As a former GM employee and a GM customer, I'm really fascinated by the reaction of the public, the media, and Congress to the recalls and scandal over ignition switch problems in some GM small cars from recent years.
The defect or design flaw is believed to have caused between 13 and 300 deaths (depending on who you ask).
This leads to a great public outcry. As happened with Toyota, the CEO gets called on the carpet to explain themselves and the company to Congress (with lots of politician showboating taking place). It's good to examine what happened, to see what companies, regulators, and the public can learn to prevent future problems. Or, it might just be unhelpful political theater.
There are anywhere from 44,000 to 400,000 preventable deaths a year in the U.S. as a result of medical errors and systemic problems in healthcare. Not that it necessarily helps, but why aren't hospital and health system CEOs testifying in front of Congress each day? Why is this not regular front page news? Are people more concerned about vehicle safety than healthcare safety? Which is a bigger risk?
This week, GM CEO Mary Barra testified. See also this WSJ story if you have access.
Some of her comments are very interesting, from the WSJ article, as she blamed “the old GM culture” (of which she has been a part since 1981, although she is the new CEO):
Ms. Barra called the decision “not acceptable” as family members of some of the 13 people killed in accidents blamed on the switches looked on. “In the past,” she told them, “we had more of a cost culture, and now we have a customer culture that focuses on safety and quality.”
This is a pretty blunt assessment and admission of the “old culture.” Can it really change to a “new culture” as quickly as signing bankruptcy documents for the “old GM?”
When I worked for GM from 1995-1997, it was certainly a “cost culture” in the factory. More of a “quantity first” culture where making daily production numbers was far more important than quality and employee safety. That's my blunt assessment of that environment and I'll probably share a long story about one experience in Friday's blog post.
The discussion reminiscent of a famous scene in the movie “Fight Club” in which Edward Norton Jr.'s character coldly explains the thought process at an automaker. Which one did he work for? “A major one.”
Narrator: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.
Business woman on plane: Are there a lot of these kinds of accidents?
Narrator: You wouldn't believe.
Business woman on plane: Which car company do you work for?
Narrator: A major one.
What did Barra admit to GM deciding?
“GM managers ruled out redesigning a flawed ignition switch because the fix would cost 90 cents a car, and return only 10 cents to 15 cents in warranty-cost savings.”
Yikes. That's a slightly different equation than Fight Club, but it's the same cold logic. “On average,” the company comes out ahead but some particular customers might be hurt or killed. Yikes.
And Barra said:
But Ms. Barra repeated assurances that “today's General Motors” is putting safety first, and fixing its internal lines of communication to assure that customer complaints and evidence of safety problems get acted on more quickly.
Again, does a huge company's culture change overnight? Has it really changed? Is it as easy as yesterday and today? Probably not.
There's an interesting aside about the unintended consequences of well-intended government regulations, as described in this USA Today piece.
One reason for the lapse is GM's disarray at the time. But another is that the 2000 Transportation Recall Enhancement, Accountability and Documentation Act created a perverse incentive for automakers to refrain from fully airing safety concerns internally — the exact opposite of its purpose. Once the matter reaches company higher-ups, NHTSA has to be informed within five days, inviting intrusive investigations. Hence, there was an unwritten code that evidence not be moved up the chain of command until necessary.
Oops! One can fault the law, but I think the burden really has to fall on GM for not doing the right thing.
Are most of “today's hospitals” like the “old GM?”
Barra's statements sadly remind me of today's hospitals talking about now putting patient safety first. Many hospitals, as part of their Lean healthcare initiatives, are thankfully improving “internal lines of communication,” such as Virginia Mason Medical Center and their “patient safety alert” system that's being adopted, recently, in Saskatchewan.
“On average,” patients are safe, but far too many are being hurt and killed by preventable systemic errors (things we don't leap to blame individuals for). You're not guaranteed to get hurt, but, then again, you're not guaranteed that a GM small car covered by the recall will always shut itself off while you're driving.
One other way Barra described GM reminds me of hospitals and health systems.
[GM's] disclosures and depositions leading to the recall suggest a cultural landscape during the prior decade where employees worked in silos, isolated from other departments and critical information.
We can sit back and snicker at GM, but are hospitals doing any better?
Does your hospital focus more on costs instead of quality and patient safety? Are there isolated silos that aren't sharing critical information that would help or protect patients? Are there times when we are “penny wise and pound foolish,” in terms of saving a little money today in a way that might harm our patients down the road? What is your honest assessment of that?
