Denial is a normal way of dealing with unpleasant change. But denial changes nothing. It doesn't lessen the pain.
General Motors Corp., currently the world's biggest car company, is learning that much; and therein lies a lesson for all of us.
GM's denial has been recurring, often apparent in discussions with the company's executives about declining U.S. market share. I first witnessed it in 1982, when I began covering the car industry for The Washington Post.
GM was under attack. Its overall product quality was poor. Its service was lousy. Its market share, once more than half of all new cars sold in the United States, had fallen to about 40 percent.
But back then at GM's old, fortress-like world headquarters on West Grand Boulevard, just north of downtown Detroit, the standard pitch from the executive suites was: "We'll get it back."
That was said with such fervor and passion, it was hard not to believe it; and the executive who was saying it loudest, Roger Smith, then GM's chairman, was doing a lot more than talking.
Smith, whose demeanor was that of the stereotypical Main Street banker, seemed a most unlikely revolutionary. He was frank. Yes, he said, GM's product quality was bad, and it had to be improved -- quickly. Yes, he said, the company's middle-level management was stagnant and obstructive. Smith even agreed that GM's huge U.S. dealership body had to be reduced and reorganized.
He started doing things, disturbing things in the context of the old GM culture -- shuttering demonstrably inefficient plants in places such as Flint, Mich.; investing heavily in automation, especially robots; consolidating divisional functions, such as purchasing, and thereby breaking up mini-fiefdoms that had established themselves over decades.
In 1984, Smith did what many people in America once considered unthinkable: He entered a joint manufacturing agreement with one of his toughest foreign rivals, Japan's Toyota Motor Corp. It was a symbiotic relationship. Toyota needed to establish a manufacturing foothold in North America (where it now has 13 plants). GM needed to get up to speed in modernizing and improving its vehicle assembly processes (and GM now runs the first-, second- and third-highest-ranked plants in the United States in terms of assembly quality, according to J.D. Power & Associates).
Finally, Smith upset a lot of GM people in the early 1990s by establishing what was then a separate car company altogether, Saturn Corp. His idea was to prove that GM people could make high-quality cars if they were freed from the traditional GM bureaucracy to do their work.
It all seemed to make sense; and some of it, as demonstrated by major improvements in GM's product quality, worked well. But Smith's plan and the many GM reorganization plans that followed all had a huge tragic flaw: They were aimed at achieving the unachievable in a dramatically changed world. That is, they were conceived and executed in the mind of a GM that thought it was still operating in an era when one company anywhere could hold on to more than a 50 percent market share in a brutally competitive environment.
That's crazy. It's nonsense. It's the worst kind of denial; and GM, based on its own experience in places such as Europe, should have known better. It wasn't solely because of initial poor product quality that its U.S. market share fell from 50-plus percent to 40 percent, then to 37 percent, 33 percent, 29 percent, and now down to a low of 25.5 percent.
It wasn't because of overbearing employee pension and medical costs that those declines occurred. Nor was it because of GM's demonstrably bad marketing that is now, thankfully, being corrected under the tutelage of Mark LaNeve, GM's savvy new director of sales, service and marketing operations in North America.
None of those problems helped. But they were all exacerbated by GM's steadfast refusal to accept the reality that mass production and sales are no way to gain or defend share in an increasingly segmented, exceptionally fickle consumer market. You cannot create product buzz with a snore.
Look at Europe, where the biggest car company is the Volkswagen Group, including Volkswagen's various automotive affiliates. The VW Group holds a 17.5 percent share of the European market. VW alone barely holds 15 percent. France's Peugeot and its various affiliates collectively hold a 14.4 percent European share. The Japanese car companies, which began pushing into Europe in the 1980s, have a 13.4 percent share. Ford Motor Co. and its affiliates have an 11.5 percent share; and GM and its affiliates have a 9.7 percent share, which is up -- that's right, up -- from 9.4 percent a year ago.
In short, if GM had been more willing to accept its changed marketing environment in the United States, had it been more accepting of the reality that it would have to try to make a living from an inevitably smaller share of the U.S. market, which now plays host to nearly all of the world's major and minor car companies, GM would be in much better shape today.
What is happening to GM now -- its decision to cut 25,000 U.S. assembly jobs, shutter some plants and consolidate Buick, Pontiac and GMC into one marketing group -- simply reflects the reality of what GM should have been doing all along. It is a question of sustainability. No empire can sustain itself ad infinitum, at the expense of everyone else, in a world where everyone wants to be emperor.
Sometimes, it is better to share market share, to maximize the profitability of what you have, than it is to continue losing money and risking your corporate life in pursuit of having everything.