THE AUTOEXTREMIST

December 2, 2009

It’s time for a True Believer to run GM.

By Peter M. De Lorenzo

(Posted 12/2, 8:30pm) Detroit. The rumors started weeks ago - that GM had put out feelers to replace CEO Frederick “Fritz” Henderson - so it was frankly no surprise to me when it was announced late today that the board had accepted his resignation.

In other words, Fritz was forced out, aka fired.

Fritz was the quintessential company man, loyal to a fault and a specialist at being dropped into GM hot spots and doing yeomen duty as a “fixer” of GM’s financial problems throughout his career. But it was for exactly that reason that Fritz’s tenure was destined to be short.

With a new makeup of its Board of Directors and new board chairman and industry outsider “Big Ed” Whitacre demanding action, there was no way Henderson was going to survive the year. Was there a ridiculous set of expectations imposed on Henderson? Absolutely.

Whitacre’s painfully limited knowledge of the task at hand and general naiveté about this business was prominently displayed when he announced that he wanted to see results “in 90 days,” a little less than three months ago. It was patently absurd that GM was going to see a meaningful turnaround in 90 days, and everyone in the business knew it, not the least of which was Fritz Henderson himself, so when Whitacre got up and said it I winced, because it was the quintessential example of notgonnahappen.com.

But the bottom line in all of this was that Fritz Henderson was a GM “lifer” and GM wasn’t going to change fast enough – or at all, frankly – under his watch. The buzz among the analysts and the media over the last few months has been that the “new” GM looked a lot like the “old” GM, and it was more than obvious that this was the case. As much as we all heard that things were “different” and that the GM “culture” had been turned upside down, the people saying it were all GM lifers, and the lingering scent of “same as it ever was” was hovering over the entire enterprise like a cloak of mediocrity.

The legendary arrogance was not only still present and accounted for - it seemed to be actually growing, which was absolutely astounding given the spectrum of perilous circumstances facing the company. Where was the meaningful progress within the organization to mirror the stellar products either here or due to arrive? It was missing in action, because the reality was that legions of GM lifers were being rearranged and reassigned, but the look, feel and reality of the place wasn’t changing one iota.

What’s next?

It’s clear that Whitacre and the GM Board have had their fill of reading about Alan Mulally and his success with turning around Ford, and right now the marching orders to the search firm assigned the task of finding the next GM CEO are specific and they go something like this: Get us an outsider with vision and perspective, someone with a proven track record of success in whatever industry they come from, someone who commands respect and demands - and gets - results.

Simple, right? Wrong.

First of all, if they’re smart, they won’t move too far afield from a candidate with heavy industry experience, preferably in the automobile business, or one very similar to it, because I don’t care what the intelligentsia in the business community say, the automobile business is unlike any other business in the world, and to suggest otherwise is just plain silly. Don’t forget that Alan Mulally had heavy industry experience in building airplanes, and he also has an engineering background, so it’s not as if he was plucked from obscurity and dropped into a business that was completely foreign to him or that he didn’t have a fundamental feel for.

The other important fact to remember about Alan Mulally is that he’s a singular figure in this business, and Ford happened upon a once-in-a-lifetime leader to guide it into the future. And for GM to expect that there will be another candidate “like” Mulally out there in terms of talent and ability is ridiculous. Even if they identify someone who seems to have the same qualifications as Mulally on paper, that doesn’t mean that the all-important intangibles of chemistry, personality and leadership will be there too.

That you cannot predict, and that is why GM’s search for an outsider is a crap shoot, at best.

But the one thing that Whitacre and the GM Board are forgetting about in this situation is that the “lifers” and the “lifer mentality” run so deep inside GM and are so entrenched that even if they do manage to stumble upon a Messiah-like figure who apparently can lead them out of the wilderness, I firmly believe that the bureaucratic paralysis that has powered the “GM way” for so long has to be addressed.

As in blown to smithereens.

The legendary GM arrogance has to be dealt with at the source. That means that many of the upper-level executives and the layer of executives just below them have to be exited from the company. In other words, a rearranging of the deck chairs will not suffice, and a whole new management crew is needed if GM is ever going to pull out of its perpetual two-steps-forward-and-five-back operating cadence.

I’ve often said that the True Believers within GM - meaning the tremendously talented individuals in design, engineering and manufacturing who have delivered outstanding products time and time again despite the corrosive GM system and against all odds - and who are some of the most capable people in this business - will be the ones who will have to lead the company out of the wilderness.

That means the people behind machines like the Corvette ZO6 and ZR1, the Cadillac CTS-V and new Cadillac CTS Coupe, the Buick Enclave, etc., etc. – outstanding products by any measure – are the ones who will bear the burden of delivering GM’s future success, or failure.

As I've often said, it’s all about the product, it has always been about the product, and it always will be about the product in this business. And in GM’s case, the company has some of the most competitive products in this business either here or on the way. But the systemic cancer fueled by the go-along-to-get-along mentality that’s still alive and well within GM and that still fights against its progress every single day will have to be eradicated in order for these new products to shine.

GM needs to identify a candidate with a scintillating track record in this business, a product-focused True Believer with the guts and the guile to blow up the GM system and shake the company to its very foundation, while marching the company out of the wilderness of organizational mediocrity and unjustified arrogance that has dominated the company for the last 30 years.

“Big Ed” Whitacre and the GM Board better do their homework and choose wisely in their search for someone to lead the company into the future.

Anything less will be unacceptable.

Thanks for listening.

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