April 04, 2006

GM’s forgetting curve

In a recent interview General Motor’s chief executive, Rick Wagoner, said this about critics who observe he’s grown up in the GM culture and therefore unable to make the radical changes required to move the company forward:

"That is so simplistic. These are sophisticated problems with historical tails that run back 80, 90 years. The chance of someone coming in and not understanding our business, making the right calls and doing them in cooperation with key constituencies like dealers and unions, is absolutely microscopic. That would be the biggest risk I’ve ever heard of."

Wagoner is using the risk of the “steep learning curve” to protect his job. Of course, that wasn’t an obstacle for Louis Gerstner at IBM or Carlos Ghosn at Nissan. He’s forgetting that when the issue is renewal and growth, the forgetting curve usually trumps the learning curve.


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