December 9, 2009



GM’s classic "two steps forward, three back" dance of mediocrity is alive and well.

By Peter M. De Lorenzo

(Posted 12/6, 5:00pm) Detroit. Some of my colleagues in the media have been quick to canonize Ed Whitacre, characterizing the new “interim” GM CEO as some sort of visionary for his latest management shake-up this week. And judging from what I’ve been reading, “Big Ed” seems to be getting a huge pat on the back for making the most rudimentary executive moves he could have possibly made - some of which are highly suspect, at best – and for using the words “accountability” and “responsibility” and phrases like “taking risks” as examples of GM’s new mantra.

Please. If coming up with a new set of corporate buzz words was all it took to get GM back on track then we could all breeze a sigh of relief and book that loan payback ceremony at the White House for sometime in early March.

But before I get into Whitacre’s executive moves, you’re probably gathering I’m not buying “Big Ed’s” act, and you’d be right. After doing some digging around Whitacre’s previous executive life at AT&T, it’s easy to come away with a highly unflattering portrayal of GM’s “interim” CEO. First of all, the “aw shucks I’m just a country boy who has a few good ideas” persona is total bull****. In his previous executive life Whitacre was known as an arrogant know-it-all who was never wrong, never listened to reasoned advice and who brought absolutely nothing to the table of his own on a day-in, day-out basis. Shocking? Hardly. Anyone who thinks The Peter Principle isn’t alive and well in corporate America today is kidding themselves.

The fact that Whitacre was plucked from semi-obscurity after a lukewarm career punctuated by abject mediocrity at AT&T to lead what was once one of America’s greatest corporations out of the wilderness was not only puzzling, but immediately makes the entire “new age” GM board suspect right along with him.

Let’s take a microscope to some of “Big Ed’s” so-called “visionary” moves, shall we?

First of all, I commented on the Fritz Henderson situation in last week’s issue, so if you missed it scroll down to the bottom of the page and click on “next entry.” There you’ll find my take on the Fritz firing in my column and in “On The Table.”

As for Bob Lutz’s new “advisory” role? This announcement was made in preparation for Bob leaving the company at the end of this month. Lutz was originally going to leave at the end of this year but then last spring he and Fritz got to talking about what he’d like to do when he did leave, and that’s when Bob mentioned that he’d like to keep his hand in product development and design, but that he’d really like to take a shot at revamping GM’s marketing, which he viewed as one of the company’s weakest links (he was right, of course). One thing led to another, and all of a sudden Bob was Vice Chairman in charge of marketing for GM.

Bob was slated to stay in that capacity at least through the end of 2010, but it was no secret that he has become less than enchanted with developments down at the RenCen of late, so he has decided that now would be a good time to end his day-to-day involvement in this business. But Bob isn’t going away by any means, so no premature career send-offs need to be written. He will continue to advise GM on product development and design, and - seeing as I consider him to be the top product guy of the last 40 years in this business - that will be a very good thing for GM, or at least it should be if they continue to listen to him. But remember what I sad about “Big Ed’s” listening skills?

And what about Susan Docherty being promoted to run all of GM’s Sales, Marketing and Service? Yes, Docherty’s young, which the media latched on to as some sort of signal that Whitacre was shaping things up in a positive direction, but upon closer review, what exactly has Docherty accomplished over her career other than just being there?

Two words for you: Not Much.

As a matter of fact, this has been the unfortunate career path for a lot of GM executives over the last 30 years. What I mean by that is that longevity in the GM system does not necessarily mean that there’s a dimension of success involved, it just means that an executive has survived long enough to make it to the next level on the “Big Magic Wheel” of executive job assignments.

A classic example of what I’m talking about? Docherty has just benefited from the latest spin of the “Wheel” - and been entrusted with the toughest task in automotive marketing history - and that is to somehow break through the black cloud hovering low over the “new” GM and to gain consumer consideration for GM’s excellent new vehicles through laser-focused marketing and advertising.

Really? This from the person who green-lighted the embarrassing “Take A Look At Me Now” campaign for Buick, the one that she tried to defend to Lutz when he first took over marketing and that he immediately killed? And now Docherty is going to ride herd over awarding ultra-crucial new advertising agency assignments for Cadillac (the launch of the CTS Coupe) and Chevrolet (the launch of all-important the Cruze)?

