GM Has a New Model for Change

BY: ANNA MUOIONovember 30, 2000

"Change takes guts. It takes imagination. It takes commitment," declares John Taylor of
General Motors's APEx team. APEx is designing radically new concept cars -- and
changing the concept of change inside GM.

John Taylor never meant to make his colleague cry. But when Taylor, director of design
strategies for General Motors's forward-thinking Advanced Portfolio Exploration Group
(APEx), told one of Chevrolet's brand managers that it was time to rethink and redesign the
Camaro -- a relic of an extinct consumer group that Taylor describes as "medallion men,"
with their unbuttoned shirts and exposed gold chains -- the manager literally broke down in
tears.
Change is never easy -- especially in a vast, global organization like GM, which has been
struggling with a change agenda for years. But having weathered an 18% dip in its U.S.
market share over the last decade, a dip that's been partly due to the fact that many of the
company's new vehicles don't seem to appeal to young buyers, GM finally understands that
keeping its leadership position in the worldwide auto business demands deep-seated
change.
"Change takes guts. It takes imagination. It takes commitment. This place has had so many
life-threatening shocks over the years that the thought of even taking a risk has been
considered too risky," says Taylor, 60, a sharp-witted Aussie who came to GM headquarters
five years ago from Ruesselsheim, Germany, where he served as assistant director of design
at Adam Opel AG. "But the upside is that when you finally do get a supertanker to turn
around, shit happens."
APEx, a team of 40 designers, analysts, and engineers temporarily housed in the basement
of GM's sprawling Technical Center in Warren, Michigan, is charged with imagining and
developing bold new concept cars -- future vehicles that will, ideally, create the type of buzz
and cultlike following that the Volkswagen Beetle and the slick Audi TT Roadster have
generated. APEx is part of an idea-generating triumvirate inside GM that includes the
Corporate Brand Character Center, a creative think tank that sharpens the images of GM's
nine different vehicle divisions, and the Innovation Zone, a 12-person team that focuses on
how to make gm's best new ideas an engineering reality.
Already, APEx's hand can be seen in gm's 2000 concept-car lineup, as well as in several on-
the-market vehicles such as the new "funkstalgic" Chevrolet SSR, which is half-pickup, half-
roadster, and which debuted to much fanfare during this year's auto show in Detroit.
How has APEx changed how GM generates ideas? First, it convinced the company that it
had to break out of what APEx manager Bill Ochalek calls GM's "16-mile-road mentality."
"There's this idea that the world runs right around our technical center, that Warren is at
the center of the universe," says Ochalek, a 23-year veteran of GM. "But being alone is not a
good thing in our environment. It's too easy to talk yourself into the brilliance of your
ideas."
The basic insight: You learn the most by interacting with people who are the least like you.
But the reality of life inside GM -- and, to be fair, inside virtually all big companies -- is that
you spend most of your time with people who are exactly like you. To counter this insularity,
Ochalek, 43, lobbied to get his team out into the real world. Members of APEx went to work
inside various car dealerships and visited with companies in different industries. They
stopped attending auto shows and started going to Internet conferences, consumer-
electronics trade shows, and toy fairs.
Another challenge for APEx was to get GM comfortable with the idea of "waste rates." Years
of being drilled in "Crosby Quality" (after management guru Phil Crosby's motto: Do it right
the first time) had made most GMers uncomfortable with the messiness that innovation
requires. "Who in hell ever did anything great by getting it right the first time?" asks Taylor.
"You can put a stamp on an envelope and get it right the first time, but when you're trying to
create products for the future, you're going to make mistakes."
Taylor knew that for every 20 ideas that APEx generated, it was likely that only one would
come to fruition. He presented his case to GM executives, explaining the importance of
countering the company's "no-waste" mind-set, illustrating his point with examples of waste
rates from different industries. In the pharmaceutical business, for instance, an idea waste
rate of 5,000-to-1 is common. "If we had a 20-to-1 idea waste rate in a company that
couldn't think of one idea, then that would be a hell of a revolution," says Taylor. "We knew
that it would be a tough sell to talk waste rates to a manufacturing company. But it was
imperative if we were going to create a fear-free, risk-taking workplace. Because if you're
frightened of making a mistake, you won't make a thing."
That said, Taylor thinks that the real secret to APEx's creativity lies not in ideas like waste
rates and risk taking, but somewhere else. "The secret to what we're doing is not in any
process at all," he says. "The secret is in our people. What we're doing under the cover of
'processes' is reinvesting in people -- finding the right kind of talent to make great change."

Indeed, as APEx increased its impact on gm, more and more people started to take notice. It
used to be that managers from the design center would call Ochalek when they had
interviewed a great person who didn't really fit at the company. "So they'd send him or her
to us!" Ochalek jokes. But two years ago, when Ochalek posted three analyst openings at
APEx on GM's internal-hiring system, 400 people applied within a few days.
"I hope that down the line, APEx, as a group that you come visit down in the basement, will
disappear," says Ochalek, "and that it will simply become a way of thinking and of doing
business -- a networked system of people and connections that keeps innovation running
continuously."
The early signs are positive, but both Ochalek and Taylor are clear that APEx and GM still
have a long way to go. "The real triumph I've seen so far hasn't been in the products or the
ideas that we've created. It's been in the minds of our people, and in the enthusiasm that
we've been able to harvest," says Ochalek. "It's been in seeing a change from an iterative
portfolio to an innovation-driven portfolio. This might seem like a little step, but for us, it's a
huge triumph."