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Harvard Business School Professor, former Medtronic CEO

Whitacre In For The Long Haul

Interim General Motors CEO Ed Whitacre will assume the position permanently following an announcement this past Monday.  As a long-time proponent of Whitacre as a leader and CEO, and as a watchful observer of the changes he’s already overseen at GM, this development makes me optimistic about the future of the great American car company.

The GM board’s decision to make Whitacre the “permanent” CEO is great news for taxpayers who own 70 percent of GM, GM customers, and GM employees. Here are just a few of the positive things it offers for the company:

  • In officially signing on as full-time CEO, Whitacre can devote an extended period of time to overseeing GM’s return to profitability.  He’s already trimmed a great deal of the fat at GM, shedding unprofitable brands, excusing unnecessary managers, and reducing excess inventory, in part by closing 1,350 underperforming dealerships (although 100s of “performing” dealerships will likely re-open in the coming year).  Now, he can continue working to back up his bold – but attainable – projections for profitability in 2010. 
  • How will Whitacre hit those profit numbers?  Through an aggressive, innovation-backed strategy focused on introducing smaller, more eco-friendly cars at home and in emerging markets like India, China, and Brazil.  His commitment to GM as full-time CEO enables him to oversee this daunting logistical and strategic hurdle, and his seasoned “turn-around” experience will be immeasurably helpful in that process. Whitacre is the CEO who build Southwestern Bell (SBC) into the leading regional Bell operating company and then salvaged the failing AT&T by consolidating it into SBC (AT&T).
  • Installing Whitacre as full-time CEO also ensures that the cultural shift currently underway at General Motors continues.  When Whitacre took the helm, he began to rectify decades of misguided management, misallocated automobile development, and misplaced union concessions.  Now, these improvements can be brought to fruition.  As permanent- CEO, Whitacre can institutionalize a renewed commitment to lean production and product innovation, as well as a continued avoidance of “power point charts, consultants, and the “analysis paralysis” that have plagued GM for decades.”
  • The most impactful result of Whitacre’s announcement to become permanent CEO is that it sets the stage for an even longer-term continuation of these changes, and a renewal of trust in GM by the American people.  In staying on with GM for the long-term and executing measurable improvements in products and the company’s bottom-line, he’ll earn prestige for the company and more buy-in from now-wary American consumers.  With that trust and success in place, Whitacre will be in a position to influence the selection of a successor (perhaps his gritty CFO Chris Liddell) to continue on a track of product improvement and profitability.

The bottom line: long-term commitment from Ed Whitacre spells long-term success for General Motors.