The NUMMI Cargo Cult: Ideas Are Easy, Execution Is Hard

from the nummi dept

As some of you know, I have an undergraduate degree in industrial and labor relations -- which I got in the mid-90s. One of the things I remember clearly was that the big concerns at the time were over competition not from India or China -- which is what you hear about today -- but competition from Germany and Japan. I had multiple classes where we looked at how organizations and businesses worked in the US compared to Japan and Germany, with questions being asked about what methods made the most sense. A key case study was the case of NUMMI -- the New United Motor Manufacturing Inc. I remember having to do case studies on NUMMI in three separate classes.

The Classic NUMMI Story

The simple story: GM had an auto plant in Fremont California that was the worst of the worst in terms of quality and productivity. The cars coming out of the factory were dreadful, and management and labor were constantly fighting -- even more than elsewhere, in an industry where labor and management have never been close. Eventually, in the early 80s, GM shut down the plant, but later worked out a deal with Toyota, to reopen the plant, under joint ownership -- with Toyota effectively running the plant. Both car companies could get something out of this. Toyota could start building cars in the US -- which was important as the US was threatening very high tariffs on imported Japanese cars, and GM would learn about how Toyota was able to build cars of much higher quality than GM. Amazingly (and against the wishes of both companies initially), the same awful workers who had worked at the plant previously were rehired.

But, then something amazing happened. Under the Toyota process, the plant flourished. The relationship between labor and management was no longer antagonistic, and the plant became much more productive, and quality shot sky high. It was a success story in almost every way. Through the late 80s and 90s, NUMMI was seen as the key to reviving American manufacturing (especially in the auto industry).

The New NUMMI Story

Today, on April 1st, 2010, NUMMI is shutting down for good. Last weekend's This American Life had an hour long episode all about what happened to NUMMI -- from the original, horrible old plant, to the revitalization, and then up through now as it's closing. The episode explains the second half of the story. If NUMMI was so miraculous, why is it now shutting down? Why is GM bankrupt? Hell, why is Toyota now recalling millions of cars over serious quality questions. What the hell happened?

Ideas Are Easy, Execution Is Hard

It really is a fascinating story all around -- but the key to me is that it highlights the vast difference between ideas and execution. We've said it before: lots of people have good ideas, but it's much, much more difficult to execute on a good idea. However, as a society, we tend to assume that the execution is easy, but the ideas are hard -- getting the equation backwards. NUMMI was a success -- for both GM and Toyota, but GM got the wrong lessons out of it.

Initially, it really just took the superficial parts of what worked at NUMMI in trying to expand that kind of production elsewhere. GM ignored the nuts and bolts of how to really execute on the teamwork process and how to focus on continual improvement. In one case, a GM manager even told someone to go to NUMMI and photograph every square inch, so that it could be recreated in a different plant, without bothering to care about how the rest of it worked. This is just the "idea." It's the window dressing. It's what people see that's pretty and clean, but not what's really going on behind the scenes.

How NUMMI Became A Cargo Cult

In fact, it sounds like the folks at Toyota knew this all along. While many were surprised that Toyota would "give up its secrets" to GM, someone on the program points out that the GM folks asked all the wrong questions. They were focused on the shiny front-end stuff, and not the dirty back-end of how it all really worked. As, we've pointed out before, it's like the infamous cargo cults that think if they just copy what they see of something, they'll get the same results, totally missing the fact that the execution involves a lot more than you can see.

Following that, GM kept trying and failing (miserably) to replicate the success of NUMMI elsewhere -- but as the report points out, it effectively took two decades, often involving numerous execs who had to spend years at NUMMI before moving elsewhere, before GM finally realized that what worked at NUMMI involved a lot more than just teamwork and a cable that allowed anyone to stop the line. It was more than a cargo cult. It was more than the idea. It involved a lot of careful, detailed execution. But, of course, by then it was too late. GM's reputation for making crappy cars was well established. Add in a healthy dose of paralyzing union agreements and whack the whole thing around with a freefall economy, and you have a bankrupt car company, now mostly owned by the US government.

Oh, and as for Toyota's more recent problems? It seems that it may have learned some of GM's bad lessons in return. It started focusing on rapid growth over quality in an attempt to bulk up and compete -- and now it may be facing some of the same problems that GM faced.

It's The Execution, Stupid...

In the end, though, it really is a fascinating case study. The original case studies from back in the 90's of what worked at NUMMI only told half of the story. The closing of NUMMI today highlights the other half: ideas are easy. Executing is hard. Pretending it's the other way around can get you into an awful lot of trouble.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    :Lobo Santo (profile), Apr 1st, 2010 @ 12:16pm

    Words to die by:

    (I like to say:) "Meh, how hard could it be?"
    ; P

     

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  2.  
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    The Groove Tiger (profile), Apr 1st, 2010 @ 12:29pm

    Everyone knows that the reason this auto-plant worked was because of the culture clash and humorous interaction of Gedde Watanabe and Michael Keaton.

     

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  3.  
    identicon
    The Great White Hype, Apr 1st, 2010 @ 12:35pm

    Reminds me of a quote...

    "To summarize the summary of the summary: people are a problem." ~Douglas Adams

     

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  4.  
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    Wesha (profile), Apr 1st, 2010 @ 12:39pm

    > GM had an auto plan in Fremont California

    Mike, you meant "auto plan*t*"?

     

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  5.  
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    Mike Masnick (profile), Apr 1st, 2010 @ 12:41pm

    Re:

    Mike, you meant "auto plan*t*"?


    Indeed. They certainly didn't have a plan. :) Sorry about that. Thanks for pointing it out... fixed now.