Short of lambasting hospital CEOs in front of Congress, what can we do to change the “old hospitals” into “new hospitals” with a better culture and better outcomes?
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It’s great that the new GM claims that the customer and safety come first. I’ll believe it when I see it (and this isn’t just a GM problem).
What happens when “what the customer wants” runs up against safety?
GM has been touting all sorts of hands-free OnStar features that will distract the driver, doing things like reading your Facebook news feed to you.
I’m not sure any customer has ever really asked for this…
Since studies show “hands free” doesn’t mean a lack of distraction… which means safety risks, will Barra kill these features?
Will Barra kill the huge touch screens that take your eyes off the road to just adjust the temperature?
I’m curious to see if the next wave of lawsuits comes from distracted driving that’s promoted by GM and other automakers (Tesla’s huge screen and web browser comes to mind).
Automakers – if you’re going to put safety first, please start now.
Why is it always that the current managers she how foolish the past managers were being?
“we had more of a cost culture, and now we have a customer culture that focuses on safety and quality.”
I hear the equivalent of this all the time. I never hear people say (outside of to some colleagues offline, which is only whining not an attempt to change) we used to do what was right, now we are doing the wrong thing.
And I don’t notice much evidence companies claiming to “have seen the light” actually change. 2, 5 or 10 years later the new executives are making an extremely similar claim yet again. In the past 40 years how often has a GM senior executive said something very similar to that? 10, 20?
My guess is her statement is a bit more straight forward than the average on over the last few decades at GM, which is nice, but I am not convinced just being more honest about past failures really ends up with any different results over the long term. I guess in 20 years we can see. I wouldn’t bet on GM having avoided numerous senior executives repeat the same claims of that was the old GM, from now on we are going to be so good you just wait and see.
Great point. As to former GM CEOs….
Rick Wagoner made this pronouncement in 2005:
Mission accomplished! Heckuva job, Gibby.
In 2009, Wagoner said GM would be more customer-focused:
So they already were in 2005 or they weren’t. Thanks, Rick.
Mark,
You pose an interesting question. If today’s Hospitals are not like the “Old GM” thanks to the Affordable Care Act, tomorrow’s Hospitals Will Be.
Strong evidence of this can be found from one of the Chief architect of Obamacare, Ezekiel Emanuel, who states proudly, “There is too much Innovation in Healthcare” and most recently in his New York Times op-ed this week titled “In Health Care, Choice Is Overrated“.
Having the privilege to work in the Healthcare Industry, I see and experience every day how innovation extends life, and how “Choice” in treatment options determine return to a good quality of life versus a slow but certain death sentence.
I think Emanuel brings up good points about how not all healthcare choices are going to be high value (high quality and reasonable cost). It would be great if we had better data for choosing providers or hospitals with the best quality and the lowest cost (because low cost and high quality actually tend to go hand in hand in healthcare). I wouldn’t say “choice is overrated” or that innovation is bad. I think it’s reasonable to say “not all choices are good choices.”
I can agree with him on that without agreeing with the “there’s too much innovation” in healthcare statement.
Having also worked at GM & being a Hospital Board Member I can say with certainty that our hospital puts patient safety above all else. When it is time to balance the budget the final review is always from a safety first perspective. Safety first is not the best for the bottom line, but it is the best for the patient. It has led to collaboration and information sharing from all participants in a patients stay on a daily basis, changes in procedures with medications, increased involvement with community agencies and family members, etc. A Safety first system will cost more up front, but the long view shows that it will decrease healthcare costs and lead to a more efficient system.
I’m glad to hear that, Daniel. We need more boards setting that sort of priority and making sure it cascades through each organization.
I am not sure how a board member really knows how safe the hospital they govern really is. Board members only hear what the organization wants them to hear unless there is a spectacular fail (dead body found in stairwell). I am not saying that hospitals hide information, but I think almost all CEOs believe their hospital is much safer than average and we know that is just not the case even though they can put together a nice presentation saying otherwise.
Mark,
Ideally companies would have a culture of integrity that ensures all issues impacting public safety are discovered, solved, and prevented in a timely- and transparent- manner.
Until this happens, how can we make the customer aware of who takes public safety seriously? IIHS and NHTSA have crash ratings for cars. And there’s a “Hospital Safety Score” at http://www.hospitalsafetyscore.org .
