A Wealth of Lessons from Saturn Failure

From Knowledge@Wharton: General Motors' decision earlier this month to scrap its Saturn brand triggered frequent retellings of the many ways in which GM missed an opportunity to recast itself and the auto industry. But other manufacturers did adopt some of Saturn's innovations, according to Wharton faculty. Indeed, they say, the Saturn story provides a roadmap for what to do - and what not to do - as the auto industry adjusts to the post-financial crisis world. Wharton Marketing professor Americus Reed II once cited Saturn's strategy for building a community of customers with an emotional connection to the brand as an example for his students. Wharton operations and information management professor Morris A. Cohen describes its system for distributing replacement parts to its retailers as an industry model. And Lawrence G. Hrebiniak, a management professor at Wharton, says that in its early years, Saturn made "innovation a corporate strategy." One of those lessons is the importance of persistence. "Saturn started out on the right foot - as an autonomous division with market focus and an emphasis on quality," says Hrebiniak. But the brand and its parent failed to sustain the effort. "It ended up on the wrong foot - with internal squabbles, and production- and cost-driven focus."

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GM Announces Significant Production Cuts for Q1 2009

General Motors announced today a significant reduction of planned production for the first quarter of 2009 due to the ongoing and severe drop in industry sales, which were down 36% in November overall and 41% for GM (2007 vs. 2008). The impact of these and recently announced actions to adjust production with market demand, will result in the temporary idling of approximately 30% of GM's North American assembly plant volume during the first quarter of 2009 and will remove approximately 250,000 units from production.