Photograph by Marvin Shaouni

Mary Barra is Changing GM’s Culture—Now Can She Move Its Stock?

An interview with the CEO and Fortune’s Most Powerful Woman in Business.

Not that long ago, mere survival was the goal for General Motors gm . But since Mary Barra took over as CEO in January 2014, the 108-year-old, $152-billion-in-sales behemoth has accelerated out of bankruptcy and recalls and shifted into overdrive with record profits. Now she’s navigating the future as she brings GM into ride sharing and autonomous driving. That performance has earned Barra the No. 1 place in Fortune’s Most Powerful Women in Business list for the second year in a row. She talks to editor-at-large Jennifer Reingold about what has changed at GM—and what’s next.

Fortune: Your first year as CEO was a whirlwind. Days after you started, the company announced it would recall what eventually became 2.6 million vehicles because of a defective ignition switch that was linked to over 100 deaths. It was insanity. What was the focus of your second year?

Mary Barra: While we were clearly dealing with the issues associated with the ignition-switch recall, we were also doing things to strengthen the company by working both on the core business and on the technologies that are going to be important from a personal mobility perspective. We’ve made some really tough decisions in places around the world [like the 2015 decision to exit Russia], deploying capital in a way that is going to generate the right return.

At the same time, we’re investing. When we are thinking of the technologies that are going to disrupt our business, there is connectivity, different propulsion systems, autonomous, and sharing. When you look at connectivity, GM has 20 years of experience with OnStar. We’ve had over 1.3 billion interactions with customers, and by the end of the year we will have 12 million OnStar vehicles connected across the globe. That’s a huge advantage and a huge foundation to build on.

We’re really excited about launching the Bolt electric vehicle at the end of this year, with a range of 200-plus miles. I’m really proud of how hard the team has worked to have an all-electric vehicle that takes away range anxiety for most people. And I’m most excited about people getting inside the vehicle. It’s a vehicle that hasn’t compromised; when you look at it from a technology platform, it will surprise a lot of people.

Michael Millikin, left, General Motor's general counsel, looks on as Mary Barra, GM's chief executive, testifies before Congress on Capitol Hill in Washington. Barra has been widely credited for steering GM out of crisis. Above, the CEO (alongside now-retired GM general counsel Michael Millikin) testified at an April 2014 congressional hearing about GM’s faulty ignition switches.Gabriella Demczuk—Redux

Talk about automation.

There’s the work the company has been doing for over a decade, and then we are marrying that with the [March 2016] acquisition of [San Francisco–based self-driving-car startup] Cruise Automation. It’s a company we’d been following for two years. There are many things that need to come together to do autonomous driving. You need to know precisely where you are, exactly what is going on around you, and then based on those things, you pick your path. And that’s really what Cruise is working on.

How are you integrating a Silicon Valley startup into big old GM?

With Cruise, we created an autonomous technology organization led by Doug Parks, Vehicle Line Executive of the Volt, with an incredible team of people who have been trailblazers within GM. These are people who understand how the organization works and can get things done but really have a vision for speed and innovation.

It’s still early days. I occasionally sit in on Doug’s weekly call that brings the whole team together. I really feel good about the way the two teams are working together. Cruise now has this incredible resource to pull what they need and do it quickly. They have access to data they never would have had. Within weeks after [the deal closed] we had Bolt electric vehicles on the road in San Francisco and Scottsdale collecting miles and developing the autonomous technology.

When do you think you’ll have a self-driving product?

We’re not putting a specific date on it, but I think we have a very aggressive timetable. One of the things we will be gated by is safety.

There have been a lot of rumors Lyft tried to sell itself to you. Did you bid?

There’s constantly speculation about General Motors. We are extremely pleased with the alliance we have. I can’t speculate on what might happen down the road, but right now I would say it is accomplishing everything we need it to.

“The auto industry is cyclical. But this company is fundamentally different than it was in the last recession.”

Mary, you have had tremendous financial success in your tenure. Profits are at an all-time high. Why hasn’t the stock responded?

We do believe that General Motors stock is undervalued. We think the most important thing we can do is just keep putting results on the board, quarter after quarter, year after year, while demonstrating that we have a strong future with the technologies that everyone understands are transforming this industry. I think a lot of the issue is industry-based. Everyone is very concerned, wondering, “What is peak?” “Are we at a plateau?” The auto industry is cyclical. But this company is fundamentally different than it was in the last recession. We have a stronger balance sheet, we are more disciplined, we are a much leaner organization. We may just have to prove that we can continue to generate the results.

Isn’t it frustrating, though?

At times, because I know how hard everyone is working. But I spend a lot of time talking to investors and analysts. All we can do is demonstrate that we are balanced and that we are prepared and that we do understand that we are cyclical.

You have said openly that changing the culture at GM means changing behaviors. Can you give some examples of what has changed?

Twice a year we get the top 300 leaders across the globe together. We meet and we drive cars—because that’s what we do. Two years ago we asked a simple question before everybody came to the meeting: If you could change one behavior across the organization, what would it be? We came up with about five or six things we all wanted to improve—including driving accountability, owning each other’s problems, a relentless desire to win, and having candor and transparency. People were able to walk out the door and start to behave that way.

I think a great example is how the whole org came together most recently during the earthquakes in Japan [in April] that disrupted the supply chain. Very quickly, the cross-functional team came together, took steps, and worked with the supply base. We had to make tradeoffs in the early days, but we did what was best for the enterprise.

 

One of the other keys is to be customer focused. My predecessor always said we don’t win until the customer says we do. And when you are in a meeting where they are making tradeoffs on a new vehicle and someone will say, “But wait a minute, will the customer care about this?”—when you hear that question regularly occurring—that is something that’s extremely significant.

And then lastly, even though we had a very strong first half, there were challenges outside of our control when you look at the macroeconomic situation in South America, the [Japan]earthquake, and the pricing pressure in China. The team is saying, “I understand this happened, but where are the opportunities that I can seize, because I’m accountable to do what I said I was going to do.”

We have more work to do. We’ve got to get to every single employee. We do this external survey with Aon Hewitt so that we can benchmark ourselves to other industries, and we’ve seen tremendous improvement in the engagement of our employees. This time we were able to include our global hourly workforce. All 214,000 employees had the chance to participate.

General Motors Chairman and CEO Mary Barra unveils the 2017 Chevrolet Bolt EV during a keynote address at the 2016 CES trade show in Las Vegas The 2017 Chevrolet Bolt EV during a keynote address at the 2016 CES trade show in Las Vegas in January. The car will have a 200-mile range and cost about $30,000, she said.Steve Marcus—Reuters

What do you want to accomplish next? You once talked about the biggest problem at GM being the “frozen middle” layer of management. What has happened to the “frozen middle”?

I would say that the frozen middle has melted.

Across the company there are about 1,600 people who are considered executives. Two to three times a year we get together with newly appointed executives, and I spend about an hour with them. I say how many of you have said, “If only they would do X …” or “If only they understood Y.” And they all raise their hand, and I say, “You are they!”

Another core thing we are driving toward is understanding that when we first know (or think) we might have an issue, that’s the easiest time to solve it. Raise the issues and solve them early.

What would you tell your younger self to do differently?

Focus more on speed. Time is not our friend.

A version of this article appears in the September 15, 2016 issue of Fortune with the headline “Hail, Mary.”

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