The Four Bureaucratic Horsemen of GM’s Apocalypse
June 17, 2014
by Mariko Gordon
After 13 years at the head of KG Funds, the firm's founder, Ike Kier, has decided to step down and return outside capital to investors. The firm manages around $613 million of assets across its funds and client accounts. According to a copy of the firm's latest investor update, Kier has decided to step down Read More
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Anton R. Valukas could have three heads with a big horn in the middle of each – and I would still have a schoolgirl crush on him. You know, like those screaming teenage girls chasing after the Beatles in A Hard Day’s Night.
Valukas is a freaking genius, writes like a legal Hemingway, and totally upended my world with his Report to Board of Directors of General Motors Company Regarding Ignition Switch Recalls. Don’t let the boring title fool you – it’s a 309-page study on the evil that bureaucracy can inflict upon the universe.
In my experience, postmortems usually force you to slog through a dense underbrush of legalese to get at the applicable life, business or investment lessons. But Mr. Valukas’ report is a page-turner on a par with a Tom Clancy novel, except with pictures of smoking gun memos and car parts. His seven-page summary is the single best synopsis I have ever read of a complicated, multi-year narrative, even more impressive when you consider that it was drawn from 41 million documents (23 terabytes of data!).
In case you’ve been living under a cone of silence, let me provide some background…
Beginning in 2002, GM started selling cars that stalled easily. The reason for the stall – a below-spec ignition that too easily switched off when the key was jostled – also caused the airbags not to deploy. And while having your engine cut out on the highway was no picnic to begin with, it was particularly lethal when the stall occurred without airbags, just prior to hitting a tree. For 11 years GM could not solve this mystery; its failure to issue a recall caused deaths that would have otherwise been prevented.
Hopefully, some good can come from this sad tale of colossal incompetence and bureaucratic bungling. For those of us who run investment processes and/or manage organizations, there are so many useful lessons here that I hardly know where to begin.
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