Good stuff: AE on Fritz, Big Ed and GM's culture.
 

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.

If Ed can see some major issues with the attitude of some 'GM-lifers', then he should be culling them (all).

However, I'm not sure I agree with the comments that the next GM CEO must have extensive auto or heavy industry experience per se. What they must have is vision and the ability to lead.

I've often wondered how a Steve Jobs would go from running a dynamic company like Apple to transitioning that dynamic over to GM... We might never know... but sometimes it takes success to breed success.

I'm wondering where they will dig up this "true believer," within their compensation restraints??

In the 1990s, GM was run by a group of outsiders who were highly talented and successful in the fields they came from, and had great vision in those fields and was able to communicate well.

We know what happened.

Rick Wagoner was perhaps the best finance guy around. Period (he'd have to be to have kept GM from caving in all these years).

I feel that the next CEO has to have a strong background in industry and/or someone with an unusual capacity to learn quickly, cut to the chase, and deal with people. Former General Colin Powell (whose hobby was actually rebuilding Volvos himself) even has the potential of pulling off a successful turnaround.

Just heard a news announcement that Bob Lutz will be replacing Fritz.....

Is that official or just speculation? Similar to...

http://wheels.blogs.nytimes.com/2009...gm-is-lutz-in/

lol i don't buy that.
next you'll be telling me wagnor is going to replace lutz and bring it full circle.

in every job i've had I've turned around and made the most change in the first 3 months.
That it's not going to happen attituted is the problem not the solution. The authour is another failure.

So you agree with the author, but call him a failure?

no you somehow managed to read it wrong.
The author believes 90 days is too soon to do anything.
I say that's BS and Whitacre had the right idea saying something better happen in the next 3 months.
The author is a failure because he sounds like another lifer who bitches and moans and wants to drag ass and waste time.

Got it.

Anybody opposed to Lutz taking over on an indefinte basis (until he decides to retire)?

Knows the product? check

Strong willed? check

Decent track record? check

Actually WANTS the job? check

Worth a shot I suppose.

Yeah, DeLorenzo isn't giving Whitacre a whole lot of credit ... basically treating him like he was fresh out of business school ... or maybe even high school.

Of course Whitacre knows you can't overhaul your product line or change brand images or anything long term in 90 days. Unless I missed more of the quote somewhere, that's not what he was said. He said he wanted to "see results" in 90 days. That could mean dozens of things, e.g. winding down brands, starting to streamline engineering, laying the foundation for some longer term goals, etc. It could even mean increase sales, since marketing can help that in the short term, such as GM's buy-back program. It's foolish to think nothing can be accomplished in 90 days.

I personally think Whitacre is a great choice for Chairman of the Board. For those that like to compare Whitacre to Smale, don't you think Whitacre is acutely aware of what went wrong under Smale's watch and will be absorbing every lesson possible? Again, let's not treat him like a complete dummy.

I read it the same way.

And that 90 day thing - I expect GM's corporate culrure is not used to being told that results are expected in days, rather than years/decades. - and have their boss mean it.

That may have been the whole point of the 90 day deadline...to shock people. Fritz was always destined to be an interim leader, so Ed may have figured that terminating him would serve to shock people out of neutral and into OD.

Yup.