GM CEO Dan Akerson: ‘We’re dancing as fast as we can’ by Geoff Colvin @FortuneMagazine May 31, 2012, 9:14 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons GM CEO Dan Akerson FORTUNE — Dan Akerson’s first job in the auto industry is his current one, CEO of General Motors GM . A telecom executive who had run Nextel, XO Communications, and General Instrument, he had joined Carlyle Group, the giant private equity firm based in Washington, D.C. His career took an unexpected turn when the federal government bailed out GM in 2009 and asked him to join the board — then swerved again in 2010 when CEO Ed Whitacre decided on short notice to step down. Akerson, now 63, got the job. He talked recently with Fortune’s Geoff Colvin about how he’s driven 3,000 miles on one gallon of gas in his Chevy Volt, making GM more customer-centric, career lessons, and much else. Edited excerpts: Q: Toyota passed GM in the first quarter to become the world’s largest carmaker. How much does that matter? A: I’d rather be the most profitable in terms of margins. To produce the most cars — quite frankly, that’d be pretty easy. Overproduce and no margin. That’s not the game we’re trying to play. So hats off to them. I think they’re a great company, and I think we’re doing fine. The resurrection of General Motors has been centered on great products, and the product lineup we have is what’s really important to our success. Development of the product line took a hit during the crisis, when money was scarce. How long does it take to get back on track? By good fortune our products that came out last year when oil spiked were all real fuel-efficient models. In the month of April we were the first car manufacturer in the U.S. ever to produce and sell 100,000 cars whose average mileage exceeded 30 miles per gallon. That’s representative of how our portfolio has shifted. We came out with the Volt, the Cruze, and we’ve come out with the Sonic this year. But to your original question, over the next three years, 70% of our portfolio will be turned over and in its first run. The big picture is that the auto industry is consolidating into a few very large global players. What are the biggest challenges to succeeding in that environment? You’ve got to play for the long haul. One of the things that was surprising to a lot of people when we were on our IPO trip 15 or 16 months ago was that we have good, strong market positions in the BRICs [Brazil, Russia, India, and China]. In the two biggest markets in the world, China and the U.S., we’re the leading market-share holder. I think that portends good things for General Motors. The global business can get very complex. You have plants all over the world, and you are sourcing and selling all over the world. How can you stay on top of that? We’re dancing as fast as we can. There are 167 plants globally in the General Motors universe. We’re in 33 countries. At any one time we have about $90 billion of product being shipped to supply those plants. It is formidable. We do manage our products on a global basis. We develop them on a global basis, and we link our development and design centers around the globe. GM wasn’t always a true global entity. Not to be critical, but General Motors was a global company run as many smaller companies. A couple of years ago only 14% of our production was on our global platforms. Our goal by 2015 is to have 65% of our total automotive manufacturing on global platforms. We can improve quality, reliability, and durability. We’ve made great strides but have more work to do. This industry is in transformation. After more than a century with the internal-combustion engine, a lot of technologies can now power a vehicle. For private noncommercial use, is electric going to be predominant? The car today vs. the car that was on the road in 1910 is still four-wheel, still run by combustion engine. It’s safer, bigger, heavier, it’s got air conditioning and an automatic transmission, but it’s fundamentally the same game. A number of alternative propulsion opportunities are there for us. The first is electric. About 80% of the drivers in America drive 40 miles or less a day. The Volt will drive you 40 miles on a single charge, and then you have a small combustion engine that never experiences mechanical drag. It just cuts in to charge the battery, so you’re always on electric motor. I’ve been driving my Volt for 3,000 miles, and I’ve used one gallon of gas. One gallon or one tank? One gallon. But I’m charging my car every day, for around town. If I want to, though, I can drive it from New York to California and back — you can’t do that in an all-electric car. So those to a certain degree are being reduced to urban cars. There will be a day when the average charge will be 300-plus miles, and then you’ll have to worry about how to charge it. We’ve developed an engine we’re now putting in the market that will cost you on the order of $1,500 and has two reservoirs of energy, one for compressed natural gas and the other for gasoline. Why are we building an engine that can burn either? Because the infrastructure is not ubiquitous enough in this country to have compressed natural gas. On an energy-equivalent basis, compressed natural gas sells for about a third of what gasoline sells for. So that’s another way of revolutionizing the market. And then there’s one we feel strongly about, which probably won’t happen in this decade, and that’s hydrogen fuel-cell technology. It’s kind of the nirvana of where this eventually goes. You were well known in earlier careers for being highly focused on what matters to customers vs. what may matter to engineers or other insiders. Is GM sufficiently customer-centric today? Not yet, but we’re getting better. We just named a very talented young woman [Alicia Boler-Davis] vice president of customer experience — that’s a new kind of perspective from an automotive point of view. She’s been with us about 10 years, helped develop one of our key products, and managed a plant that produced it. So she’s got street cred. She’s seen the vehicle designed and built. For us the customer experience is not only making the vehicle reliable and durable and quality-oriented, but also how it was designed, manufactured, sold, and the post-sale. We’re going to be very, very data-driven rather than episodically driven. I hold great hopes for the improvement of how we’re perceived in the marketplace. You must have a tremendous amount of customer data, but if you’re like many companies I talk to, you haven’t been using it for all it’s worth. Is that fair? We’re looking at our IT systems real hard. Data warehousing of customer information was not a strength in the company. Maybe it wasn’t even existent, but it will be in the future. The U.S. Treasury still owns 26% of GM. Is that an impediment to the company’s performance? Yes and no. A recent survey showed there’s a percentage of people who say that as long as the company has government ownership, they’ll not buy a car from General Motors. I think there’s a certain percentage of the buying public that has a very free-market perspective on the economy. I do too. But had General Motors and Chrysler gone down, it’s reasonable to say that a good part of the supply chain would have collapsed. The manufacturers, the supply-chain folks like BorgWarner, Delphi, Visteon, and others, plus the dealerships employ 8 million people. That represents $500 billion a year in payroll and $70 billion in taxes that would have been at risk. And the social destruction — people losing their homes, children not being able to go to college — every once in a while you have to do something for your citizens. Two administrations had the courage and the leadership to stand up. Whenever there’s a restructuring or a bankruptcy, there are multiple paths to resolution. We took the right path. Did you ever think you’d be CEO of General Motors? Never. Is there a larger lesson for people thinking about careers? I was blessed. I went to the United States Naval Academy, and they talk about service to the nation in positions of command and in the civilian world. Believe me, I believe in the free market and want to make a good living and create financial security for my family, but this was a call to service for me. I wasn’t expecting it. It was somewhat of a dislocation — I had to move, and I’m 60-some years old. It’s a little late in life to try to reinvent yourself. But I thought I could be part of a greater team, and we have created a wonderful team at General Motors. I think our future is reasonably bright, but we’re going to have to earn it every day, and it’s a rewarding experience for all of us. The Leadership series This is the latest interview with a top executive by Fortune senior editor-at-large Geoff Colvin. See video excerpts of this interview at fortune.com/leadership — plus find Colvin interviews with Dow CEO Andrew Liveris, DirecTV’s Michael White, Chicago Mayor Rahm Emanuel, Southern Co.’s Thomas Fanning, and many more. This story is from the June 11, 2012 issue of Fortune.