Strange Days at General Motors

When Ford (NYSE: F  ) first announced that Boeing engineer Alan Mulally would be joining the company as CEO, there was a lot of hand-wringing among Detroit-watchers. He's not a car guy, they said.  He's coming from an industry that serves a very different marketplace.  He doesn't understand the auto business. How can he succeed?

But as we all know, Mulally turned out to be a great leader for Ford. And even though I was surprised by his hire, I haven't been surprised by much that he's done since. That's partly because he and his team have communicated their intentions well, and partly because his moves have just made so much sense. It was clear what needed to happen at Ford, and he has been making it happen.

But some recent moves by CEO Dan Akerson make me wonder if we'll be able to say the same about General Motors (NYSE: GM  ) .

The head-scratching reorganization
Akerson has only been on the job for a few months, but some of his moves have been puzzling. For instance, why did he just kick Bob Lutz's successor as product chief, the well-regarded Tom Stephens, upstairs -- and hand the job to the company's human resources head?

GM's products came a long way over the past decade, thanks in large part to efforts set in motion by Detroit icon Bob Lutz, the company's now-retired vice chairman and product-development chief. But the company needs to continue its upward trajectory, and while recent signs like the Chevy Volt are promising, much remains to be done. Leading that product design charge might be the most critical job in the whole company.

So why might Akerson think that Mary Barra, most recently GM's VP of global HR, is the person to do it? Here are a couple of possibilities:

  • She's not exactly an HR person. Before being put in charge of HR -- a role she took on to help drive cultural change within GM, something it dearly needed -- she had spent years working in a variety of GM posts related to manufacturing and had acquired a reputation for getting diverse groups to work together. She also has experience in adapting global vehicle "platforms" for regional markets, something the company has been doing more of recently (and should be doing more of going forward).
  • This isn't exactly Lutz's old job. Stephens was promoted into a newly created role as GM's global technology leader, following Joel Ewanick's recent promotion into a new role as head of global marketing. Barra's job may be less about conceiving bold new products on her own and more about distilling Stephens' and Ewanick's input into a clear mandate for the product-development staff -- about using GM's technology advantages to serve customers well, in other words.

To be clear, Barra's clearly a capable executive, despite the fact that her resume is not what you would expect for Bob Lutz's heir. But maybe Lutz -- who was the man behind all of GM's acclaimed new products, from the Volt to the Cadillac CTS -- is being replaced by a new way of conceiving products and bringing them to market.

Could this actually be a good thing?

Color me seriously skeptical
Time will answer that question, but I can't say I've been profoundly impressed by Akerson so far. He may be struggling to pick up the nuances of the business, something he hinted at in an interview he gave to The Wall Street Journal a few weeks back. In it he described his new job by saying, "It's like studying for finals every night."

But make no mistake: Understanding or not, Dan is a man with a plan. And that plan involves remaking GM as a "consumer-driven" company, while doing things like benchmarking GM's engine portfolio against Toyota's (NYSE: TM  ) because, in his view, the company has too many engines. That would be fine if GM's global product lineup duplicated Toyota's, which it doesn't. (It's exactly these kinds of nuances that worry me.)

Akerson's drive to make GM "consumer-driven" instead of "engineering-driven" sounds great on the surface, but it reminds me of GM's old habit of trying to wallpaper over product deficiencies with slick marketing. On the other hand, a corporate philosophy that aimed to have every new GM product be a "gotta-have" hit would be a great thing if it worked. But can Akerson get there from here?

What do you think? Is there a method to Akerson's seeming madness? Scroll down to leave a comment and let me know.

Want to stay on top of GM's turnaround? Add the company to My Watchlist to find all of the Fool's analysis on the General's ongoing return to glory (or, um, not).

Fool contributor John Rosevear owns shares of GM and Ford. General Motors is a Motley Fool Inside Value selection. Ford is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 31, 2011, at 9:58 PM, michnow wrote:

    As long as it is government motors why should he care how many cars he sells?

  • Report this Comment On January 31, 2011, at 10:13 PM, bkaufman10 wrote:

    Akerson needs to do two things to stay at the top spot:

    1) Get along well with the UAW and White House and 2) invest heavily in Green adventures. While GM may actually repay the original bail out - the government will dump millions back into the company in the form of grants to develop Green vehicles. So consumer driven vehicle development is less important then when it was a privately held company.

  • Report this Comment On February 01, 2011, at 12:06 AM, carguyAZ wrote:

    I'm an engineering student aspiring to a career in the car industry, so call me biased but...

    engineering driven cars have created the icons that have made car companies so sought after.

    The thrifty honda crx

    the reliable toyota pickup

    the innovative original corvette

    the mindblowing for gt40(the old school one, to clarify)

    BMW has made its name on engineering, not being consumer centric.

    the companies that have lost their engineering heritage have gone the way of the pontiac. or the plymouth. or the mercury. or the hummer.

    Lutz hired automotive journalists and took it back to the engineers to make cars better.

    akerson wants the product development time cut in half. I dont want a car that was rushed through engineering in half the time. sorry.

    car companies everywhere: sell us good cars. we will be loyal.

  • Report this Comment On February 01, 2011, at 7:14 AM, TMFMarlowe wrote:

    @carguyAZ: According to that WSJ article I mentioned above, Akerson apparently offered a promotion to one of the Vette development leads if he could deliver the next-gen car a year earlier than planned. That's a recipe for lousy first-year quality, something that used to plague Detroit but that has become less of an issue in recent years. Or put another way... I like Vettes, but I suspect I won't be buying a first-year C7 (new or used), no matter how awesome it seems to be when it arrives, because I don't want to have to finish the engineering myself, in my garage.

    John Rosevear

  • Report this Comment On February 01, 2011, at 10:02 AM, Buffsplace wrote:

    I always find responses to these kinds of posts interesting. GM went broke being an engineering company but some above are rooting for that to continue. Being concerned about the customer is what "outstanding quality" is about and that identifies companies like Honda and used to be Toyota. Let's see now, which ones did not require government bailout recently? GM and Chrysler are still bankrupt companies and won't make it unless their products shift focus to the majority of customers, not just "car guys and gals".

  • Report this Comment On February 01, 2011, at 12:13 PM, TMFMarlowe wrote:

    @Buffsplace: Actually, if we're going to sum it up in one sentence or less, GM went broke after a few decades of trying to wallpaper over engineering deficiencies (and cost disadvantages) with slick marketing. Until very recently, GM's "car guy" vehicles actually tended to be their very best products, because they got more care and attention inside the company. Their challenge now is to make every single vehicle to that standard, and that's an engineering and management problem as much as it is anything else.

    Quality is one metric. An interior that doesn't look or feel cheap is another. "Fun to drive" is still another. All are important at the moment a buying decision is made. The key takeaway is that building and selling cars is not at all like selling Pepsi, and I'm concerned that Akerson might not really grok that yet.

    John Rosevear

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