As an example of industrial renewal, General Motors is now the most interesting company in the United States. Its acquisition of Hughes Aircraft, which makes missiles and advanced electronic equipment, is one of a series of ventures by which GM is not only broadening its business but -- much more difficult -- changing its internal structure and character.
Buying Hughes Aircraft is not merely a matter of obtaining technology. A company as rich as GM can buy whatever it needs in the way of patents, blueprints and people who know how to use them. GM is attempting to go much further and turn itself into an organization that, despite its size, is capable of absorbing new technology fast and putting it to work effectively. The people running GM see in Hughes not only a high degree of engineering ability and some profitable defense contracts, but also a style of management that has been successful at encouraging innovation and applying it to a field in which products rapidly become obsolete.
Fifteen years ago GM was a rigidly hierarchical company, set in its ways and self-confident to the point of myopia. When a company has made as much money as GM for as many years, its management finds it hard to think that it may not have all the answers. Then the shocks began: the rises in gasoline prices, the tightening environmental regulation, the customers' shift to smaller cars and, above all, the loss of one-fourth of their market to imports. GM spent enormous amounts of money to adjust, but its labor productivity still isn't up to Japanese levels.
Finally, GM seemed to lose its temper. With the corporate jaw grimly set, it evidently decided to do whatever was necessary, however radical, to regain its position. It went into a joint venture with its chief rival, Toyota, to see whether Japanese production methods -- meaning labor relations -- could work in an American factory. It bought a large data processing company, Electronic Data Systems, where the incentives are designed to encourage employees to take risks. It embarked on its Saturn project, founding an entirely new company within GM to build a new car. Why not have Chevrolet build it? Because GM's management wants it built differently, with a disregard to tradition and established practice that Chevrolet might find difficult. Now GM has added another large subsidiary with experience in suddenly changing technologies and markets.
GM's experiments in industrial organization are going to have a powerful influence on the national economy, and it will be an influence for the better. Other companies, under similar pressures, alternate between blaming the government and blaming imports for their troubles. GM has embarked on a more vigorous response. The audacity of its strategy commands respect.