What GM’s Mary Barra must do now
Mary BarraA heavy schedule of 2013 GM product launches tested Barra—the highest-ranking woman in the auto industry—and her grades were all superlative. She's brought a new rigor and discipline to GM's often unruly product development process. Critics praised the 2014 Chevy Impala as the best GM car in decades, and the upcoming seventh-generation Corvette is a top contender for car-of-the-year honors. Her biggest fan: chairman and CEO Dan Akerson, who keeps talking up the likelihood of a woman becoming a Detroit CEO .
The business world and auto industry will soon get over their fascination with incoming GM CEO Mary Barra’s gender and pay attention to the leadership she must impart on General Motors and its efforts at revitalization.
The fact that Barra is a GM (GM) lifer who grew up in southeast Michigan, the product of a GM family, is a critically important part of her resume, along with her obvious skills and record as an executive. That aspect could be an advantage, provided she recognizes that GM has been a hidebound place, too reliant on the habits that made it, until the 1990s, the world’s biggest and most impressive company. If so, she could deliver necessary change.
The GM of her youth could do very little wrong and thus was blinded by its success, which led to an acceptance of the status quo and ultimately, in 2009, to its failure. An example: GM executives of the 1980s snickered at a little outfit from Japan named Toyota (TM). They were stricken with hilarity when Toyota announced it would sell luxury vehicles under the Lexus brand. Dan Akerson correctly showed his fellow executives that they better not take Elon Musk or Tesla (TSLA) lightly.
Another example of status quo thinking: GM more or less has accepted occasional flare-ups with the United Auto Workers union as the price of doing business.
Barra can’t afford to ignore labor relations. True, the financial collapse of 2008 and the bailout by the U.S. served to moderate union demands and quieted calls for work stoppages. Will the union worry about GM’s long-term health in the next labor negotiations in 2015? Specifically, Barra must find a way to resolve GM’s current pension obligation to the UAW, which is about $70 billion, $20 billion more than GM’s market capitalization.
GM needs a new strategy in Europe, one that will turn a profit. No doubt, Barra realizes that another streak like the $18 billion in losses over the past 15 years could sink the company. Should GM consider selling Opel, as it had planned after the bankruptcy? Should it find a better partner than Peugeot, which is weak and starved of capital? GM turned down a chance in 2006 to join forces with Renault, probably for reasons of pride. Maybe Barra can find a brilliant partnership in Europe that will help GM gain a sustainable foothold there.
Turnarounds can happen under brilliant leadership. Alan Mulally’s stewardship of Ford (F) over nearly eight years has become a model for how to heal a troubled organization and get it back on track. He recognized that Ford executives were undermining one another and put a stop to it. He prevented overachieving Ford execs from shelving Taurus, one of the company’s most recognized brands. And Carlos Ghosn led a spectacularly successful resurgence at Nissan, starting in 1999. Ghosn had to put an end to corporate practices such as promotion by seniority, which was sacrosanct in Japan. In both cases, the new leaders applied a fresh, bold perspective to address seemingly intractable business problems.
No doubt, Barra is reminded at every turn of the wonderful traditions, history, and heritage of GM. She will have to try to put them out of her mind as she searches for strategies and solutions — as well as talented individuals — to put GM on a solid footing.
Her gender will matter a great deal to those who worry about women being unfairly excluded from the corporate suite. Her gender will matter little as it relates to the leadership chops she displays in her new job.