Risk Takers 2019: Sometimes a risk works. Sometimes it fails. Sometimes it takes years before you know. See who else made the list.
Mary Barra, the boss of General Motors, didn’t win friends in Washington when she announced the company would shut down four US plants and lay off thousands of employees. The move seemed heartless, especially since GM had just said it could take in record profits, a decade after its bankruptcy had been funded by taxpayers.
The decision said a lot about Barra — but not that she’s coldhearted. In fact, she was deeply affected by the criticism from some GM employees that she was uncaring, according to someone who knows her.
Barra decided to close the plants after analyzing GM’s business needs. General Motors must position itself for the future in an industry that is clearly shifting. Better to make adjustments now, when the economy and the company are healthy, rather than to do so in the throes of a financial crisis as most automakers — GM included — would usually have done.
“I am forever grateful for the assistance we received in 2009, and one of my primary responsibilities is to ensure it never happens again,” Barra said in an email interview with CNN Business.
The layoffs were wrenching for workers. As it turned out, however, almost all the hourly factory employees who weren’t eligible for retirement have since found work at other GM plants, although some had to relocate. Even the salaried employees, who lack the protection of a union, should have an easier time finding other work now when the labor market is strong and jobs are plentiful, GM executives say.
From Barra’s perspective, she sees where the industry is heading and she’s making sure GM won’t fall behind.
“Five years ago, when I first got into the job, I said I expected to see more change in the auto industry in the next five years than we had in the last 50,” Barra told CNN Business. “Today, we are seeing the changes and transformation accelerate.”
‘Time is not our friend’
The key thing to remember about Barra is that she is, by training, an engineer, and she is obsessed with speed. Not speed going down the road or around a track. There are other people at GM who can take care of that. Barra is obsessed with speed of action, how fast she can find the right solution and make it happen. “Innovate now,” is one of her mantras, because, to her, the greatest risk is inaction.
Her master class in the danger of organizational inertia was the GM ignition switch crisis. In 2001, long before she became CEO, a few GM engineers realized there was a problem with the ignition switches in some of the company’s small cars. They could accidentally turn off while driving, leaving startled drivers without power steering, power brakes or airbags. It was a dangerous defect demanding immediate attention.
For the next 15 years, GM failed to take effective action. Meetings were held. Reports were written. Committees were created and forgotten. That blind inaction, caused by a culture of bureaucracy and buck-passing, contributed to the deaths of 124 people. A recall only took place after Barra took over as CEO.
The experience made it clear to Barra that GM’s famously careful and rigid culture needed to change.
“I never want to put this behind us,” Barra said in a companywide video conference at the time. “I want to put this painful experience permanently in our collective memories.”
Barra set about creating an atmosphere inside GM in which no one feared to speak and, when they did, they were heard.
She simplified things, doing away with cumbersome rules whenever possible. One small example is GM’s dress code. Once a book, Barra brought it down to two words: “Dress appropriately.”
“Having gone through bankruptcy and then the ignition switch crisis has fundamentally made me more impatient,” Barra told CNN Business. “Time is not our friend.”
She doesn’t over analyze and wait for every data point before acting, realizing that a great thought not acted on is as good as not thinking at all.
“If we get 80% of what we need to know we’re probably directionally correct,” said the person familiar with Barra’s management style. “As more information comes in, changes can be made later.”
Even with the urgent speed of her decision-making, Barra never seems flustered. And not just in public, according to those who know her. Unlike some legendary auto industry executives, she does not yell, bang on desks or slam down phones to get her way.
“A forceful, militaristic style makes sense when you’re on a battlefield,” said Jeffrey Sonnenfeld, senior associate dean for leadership studies at Yale School of Management. “When you’re going through a time of more wrenching change, it takes persuasion and understanding and vision, and she has buckets of that.”
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People who know Barra describe her as fearless when it comes to digging in, finding the problems and fixing them. She doesn’t concern herself with the way things have been done before.
In 2017, GM announced it was selling off its European brands, Opel and Vauxhall, to Groupe PSA, the French company that makes Citroën and Peugeot.
To a casual observer, the decision might have seemed obvious. The brands had struggled for decades to earn a profit in a hyper-competitive European market.
But both brands, Opel, in Germany, and Britain’s Vauxhall, had been part of GM since the 1920s and were integrated into the global company. Selling them wasn’t like selling a sofa. It was like selling a room of your house. These businesses had to be carefully carved out and the weak points left by their absence — the lost engineering and design talent, for instance, that had gone to Groupe PSA — had to be shored up. Selling Opel and Vauxhall meant that GM would give up any claim to being the world’s largest automaker or, for that matter, a global automaker at all.
Barra had, in a single move, redefined what it meant to be General Motors. But GM’s long-term survival and success required thinking differently about the business.
“We don’t have a right to exist,” Barra said in an interview with former Goldman Sachs CEO Lloyd Blankfein last May. “We have to earn our right to be General Motors.”
Even more interesting than the parts of the operation that Barra has pared back are the areas where she has pushed the company forward. She created a vision for GM summarized in three goals: “Zero crashes, zero emissions and zero congestion.”
Those goals sound impossible, even though they’re not paired with even a vague timeframe. Still, they give employees something to aim for as the company embraces the brave new world of electric vehicles, self-driving cars and car-sharing.
In 2016, GM bought Cruise Automation, a small San Francisco company working on autonomous driving technology, in a deal worth about $581 million in cash and stock. Honda and Japan’s Softbank also put major investments into the company last year. Now, GM has become the first company to make self-driving cars on a moving assembly line. In short, GM now looks like one of the best-prepared companies in the world to capitalize on self-driving technology. It has some of the most advanced tech, it is already learning to produce that technology at scale and it can combine that with decades of experience in “networked cars,” thanks to its OnStar subsidiary.
GM also launched Maven, a car-sharing service similar to Zipcar, in 2016. It first started by renting out a fleet of GM vehicles through an app. Now Maven also allows owners of GM vehicles to rent out their own cars and SUVs using the app. Maven is helping GM learn about the mobility needs of people who may not own cars at all and about the prospects for revenue streams outside of traditional car sales.
“It’s ripe for disruption,” Barra said of the auto industry in her talk with Blankfein, “and technology is making that possible.”
GM also began selling the Bolt EV electric car that same year, beating Tesla to market with a broadly affordable electric car. More electric cars are planned for coming years, with Cadillac leading the way as GM rolls out a new generation of EV technology.
Electric cars are not big profit makers, at least not now. Ford has been slow to market EVs on anything like GM’s scale. Toyota is also taking a much more cautious approach.
“We believe in an all-electric future,” Barra has said. “Both battery-electric and hydrogen fuel cell.” (Hydrogen fuel cells generate electricity on board a vehicle from hydrogen gas.)
Since Tesla and a number of other startups have entered the market, a new term has been created for companies like General Motors. They’re called “legacy automakers.” The term connotes a company that was once great, now viewed respectfully as it fades away in the rearview mirror. But if Barra has her way, she will make sure that term no longer applies to GM.