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Bill George

Harvard Business School Professor, former Medtronic CEO

What a Difference an Authentic Leader Can Make

It is hard to believe it was only a year ago that General Motors emerged from bankruptcy. How much difference a year has made! GM is now solidly profitable, growing its revenues once again, and retooling its lineup of automobiles. It is on the verge of a public offering that will enable the U.S. government to recoup the investment from its “bailout.”

GM’s fall into bankruptcy was more like a steady decline over fifty years, as its U.S. market share tumbled from 53 percent to a meager 19 percent. In spite of their loyalty to “Buy American,” many GM customers turned to higher quality, better designed vehicles made by GM’s Japanese and European competitors. Most younger buyers never began buying GM cars. A steady stream finance-trained executives – from Roger and Jack Smith to Rick Wagoner – focused on short-term actions to maintain some semblance of quarterly earnings while denying that GM’s autos were no longer competitive.

Every time union negotiations came around, these CEOs gave away the store to the UAW in order to avoid a strike, while the long-term obligations for health care, pensions, paying laid off workers, and work rule inflexibility just kept piling up. The GM board of directors was just as complacent as the management, and kept appointing finance executives without ever addressing the company’s long-term strategic issues.

When the end came in early 2009, President Obama had the courage to finance the company to bring it out of bankruptcy. Even more importantly, he appointed a highly successful board chair in Ed Whitacre, who became CEO four months later. Whitacre gained his reputation as the nation’s most successful telecommunications executive, as the chair and CEO of SBC who saved ATT from its demise. While Republicans moaned that the government was running the company, Whitacre told me that the Obama administration gave him and the new GM board complete freedom to run the company.

Ed Whitacre’s remarkable leadership had monumental impact in rapidly turning around this lumbering giant. His one-year tenure marked a dramatic shift in the old way of doing business at General Motors, as the days of redundant bureaucracy and disjointed innovation quickly ceased.  Whitacre abandoned GM’s moribund committee system that protected executives from being held accountable for results, and made clear, decisive decisions while challenging his troops to move fast – much faster.

Whitacre even put himself on the line by appearing in GM advertisements, heralding the new GM and challenging customers to give GM cars a try while offering them their money back if they weren’t satisfied. He got a break earlier this year when arch-rival Toyota ran into quality problems, but he moved quickly to take advantage of the opportunity, ramping up production rates and sales and marketing efforts. GM still has a long way to go to catch up with Ford, whose highly successful CEO Alan Mulally started retooling Ford’s product lineup four years ago, but GM’s trajectory is solid.

Since turning over the CEO reins to successor Dan Akerson, Whitacre has received some undeserved criticism for stepping down after just one year. But this has been his intention ever since he took on the CEO title. He noted, “It was my plan all along…to help return this company to greatness and I didn’t want to stay a day beyond that.”  He is a man of his word, and he delivered on every promise and commitment he made.

Cheers to Ed Whitacre for a job well done.