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GM's CEO, Rick Wagoner, has opined that the automaker's biggest blunder was to walk away from the electric car.

In my view, however, GM's biggest strategic blunder was its failure to view Saturn strategically—and as a consequence not allowing it to fulfill its destiny as a domestic competitor to Toyota, Nissan, and Honda that could actually win.

As the company makes hard decisions in the struggle to survive, the challenge to GM will be its ability to learn from—and not compound—that mistake.

Introduced in 1990, Saturn was for many years surpassed in JD Powers ratings by only Lexus, Infinity, and Cadillac—much more expensive brands. It attracted a host of best-car awards. But it was the customer experience that made Saturn stand out.

For starters, there was a "no-haggle" price policy, made possible because adjacent dealers were sister companies with common ownership. In each dealership, customers were greeted by a salaried sales agent who would answer questions about the car in a relaxed atmosphere. Buyers would be treated as part of the family; they would see their picture on the wall and be invited to monthly cookouts.

Saturn could deliver this experience because it was truly was, as its ads said, "a different kind of company."

At its outset, a team of 99 people created a new culture based on teamwork, partnering, and treating the customer with respect. The new plant in Spring Hills, Tenn. had a simple labor contract that consisted of a few paragraphs rather than the volumes of legalese elsewhere at GM.

What was truly remarkable was the intensity of loyalty that Saturn generated among its customers. People got married in their Saturn. They acted not only as advocates but also as sales consultants to prospective buyers. And over 30,000 of them came to Spring Hill for a party in 1994. (Shades of Harley Davidson.)

They were proud of the fact that an American company had made a quality car and created a customer relationship based on friendship and respect.

So what did GM do with this gem? It let 10 years go by with no product investment in Saturn outside of cosmetic changes. GM invested instead in Oldsmobile!

It created from scratch the Aurora, introduced in 1995, which lasted only four years, except for an abortive attempt to revive it in 2001. The Aurora was intended to save Oldsmobile... although, ironically, GM tried to eliminate any connection with that model because of its problem image. The Aurora failed in creating a brand following, largely because it simply was not a very well made car.

If the Aurora investment had been channeled to Saturn, the car would have been of superior quality—the Saturn family would have made sure of that.

Here's what can be learned from Saturn and applied today.

First, GM had too many mouths to feed, all lining up and saying "my turn." It was Oldsmobile's turn for a new model, and even though the Oldsmobile brand was in trouble GM could not then bite the bullet and do away with the brand.

Second, there was a preoccupation on short-term profits and a lack of strategic vision and scenario planning, a problem not at all unique to GM.

I once gave a presentation about Saturn, and a GM board member in the audience said that Saturn's ROI was inferior—implying that it was an investment mistake. He was right. The ROI was inferior given its substantial investment in product and plant and the relatively low prices of this class of car. However, it should have been clear, as it was to those who conceived the Saturn concept in 1985, that it provided a platform to fight the Japanese brands, a platform that could be key to the survival of GM, especially in the event that customer support for the gas guzzlers were to wane.

In short, strategic vision was either absent or trumped by short-term-ROI prospects.

Clearly, GM needs to prune its line, but Saturn should be a candidate to live on. Even today, the brand image, customer loyalty, green association, and dealer network constitute a platform that could be leveraged as GM competes with the Japanese brands in the automobile environment of the future.

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ABOUT THE AUTHOR

David A. Aaker is vice-chairman of Prophet (www.prophet.com), Professor Emeritus at the Haas School of Business, UC Berkeley, and executive adviser to Dentsu. His latest book, his 14th, is Spanning Silos: the New CMO Imperative. Reach him at daaker@prophet.com.


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