Chrysler and GM: A Classic Case of Top Management Failure

By Ross Reck

The headline to an article in a February, 1968 issue of the Wall Street Journal read something like, "Domestic Automobile Sales Down, Foreign Automobile Sales Up; Japan Could Be Big Player Someday." Today, some 41 years later, with Chrysler and GM going into bankruptcy, are we in a position to fully appreciate the profoundness of that headline? The Japanese automakers took on the mighty U.S. automakers on their own turf and in a little over 40 years took control of the American auto industry. What’s more, they made it look easy. This begs the question: Why was it so easy for the Japanese automakers to walk in and take over? The answer is simple. The senior executives running the American auto companies were completely and totally out of touch with the basics of making and selling cars - they lacked hands-on knowledge and experience in dealing with front line employees, customers, suppliers and technologies. This made for pretty easy pickings for the Japanese auto executives who were well schooled in those same basics. Consequently, when the Japanese automakers moved in, the American automakers had nothing to counter with. For the Japanese, it was like fighting a battle where your counterparts had no weapons. And now, as Paul Harvey used to say, "You know the rest of the story." [more...]