At Hawley Martin, we are in the business of helping our clients create brands that form bonds with customers, bonds that lead to increased sales and profit. But branding is only the first step, which is why I wrote the book pictured here. A brand must deliver on its promise, and it must keep up with the times. Consider, for example, what happened in the case of General Motors.
Back in the early 1920s, when Ford had 60 percent of U.S. auto sales, General Motors put a branding strategy into effect that snatched away much of that share of market. You see, Henry Ford had made the mistake of holding on too long to the business model that had led his company to success: Provide everyman with dependable, affordable transportation in the form of a Model-T. His competitor, Alfred Sloan at GM recognized used car sales would soon fill much of that need and that many American consumers wanted more.
Sloan devised a clever branding strategy to capitalize on what he saw coming. He positioned Chevrolet as his entry-level brand directly against Ford. Pontiac became the brand for those ready to move up to something more snazzy, Oldsmobile was positioned for the solid, middle-America family man, Buick for the successful individual who wanted luxury without being overly showy, and Cadillac for the established, moneyed set who didn’t mind letting the world know who was on top of the heap and who planned to stay there.
The plan worked so well that by the 1960s, General Motors market share stood at nearly 60 percent. But as the years rolled by General Motors fell victim to the same disease that earlier had caused Ford’s problems, perhaps because we had not yet written our book on continuous improvement marketing. Ford failed to keep its finger on the pulse of the consumer and to adjust what it offered accordingly. It kept making behemoth automobiles, for example, when smaller cars became popular. It continued turning out vehicles that required multiple return trips to the dealer to “get the bugs out” when Toyota and others turned out hassle-free vehicles using new, lean manufacturing techniques. The result was that by 2004 General Motors share had dropped to a little more than 25 percent of the market.
What made General Motors so myopic? The same bureaucratic structure that enabled Sloan to build a company large enough to handle 60 percent of the U.S. market. Aside from out-thinking Henry Ford, Alfred Sloan had to fashion a huge industrial enterprise that wouldn’t collapse under the weight of its own complexity. When he was doing this, it wasn’t obvious how companies would marry the efficiencies of mass production with the potential inefficiencies of distributing and marketing more and more products. Sloan built a company that worked well for a while by decentralizing operations such as production and distribution by setting up separate divisions while centralizing policy matters and administrative functions such as personnel and finance at the top.
GM’s way of doing business became a model for many U.S. companies. It also placed the policy-makers in an ivory tower far from the customers they served and the daily revelations apparent to those slugging it out in the trenches. Unwittingly, the bureaucratic pyramid Sloan built became choked with overconfidence and red tape.
It took the Great Recession and a government bailout to get General Motors open its eyes and the take actions that have now turned things around. General Motors was deemed one of those companies too big to fail and received two bouts of financial support from two separate presidential administrations during the depths of the recession: $13.4 billion came from the Bush administration, and $36.1 billion from the Obama administration, making up a total of $49.5 billion.
At this writing, all but about $11 billion has been recouped by the government and GM’s fortunes appear to be very much on the upswing. In 2016, the company had EBIT-adjusted earnings of $12.5 billion, which was up 15.9 percent from 2015.
Moreover, in terms of quality, in 2016 GM topped all other car makers in the number of models ranked by J. D. Powers as most dependable in their segments–eight in all. Sometimes it takes a fullblown crisis to get the stakeholders of a company to wake up. Our advice is, don’t let it come to that. Instead, click here for a free download of a PDF of my book, CONTINOUS IMPROVEMENT MARKETING.