Power Sheet: How Mary Barra Is Disrupting General Motors

September 9, 2016, 2:20 PM UTC

One of the great business leadership projects underway now is Mary Barra’s attempt to rescue, reinvigorate, and reinvent General Motors. For a revealing progress report, see this assessment by Paul Ingrassia, published this morning, and this new interview with her by Fortune leadership authority and editor-at-large Jennifer Reingold. The articles are part of our 2016 Most Powerful Women ranking, on which Barra is, for the second straight year, No. 1. If she succeeds, it will be a landmark achievement in corporate leadership, sure to be studied for years. The outcome is far from certain, but the early signs are promising, and just understanding Barra’s strategy is highly instructive.

Think of this: When she got the job in January 2014, GM’s century-old business model was (and still is) being disrupted not in one way but in three. The Uber concept is transforming the car from a consumer product to a consumer service; autonomous technology is changing the car from a driving machine with technology to a computer with wheels; and electric propulsion is replacing the power source GM has spent 108 years perfecting, the internal combustion engine. All of history says a giant old incumbent firm is extremely unlikely to survive that revolution.

But wait, there’s more. Within days of taking over, Barra faced a crisis of historic proportions caused by defective ignition switches that have so far been linked to more than 100 deaths.

She understood from the beginning that one of her hardest jobs would be changing the risk-averse, process-obsessed, inward-looking GM culture. Wisely, she didn’t even talk about culture change, though. She just focused on behavior change. As she explains in the interview, she immediately focused GM’s top 300 leaders on identifying their own behaviors to change, and then changing them. A related challenge was a common one in big organizations: the “frozen middle,” managers whose primary motivation is survival. She claims “the frozen middle has melted.” She also claims, based on surveys of the entire workforce, that the company has achieved “a tremendous improvement in the engagement of our employees.” Those are highly encouraging signs.

She has acted with un-GM-like speed to get ahead of the disruptions threatening the company, investing a half-billion dollars in Lyft in January and buying a Silicon Valley startup, Cruise Automation, in March. A big question now: Will GM become more Cruise-like, or will Cruise become more GM-like? Much depends on the answer. Barra suggests it’s the former: “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.”

It’s years too early for a verdict on Barra’s performance, but here are two more reasons for optimism: She delivered record profits last year, and she’s only 54. Wall Street is still skeptical; the stock is lower than it was when the company emerged from bankruptcy almost six years ago. You can’t blame investors for feeling doubtful. After all, history is against GM. This week especially, let’s think of it in NFL terms. We’re in the first quarter of a leadership Super Bowl, there’s at least a chance of a major upset, and the fans are rooting for the underdog. Whatever the outcome, it’s looking like a great game.

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