GM’s Barra Leads from the Front
Published on April 1, 2014
Put yourself in Mary Barra’s shoes: After 33 years with the company, you have been CEO of General Motors (GM) for just two weeks – the first operating executive in 30 years to be CEO and the first female. You are determined to transform the moribund GM culture that led the company into bankruptcy by focusing on superior vehicles that meet your customers’ needs with design, quality, and most of all, safety.
Then you learn that the company has a major safety problem with ignition switches on the Chevrolet Cobalt that has caused 12 deaths, and you must recall 1.6 million vehicles. Your investigation uncovers that GM employees have known about this for 12 years but the problem was never surfaced – all to save $1 per car.
You recognize immediately the potential consequences: angry customers, negative publicity, and an array of liability suits, Congressional investigations, and significant financial impact. You recall how Toyota’s quality problems impacted its reputation and cost the company more than $1 billion.
You know there is likely much more looming below the surface. Amid this uncertainty you are determined to be open and honest with your customers and the general public, yet you don’t have all the facts. How can you go public without complete answers and solutions?
The pre-bankruptcy GM often had similar problems but its leaders refused to face reality. Mary Barra is a very different kind of CEO: she is determined to lead GM into a new era that focuses on customers first and sets new standards of transparency in providing the safest, highest quality vehicles. I had the privilege of getting to know her last summer when she attended my Harvard Business School course, “Leading Global Businesses” while she was GM’s chief of worldwide product development.
Thus far, Barra has performed remarkably well under the mounting pressure. She has stepped forward and acknowledged the problems, and taken full responsibility for them. Unlike the old GM, she isn’t hiding behind lawyers and PR specialists. Rather, she has spoken directly to GM’s customers and apologized for what has happened, expressing empathy by admitting that “something went very wrong … and terrible things happened.”
When Congressional hearings begin on April 1, Barra isn’t sending a subordinate: she will testify herself. She has promised to release findings of an internal investigation examining the problem’s root causes and why no action was taken. “Our overriding goal is to be transparent,” Barra said.
Barra is using this crisis to transform the old GM culture. In early March, she wrote to employees: “Our company’s reputation won’t be determined by the recall itself, but by how we address the problem going forward … What is important is taking great care of our customers and showing that it really is a new day at GM.”
To signal her determination to change GM’s culture, she appointed a new chief of global vehicle safety. She has assigned 50 employees to GM’s technical center to handle customer inquiries about safety and is holding daily meetings to oversee the recall. Using decades of experience in designing GM’s vehicles, she is focusing on understanding how the defect occurred and why it took over a decade to bring it to the public’s attention.
With so many problems like GM’s surfacing in the past decade, the American public has lost trust and confidence in the integrity and transparency of corporate leaders. In the automobile industry alone, the public still has raw memories of Ford’s Jacques Nasser blaming Firestone tires for the rollovers of Ford Explorers that caused 273 deaths, and denials of Toyota and Audi about problems with their vehicles.
It takes a long time to regain consumer confidence. By being open and transparent about GM’s problems, Barra has aligned herself with her customers and ameliorated public outrage. Acknowledging there is no quick-fix for these problems, Barra said “We have apologized, but that is only one step in the journey to resolve this … We have much more work ahead of us.” To reinforce her commitment, she announced the recall of 1.7 million newer GM vehicles suspected of carrying faulty airbags.
Barra recognizes regaining the trust of GM’s customers is far more important than the billions of dollars in lawsuits and fines that GM may incur. She weathered decades of “financial engineers” in the CEO’s chair who focused on short-term profit instead of building great products. She has been at GM long enough to know how difficult it will be to change GM’s entrenched culture. To change GM’s culture from its inward-looking, short-term focus, she has to be the role model for all employees of how to treat customers, especially during a crisis.
Mary Barra recognizes that “a burning platform” like this one offers a golden opportunity to convert GM’s culture permanently into a passionate focus on vehicles that make customers’ transportation safer and more enjoyable. Demonstrating her visionary approach to leading GM, Barra says, “We will be better because of this tragic situation, if we seize the opportunity.”
She has the leadership, wisdom, and commitment to do just that.