Just off the top of my head, that isn’t shaping up to be a good scenario for GM.

I’ve said it before and I’ll say it again, GM marketing has a long history of being stocked with people who have no business making these kinds of decisions. They don’t get it, they’ve never gotten it, and they’re unlikely to get it anytime soon either. They lack a solid frame of reference and a measurable track record of success in the advertising/marketing game, and it shows, time and time and time again. (As if to make matters worse, Docherty’s replacement named to run Buick-GMC is Michael Richards, an ex-Ford marketing guy who brings absolutely nothing to the table. I mean z-e-r-o. Talk about perpetuating the mediocrity...)

And to think that “Big Ed” and the Board are entrusting the very future existence of the company - betting the whole damn rodeo on it as a matter of fact - on the idea that somehow, some way a miracle will transpire within the GM marketing ranks and that it will all come right for once?

This is a seething cauldron of Not Good, folks.

One positive development at GM in the past week, however, was the elevation of Mark Reuss to become president of GM North America. Mark - who just completed a less than two-year stint running GM’s Holden operation in Australia and who was brought back to head engineering – will now have more of a direct say in what happens down at the RenCen, and believe me that’s a very good thing. If they let Mark run, that is. The other was that Stephen J. Girsky, who’s already on the GM Board, will become another personal adviser to Whitacre (along with Lutz).

The positives I’ve mentioned are all well and good for GM, but anyone who thinks Ed Whitacre is the answer – short or long term – is sadly mistaken. You either have a feel for this business or you don’t, and “Big Ed” Whitacre clearly doesn’t. And there’s no amount of schooling on the fly by Lutz and Girsky as to the “whys” and “wherefores” of this game that’s going to make a damn bit of difference either. Certainly not in the time frame that’s required, which is like yesterday.

But the most crucial issue facing GM is the fact that a highly skeptical American consumer public is finding it hard to be impressed with GM’s excellent new vehicle lineup. And until that consideration needle is moved in a dramatically positive direction, the company will literally and figuratively be nowhere.

And it’s the one crucial issue that has not been addressed by Whitacre’s changes.

Why is that do you suppose? I’ll answer that one for you: 1. He doesn’t have the first clue at to how to go about it, and 2. Even if he did there’s no one currently in the building in the post-Lutzian era who is capable of taking them where they need to go.

There continues to be a massive disconnect between GM’s excellent new products and the ability or, more accurately, the inability of the company’s marketing minions to communicate their strengths in compelling fashion to an entire nation of consumers who are all of a sudden from the “show me” state of Missouri.

And until this company figures it out – or somebody is brought in to figure it out for the Board and “Big Ed” – then this company will continue chugging along in time-honored fashion, lost in its classic “M.O.” - the "two-steps forward, three back" dance of mediocrity - indefinitely.

Thanks for listening.

 

Ed supposedly does not use email. or a computer for that matter. While I am not saying that a CEO/Chairman type needs to..it does say a lot about the person.

 

I'm not sure where I stand regarding Big Ed yet.

I think I've formed a pretty good idea on Docherty, as someone who knows how to work her career through the corporate culture. That doesn't necessarily make her good at her job though.

Still watching....

 

While I agree with AE on Docherty, it seems weird that he champions Jill Lajdziak who is going to Penske. Isn't her track record a little shakey?

Too soon to judge Big Ed. The timing of Fritz's departure is curious, but if he's not the right guy for the job, he needs to be out ASAP.

 

Apparently, Ed drives a CTS-V. If it's a stick, he gets extra credit points from me.

 

I want to like Ed.

But it scares me that I agree so much with what DeLorenzo says.

Thus far, Ed hasn't shown me anything to put confidence in. And, after his appearance in the commercial, I can certainly see the 'ego trip'

GM desperately needs help in marketing. A lot of us enthusiasts have been SCREAMING that since 2001.

However, I think GM needs serious help in product planning as well. Most of the stuff they're debuting now and have planned in the future is segment specific, run of the mill BLAND-O-LA.

Sure, GM needs volume cars like the Cruze... But it also needs those volume products to be attractive and innovative. The Cruze is nice, but it brings absolutely NOTHING new to the table in terms of design or technology IMO.

Blah.. blah... 40MPG... I know. But that'll be the NORM almost before the car is through it's first year.

