The current economic environment has created a lot of talk about failed organizations; much of the conversation has centered around the massive shifts auto-makers will have to undergo to survive.

Talk has been especially negative regarding General Motors, and their inability to observe shifts in the habits & needs of motorists. It seems they’ve failed to adapt to changing conditions, and have paid a heavy price for their leadership or lack thereof.

If we flash back in time to another period of recession, the 1980’s, it seems the automotive industry was already providing clues to help GM grow and change. You may have seen the movie Gung Ho, which chronicles how Toyota collaborated with GM to help turn around the fledgling Freemont, California plant.

While GM had remained a top-down & centralized structure (think Spider), Toyota had embraced hybrid leadership principles (think starfish).

They innovated, adapted, and embraced feedback from both customers and staff. In fact they even had a system whereby any worker could stop the assembly line to suggest improvements on the manufacturing process.

Employees felt like part of the team, and the vast majority of improvements suggested were actually implemented, creating a high level of ownership amongst staff. Toyota viewed its employees as key assets, not just pieces in an assembly line.

GM scoffed at their innovative ways, despite the fact that their own vehicles were prone to mechanical failure. They contended that their own problems were the result of unchecked union power, and that Toyotas success was birthed in cultural differences.

The story is rich with learnings about what makes organizations and their leaders, great.

Freemont was so bad, that GM had already decided to close it down when they offered it to Toyota. It was their lowest producing plant, with the poorest quality vehicles. Relations between staff and management were so bad that managers carried guns for protection, and the union had a terrible relationship with management. It was a nightmare by any standard.

GM threw down the gauntlet, and forced Toyota to hire the same unionized workforce they dealt with.

GM & Toyota re-opened the plant and immediately embraced the principles that had served the Japanese operators so well. The pay scale was flattened. The value of team work and individual ownership was stressed and they  created a culture where staff were assets.

Team members were quoted as saying:

“our team dictates what we do and how we do it; we see our group leader for 30 minutes each week…the team members are what is most important; we can function without management.”

The results were remarkable; within 3 years the plant was among the top GM units worldwide, with an average of 60% higher productivity than comparable plants. Quality had dramatically improved.

When a secret managerial spy infiltrated the Freemont plant as an ordinary worker, and began slacking off with long lunches, lapses in concentration and a poor attitude, he was stunned by the response of his team; they were tougher on him than management, due to their new-found pride and desire to see the plant run smoothly.

Values, not structure or procedure, transformed the Freemont plant. Toyota realized that values were an important addition to structures, and they learnt to harness the power of values to produce great results.

They realized that a centralized assembly line would take vital influence and power away from their employees; however they maintained a structure that meant employees still had projects and targets to work on.

They were never free to just do whatever they wanted, but they were empowered to do the job in the most innovative way they could imagine.

Essentially, Toyotas values gave it control over consistency, and its decentralization inspired ownership & creativity.

Recent events might lead us to conclude that GM is still holding onto structures that are ineffective, and despite the lessons of Gung Ho & the Freemont plant, have still not harnessed the potency of values in leadership.