Are these making a difference by putting market pressure on companies to address safety issues? It would be interesting to see any data about this.
Great question, Mark.
There’s arguably better data available about cars, including crash ratings, reliability data, etc. to help customers choose. There are many reasons people buy a car other than safety – style, image, performance, etc.
I’d like to think safety would be a primary criteria for choosing a hospital. But, there are many relatively superficial reasons for choosing a hospital – location, “reputation,” the doctor told us to go there, who takes our insurance (that’s pretty important), etc.
Much of the data or the different hospital ratings/rankings seem flawed in one way or another. I don’t know that the original “To Err is Human” study and the data from that (estimates of 44,000 to 98,000 dead each year) have really spurred enough of an overhaul. Is healthcare, on the whole, safer today than in 1998?
Did Ralph Nader’s “Unsafe at Any Speed” have a bigger effect on the nation than these different hospital studies and reports?
If there’s market pressure to choose a hospital based on safety, I’m not seeing it.
Mark,
I have not worked at GM nor in a Hospital but I have worked in many other industries as a Management Consultant. You asked the following the question:
‘what can we do to change the “old hospitals” into “new hospitals” with a better culture and better outcomes?’
What I have analyzed in many organizations and industries is there lacks an accountability process. Being “better” depends on what the KPI’s are for the organization which “should” drive accountability. Once you train and equip leaders at the supervisor and manager level to drive “real” accountability then you will see a more effective and responsible organization.
Measures are important, but “accountability” too often means “beat people up” (verbally) for not making their numbers.
I think “real accountability” is something that people choose to take on. We can choose to be accountable, it can’t be forced or mandated.
This requires a supportive and collaborative leadership culture. Hospitals, like GM, suffer from a history of a top-down command and control culture.
Adding more KPIs on top of that won’t help, I believe.
What do you mean by “real accountability” in your comment?
Mark,
I am trying to process this comment that you made:
‘I think “real accountability” is something that people choose to take on. We can choose to be accountable, it can’t be forced or mandated.’
Every single organization has a Management Operating System and the foundation for this system to operate effectively is Accountability. Being accountable is not a choice, it is requirement. The problem is that leaders do not know “how” to effectively hold people accountable to make them feel part of solution.
Holding someone accountable means that each person knows the target, what is expected with outcomes of quality, safety, etc. , a verbal confirmation, and then actions to follow up. Here is the key – the supervisor / manager must follow-up frequently to mitigate any issues. They cannot just wait and see. This is were you refer to the “beat people up” because the supervisor or the manager waits until the end of the day to follow up. Who’ s fault is it then?
I did not indicate to add more KPI’s but it depends on what the KPI’s are for the organization. If safety is not a KPI’s then how would you expect the supervisor or manager to get better? You cannot then hold them accountable. You get what you focus on.
Thanks, Rafael.
I’ll address your question and comment in a second.
First though, I think the word “accountability” gets used wrongly here. I think we mean “responsibility.”
Accountability really means to explain what happened, give given an “account” of:
So it also means responsible.
Can we “hold people responsible?”
No, but they can choose be to responsible.
What you describe as an “accountability” process, Rafael, just sounds like leadership to me.
Accountability in most organizations means to dictate goals or measures and then blame and punish people when they don’t meet those goals.
What you’re describing sounds far better. We agree that leaders can’t just judge at the end of the day or the end of the month. The leaders must make sure employees understand goals (and I’d add that employees should help create those goals). When there’s agreement and alignment and when leaders are helping along the way (not just judging), then people can be responsible (or accountable) for their results.
I’m nitpicking on words a bit (accountable vs. responsible), but I think we’re on the same page.
I had a problem with a hospital one time and had a simple suggestion. The nurse said it wasn’t a bad idea, and I should tell her supervisor. I said, “Why don’t you just tell your supervisor?” She said, “Oh, he would never listen to me.”
Yes, hospitals are just like the “Old” GM.
Mark,
Here’s an idea for you. Maybe you’ve had it already. For your podcast, interview a former GM manager/executive who currently works in health care and has a thoughtful perspective about quality, safety and lean. Maybe there’s someone like this at a big system like Henry Ford Health System or Trinity Health. Ask them to compare and contrast their experiences in the two (or more) environments. I’d listen to that one!
Amiel
Amiel – That’s a great idea. I don’t know anybody who fits that profile. If any readers do, please let me know.
Mark