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Power Sheet – September 18, 2015

The announcement yesterday of a $900-million settlement between General Motors and the U.S. Justice Department in the ignition-switch case reveals new information about CEO Mary Barra’s continuing cultural rehab of the company. It’s an unusually powerful story so far – and one reason it’s so compelling is that we still don’t know how it will turn out.

The agreement by GM to pay a $900-million fine settles criminal charges the U.S. had made against the company for wire fraud and withholding information from regulators about a defective ignition switch that has been blamed for over 100 deaths. The tragic events are not especially surprising in the auto industry. Mistakes are made, lives are lost, cases are settled. What’s new and worth watching is the way Barra is handling the case.

From the beginning of this mess, which emerged just days after Barra became CEO in January 2014, she has ignored the GM template for handling these situations – minimize their importance, fight them, drag them out, settle grudgingly. Barra, a GM lifer and daughter of a GM lifer, saw that the company had a culture problem, and here was an opportunity to attack it. So she took the direct opposite of the GM approach. “I never want to put this behind us,” she told employees at a town hall meeting that stunned many of them. “I want to put this painful experience permanently in our collective memories.” A retired executive told me her remarks “were unlike anything any previous GM CEO has ever said.”

She apologized publicly and profusely, visited the families of victims, and set up a compensation fund for them before any legal liability had been established. She continued this pattern yesterday. “The mistakes that led to the ignition-switch recall should never have happened. We have apologized and we do so again today,” she said. “I believe that our response has been unprecedented in terms of candor, cooperation, transparency, and compassion.”

Apparently so. U.S. prosecutor Preet Bharara said the cooperation by GM executives had been “fairly extraordinary…. It’s the reason we’re here after 18 months rather than four years.”

Defeating an entrenched, dysfunctional culture in a huge, old company is rare. Almost every GM CEO of the past 30 years has tried it and failed. Barra is already ahead of any predecessor, but that’s no assurance she’ll succeed. The GM culture is highly evolved for survival. We won’t know for years whether it has really changed, and in the meantime she has to improve GM’s products, its customer experience, and its financial results.

Everyone is rooting for Mary Barra, but this game is far from over. What we can say for now is that she’s breaking boundaries, asking her organization to follow her into unknown territory, showing real leadership. That makes her story worth following.

What We’re Reading Today

The Fed delays interest rate hikes

The decision to delay was a sound one – the dollar remains strong as emerging markets struggle and energy prices are low. But some wonder why Fed Chair Janet Yellen didn’t signal the move in advance — maybe because she didn’t know what the committee would decide. In any case, the markets guessed right. U.S. News & World Report

A look at SABMiller’s Alan Clark

The head of the planet’s second-largest brewer faces his toughest challenge since becoming CEO two years ago. With demand wilting as craft breweries steal market share, will he use the Anheuser-Busch InBev merger offer as a lifeboat, or will he grab the opportunity to turn SABMiller around? The quiet, stoic Clark isn’t offering many hints.  WSJ

Fifa’s No. 2 embroiled in ticket scandal

The much maligned soccer federation has relieved Jérôme Valcke of his duties pending an investigation. Valcke, who has served as Fifa President Sepp Blatter‘s right hand since 2007, faces allegations that he participated in selling World Cup tickets to vendors at prices up to four times face value and reaping profits in the hundreds of thousands of dollars. The Guardian

If Uber paid its drivers as employees…

…its costs would go up $4.1 billion or $13,000 per driver. Surprisingly, healthcare is only a small portion of the cost – $112 million – but reimbursing for gas, miles, and tolls would raise expenses $2.2 billion. With a valuation of $51 billion, Uber might be able to take the hit, but Travis Kalanick‘s company would certainly like to defeat court challenges to its freelancing model. Fortune

The Dolans say goodbye to Cablevision

With the $17-billion sale of the company to Altice, James Dolan and his family will gain $2.2 billion and exit the company his father started in 1973. It ends a love-hate relationship between the family and its customers in the Northeast, who complained for years about poor service. Then again, James Dolan still owns the  Knicks basketball team, so New Yorkers still have plenty to gripe about. NYT

Building a Better Leader

The draw of lunch 

Employees are 81% more likely to stay in their current job if their boss encourages them to take a break for lunch. Only 17% of leaders actually do so. Fortune

The reasons for meetings 

Wharton management professor Nancy Rothbard says the number of meetings we have in the office has increased, in part because we’re so busy we must schedule time to force people to focus on an issue. Knowledge@Wharton

Pfizer follows its “no jerks” policy…

…through a strategy it dubs “Straight Talk.” It’s an approach to giving and receiving feedback by employees and managers that allows for open communication without belittling or destroying trust. SmartBrief

This CEO asks candidates for a bad reference 

And hiring experts see the upside to FullContact founder Bart Lorang‘s strategy. Fortune

Worth Considering

Snapchat lands the NFL as new partner

Evan Speigel‘s social site will showcase the NFL on its Live Story feature every weekend and maybe some weekdays, using fans and behind-the-scenes images snapped by NFL employees. No game film will be added. Both sides will promote and sell ads for the feature. Re/code

Bitcoin now considered a commodity

The Commodity Futures Trading Commission director of enforcement Aitan Goelman announced on Thursday that Bitcoin and other virtual currencies fall under the CFTC’s jurisdiction. That means any futures manipulation in the currency could be indicted by the CFTC. It also shines more light on a hidden currency, since exchanges must register with the CFTC.  Bitcoin

Western corporations’ time has passed

At least according to a new McKinsey study. Data show that profits of companies in the western world rose from 7.6% of global GDP to 10% from 1980-2013. But that share should decline to 8% over the next decade as emerging market companies grow faster. Economist

Up or Out

Jose Cabanas has been named Cuban ambassador to the U.S. He’s the first person to fill the role in 54 years. Reuters

La Quinta Holdings announced that CEO Wayne Goldberg has agreed to step down amid dragging sales. CFO Keith Cline will serve as interim CEO until a replacement is named. Dallas Business Journal

Jerry Pender, who served as the Federal Bureau of Investigation’s chief information officer and executive assistant director, will join private equity firm Z Capital Partners as an operating partner.  Fortune

Oshkosh President and COO Wilson Jones will become the clothing company’s next CEO, effective Jan. 1, 2016. He will replace the retiring Charles Szews Milwaukee Journal Sentinel

Fortune Reads and Videos

Facebook has a new Twitter killer

It’s called Signal, and Mark Zuckerberg‘s company hopes it will become journalists’ next news gathering tool. Fortune

Facebook COO Sheryl Sandberg has advice for hiring fast

“You should always have several people who could succeed you—and then several people who can succeed them—so that you’re prepared for future challenges.” Fortune

Uber’s surge pricing is good for you

Uber swears. Fortune

Apple’s Angela Ahrendts made $522 million in 5 months

She tops the list of the highest paid Most Powerful Women. Fortune

Birthday Wishes

Republican presidential candidate and former neurosurgeon Ben Carson is 64 today.  Biography

Disgraced cyclist and founder of the nonprofit LiveStrong Lance Armstrong turns 44.  Biography

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Produced by Ryan Derousseau
@ryanderous
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