     

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  6.  
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    Matthew Cruse (profile), Apr 1st, 2010 @ 12:44pm

    Other Industries

    What I find interesting, is that out of the whole NUMMI project, a brand new industry was developed that was no longer directly tied to car plants or even manufatcturing, the whole LEA/Six Sigma thing. If you trace it back, almost all of these LEAN and SS programs come from the toyota manufacturing process. Now they apply these concepts to everything. Doesn't always work, sometimes it is just thrown on as it's own kind of window dressing, but it has really beneffited a lot of indutries. If GM had used the real concepts and correctly trained there personnel, I bet that they would not have had the problems they did.

     

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  7.  
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    New Mexico Mark, Apr 1st, 2010 @ 1:03pm

    I heard part of that show on public radio the other day. Outstanding idea for a show AND well executed! I was disappointed I didn't get to hear the whole thing.

     

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  8.  
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    interval, Apr 1st, 2010 @ 1:11pm

    Re:

    Yeah, listened to the story on our local NPR affiliate that week. I couldn't take my attention away from the radio for the full hour. The stories about NUMMI pre-Toyota were frankly horrific. Cars pushed off the assembly line with engines put in backwards, grills from one model some how bolted on another, totally inappropriate model. Apparently the mistakes were pushed on to a huge lot for repair later. Sometimes they didn't get repaired. Workers would fall into assembly pits and line managers would still refuse to shut down that line. Simply horrific.

     

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  9.  
    identicon
    PRMan, Apr 1st, 2010 @ 1:22pm

    Re: Re:

    The auto PLAN was easy, the auto PLANT, well, that's much harder... ;)

     

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  10.  
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    pr, Apr 1st, 2010 @ 7:54pm

    There's No Substitute for Caring

    I heard the TAL story too. It's just like everything: there's no substitute for the people on the front line caring.

    Old Fremont: workers didn't care, cars were ****. New Fremont: workers (the same ones!) care, cars are good. Old Van Nuys: workers didn't care, cars were ****. New Van Nuys: all the trimmings, but workers didn't care, cars were still ****.

    How do you make the workers care? I'm not sure. Firing a few of them might occasionally help, because sometimes it's the only to make it clear that management cares about producing quality products, too. But it's certainly not the answer. A terror culture doesn't lend itself to caring about the final product.

    Adding Lean/Six Sigma/Total Quality/Management Fad of the Week certainly doesn't help, either. I've seen them all come and go. Everybody in the trenches can see that it's just another bull**** bureaucracy getting in the way. There's always going to be a point of decision, where there's a choice between caring about the product and paying homage to the FOTW. Choose to pay homage and you survive; care and you get reamed. It doesn't take long to learn that lesson.

    In my industry discussions about quality usually go something like this:

    Management: We care about quality. We've implemented a new quality initiative and established an entire quality organization to show how much we care about quality.
    Engineer: I need a week that's not in the original schedule to figure out how to do this right.
    M: We don't care that much about quality.

    Pretty soon, you learn not to argue about it.

     

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  11.  
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    Jim, Apr 2nd, 2010 @ 3:42am

    It's true in software, too

    I've been involved in several software companies that were acquired. In each case, we probably could have turned over our software to the buyers before they acquired us, and they still would have had to buy us. It wasn't the code; it was the people that knew how to do stuff (i.e., execute) with the code.

     

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    out_of_the_blue, Apr 2nd, 2010 @ 8:41am

    There's no substitute for management knowing AND caring.

    Early 80's, GM had 54 (FIFTY-FOUR) levels of management. Let that sink in for a moment. It's about four times more levels than between the newest recruit in the military and the US President.

    That was also the worst period for "business" majors and accountants to go directly into high management, never having even looked under a hood, let alone gotten their little nebish hands greasy.

    But of course management didn't care because they got paid the same (ridiculously high) regardless of product quality or sales -- while simultaneously yelling that high union wages were the problem.

    Somewhere a horrible self-contradictory myth got accepted about "capitalism": that cost controls on workers wages are always good, while management is shameless in demanding and taking millions for actually doing damage to a company.

     

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  13.  
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    Rodel, Apr 6th, 2010 @ 8:18am

    Re: @New Mexico Mark

    Mark,
    You can still stream this episode on the TAL website: http://www.thisamericanlife.org/radio-archives/episode/403/nummi or download the podcast. Just one of the all the excellent episodes on This American Life :-)

     

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  14.  
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    Jian H., Apr 7th, 2010 @ 9:36am

    contact information

    do you guys know who work at Nummi?? This week, i have a project to do. i need to interview the people, who worked at Nummi??Please contact me if you know them.....Or u can give their contact information for me....please!!

     

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  15.  
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    Jian, Apr 9th, 2010 @ 10:11pm

    interview

    Hi. i am a student in Ohlone. i am doing a project about Nummi closing interview. i need some information. if you worked at Nummi? can i ask you guys some questions??? 1--how long do you work at Nummi toyota company?? how old were you when you got in the company?? 2--how do you treat the severance package? did you ratify it?? 3--do you think that the Nummi closing will effect your life???if so, how will change in a short term and in a long term? 4--how do think the effect bewteen the single and the person who need to afford family expenses? 5--what position did you work at?? 6--how long will you spend to find another job?? 7--do you think the new job's wage will higher than before??? 8--Does the Nummi closing effect the local economy? if so, what will effect?? 9. how is your feeling when you hear this new??? 10. can you describe how was your life in Nummi?? thank you very much!!

     

    reply to this | link to this | view in thread ]


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