1962 was a peak year in market share for GM, with 52% of the U.S. car market. Today they stand at 18%. The decline was not sudden nor should it have been unexpected. There were rumblings of change all around them, beginning with the rise in oil prices in the 1970’s, but they were ignored. By the 80’s they finally realized that the Japanese could not only make better cars, but also make them more efficiently, and they were popular with the U.S. market. What took the leadership so long to realize this? Part of the answer is the mental models they operated within.
Peter Seng, in his book, “The Fifth Discipline”, defined mental models as, “deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the worlds and how we take action. Very often, we are not consciously aware of our mental models or the effect they have on our behavior.” This is not new. The idea of mental models was first postulated by the American philosopher, Charles Sanders Peirce in 1896.
The assumption under which GM functioned were never written down, but, the following were obtained from interviews of retired former senior GM executives:
1. GM is in the business of making money, not just cars
2. Success flows from rapid adaptation, not technological leadership (automatic transmission was last major innovation)
3. Cars are primarily status symbols: people want to upgrade
4. The U.S. car market is isolated from the rest of the world
5. Fossil fuels (oil) will remain cheap and abundant
6. The government is an enemy and so are unions
7. Planned obsolescence works (quality less important)
8. Efficiency of mass production beats other approaches
9. Bigger is better – we can manage anything
Imagine how these filters and perceptions of the world affected the decisions GM was making. Mental models are subtle, yet very powerful. And not all models are bad, in fact, they help us organize and navigate our lives. For the most part, they have helped us survive. The issue is that they can influence our behaviors without us even being aware. In fact, they can at times cause a collective herd mentality that in the case of GM, had disastrous effects.
What are the unwritten rules or mental models in your company? It’s the stuff you talk about that is not in your employee handbook, or the bits of wisdom you provide to new employees to help them adjust to your culture. Are the mental models of your most senior executives different from the rest of the staff? How are your individual or corporate wide mental models affecting your decision-making? How are they possibly blinding you from growth opportunities, competitive threats, or changes in your target audience purchase patterns?
Take the time to reflect and write down your unwritten rules – whether in your company or in any other aspect of your life. Question them. How do you know them to be true? Are they helping or in actuality, limiting beliefs? Share your mental models with others in your company and look to get to the data behind them and see if they can really stack up or if they are just assumptions that filter your thinking and actions.
Being consciously aware of your mental models and intentionally managing them can not only free up your thinking to new possibilities, but also shed light upon blind-spots.