 

I agree with alot here Future. I really want to like Ed too. But I've been waiting for GM's turnaround for over 20 years now, and what I've realized is it's always pretty much the same old crappola - over and over again. On today's webchat, Ed did say something which I found psuedo-comforting though. He was asked how much time the next CEO had to make things better. Ed's answer was short and sweet - "Not long". Yeah, I know it's unreasonable to think that GM can turn around quickly, but I have zero tolerance for the old GM method of "no rush CEO, you have years and years or until we implode (whichever comes first), to show us results". The answer "Not long" was refreshing in a very cathartic way for me.

BTW, he also said we'll be hearing some CEO news in afew weeks.


I agree about the Cruze, nice interior, bland sheetmetal.

 

I like Mark Ruess he has done a lot of good when given the chance. I'm sure he received some preference because of his former GM President father Lloyd. But when it was his turn to run things he has done a good job.
He did well by me when heading up the PVD Group I was in it at GM 8-9 years ago.

There is another rising figure at GM and we who love performance owe him a lot for where GM power is and where it's going. He is a friend of my extended family and local Detroit gear head; Tom Stephens. He has quietly worked to get GM Powertrain to the levels it is now without a lot of credit. At least outside of GM. Now he takes over for Bob Lutz. While not the marketing and media savvy showman that Lutz is. Behind the scenes he is just as talented.
http://www.autoobserver.com/2009/04/...nthusiast.html

GM has a lot of talented people with a lot of passion and determination inside the company. We only see or hear about the top layers but there is no shortage of fine men and women at GM who are plenty capable of driving this company back to health. GM has long suffered from mismanagement and some nearsighted leadership at the top but GM's rank and file employees are strong and driven. So when I hear about the "New" GM or an attempted change in culture what they really need to do is just peel back a few layers of management and let these underutilized people do what they love to do; design, engineer and build great automobiles. GM has spent so much time and money to bring in the very best and then stifle their own people under needless levels of bureaucracy.

 

...and IN trouble ...if they only intend to go with only a sedan and no perfomance models . The new Focus is gonna make a happy life for the Cruze difficult or interesting , take your pick ....jmo . Then the new Civic . The Cruze is good maybe even great ...I do not think it will be a class leader though once the Focus and new Civic are out .

Hopefully Ruess shakes it up big time , he sure did have alot of interesting things to say about returning to class leading products as opposed to the current class competitve mindset . YA know what though , I dont have faith . I think the big GM failboat will run Ruess out too . How many years now have they been rebuilding , re-organizing bleh bleh bleh . If I were a large corp like GM , I would think it would honestly get embarrassing announcing another revolution . I guess thats part of their arrogance though .

 

What's there to like about a Chairman or CEO?

Either they do a good job and make the company money or they fail to deliver on their tasks... Ed has a proven track record unlike GM board members of the recent past.

Money will come from successful product - which is the job of the engineers and manufacturing base. Couldn't have better personnel than Lutz and Reuss who have shown they have what it takes to change the ways of the old GM around.

 

I really like the Cruze. I saw it in L.A., and it has a great interior, and the exterior is good-looking too. I particularly like that they resisted the high belt line, slit window look and that they avoided hitting it with the ugly stick (seen a gaping Maw-zda lately?).

As far as new technology, 138hp and 40mpg from a car that seats 4 is something new in terms of technology, especially at that price point. That's substantially better than the sales leaders in its class.

So I don't know exactly what more you would want. Fusion reactor maybe?

 

Well..if you look at what Whitacre did in his career..it is really kind of the opposite direction GM needs to go. 10 years ago..AT&T was basically a almost defunt long distance carrier. Whiticare basically to one Baby Bell in SBC and slowly pieced togethor the old Ma Bell (10 other baby Bells, Cingular, AT&T long distance) and rebranded it all as AT&T. While I would love to see GM rebuilt in a similar manner, I think the government has a smaller leaner GM in mind, kinda what Ford has done. In that sense, Whitacre is the exact OPPOSITE executive you want in terms of background.

 

AMEN!

 

You nailed it!

Look, it doesn't mean a bowl full of warm crap if Peter Delorenzo likes or dislikes Ed Whitacre. Most of what Delorenzo says about Whitacre's career at AT&T seems to be based on cherry-picked items, and not the big picture. When Peter is right, he's dead on. But when he's wrong, it's also glaring.

