I recently had the privilege of participating in a webinar sponsored by the Institute of Labor Relations (ILR) at Cornell University on How Innovative Auto Industry Practices Could Help Transform Health Care. I urge all of you to view the webcast on line.

I want to focus on an important observation shared by Mike Bennett, a retired UAW leader, Professor Thomas Kochan of MIT, and Harry Katz, Dean of ILR. According to Bennet, Kochan and Katz: One of the key causes of the failure of the Saturn experiment was the failure of both GM and the UAW to fully integrate the lessons of the LMP into their organizations

In the late 1970s and into the 1980s, U.S. automobile manufacturers lost significant market share, especially in the small car market, to Nissan, Honda, and Toyota. Unprecedented oil and gas prices in the mid-1970s began to change the purchasing behavior of American car consumers. The U.S. automakers failed to respond, and that period was the beginning of the end of the U.S. auto industry as we knew it, according to many industry analysts.

What made Saturn different?

GM and the UAW developed Saturn—not just a new car, but a new division of GM. Their goal was to bring a high quality, affordable, small car to the U.S. market, built by unionized workers. What would differentiate Saturn from other GM cars on the market? It would be built under a fully integrated labor-management partnership embedded in operations, product development, sales, marketing, customer relations and dealership management that would produce a better car.

Saturn quickly gained a popular following and earned a string of industry and customer satisfaction awards for several years running. The company made a profit and the labor-management partnership was understood to be at the core of this success. Ongoing quality control and affordability measures were part of each work team. Disputes were handled through alternatives to traditional grievances. The focus for production and problem solving was on the needs of the customer.

However, success on such a scale cannot be sustained in a vacuum.

As Saturn demonstrated success, major challenges in the U.S. auto industry and at GM continued. By 1996, GM was facing major challenges:

• Capital constraints created barriers to further investing in Saturn operations
• New leadership emerged at the top of GM
• New leadership emerged at the top of the UAW

GM and the UAW chose not to reinvest in the Saturn plant, but instead to build the Saturn in more traditional settings. Over time, neither UAW nor the GM leaders were willing to sustain unit-based quality and innovation systems or continue to build the systemic learning network that existed in the original Saturn plant in Spring Hill, Tenn., into other operations.

As MIT’s Tom Kochan pointed out: “In these labor-management partnerships that we have seen over the years, there must be a full strategy to go from unit level organization to full integration of the learning network throughout the organization. If this is not done, economic, competitive, and leadership challenges will create political trouble that will not sustain the learnings and successes that had been created.”

“Top leadership of the organizations, both union and corporation must be 100 percent committed,” Mike Bennett of the UAW said. “The more people who are involved in decision-making naturally creates turbulence, and because the top leadership changed in both organizations and because that new leadership was not committed to the Saturn labor-management partnership, that turbulence overwhelmed the chances of the partnership to succeed and ultimately to exist.”

Lessons for our partnership

These lessons from Saturn are chilling and stark, and, I think, ring true in our work in the LMP at Kaiser Permanente. Our LMP is at a crossroads:

• We have started down the path to have every work unit in KP function as a high-performing unit-based team.
• Our highest performing teams have achieved success through training, experimentation, sponsorship, and support. Their accomplishments stem from the very conscious and consistent use of time, resources and materials to transform the work environment from a traditional and hierarchical setting to one that is collaborative and more equal.
• We also know that lower performing teams often are in need of these types of support and experience, but that there is wide variation in the resources available for implementation.

We have a choice. Will we as top leaders support the full integration of the known building blocks of high performing teams? Or, will we, as GM and the UAW did, make other decisions based on perceived and real challenges and move away from our National Agreement and partnership?

The current economic, public policy, budgetary and competitive pressures present unprecedented challenges to all of us. In the days before LMP, similar pressures pulled KP and its unions apart into decades of acrimony and under-performance.

Our partnership has been in place for nearly 14 years and we are achieving high performance. Shall we sustain and deepen the transformative experience of the front lines, or will we become frustrated and abandon it?

As Mike Bennett said: “We may have been able to avoid the catastrophe in the U.S. auto industry had we been able to sustain the learnings from the experiment at Saturn.”

Many more blogs to write on this subject to be sure! Meanwhile share your thoughts on the choices we face in the Labor Management Partnership.