More thoughts on GM.

Still thinking about the car industry, it saddens me to learn that Lee Iacocca, the executive who turned Chrysler around in the 1980s, will lose a major part of his pension and a guaranteed life-long company car as part of the fall-out from Chrysler's bankruptcy deal. Chrysler CEO Robert Nardelli told a U.S. bankruptcy court that Iacocca's pension would be among the obligations Chrysler wouldn't be paying when it got court approval to sell itself to a "New Chrysler" to be owned by the UAW, the U.S. and Canadian governments and Fiat. Iacocca's retirement was part of a supplemental executive retirement plan including non-IRS qualified pension funds that are therefore subject to bankruptcy. Chrysler is also stopping a program that gave company cars for life to former executives and directors including Iacocca.

Now, back to GM, I believe the key flaw with Obama's plan for the company is that it doesn't address the perniciousness of the traditional corporate and organizational culture at GM and bring in fresh thinkers empowered to make material changes, like Ford has done. This would go against a fatal aspect of GM's culture - its insularity. The Obama plan generally appears to be based on the traditional venture capital model in that it promises the Government will only be a short-term investor and its efforts will be focussed on turning the company around and producing a sizeable return on divestment to the new shareholders (U.S. and Canadian taxpayers).

However, the plan is missing the most critical element of the venture capital model - when a venture capital fund buys a company to turn it around, it places experts and innovators from outside in key management roles and sees that they're empowered to make decisions and effect real change. There's no evidence that the Obama turnaround team has the experience, skills, mandate, authority or even desire to make the sweeping strategic, cultural, and organizational changes required to return GM to viability. This, among other things, makes the current approach unworkable and just creates another black-hole for taxpayer money.