Small Biz: Lessons to Learn From GM Revamp

Quick Fixes

Last week, GM announced its short-term fixes, which included wooing potential buyers with interest-free loans through the end of the month. The company is also cutting production of pickup trucks, which have been a major casualty of high gas prices. (GM's truck sales have dropped 23% compared to a year ago, and truck sales fell almost 40% in May alone.)

"There's been an unprecedented shift in consumer demand," says Wolkonowicz. "In the past three months, consumers have gone from wanting big, powerful vehicles to small, fuel-efficient cars. Cutting production and laying off people is a necessity."

Making Sure It's Cost-Effective

The company is also looking to shed brands such as Hummer, which has become a symbol of gas-guzzling extravagance. GM recently announced it has hired Citigroup(C Quote - Cramer on C - Stock Picks) to evaluate options for Hummer, including a sale.

Shedding brands seems like an easy way to boost GM's profitability, but dealer protection laws make it more complicated than many outsiders realize.

With that in mind, make sure your company's quick fixes really will deliver the savings you expect.

Risking Big

While shrinking GM's product lineup may keep the company alive for now, its best hope for the future is making bold, long-term changes. Since the hiring of Bob Lutz as head of global product development in 2001, the company has revolutionized the way it develops new cars.

"They're able to create exciting products that are critically well reviewed and become best in class," says Wolkonowicz, citing the Chevy Malibu and Buick Enclave as examples.

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