“USC Professor James O’Toole once identified the core assumptions of the management team at General Motors in the 1970s, when they were on top of the world. He developed a list of sort of the 10 fundamental shared basic assumptions at General Motors, c. 1972. Now, it’s a bit of a stylized list, it may be a little extreme. I’m sure that some of the managers at General Motors would quibble with some of these, but it’s illustrative. He said: One: GM is in the business of making money, not cars. In his belief that was sort of one of the fundamental shared basic assumptions, one of the fundamental facets of the mental model-driving behavior and decision-making at GM. Two: Success comes not from technological leadership but from being able to quickly adopt innovations successfully introduced by others. Three: Cars are primarily status symbols. Styling is, therefore, more important than quality to customers, who, after all, are going to trade up every other year anyway. That was the model in the automobile industry in the ’60s and ’70s: Get people to trade up as incomes rose in the post-World War II era. Next: The U.S. car market is isolated from the rest of the world. Foreign competitors will never gain more than 15% of our domestic market. Energy will always be abundant and cheap—the fifth poor assumption (1972 note, just before the first OPEC embargo, the first dramatic spike in oil prices that occurred during the 1970s). Okay, five more assumptions that O’Toole identified. Workers have no important impact on production or product quality; that’s the purview of inspectors, of engineers. Seven: Consumer, environmental, and other social concerns are unimportant to the U.S. public. Eight: Government is the enemy. It should be fought tooth and nail every inch of the way. Nine: Strict, centralized financial controls are the secret to good administration. Finally: Managers should always be developed from the inside; managers should be promoted from within. Those were the 10 assumptions O’Toole identified in looking back at the management team at GM; that was their mental model in 1972.”
—Michael A. Roberto
