Whittling Rotten Wood

In 1983, General Motors unveiled “a new kind of car company.” Saturn was GM’s five billion dollar gamble in innovation. They lost their wager.

This year, Saturn is being shut down. An accurate assessment of human nature would have predicted this. Almost 100 percent of the time, when a company tries to innovate inside their old culture, they’re whittling rotten wood.

The fact that it took seven years from the first announcement for the first Saturn sedan to roll off the assembly line was the first red flag. Saturn was built around great ideas, including a promised collaboration between labor and management and making the purchase of a car a dignified experience. Yet as Saturn went forward, GM’s culture overwhelmed Saturn’s innovations. GM dealerships competed against Saturn, investment money was steered away, and the models went stale. In the end, Saturn became just another indistinguishable GM brand.

GM was whittling rotten wood. Every organization has a set of assumptions espoused by its leaders. These become a definition of reality, eventually shaping the company’s culture. But the effect of this culture is selective hearing by the company’s leaders since they tend to draw on research generally “in sync” with their assumptions. So they only “hear” what aligns with their definition of reality and sustains the existing culture they take for granted. Real innovation, by definition, requires “creative destruction”. It disrupts the status quo rather than sustaining it. Most organizational leaders are incapable of voting for their own obsolescence.

Paul Ingrassia, a columnist for the Wall Street Journal, tells this story in his new book, Crash Course. Ingrassia has covered the American auto industry for a quarter-century and begins his account by describing the “Jobs Bank.” It was established by GM leaders and the United Auto Workers in the 1980s “to provide temporary security for hourly workers on layoff,” but “by the 1990s laid-off workers could remain ‘bankers,’ as they were nicknamed with knowing irony, for an unlimited time, making 95 percent of their wages while not working.” This in turn led to “inverse layoffs,” wherein “senior workers volunteered to be laid off and thus bumped junior workers back onto the assembly line.” Ingrassia asks why any worker with high seniority would slave away building cars when workers with lower seniority collected virtually full pay just for sitting around.

This kind of thinking is the result of a culture of antagonism between management and labor. In the 1930s, UAW leadership began to organize the labor force and GM management resisted. A mood of intransigence calcified on both sides. For example, “When a machine broke down and stopped the assembly line, workers would take an unscheduled break and wait for an electrician or machinist instead of rushing to fix it themselves. Only skilled tradesmen were allowed to repair machinery, even if ordinary workers were capable of doing it—rules enforced not only by the national contract but also by the separate local contracts at each factory. The electricians or machinists often took their time getting to where they were needed, so that the plant would have to go into overtime to make up for lost production, and everybody would get more money.”

GM management was effectively complicit in this culture. There actually were separate men’s rooms for salaried and hourly-wage workers, “part of an apartheid system in which the behavior of white-collar managers constantly sent humiliating reminders to blue-collar workers that said, in effect, ‘I’m better than you are.’ ” Labor got their revenge. Those “in the know” at GM ordered “a Wednesday car.” That was the only day of the week that reliable cars were built, given management callousness and worker absenteeism (or drunkenness). Even Johnny Cash cut a song in 1977 titled, “A Wednesday Car.” Leadership on both sides was unwilling to reset assumptions.

In the 1980s, Elmer Johnson, a committed Christian, joined GM as executive vice president. He sought change in the GM culture, especially in the top managers’ attitudes toward hourly employees, writes Laura Nash in Believers in Business. “Johnson recommended a number of sweeping changes in GM’s employee relations policies to realign responsibility between management, owners, and union workers.” He failed. As Johnson later put it, “The golf course way of doing business is not easily changed.”

The story of GM and Saturn fits findings from Harvard’s Clayton M. Christensen on the lack of long-term innovation in institutions. In 2000, he reported on the failure rate in 350 companies that tried to embrace and develop recognized disruptive innovations within their old culture. It was 100 percent. That’s not a typo. That’s human nature. Of the dozens of firms that John Kotter has studied over the years, he found that only ten had succeeded in enterprise-wide culture change. And, on average, change took ten years.

Innovation means “to renew.” Renewal requires disruption, even destruction. Most organizational leaders are incapable of voting for their own obsolescence, since it might mean losing their jobs. Or adopting a better definition of reality. Or disavowing an inaccurate assessment of human nature. Or jettisoning some staff and programs.

This might be what the church needs to do. Several years ago, one of the largest churches in the U.S. completed an extensive survey of their congregants. The findings revealed a brutal reality. The programs didn’t yield the intended results. Behavior fell too far short of stated beliefs. To their credit, this church published the report and now thousands of churches are trying to innovate. Given that most organizational leaders are incapable of voting for disruption, what are the odds of success?

For example, can church leaders veto the “two-chapter” gospel (truncated to only include the fall and redemption), an aberrant and recent take on the ancient gospel? Can they veto their understanding of human nature—that people are primarily cognitive creatures—based on Enlightenment assumptions? Can they rewrite their mission statement to include making culture? We’ll see.

The old adage is that the fish rots from the head. Does the modern American church have the kind of leadership that encourages disruption and enhances the odds of being truly innovative over the long haul? For most, it’d be a crash course. If however organizations aren’t disrupting, they’re simply rearranging 1+2+3 into 3+2+1 and expecting a different result. That’s insanity. That’s whittling rotten wood.