Harvard Case - Ross Perot and General Motors
"Ross Perot and General Motors" Harvard business case study is written by Jay W. Lorsch, James E. Sailer. It deals with the challenges in the field of Organizational Behavior. The case study is 31 page(s) long and it was first published on : Feb 18, 1991
At Fern Fort University, we recommend a multi-pronged approach to address the challenges faced by Ross Perot and General Motors. This approach focuses on fostering a collaborative and innovative organizational culture, empowering employees, and driving strategic change through a combination of leadership development, organizational restructuring, and technology adoption.
2. Background
This case study revolves around Ross Perot's tumultuous tenure as a consultant to General Motors (GM) in the early 1980s. Perot, a successful entrepreneur, was brought in to help GM address its declining market share and operational inefficiencies. Despite his initial success in identifying problems and proposing solutions, Perot's direct and confrontational style, coupled with resistance from GM's entrenched bureaucracy, led to his eventual resignation.
The main protagonists of the case are:
- Ross Perot: A visionary entrepreneur and self-made billionaire known for his direct and assertive leadership style.
- Roger Smith: The CEO of GM at the time, known for his focus on automation and technology.
- GM Executives: A group of individuals resistant to change and unwilling to embrace Perot's radical ideas.
3. Analysis of the Case Study
This case study highlights several key organizational behavior issues:
- Leadership Styles: Perot's entrepreneurial and visionary leadership clashed with GM's hierarchical and bureaucratic structure. This clash of styles created a significant barrier to implementing change.
- Organizational Culture: GM's deeply entrenched culture of resistance to change and emphasis on seniority hindered Perot's efforts to introduce new ideas and practices.
- Team Dynamics: The lack of trust and collaboration between Perot and GM executives led to communication breakdowns and hindered effective decision-making.
- Power and Politics: The power dynamics within GM's organizational structure created significant resistance to Perot's proposals, making it difficult for him to gain traction for his ideas.
- Change Management: GM's lack of a comprehensive change management strategy and its failure to engage employees in the change process contributed to the failure of Perot's initiatives.
4. Recommendations
To address the challenges faced by GM and foster a more successful environment for change, we recommend the following:
- Leadership Development: Implement a comprehensive leadership development program for all levels of management, focusing on fostering collaboration, communication, and a willingness to embrace change.
- Organizational Restructuring: Re-evaluate GM's organizational structure to create a more agile and responsive organization. This could involve streamlining processes, decentralizing decision-making, and creating cross-functional teams.
- Technology Adoption: Invest in new technologies to improve efficiency and productivity, while also focusing on training employees to utilize these technologies effectively.
- Employee Engagement: Foster a culture of employee engagement through open communication, regular feedback, and opportunities for professional development.
- Diversity and Inclusion: Promote diversity and inclusion within GM's workforce to foster a more innovative and creative environment.
5. Basis of Recommendations
These recommendations are grounded in the following principles:
- Core Competencies and Consistency with Mission: The proposed changes align with GM's core competencies in manufacturing and technology, while also supporting its mission to provide high-quality vehicles to customers.
- External Customers and Internal Clients: The recommendations prioritize customer satisfaction by improving product quality and efficiency, while also creating a more positive and engaging work environment for employees.
- Competitors: The proposed changes aim to enhance GM's competitiveness by fostering innovation, improving efficiency, and adapting to changing market demands.
- Attractiveness: The proposed changes are expected to generate positive returns on investment by improving productivity, reducing costs, and enhancing customer satisfaction.
6. Conclusion
By implementing these recommendations, GM can foster a more collaborative and innovative organizational culture, empower employees, and drive strategic change. This will enable the company to adapt to the changing automotive landscape and regain its competitive edge.
7. Discussion
Alternative approaches to address the challenges faced by GM include:
- Hiring a New CEO: Replacing Roger Smith with a leader who embraces change and possesses strong leadership skills.
- Merging with Another Company: Combining with another automotive manufacturer to gain access to new technologies and markets.
- Divesting Non-Core Businesses: Selling off unprofitable or non-strategic business units to focus on core competencies.
However, these alternatives carry significant risks and may not be feasible in the short term. The proposed recommendations offer a more pragmatic and achievable approach to address the challenges faced by GM.
8. Next Steps
To implement these recommendations, GM should:
- Develop a comprehensive change management plan: This plan should outline the specific steps, timelines, and resources required to implement the recommended changes.
- Communicate the vision and strategy to employees: Transparency and open communication are crucial to garnering employee buy-in and support for the proposed changes.
- Invest in training and development: Provide employees with the necessary skills and knowledge to adapt to the new organizational structure and technologies.
- Monitor progress and make adjustments: Continuously evaluate the implementation of the recommendations and make adjustments as needed to ensure success.
By taking these steps, GM can transform itself into a more agile, innovative, and customer-centric organization, ultimately securing its place in the competitive automotive market.
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Case Description
In December, 1986 the General Motors Board of Directors must decide whether to accept the buyout agreement between GM and Ross Perot, a director of GM and its largest stockholder. The agreement called for GM to purchase all of Perot's GM shares in exchange for his resignation from the GM board and his resignation as Chairman of EDS, the company Perot founded in 1963 and sold to GM in 1984. The case chronicles a history of the Perot/GM merger, and the friction between Perot and GM management which led to the buyout agreement.
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