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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What We’re Reading Today
North Korea carries out fifth nuclear test
South Korea said that a 5.3 magnitude tremor was detected prior to the announcement, adding to fears that the country run by Kim Jong-un has made significant advances to develop a nuclear warhead. The U.S. said that “serious consequences” would follow, if the report is confirmed, while South Korean president Park Geun-hye called the test an act of “self-destruction.” BBC
Wells Fargo fined $185 million…
…for opening accounts against customers’ wishes in order to charge them fees. The fines levied against John Stumpf‘s company were the largest ever collected by the Consumer Financial Protection Bureau. While the bank has fired 5,300 employees in response to the investigation, regulators blamed a culture of unrealistic quotas, leading to employees using the practice to reach the lofty goals. Los Angeles Times
Airbnb tries to address discrimination
Brian Chesky‘s company has come under criticism as claims that customers are singled out and denied rooms due to their racial or religious background grow. In an effort to stem this practice, Airbnb released a 32-page document, outlining fixes. Starting next month, those that feel they’ve been discriminated against will now be able to use the company for booking assistance. And it has strengthened its anti-discrimination clause that renters have been asked to sign. Wired
How The Apprentice turned Trump’s image
When Donald Trump was first pitched the idea of The Apprentice, a business related TV show didn’t seem promising. But producer Mark Burnett sold him the idea during the first meeting. The show became an instant hit, turning Trump’s image from a corporate “barbarian” to a savvy business man while promoting his brand throughout, helping him even now as he runs for president. Fortune
Building a Better Leader
Why aren’t factories filling their open jobs?
Some say it’s due to a skills gap, but there’s little evidence of such a gap in manufacturing (or other sectors). Instead, the cause may be they’re not trying hard enough to find new employees and automation plays a role in why. FiveThirtyEight
To tackle sexism at work…
…leaders must ensure that the behavior is tracked and those that step over the line are held accountable. Otherwise, it could create a culture of complicity. Fortune
The number of organizations offering on-site day-care…
…has fallen from 9% to 3% over the past 20 years. The perk is becoming nearly extinct, even as other lifestyle benefits, such as maternity leave, grow. Bloomberg
Calling for Tech Help
Chipotle to test drone delivery with Alphabet
Virginia Tech students will be able to order Chipotle during a test trial this month, receiving a burrito from the clenched grasp of a drone. It’s Larry Page‘s Alphabet’s first test with drone delivery to the general public. For Steve Ells‘s Chipotle, the announcement comes as it searches for answers as sales lag due to the E. Coli scare last year. Meanwhile, the company settled over 100 cases with customers who got sick from eating at a Chipotle restaurant. USA Today
Macy’s signs deal with Apple
As Terry Lundgren‘s company struggles to respond to the slowdown in brick-and-mortar retail, it’s trying something no other department store has: installing an Apple store within its flagship location in New York City. The deal with Tim Cook‘s Apple also allows Macy’s to sell Apple watches in 180 of its stores before this year’s holiday rush. Fortune
Republicans attempt to block the Internet handoff
President Barack Obama plans to officially hand over most oversight of the Internet to the Internet Corporation for Assigned Names and Numbers (Icann), which already oversees much of the daily operations. Experts fear that global support could become fragmented without consolidating oversight, allowing greater access and control by authoritarian governments over the internet. But Republican Senators Charles Grassley and John Thune, along with GOP Representatives Bob Goodlatte and Fred Upton asked Obama to delay the transfer over concerns of Icann’s accountability. It’s unclear if the GOP has the votes to stop the transfer. WSJ
Up or Out
Pier 1 Imports CEO Alex Smith will step down in December. Fortune
Retired Air Force Brigadier Gen. Gregory Touhill was named the first federal chief information security officer. Fortune
Fortune Reads and Videos
Donald Trump has his best fundraising month
But the $90 million he raised in August is dwarfed by Hillary Clinton‘s $143 million. Fortune
Zara’s founder Amancio Ortega may have passed Bill Gates…
…for the title of the world’s wealthiest person. Fortune
There are 8 newcomers to…
…Fortune‘s Most Powerful Women International list. The highest newcomer rank came in at No. 14, with Wan Ling Martello, head of Nestle’s Zone AOA—Asia, Oceania, and Africa. Fortune
Don’t expect many more exclusive album releases
Despite the success, executives worry it’s limiting the album’s availability while interest is highest. Fortune
Jack Ma, founder of Alibaba, turns 52 on Saturday. The Richest
Syrian President Bashar al-Assad turns 51 on Sunday. Biography