In February 1984, a radical new experiment began with the establishment of the Group of 99, which consisted of 99 individuals representing a broad cross-section of members of the United Auto Workers (UAW), General Motors (GM) managers, and staff from 55 plants and 14 UAW regions. The group’s mission was to study GM divisions as well as other organizations and to create a new approach to building automobiles. The group travelled some two million miles and concluded that employees perform best when they feel part of the decision-making process, which meant that to overcome the traditional difficulties of automobile manufacturing, auto plants would have to operate under a different philosophy.

On January 8, 1985, then-GM Chairman and CEO Roger B. Smith held a press conference in Detroit to make a “historic announcement”: the unveiling of Saturn, GM’s first new brand in 70 years. Saturn was conceived as a totally new corporation, a wholly owned General Motors subsidiary that delivered its first cars in the fall of 1990. The autonomous division, headquartered in Spring Hill, Tennessee, had its own sales and service operations.

Why did GM decide to separate Saturn so decisively from the existing corporate structure, rather than just add yet another product line to its Chevrolet, Oldsmobile, Pontiac, Buick, and Cadillac lines? General Motors insiders and auto industry analysts cited two primary reasons. First, GM badly needed to find ways to cut costs to compete in the small-car market, in which estimates suggested that Japanese manufacturers enjoyed a great cost advantage. According to Smith, Saturn’s mission was “to develop and produce an American-made small car that will be fully competitive with the best of the imports...[and] affirm that American ingenuity, American technology, and American productivity can once again be the model and the inspiration for the rest of the world.”

Second, top GM executives hoped to use the Saturn venture as a testing ground for innovations that could be applied throughout the rest of the organization, especially ones that could get new models to the market more quickly. According to Smith, the techniques GM learned from Saturn would spread throughout the company, “improving the efficiency and competitiveness of every plant we operate... Saturn is the key to GM’s long-term competitiveness, survival and success as a domestic producer.” To accomplish both these goals, the freedom of a completely “fresh start” and the protection autonomy offered seemed to be essential.

QUESTIONS 

1. Discuss the role that environmental constraints and opportunities may have played in the creation and fall of Saturn. What contributed to its inception and its end?

2. Apply the concepts of environmental uncertainty, resource dependence, and strategy to the Saturn case. To what extent does the strategy correspond to the constraints and opportunities of the environment?

3. Consider the relationship between the strategy and structure of the Saturn plant. What came first and how and why is the structure different from the rest of GM?

4. What strategic responses were used by Saturn to try to cope with environmental uncertainty? What other strategic responses might have been considered?

5. Describe the technology of Saturn in terms of Perrow’s routineness, Thompson’s interdependence, and Woodward’s production processes. Does the structure fit the technology? Explain your answer.

6. Describe the nature of advanced manufacturing technology at Saturn. What effect did the technology have on organizational structure and job design?

7. What does the story of Saturn teach us about the linkages between environment, strategy, and technology? What lessons can be learned from the Saturn experiment?