing. But in this case, GM agreed to design, engineer, and market the vehicles, leaving AM General to manufacture them at an Indiana plant built with money loaned from GM. GM pays a manufacturing fee on every H2 that gets built.

The second signal that Hummer was made from very different stuff was the decision to grant DiGiovanni his wish: to lead the Hummer team. As executive director of the market-intelligence unit, DiGiovanni met with the strategy board every few months. But that didn't make him part of GM's inner executive circle. "I'd always wanted to be a general manager of a division," DiGiovanni says. "But I hadn't broadened myself, so there was no way I'd ever work my way up to a general-manager job."

What the board saw was DiGiovanni's passion for Hummer. "There's nothing more appealing than someone who wants to try to grow their own idea," says Gary Cowger, president of GM's North American operations and a member of the strategy board. "Mike wanted the job, and ultimately, that made all of the difference."

Picking the Parts To make Hummer go, DiGiovanni would need all of the passion that he could muster. In January 2000, with the AM General agreement signed and an H2 concept vehicle unveiled at Detroit's annual auto show, DiGiovanni got his marching orders from the strategy board: You've got two years to put H2s on the road. At the time, the Hummer team consisted of three people, no plant, no dealers, and no vehicles.

DiGiovanni needed to find a few more people willing to share the risk. He knew he wanted to keep the people who had already worked hard to make Hummer a reality -- even though that wasn't tradition at GM. Lindensmith, who had helped negotiate the AM General agreement, fully expected to go back to his old job in truck product forecasting. "There were other people better suited for this job," he says. "But if passion was the most important element, I guess I had it. My boss said, 'Now you get to live with your decisions day in and day out.' "