To be sure, Ed Whitacre is no corperate angel. He KNOWS how to play corperate hardball. He is an extremely demanding boss. But what Delorenzo completely skipped was the fact that Whitacre transformed AT&T.

Remember when Southwestern Bell changed it's name to SBC, and through a series of mergers and takeovers became the largest telecommunications company in the US.

Does "Cingular Wireless" ring a bell? How about "Comcast"? There's a few other companies I can name.

What's the common denominator of all of them?

There were put together under the same corperation while that fellow who "brought nothing to the table" was Chairman and CEO of what eventually re-emerged as AT&T. They even named a building after him after he left. Not exactly the trail of a mediocre executive.

The dowside of Whitacre's career is that he did wind up hauled before a Federal Anti-trust comittee.

Looking at all this as a whole, whether you like him or as Peter Delorenzo no doubt does, you hate him, simply doesn't matter. The fact that stands out far and above all else is that Ed Whitacre is THE perfect person for the job.

Between "complex" accounting, a dysfunctional product development system, money managed so badly that no private lender would loan GM money, and the fact that GM would have never have gotten out of debt on their own in 50 years is a strong case for an extreme dose of a no-nonsense person at the helm. When you consider that all of this piled up over the course of at least the past 20 years, and was made even worse the past decade since no one was willing to (or could) make the changes that were absolutely vital to the company's survival, the only person who has even a chance of turning things around is an Ed Whitacre. Someone who isn't afraid to rip things apart, doesn't care what outsiders think, knows how to play seriously rough, AND gets results.

When I weigh Peter Delorenzo's negative opinion of Ed Whitacre's history and his view of Mr Whitacre being the person to run a self-obliterated General Motors "Company" against the fact that Ed Whitacre took a regional phone company and made it so big and domineering that he won an invitation from Congress to explain why he shouldn't get slapped with an an Anti-Trust violation.......sorry, but Peter looses. BIG!


Whitacre is by no means an "Aw Shucks" type of guy. Peter is the only person who I've ever heard say that about the man. The guy is one mean SOB.

And he's THE perfect guy if anyone wants to see GM turn into a company that will beat the living snot out of Toyota's financial and product dominance in the automotive world.

Backed by a board of directors who collectively are the extreme exact opposite of the wallflowers that used to sit on the board, and one can only get a feeling that the new General Motors is a cutthroat, take no prisoners type of company.

Peter Delorenzo may prefer a batch of nice, soft, & cuddly group that cares very much what he (or any other critic) thinks. But I doubt there is a soul on this site who believes that GM is hellbent on getting it's act together, and doesn't believe that GM is going to make the best vehicles possible from now on, or have a high body count trying.

I doubt there were very many people believing that this time last year....

....when GM was frantically attempting to get the Bush Administration to bypass Congress and give them money so they could survive past the end of the month.

Some might need to be reminded that Congress refused to fund GM (TWICE), and the General Motors Corperation was quickly headed to oblivion.

This is another example of having the perfect people in the right position at the right time. I have nothing but top things to say about Mark Ruess as well as Tom Stephens. Keep in mind that Bob Lutz is still there and running the thing that he's spent his whole life doing, making great product. Ed Welburn is proving to be perhaps the best Design Chief in the business. These people weren't brought from the outside, they resided INSIDE GM.

Problem was, their bosses were people whose focus wasn't on using them to create the best product possible when it conflicted with cost savings and indivdual fifedoms.

I feel, like Ford, it took someone from the outside to come in and clear away the obstacles that prevented these people from doing the job that they wanted to do all along: Create the best vehicles possible.

Whitacre isn't going to be around forever. And there is going to eventually come a time when his strongpoints are going to reach the end of it's effectiveness at GM, and someone else is going to have to step in. He's the perfect man for the job of rebuilding GM and making it a financial and product powerhouse again. But sooner or later (like at Ford) it's going to have to be handed back to someone who is already in the company.

With product front and center, and both design and engineering powering products, we may get back to the days where "Car Guys" are running the car business. Where we'll have people like Mark Reuss and Tom Stephens running GM instead of obscure financial guys whose focus is on taking the cheapest route possible instead of the best product possible.

 

That would be cool, IMO "car" guys should be running the business, but mark my words, those obscure financial guys will worm their way back in and screw it all up again. Its an inevitable outcome whenever you have a publicly traded company.