What it is: General Motors announced layoffs to shift towards autonomous and electric vehicles.
General Motors nearly went bankrupt in 2009 and only survived through massive government bailouts. The problem is that the business of cars is changing and General Motors is still designed to sell cars to a market that no longer exists.
In the old days, people bought cars regularly and General Motors happily sold them cars. Now General Motors sees the future and it’s no longer car ownership. Cars make far less profit than SUVs so General Motors is going to focus on the high-profit products and dump the low profit cars. Even worse for General Motors, the future is no longer cars but electric vehicles, self-driving cars, and ride-sharing services, all of which General Motors isn’t focused on. That means the future of the car industry is heading in one direction while General Motors is designed to appeal to the past.
That’s why General Motors decided to lay off thousands of workers and shut down several factories because they know they need to cut costs now before it’s too late like 2009. General Motors wants to essentially get out of the car manufacturing business and get into the electric vehicle, autonomous, and ride-sharing business. Good luck with that.
The big problem is that few big companies can manage the shift to a new market because they’re burdened with an infrastructure designed to satisfy a dying market. Kodak tried to straddle between film and digital photography. Meanwhile, their rivals simply focused on the growing digital photography market and ignored the film business, and wound up grabbing the lion’s share of the digital photography market, leaving Kodak far behind.
The Yellow Pages used to be the main directory people used to search for local businesses. Now people rely on Google, Yelp, and other sites, completely ignoring the Yellow Pages. In most cities, the Yellow Pages no longer exists because people no longer use it. If people no longer use it, advertisers see no reason to advertise in it.
Yet the Yellow Pages could have shifted into search, Kodak could have shifted into digital photography, and Borders Books could have shifted into online book selling like Amazon. Instead, these companies were burdened by their past infrastructure catering to the past while the future beckoned newer, leaner rivals forward.
So the question about General Motors surviving to shift to a world of electric, autonomous, and ride-sharing services seems dim at best. First, General Motors needs to embrace the future quickly. Second, they need to free themselves of their infrastructure designed to profit from the past. To move quickly, they need to be like a lean startup that focuses solely on the future. Focusing partly on the future and partly on the past means General Motors will have no way of keeping up with rivals who focus solely on the future.
Despite what General Motors is trying to do, their chances of surviving the future is dim. They don’t have the luxury of focusing solely on the future but they do have the drawback of paying expenses to support the past. These twin drawbacks will likely sink the company for good that no government bailout will ever revitalize again.
Given the odds, General Motors and the entire Big Three auto makers are doomed. The future is not the past anymore than Sears is the future of retailing compared to Amazon. General Motors is making a valiant attempt to stay relevant, but the odds are against them. The company will likely become a footnote in history as newer companies like Tesla and Uber redefine the new transportation market. The future belongs to companies that focus on where the market is going, not where it once was. Tesla can focus 100% on the future. General Motors cannot, and that’s why companies like General Motors have little chance of surviving the future, let alone defining it any time soon.